Prepared for professional investors only Presentation on: Achieving perspective in an uncertain world – Newton’s solution - BNY Mellon Global Real Return Fund (EUR) Suzanne Hutchins – Investment Manager and lead fund manager for BNY Mellon Global Real Return Fund (USD) at Newton Citywire Montreaux - 11 th -13 th May 2011
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Prepared for professional investors only
Presentation on:
Achieving perspective in an uncertain world – Newton’s solution - BNY Mellon Global Real Return Fund (EUR)
Suzanne Hutchins – Investment Manager and lead fund manager for BNY Mellon Global Real Return Fund (USD) at Newton
Citywire Montreaux - 11th -13th May 2011
Curriculum Vitae Biography2010 to date Newton Investment Management2005 – 2010 Capital International Limited1991 – 2005 Newton Investment Management
Suzanne Hutchins rejoined Newton in 2010 as global investment manager and member of the Real Return team. She moved to Capital International in 2005 as Investment Specialist for global equity, income and absolute return based strategies. She had additional client facing responsibility for ESG (Environmental, Social and Governance) issues. Suzanne joined Newton in 1991 as a research analyst after completing a BA (Hons) at University College London. During her 14 years with Newton, she worked closely with Stewart Newton before becoming lead on the UK and Intrepid team. She managed multi-asset, global equity mandates and RPI+ based strategies for institutional and retail clients.
ResponsibilitiesInvestment manager – global fundsMember of the Real Return investment teamMember of the global investment meeting
QualificationsAssociate member of the United Kingdom Society of Investment Professionals (UKSIP)BA (Hons)
15 years at Newton20 years’ investment experience
Suzanne Hutchins
Our culture is aligned with your objectives
Newton’s appealBusiness focus
* ECU prior to Euro** As at 31 March 2011
Source: Newton
Total assets under management • Performance culture – concentrates teamwork,
communication and resources towards delivering outperformance
• Global specialists – 70% of mandates are global including over €30 billion in global funds
• Long-term incentive plan attracts and motivates staff. We
operate as ‘owners’ of the business
6.9
16.0
34.8
41.9
53.6
0
10
20
30
40
50
60
1993 1997 2001 2005 2011**
€bn*
Institutional Retail Private
4
Newton’s Real Return strategy for long-term growth
The power of perspective and flexibility
Target
Strategy type
EURIBOR +4% p.a. gross of feesover rolling 5 year periods
Absolute return
● Equities
● Government Bonds
● Corporate Bonds
● Cash
● Derivatives
● Other assets via tradeable securities e.g.
Real estate
Commodities
Currencies
‘Alternative’ strategies
Can invest in:
Allowable assets
● An unconstrained active multi-asset strategy with lower volatility
● Emphasis on long term investing and capital preservation
● Transparent, single portfolio of direct, liquid investments
● Maximum flexibility at the portfolio construction level;
emphasis on traditional asset classes
no asset allocation constraints
5
Low
High
Global equities
UK equities
Global bonds
Newton Real Return
Hedge funds
UK Index-linked bonds
UK Govt bonds Property
Cash
0
2
4
6
8
10
12
14
0 2 4 6 8 10 12 14 16 18Volatility (% p.a.)
Ret
urn
(%
p.a
.)
Newton's absolute return credentialsNewton Real Return Fund
● Unconstrained evolution of Newton's proven global multi-asset approach
● Compelling long-term return; not possible through market returns in broad asset classes
● Absolute return in every calendar year
● Achieved with absolute volatility closer to bonds than equities
Past performance is not a guide to the futureSource: Newton, weekly data, total return in sterling, gross of fees and income reinvested. Asset class statistics relate to the following measures: FTSE All Share, FTSE World, FTSE Brit. Gov't Fixed All Stocks, FTSE Brit. Gov't Index IL All Mats, JPM Global Gov't Bond, HFRI Fund of Funds (net), IPD All Properties, LIBOR 1 Month
Risk versus return since inception1 April 2004 to 31 March 2011
6
Newton’s real return strategiesOverview as at 31 March 2011
Please see important information at the end of this presentation.Source: Newton
Real Return Strategy
GBP version
Global Real Return Strategy
EUR version USD version
Investment team James Harries, Iain Stewart, Matt Brown,Suzanne Hutchins, Aron Pataki
plus wider investment team
James Harries, Iain Stewart, Matt Brown,Suzanne Hutchins, Aron Pataki
plus wider investment team
James Harries, Iain Stewart, Matt Brown,Suzanne Hutchins, Aron Pataki
Base currency exposure (current) 69.2% 61.3% 81.8%
Target outperformance +4%pa +4%pa +4%pa
Time horizon 3-5 years 3-5 years 3-5 years
Strategy AUM £4.6bn €208m $65m
Pooled vehicle name Newton Real Return Fund (£3.0bn) BNY Mellon Global Real Return Fund (EUR) BNY Mellon Global Real Return Fund (USD)
Pooled vehicle country of domicile UK Ireland Ireland
Launch year 2004 2010 2009
Full flexibility Able to invest anywhere (including Private Equity, HFOF, Convertibles, Property and other
Alternatives)
Able to invest anywhere (including Private Equity, HFOF, Convertibles, Property and other
Alternatives)
Able to invest anywhere (including Private Equity, HFOF, Convertibles, Property and other
Alternatives)
Expected long term volatility intermediate between equitiesand government bonds
intermediate between equitiesand government bonds
