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General Meeting 6

October 16, 2012

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Meeting Agenda

Market Update

Portfolio EvaluationStock PitchBreakout SessionAnnouncements

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S&P Since 10/08/2012

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S&P Since July

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Major Events Alcoa starts off earnings

season beats earningsbut tumbles Lower aluminum demand

for 2012 JPM and Wells Fargo

report earnings State of housing market Effect of QE on banks?

Bernanke Defends QE3 Money outflows to other

nations Currency war inflationary

pressure? Softbank acquisition of

Sprint for $20.1Bn Entry into US market Possibility of over-

leverage?

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Economic News/Next Week Unemployment down

7.8% Jack Welch Its a trap!

September retail sales up+1.1% (beating 0.7%)

Recovery? Michigan ConsumerSentiment Index 5-yearhigh!

Spain hasnt asked forbailoutyet Talks point to November

and larger bailout package Posturing vs Germany

Earnings reports thisweek: GS/MS/BAC GOOG/MSFT/VZ GE/MCD

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Kohls

2.7% decline in September same-storesales.

52,000 seasonal employees for theholiday shopping season.

Opening new stores and renovating oldones in expectance of a busy holiday

shopping season. Hold until after the holiday season and

then reevaluate.

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Apache

Not been doing so well, continuous downwardtrends

Hurricane Isaac stopped production for 6 weeks,but the COO released a statement saying thatproduction is now at an all-time high. So, thefourth quarter should be better than their third.

Hold until after the election due to instability inthe environment causing oil price fluctuationsand then sell if theres no improvement

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Decision:

SELL Risks outweigh the potential upside; Beta of 2.32

too much volatility for USIT portfolio

Entry Point: $12.27Current Price: $9.44

Loss: 23%

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Rio Tinto Ltd.

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Risks

Strongly impacted by U.S. recovery, Eurozonecrisis and ability for China to stimulate moregrowth

Plans to expand iron ore production Labor dispute caused aluminum production to be

down 12% from last quarter Copper and bauxite up 5% and 8% respectively Affected by natural disasters (Japan earthquake,

etc.)

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Key Advantages

All parts of Steel value chain Vertical Integration

Internal Distribution system Commissions down, margins up

Exposure to foreign markets Brazil, China etc.

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Industry Indicators

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Exit Point

Key Takeaways

-High Risk-Low/No Growth

Recommendation: Sell

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IBM

Hold Hardware segment on a slight decline Software and Service segment new focus for IBM

Total Solution are higher margin services and can be veryprofitable

Risk General information Technology spending decrease Increase competition Risk with integrating newly acquired companies

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Financial Metrics

52-Wk High 211.79 P/E Ratio- 15.19x

Market Cap- 240.2B Beta- .7 Dividend Yield- 1.63%

Expected YoY Revenue Growth- (1.38%) Expected Diluted EPS- 15.15

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LINC

Hold Until 11/5 (reevaluate immediately) Announced earnings call MD&A

claim to have effectively restructured after selling off sevencampuses

Risk New regulation of for-profit education

Repubs take Senate, fewer student loans, lowerstudent demand Just Settled two class action lawsuit; likely face more

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Financial Metrics

Current P/E: 47.3 EPS TTM: 0.09

Market Cap: 97.08M Dividend Yield: 6.58%

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Andrew Smith

Arun Gopalakrishnan

James Jittiwan

Ryan Lemen

Analysts:

USIT Stock Pitch

10/16/2012

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Portfolio Compatibility

Only one other company in sinful industry(BUD)Value stocks not growing USIT portfolioRisk tolerance needs to increase

Need for growth

Buy at Current Price: $113.94 6 month time frame

Exit Strategy: Sell half after 15% increase and ride growthSell half after 10% decline and reevaluate

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Diageo Overview

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Company Overview

Price: $113.94P/E: 22.2752 Week: 72.39 116.96Mkt Cap: 71.46BDividend Yield: 2.42%Beta: 0.79EPS: 5.00

Key Trading Statistics

2008

acquired RosenblumCellars2009 opened malt distillery inScotland2011 acquires Mey Icki inTurkey

2011 acquires Ypica in Brazil

Key Developments

CEO: Paul Walsh in brewerybusiness for 30 years (GrandMet Guinness Diageo)

CFO: Dierdre Mahlan in

alcoholic beverages for 20 years(Seagram Diageo)

Management

30,000 suppliers

180 countries

58 brands of alcohol

Focused marketing strategy

Key Facts

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Competitor Analysis

Diageo30%

Pernod Ricard23%Brown Forman

7%

Other40%

Intl. Spirits Market Share

Diageo, 23.46Pernod Ricard,13.18

Beam Inc, 2.3

BrownForman, 3.6

2011 Sales (in billions $)

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Investment Merits

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First-Class Brand Strength

Global Rank

Organic Sales Growth (YoY)

