global equities portfolio : income as a solution to a...

For Professional Clients and, in Switzerland, for Qualified Investors

only

Any views and opinions expressed hereafter are those of the

investment manager, unless otherwise stated.

Global equities portfolio : income as a solution to a challenged investment

backdrop ? BNY Mellon Global Equity Income Fund Nick Clay Lead portfolio manager

February 2016

INVESTMENT MANAGEMENT INVESTMENT SERVICES

• $1.6 trillion in assets under management1 • One of the largest providers of investment services with $28.9 trillion of assets under custody and/or administration (as at 31 December 2015)

• 6th largest global asset manager2 • $2.1 trillion average tri-party repo balances globally (as at 30 September, 2015)

• 7th largest US asset manager2 • #1 service provider for ETFs, based on # of funds 4

• 5th largest asset manager active in the European marketplace2 • #1 provider of third party subaccounting services in the US4

• $183 billion in private client assets (as at 30 September 2015) • $2.9 trillion in inventory of lendable assets for securities lending5 (as at

30 September 2015)

• Top 10 US wealth manager3 • #2 among peers for Fund of Hedge Fund Assets 6

• A leading provider of clearing and financial advisory solutions to introducing broker-dealers and registered investment advisor firms (Pershing)7

• #1 US clearing firm, ranked by number of broker-dealer clients (Pershing LLC)8

• Fifth largest participant in CHIPS funds transfer volume9

• One of the world’s leading providers of performance & analytics

BNY Mellon Strong market positions in our businesses

All company statistics are as at 31 December 2015 unless otherwise noted 1 Assets under management include investment boutiques and wealth management and exclude securities lending cash management assets and assets managed in the Investment Services business. BNY Mellon Investment Management is

one of the world’s leading investment management organizations and one of the top US wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management services and global distribution companies. 2 Rankings include assets managed by BNY Mellon investment boutiques and BNY Mellon Wealth Management. Each ranking may not include the same mix of firms. Global asset manager rankings by Pensions & Investments, November 2015;

US asset manager rankings by Institutional Investor, November 2015; European asset manager rankings by Investment & Pensions Europe, November 2015 3 Barron’s, 25 September 2015 4 As ranked by the 2015 Mutual Fund Service Guide 5 As at 30 September 2015, and includes assets of CIBC Mellon clients. CIBC Mellon is the brand name for CIBC Mellon Trust Company and CIBC Mellon Global Securities Services Company, each a joint venture between BNY Mellon (50%)

and Canadian Imperial Bank of Commerce (50%). Securities lending for CIBC Mellon clients is transacted through The Bank of New York Mellon as agent, and is part of The Bank of New York Mellon Agency Lending Program 6 Based on assets under administration. HFMWeek 24th Biannual AuA Survey – April 2015 7 Pershing is the umbrella name for Pershing LLC (member FINRA, SIPC and NYSE), Pershing Advisor Solutions (member FINRA and SIPC), Pershing Prime Services (a service of Pershing LLC), Pershing Limited (UK), Pershing Securities

Limited (UK), Pershing Securities International Limited (Ireland), Pershing (Channel Islands) Limited, Pershing Securities Canada Limited, Pershing Securities Singapore Private Limited and Pershing Securities Australia Pty. Ltd. SIPC protects

securities in customer accounts of its members up to $500,000 in securities (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. SIPC does not protect against loss due to market fluctuation. SIPC protection is not the same as, and should not be confused with, FDIC insurance. Investment products (other than deposit products) referenced in this brochure (including money market funds) are not insured by the FDIC (or any other

state or federal agency), are not deposits of or guaranteed by BNY Mellon or any bank or non-bank subsidiary thereof, and are subject to investment risk, including the loss of principal amount invested 8 InvestmentNews, 2015 9 ClearingHouse, August 2015

2

BNY Mellon Investment Management

1 As at 31 December 2015

• Total AUM US$1.6 trillion1

• Institutional grade investment management, innovation and market leading intelligence

• Each investment manager has its own proprietary investment processes

No ‘house view’ is imposed: there is no overall Chief Investment Officer

Each investment manager retains complete investment autonomy

• An entrepreneurial, focused approach is encouraged

Each investment manager focuses on investment management

• A great breadth and depth of expertise in every major asset class and sector

More than 275 institutional investment management product offerings

3

A multi-boutique investment management model encompassing

investment skills of world class specialist investment managers

BNY Mellon Investment Management Our world class specialist investment managers*

* Investment managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA) or affiliated fund operating companies to undertake portfolio management services in respect of the products and services provided by BNYMIM EMEA or the fund operating companies. These products and services are governed by bilateral contracts entered into by BNYMIM EMEA and its clients or by the Prospectus and associated documents related to the funds

1 AUM f or The Alcentra Group 2 A div ision of The Drey f us Corporation 3 Assets under management are represented by the v alue of cash securities and other economic exposure managed f or clients 4 AUM f or the Newton Group 5 Minority Owned Prov isional AUM has been prov ided by BNY Mellon Finance as at 31 December 2015 Total AUM includes the asset managers outlined in this f ile as well as The Drey f us Corporation, BNY Mellon Wealth Management and ex ternal data

4

Global sub-investment grade

debt asset management

US$25.1bn1

Brazilian multi-strategy, long/short,

long-only and f ixed income strategies

US$1.9bn

Money market funds

US$224.2bn

Active fundamental equity manager;

core, grow th & value styles; US, global

and w orld ex-domestic market

US$36.6bn

US & Global real estate

investment management

US$8.2bn

Fund of hedge funds; non-proprietary

manager of managers

US$4.8bn

Leader in liability driven investment, f ixed

income, currency risk management, multi-

asset, absolute return and specialist equity

solutions

US$603.2bn3

Global multi-asset solutions and strategies

ranging from indexing to alternatives

US$352.4bn

Active equity and bond, multi-asset, real-return

and income solutions in a global thematic

framew ork

US$69.2bn4

Multi-strategy private equity investing; direct

investment and fund-of-funds

US$10.6bn

Aw ard-winning global, emerging markets and

regional f ixed income solutions specialist

US$156.4bn

Global equity

investment management

US$58.8bn

Total AUM US$1.6 trillion

2

5

600

800

1.000

1.200

1.400

1.600

1.800

2.000

2.200

2.400

2.600

nov/0

5

me

i/06

okt/0

6

mrt

/07

aug

/07

jan

/08

jun

/08

nov/0

8

apr/

09

se

p/0

9

feb

/10

jul/1

0

dec/1

0

me

i/11

okt/1

1

mrt

/12

aug

/12

jan

/13

jul/1

3

dec/1

3

me

i/14

okt/1

4

mrt

/15

aug

/15

jan

/16

(£)

Newton Global Income FTSE World Index²

Newton Global Income strategy

Key facts

• Newton Global Income Strategy £6.1bn asset under

management across seven funds, as at end December 2015

Investment policy/guidelines

• All new holdings must have a prospective yield 25% greater

than the FTSE World Index yield

• Any holding whose prospective yield falls below the FTSE

World Index yield will be sold

• Portfolios of 50-80 stocks, not constrained by any country,

regional, sector or industry restrictions

About Newton

• Top tier, London-based investment house with more than 30

years of global fund management experience

• A pioneer of global thematic investing

• Dedicated global research analysts employ the Fund’s

thematic approach to drive their stock recommendations

• £47.0bn in assets under management as at end December

2015

Notes: 1 Inception 30 Nov ember 2005 2 For illustrativ e purposes only . This example does not take into account f actors, such as inf lation, that could hav e a negativ e ef f ect on the v alue of an inv estment 3 The FTSE World Index is used as a comparativ e index f or this strategy Source: Newton. Total return including income net of UK tax, ongoing charge and perf ormance f ee (where applicable). The impact of an initial charge (currently not applied) can be material on the

perf ormance of y our inv estment. Further inf ormation is av ailable upon request

Strategy type Global equity income

Performance

aim

To achieve increasing income and capital

growth over the long term from investing

predominantly in global securities

Value of £1,000 invested at launch1 to 31 January 20162

£2,398

£2,005

5

Newton outlook

6

Recap …

For illustrativ e purposes only Source: Shutterstock (unless otherwise stated), October 2015

The Migration

The experiment

QE

Mind the gap

The Sirens

Cover your ears

Source: John William Waterhouse (1849-1917), ''Uly sses and the Sirens'' (1891)

7

False assumption of central banks “a machine where you can control the output”

For illustrativ e purposes only

LSAPs

Boost broader

asset

prices

INF

LATIO

N

GAU

GE

Increase confidence

Raise income,

profits

Spurs spending,

investment

MONEY IN

Unconventional

policies

Not everything that counts can be counted, and not

everything that can be counted counts

William Bruce Cameron 1963, Informal Sociology

” Source: PA Photos Limited, PA- 24236609, 24 September 2015

Car emissions test body receives 70% of cash from

motor industry

The Guardian, 4 October 2015

”

Suppression, fat tails, fragile

8

Ecosystem instead – constant change

For illustrativ e purposes only Source: Shutterstock, October 2015

Anti-fragile

In all my work on the evolution of cooperation, it is always the same story –

cooperation is never here to stay. Cooperation prevails for some time. Then the

system breaks down and you have to rebuild it. … This is far away from the

typical economist notion of equilibrium. There is no equilibrium.