intermediate between equitiesand government bonds
Use of derivatives yes yes yes
Equity sector constraints max 20% in one sector max 20% in one sector max 20% in one sector
Regional constraints no no no
Maximum position in one company 5% 5% 5%
Hedging capability yes yes yes
7
Newton’s structure and multi-asset investment approachThe importance of perspective
● Highly interactive investment process
● Newton's structure of thinking globally from a single location allows us to utilise themes
● Themes provide valuable perspective
● Generalist multi-asset team supported by teams of specialists provide objective thinking and a powerful combination of perspectives;
global cross comparison of asset types
global cross comparison of securities within asset types
● Single ‘holistic’ portfolios enable global portfolio construction and enhanced risk awareness
Assessing the world as one investment opportunity
Efficient id
ea generation
Rapid implementation of ideas
MotivationalTeam based
8
Global equity research – 22
Avg yrs’ experience: 14Avg yrs at Newton: 6
Newton’s Real Return teamIdea generation and input
JamesHarries
IainStewart
MatthewBrown
Source: Newton, March 2011
Portfolio ideas come from everywhere – powerful combination of perspectives
Bond / FX Strategy GroupAsset Class Strategy GroupMacro Strategy Group Equity Strategy Group
Strategy – 3Avg yrs’ experience: 16Avg yrs at Newton: 11
Global equity – 14Avg yrs’ experience: 16Avg yrs at Newton: 13
Specialistregional equity – 18
Avg yrs’ experience: 12Avg yrs at Newton: 7
Fixed income – 8Avg yrs’ experience: 12
Avg yrs at Newton: 5
Other assets – 5Avg yrs’ experience: 9Avg yrs at Newton: 9
Real Return team
AronPataki
SuzanneHutchins
Real Return Meeting
9
… and Newton's view of the world…
…which defines the portfolio structure…
… and provides the building blocks…
… to construct a single, flexible portfolio
Newton's starting point is the target…
Absolutely focused – flexibility is key
● Security characteristics
● Capital preservation
● Asset allocation
● Regional mix
● Volatility
● Currency
ResearchRecommended
Lists
Model Portfolios
Return(EURIBOR +%)
Risk(Volatility%) A BNY Mellon Financial
CompanySM
Real Return strategy
LO
W
MEDIUM
HIG
H
3
1
2 4
5
Global Strategy
Unconstrained multi-asset investingThe process
10
Idea generationHow themes influence investment selection
Source: Newton, 28 February 2011Information is for illustrative purposes only and should not be construed as investment recommendations.
The popping of the credit bubble marks the beginning of the end for rapid credit creation in the developed world, and the start of a period of deleveraging. Higher volatility anticipated as well as detrimental consequences for growth in consumer driven economies.
Selected developing world currencies (eg. Chinese RMB)
Weak, deficit economy currencies (eg. Sterling, US dollar)
Equity market hedges
Government bond options
Senior debt in more cyclical sectors
‘Surplus’ economy Government bonds eg. Norway
Deficit economy sovereign debt
Self financing, ‘stable’ earnings, high yields
Large capitalisation, global reach
Growth areas
Credit dependent sectors/leveraged business models
CurrencyOther assetsFixed IncomeEquity
+
––
+
+
––
+
+
+
+
+
+
––
11
Idea generationStock selection
• P/E 9.0x 2012
• EV/EBITDA 7.0x 2012
• Dividend yield 5.3%
• Market cap $150bn
• Product pipeline innovation
• Specialist product portfolio
• Low patent expiry
Identifying global winners As at April 2011Portfolio holdings are subject to change at any time without notice and should not be construed as investment recommendations
Stock example: Roche
Attractive valuation Strong fundamentals
12
Idea generationStock selection
• Senior paper
• Leverage of 4.3x net debt / EBITDA
• Running yield of 7.6%
• Largest producer of processed meats in Europe
• Market leading positions in both branded and private labels in its key markets
• Company continues to delever and is targeting a range of 2.5-3.0x net debt / EBITDA
• Good liquidity with no near term debt maturing
As at April 2011Portfolio holdings are subject to change at any time without notice and should not be construed as investment recommendations
Stock example: Campofrio
Attractive valuation Strong fundamentals
Identifying global winners
13
BNY Mellon Global Real Return Fund (EUR) Equity analysis – Top ten holdings at 31 March 2011
Portfolio holdings are subject to change at any time without notice. This information should not be construed as a recommendation to purchase or sell any security. Source: Newton, as at 31 March 2011
Stock Weighting(%)
Bayer 2.66
Newcrest Mining 2.46
Roche 2.19
GlaxoSmithKline 1.98
Reynolds American 1.96
Mtn Group 1.53
Novartis 1.50
Petroleo Brasileiro 1.49
Scottish & Southern Energy 1.47
Statoil 1.45
14
Newton Real Return positioningConceptual representation
Seamless management of ‘risk’ and returnSource: Newton, 31 December 2010
● Emphasis on traditional asset classes
● A return seeking core with particular security characteristics
● Risk offsetting positions for dampened volatility and downside protection
● Not an asset allocation fund – flexibility to adjust risk hedging in addition to shifting asset allocation
Building an asymmetric multi-asset portfolio
15
BNY Mellon Global Real Return Fund (Euro)Strategic positioning at 31 March 2011
Source: NewtonPortfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations.
