Short term - Attractive returns,The right choice for corporatebondsCORP_1Prepared for professional clients onlyAlexis Rena...
AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short...
Investment Management Investment Services● $1.4 trillion in assets under management1● 7th largest global asset manager2● 7...
BNY Mellon Investment Management• Total AUM US$1.4 trillion1• Institutional grade investment management, innovation and ma...
BNY Mellon Investment ManagementOur world class specialist asset managersGlobal sub-investment gradedebt asset managementU...
AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short...
The Short Duration Credit OpportunityShort duration credit (SDC) is an attractive, risk‐adjusted investment opportunity;• ...
Cumulative default rates over time*Defaults inyears 5-8: 7.46%Defaults inyears 1-4: 15.13%High Yield1015202530Cumulativede...
Yearly Performance Short Duration Credit:the attraction of a blended approach2000 3.75 3.91 4.23 4.54 -15.87 - 6.28 - 6.22...
Yearly Performance Short Duration Credit:the attraction of a blended approach2 Years 10 Years 2 Years 10 Years2000 3.75 3....
Duration effectIndexedPrice development80.082.585.087.590.092.595.097.5100.0102.5105.0107.5110.0Jun-11Jul-11Aug-11Sep-11Oc...
Risk and return in selected periods(as of 31/05/2013)Performance and risk of alternative portfolios structures (in %)Portf...
0.60 0.610.640.690.720.800.940.59 0.590.650.720.77 0.770.901.13Highest Sharpe Ratios by combining High Yield and Investmen...
5.454.666.67Short duration credit stands out in today’s low rate environmentYield*Modified Duration*2.761.730.911.423.65BN...
Breakeven AnalysisECSD and EHY vs Short term German Government BondsWith a modified duration of 1.42 ECSD willoutperform s...
AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short...
BNY Mellon Compass Fund Euro Credit Short Duration FundFirmMeriten Investment Management is a wholly owned subsidiary of B...
Assets under Management in “Euro Credit Short Duration”Successful in challenging markets6007008009001000millions €Total Au...
100105110115120125EuroCredit Short Duration-Fund* EuroHigh Yield-Market** EuroEquity-Market***BNY Mellon Compass Fund Euro...
9.16%3.06%8.03%5.49%Performance BNY Mellon Compass Fund Euro Credit Short Duration Fund(gross of fees, RF-B share class)Ca...
Performance analysisBNY Mellon Compass Fund Euro Credit Short Duration Fund (30/12/2012 - 31/05/2013)Sector/Segment Weight...
Low volatilityEx-ante volatility of the BNY Mellon Compass Fund Euro Credit Short Duration Fund(share class RF-B) since in...
AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short...
Investment Management TeamAlexis RenaultCorporate CreditHenning LenzHeike ChristianGunther WestenAsset Allocation/Fund Man...
BNY Mellon Compass Fund Euro High Yield Bond Fund6 Months YTD 1 Year3 Years(p.a.)5 Years(p.a.)10 Years(p.a.)sinceinception...
BNY Mellon Compass Fund Euro Corporate Bond Fund6Months YTD 1 Year3 Years(p.a.)5 Years(p.a.)10 Years(p.a.)sinceinception(p...
AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short...
Investment philosophyInvestment philosophy and approach address the asymmetric risk/return profile of short duration corpo...
Investment Process• Qualitative analysis• Model/scenario analysis•• Systematic monitoringof issuer risks& portfolio risks•...
Credit analysisA financial model of the company* (1)Peugeot (Manufacturing & Sales Companies) Name of the company :GAAP An...
Credit analysisA financial model of the company* (2)Liquidity at year end 2004 2005 2006 2007 2008 2009-H1 2009-H2 2009 20...
Portfolio constructionCredit risks are managed at two levels Basis for decision• Allocation between high yield and investm...
Portfolio constructionQuantitative tool supports allocation and beta managementSignals and OAS: Current signal NEGATIVEEU ...
Active allocation between both segments depending on theeconomic cycle60%70%80%90%100%weightAllocation between HY and IG s...
Risk managementSingle issue level Portfolio level• Continuous review of whether information on thecompany and its environm...
AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short...
BNY Mellon Compass Fund Euro Credit Short Duration FundFund StrategyCurrent allocation at 80% HY / 20 % IGThorough monitor...