Martin Nowak

Supercooperators: Altruism, Evolution, and Why We Need Each Other to Succeed. 2011

” ”

9

Ecosystem

For illustrativ e purposes only Source: Shutterstock, October 2015

Cause

Zero Interest Rate Policy

Negative Interest Rate Policy

Quantitative Easing

Asset

prices

rise

Confidence

Spending

Leverage

Bubbles

Investment

De-valutions risk on • Mal-investment

• Bursts

• Default

• Low growth

• Deflation

• Volatility

• Inequality

• Inflation …

Instead, the main impact of suppressed interest rates is to

encourage yield-seeking speculation, to give low quality creditors access to the capital markets, to misallocate scarce saving, to

subsidise leveraged carry trades, to reduce the long-term

accumulation of productive capital, and to foment serial bubbles and crashes.

Hussman funds, 21 September 2015

Re-set

So the consequences

Transfers to

10

Effect Consequence

In corporate profits … … in world GDP …

Low growth …

For illustrativ e purposes only Source: Newton, Bloomberg, IMF, September 2015

… and now employment growth …

… and in prices

-40

-30

-20

-10

0

10

20

30

40

jan/91 mrt/95 apr/99 mei/03 jun/07 jul/11 sep/15

(% y

y)

S&P 12m forwards earnings growth, 3m average, Bloomberg ests

70

120

170

220

270

320

sep 10 sep 11 sep 12 sep 13 sep 14 sep 15

(Thousands)

3m average change in US private employment

-3,0

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

5,0

6,0

dec/00 nov/03 okt/06 okt/09 sep/12 sep/15

(% y

y)

US UK Eurozone Japan

Annual % change in 12m forw ard EPS

expectation turns negative for the f irst

time since 2009

CPI YoY % change

Serial disappointment

11

1,8

2,3

2,8

3,3

3,8

4,3

mrt/10 mrt/11 mrt/12 mrt/13 mrt/14 mrt/15

(% y

y)

2011 forecast 2012 forecast2013 forecast 2014 forecast2015 forecast 2016 forecast2017 forecast IMF World GDP (actual) %yy

… and volatile backdrop

For illustrativ e purposes only Source: Newton, Bloomberg ,September 2015

No risk?

… uhm

0

5

10

15

20

25

0

20

40

60

80

100

aug/0

1

aug/0

2

aug/0

3

aug/0

4

aug/0

5

aug/0

6

jul/07

jul/08

jul/09

jul/10

jul/11

jul/12

jun/1

3

jun/1

4

jun/1

5

(Index le

vel)

(Index le

vel)

VIX Index S&P Deutsche Bank FX volatility index (RHS)

-20

-15

-10

-5

0jul 05 jul 07 jul 09 jul 11 jul 13 jul 15

($ tr

illio

ns)

Bloomberg World exchange market cap ($tn) 3m change from high

The riskiest thing in the world is the widespread belief that there’s no

risk.

Howard Marks, It’s not easy

September 2015

”

It ain't what you don't know that gets you into trouble.

It's what you know for sure that just ain't so.

Mark Twain

”

Risk always been there

– now simply being priced in

12

Remember – central banks not omnipotent

For illustrativ e purposes only Source: Jef f eries/Twitter September 2015

Promises can be broken

13

Their influence is eventually finite

For illustrativ e purposes only Source: Newton, Bloomberg 30 September 2015

Increasing gap risk

SNB gives up China’s non command stock market

Commodities telling a different story Not such a one way bet

-43%

+187%

-50%

-22%

0,95

1,00

1,05

1,10

1,15

1,20

1,25

1,30

jan/12 jun/12 okt/12 mrt/13 aug/13 jan/14 jun/14 nov/14 apr/15 sep/15

(EU

R:C

HF)

Swiss Franc vs. Euro

50

70

90

110

130

150

170

190

2010 2011 2012 2013 2014 2015

(Index le

vel -

rebased)

LME Copper USD Brent Crude USD

6,10

6,15

6,20

6,25

6,30

6,35

6,40

6,45

2.000

2.500

3.000

3.500

4.000

4.500

5.000

5.500

okt/14 nov/14 dec/14 feb/15 mrt/15 apr/15 mei/15 jul/15 aug/15 sep/15

(Index le

vel) (I

ndex le

vel)

Shanghai stock exchange Chinese Renminbi

0

200

400

600

800

1.000

1.200

1.400

jan/12 jul/12 jan/13 aug/13 feb/14 aug/14 feb/15 sep/15

(Index le

vel)

US High Yield energy spreads

14

Infamous joke

For illustrativ e purposes only Notes: 1 Source: Datastream, Bloomberg, US Census Bureau, Newton 2 30 September 2015 3 Calculated by the Bureau of Economic Analy sis in the US in calculating the national accounts 4 Used 10 y ears of earnings to remov e the ef f ect of the economic cy cle f rom the PE calculation 5 Data as at 30 June 2015 6 Source: Newton, September 2015

SNB gives up Then and now: it’s a different world1

And cycle already long in the tooth6 Duration of US expansionary periods6

How do you get to escape velocity? …

well I wouldn’t start from here.

”

End 1981 United States Q3 20152

12% Fed funds rate 0.25%

14% 10-year bond yield 2.0%

$149 billion Monetary base $4.0 trillion

10.7% Profit margins (national accounts)3 16.5%5

7.8x S&P cycle adjusted PE4 24.7x

5.8% MSCI USA dividend yield 2.2%

27 Average age of baby boomer 59

50

100

150

200

250

300

350

400

0 4 9 13 18 22 27 32 36 41 45 50 55 59 64 68 73 78 82 87 91

(% g

ain

fro

m lo

w)

Number of months since low

1942 1949 1982 1990 2002 2009

The start is everything

15

50

80

37 45 39

24

106

36

58

12

92

120

74 75

0

20

40

60

80

100

120

140

mrt/3

3

jun/3

8

okt

/45

okt

/49

mei/5

4

apr/58

feb/6

1

nov/

70

mrt/7

5

jul/80

nov/

82

mrt/9

1

nov/

01

jun/0

9

Expansio

n (

month

s)

Date of prior trough

Expansion (Months) Median expansion over period

Protectionism rising as growth slows

According to the Global Trade Alert report the number of protectionist measures introduced in 2013 exceeded those

in 2009... G20 economies had introduced more than 450

protectionist measures, an average of one every 23 hours.