Convertibles 3.0%
Bonds 17.3%
Equities 57.4% Other 4.2%
Cash & equivalents 17.6%
UK 11.1%
North America 14.1%
Europe ex UK 19.4%
Pacific Basin ex Japan 2.6%
Japan 2.0%Emerging markets 8.3%
Government index linked 2.3%
Government bonds 4.7%
Corporate 10.7%
Derivatives 0.1%
Commodities 4.1%
Return enhancing assets
● Equities High yielding global equities Positions in unloved sectors (healthcare, telecoms) and
emerging world growth
● Corporate debt Selective exposure at compelling yield
Risk offsetting positions
● Derivatives Euro Stoxx options
providing downside protection if equity markets sell-off AUD put options
risk aversioncommodity cooling
US Bond call optionsProviding protection if bond markets rally
Euro put optionsrisk aversionincreasing peripheral Europe contagion risk
● Currency Approximately 40% exposure to overseas currencies
not accounting for overseas earnings of domestic stocks
● Commodities Inflation hedge – gold via physical gold ETF
hedge against any inflation from the scale of loose policy and QE
Inflation hedge – soft commodities via agricultural ETFearth matters and developing economies support this
16
BNY Mellon Global Real Return Fund (Euro)*Historical analysis of fund positioning
Source: Newton, 31 March 2011Portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations.
The chart above illustrates changes in asset allocation for the € Real Return Fund over five years. For illustrative purposes, delta adjusted equity market option exposure is shown below the main body of the chart, to demonstrate the extent to which downside protection has been utilised over time. Similarly, synthetic bond positions (bond options) have been highlighted above the main body of the chart to illustrate clearly the different bond exposures -via options and physical positions. Importantly, the strategy does not borrow to implement derivative strategies and risk controls exist to prevent exposing the strategy to open-ended losses. * Pre July 2007, delta has been adjusted using end of day data sourced from the relevant exchanges. ** Data pre April 2010 relates to £ Newton Real Return Fund. Data post April 2010 relates to the € Newton real Return Fund
Newton’s Real Return Strategy Derivatives use since inception
Source: Newton, March 2011Portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations.
Cash / income generation Synthetic exposureHedging / risk managementCash / income generation Synthetic exposureHedging / risk management
Eq
uit
yB
on
dC
ash
/C
urr
en
cy
Oth
er
FTSE 100 Index, S&P 500 IndexHang Seng Index, DJ Euro Stoxx
50 Index
Bought equity put options
FTSE 100 Index, S&P 500 IndexHang Seng Index, DJ Euro Stoxx
50 Index
Bought equity put options
S&P 500 Index, FTSE 100DJ Euro Stoxx 50 Index
Written equity index call options
S&P 500 Index, FTSE 100DJ Euro Stoxx 50 Index
Written equity index call options
US Long bondUS 10 year Notes
Euro – Bund 10 year future
Bought call optionson bond futures
US Long bondUS 10 year Notes
Euro – Bund 10 year future
Bought call optionson bond futures
Sterling to Singapore Dollar, Japanese Yen, Swiss Franc
Sterling to EuroUSD to Chinese Rembini(non deliverable forward)
Taken forward currency positions
Sterling to Singapore Dollar, Japanese Yen, Swiss Franc
Sterling to EuroUSD to Chinese Rembini(non deliverable forward)
Taken forward currency positions
14 stocks
Written covered calls on securities
14 stocks
Written covered calls on securities
VIX Index(volatility index of S&P 500 index)
Bought volatility index put options
VIX Index(volatility index of S&P 500 index)
Bought volatility index put options
Australian dollar to USDEuro to USD
Taken exchange traded currency option position
