Client Summary 031309

s p e c i al is t s i n m u n i c i pa l b o n d i n v es tments

MainLine West

Introduction for clients

MainLine Wests p e c i a l i s t s i n m u n i c i p a l b o n d i n v e s t m e n t s

municipal bond specialists

products and services

A broker/dealer focusing on institutional level service for our clients.

An alternative investment opportunity providing high tax-exempt income.


value trustopportunity

• Complimentary portfolio review• Institutional access = better

• Competent, attentive service• Fair and modest markups

bonds at better prices • Transparent fee structure• Client-focused philosophy• Clear and concise reporting

bond market experience• 70 years combined municipal• Diversification of credit

• Risk management• Principal protection• Tax/income considerations• Unique duration/maturity• Preferential bond selection

institutional level access for investors

broker/dealer services:


institutional level access for investors


municipal bond issuers

investment bank / underwritersSell bonds on behalf of issuer to MainLine West & Institutional Investors

mainline west clients$1 million par purchase

Total cost to acquire: $990,000

‐ Purchase bonds from investment bank @ 98.5‐ Sell bonds to MainLine client @99.0 (0.5 mark‐up)

mainline westmunicipal securities

$1 million par purchase @ 101.5Total cost to acquire: $1,015,000

institutional brokers‐ Purchase bonds from investment bank @ 98.5

‐ Offer bonds to retail brokerage @ 99.5

UP‐FRONT COST SAVINGS FOR MAINLINE CLIENTS = $ 25,000

• Our mark‐up is modest compared to retail, and based on a price lessthan available from retail.

•MainLine bond selections are notavailable to all retail brokerages.We have access to the best bondsavailable.

• Bonds we select are desirable. They are attractive to retail brokerage as well as our clients.

•MainLine selects bonds fromamong those offered by 50 underwriters with whom we have relationships for the mostattractive credit quality and price.

retail clients

retail brokerage‐ Sell bonds to retail client @101.5


helping optimize the client’s portfolio - example


Portfolio and Investor Profile: National investor, state of residency has no income tax, a portion of the portfolio is invested in tax‐exempt mutual funds . Portfolio value = $10MM

Yield Increase

% of Portfolio

PortfolioPick-up

Credit Quality & Comments

Issue: Bonds are from high income tax states, which make good investment sense for a resident of that state. This national investor does not enjoy the after tax advantage, and lose income as these states provide lower yields due to high in state demand.

Enhancement Opportunity: Substitute specialty state bonds for like quality national trading states.

0.20% 15.65% 0.02% Some improved from A to AA

Issue: Not taking advantage of bonds good for non-AMT eligible investors.

Enhancement Opportunity: Introduce AMT GNMA backed housing bonds. These bonds are AAA rated, and work well for those investors not eligible for AMT. Credit quality is highest quality, and housing programs have not suffered from the sub-prim

1.25% 10.00% 0.14%All credits AAA

and GNMA backed

Issue: Mutual Funds charge an annual expense fee, that hurts investor’s returns. This investor was paying roughly 45 bps on 25% of his portfolio for mutual fund services.

Enhancement opportunity: Replace mutual funds with direct owned bonds. Mainline believes an investor should only pay to buy bonds, and not hold them.

0.45% 26.05% 0.14% Fees to hold portfolio avoided

TOTAL FOR ALL ENHANCEMENTS 51.7% 30 bps = $30,000ANNUALLY


municipal bond borrowers

General Obligation

Bonds

State Governments/Agencies

Local Governments

Not-For-Profit Corps

Hospitals Universities

For-Profit Corps

Developers Solid WasteAirlines

Highest Credit Quality & Financial Flexibility

Less Credit Quality

Revenue Bonds

Public Enterprise

Water & Sewer

AirportsElectric Utilities

Mass Transit

Cities SchoolsCounties

GNMA/GSE

*

**

*MainLine focus

The MainLine West focus is on high quality credits from state and local government GO credits, and high quality, essential service revenue bonds issued by the public sector, including unique opportunities in GNMA /GSE bonds.


tax equivalent yield examples

bond offering examples

Massachusetts Water Pollution$408,665,000.00

Ratings Maturity Amount (mm) Coupon Yield

Federal TaxableEquivalent Yields*

MA Taxable Equivalent Yields*

Moody's: Aaae 5 years 7,140 5.000 2.460% 3.78% 4.12%

S&P: AAAe 10 years 11,515 5.000 3.470% 5.34% 5.87%

Fitch: AAAe 15 years 17,630 5.000 4.330% 6.66% 7.25%

Typical GNMA Housing Authority Example

Maturity Amount (mm) Avg Life YieldMaturityto AVL

Taxable Equiv Yield to AVL

5 years 1,000,000 5.0 yrs 5.0% 4/1/2014 7.77%


client-focused communication

keeping our clients informed

The MainLine West team works in the municipal bond market all day, every day. We understand it, and we are experts. Activity in U.S. and world markets affect municipal bonds, and we are busy interpreting and adjusting our strategies and recommendations for our clients. We share our thoughts and commentary throughout the day on our blog. Join us and share your comments on our thoughts and opinions.

