Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 1 Alps Mutual Funds Services Moderator: Marc Rappaport June 12, 2008 4:15 PM ET Operator: Good day, ladies and gentlemen, and welcome to your Alpine quarterly conference call. At this time all participants are in a listen-only mode. Later we will conduct a question- and-answer session, and instructions will be given at that time. If anyone should require assistance during the conference call please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to hand the conference over to Mr. Mark Rappaport. Sir, you may begin. Mark Rappaport: Thank you, Sayeed, and good afternoon, everyone. This is Mark Rappaport, Senior Managing Director of Alpine Funds and host of today's call. We are committed to regularly keeping you informed of what our thinking and strategy is at Alpine, and that's the main purpose of this second quarter conference call. Our funds are unique, and we believe more one understands our differences and appreciate how we manage risk, the more conviction one might have in our Dynamic Dividend strategies built for high current income and long-term appreciation and global premier property strategy for growth and current income. We will be hearing comments today from our Chief Investment Officer, Steve Lieber; our President and Head of the Real Estate team, Sam Lieber; and the co-portfolio managers of our Dynamic Dividends series -- that would be Jill K. Evans and Kevin Shacknofsky. The feedback from these quarterly calls has generally been very positive and yet many participants are looking for us to cut down on the length of the call, so today we are going to respond to the most popular questions that we've received via e-mail over the last week and a half since the press release of the call went out, and then if there's time, we're going to open the call up for additional live questions. Steve Lieber, as founder of the Evergreen Funds in 1971 and co-founder of Alpine has built teams of analysts and managers to navigate portfolios through periods of great challenge and opportunity. And here with us to start our call with his view is Steve Lieber. Steve Lieber: Thank you, Mark. We appreciate the many significant questions, which have been submitted to us for this conference call discussion. They certainly raise the central issues in the current investment environment and the position of the financial structure. Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 2 We believe that we are in a period of transformation. In my experience, such periods generate great opportunity, and we have oriented our investment effort toward seizing such opportunities. But first we think it best to respond to concerns about the risk factors, which may appear in our three closed-end funds. So let me take a few minutes to cover the major ones. First, these funds are not leveraged. Second, no dividends are being paid from capital. This is not a return-of-capital investment structure. Third, there are no auction rate preferred stocks providing another form of leverage. Fourth, the higher-than-typical yields we are generating in these funds are based on the effective use of our dividend rotation strategies. Now I would like to take a few minutes to just remind you of what the dividend strategy entails. It primarily means an effort to obtain more than the typical four-dividends-per- year from an investment. It typically aims for tax efficiency. In Alpine Global Dynamic Dividend, where we must hold an issue 61 days in order to get the 15 percent tax rate applied to the dividends. In the Total Dynamic Dividend Fund and the Premier Properties Fund, this restriction does not apply. However, in many cases, we are achieving the dividend result with a 60-day holding period. The central challenge of the dividend rotation structure is the goal to profitably hold the shares and reach the dividend return. We have developed a very strong analytical group and a strategy to achieve this goal. A question has been raised as to whether the dividend rotation may expose us to greater- than-typical risk. Our experience is the contrary. We are holding the issue to achieve the dividends and capital gains return. With a very short-term approach, it implies we are often out of an issue when risk appears. Questions have been raised about the vulnerability to the mortgage market, especially the subprime one, particularly in the Global Premier Properties Fund. The answer is that we are not specifically investing in companies which focus assets on this area. We may, from time to time, be holding shares of financial institutions, which, in turn, have exposure. But the kind of exposures that we have been investing in in major banks usually have only limited vulnerability. Further, if we see signs of significant negative risk, we are ready to rotate out of these shares. I want to conclude my comments before introducing the portfolio managers by noting that the very flexibility of our active management style and structure for these funds makes them highly responsive in a negative market environment and very effectively opportunistic in the recovery phase. The focus on dividend paying capacity is, in itself, a test of corporate health and potential among the issues in which we invest. These positive factors do not mean that the funds are immune from declines in a negative market environment, but we feel confident that they are structured with protective qualities and significant upside. You will hear more of our strategies from each of our fund managers who will now be introduced. Jill Evans. Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 3 Jill Evans: Thank you, Steve, thank you very much. We are very happy to have the opportunity to talk to our investors and in response to the questions that have been sent in, Kevin and I will cover several areas of interest including our dividend, our recent stock performance, currencies, and looking forward to where we see opportunities. First, regarding our dividends, we want to reiterate once again that the dividends for both AGD and AOD are safe and secure. As you know, we have several different strategies for capturing dividends and we've already generated a substantial portion of our dividend income. So investors should have complete confidence in the dividends that they will receive from AGD and AOD. And just a reminder, AOD pays out a monthly $0.18 dividend, and we've distributed $3.24 since inception in January of '07, and AGD pays out $0.17 per month. We've distributed a total of $3.71 in dividends since inception in July of '06. Also want to keep in mind that our NAV is adjusted to reflect our dividend payments. So when you're looking at the historical performance of our NAV, you need to add back the dividend distributions in order to get our total return calculation. And, again, all of the dividends in AOD, AGD, and ADBX are 100 percent earned dividend income. We have two questions sent in regarding our dividends that I'd like to address. One is, are you having trouble finding special