Australian dollar to USDEuro to USD
Taken exchange traded currency option position
Sterling to YenSterling to USD
Taken OTC currency option position
Sterling to YenSterling to USD
Taken OTC currency option position
BP
Single stock strategy / stock replacement
BP
Single stock strategy / stock replacement
S&P 500 Index, FTSE 100DJ Euro Stoxx 50 Index
Written equity index put options
S&P 500 Index, FTSE 100DJ Euro Stoxx 50 Index
Written equity index put options
18
Real Return investing Controlling the risks
Ensuring risk is appropriate, consistent and intended* Based on long term volatility statistics
Portfolio objectives
(1 month Euribor +4% target)
Risk control (portfolio guidelines)
Risk monitoring
Real Return strategy
Risk parameters
Volatility expectations 10% – 12%*
Portfolio diversification Max 5% in any corporate issuer at purchase
Portfolio concentration Max 20% in any sector
Quantitative risk assessment
How much risk? – (stock weights, correlation, volatility)
What kind of risk? – (currency, industry, stock specific)
Is risk consistent? – (strategic views, stock & bond picks)
A BNY Mellon Financial CompanySM
Bottom up risk management
Themes
Security selection
Portfolio construction
FundamentalsProprietary research Price
Single portfolio approach Perspective
19
Newton Real Return Fund (GBP)Results analysis
Source: Newton* Monthly data, total return, gross of fees. Rising and falling periods defined using quarterly MSCI World NDR returns
-20
-15
-10
-5
0
5
10
15
Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08
(%)
Equities BondsCash & currency Derivative InstrumentsCommodities Total Fund
Cumulative contribution month by month for 2008
Real Return +6.05%
Target return (LIBOR +4%) +9.52%
Global equities (MSCI World NDR) -17.92%
-10
-5
0
5
10
15
Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09
(%)
Cumulative contribution month by month for 2009
Real Return +10.93%
Target return (LIBOR +4%) +4.86%
Global equities (MSCI World NDR) +15.73%
Contribution by asset class
109.3
6.9
123.7
-40.6
65.8
179.3
-50
0
50
100
150
200
Rising Markets Falling Markets Cumulative
(%)
New ton Real Return Fund MSCI World NDR
Results in differing equity markets since inception (to 31 March 2011)*
Equities Bonds Cash Derivative instruments Commodities Unitised/structured investments (other) Total fund
BNY Mellon Global Real Return Fund (EUR)Results contribution by asset class
Cumulative attribution month by month since inception to date
Source: Newton as at 31 March 2011Past performance is not a guide to the futurePlease remember that the value of shares and the income from them can fall as well as rise and investors may not get back the full amount originally invested
Different investments take the strain in different environments
BNY Mellon Global Real Return Fund (EUR) +10.30%
Target return (EURIBOR +4%) +4.93%
Global equities (MSCI World NDR) +11.75%
-60
-40
-20
0
20
40
60
80
100
120
140
Apr
-04
May
-04
Jun-
04Ju
l-04
Aug
-04
Sep
-04
Oct
-04
Nov
-04
Dec
-04
Jan-
05F
eb-0
5M
ar-0
5A
pr-0
5M
ay-0
5Ju
n-05
Jul-0
5A
ug-0
5S
ep-0
5O
ct-0
5N
ov-0
5D
ec-0
5Ja
n-06
Feb
-06
Mar
-06
Apr
-06
May
-06
Jun-
06Ju
l-06
Aug
-06
Sep
-06
Oct
-06
Nov
-06
Dec
-06
Jan-
07F
eb-0
7M
ar-0
7A
pr-0
7M
ay-0
7Ju
n-07
Jul-0
7A
ug-0
7S
ep-0
7O
ct-0
7N
ov-0
7D
ec-0
7Ja
n-08
Feb
-08
Mar
-08
Apr
-08
May
-08
Jun-
08Ju
l-08
Aug
-08
Sep
-08
Oct
-08
Nov
-08
Dec
-08
Jan-
09F
eb-0
9M
ar-0
9A
pr-0
9M
ay-0
9Ju
n-09
Jul-0
9A
ug-0
9S
ep-0
9O
ct-0
9N
ov-0
9D
ec-0
9Ja
n-10
Feb
-10
Mar
-10
Apr
-10
May
-10
Jun-
10Ju
l-10
Aug
-10
Sep
-10
Oct
-10
Nov
-10
Dec
-10
Jan-
11F
eb-1
1M
ar-1
1
Cum
mul
ativ
e %
gro
wth
Newton Real Return MSCI World (NDR) Libor plus 4%p.a.