FT.com, 12 November 2014

Newton’s perspective Structural headwinds are outweighing policy action

All charts are f or illustrativ e purposes only Source: BAML, Bloomberg, Datastream, Newton, 31 January 2015 unless otherwise stated

16

Backdrop to remain

Source: UN World Population Projects, 2010 Source: Euromonitor, Centre f or Retail Research, y Stats.com, Forrester Research, select GEM markets in

orange 2013

Change in the ratio of the working-age population (15-64 year

olds) to the total population between 2010 and 2050

eCommerce as % of total retail (2013)

Government net debt as % of GDP

UK was 1% in 2004

US was 4% in 2003

020406080

100120140160180

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

(% o

f G

DP)

USA Japan UK France

Greece Portugal Italy Ireland

12,7% 12,4%

7,8% 7,7%

6,0% 5,5%

4,4% 3,6%

2,5% 2,5%

0

2

4

6

8

10

12

14

USA UK Brazil China Poland Mexico Russia Chile Turkey SouthAfrica

(%) of to

tal r

eta

il

7,5 5,8

1,1 -0,3

-0,7 -2,4

-5,8 -8,6

-9,0 -9,2

-9,6 -12,4

-20% -15% -10% -5% 0% 5% 10%

AfricaIndia

Lat AM & CarribeanAsia

WorldBrazil

United StatesWestern Europe

Russian FederationChina

Eastern EuropeJapan

Yet no turning back

For illustrativ e purposes only Source: (image) Shutterstock, October 2015

China launches Rmb1tn infrastructure bonds plan

as economy fears grow

FT, 5 August 2015

Federal Reserve rate rise would cause

panic and turmoil, warns World Bank

Telegraph, 9 September 2015

Fed Delays Interest-Rate Liftoff

The Wall Street Journal, 17 September 2015

Japan needs extra stimulus, says Abe adviser

FT, 30 September 2015

IMF asks US Federal Reserve to delay rate rise

BBC, 4 June 2015

Jeremy Corbyn's QE for the people is exactly what

the world may soon need

Telegraph, 16 September 2015

US woos private investment in transport infrastructure

FT, 30 September 2015

More stimulus likely

17

A perspective on investment returns remains appropriate

Notes: For illustrativ e purposes only 1 31 December 2015 2 Calculated by the Bureau of Economic Analy sis in the US in calculating the national accounts 3 Used 10 y ears of earnings to remov e the ef f ect of the economic cy cle f rom the PE calculation 4 Data as at 30 June 2015

Source: Datastream, Bloomberg, US Census Bureau, Newton

18

• Active, flexible approaches

• Emphasis on income

• Strategies that preserve capital and aim for asymmetry

of return

• ‘Return based’ objectives

Characteristics for a lower return/volatile world

End 1981 United States Q4 20151

12% Fed funds rate 0.5%

14% 10-year bond yield 2.3%

$149 billion Monetary base $3.8 trillion

10.7% Profit margins (national accounts)2 16.2%4

7.8x S&P cycle adjusted PE3 25.9x

5.8% MSCI USA dividend yield 2.1%

27 Average age of baby boomer 59

Recent history characterised by

more volatility and lower expected returns

Re

turn

Time For illustrative purposes only

1980-2000’s trend 2000’s – ? trend

Relevant solutions need to reflect a changed environment

Positioning and performance

Pricing power and structural drivers

For illustrativ e purposes only

China consumes mind-boggling amounts of raw materials

… and that’s w hy slowing growth may continue to cause headaches for commodity

producers

Bloomberg commodity Index

Yes

• Microsoft

• Procter & Gamble

• Sysco

• Paychex

• Roche

• Tobacco

• Relx

• Wolters Kluwer

Not

• Miners

• Oil Services

• Weak brands

• Tech hardware

• Agricultural equipment

• Banking

0

50

100

150

200

250

1991 1994 1997 2000 2003 2006 2009 2012 2015

(Index le

vel)

US retail sales: grocery stores vs restaurants

and bars – January 1992 to August 2015

Growth in nominal aggregate health

care spending

US tobacco volumes and price

Source: US Census Bureau, August 2015 Source: Census Bureau, Quarterly Serv ices Surv ey (hospital serv ices & ambulatory serv ices); Bureau of

Economic Analy sis National Income and Product Accounts

(prescription drugs, population, GDP price index), Q2 2015

Source: TMA 1976-2008; Altria 2009-2015

20

Source: FT, 11 September 2015 Source: Bloomberg, September 2015

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

197

6

197

8

198

0

198

2

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

Volumes Price

Positioning as at 31 January 2016 BNY Mellon Global Equity Income Fund

Notes: 1 The FTSE World Index is used as a comparativ e index f or this strategy

Source: Newton, 31 January 2016

Major stock positions Major sector positions

Country allocation

Relative to index1 (%)

Number of stocks – 50

21

Fund (%)

Index1 (%)

Relative (%)

Top 10

Reynolds American 5.57 0.13 5.44

Philip Morris International 5.52 0.43 5.09

Microsoft 5.20 1.23 3.97

Sysco 3.45 0.06 3.39

Procter & Gamble 3.97 0.69 3.28

Eversource Energy 3.29 0.05 3.24

GlaxoSmithKline 2.81 0.31 2.50

CMS Energy 2.49 0.03 2.46

Wolters Kluwer 2.46 0.03 2.43

Roche 2.79 0.56 2.23

Bottom 5 holdings

Apple 0.00 1.67 -1.67

Alphabet 0.00 1.35 -1.35

Exxon Mobil 0.00 1.00 -1.00

General Electric 0.00 0.84 -0.84

Apple 0.00 1.67 -1.67

11,4

6,4

2,6

2,1

1,3

-2,4

-4,1

-4,4

-4,7

-11,3

Consumer goods

Utilities

Health care

Telecommunication

Consumer services

Technology

Basic materials

Industrials

Oil & gas

Financials

Asset Allocation Fund (%)

Index1 (%)

Relative (%)

Top five

United Kingdom 14.98 7.22 7.77

Netherlands 7.27 1.11 6.16

Switzerland 8.20 3.31 4.89

Norway 2.00 0.21 1.79

United States 56.08 55.01 1.07

Bottom five

Japan 0.00 9.01 -9.01

Germany 0.00 3.16 -3.16

Canada 0.00 2.69 -2.69

Australia 0.94 2.46 -1.52

Taiwan 0.00 1.25 -1.25

Performance BNY Mellon Global Equity Income Fund, as at 31 January 2016

1Perf ormance calculated as total return including income net of UK tax, net annual charges, no initial charge, in GBP. 2 The FTSE World index is used as a comparativ e index f or this strategy

Source: Lipper as at 31 January 2016

(%) GBP 3 months 1 year

3 years (cumulative)

Since inception1 (Annualised)

BNY Mellon Global Equity Income Fund C Inc -4.00 -0.51 4.69 8.23

FTSE World TR USD2 -8.16 -5.62 5.04 7.93

Lipper UK Offshore – Equity Global Sector Avg. -9.66 -8.89 1.64 4.56

Cumulative return over five years

22

28.30%

55.85%

52.71%

-10

0

10

20

30

40

50

60

70

80

jul/10 dec/10 mei/11 okt/11 feb/12 jul/12 dec/12 apr/13 sep/13 feb/14 jun/14 nov/14 apr/15 sep/15 jan/16

Gro

wth

(%

)

BNY Mellon Global Equity Higher Income Fund C Inc FTSE World Lipper UK Offshore – Equity Global

Equity income can provide an asymmetric return profile

For illustrativ e purposes only Note: Chart created f rom MercerInsight MPA on 26 October 2015 at 10.14 am. This output should be read in conjunction with, and is subject to, MercerInsight MPA™:Important notices and

Third-party data attributions. See https://www.mercerinsight.com/importantnotices.aspx f or details. Copy right 2014 Mercer LLC. All rights reserv ed

Source: MercerInsight MPA, February 2016

Newton Global Income composite

Quarterly Excess Return vs FTSE World with cumulative line in GBP (before fees) over nine years and three quarters, ending

December 2015

• Actively change

RP composition to

suit the times

• Meaningfully

reduce RP risk

from end 2007

• The global income

strategy generally

outperforms in

down markets

since 2007

• Compounding

effect on returns is

important

23

-80

-60

-40

-20

0

20

40

60

80

-8

-6

-4

-2

0

2

4

6

8

mrt

/06

jun

/06

sep/0

6

de

c/0

6

mrt

/07

jun

/07

sep/0

7

de

c/0

7

mrt

/08

jun

/08

sep/0

8

de

c/0

8

mrt

/09

jun

/09

sep/0

9

de

c/0

9

mrt

/10

jun

/10

sep/1

0

de

c/1

0

mrt

/11

jun

/11

sep/1

1

de

c/1

1

mrt

/12

jun

/12

sep/1

2

de

c/1

2

mrt

/13

jun

/13

sep/1

3

de

c/1

3

mrt

/14

jun

/14

sep/1

4

de

c/1

4

mrt

/15

jun

/15

sep/1

5

de

c/1

5

Rollin

g e

xcess re

turn

(%)

Excess retu

rn (

%)

Quarterly excess return (up markets) Quarterly excess return (down markets) Cumulative rolling

Newton has been here before

Notes: RP*= representativ e portf olio 1 Period 31 March 2009 to 30 April 2010 2 Period 30 September 2012 to 31 October 2014 3 The FTSE World Index is used as a comparativ e index f or this strategy . 4 Perf ormance calculated f rom Lipper, net of f ees, net income reinv ested in GBP. Inception (30 Nov ember 2005) v s FTSE World

Source: Newton as at 31 December 2015

Cumulative performance4

GI RP rolling 12 month relative performance4

CAPE valuation (S&P 500)

-50

0

50

100

150

(%)

Newton Global Income RP* FTSE WORLD³

• Market remains distorted by policy

• Portfolio behaving as expected

• Over medium/long term process works

• Been here before

• Comfortable with their view

• Confident over medium term

• Active stock selection retains focus on valuations

• Overall market not attractively valued

• Underlying fundamentals not driving

markets

-15

-5

5

15

(%)

Rolling relative 12m periods

10

20

30

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

CA

PE (

x)

CAPE Long run average

+50%1 +46%2

RE rating RE rating

24

How have dividends helped?