dividends? And the answer to that is no. We are still able to find good opportunities in special dividend world. In general, we'd say the environment is still very good; maybe not as robust as '07, but we anticipated that. But, again, we have total confidence in our ability to earn our dividend, and the large specials are still out there. For example, Time-Warner Cable recently announced a special dividend of $10 at that company. So they're still out there, and we're finding the opportunities. Second, has our performance been hurt by our dividend capture strategy in the down market? And Steve kind of touched on this, and I'm really glad to have the opportunity to say that our performance has not been hurt by our dividend capture strategy and, as a matter of fact, our dividend capture strategy in the U.S. is in line with the performance of the S&P 500, and internationally we're actually beating the Dow Jones Stock 50 Index year-to-date, which is the largest 50 European stocks. We believe that, actually, dividend capture is beneficial to our investors regardless of an up or down market. But in a down market, stocks go down, whether you buy and hold or you do a dividend rotation strategy. So we actually think we're benefiting our investors because, as we said, you can buy the stock and hold it and watch it go down, or you can grab dividends and rotate the stocks and try to enhance your return, and that's what we've been able to do -- so while we can't control the overall market sentiment, we can sustain our dividend yield, and that continues to be our emphasis. I also want to remind you that while our NAV has declined over the past several months because of the global crisis, as you are all aware of, over the long term, equities do outperform and do tend to rise, and that is the upside of owning an equity fund, and our NAV has been able to outperform over the long term. Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 4 As you know, our open-ended fund is approaching its five-year anniversary, and we have significantly outperformed the S&P 500 over that five-year period and while paying out over $7.00 in dividends. So turning to our performance, if it hasn't been our dividend capture strategy, what really has been bringing our performance down recently, and we would really attribute that to our country and sector exposure in our value and growth strategies. Countrywide, as you know -- not countrywide -- country-wise, we are international funds, and we have taken our investments overseas because that is where we find better dividend opportunities and great growth opportunities. So as of recently, AGD is only about 20 percent invested in the U.S. and AOD about 28 percent. Our largest holdings are in Europe, which is about 60 percent of both funds, and that's where we've really been hit. The Dow Jones Stock 50 Index is down 17 percent year-to-date in local terms; 11 percent in dollar terms versus the S&P 500 is down only about 8 percent. But even more remarkable is that this Dow Jones Stock 50 Index is down 25 percent from the high set in July of last year versus 15 percent for the S&P 500 high. So unfortunately Europe has really been significantly hit, and we have been invested there. Individual markets in Europe have really been decimated. Finland is down 23 percent year-to-date; Italy down 20 percent, and these are some of the markets that we've been invested in, and the U.S. has actually been one of the best-performing markets year- to-date largely due to the aggressive rate cuts by the Fed versus the European countries are facing raising rates in the concern that the U.S. slowdown will drive down Europe. Now, we continue to be in Europe because we see great opportunities there for dividends and growth and, again, Kevin is going to get more into that in a minute, and our feeling here is that we're going to do our homework. We've lightened up on companies where we see earnings risk, but we're going to continue to take a long-term view, and many of these companies have been oversold, and we're going to stick with them in the long term. Turning to the sectors, I just wanted to highlight that last summer when the problem started, we did get caught overweight financials, which did hurt us. We did not have any direct subprime exposure, but we did not anticipate the tsunami that would take down all the global markets. Since that time, I just want to tell you that we have steadily repositioned the portfolio, and right now we see the best opportunity is more towards hard assets versus financial assets. We've taken energy from about 10 percent to 20 percent of the portfolio, and financials down from 27 percent to 12 percent. We've increased materials a bit, and we've decreased industrials a bit and, again, Kevin is going to get more into that, but we really have aggressively moved here to reposition the portfolio where we see the best opportunities. Lastly, on market cap, I just want to point out that during this market volatility, there has been a flight to quality and profit-taking, which has hit the small and mid-cap names, and this has impacted our smaller fund, AGD, more than AOD. Just to give you an idea, the average market cap of the stocks in AGD is about $30 billion versus $45 billion for AOD, and actually the medium market cap in AGD is about $5 billion versus $16 billion for AOD. So, again, we think some of the profit-taking and hits in the smaller cap stocks is what's been hitting AGD more than AOD. Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 5 So taking a long-term view, we're confident in our dividend performance and our ability to improve our NAV performance over the course of 2008 and, with that, I'm going to turn it over to Kevin. Kevin Shacknofsky: Thank you, Jill. Firstly, I'd like to address currency. Obviously, watching currency on a daily basis, you can see that it's highly volatile, and this does affect the volatility of NAV in our portfolio considering that in AOD we have over 67 percent of the fund internationally, and AGD over 70 percent international. With currency we can hedge from time to time. We are currently unhedged, and our current strategy now is to diversify the portfolio in terms of our stock selection away from the European -- or the Europe currency and have more exposure to currencies, which are benefiting from strong commodities such as Australia, Canada, Russia, Brazil. We see this as the best way of going forward concerning the volatility in the currency. Going forward for the rest of the year, Jill and I are very focused on increasing the NAV of the fund considering we are now very confident for our ability to generate our dividend now for 2008, and so NAV is top of mind right now. We'll continue to focus on the themes that we think have the best opportunity for capital appreciation such as the global infrastructure theme, the merging consumer and emerging markets and, obviously, the strong commodities and oil stories. We still continue to be cautious on financials, and we will actually -- going to carefully