Q:  What is the history and objective of the firm? A : Evergreen Asset Management Corp. was started by Stephen Lieber 1971. First Union Bank, later renamed to Wachovia, acquired Evergreen in 1994. Sam Lieber purchased Evergreen's real estate mutual fund management operation in 1998, and founded Alpine Management & Research, LLC, which was renamed to Alpine Woods Capital Investors, LLC in 2005. The company manages Alpine Mutual Funds, a family of fifteen open-end mutual funds and three closed-end funds with over $5 billion in assets under management. We focus on three key areas of the marketplace – equity income, real estate funds, thematic and fixed income with municipal securities as our primary focus. The primary investment objective of the Alpine Ultra Short Tax Optimized Income Fund is to seek high after-tax current income with minimal principal fluctuation and to enhance returns by capitalizing on fundamental and technical opportunities in the fixed-income markets. Q:  What core beliefs guide your investment philosophy? A : Our primary focus is on maximizing income and minimizing net asset value fluctuation. We constantly seek out the best opportunities in the marketplace that meet our objectives regardless of how short that period of time might be. Q:  What is your investment strategy? A : We invest in all types of securities that include variable rate demand notes, tax-exempt commercial paper, general market notes, auction-rate securities and standard municipal bonds. The fund's average maturity will range from thirty days to three years. We seek to take advantage of the aberrations and inefficiencies that exist in the marketplace. If we find securities with two weeks or two months left to maturity but producing an above-average income stream with no credit issues, we take advantage of those securities in the marketplace. The starting point is that municipal securities have to be investment grade or better. Then, our focus is primarily on income so we tend to look less at discount bonds and zero-coupon bonds because they do not meet the objective of the fund. Even in the worst of geographic locations or in the most difficult of industries we can find rewarding situations because of specific characteristics individual only to particular securities. Q:  Would you provide a definition of variable-rate demand notes? A : Variable-rate demand notes are long-term securities that carry a daily or weekly put feature allowing the holder to sell the security back to the issuer at par on a weekly or daily basis. By having a hard put feature attached to them, these securities do not depend on the auction for liquidity and are the primary securities in all tax free money market funds. Most of these notes also have a protection feature, so in the event if the issuer defaults, the banks providing the guarantees will buy the credit at par and pay for interest. Q:  What is your research process? A : We look mostly at technical factors such as supply and demand. The reason why supply and demand is so important to us is because fixed-income markets are largely driven by these characteristics, and municipal markets are even more so. In addition to that, the amount of securities issued at any one time coupled with the amount of demand, which can have a diverse effect, both positive and negative, on how the market trades. Furthermore, we look at liquidity issues in the marketplace because we want to make sure that all of our securities have proper liquidity attached to them, meaning that there is an active trading market on the bonds that we hold. Another factor that we take into consideration is the credit quality of a security. We examine everything from finances to pension funding, healthcare costs and credit enhancements. Next, we look at the different types of securities that trade in the market to track and evaluate comparative and relative returns. Lastly, we look at the economic trends and what is going on in the global economy. We focus on issues that are fairly predictable, easy to grasp and understand. We make our investment decisions based off of those characteristics versus trying to make an economic prediction about the cycle of interest rates in the future. We will rarely sell securities unless the credit quality or fundamentals deteriorate. The rationale for this is we try to generate as much income for the fund as possible. Q:  Would you discuss one or two holdings in your portfolio? A : I would like to quote an example that has to do with our interest in aberrations in the marketplace such as tax exempt bonds issued by corporations. For instance, when BP Amoco experienced the Gulf oil spill, we were buying BP Amoco municipal variable-rate demand notes that were issued by them, because we knew that those securities were always trading at par and had daily liquidity. But then, they just totally fell out of favor with the primary buyers of those securities which were tax free money market funds. So, from a security that was normally yielding anywhere from 10 to 25 basis points, it was now trading at 10% tax free. We bought as much as we were allowed to buy in one security, according to our mandate, and as soon as we started to see the government getting involved, we sold all the securities and waited to see what the settlement was is going to be. We then piled back in and rode the wave until the yield became so low it wasn’t attractive anymore. Another example would be the tax-exempt commercial paper from the Dow Chemical Company, which we first bought at a time when they were involved in the purchasing of Rohm and Haas. The short term commercial paper totally fell out of favor with the primary buyers and we were once again buying overnight tax-exempt commercial paper backed by Dow Chemical that yielded between 8% and 10%. As soon as the deal went through, the paper traded at a more normal range with Dow Chemical now trading at 65 basis points for three months, which obviously made a huge difference. We have also been able to take advantage of other great opportunities such as variable-rate demand notes with LOC’s by European banks. We like them is because they have double barrel protection where we can either depend on the letter of credit or the underlying issuer. In terms of municipal bonds, we have done well on bonds offered by Puerto Rico’s Government Development Bank. In fact, we have been big buyers of these sometimes overlooked securities, which have traded relatively cheap in the marketplace. However, as investors started to focus on that marketplace in their quest to generate income and chase yield, those securities stopped being traded at such low levels any more. Q:  How do you construct your portfolio? A : Currently, there are 300 holdings in the portfolio. We do have a lot of turnover in the fund and we hold securities to maturity before replacing them with new papers. Our diversification can change quite dramatically from a week to week or month to month for the simple reason that we try to take advantage of specific situations when we find them depending on developments in the marketplace at any given time. If we find concentrated positions of securities that are extraordinarily cheap, we take advantage of them despite the fact that it might be for a very short period of time and we might have to deal with the reinvestment risk when that time comes around. Q:  What is the greatest challenge in managing this fund? A : Our primary objective is to generate income and minimize principal fluctuation. Right now, the challenge we have is to find income in a market where there is no income to be found with short term rates hovering near zero and at levels not seen in several decades. However, the current volatility in the global marketplace also has the ability to create good opportunities. Since markets have a lot of different moving parts that are not connected to the interest rate cycle, my job is to find those specific situations where they are trading out of sync with the rest of the market for a number of reasons. Q:  What kinds of risk do you focus on? A : Through active portfolio management which includes in-depth research and due diligence, we believe that we can evaluate and monitor credit and interest rate risks. We are continually monitoring economic conditions and supply and demand fundamentals as well evaluating new issuance. Furthermore, we track multiple credit and industry sectors and look for irregularities that might effect the performance of those specific categories. The bottom line is that everything concerns us. We look on a global scale at a large number of factors because they can all adversely affect the performance of our securities at any given time. Based upon how we structure the portfolio, we do not have any interest rate risk. We have never had a security that has failed to pay interest in our portfolio or principal for that matter.