Portfolio structure (1)BNY Mellon Compass Fund Euro Credit Short Duration FundSector structure (*1)Rating structure (*1)Yi...
Portfolio structure (2)BNY Mellon Compass Fund Euro Credit Short Duration FundMaturity structure21.0%16.4%12.3%12.0%8.2%4....
Portfolio structure (3)BNY Mellon Compass Fund Euro Credit Short Duration FundTop ten holdings (*1)PHOENIX PHARMA 4.5%PEUG...
AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short...
SummaryAttractive risk/return profileAttractive risk/return profileLow Interest rate and spread duration riskLow Interest ...
Appendix
Credit Outlook: Key topicsOpportunitiesLow expected defaultLow corporate leverageLoose lending standardsLow market volatil...
304050607080Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13Economic SentimentImprovement sinc...
-150-100-50050100Feb 06 Feb 07 Feb 08 Feb 09 Feb 10 Feb 11 Feb 12 Feb 13Citigroup Economic Surprise IndexReduction in USA,...
Percentage of issuers• Default rates per end of April 2013 globally 2.6% (USA: 3.1%, Europe: 2.0%)• Peak of default rate c...
„Fiscal Cliffs“ also in EuropeBudget Balances, in % GDP (2012-14: prognosis EU Commission)-15-10-50Greece Ireland Portugal...
4505005506006507005Y CDS Italy 5Y CDS ISPIM4805305806306805Y CDS Spain 5Y CDS Banco SantanderRisk premiums of corporate bo...
7008009001,0001,1005Y CDS Spain ONO 12/20184505005506006507005Y CDS Spain Telefonica 09/2017Risk premiums of corporate bon...
Expansionary monetary policy supports risky asset classesPolicy rates of major central banks, %50150250350450550January 20...
European HY bond fund flowsFund flow data shows recent inflows in high yield51This information is provided for illustrativ...
Profit and leverage ratios of companiesCorporate Profits at a high levelCorporate profits & wage share, in % of GVA*Low le...
Percentage of Commercial and Industrial Lenders Tightening• Recently easing of lending standards• So far no indication of ...
The Corporate Credit CycleUS ahead of Europe54This information is provided for illustrative purposes only and should not b...
1,5002,0002,500152025Percent Base pointsUSAEurope(rhs)Default rates (lhs)Default rates and spreadsGlobal default rates in ...
Development of short-duration corporate bond spreads100015002000250030003500US HY 1 - 3 Years* Euro HY1 Month - 3.5 Years*...
Conclusion• The credit quality of companies has improved significantly over the last three years and is at a solid level.•...
Corporate CreditCorporate Credit – Investment GradeMatthias Lackmann, CFA*• Responsibilty/ sectors covered:Telecommunicati...
Corporate CreditCorporate Credit – High YieldAlexis Renault, CFA*Head of High Yield TeamResponsibilty/ sectors covered:Hig...
AppendixMeriten Investment Management GmbH – Composite Performance (1)Glossary / GIPS® Compliance Verification Statement*D...
AppendixMeriten Investment Management GmbH – Composite Performance (2)Relevant Composites*CompositeBenchmarkPerformance Ty...
AppendixMeriten Investment Management GmbH – Composite Performance (3)Relevant Composites*CompositeBenchmarkPerformance Ty...
AppendixMeriten Investment Management GmbH – Composite Performance (4)Relevant Composites*CompositeBenchmarkPerformance Ty...
Important informationThis document has been prepared by Meriten Investment Management GmbH, which isregulated by the Bunde...
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Bny euro credit short duration june 2013_final

  1. 1. Short term - Attractive returns,The right choice for corporatebondsCORP_1Prepared for professional clients onlyAlexis Renault, CFAExecutive Director, Head of High Yield20.6.-21.6.2013Any views and opinions expressed within are those of the investment adviser.CFA© and Chartered Financial Analyst© are registered trademarks owned by CFA Institute.