The MainLiner Blog

Advisory NotesSM are a series of free client documents providing important information to clients regarding investment strategies and tax considerations.

Muni AlertsSM provide an overview and detailed yield and credit quality information for municipal bond credits recommended by the MainLine investment team for inclusion in a client portfolio.


complimentary portfolio review

Our complimentary portfolio review provides a comprehensive analysis of current holdings:

• Cost for executing trades• Diversification elements• Credit quality• Tax efficiency• Investment strategy• The MainLine Advantage:

Take advantage of our expert advice and recommendations to optimize value, tax advantage, and minimize risk exposure.

understanding our client’s needs


personalized pro forma

This is a personalized proposal based on our expertise and your specific investment objectives and specifications:

• Investment horizon• Tax status• Risk tolerance• Liquidity preferences• The MainLine Advantage:

Take advantage of our expert recommendations using investment themes that are aligned with your needs and constraints.

helping optimize the client’s portfolio


introduction to mainline fund investments

tax advantaged opportunity fund

An alternative investment opportunity providing high tax-exempt income.A consolidated vehicle to take advantage of:

• Current relative value of municipal bonds• Structural imbalances in the municipal market

Efficient use of low leverage = 8 – 10% federal tax-exempt income*

• Illiquid long term commitment • 30% reserve deleveraging capital

Unique private equity capital structure

*Investment of capital in our Tax-Advantaged Opportunity Fund includes risk. When evaluating the fund as a part of your investment strategy, you should understand the potential risks that could lead to a loss of some, or all, of your capital investment. There is no assurance that the fund will achieve its objective. Past performance does not guarantee future results. A prudent investor always considers the potential risks as well as the rewards before proceeding. There are interest and management fees associated with participation in the fund which will be fully disclosed to you prior to your commitment.


your partner for the journey

what mainline can do for you

• Top selection of bonds

A broker/dealer focusing on institutional level service for our clients:

• The best price

An alternative investment opportunity providing high tax-exempt income.

• Higher income per $ invested

let the mainline advantage enhance your investment portfolio:

Prudent monitoring and proactive response in today’s volatile marketplace

A team of professionals with over 70 years of combined experience

Focus on the long-term, not reacting to short-term market uncertainty

Clear, concise, client-focused thinking


Brad kreidle, founder and president

Mike maciolek, cfa, senior vice president

•20 years as municipal professional, including head trader at George K. Baum•Leader in establishing municipal arbitrage strategies•Leading market maker in tax exempt GNMA municipal bonds •Instrumental in developing and maintaining the leading database for prepayment analysis

•16 years experience as municipal professional, including First Data Corporation• Managed $12 billion muni bonds, $7 billion fixed income swaps; orderly liquidation•Analyst at Oppenheimer Funds; assisted in portfolio management of $2 billiontax-exempt money market funds

the mainline west team

70 years municipal bond investment experience


Roger dalen, senior vice president

Dennis kortman, cpa, cfo, senior vice president

• Over 30 years experience in investment banking• Specialist in quantitative municipal finance• Vice President and Trustee at Capmark Finance; responsibilities included hedging$1.5 billion portfolio of non-rated multi-family housing revenue bonds

• 13 years as CFO of Kirchner, Moore & Company

• Served on AICPA’s subcommittee on Stockbrokerage Accounting and Auditing• Managing Director and CFO of investment banking firm Hanifen, Imhoff, Inc. • Consultant to brokerage clients regarding FINRA and SEC rules and reporting compliance

• 30 years partner at national CPA firms; in charge of investment banking andaccounting auditing practice

70 years municipal bond investment experience

the mainline west team

the journe y is the destination

MainLine West

700 17th street . suite 1500

denver . colorado . 80202

www.mainlinewest.net

Client Summary 031309

Economy & Finance

Transcript of Client Summary 031309