8th September 2011

BNY Mellon Investment Fund range

This is to inform you of some planned changes to the Newton UK equity funds offered within the BNY Mellon Investment Fund range. Following a review we plan to simplify and clarify our UK range and once complete, our future offering will consist of the following:

• Newton UK Equity Fund: A UK equity fund that can invest in companies of all sizes and in any industry with a view to providing long-term capital growth and some income.
• Newton Higher Income Fund: A UK equity income fund, that invests in companies that pay dividends that are higher than that of the average in the UK equity market, with a view to providing income and some long-term capital growth.
• Newton UK Opportunities Fund: A UK equity fund that follows a concentrated approach, typically investing in less than 60 company shares with a view to providing long-term capital growth.

To achieve this and subject to shareholder and regulatory approvals, we intend to make the following changes:

• Newton Income Fund - to be renamed the Newton UK Equity Fund.
• Newton Growth Fund - to be merged into the renamed Newton Income Fund (Newton UK Equity Fund).
• Newton UK Equity Fund (predominantly marketed to pension schemes) - to be merged into the renamed Newton Income Fund (Newton UK Equity Fund).

As we progress through these changes, we expect the manager of the three portfolios to invest the funds in a similar way. Please note that if your clients are invested in the Newton Growth Fund or the current Newton UK Equity Fund, we will continue to accept investments into the funds from existing investors throughout this process. However, we intend to soft close both of these funds to new investors with effect from 1st October 2011. The Newton Income Fund will be available for investment from both existing and new investors throughout the duration of the planned merger process and we do not anticipate making any changes to this Fund’s objective.

As part of further changes to our UK equity fund range, we have also decided to make a change to the Newton Higher Income Fund. Following a review, we do not believe that the current level of income is sustainable in the challenging economic environment and have therefore decided to lower the regular dividend payment of the Fund. However, notwithstanding the reduction in the dividend payments, we will continue to seek to provide a high income. Our objective will be to align the level of distributions with the highest dividend paying UK equity income funds such that the Fund will be ranked in the top 10% of its peer group sector (the Investment Management Association UK Equity Income sector), as measured by the average yield*.

*Fund yield figures are calculated on the basis of dividing the last 12 months dividends by the current price. Current yields are not indicative of future yields.

This is not a decision we take lightly, however, as a result of the lower dividend, the Fund will have access to a wider range of high quality companies which will not only pay dividends that are higher than that of the average in the UK equity market, but also provide greater potential for capital growth.

Below we provide the dividends per £100 invested paid out for the 12-month period ending 30 June 2011 (Table 1) and compare them with our current estimated range of dividends per £100 invested which you may see during the next 12-month period ending 30 June 2012 (Table 2).

Table 1

Table 2

Please note that the estimated dividend figures in Table 2 are not guaranteed. These are only estimates, based on current market prices and our expectations of future dividends paid by the companies in which we invest. It is important to note that despite these changes the Fund’s objective will continue to be to increase its distributions on a calendar-year basis and to deliver long-term capital growth.

You do not need to take any action as a result of this email. We will write to you in the next few months with additional details about the proposed changes. In the meantime should you have any questions on the information found in this letter, please do not hesitate to contact the Business Development Team on 0500 66 00 00. In addition, if you need any further information on our fund range, this can be found at www.bnymellonam.co.uk or from our Business Development Team on brokersupport@bnymellon.com.

Yours sincerely,

Paul Feeney
Executive Director, Head of Distribution BNY Mellon Asset Management International

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