Key Markets

#1

Ultra Premium Vodka

#1Premium Vodka

#1Stout in the world

#2 Latin Am,Whiskey

#1

Scotch Whiskey

Unranked

Irish Whiskey

62% 6% 4% 24% 20% 15%

U.S.,

Brazil

U.S., Middle East, China,Mexico

U.S., Mexico,Brazil,Colombia

U.S., Ireland,Russia, G.B.,France

U.S., France,

South Am.,Brazil

U.S., G.B,Indonesia,Nigeria

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Risks and Mitigations

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Risks and Mitigations

Eurozone debtcrisis worsens Suppliers hikeprices Regulation inforeign countries

Likelihood: 3/10Magnitude: 4/10Mitigation: Alcoholconsumption hassteadily increased;grow sales inemerging markets

Likelihood: 6/10Magnitude: 2/10Mitigation: Diageois in so manymarkets thatregulation in a fewwont affect the

company too much

Likelihood: 3/10Magnitude: 5/10Mitigation: Diageocan leverage thevolume that theypurchase in to getfavorable terms

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Financials

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Supplemental Slides

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Tarun Kanthety

Manideep Ravi

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Royalty revenue from handset makers use of CDMA basednetworks (30% of revenue)

Early adoption of 4G patent technologies from many mobilemanufacturers

Hardware present in all 3 of the largest phone manufacturers(Apple, Samsung, Nokia)

Snapdragon S4 chips are present in most tablets/smartphones Developing pipeline of new technologies

Machine to machine communications

Halo wireless charging system (electric cars) Strong acquisition presence (4 in the last 2 years)

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Very solid and strong balance sheet

Debt/Equity Ratio of 0.03

Held 48% market share in smartphone chips

Operating margins are north of 30%

Growing dividend (1.7%)

Strong Cash Flow: $4.29 B ($2.52/share)

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Shortage of new 28 nanometer chips mobile chips Demand far outpaced the supply for these Snapdragon S4 chips Taiwan Semiconductor Manufacturing shortages expected to last

till December

New entrants into the 3G/4G LTE baseband processors-(only onecurrently producing)

Intel

NVIDIA Correlation with AAPL has caused stock price to fluctuate (minor risk)

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Based on the strong fundamental performance and market positioning: We recommend holding Qualcomm (QCOM) for another 1 year

Entry Point = $54.06Current Price = $59.28Gain = 9.78%

Current Holding Period = 1.5 years

Fair Value Consensus Estimate = $70.55

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Strong growth over the past 3 years

Humira Expected to be the best selling drug in the nation

(Reuters)

Patent expires Dec. 31, 2016

Consistent growth

Successful acquisitions

Strong patent outlookCompany is splitting into two -> Better valuation

AbbVie is a promising split

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Potential competition with HumiraHeavily dependent: 21% of sales

Affordable Care Act Cost $85 billion over 10years for the industryQualifications of new CEO: Richard Gonzalez

Accidentally misstated, but still cause to worryfor investors - minor

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Entry Point: 53.05 Spring of 2011Current Price: 72.05 as of yesterdayGain: +35.81%Current Holding period:

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EXXON

MOBILT I C K E R : X O M

L A S T P R I C E : 9 1 . 5 1

P U R C H A S E P R I C E : $ 7 9 . 9 4

S H A R E S : 5

R E T U R N : 1 4 . 5 7 %

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Kinder Morgan (KMP)

Strong Dividend(MLP)

Not highly

leveraged towardsprice of oil Strong growth

prospects movingforward

Recommendation:HOLD

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Pitch Schedule

Date Name

11-Sep SCG Directors18-Sep John C25-Sep Olympics2-Oct John T

9-Oct John C16-Oct Billy23-Oct Stephen30-Oct Ryan6-Nov Angela

13-Nov Finance Panel

20-Nov Thanksgiving27-Nov Ali4-Dec John T

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Clip of the week

http://www.youtube.com/watch?v=yFU774q6eVM&feature=g-logo-xit

http://www.youtube.com/watch?v=yFU774q6eVM&feature=g-logo-xithttp://www.youtube.com/watch?v=yFU774q6eVM&feature=g-logo-xithttp://www.youtube.com/watch?v=yFU774q6eVM&feature=g-logo-xithttp://www.youtube.com/watch?v=yFU774q6eVM&feature=g-logo-xithttp://www.youtube.com/watch?v=yFU774q6eVM&feature=g-logo-xithttp://www.youtube.com/watch?v=yFU774q6eVM&feature=g-logo-xithttp://www.youtube.com/watch?v=yFU774q6eVM&feature=g-logo-xithttp://www.youtube.com/watch?v=yFU774q6eVM&feature=g-logo-xithttp://www.youtube.com/watch?v=yFU774q6eVM&feature=g-logo-xit

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