Notes: *RP=representativ e portf olio 1 Inception: 30 Nov ember 2005 2 The FTSE World Index is used as a comparativ e index f or this strategy Source: Newton, 31 December 2015, net of f ees GBP

Newton Global Income RP* (since inception1 to 31 December 2015)

83,7

56,2

139,9

47,0

58,1

105,1

0

20

40

60

80

100

120

140

160

Income Contribution Capital Return Total Return

Cum

ula

tive

re

turn

(%

)

Global Income Fund FTSE World²

25

Newton Global Income Strategy Composite performance as at 31 December 2015

For illustrativ e purposes only Notes:

1 The FTSE World Index is used as a comparativ e index f or this strategy . The strategy does not aim to replicate either the composition or the perf ormance of the comparativ e index.

2 To f if th percentile 3 To 95th percentile

Chart created f rom MercerInsight MPA on 12 February 2016 at 10.57 am. This output should be read in conjunction with, and is subject to, MercerInsight MPA™:Important notices and Third-party

data attributions. See https://www.mercerinsight.com/importantnotices.aspx f or details. Copy right 2016 Mercer LLC. All rights reserv ed. Source: MercerInsight MPA, February 2016

Performance characteristics vs FTSE World1 in GBP (before fees) over nine years and nine months, ending Sept-15 (monthly calculations)

Comparison with the Mercer Global Equity Universe (actual ranking)

First quartile²

Second quartile

Third quartile

Fourth quartile³

Newton Global Incomecomposite

Excess return (% p.a.)

Standard deviation (% p.a.)

Return/ standard deviation

Tracking error (% p.a.)

Information ratio

Newton composite return 3.41 13.50 0.78 5.77 0.59

Newton composite ranking 12 172 13 61 22

Upper quartile 1.67 15.54 0.60 6.04 0.37

Median 0.67 14.66 0.53 4.42 0.17

Lower quartile -0.29 13.79 0.46 3.32 -0.09

Number in universe 208 207 207 207 207

26

-3,0

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

12,0

13,0

14,0

15,0

16,0

17,0

18,0

19,0

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

10,0

-0,6

-0,4

-0,2

0,0

0,2

0,4

0,6

0,8

Summary, as at 31 January 2016

• Global dividend yields are attractive

relative to other sources of income

• Income will remain important driver of total

return

• Newton Global Income concentrated,

active and focused on income

• Income a core Newton competency

• Well placed to continue to deliver global

diversification, income generation and

capital growth

Notes: 1 Inception date: 30 Nov ember 2005 2 RP= representativ e portf olio. Perf ormance calculated as total return including income net of UK tax, net annual charges, no initial charge, in GBP 3 The FTSE World Index is used as a comparativ e index f or this strategy Source: Newton, Lipper (weekly data, total return in sterling, net of f ees and income reinv ested), 31 January 2016

Risk versus return since inception1

27

Low High

Newton Global Income RP2

FTSE World3

IA Global

MSCI World High

Dividend Yield

MSCI World

5,0

5,5

6,0

6,5

7,0

7,5

8,0

8,5

9,0

9,5

10,0

13,4 13,6 13,8 14,0 14,2 14,4 14,6

Retu

rn (

% p

.a.)

Volatility (% p.a.)

Appendix

Newton’s investment philosophy Global thematic investing since 1978

Newton believes in …

Source: Newton, 2015

Thinking globally,

evaluating each idea in a global context

Using themes to

understand the forces driving global change

Global Themes Analysis Conviction

Conducting rigorous

fundamental analysis of each

investment opportunity

Constructing

investment portfolios incorporating

Newton’s highest

conviction ideas

29

Newton’s sole objective

is delivering results for their clients

Newton Investment Management As at 31 December 2015

Focus

• Single location

• Investment only; no distractions

Stability and experience

• +30 years in global investing

• Team-based approach

Perspective

• Thematic framework

• Proprietary global research; skilled security selection

• Integrated ESG research

Alignment of interests

• Performance culture

• Real equity ownership

30

Our culture is aligned with your objectives Note: 1 AUM f or SAA included in respectiv e underly ing asset class Source: Newton, 31 December 2015

Newton Global Income Strategy

Newton Global Income RP*

• Launch date: 30 November 2005

• Objective: The objective is to achieve increasing income and

capital growth over the long-term from investing

predominantly in global securities. The strategy may also

invest in collective investment schemes

• Domicile: UK

• Comparative Index: FTSE World1

• IA sector: Global Equity Income

• Historic yield: 3.6%

• AUM: Ten year old RP* has grown to over £4.4bn in assets

BNY Mellon Global Equity Income Fund

• Launch date: 29 July 2010

• Objective: The objective is to achieve increasing income and

capital growth over the long-term from investing

predominantly in global securities. The Fund may also invest

in collective investment schemes

• Domicile: Dublin

• Comparative Index: FTSE World1

• Historic Yield: 3.4%

• AUM: $466 million

Launched following investor demand from clients who did not

wish to use sterling denominated UK domiciled funds:

• Same team, same strategy

• A broad choice of currency share classes available

Notes: 1 The FTSE World index is used as a comparativ e index f or this strategy

*RP= representativ e portf olio

Source: Newton, all data 31 December 2015

31

Single location, interactive and collaborative approach

Global Equity Income team Income a core competency

Total number of inv estment personnel = 68 (some personnel included in more than one category ) Source: Newton, December 2015

Equity

Real Return team 17 years’ investment experience

8 years at Newton

Global Strategy Group Thematic Focus Groups Bond/FX Strategy Group

UK Equity Income

Multi-Asset

Portfolio Managers

18 years’ investment experience

12 years at New ton

Global Research


8 years at New ton

Emerging & Asian Equity

Global Equity

Fixed Income

Multi-Asset & UK

Real Return Responsible Investment

Industry analysts

Credit

32

Asian Equity Income Emerging Equity Income

Nick Clay

Ian Clark

Terry Coles

Global Equity portfolios

Common philosophy and process, distinctive portfolios

9,847

listed Global Equities

50-80 stocks Focused income portfolios, constructed without reference to

the benchmark, seeking strong total returns with lower volatility

over the medium term

Global Income

Research

Recommended Lists

Income Filter

Themes

Global Research

Global Equity

Team

Portfolio

33

Fo illustrativ e purposes only .

Global thematic framework Themes help identify opportunities and challenges

Represent the first

stages of idea generation and risk

management

Provide a dynamic

framework for investment thinking

Identify drivers of

long-term change

Allow a longer-term

global perspective in a volatile world


34

Dividends Favourable characteristics

Dividends are important because

• They encourage disciplined capital allocation by management

and the generation of cash flow

• Aligns management and investor interests

• Capital discipline leads to higher earnings

• They can be used to highlight value

• Generates a consistent source of return

• Thus making them an important part of the returns investors

receive from an equity investment (especially in a low return

world)

For illustrativ e purposes only Source: Arnott and Asness (2003) ‘Surprise! Equity Div idends = Equity Earnings Growth’ FAJ v ol 59, no. 1

Subsequent 10-year earnings growth (%)

Dividend payout ratio (%)

30 40 50 60 70 80 90

(% p

.a.)