Newton Real Return Fund (£) Long-term investment results
+123.74%
+69.74%+65.83%
Newton Real Return in market downturn MSCI World in market downturn
Market downturnMarch 05 – April 05
March 2004 Market downturnApril 06 – May 06
Market downturnJune 07 – July 07
Market downturnDecember 07 – Feb 09
Market downturnApril 10 – June 10
Figures are based on sterling returns. Past performance is not a guide to the futureSource: Newton, weekly data, total return, gross of management fees, gross income reinvested. 31 March 2011
-7.8-3.3-2.0 -3.0 -5.5-1.8
-30.9
1.9
-11.5-1.6
22
BNY Mellon Global Real Return Fund (EUR)Conclusion
WhyBNY Mellon AM
Specialist approach to fund management. Appointed Newton to manage the portfolio as their Global Thematic specialist with expertise in global mixed funds. Newton has €9.7 bn in multi-asset/real return strategies.
Aims to beat cash returns
1 month EURIBOR +4% over a 3- 5 year rolling periods
Track recordBased on the Newton Real Return Fund, managed by Newton since 2004, which has achieved this objectivein this time frame and has AAA rating by Standard & Poor's, 5 stars Morningstar.
Resourceful Fund manager is supported by a team that generates ‘global themes’ and the macroeconomic strategy as well as by a team of 21 analysts responsible for the bottom-up input.
Experienced Strategy Director has 23 years investment experience at Newton. Fund manager, has 15 years’ experience managing multi-asset class portfolios.
Qualitativerating
Flexible approachCan invest in a variety of asset classes (equity, fixed income, cash instruments, REITS, commodities) with aglobal approach. Can also invest in simple derivatives to capture strong returns and preserve capital in all conditions.
The strategy was launched on 31 March 2004 (the Fund was previously called Newton Intrepid and followed a completely different strategy).
23
More informationFund Microsites – www.bnymellonam.com/grr/en
24
Appendices
25
Newton Real Return FundInvestment team
Portfolio management team
Iain Stewart
Iain is investment leader of the global funds, a member of the Real Return team and a senior member of the strategy group, with particular responsibility for co-ordinating the development of Newton’s global investment themes. He joined Newton in 1985, and has specialised in the management of multi-asset and global equity mandates. Iain is also responsible for a significant portion of Newton’s pooled balanced portfolios.
James Harries
James is a member of the Real Return team, a global manager specialising in our global higher income and real return strategy. He joined Newton in 1995 and is a member of the global investment and global model groups. Additionally, he worked at Veritas Asset Management between 2004 and 2005, where he established and managed a global income fund.
Matthew Brown
Matthew is a global funds manager and a member of the Real Return team. He is also a member of both the multi asset and European equities groups. Since joining the Newton multi asset team in 2000, Matthew has acquired varied experience in a range of mandates including multi asset, global equity and absolute return portfolios. He is a chartered financial analyst (CFA).
Aron Pataki
Aron is a risk strategist for the Real Return strategy, with a particular focus on the use of derivatives and hedging. He joined Newton in 2006 as a member of the portfolio analytics team, where he was responsible for risk analysis and portfolio construction across Newton’s institutional and retail portfolios. Previously, he worked as a quantitative analyst at Lacima Group.
Suzanne Hutchins
Suzanne Hutchins rejoined Newton in 2010 as global investment manager and member of the Real Return team. She moved to Capital International in 2005 as Investment Specialist for global equity, income and absolute return based strategies. She had additional client facing responsibility for ESG (Environmental, Social and Governance) issues. Suzanne joined Newton in 1991 as a research analyst after completing a BA (Hons) at University College London. During her 14 years with Newton, she worked closely with Stewart Newton before becoming lead on the UK and Intrepid team. She managed multi-asset, global equity mandates and RPI+ based strategies for institutional and retail clients.