watch the next earnings season on the financials to see whether that story has changed. One thing of note -- in the U.S. side of the portfolio, is that the U.S. companies ex financials actually have experience strong earnings growth, double digit, in fact, and will continue in the near future, which most of this is buoyed by exporters who have benefited from the decline of the dollar. And this is an area we will continue to focus on -- companies with strong exportability. You know, in the years we are currently cautious on financials but also health care and utilities where we believe could have regulatory risk from a changing government. So before I finish up, I'd like to say, you know, as usual, we are underweight technology, which, you know, do not pay great dividends, but also I'd also like to focus on what we don't do, and that is, you know, we do not have permanent leverages, we don't use auction rate preferreds, we don't invest in bonds or preferred stocks. We do not use covered (ph) calls. We just focus on dividend paying stocks with potentially strong capital appreciation. And, with that, I'd like to pass the call onto Sam Lieber. Sam Lieber: Greetings, I hope all of you can hear me. We've heard some indications that this call has been coming in and out a little bit. So hopefully this is clear enough for all of you. I just want to start and say that real estate is a long-term gain. I'm sure many of you have heard that over the years. You've heard that location, location, location is key; you've heard that long-term investors do well when they can ride through the cycle. One of the ideas behind the Alpine Global Premier Properties Fund has been that we would buy properties, companies, with high-quality assets that would do well in a down environment Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 6 that would be sustaining their occupancy and the highest proportion, at least, a rental income in a marketplace even in a downturn while other secondary or tertiary properties might go wanting. Our view is that that is how this portfolio will perform over the course of time. However, we are not in the typical real estate market; that is, we are in a mark-to-market environment, and real estate is being looked at very differently right now at a time when the markets don't know whether we are facing a broad slowdown in the economies, or perhaps stagflation, and the markets do not know how to read that, necessarily and, for that matter, they don't really know whether we're in one or approaching one. And as I relay that back to the long-term investing theme in real estate, it's important to understand that most of the properties in the portfolio, primarily commercial property companies, have relatively long-term leases; hence, they don't have problems in cash flow during intervening short-term transitions in economic activity such as we're seeing right now. You know, please recall that last summer -- actually, this time last year -- we felt the economies were slowing down a bit in Europe, values were a little high there. But certainly I don't think many people foresaw the kind of environment that we're in today. Today we're in a mark-to-market world, and that is private real estate securities or the real estate owned by public companies is being viewed on a mark-to-market basis -- where are values today; where are they going tomorrow? And as a result companies which have mismatches between their funding for long-term assets and short-term funding are being penalized. Now, some of those are equities and, in some cases, that makes sense; in other cases, it may not. Certainly, we've seen that sort of mismatch in the securitized bond market where we've seen huge problems with, first, the subprime bonds and then, more broadly speaking, in other forms of investments. But structured finance, which has really been the core of the problem for our financial system over the past nine months, was fundamentally flawed in how it packaged and sold securities -- packaged and sold real estate mortgages. Secondly, they also gained -- that is, "they" the packagers -- gained the system, to a degree. So this created an environment of uncertainty over credit quality, uncertainty over the stability of incomes. What we do when we look at the real estate companies is focus on companies that have stability, stable cash flows, companies that have enduring asset value. And we look for opportunities in terms of underlying valuation, and we look for opportunity where we have companies with strong, durable cash flows and solid dividends. Let me give you a little perspective on what's happened in the marketplace, however, and this is creating some opportunities from our perspective. U.S. rates are trading right now about 5 percent, about 5.6 percent on average, 5 percent on a weighted basis; about 2.25 times book value. The stocks are actually up this year after a horrible year last year. U.S. rates are up about 3 percent in total return. Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 7 Japanese rates, J-rates, have about a 5.4 percent dividend yield now. They are trading at book value. They are down 26 percent -- 26.4 percent for the year as are other Japanese non-REIT real estate companies down 26.6 percent. Singapore stocks, broadly speaking, are trading about a 4.1 percent dividend yield, down 19.7 percent and trading at low EBITDA multiples. Indian real estate stocks -- Bombay Real Estate Index, trading under 10 times earnings, down 52.4 percent for the year. Hong Kong, which includes Hong Kong H-shares or Chinese stocks trading in Hong Kong, trading around 11 times PE, down 26 percent for the year. Europe -- the broad EPRA, ex UK REITs, 5.5 percent dividend yield, 0.87 book, minus almost 13 percent for the year, and UK REITs trading about 0.7 book, 15.5 percent down. Why do I give you these numbers? First, they give you a relative sense of where we are; secondly, what's important about them is that it indicates that the valuations are getting pretty attractive. In doing this for over 20 years, I never thought I'd see Japanese real estate companies trading at single times multiples. I'd never -- you know, for a long time, for a number of years now, many of us got accustomed almost -- almost, I say -- to seeing REITs trading with dividend yields underneath treasuries. Well, now, even in the U.S., the dividend yields are once again above treasuries -- REITs yielding around 5 percent on a weighted basis, treasuries today at 4.2 percent or so. By the way, it's worth just looking at history to see how, looking back over 30 years, the 10- year interest rate, 10-year treasuries, were yielding 7.5 percent, on average, for the past 30 years. The past five years, it's been 4.4 percent, last year 4.2. We are right in line, even though rates have backed up a little bit, when you really take a longer-term view, things haven't changed all that much. So, again, what has changed, is concern in the market, fear about potentials, and we can talk about those potentials with you in