Payout ratios and earnings growth from 1946-2001

35

Dividends The biggest driver of equity returns

For illustrativ e purposes only Source: SG Cross Asset Research, MSCI, total annualised real return in local currency , to 31 December 2014

Compounding effects of dividend yield dominates real returns in the long term (1970-2014)

36

5,0

6,2

5,3 4,8

4,1 5,6

3,6

-3,0

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

UK US France Germany Australia Canada Japan

(%)

Dividend Yield Dividend growth Multiple expansion Total annualised returns

Dividends: need to be active

Source: SG Quantitativ e Research, Newton/Factset, 31 December 2015

Comparing forecast and realised dividend yields since end-1995 to 31 December 2015

1,7

4,5

5,4

6,5

7,4

8,4

9,5

11,8

17,0

1,8

4,3 5,1

5,7 6,2 6,5 6,4

6,0 5,3

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

<4% 4%-5% 5%-6% 6%-7% 7%-8% 8%-9% 9%-10% 10%-15% 15%-20%

Div

idend

yie

ld (

%)

Average yield Realised yield

37

Controlling the risks

Fundamentals/Valuation Proprietary research Single portfolio approach Perspective

How much risk? Stock weights, correlation, volatility

What kind of risk? Currency, industry, stock specific

Is risk consistent? Strategic views, security selection, income level

Portfolio diversification: At country and sector level

Single Portfolio: 50-80 holdings

Volatility is not at risk: Dividend cuts are risks

Risk control

(portfolio guidelines)

Risk monitoring

Outperformance of

FTSE World

Newton Global Income Strategy Yield criteria

Bottom up risk management

Themes

Security selection Portfolio construction

Risk parameters

Quantitative risk assessment

Ensuring risk is appropriate, consistent and intended

38

Portfolio

construction

Security selection

Source: Newton

Assess the outlook for end markets, industries and regions

Thematic headwinds

Thematic tailwinds

• Unrecognised business quality:

Lowest cost; unique assets

• Cyclically depressed with business outlook improving

• Management: integrity, quality and

capital allocation

• Dividend yield as starting point …

but focus on cash flow and return on invested capital based valuation

• Scenario analysis with a focus on

downside

• Balance sheet strength in worst

case scenario

39

Evolution of investment themes From 2003

Source: Newton, Representation of themes since 2003, as at Nov ember 2015

2015 2012 2009 2006 2003 2006 2009 2012 2014

Current theme timeline

Historic theme timeline

40

Capital cycle Necessity of perspective

For illustrativ e purposes only Note: 1 ROIC – Return on Inv ested Capital, CoC – Cost of capital

Source: Newton, December 2015 Themes help Newton think about capital allocation

ROIC1 low

Asset values low

BUST

BOOM

ROIC1 high

Asset values high

No one makes money

Capital denied

Capacity exits Price wars

Utilisation falls

ROIC1 < CoC1

Supply > demand

Marginal ROIC1 falls

Leverage, M&A Capital aplenty

Supply < demand

ROIC1 > CoC1

Capital returns

ROIC1 increases

Capital cycle

Favourable investment environment Dangerous investment environment

41

Where today?

For illustrativ e purposes only Note: 1 ROIC – Return on Inv ested Capital, CoC – Cost of capital

Source: Newton, December 2015

ROIC1 low

Asset values low

BUST

BOOM

ROIC1 high

Asset values high

Capital cycle

Leverage, M&A Capital aplenty

IPO’s

Mining

Content media

Chinese fixed asset

investment

Rights Issues

Central bank policies/

currencies

Copper

UK Food Retail

Mature IT

EM debt

Beef

European Telecom’s

Share buybacks

European construction

Social media

Big Oil

Oil sands Big Pharma

Capital denied

Capacity exits

Price wars

Utilisation falls

ROIC1 < CoC1

Supply > demand

Marginal ROIC1

falls

Supply < demand

ROIC1 > CoC1

Capital returns

ROIC1 increases

No one makes money

Favourable investment environment Dangerous investment environment

42

Guides our stock selection

Recent transaction highlights Newton Global Income strategy

Source: Newton, December 2015

Sales

Tesco

Balfour Beatty Sell discipline

Suez Environnement

Pfizer

SES

Deutsche Post

Statoil

Reynolds American

Total

Valuation

McDonalds

Johnson & Johnson

Imperial Tobacco

Royal Mail

CMS Energy

Principal Financial

Western Union

Procter & Gamble

Altria

Purchases

43

Portfolio positioning

For illustrativ e purposes only Source: Newton, September 2015

Extremely selective in financials. Avoid those

challenged by government interference

Focus on healthcare, telecoms, selected

technology areas and staples.

Limited exposure to developing markets

Caution in energy, commodities and basic

industries and their infrastructure

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

The effect of debt will continue to pressure financials and

economies. Divergent performances likely to yield stock and

regional selection opportunities

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 and risks

Selective developing world economies have longer term

attractions in terms of their stage of development and

favourable demographics. However capital flight driven by

falling returns on capital are likely to lead to pro-cyclical

monetary tightening or currency weakness as the credit cycle

plays out

44

Performance attribution Newton Global Income RP*, year to date to 31 January 2016

Note: *RP= representativ e portf olio

1 The FTSE World index is used as a comparativ e index f or this strategy

Source: Newton, 31 January 2016

Sector attribution Stock attribution

45

Net mgmt

effect (%)

Top 10

Reynolds American 0.72

Philip Morris International 0.44

Eversource Energy 0.36

CMS Energy 0.33

Procter & Gamble 0.32

McDonald's 0.24

Microsoft 0.22

Verizon Communications 0.21

GlaxoSmithKline 0.18

Wolters Kluwer 0.17

Bottom 10

Zurich Insurance -0.20

Novartis -0.12

Cisco Systems -0.10

Principal Financial -0.10

Cobham -0.10

Facebook -0.09

AT&T -0.08

Centrica -0.08

TDC -0.07

Paychex -0.06

Total RP* return

(%)

Total index

return1

(%)

Net mgmt

effect

(%)

Total 2.89 -2.22 –

Oil & gas -1.94 0.52 -0.16

Basic materials 0.00 -6.07 0.16

Industrials -1.74 -2.65 0.09

Consumer goods 7.59 0.38 2.11

Health care -0.30 -3.90 0.49

Consumer services 4.84 -1.05 0.78

Telecommunication 2.75 4.30 0.08

Utilities 3.74 5.56 0.35

Financials -2.69 -5.87 0.75

Technology 0.97 -1.52 0.22

Cash - 0.00 0.60

Newton Global Income Representative Porfolio Performance attribution highlights: 2008-2015


Financials u/w t

Telecommunications

Industrials

Basic materials

Gold Fields

Fording Canadian

Coal

Hopew ell Highw ay

HTC

Advanced Info

Service

Utilities u/w t

Financials u/w t

Standard Charter

Turner

Parkw ay

TNE

Vale Capital

Noble Group

Financials u/w t

Technology u/w t

HTC

Reynolds American

Advance Info Service

Link Real Estates

DNB

Gold Fields

Consumer goods

Healthcare

Financials u/w t

Telecommunications

Reynolds American

Phillip Morris

Advance Info Service

Roche/Glaxo/Pfizer/

Abbott

Utilities u/w t

Industrials

Deutsche Post

Aberdeen Asset

Man.

REITS

CCR

DNB

Industrials

Deutsche Post

Lockheed Martin

Microsoft

Paychex

ICAP

Deutsche Telekom

Financials u/w t

Basic materials u/w t

Consumer goods

Reynolds American

Microsoft

Northeast Utilities

Novartis

Consumer goods

Oil & gas u/w t


Technology

Reynolds American

Microsoft

Philips Morris

Utilities

Consumer services

Healthcare

Consumer goods

Parkw ay

First Gen

Bursa Malaysia

Astra Agro Lestari

Straits Asia

Resources


Telecommunications

Technology u/w t

LG Telecom

Cable & Wireless

Bristol-Myers Squibb

Merck & Co.