26
Investment team Overview at April 2011
NotesChart illustrates primary responsibilities. Regional fund management teams combine portfolio management with regional research responsibilities.1 Combined Global Research/Investment Management roles. 2 Corporate Governance / SRI. 3 Combined Investment Management / Specialist Research. 4 Specialist Research. 5 Derivatives
Helena Morrissey Chief executive officer
Jeff Munroe Chief investment officer
Simon Pryke Head of private clients & charities
Andrew Downs Chief operating officer
Matt DuncanHead of business strategy
Roger WilkinsonInvestment leader, global research
Campbell WattersonDeputy chief investment officer
Chris RexworthyChief risk and compliance officer
StrategyTim Wilson1
Peter HensmanDouglas Reed
CreditHoward Cunningham1
Parmeshwar Chadha1
Scott FreedmanMartin Chambers
SpecialistsPaul Flood5
Aron Pataki5
Sophia Whitbread4
Yuko Takano4
Roger WilkinsonRosie BichardDuncan BulginRobert Canepa-AnsonTracey DominickCharles FrenchRobert Gullett
Paul SchenkChristopher SmithDavid StephensonJeremy StuberCharles WhallIan Burger2
Newton Real Return FundPerformance contribution by asset class
5 years to 31 December 2009
-10
0
10
20
30
40
50
60
70
80
Dec-04 Oct-05 Aug-06 Jun-07 Apr-08 Feb-09 Dec-09
(%)
Equities Bonds Cash & currency Derivative Instruments Commodities Total fund
Annualised performance
Real Return +11.76%
Target return (LIBOR +4%) +8.53%
Global equities (MSCI World NDR) +5.60%
Source: Newton, gross of fees
Different investments take the strain in different environments
28
Newton Real Return Fund (£)Longer term results
‘Equity like’ performance with lower volatility Source: Newton, as at 31 March 2011, total return, gross of management fees, gross income reinvested Figures are based on sterling returns. Past performance is not a guide to the future Please remember that the value of shares and the income from them can fall as well as rise and investors may not get back the full amount originally invested. †Restyle date
From 1 April 2004† to 31 March 2011
Real Return Fund
MSCI World NDR
UK Govt All Stocks LIBOR +4% UK RPI +5%
Total return (cumulative) 123.74 65.83 42.61 70.24 76.29
Total return (annualised) 12.19 7.47 5.18 7.87 8.41
1. Return less risk free rate (LIBOR 1 month) divided by standard deviation
2. Standard deviation
3. Value at risk: worst case of 95% confidence (normal distribution assumed)
Ex
Po
st
Ex
An
te
29
Newton Real Return FundCalendar year results (since inception)
* 31 March 2004 to 31 December 2004Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. The value of overseas securities will be influenced by fluctuations in exchange rates.Source: Newton, as at 28 February 2011, gross of fees, COB prices
BNY Mellon Global Real Return Fund (EUR)Positioning
Source: Newton as at 31 March 2011Portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations
Credit rating (% of credit exposure)
Bond Sector breakdown (% of credit exposure)
Average maturity (Years)
Investment grade 10.25
High Yield 5.17
Corporate bond positioning
6.59
11.39
35.66
0.90
45.45
A
BBB
BB
B
CCC & Below
11.52
9.24
3.97
1.53
73.74Industrial
Telco/Utility
Financial
Govt/Agency
Asset Backed
31
Newton Real Return FundDistribution of weekly returns as at 31 March 2011
Newton Real Return
0
20
40
60
80
100
120
140
<-5
-4 to -5
-3 to -4
-2 to -3
-1 to -2
0 to -1
0 to 1
1 to 2
2 to 3
3 to 4
4 to 5
>5
Fre
quen
cy
MSCI World NDR index
0
20
40
60
80
100
120
140
<-5
-4 to -5
-3 to -4
-2 to -3
-1 to -2
0 to -1
0 to 1
1 to 2
2 to 3
3 to 4
4 to 5
>5
Fre
quen
cy
Source: Newton, weekly data, total return, gross of management fees, gross income reinvested, since inception (1 April 2004 )
Weekly returns (%)
Narrower, less volatile return profile than global equities
32
Newton Real Return Fund (£)Relaunch (1 April 2004) to 31 March 2011
Figures are based on sterling returns. Past performance is not a guide to the future.Please remember that the value of shares and the income from them can fall as well as rise and investors may not get back the full amount originally investedSource: Newton, weekly data, total return, gross of management fees, gross income reinvested
Investment results
-20
0
20
40
60
80
100
120
140
Mar
-04
May
-04
Jul-0
4
Sep
-04
Nov
-04
Jan-
05
Mar
-05
May
-05
Jul-0
5
Sep
-05
Nov
-05
Jan-
06
Mar
-06
May
-06
Jul-0
6
Sep
-06
Nov
-06
Jan-
07
Mar
-07
May
-07
Jul-0
7
Sep
-07
Nov
-07
Jan-
08
Mar
-08
May
-08
Jul-0
8
Sep
-08
Nov
-08
Jan-
09
Mar
-09
May
-09
Jul-0
9
Sep
-09
Nov
-09
Jan-
10
Mar
-10
May
-10
Jul-1
0
Sep
-10
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Newton Real Return (gross of fees 1.0%) FTSE Govt. All-Stocks MSCI World NDR LIBOR 1 Month +4% p.a. UK RPI +5% p.a.
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The benefits of appointing Newton
● Managing money is Newton's sole business
● Global specialists since Newton's inception
● Integrated single portfolio management a key strength for global target return mandates
● An investment process that has been in place for 30 years
Efficient id
ea generation
Rapid implementation of ideas
MotivationalTeam based
“The first rule is not to lose money. The second rule is not to forget the first rule” – Warren Buffett
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Idea generationHow themes influence investment selection
Source: Newton 28 February 2011Information is for illustrative purposes only and should not be construed as investment recommendations.
ThemeThe inflation/deflation debate. The credit crisis is deflationary, but the response to the crisis could ultimately be inflationary and the developing world’s disinflationary impetus may be waning.
In a lower growth world, with more volatility, investors should prize both growth and stability. At the current time large capitalisation, diversified and relatively defensive equities are selling at attractive valuations.
