Newton European Higher Income Fund Aaron Barnfather Director of Investment Management (European Equities)

1 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Newton’s income process captures market dynamics Dividend yield Real dividend growth Valuation change Newton’s focus on yield ensures that every stock in the portfolio yields more than its market index Newton specifically targets yield stocks with above average dividend growth – aided by Newton’s renowned thematic approach to investment Newton’s Buy Discipline focuses the manager on the value to be found in the market Newton’s Sell Discipline locks in profits, forcing capital to be recycled into areas with greater potential upside

2 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew FTSE AW Asia Pacific ex Japan IMA Asia Pacific ex Japan Newton Asian Income** Three of a kind: Newton’s discipline delivers Fund size as at 31 December 2006 £117.18m Fund size as at 31 December 2006 £117.18m Fund size as at 31 December 2006 £3,428.79m Fund size as at 31 December 2006 £96.33m Newton Higher Income Fund 5 years* FTSE All Share IMA UK Equity Income Newton Higher Income Newton Asian Income Fund 1 year*Newton Global Higher Income Fund 1 year* FTSE World IMA Global Growth Newton Global Higher Income** Source: *Lipper as at 29 Dec 2006; Total return, including annual but excluding initial charges, income reinvested net of tax, GBP **Inception date: 30 Nov 2005; Past performance is not indicative of future performance

3 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Introducing Newton European Higher Income Strategy Profile An unconstrained, Europe ex UK equity fund focused on high yield stocks Actively managed using Newton’s global thematic approach Aims to achieve increasing annual distributions with long-term capital growth Employs Newton’s proven approach to income investing using strict buy and sell criteria Investment policy Buy discipline: –All new holdings must have a prospective yield 15% greater than the yield of its domestic market index Sell discipline: –Any holding whose prospective yield falls below the yield of its domestic market index will be sold Fund must yield at least 15% more than the yield of the FTSE W Europe ex UK Index Benchmark FTSE W Europe ex UK Index (£) Estimated yield: 4.0% – 4.4%* Income distributed quarterly in February, May, August and November *Estimated at launch calculated gross of tax and charges

4 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Refining the stock universe – Newton European Higher Income Fund Convergence of global thematic and yield disciplines creates focused stock selection Our global thematic research process defines those stocks that have strong fundamentals, attractive valuations and are supported by positive trends Newton's income process refines the universe further: –New stocks must have a prospective yield 15% higher than the yield of their domestic market index –Stocks are automatically sold when they reach a market yield –The Fund must yield a minimum of 15% more than the FTSE W Europe ex UK Index This drives a sentiment contrarian approach Forces significant stock voids Narrows the index from 378 to 140 stocks In the wider universe, there are around 400 stocks that yield more than the index

5 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Newton’s disciplined income process outperforms in Europe Outperformance would be enhanced by: –A higher level of income from this portfolio –Stock picking Source: FTSE Group, Dec 2006 Chart shows the relative performance of the basket of stocks that yield 15% more than their local market index rebalanced quarterly Results are simulated and do not represent actual trading/returns Newton's European high yield universe vs FTSE Europe ex UK index (capital returns)

6 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Newton European Higher Income Fund Source: Newton, as at 12/02/07 Portfolio holdings are subject to change at any time without notice and should not be construed as investment recommendations Stock selection and yield discipline drive regional allocation

7 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew European Higher Income Model Portfolio Source: Dresdner Kleinwort, UBS, Newton, as at 02/01/07, Euros

8 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Appendix

9 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew 2001 to dateNewton Investment Management Limited – Director of Investment Management (European Equities) 1996 – 2001Royal Sun Alliance Investment Management – Associate Director (European Equities) 1996 – 2001– Fund Manager (European Equities) 1994 – 1996Global Equity and Bond Analysis Responsibilities Investment Manager; Pan European Equities Qualifications BA, MSc Member of the United Kingdom Society of Investment Professionals (UKSIP) 5 years at Newton 12 years’ investment experience Aaron Barnfather Fund Management Team 2002 to dateNewton Investment Management Limited – Director of Investment Management (European Equities) 1997 – 2001Credit Suisse Asset Management 2000 – 2001Director, European Equities, Senior Portfolio Manager 1998 – 1999Associate Director, European Equities 1997 – 1998Portfolio Manager, European Equities 1994 – 1996Royal Insurance Management – Portfolio Manager 1991 – 1994Provident Mutual – Investment Analyst 1990 – 1991Midland Montague – Graduate Trainee Responsibilities Investment Leader; European Equities Qualifications BA, Member of the United Kingdom Society of Investment Professionals (UKSIP) 4 years at Newton 15 years’ investment experience Raj Shant