PDLT

Telstra

Industrials

Oil and gas

Telecommunications

TNE

Deutsche Telekom

Deutsche Post

Total

QBE Insurance

ENI

Technology

HTC

DNB

Suez Environment

Apple(void)

ICAP

IBM

Consumer goods

Health care

Technology

HTC

Reynolds

Telekom Polska

Statoil

Worley Parsons

Financials u/w t

Consumer goods

CCR

Telekom Polska

Philip Morris

Annaly Capital Mgmt

Gold Fields

China Mobile (HK)

Orkla

Telecommunications

Health care

Mattel

Centrica

GlaxoSmithKline

Apple(void)

TeliaSonera

TDC

Balfour Beatty

Telecommunications

Health care

Financials

TDC

Centrica

Po

sit

ive

co

ntr

ibu

tors

N

eg

ati

ve

co

ntr

ibu

tors

2014 2013 2012 2011 2009 2008 2010 2015

46

Newton Global Income RP*

Notes: *RP= representativ e portf olio 1 Perf ormance calculated as total return including income net of UK tax, net annual charges, no initial charge, in GBP 2 The FTSE World Index is used as a comparativ e index f or this strategy . The strategy does not aim to replicate either the composition or the perf ormance of the comparativ e index Source: Lipper as at 31 January 2016

Longer term performance Returns (net annualised)

Newton Global Income1 FTSE World2

47

4,8

8,0

9,2 9,0

-0,1

9,0

8,0

7,1

-2

0

2

4

6

8

10

1 yr 3 yrs 5 yrs Since inception30-Nov-05

(%)

16,3 18,3

-16,9

17,7

13,3

2,5

10,2

14,2

8,2 9,1

6,5

9,5

-18,2

19,6

16,3

-5,8

11,8

22,4

11,3

4,3

-25

-20

-15

-10

-5

0

5

10

15

20

25

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(%)

Newton Global Income RP* Fundamental analysis


*RP= Representativ e portf olio 1 Sty le Research, based on 3 y ear data Source: Bloomberg, Newton

All calculations, portf olio and index are weighted sums using weights as at 31 December 2015

LT ROIC ref ers to av erage of last 5 y ears ROIC F Score is non f inancials – in keeping with Soc Gen’s methodology . Cash Conv ersion – adds back D&A to the Net Income bef ore calculation and excludes any stocks with negativ e amounts

Newton Global Income portfolio data at 31 December 2015

Aggregate statistics Portfolio ex financials MSCI World Index ex financials

Risk

Tracking error1 4.2

Beta1 0.9

Number of stocks 50 1,269

Fundamentals

Return on equity % 25.3 20.5

Return on invested capital % 13.8 12.0

Net debt/equity % 63.9 79.6

Cash Generation (NI/FCF) % 72.2 67.6

Valuation

Free cash flow yield % 5.0 4.3

Dividend Sustainability (F score) 5.8 6.2

Distributions

Historic yield (last 12 months) % 4.0 2.6

48

Dividends Need to be active

Source: SG Quantitativ e Research, Factset/Newton Global Income strategy as at 31 December 2015

Comparing forecast and realised dividend yields since end-1995 to 31 December 2015

1,7

4,5 5,4

6,5 7,4

8,4 9,5

11,8

17,0

1,8

4,3 5,1 5,7 6,2 6,5 6,4 6,0 5,3

0,0

5,0

10,0

15,0

20,0

<4% 4%-5% 5%-6% 6%-7% 7%-8% 8%-9% 9%-10% 10%-15% 15%-20%

Div

idend

yie

ld (

%)

Average yield Realised yield

Newton Global Income strategy stock selection

61,7

15,0 10,0

4,6 4,6 1,4 1,8

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

<4% 4% - 5% 5% - 6% 6% - 7% 7% - 8% 8% - 9% 9% - 10% 10% - 15% 15% - 20%

% o

f N

ew

ton G

lobal

Incom

e R

P

Dividend yield group (%)

49

-32

-24

-16

-8

0

8

16

24

32

Dec-

05F

eb-0

6A

pr-

06

Jun-0

6A

ug-0

6O

ct-06

Dec-

06F

eb-0

7A

pr-

07

Jun-0

7A

ug-0

7O

ct-07

Dec-

07F

eb-0

8A

pr-

08

Jun-0

8A

ug-0

8O

ct-08

Dec-

08F

eb-0

9A

pr-

09

Jun-0

9A

ug-0

9O

ct-09

Dec-

09F

eb-1

0A

pr-

10

Jun-1

0A

ug-1

0O

ct-10

Dec-

10F

eb-1

1A

pr-

11

Jun-1

1A

ug-1

1O

ct-11

Dec-

11F

eb-1

2A

pr-

12

Jun-1

2A

ug-1

2O

ct-12

Dec-

12F

eb-1

3A

pr-

13

Jun-1

3A

ug-1

3O

ct-13

Dec-

13F

eb-1

4A

pr-

14

Jun-1

4A

ug-1

4O

ct-14

Dec-

14F

eb-1

5A

pr-

15

Jun-1

5A

ug-1

5O

ct-15

Dec-

15

(%)

Oil & gas

Basic materials

Industrials

Consumer goods

Health care

Consumer services

Telecommunication

Utilities

Financials

Technology

Cash / bonds / options

-60

-40

-20

0

20

40

60

Dec-

05F

eb-0

6A

pr-

06

Jun-0

6A

ug-0

6O

ct-06

Dec-

06F

eb-0

7A

pr-

07

Jun-0

7A

ug-0

7O

ct-07

Dec-

07F

eb-0

8A

pr-

08

Jun-0

8A

ug-0

8O

ct-08

Dec-

08F

eb-0

9A

pr-

09

Jun-0

9A

ug-0

9O

ct-09

Dec-

09F

eb-1

0A

pr-

10

Jun-1

0A

ug-1

0O

ct-10

Dec-

10F

eb-1

1A

pr-

11

Jun-1

1A

ug-1

1O

ct-11

Dec-

11F

eb-1

2A

pr-

12

Jun-1

2A

ug-1

2O

ct-12

Dec-

12F

eb-1

3A

pr-

13

Jun-1

3A

ug-1

3O

ct-13

Dec-

13F

eb-1

4A

pr-

14

Jun-1

4A

ug-1

4O

ct-14

Dec-

14F

eb-1

5A

pr-

15

Jun-1

5A

ug-1

5O

ct-15

Dec-

15

(%)

UK equities

North American equities

Europe ex UK equities

Japanese equities

Pacific ex. Japan equities

Other International equities

Bonds/ Cash/ Other

Portfolio actively managed Positioning since inception1 to 31 January 2016

Note: 1 Inception 30 Nov ember 2005 Source: Newton, 31 January 2016

Relative sector positioning (%)

Relative regional positioning (%)

50

Portfolio actively managed Positioning since inception1 to 31 January 2016

Note: 1 Inception 30 Nov ember 2005 Source: All charts, Newton at 31January 2016

Ex Post Beta rolling three year

51

0,5

0,6

0,7

0,8

0,9

1,0

1,1

1,2

2008 2009 2010 2011 2012 2013 2014 2015 2016

Beta

-15

-10

-5

0

5

10

15

20

Oil

& g

as

Basic

ma

teria

ls

Ind

ustr

ials

Consu

mer

good

s

Health

care

Consu

mer

serv

ices

Te

lecom

mu

nic

ation

Util

itie

s

Fin

ancia

ls

Te

chnolo

gy

Cash /

bond

s / o

ptio

ns

(%)

Current positioning

Newton Global Income strategy Newton Global Income RP* – dividend payment history

For illustrativ e purposes only *RP= representativ e portf olio

Source: Newton, Newton Global Income Representativ e portf olio; GBP, income share class, January 2016

0,34 0,55 0,78

1,28 1,01 0,99 0,84 1,01 0,96 0,99 1,11 0,50

0,71

0,94

1,05 1,20 1,06 1,20

1,30 1,05 1,12

1,65

1,85

2,01

2,12 2,81

2,64 2,25

2,36 2,53 2,39

0,94

1,11

1,56

1,18

1,02 1,36

1,32

1,21 1,13 1,07

3,43

4,22

5,29

5,63

6,04 6,05

5,61 5,88

5,67 5,57

0

1

2

3

4

5

6

7

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Net

am

ount

(GB

P)

Jan Apr Jul Oct

52

Newton Global Income RP* Since inception dividend growth history


*RP= representativ e portf olio 1 Annualised div idend growth since inception (30 Nov ember 2005), illustrated by a starting income pot of £1,000 Source: MSCI as at end December 2015 and Newton, Newton Global Income RP; GBP, SG Quantitativ e Research, MSCI High DY GBP, December 2015