the Q&A session. So I would just encourage you to notice that the fear and concerns in the financial markets have had a direct impact on real estate, securities, in particular, real estate finance, to a degree, certainly, and this is creating some real opportunities, we believe, in the market for real estate equities. I've taken too much time already, so let me pass this back to Mark Rappaport. Mark Rappaport: Thank you, Sam, and, everyone. We're going to ask Sayeed to give instructions on how to ask questions, and come back right after he does so. Operator: Thank you, sir. Ladies and gentlemen, on the phone line, if you have a question at this time, please press the 1 key on your touchtone telephone. If your question has been answered, and you wish to remove yourself from the queue, please press the pound key. Again, if you have a question at this time, please press the 1 key. Thank you. Mark Rappaport: While you are doing that, those of you that want to ask some live questions, we did want to get to some of the most common questions that came in via e-mail -- Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 8 firstname.lastname@example.org. We really did, as Steve said, enjoy seeing what's on your mind. It's easier to do that via e-mail, so we've kind of narrowed it down. Jill, we'll start with you -- other than the obvious, which you touched on, the most common question is, you know, how secure the dividend is, and you did a wonderful job illustrating that. One of the popular questions is about leverage. It's kind of a twofold question that seems to come up in e-mail. One is, do we plan on using leverage, and then the other is almost kind of why wouldn't you use leverage? Can't you impact returns on the upside a lot more by doing so? Jill Evans: Well, our agreement here amongst all the portfolio managers is we really don't want to put on leverage unless we see clear upside potential for the market and, right now, we just feel like the markets are a bit too volatile to put on that cost. I mean, leverage costs money, and, you know, our feeling is that we've always said we would put on leverage opportunistically for when we want to do, for example, dividend capture opportunities or, again, where we see great upside potential. Right now, we just don't see that in the markets. Right now, we're actually about 10 percent -- or 8 percent in cash given the volatility and the downward moves in the market lately. So at this point leverage is not on our mind and, again, until we see some clear upside, we don't want to put the cost of the leverage on. Mark Rappaport: All right. Thank you. Also, another question on people's minds is about the tax-qualified status of dividends. It's also a twofold question -- one, what if it goes away, in part or in whole? And then, two, how are you prepared to manage the funds? Kevin Shacknofsky: Well, we'll be, obviously, watching the election with bated breath to see how that plays out, but, you know, look, if the tax structure of the dividends changes, we believe that will just give us greater flexibility in terms of doing our dividend capture, you know, the current tax or reposit (ph) to hold the stocks for 61 days. If this should change, well, we would just have a more flexible and more opportunistic approach. We see it as actually a potential benefit. I would also remind you that AOD only targets half its dividend to be qualified, anyway, so, you know, we have sort of been practicing, so to speak, with that other half, what we would do in such a case, anyway. Mark Rappaport: Thank you, Kevin. And, as you know, AWP does not have any tax-qualified objectives. Well, speaking of AWP, Sam, one of the two most popular questions that comes in are the following -- "Other than the dividend yield and diversification, what reasons would you give to continue to hold AWPs? What are you look for as far as growth?" Sam Lieber: The bottom line is growth. It is -- we are managing this portfolio for high dividends, of course, but, really, the opportunity is where will see values rise over the next two, three, five years? It's important to realize that, longer-term, that we're going to start to see increased urbanization in many parts of the world. You know, over half the world right now is living in cities. In 40 years, the U.N. has that number running up to 66 percent, 67 percent. Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 9 That will happen in Asia; that will happen in Latin America, most -- and Africa -- most rapidly. I am not suggesting all of that will be discounted into the market over the next two or three years, but it is a trend, and we're seeing, when we travel abroad -- and, by the way, our analysts have met with companies from 36 countries so far this year on the real estate side alone -- we have a sense that there is still a rapid expansion of many of the BRIC countries. There is a lot of growth opportunity in those countries, and we think that's where great growth opportunities lie. And we are trying to position the portfolios now to benefit from that growth potential -- not now but, really, not this quarter, but over the next three, four, six quarters or so, as we think this is a longer-term trend, and we're trying to buy opportunity, especially at good values. As I mentioned, many of the stock indices have been quite volatile. Some were too high, and they've come back to pretty cheap levels now, and some, which may not have as much near-term growth but are quite stable are also appealing to us if there is real value, and where there is value, we have found, historically, you get M&A. Right now, with what's going on in the financial markets, there is less capital available, M&A is going to be a little slow in ramping up but once it does, we think it will be accelerating quite quickly and, hopefully, we'll have many opportunities to benefit from that in the portfolio. Mark Rappaport: Thank you, Sam. The second most common question for you is kind of framed this way by one e-mailer -- "Is the global real estate market at fair value today and what are some of the key measurements for that appraisal?" Sam Lieber: Yeah. As I said earlier, I suspect the -- I think a lot of things are at fair value. I mentioned that REITs now are back at -- in the U.S. -- at 80 basis points over treasury. That's one measurement -- the relative yield spreads. That's obviously a much higher number in Japan, even though the yields are a little bit less because the long-term treasuries in Japan are running at 2.5 percent or less. So the spreads are quite wide. We think that other measures are in relation to underlying asset value or adjusted book based on appraisals -- ours and professional evaluers (ph), and we're finding many companies are trading at 20 percent to 30 percent discounts or higher. We think those are fair values, but this is not unusual in markets where people see a recessionary environment. The question is -- do we have a recessionary environment in the BRIC countries? I think the answer is no. Do we see a recessionary environment in Europe? Not at the moment -- perhaps, over time, but not now. Do we see a recessionary environment in the U.S.? Possibly, and it's certainly a little bit more cloudy as to what it will look like in the second half of this year. But we do think that there is some opportunity, and we think that basically we're already working through, in terms of the pricing of these stocks, these stocks have already priced in a downturn that may be more severe than what we've seen. So we think there is opportunity in the world, yes, right now -- good value. Maybe a little bit better, maybe a little rocky over the next couple of months, but as more visibility becomes clear on the path and trajectory of economic activity, we think prices have an opportunity to firm. So we see value, thank you. Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 10 Mark Rappaport: Thank you, and one last e-mail question before we go to live questions -- Jill and Kevin, the question is essentially about other dividend income funds -- the questions kind of observe that, year-to-date, other funds have not had as much of a decline in net asset value than AOD or AGD, and if you could comment on that. Jill Evans: Okay, Mark. We have closely tracked the funds that are within our peer group, although it's really difficult because we really don't have a direct peer group, and one of the reasons is that we do not use, as Kevin mentioned, we don't use leverage, we don't use cover calls, we don't use options so -- but that's our actually, really, plain manila (ph) dividend capture does not lend us to have a lot of peers, but with that said, in the down market, the firms that have used the cover call strategy has actually been to a benefit for them this year. So I would point out that that was one difference as well as the fact that we are much more overseas than many of these funds. The other funds that we have looked at have really well over 50 percent exposure to the U.S. versus, as we mentioned, we are more 80 percent overseas and, as I highlighted, those are the markets that have been really hit. So if I had to summarize that, you know, it's really the exposure overseas as well as some of these other cover call type of strategies. Mark Rappaport: Sam? Sam Lieber: Yes, I would just highlight that the general approach that we have taken is multi-cap. So, for example, almost -- over 25 percent almost 30 percent of, for example, AWP, could be categorized as smaller cap opportunities. And the bulk of the portfolio, 40-odd percent, is in mid-cap. And so as a result we might have more volatility in the portfolio but, candidly, we've been buying these stocks over the past six months or so -- nine months, actually -- as we've seen, those are the stocks that have been hit hardest and may offer the greatest opportunity for a rebound. And, historically, and if you go back to periods -- and you can see this with ADVDX or EGLRX, historically, we've had very good outperformance with these strategies of having a multi-cap portfolio when the markets do tend to bounce, such as in 2003 or going back to earlier rebounds in the economy and market. So we think that a multi-cap approach can hurt a little more in some parts of the downturn, but generally are beneficial during the -- particularly, in the rebounding period and -- or so has the economy continues to grow. Mark Rappaport: Sam, related to that, what kind of exposure does AWP have for the BRIC countries, roughly? Sam Lieber: Well, we've got reasonable exposure there. I mean, we happen to think that Brazil is very attractive. We have had a higher proportion in our international funds than in AWP for a while, but we've been increasing the AWP exposure. We think Brazil offers great potential, long term. We think there's a lot of growth opportunity there; we think that India has been very volatile. We have only a couple of percent there, but we think there - - it's getting down to prices that make some sense and may be very attractive soon. Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 11 We think that China has great growth opportunities as well, and so we're not shy about having, you know, 10 percent, 15 percent of the portfolio or possibly even more in the BRIC countries. Mark Rappaport: And that would differ from (inaudible) or no? Sam Lieber: Right now, since most funds are pegged to different indices, and typically these indices have not adopted emerging markets in their portfolios, that would be the case. Because we run a non-index-dependent multi-cap approach to our portfolios, we, as Jill said, are not 50 percent or 45 percent in the U.S., as most other funds are, and the U.S. has, frankly, been a very good performer, curiously enough, this part of the year-to-date, whereas foreign markets have been hit harder and, of course, even the BRIC countries have been hit harder. So I would say that our approach, we think, will derive dividends, over time, and that's how we look at investing. We don't invest for a quarter at time, we invest -- well, obviously, we focus -- we like to look at that, but we focus on investing for 12 months to 24 months. Mark Rappaport: Thank you, Sam. Sayeed, at this point, why don't you help us open the call up for some live questions? Operator: Thank you, sir. The first question comes from David Lasinsky. David Lasinksy: Hi. My question is for Sam. It's actually a two-part question. One, is the last time I saw that you purchased AWP stock was in December of '07, and have you bought any more since then? Sam Lieber: Can you hear me, Dave? David Lasinksy: Yes. Sam Lieber: Okay, great. I have not bought more shares, per se, in the market, but what I have done -- and we bought a lot, obviously, last year, through December. But we are reinvesting our dividends in the equity. So that may not show up, I don't believe, in the register. But we are actually buying more shares through that in lieu of the dividend. David Lasinksy: Okay, and the second part was how much cash percentage does AWP have in equity now? Sam Lieber: The cash varies from any point in time, because, obviously, with the dividend rotation strategy, we have periods when we are not as active and others where we're very active. Right now, we're pretty fully invested, but we could be -- we have been as low as -- you know, we have had as much as 4 percent or 5 percent in cash at different times this past year. David Lasinksy: Okay. Just one last question -- as far as replacement value for a lot of these commercial real estate holdings, it's got to be substantially high. I mean, if we're in an inflationary environment to rebuild some of these assets, there is certainly value there. Sam Lieber: Well, you are right. I mean --. Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 12 David Lasinksy: -- going forward. Sam Lieber: No, your point is well taken, Dave. The cost of reproducing the assets is going up in an inflationary environment. As a result, that means that new supply is not coming on, and this is a very interesting real estate downturn in that most times you get a real estate downturn when there is excess supply coming online in the market. There are only a couple of markets in the world where there is excess supply right now, and or even prospective excess supply. Most markets are running at very low vacancy rates, whether it's Moscow or Tokyo, markets where you have less than 3 percent vacancy rates in office buildings in the central markets. You know, you have even markets in the U.S., by and large, are single-digit vacancy rates in many markets, not all. The issue here is the demand side, and demand is what I think the markets are focusing on, and perhaps concern that if there is a slowdown, and, again, if there is a slowdown, we think it will be most acute in the U.S., possibly the UK and peripherally in a couple of other markets, that, effectively, that demand slows and, hence, that might take some -- might increase vacancies somewhat; might hold rents flat or slightly down in some markets. But this is not a precipitous downturn and, again, with the cost of materials rising, that means new supply will not be coming on two years, three years, four years down the line to any significant degree. So it's -- and the reproduction value, replacement cost is much higher. So this is an attractive time from that perspective, you're quite right. David Lasinksy: You know, if -- beg my pardon, just one last question just to try to understand -- how am I getting on an 11.5 percent dividend when you're talking about these REITs generating 5 percent or whatever, slightly over treasuries? Sam Lieber: A good question -- as you may remember, we are talking about 5.5 percent. These are the average yields, so some are yielding 2, 2.5 percent, 3 percent, some are yielding 7 or 8 percent -- that's for starters. Secondly, you may recall from our various -- from the website or from discussions on marketing the funds, that -- and other materials -- that our dividend capture strategy is one where we don't just get four quarterly dividends. We can get six, seven, eight dividends, perhaps, depending on the strategy. So, effectively, we are able to pick up more dividends than you might normally get if you were just buying stocks that had a 5 or 6 percent yield, and that's, basically, how it's done. David Lasinksy: I see. Thank you very much. Sam Lieber: You are very welcome. Operator: Our next question comes from Eugene Fields. Eugene Fields: Thank you. I've got two questions -- one, first, for all the portfolio people, and that being -- maybe I missed it earlier on the call, but looking at the net asset value of all three of these funds, especially the AWP, which are down substantially, which are down substantially from their current market value, the dividends -- do they seem to be secure? Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 13 Do we look -- can we tell our clients, point blank, that these funds are not going to cut their dividends over the next year or two or whatever? And, secondly, the question goes to Sam on the AWP -- it's all well and said that we're getting a good return on our money right now, but when our clients see the fund trading down 40 percent from what they paid for it with all these things that you've mentioned today, they are certainly not going to understand as to why it's still trading as low as it is compared to other benchmarks, even in the REIT area. And it's very hard for me to justify to my clients how they can go into a fund like this and look at their principal evaporate to the tune of almost 40 percent. The other two funds have paid some relatively good capital gain distributions, which certainly helps. This fund has paid, I believe, about $1.52, so far, and we need better justification to our clients to explain just what the heck is going on. Thank you. Sam Lieber: Sure. Let me see if I can give you that justification, okay? First of all, if you go back to the beginning -- certainly, this year, we have underperformed, it's very true, and as I mentioned earlier, I think it's because of the year-to-date. Some of the smaller cap stocks, the fact that our strategy is one of buying some of these stocks -- sometimes we're buying, frankly, falling daggers, maybe we're just reaching out a little bit too early, that's the risk of trying to buy cheap because when things turn, they can turn 20 percent, you know, in a day or two. And so we don't take big positions --. Eugene Fields: (inaudible) for that reason. Sam Lieber: You know, but that's what we're trying to do to get these values. But, let me tell you, addressing your point, the NAV is specifically down 25 percent, I believe, from back in last May -- no, a little more, forgive me -- sorry about that -- no, 30 percent -- but -- and during that time we've paid out a high yield that's now the equivalent to 12.4 percent. Our peer group, the other two funds you mentioned, are yielding about -- almost 300 basis points, 275 to 325 basis points less than our fund is yielding. So we think that that's, obviously, and attractive yield at this time, but the fundamental issue, and your point is well taken, is where is the growth coming from? And right now, at this point in the cycle, the way to play it, based on our experience, going back internationally since as far back as 1987, running public funds in operation since early '89, is that you buy what's cheap, you buy what's got great quality, you buy the companies that you think have M&A potential, and that's what we are trying to do. And we think that if we can pick up stocks at $0.30 or $0.40 below NAV, if we think the underlying assets, in other words, of the portfolio may very well be worth $20, theoretically, we'll see if that gets realized soon. But, you know, that's where we see the opportunity at this stage of the cycle. Clearly, we didn't think that the real estate cycle was going down the tubes in April when we talked to you, and you talked to your clients. But, frankly, the structured finance meltdown has changed a lot of things and accelerated a downturn in the U.S., and that has, in turn, accelerated downturn in equities broadly around the world, and real estate has been viewed as the bad boy of the cycle this time, even though, really, it wasn't real estate but it was the way real estate was packaged and sold in terms of securities. Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 14 So I would tell you that the way to talk to your clients and say, "Hey, you know, you're down." We bounced off the bottom in terms of NAV, I believe. Bear Stearns did seem to mark that period, and I think we've got some good growth potential embedded in a number of the stocks, and we've got some great values embedded in the stocks, and you have to look at the track record of the management, over time, perhaps with EGLRX as an example, and determine whether that makes sense, and you want to participate in that, and, hopefully, the yield is going to be attractive. I hope that helps. Jill Evans: And I would just briefly jump in -- we said at the beginning that the dividends in AGD and AOD are completely 100 percent secure. You know, I think some investors look at our funds as a bond surrogate, and they expect the NAV to go down, but as I mentioned, when the European markets are down 25 percent off their highs in less than a year, our NAV is going to go down. We're an equity product. With that said, we can't control the market sentiment. We're doing our best to control that, but we can control the dividends and, as we mentioned, we've already generated a substantial part of our dividend for the year, so the dividends received -- we can get the dividends, our strategy works. What we're going to focus on is getting that NAV up and, as Kevin mentioned, that's going to be our top priority for the rest of the year, and we're going to work hard to do that for you investors. But, once again, I can't reiterate it enough -- the dividend is secure. Sam Lieber: And that's true for AWP as well and, again, the issue here is we are earning our dividends, we are capturing dividends, and, frankly, as long as these companies and companies out there pay their dividends, even though the share prices are down, which is why our NAVs are down, of course, but that means that their yields are higher, and with those higher yields, we can still manage to comfortably cover the dividends, and that's where we are. Yes, there is risk if these companies were to cut their dividends dramatically, but we don't see that, we don't see that globally, we don't think we're going into a global meltdown phase -- so our view is that -- and, by the way, other funds that you may have mentioned or other closed-end funds, or other funds that capture dividends would be very hard-hit also, if not moreso, given leverage. So I would just tell you that the overall opportunity here is one -- we don't know when that opportunity is going to come, but we think that there is an opportunity for growth, and we're trying to buy companies that have good, solid balance sheets, good dividend- paying capability, and good potential. Mark Rappaport: Also, I'll just add one other way of looking at it, since you're kind of touching on investor experience and investor expectation, I would say while Sam was responding, I was looking at Sam's open-end international real estate equity fund fact sheet, and for the last 10 years --. Unidentified Participant: I didn't look at that. Mark Rappaport: Well, stay with me one minute here -- it shows, on the fact sheet, growth of 10,000 over the last 10 years, mind you, Sam's been running that fund since 1989. In 10 years the capital mushroomed greater than threefold -- now, that's very exciting growth. I think Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 15 that's what leads us to the passion to this space here at Alpine, but also it's probably what led many investors to want to. What we thought we would offer with AWP, keep in mind it's kind of getting paid while you wait. AWP has very exciting growth prospects once equities do grow again, but, in the meantime, you know, you're clipping quite an extraordinary higher-than-treasury -- Unidentified Participant: It's going to work. Mark Rappaport: -- monthly income. So that was kind of one of the premises, too, is that, you know, maybe while you're waiting for the capital markets to grow and give you these kind of long-term results, you know, we could provide something with a very attractive yield, which we're doing, and I think the managers spoke to that yield. But, again, thanks for your question. I know there are others in the queue. Sayeed? Operator: Thank you, sir, our next question comes from Adam Waldo. Adam Waldo: Good afternoon, everyone, thank you for having the call. My question is specifically for Jill and Kevin, and to the extent that time permits, if Sam would like to comment on it with respect to his fund, I think that could be helpful, but, you know, for the last four or five years, we've seen rapid growth, obviously, in money supply in most major economies. That's translated in the last few quarters, too -- pretty rapidly accelerating inflation in most global economies, less so in Western Europe and the U.S. And in the last few weeks, we're seeing heightened global central bank concern about inflation, low real interest rates and some clear signaling of a fair amount of tightening ahead. Can you comment a little bit about how you'll run your friends in a potentially rapidly rising interest rate backdrop and, particularly, could you comment on your exposure in the Dynamic Dividend Funds to the energy, materials, and industrial sectors, which tend to be fairly volatile in a rising interest rate environment. Thank you. Jill Evans: Well, you know, in a rising interest rate environment, our feeling, as I said earlier, that the hard assets are going to look more attractive than the financial assets, and, you know, not that we're going back to a period like the '70s, but, you know, right now, there's a lot of similarities on the commodity constraint side. So Kevin and I, across all the portfolios right now, continue to be opportunistic, and positive on the commodities, on energy, on coal, on corn, on some of these really wonderful growth opportunities. I mean, the earnings growth for the companies in so many of these sectors is spectacular, and we're going to continue to focus there because regardless of interest rates or growth, this is pure supply and demand, and the demand is just, you know, as you know, exploding while this supply cannot respond fast enough. And I keep referring to this great meeting -- Sam talked about how many meetings we have here. We have a lot of meetings, we're constantly talking to management, and we had one of the senior officials at Statoil -- which is one of the largest oil producers in the world, they're based in Norway, in our offices -- and they showed us a chart where they have three proven barrels of oil in the ground for every one that they are producing. So we asked the obvious question -- why aren't you getting more of that with the prices where they are? And he literally said, "We just can't. We don't have the people, we don't Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 16 have the rigs, we don't have -- we can't get it out of the ground because there just isn't enough infrastructure in the world right now to get it out." And that's going to continue. I mean, there will be a supply response in so many of these sectors over the long term, but in the short term it just can't happen, and now you see what's going on with corn and with sugar. So, you know, we're taking a long-term view that these continue to be great opportunities, and that's where we're looking to put our money. Again, we're a very negative financial tier, we're still negative consumer discretionary, so, you know, we're stock pickers. We're just trying to kind of look for where the earnings growth is going to be regardless of necessarily the interest rates. And another point I'd like to add is, you know, overseas we're seeing great growth in this emerging consumer. We're trying to