10 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Stock example – Blue Chip Europe – Unicredito Strong fundamentals  Under penetrated retail credit in Italy  Leader in derivatives for corporates  Acquired Hypoverinsbank in Germany  The German property market is starting to improve  Consolidated its lead in Eastern European banking Recommended since July 03  Price on recommendation was €4.23*  Current price is €6.66**  Recommendation remains a Buy Attractive valuation  '08 P/E 10.5x  '07 Yield 4.2% Source: Company data, Newton, *As at 3 Jul **As at 14 Dec 2006 The information within is provided for information purposes only and should not be construed as a recommendation to purchase or sell any security Portfolio holdings are subject to change at any time without notice and should not be construed as investment recommendation Newton's Financial Analysts' recommended list of stocks Allianz: Buy Axa: Buy Deutsche Boerse: Buy Deutsche Wohnen: Buy EFG Eurobank: Buy Generali: Buy KBC: Buy MLP: Buy Sarsin: Buy Societe Generale: Buy Unicredito: Buy ZFS: Buy

11 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Stock example – Mid Cap Emerging Europe – Telefonica 0 2 Czech Republic Strong fundamentals  The dominant telecom player in the Czech Republic  Expanding mobile usage and broadband penetration  Substantial cost reduction programme  Strong management team  No debt – offering the opportunity for growth and capital returns  Expanding into Slovenia Attractive valuation  EV/EBITDA '07 5.2x  Free cash flow yield 12.4%  Dividend yield 9.5% Source: Company data, Newton, *As at 3 Jul **As at 14 Dec 2006 The information within is provided for information purposes only and should not be construed as a recommendation to purchase or sell any security Portfolio holdings are subject to change at any time without notice and should not be construed as investment recommendation

12 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Outlook for European equities Economy European growth has proven to be more robust than expected BRIC countries are driving the global capex cycle, playing to Europe’s industrial strength German corporate tax cuts in 2008 will be supportive Global capex and inflation outlook is the key but low rates mean liquidity remains high Market M&A activity will continue to be a major feature By mid-07 rising interest rates and slowing growth may start to exert a more negative influence Euro likely to strengthen over medium term Yield will play a key part in returns

13 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Summary Europe offers a diversified pool of high yielding and growing investment opportunities Demand for yield is increasing in Europe European companies are developing a dividend culture Yield will be an important part of overall return Newton’s successful disciplined approach to managing income funds will capture these market dynamics in Europe

14 J:\MGI Pres\01. Pres\2007 (Pres)\02. Feb 07\Northern Markets Forum - Chloe Cardew Important information FOR PROFESSIONAL INVESTORS ONLY 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. The value of overseas securities will be influenced by the rate of exchange which is used to convert these to sterling. This presentation 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. The information contained in the document should not be construed as a recommendation to buy or sell a security. If the portfolio invests in sub-investment grade bonds that typically have a low credit rating these carry a high degree of default risk, which can affect the capital value of your investment. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading/returns. No representation is being made that any fund will or is likely to achieve profits or losses similar to those shown. Newton Asian Income Fund, Newton Global Higher Income Fund, Newton European Higher Income Fund and Newton Higher Income Fund are sub-funds within the Mellon Investment Funds ICVC (an investment Company with Variable Capital), for which Newton Investment Management Limited is the authorised investment adviser. Mellon Fund Managers Limited is the Authorised Corporate Director. Companies in the Asian Income Fund, Newton Global Higher Income Fund and Newton European Higher Income Fund’s portfolios may generate profits and pay dividends in foreign currencies and the funds will therefore be exposed to changes in currency rates. All funds mentioned may deduct charges from capital, which may affect their growth. All of the above funds are subject to a concentration risk which can occur when a fund is invested in a limited number of securities. Newton Asian Income Fund, Newton Global Higher Income Fund and Newton European Higher Income Fund can invest in emerging markets and it should be noted that these markets have additional risks associated with local custody and registration practices that may be less developed than mature markets. A copy of the full prospectus and Simplified Prospectus can be obtained by calling This presentation is issued and approved in the UK by Mellon Global Investments Limited. Mellon Global Investments Limited, Mellon Financial Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No Newton Investment Management Limited, Mellon Fund Managers Limited and Mellon Global Investments Limited are authorised and regulated by the Financial Services Authority and are ultimately owned by Mellon Financial Corporation. A Mellon Financial Company SM