Comparing annual dividend growth with a global high yielding index

23,0 25,4

6,4 7,3

0,2

-7,3

4,8

-3,6 -1,8

9,9

13,2

-14,9

1,8

14,3

1,0 1,1 0,4

3,2

£0

£200

£400

£600

£800

£1.000

£1.200

£1.400

£1.600

£1.800

£2.000

-20,0

-10,0

0,0

10,0

20,0

30,0

40,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Cum

ula

tive gro

wth

of in

itial £

1000 d

ividend

Annual

div

idend

gro

wth

(%

)

Newton Global Income MSCI World High Dividend Yield

Newton Global Income MSCI World High Dividend Yield

£1,624

(+3.0% p.a.)1

£1,303

(+5.5% p.a.)1

53

Investing for the medium to longer term

Notes: *RP= Representativ e portf olio 1 The FTSE World Index is used as a comparativ e index f or this strategy 2 Inception: 30 Nov ember 2005 Source: Newton, Lipper, net of f ees, midday close, GBP relativ e to FTSE World, as at 31 December 2015

Newton Global Income RP* – % of months outperforming index¹

(Since inception²)

49

56

68

64

0

10

20

30

40

50

60

70

80

Monthly returns Rolling annual returns Rolling three year returns Rolling five year returns

(%)

54

Performance characteristics in different markets Newton Global Income RP*


*RP= Representativ e portf olio 1 The FTSE World Index is used as a comparativ e index f or this strategy 2 Inception date 30 Nov ember 2005

Source: Newton, Bloomberg f or all charts, 31 December 2015

Before crisis After crisis

0102030405060708090

100

<-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

quency

Weekly change

GI Gross FTSE World TR GBP¹

Frequency distributions – weekly returns 2006 – 2009 Frequency distributions – weekly returns 2009 – 2015

0

5

10

15

20

25

30

35

40

45


Fre

quency

Weekly change


0

20

40

60

80

100

120

140


Fre

quency

Weekly change


Frequency distributions – weekly returns since inception2 S&P 500 annual returns since 1899

-60 -40 -20 0 20 40 60

2013

15th best year since 1899

GI outperforms GI underperforms Appropriate characteristics

for investment backdrop

55

No change in the way the representative portfolio and the BNY Mellon Global Equity Income fund are managed

*RP= Representativ e portf olio Source: Newton. Newton Global Income Representativ e Portf olio and BNY Mellon Global Equity Income Fund, 31 December 2015

Commonality to remain high between both income RP* and BNY Mellon Global Equity

0

10

20

30

40

50

60

70

80

90

100

jun/11 sep/11 dec/11 mrt/12 jun/12 sep/12 dec/12 mrt/13 jun/13 sep/13 dec/13 mrt/14 jun/14 sep/14 dec/14 mrt/15 jun/15 sep/15 dec/15

Com

monalit

y b

etw

een

GI

and G

EI (%

)

Newton aim to keep turnover consistent and low

Annualised monthly turnover

Newton Global Income strategy 25%

BNY Mellon Global Equity Income Fund 28%

56

Dividends Globally diversified

• In 2015, 33% of the constituents in the FTSE World yielded

3% or greater – 800+ stocks

• 92% of the securities that yield 3% or greater are located

outside of the UK

• Asia Pacific ex-Japan and Emerging Market region continues

to increase in significance

Source: FactSet, Datastream, December 2015

Geographical split of the number of FTSE World Index

stocks yielding greater than 3% (2015)

20,9%

22,5%

6,9%

31,3%

13,0%

5,4%

North America Europe ex UK UK

Asia Pacific ex Japan Other Japan

57

Global diversification achievable

Global Income team

CFA® and Chartered Financial Analy st® are registered trademarks owned by CFA Institute

Nick Clay Ian Clark Terry Coles

Portfolio manager,

global equity team

Nick is the lead manager of the Newton Global Income Strategy and the BNY Mellon Global Equity Income Fund. He has been a member of the global equity

team since 2012. He is a member of a number of investment groups, including chairing the equity

income group

From 2000 to 2012 Nick was the lead manager on a variety of global multi-asset fund strategies

Prior to joining Newton in 2000, Nick acquired a range of experience as a UK equities manager at Morley

Fund Management and as an analyst at Sun Alliance. Nick is an associate member of the UK Society of Investment Professionals

14 years at Newton 24 years’ investment experience

Portfolio manager,

global equity team

Terry is a portfolio manager within the global equities team, and is responsible for the management of a number of global equity and global equity income

portfolios

Prior to joining Newton in 2010, Terry acquired a range

of experience as a global investment manager and analyst at F&C International and Morgan Stanley. He began his career as an offshore dealer at Fidelity

International. Terry is a CFA charterholder

5 years at Newton


Global research analyst,

global equity and real return team

Ian is part of the Newton global equity team specialising in the global income strategy. He is also a member of the real return team with responsibility for

generating investment ideas, monitoring and maintaining existing positions, as well as client

marketing

Prior to joining Newton, Ian worked for Ziff Brothers Investments covering industrial, building materials,

transport and commodity companies. Ian also spent two years at McKinsey as a consultant in the corporate

finance practice

3 years at Newton 10 years’ investment experience

58

Idea generation Global thematic framework

Source: Newton

Economics, geopolitics and demographics

Stephen Rowntree

Fati Naraghi

Robert Canepa-Anson

Douglas Reed

Paul Markham

Chair – Charles French

Informed debate and challenge

Strategists – Peter Hensman, Brendan Mulhern

Global Strategy Group

Finances and policy Innovation

Environment and infrastructure

Khuram Sharih

Terry Coles

Naomi Waistell

Tracey Grace

Matthew Brown

59

Global research Team overview

Notes: 1 Accounting and v aluation ov ersight 2 Combined Research/Inv estment Management roles

Source: Newton, December 2015 Fostering collaborative teamwork

Global research 18 Industry analysts

5 Credit analysts

4 Responsible investment 2 Strategy

Sandra Carlisle

RI Team Leader

Ian Burger

Victoria Barron

Freddie Woolfe

Khuram Sharih

Howard Cunningham2

Scott Freedman2

Martin Chambers

Parmeshwar Chadha2

Fati Naraghi

Roger Wilkinson Co Head of Research

Jonathan McMullan

Charles French Head of

Investment

Paul Schenk

Nick Pope

Peter Hensman

Brendan Mulhern

Stephen Rowntree

Emily Fletcher

Rosie Bichard

Tracey Grace

Maria Toneva

Duncan Bulgin Co Head of Research

Michal Plotkowiak

Tim Lucas

Robert Canepa- Anson

Christopher Smith

Jeremy Stuber1

Mathieu Poitrat Rachmaninoff

60

Investment team

Single location is key

• Fosters a global perspective

• Facilitates seamless communication

and the use of themes

• Enables swift idea generation and implementation

Well resourced investment team

• Deep sector knowledge feeds proprietary research

• Focused specialist and generalist investors

• Powerful combination of perspectives

Thematic

focus groups

Consumer (3)

Financials (3)

Cyclical sectors

(7)

Tech & Telco

(3)

Healthcare (2)

Responsible Investment

(4)

Credit (5)

Global Equity

(9)

Real Return

(7)

Fixed Income

(9)

Strategy (2)

Emerging & Asian Equity

(8)

Multi- Asset & UK (16)

Source: Newton, December 2015 Total Inv estment Personnel = 68

The abov e chart includes double counting as some inv estors are included in more than one team

61

A powerful combination Expertise in both global equity and income investing

Global equities at Newton

• £15.7bn in specialist global equity mandates

• 41 individual client portfolios managed across a range of

strategies (including Global Equity, Global Opportunities,

EAFE, Global ex UK and Global Income etc)

• £6.1bn of which is in the Global Income strategy

Source: Newton as of 31 December 2015 Note ef f ects of rounding and parentheses indicate strategy inception y ear