Extremely selective in financials. Avoid those challenged by government interference.
The “all change” world will continue to pressure financials. Divergent performances likely to yield stock selection opportunities.
Focus on healthcare, telecoms, selected technology areas and staples.
Developing world continue to have attractions in terms of growth and fiscal positions. Low western interest rates will continue to encourage capital flows into these economies.
Selected developing economy exposure
The effort to reflate western economies with QE type policies will continue to underpin demand for ‘real assets’. Longer term demand fundamentals and real supply challenges in various resources will continue to present opportunities.
Energy, commodities and basic industries and their infrastructure
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Idea generationStock selection
• Very strong, under levered balance sheet and free cash flow positive
• Revenue growth of 9% expected for 2011
• Pure play Mobile telecoms operator in Latin America, Africa & Asia.
• Current low level of Mobile and Fixed telephony penetration in Africa & Asia gives great growth potential for many years to come.
• Strong strategy which focuses on brand and offering “Value” to customer is well suited to current tough economic environment.
• Strong management & balance sheet means will be a survivor
Stock example: MTN
Portfolio holdings are subject to change at any time without notice and should not be construed as investment recommendationsSource: Newton as at April 2011
Identifying global winners
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Idea generationStock selection
• Senior secured paper
• Senior leverage of 2.7x net debt / EBITDA
• Running yield 8.5%
• One of the largest integrated chemical companies
• Broadly diverse operations including O&P, refining and chemical intermediaries
• Strong cash flow generation
• Committed to deleveraging
As at April 2011Portfolio holdings are subject to change at any time without notice and should not be construed as investment recommendations
Stock example: INEOS
Attractive valuation Strong fundamentals
Identifying global winners
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Important information
This is a financial promotion and is not intended as investment advice. The information provided within is for use by professional investors and should not be relied upon by retail investors.
All information relating to Newton Investment Management Limited (Newton) and BNY Mellon Global Real Return Fund (EUR) has been prepared by Newton for presentation by BNY Mellon Asset Management International Limited (BNYMAMI). Any views and opinions contained in this document are those of Newton at the time of going to print and are not intended to be construed as investment advice. BNYMAMI and its affiliates are not responsible for any subsequent investment advice given based on the information supplied.
This document may not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or not authorised.
Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested.
The Prospectus and/or Simplified Prospectus should be read before an investment is made. The investment objectives and policies for each sub-fund are outlined in the Supplements to the Prospectus. This document can be obtained from BNY Mellon Global Management Limited, 33 Sir John Rogerson’s Quay, Dublin 2, Ireland.
To help us continually improve our service and in the interest of security, we may monitor and/or record your telephone calls with us.
Portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations.
Tax treatment will depend on the individual circumstances of clients and may be subject to change in the future.
All rankings based on worldwide assets under management for The Bank of New York Mellon Corporation as at 31 December 2009, unless otherwise stated. Provisional AUM has been provided by each asset manager as at 31 December 2010. Total AUM includes the asset managers outlined in this presentation as well as BNY Mellon Wealth Management and external data.
The Bank of New York Mellon Corporation holds 94% of the parent holding company of Alcentra group, a 19.9% minority interest in The Hamon Investment Group Pte Limited, the parent company of Hamon Asset Management Limited, a 20% minority interest in Siguler Guff & Company LLC and certain related entities and a 50:50 joint ownership with WestLB AG in WestLB Mellon Asset Management. BNY Mellon Beta Management is a division of The Bank of New York Mellon, a wholly-owned banking subsidiary of The Bank of New York Mellon Corporation. BNY Mellon Cash Investment Strategies is a division of The Dreyfus Corporation. AUM outlined for Newton represents the aggregate AUM of the following affiliated companies: Newton Investment Management Limited, Newton Capital Management Limited, Newton International Investment Management Limited and Newton Fund Managers (CI) Limited. BNY Mellon ARX is the brand used to represent the Brazilian investment capabilities of BNY Mellon ARX Investimentos Ltda. The investment company dedicated to the management of any particular investment will depend on the strategy and domicile of the investment.
BNY Mellon Global Funds, plc is an open-ended umbrella type investment company with variable capital (ICVC) and segregated liability between sub-funds, incorporated with limited liability under the laws of Ireland. It qualifies and is authorised in Ireland by the Central Bank of Ireland as an undertaking for collective investment in transferable securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (S.I. No 211 of 2003), as amended. The Manager of BNY Mellon Global Funds, plc is BNY Mellon Global Management Limited. BNY Mellon Global Management Limited, 33 Sir John Rogerson’s Quay, Dublin 2, Ireland. The Manager is approved as a management company and regulated by the Central Bank of Ireland under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (SI No 211 of 2003), as amended. The Global (ex. US) Distributor of BNY Mellon Global Funds, plc is BNY Mellon Asset Management International Limited.
