1. Consumer Staples Company Presentation Des Dudaney Erica Elsasser Neil Hertenstein Mun Yi Se Tho May 18 th, 2010

2. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary 1.Sector Summary 2.Company Comparison 3. PepsiCo Analysis 4. P & G Analysis 5. Recommendation Table of Contents

3. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Recommendation Sell 67 BP of Pepsi Sell 40 BP of P&G Hold Philip Morris & Wal-Mart Recomm- endations

4. Sector Summary

5. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary SIM Portfolio SectorS&P 500 WeightSIM Weight+/- Consumer Discretionary10.55%10.44%-0.11% Consumer Staples10.91%11.71%0.80% Energy11.18%9.76%-1.43% Financials16.47%11.41%-5.07% Health Care11.55%14.63%3.07% Industrials10.76%13.10%2.34% Information Technology18.91%20.18%1.27% Materials3.45%1.64%-1.82% Telecommunication2.73%3.70%0.98% Utilities3.48%2.10%-1.38% * Weights as of 4/30/2010 Sector Summary

6. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary CS Sector Recap Decrease weight of Consumer Staples by 107 basis points  Provides a 27 bp underweighting  Defensive sector and lower returns in economic growth  Allows more cyclical sectors to experience higher gains Sector Summary

7. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Sector Holdings Current Holdings SIM – 11.71%  PepsiCo………………2.90%  Wal-Mart Stores Inc…2.78%  Philip Morris Int’l……..2.96%  Procter & Gamble……3.07% * Weights as of 4/30/2010 Recommended Holdings SIM – 10.64%  PepsiCo……………….2.23%  Wal-Mart Stores Inc….2.78%  Philip Morris Int’l……...2.96%  Procter & Gamble…….2.67% Sector Summary

8. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Target Prices 10/4/20158 CompanyCurrent PriceTarget PriceDividendUpside Potential Philip Morris$46.25$574.9%28.1% Procter & Gamble$63.38$723.1%16.7% Wal-Mart$52.73$622.3%17.6% PepsiCo$66.75$742.7%13.6% Prices as of 5/13/2010 Sector Summary

9. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Target Prices of Sector Stocks in S&P Sector Summary

10. Company Information

11. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Philip Morris - Hold Philip Morris International Inc. (PM) is the leading international tobacco company.  Spin-off from Altria(MO) in 2008. PM owns seven of the world’s top 15 brands  Brand portfolio includes Marlboro, the number one cigarette brand worldwide. Products sold in approximately 160 countries. As of 2008, the company held an estimated 15.6% share of the total international cigarette market outside of the U.S. Company Comparison

12. PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Wal-Mart Stores - Hold Wal-Mart Stores, Inc. operates various formats of retail stores and restaurants, including combination discount and grocery stores, supercenters, Sam’s Clubs, hypermarkets, cash-n- carry stores, department stores, and general merchandise stores  Attractive Valuation  Big move to online – sales, ad campaign etc.  Improved merchandising capabilities, capital efficiency, inventory management  Very non-cyclical Company Comparison

13. PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary PepsiCo PepsiCo, Inc., founded in 1898, manufactures, markets, and sells numerous foods, snacks, and carbonated and non- carbonated beverages worldwide. Market capitalization of $106.55 billion. PepsiCo owns hundreds of brands around the world, but the most recognizable include: Company Comparison

14. PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Procter & Gamble The Procter & Gamble Company (P&G), founded in 1837, engages in the manufacture and sale of consumer goods worldwide. The company operates in 3 global business units:  Beauty  Health and Well-Being  Household Care Products are sold in over 180 countries worldwide Company Comparison

15. PepsiCo Analysis

16. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary EPS is expected to increase, but remain significantly lower than before. EPS Growth % PepsiCo Analysis

17. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary ROE has been on a slight upward trend, but is expected to decrease. ROE Relative to S&P 500 PepsiCo Analysis

18. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary EBITDA Margin is expected to decrease. EBITDA Relative to S&P 500 PepsiCo Analysis

19. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Net profit margin is lower than Coca-Cola’s. Profit Margin Relative to KO PepsiCo Analysis

20. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Cash Flow per share PepsiCo Analysis

21. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Technical Analysis

22. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Discounted Cash Flow PepsiCo Analysis

23. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Sensitivity Analysis PepsiCo Analysis

24. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Target Price PepsiCo Analysis

25. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary PepsiCo Recommendation Benefits Global leadership in the snack business – Expand snack business in developing and emerging markets Taking advantage of the coincidence of consumption in snacks and beverages Purchase of PBG and PAS bottlers Focus on health and wellness – Expand the “Good for You” portfolio – Continue to make core snacks healthier through innovations in heart-healthy oil, sodium reduction and the additions of whole grains, nuts and seeds. Risks Failure to realize US bottler integration/synergies Currency Volatility – 48% of PepsiCo revenue is from operations outside the US. Largest operations are in North America (US, Canada, Mexico) and UK Recommendation: Sell 67 bps Current Price: 66.75 Target Price: 74.00 Implied Upside: 13.6% PepsiCo Analysis

26. Procter & Gamble Analysis

27. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary EPS growth is expected to remain negative. EPS Growth % P&G Analysis

28. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary ROE is at low levels of the decade. ROE % P&G Analysis

29. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary EBITDA margin is below JNJ. EBITA Margin Relative to JNJ P&G Analysis

30. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Net Profit Margin has low growth rate and is expected to remain so. Net Profit Margin % P&G Analysis

31. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Technical Analysis

32. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Absolute Valuation P&G Analysis

33. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Relative Valuation to S&P 500 P&G Analysis

34. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Relative Valuation to Industry P&G Analysis

35. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary 72.162 Price Target P&G Analysis

36. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Discounted Cash Flow Model P&G Analysis

37. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Sensitivity Analysis P&G Analysis

38. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Procter & Gamble Recommendation Recommendation: Sell 40 bps Current Price: $63.38 Target Price: $72.00 Ratios $72.16 DCF $71.97 Implied Upside: 13.6% Dividend yield: 3.1% Implied Upside w/ Dividend: 16.7% P&G Analysis

39. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary P&G Analysis Benefits International initiative Product Expansion Product leadership Increased Advertising Very defensive Consistent dividends Procter & Gamble Risks and Benefits Risks Currency Volatility Pampers Lawsuit Changes in consumer spending Lower upside relative to other consumer staple companies

40. Recommendations

41. Company Comparison PepsiCo Analysis P&G Analysis Recomm- endations Sector Summary Stock Recommendation Sell 107 bp  Sell 67 bp of Pepsi  Sell 40 bp of Procter & Gamble Limited potential upside in both stocks Hold Wal-Mart and Philip Morris due to high upside Sale of 107 bp in our sector will allow other sectors to utilize it to gain better returns for the portfolio Risks  Sale of 107 bp will leave the portfolio less defensive should the economy decline again Recomm- endations

42. Questions ?