play that in international telecom companies. As Kevin mentioned, infrastructure is still there regardless of what the economies do. There are still these great big spending programs going on, so, you know, we're looking for big global themes, and we're picking the stocks where we see the earnings growth and the dividends, and that's really just how we're trying to position the portfolio. I hope that answered the question. Adam Waldo: Okay, thank you very much. Operator: Our next question comes from Al Yousef. Al Yousef: Hi. My question is regarding AWP. I'm not looking for commentary, the past is the past, but what my question is, number one, what would have to happen, ideally, for us to see a pickup in NAV, and I understand a majority of assets are invested overseas, so with the strengthening dollar, how would that impact, you know, dividends and its repatriation to U.S. dollars? Thank you. Sam Lieber: Sure, Al, thanks for the question. Yeah, we're focused on the future, too, and I'll tell you that we see that the dollar may still have weakness, longer term, but it's certainly going to have bounces along the way. And if we see -- while currency hedging is not a focus of our activity, we try and stay in the currencies, exposed to the currencies. However, when we see opportunities such as a long-term shift in trend, if we think that there is going to be, let's say, a move of 5 percent to 10 percent over a period of six months or more, then we will certainly hedge our currency exposure in the portfolio. We are seeing a lot of volatility back and forth. Look at the price of oil today, look at how much dollars moved back and forth --. Al Yousef: You've answered my question. Sam Lieber: Yeah. So, you see, we'll do that, but we see the opportunities are broad. Mark Rappaport: Thank you. Sayeed, might we have another question or two? Operator: Our next question comes from Andrew Snett. Andrew Snett: Yes, thank you. In terms of cheap, regarding the financials, what are you looking for in terms of potential turn, just looking at past cycles. When they've reversed up, they've Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 17 reversed up pretty violently and in terms of oil and what's going on in the commodities market and all of these international markets. Assuming, at some point, commodity prices come back down, what's your outlook for what would happen to the underlying infrastructure build and all of the growth that you're currently seeing there now? Kevin Shacknofsky: Well, from the (inaudible) fund perspective, what we are focusing on in the financials is the housing market, and that's where it all begins with, and that's where it all ends, and as soon as the stabilizes in the U.S., we'll be comfortable earning financials. But we have not seen that stabilization yet, we have not seen any government intervention yet that can create that stabilization, and once that occurs, you know, we can see an end to these write-offs and see the end of these liquidity crunches and an end to these REITs offerings. Until that happens, you know, I don't have a lot of confidence. Andrew Snett: And in terms of data points, what are your main things that you look at in terms of the market bottoming there? Kevin Shacknofsky: Well, I'm very lucky to have a very strong real estate expertise in-house over here, and, you know, I'll rely on them to tell me when the market has bottomed. Andrew Snett: Okay. Sam Lieber: Look, Steve Kim, who some of you from Citicorp may know, joined our firm after being an II-ranked analyst in the housing sector for many years, basically believes that the opportunities will come for the stocks before the fundamentals fully turn, before these companies are earning a lot of money, and we've seen that in prior periods. The actual performance, however, will be determined by a slowdown in cancellation rates, which we've seen for the builders; a pickup in traffic and sales, both at new home communities and at existing home communities -- existing home sales, rather. But fundamentally, you know, we need to see an opportunity for more people to jump into the low end of the housing market, and that will either come through declining prices, which will lead to a period of fantastic affordability, and that's the dire case that some people are forecasting, or we are going to see a period when there are either incentives or a significant change in psychology in terms of employment stabilizing, because employment, even the ongoing claims number today has been a deteriorating trend. But when people see that improving, you know, there are a number of different factors that I think will be sort of positive notes as to when -- as to when we can start to see some improvement in the sector. But it's a little early right now, and there is still some storm clouds out there. Andrew Snett: Okay, thank you. Operator: Our last question for the day comes from Michael Costramski. Michael Costramski: Oh, good afternoon. I suppose this question is for Sam. I'm wondering if there is some type of end strategy for AGD in the event the new political administration comes in and guts the 15 percent dividend tax benefit? Alps Mutual Funds Services Moderator: Marc Rappaport 6/12/2008 - 4:15 PM ET Confirmation # 1247863 Page 18 Sam Lieber: Well, actually, Jill and Kevin can do that since AWP invests in REITs and real estate companies, which don't benefit from the current tax regime. So let me turn this over to Kevin Shacknofsky. Kevin Shacknofsky: Well, essentially, you know, I actually covered this a little bit earlier, but I'll repeat myself. AOD, as you know, targets 50 percent qualified dividends as opposed to AGD, which targets 90 percent to 100 percent. And basically we believe that if there is a change in the tax structure, we'll just go a small flexibility and greater opportunity for total return in AGD. S, you know, obviously, you know, it's not great that our fundholders will lose that benefit, but we believe we will have the opportunity for greater internal return opportunities and, from that perspective, it will be a positive. Michael Comstranski: You'll be able to buy REITs and different kinds of preferred shares and (inaudible). Kevin Shacknofsky: That's correct. It will open up our investment opportunities (inaudible). Michael Comstranski: Thank you. Kevin Shacknofsky: Great. Mark Rappaport: Well, thank you, all, for joining us on another quarterly conference call. Please keep in mind, too, we are here to always be in front of you -- good times and bad. We're not afraid to talk to you during the tough times. If anything, we think we have to be out there even more. So we're very delighted that you would join us once again. The call will be available for replay information on the funds that you heard about today, open-end and closed-end are available on Alpinefunds.com, and AlpineCEF.com for the open and closed end, respectively. And, from all of us on the management team here at Alpine, we thank you for your time and your interest in our strategy and wish you well.