Real Client Managed Portfolio Memorandum

ANALYST: Alexander Ring and Carl Wang

SUBJECT: Ameren Corp Investment Recommendation

DATE: November 16, 2006

Recommendation: Hold

We recommend that RCMP hold 400 shares of Ameren Corp. (AEE). Ameren Corp. is a regulated public utility holding company with electric and natural gas operations in the Illinois and Missouri. Ameren provides great diversification with our existing portfolio and traditionally has been significantly less risky. Given its generous dividend yield of 4.70%, price appreciation is only one component of the overall return. However, since its purchase we have seen the price go up by 7.22%, or an annualized rate of 13.49%. As of November 16, 2006 shares of AEE traded at $53.47 on the New York Stock Exchange (NYSE). Ameren currently represents 6.1% of the total market value of the RCMP portfolio.

Discounted Cash Flow (DCF) analysis provides an intrinsic value price range of $57 - $70 per share, or 20% higher than the current market price, taken at the midpoint of the given range. Forecasts were based on conservative estimates which add to the confidence of the price range specified above. There is currently significant uncertainty surrounding the rate freeze expiration at the end of this year. Some members of the Illinois government are attempting to reinstate a three year rate freeze, which Ameren says will be extremely detrimental to the company. The market seems not to assign a high probability of this occurring, as can be seen from the relatively stable market price during the time this issue was being discussed.

Current Information

86% of electricity generated was from coal, with nuclear and natural gas coming in a distant second and third with 10% and 1% contributions, respectively.

Return on Assets (ROA) 3.1%

Return on Equity (ROE) 7.4%

2006 Expected per Share $2.83

Price/Earnings Ratio 22

Pros:

·  Valued at a discount to the market and to peers

·  Holds up well to DCF analysis with conservative estimates

·  Excellent dividend yield of 4.7% versus S&P yield of 1.8%

Cons:

·  Susceptible to changes in the regulatory environment

·  Significantly uncertainty and negative public relations surrounding the impending rate increase