ICVC investments should not be regarded as short-term and should normally be held for at least five years.
Changes in the rates of exchange may affect the value of investments. The Fund can invest in overseas securities which may also generate profits overseas and pay dividends in foreign currencies, which means the fund is exposed to changes in currency rates. The Fund may invest in emerging markets. It should be noted that these markets have additional risks associated with local custody and registration practices that may be less developed than more mature markets. The Fund takes its charges from the income of the Fund. The impact of Fund charges may be material on the value of any income you receive from your investment. There is potential for future capital erosion if insufficient income is generated by the Fund to cover these charges. The Fund may hold sub-investment grade bonds that typically have a low credit rating and carry a high degree of default risk, which can affect the capital value of your investment. The Fund may hold fixed interest securities, which are particularly affected by trends in interest rates and inflation. This may affect the capital value of your investment.
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Important information
The Fund may invest in illiquid securities, which means that there is a possibility that they cannot be readily converted into cash when required. The value of these securities is subject to greater fluctuation if they are not regularly traded. All of the sub-funds may use derivatives for efficient portfolio management (EPM) purposes. EPM restricts the use of derivatives for the reduction of risk, the reduction of cost and the generation of additional capital or income with no or an acceptable low level of risk. EPM transactions must be economically appropriate and the exposure fully covered. The Fund will, additionally to EPM, make use of the expanded regulations and use derivatives in pursuit of their investment objectives. All of these factors may affect the performance of the Fund.
Newton Real Return Fund
Newton Real Return Fund is a sub-fund of BNY Mellon Investment Funds, an investment company with variable capital (ICVC) incorporated in England and Wales under registered number IC27 and authorised by the Financial Services Authority. BNY Mellon Fund Managers Limited (BNY MFM) is the Authorised Corporate Director. BNY Mellon Fund Managers Limited, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1998251. Authorised and regulated by the Financial Services Authority. The investment adviser of the Newton sub-funds is Newton Investment Management Limited. BNY Mellon Investment Funds is a collective investment vehicle ("Institución de Inversión Colectiva") that is duly registered by the Comisión Nacional del Mercado de Valores on the Register of foreign Collective Investment Institutions commercialised in Spain (“Registro de Instituciones de Inversión Colectiva extranjeras comercializadas en España”) under the number 186. BNY Mellon Fund Managers Limited (BNY MFM) and Newton Investment Management Limited are members of the IMA.
Changes in the rates of exchange may affect the value of investments. The Fund can invest in overseas securities which may also generate profits overseas and pay dividends in foreign currencies, which means the Fund xposed to changes in currency rates. The Fund may invest in emerging markets. It should be noted that these markets have additional risks associated with local custody and registration practices that may be less developed than more mature markets. The Fund takes its charges from the capital of the fund. Investors should be aware that there is potential for future capital erosion if insufficient capital growth is achieved by the Fund to cover the charges. Capital erosion may result in the amount of income that can be drawn declining over time. The Fund may hold sub-investment grade bonds that typically have a low credit rating and carry a high degree of default risk, which can affect the capital value of your investment. The Fund may hold fixed interest securities, which are particularly affected by trends in interest rates and inflation. This may affect the capital value of your investment. The Fund may invest in illiquid securities, which means that there is a possibility that they cannot be readily converted into cash when required. The value of these securities is subject to greater fluctuation if they are not regularly traded. The Fund may use derivatives for efficient portfolio management (EPM) purposes. EPM restricts the use of derivatives for the reduction of risk, the reduction of cost and the generation of additional capital or income with no or an acceptable low level of risk. EPM transactions must be economically appropriate and the exposure fully covered. In addition to EPM, the Fund uses derivatives in pursuit of its investment objectives. All of these factors may affect the performance of the Fund(s).
In Switzerland, BNP Paribas Securities Services, Paris, succursale de Zurich acts as representative agent and paying agent for BNY MGF. The Prospectus, Simplified Prospectus, Articles of Association, Annual Report and Semi-Annual Report may be obtained free of charge from their offices at Selnaustrasse 16, 8002 Zurich, Switzerland.
BNY Mellon Global Funds, plc is a collective investment vehicle ('Institución de Inversión Colectiva') that is duly registered by the Comisión Nacional del Mercado de Valores on the Register of foreign Collective Investment Institutions commercialised in Spain ('Registro de Instituciones de Inversión Colectiva extranjeras comercializadas en España') under the number 267.
This document is issued in the UK and mainland Europe (excl Germany) by BNY Mellon Asset Management International Limited. BNY Mellon Asset Management International Limited, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial Services Authority.
BNY Mellon Asset Management International Limited, BNY Mellon Global Management Limited (BNY MGM), Newton and any other BNY Mellon entity mentioned are all ultimately owned by The Bank of New York Mellon Corporation.