Fitch Affirms 'AAmmf' Rating on Alpine Municipal Money Market Fund

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the 'AAmmf' rating assigned to Alpine Municipal Money Market Fund, a tax-exempt money market fund sponsored by Alpine Woods Capital Advisors LLC. The fund managed $296 million in assets as of Dec. 29, 2011.

KEY RATING DRIVERS:

The main drivers for the rating affirmations are:

--The fund's overall credit quality and diversification;

--Short maturity profile;

--Minimal exposure to interest rate and spread risks;

--Overnight and one-week liquidity profile;

--The capabilities and resources of Alpine Woods Capital Advisors LLC as investment advisor.

Money market funds rated 'AAmmf' denote very strong capacity to achieve their investment objective of preserving principal and providing shareholder liquidity through limiting credit, market and liquidity risk. This rating also reflects Fitch's view that over the long term, the fund's historical investment and risk mitigation strategy, coupled with its sponsor's limited resources (relative to other sponsors of 'AAAmmf' rated funds), are more consistent with Fitch's an 'AAmmf' rating guidelines.

FUND CREDIT QUALITY/DIVERSIFICATION

Consistent with Fitch's 'AAmmf' rating criteria, the fund seeks to maintain high credit quality by investing exclusively in securities rated at least 'F1' or equivalent, which for variable-rate demand notes (VRDNs) are reflected in the ratings of financial institutions providing the letter of credit (LOC). Consistent with Fitch's criteria, the fund generally limits its exposure to single municipal credit/LOC providers to 15% of the portfolio. The fund managed its portfolio within these guidelines during 2011.

Fitch also notes that VRDN securities purchased by the fund, although almost always supported by full LOCs with highly rated credit institutions, are in some cases issued by municipalities with a lower underlying credit profile than VRDNs purchased by other Fitch rated municipal money market funds. While this investment practice may result in an enhanced yield for the fund, it also creates a marginally riskier credit profile as compared to municipal money market funds rated 'AAAmmf' by Fitch.

MATURITY PROFILE

The fund seeks to limit interest rate and spread risk consistent with Fitch's ratings criteria for funds rated 'AAmmf'. The fund limits its weighted average maturity to reset date (WAMr) and weighted average final maturity (WAMf) to 60 days and 120 days, respectively. As of Dec. 27, 2011 the fund had a WAMr and a WAMf both approximately at 12 days.

LIQUIDITY PROFILE

The fund's additional investment restrictions are aimed at maintaining sufficient levels of daily and weekly liquidity to meet investors' redemption requests. The fund seeks to maintain liquidity through investments in VRDNs featuring daily or weekly put provisions to appropriately rated third parties via LOCs or stand-by purchase agreements.

In line with amended Rule 2a-7 under the Investment Company Act of 1940, which governs the investment activities and operations of U.S. money market funds, the fund must invest at least 30% of total assets in weekly liquid assets. As of Dec. 27, 2011, the fund met the liquidity requirements mandated by Rule 2a-7 and was also in line with the liquidity guidelines outlined in Fitch's rating criteria.

FUND OBJECTIVES

Per its investment prospectus, the fund invests at least 80% of its portfolio in direct and indirect municipal obligations, the income of which is exempt from federal income tax other than the federal alternative minimum tax. These securities are high-quality, short-term debt obligations issued by states, territories and possessions of the U.S. and the District of Columbia and their political subdivisions, agencies and instrumentalities.

As of Dec. 27, 2011, the fund held approximately 94% of its portfolio in municipal VRDNs, 2% in tax-exempt money market funds and 4% in direct short-term municipal bonds.

INVESTMENT ADVISOR

Alpine Woods Capital Investors LLC, the fund's investment advisor, is located in Purchase, NY. Alpine Woods Capital Investors LLC was founded in 1998 by Stephen and Samuel Lieber. As of Dec. 31, 2011, Alpine Woods Capital Investors, LLC had approximately $5.2 billion in assets under management in its 14 open-end mutual funds, three closed-end funds, three hedge funds and a number of separately managed accounts. Within the organization, Alpine Municipal Money Market Fund is managed by Steven Shachet, an experienced portfolio manager in the tax-exempt space.

RATING SENSITIVITY AND SURVEILLANCE

The rating may be sensitive to material changes in the credit quality or market risk profile of the fund. A material adverse deviation from Fitch guidelines for any key rating driver could cause the rating to be lowered by Fitch. Furthermore, given the fund's primary investment focus on VRDNs, which are supported by domestic and foreign issuers in the financial sector, the rating may be sensitive to material adverse changes in the sector globally. Alternatively, any future positive rating action, while not currently envisioned by Fitch, would be dependent upon a sustained and demonstrated track-record of proactive risk mitigation on the part of the manager, combined with expanded financial and operational resources supporting the fund.

Fitch receives weekly fund holdings information and other pertinent fund data from the fund's administrator to conduct surveillance against ratings guidelines and maintain its money market fund rating.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

The sources of information used to assess this rating were the public domain, State Street and Alpine Woods.

Applicable Criteria and Related Research:

--'Global Money Market Fund Rating Criteria', April 4, 2011;

--'2012 Outlook: Money Market Funds', Dec. 19, 2011;

--'U.S. Money Market Funds Sector Update', Jan. 12, 2012.

Applicable Criteria and Related Research:

U.S. Money Market Funds Sector Update: Fourth-Quarter 2011

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=665029

2012 Outlook: Money Market Funds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=659610

Global Money Market Fund Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=614345

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