Equity Income investing at Newton

• 22% of firm assets, £10.2bn and 28 years’ experience

UK Income (1987) £1,8bn

Global Income

(2005) £6,1bn

Emerging Income

(2012) £0,1bn

Asian Income (2005) £2,2bn

Equity income is a core competency

62

Newton Global Equity Income composite Annual disclosure

• Newton Global Equity Income Composite contains fully discretionary portfolios which invest in global equities, but only if certain yield criteria are met. Securities delivering a 25% yield premium

to the FTSE W World index may be considered for investment

• New ton claims compliance w ith the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance w ith the GIPS standards New ton has been

independently verif ied for the periods 1996 to 2014, (PS Ashland (1996 to 2003), Pricew aterhouseCoopers LLP (2004 to 2010) and KPMG (2011 to 2014)). The verif ication reports are available

upon request. Verif ication assesses whether (1) the f irm has complied w ith all the composite construction requirements of the GIPS standards on a f irm-w ide basis and (2) the f irm’s policies and procedures are designed to calculate and present performance in compliance w ith the GIPS standards. Verif ication does not ensure the accuracy of any specif ic composite presentation

• New ton, the f irm, includes all the assets managed by New ton Investment Management Limited, New ton Capital Management Limited and New ton Capital Management LLC and are w holly ow ned

subsidiaries of The Bank of New York Mellon Corporation. The AUM for the f irm, w here quoted, may include assets managed by the f irm’s off icers as dual off icers or employees of the Bank of New

York Mellon

• New ton Investment Management Limited is authorised and regulated by the Financial Conduct Authority in the conduct of investment business. New ton Capital Management Limited is registered w ith the US Securities and Exchange Commission as an investment advisor under the Investment Adviser’s Act 1940.

• The Pound Sterling is the currency used to express performance. Further information regarding the exchange rates used is available upon request. Returns are presented gross of management

fees and include the reinvestment of all income. Actual returns w ill be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. The fee

schedule appropriate for this presentation starts at 0.75%, how ever, individual fees are negotiated on an account by account basis

• A list of composite descriptions and additional information regarding the f irm’s policies and procedures for valuing portfolios, calculating and preparing compliant presentations are available upon request

Composite created Q1 2006 n/a = the three-y ear ex-post risk statistics are not presented because the composite does not y et hav e 36 monthly returns as of this date. FTSE index range is calculated gross of withholding taxes

Year End

Total Firm Assets

(£ million)

Composite Assets Annual Performance (in £ terms) 3 Year Ex Post Risk Statistics

£ (millions)

% of Firm Assets

Number of Accounts

Gross Composite

FTSE W World

Composite Std Dev

Benchmark Std Dev

Information Ratio

2014 50,220 5,314 11% 7 9.3% 11.3% 8.6% 9.0% (0.6)

2013 51,301 5,588 11% 9 16.3% 22.4% 8.4% 10.7% 0.4

2012 49,364 4,322 9% 9 12.0% 11.8% 8.7% 12.6% 0.5

2011 45,364 2,556 6% Five or fewer 4.5% (5.8)% 13.2% 17.2% 0.4

2010 47,224 1,901 4% Five or fewer 13.8% 16.3% 20.0% 21.1% 0.1

2009 42,101 911 2% Five or fewer 18.3% 19.6% 19.8% 19.4% 0.7

2008 35,292 475 1% Five or fewer (13.8)% (18.2)% 17.6% 15.5% 1.4

2007 39,535 294 Less than 1% Five or fewer 20.3% 9.4% n/a n/a n/a

2006 35,610 118 Less than 1% Five or fewer 17.9% 6.5% n/a n/a n/a

63

Important information

64

PRE000176-Expires-5/24/2016

Past performance is not a guide to future performance. The value of investments can

both fall and rise. Investors may not get back the amount invested. Income from

investments may vary and is not guaranteed. 'For Professional Clients and, in

Switzerland, for Qualified Investors only.

This is a financial promotion and is not investment advice. For a full list of risks applicable to this fund, please refer to the Prospectus. Investors should read the

Prospectus and KIID for each fund in which they want to invest. Go to

www.bnymellonim.com.

In Germany, this is for marketing purposes only.

Investments should not be regarded as short-term and should normally be held for at least f ive years.

Portfolio holdings are subject to change, for information only and are not investment

recommendations.

BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and its

subsidiaries.

Unless otherw ise noted, all references to total assets under management (AUM) (w hich are

approximate), are provided by The Bank of New York Mellon Corporation and are as of

31/12/2015.

AUM for The Boston Company Asset Management, EACM Advisors, Mellon Capital

Management Corporation and Standish Mellon Asset Management Company LLC includes assets managed by those individual f irms’ off icers as associated persons, dual off icers or

employees of The Dreyfus Corporation. In addition, AUM / OUM for the follow ing f irms may

include assets managed by them as non-discretionary investment manager for, or by the

individual f irms’ off icers as dual off icers or employees of, The Bank of New York Mellon: The

Boston Company Asset Management, LLC, The Dreyfus Corporation and its BNY Mellon Cash Investment Strategies division, Mellon Capital Management Corporation, New ton Capital

Management Limited (part of The New ton Group), Standsh Mellon Asset Management

Company LLC, and CenterSquare Investment Management, Inc. AUM includes BNY Mellon

Wealth Management and external data.

AUM outlined for New ton represents the aggregate AUM of the follow ing aff iliated companies: New ton Investment Management Limited and New ton Capital Management Limited. Insight

investment's assets under management are represented by the value of cash securities and

other economic exposure managed for clients.

All rankings based on w orldwide assets under management for The Bank of New York Mellon

Corporation as at 31 December 2015, unless otherw ise stated.

The Bank of New York Mellon Corporation holds 90% of The Boston Company Asset

Management, LLC and a 20% minority interest in Siguler Guff & Company LLC and certain

related entities. BNY Mellon Cash Investment Strategies is a division of The Dreyfus

Corporation. BNY Mellon Investment Management EMEA Limited, BNY MGM and any other

BNY Mellon entity mentioned are all ultimately ow ned by The Bank of New York Mellon

Corporation. The Fund is a sub-fund of BNY Mellon Global Funds, plc, an open-ended investment company w ith variable capital (ICVC), w ith segregated liability betw een sub-funds.

Incorporated w ith limited liability under the law s of Ireland and authorised by the Central Bank

of Ireland as a UCITS Fund. The Management Company is BNY Mellon Global Management

Limited (BNY MGM), approved and regulated by the Central Bank of Ireland. Registered

address: 33 Sir John Rogerson’s Quay, Dublin 2, Ireland.

In France, the Fund received an authorisation for marketing from the AMF. Before subscribing,

please read the most recent Prospectus and latest f inancial reports. The KIID, Prospectus,

articles and latest annual report related to [the Fund/s] are freely available upon request to BNP

Paribas Securities Services, the centralising agent of [this Fund/these Funds] in France: BNP

Paribas Securities Services, 3 rue d'Antin, 75002 Paris, tél: 00 33 1 42 98 10 00.

In Austria, the current Prospectus and the Key Investor Information Document are available

free of charge from Raiffeisen Zentralbank Österreich Aktiengesellschaft, Am Stadtpark 9, A-

1030 Vienna.

In Italy, before subscribing you should read the Prospectus and the Key Investor Information

Documents. Both of these documents are available on our w ebsite www.bnymellonim.com.

In Switzerland, The Company is established as an open-ended umbrella type investment

company under Irish law and the Sub-Funds are authorised by FINMA for distribution to non-

qualif ied investors in or from Sw itzerland. The Sw iss representative is Carnegie Fund Services

S.A., 11, rue du Général-Dufour, 1204 Geneva. The Sw iss paying agent is Banque Cantonale

de Genève, 17, quai de l'Ile, 1204 Geneva. Investors in Sw itzerland can obtain the documents of the Company, such as the Prospectus, the KIIDs, the Memorandum and Articles of

Association, the semi-annual and annual reports, each in their latest version as approved by

FINMA, in German, and further information free of charge from the Sw iss representative.

In Germany, the prospectus is available from BNY Mellon Investment Management EMEA

Limited, German branch, MesseTurm Friedrich-Ebert-Anlage 49, 60308 Frankfurt am Main, Germany.

In Spain, BNY MGF is registered w ith the CNMV, Registration No. 267.

Issued in UK and Europe (excluding Switzerland) by BNYMIM EMEA, BNY Mellon Centre,

160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised

and regulated by the Financial Conduct Authority. Issued in Sw itzerland by BNY Mellon Investments Sw itzerland GmbH, Talacker 29, CH-8001 Zürich, Sw itzerland. Authorised and

regulated by the FINMA.