  2. 2. AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short Duration FundTeam & Track RecordInvestment Philosophy & ProcessStrategy & Portfolio StructureSummary1
  3. 3. Investment Management Investment Services● $1.4 trillion in assets under management1● 7th largest global asset manager2● 7th largest U.S. asset manager2● 8th largest asset manager active in the European marketplace2● Service $179 billion in private client assets● Top 3 private bank in the US3● Top 10 US wealth manager4● One of the largest providers of securities services with $26.2 trillion of assetsunder custody and/or administration● The world’s largest custodian5● Service $2 trillion in global collateral, including tri-party repo collateralworldwide● #1 service provider for ETFs6● A leading lender of US Treasury securities● A leading offshore fund administrator● Leading provider of US Government Securities clearance services7● #1 Trustee for US Debt Capital Markets8● Market leader in depositary receipts with 1,398 sponsored programs withleading companies from 68 countriesStrong Market Positions in our BusinessesCORP_2● Pershing, LLC is a leading provider of clearing and financial advisory solutionsto IBDs and RIAs● #1 U.S. clearing firm, ranked by broker-dealer clients (Pershing, LLC)9● Manage one of the ten largest US bank derivatives portfolios10● A leading provider of foreign exchange services11● Process 170,000 global payments totaling an average of $1.5 trillion daily● Fifth largest participant in CHIPS funds transfer in the US12● Sixth largest SWIFT participant worldwide13● One of the world’s largest providers of performance & analyticsAll company statistics are as at 31 March 2013 unless otherwise noted.1. Assets under management include investment boutiques and wealth management.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 managerrankings by Pensions & Investments, October 2012; US asset manager rankings by Institutional Investor,July 2012; European asset manager rankings by Investment & Pensions Europe, June 2012.3. Barron’s Top Private Banks Thriving in the Tumult, December 3, 20114 . Barron’s Top Wealth Management Firms, September 15, 20125. Institutional Investor, World’s Largest Global Custodians, October 2012, data as of June 20126. 2012 Mutual Fund Service Guide7. Federal Reserve Bank of New York - Fedwire Securities High Volume Customer Report, September 30, 20128. Thomson Reuters, US Capital Markets Review, first nine months, 20129. Investment News, July 201210. OCC Quarterly Report on Bank Trading and Derivatives Activities, second quarter, 201211. Global Finance World’s Best Foreign Exchange Providers, January 2013 and Global Investor/isf FX Survey, February 201212. The Clearinghouse and Federal Reserve Board, September 201213. SWIFT, January 20122
  4. 4. BNY Mellon Investment Management• Total AUM US$1.4 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 solely on investment management• A great breadth and depth of expertise in every major asset class and sectorCORP_41 As at 31 March 2013− More than 275 institutional investment management product offerings3A multi-boutique investment management model encompassinginvestment skills of world class specialist investment managers
  5. 5. BNY Mellon Investment ManagementOur world class specialist asset managersGlobal sub-investment gradedebt asset managementUS$18.0bn1Brazilian multi-strategy, long/short,long-only and fixed income strategiesUS$7.7bnMoney market fundsUS$225.7bnGreater China capitalmarket specialistUS$155mnActive fundamental equity manager;core, growth & value styles; U.S., globaland world ex-domestic marketUS$43.6bnFund of hedge funds; non-proprietarymanager of managersAsian equitiesmanagementLeader in liability driven investment, fixedincome, currency risk management, multi-asset, absolute return style and specialistequity solutionsGlobal multi-asset solutions andstrategies ranging from indexing toalternativesEuropean fixedincome and equitiesCORP_523461 AUM for The Alcentra Group, 2 A division of The Dreyfus Corporation, 3 Minority Owned, 4 In North America and Australasia the Insight Investment Group operates under the Insight Pareto brand.5 Assets under management figure represents the combined assets under management of Insight Investment Management (Global) Limited and Pareto Investment Management Limited, whichbecame part of the Insight group on 1 January 2013. Data as at 31 March 2013. Assets under management are represented by the value of cash securities and other economic exposure managedfor clients. 6 Meriten Investment Management GmbH (formerly WestLB Mellon Asset Management) is wholly owned by The Bank of New York Mellon Corporation following the buyout of theremaining 50% of the 50:50 joint venture with Portigon (formerly WestLB AG) in October 2012. 7 AUM for The Newton Group, *Provisional AUM has been provided by each asset manager as at 31March 2013. Total AUM, provided by the Bank of the New York Mellon Corporation, includes the asset managers outlined in this presentation as well as BNY Mellon Wealth Management andexternal data.4Total AUM US$1.4 trillionmanager of managersUS$5.0bnmanagementUS$1.2bn*equity solutionsUS$387.2bn5alternativesUS$303.9bnincome and equitiesUS$25.7bnActive equity and bond, multi-asset,real-return and income solutions in aglobal thematic frameworkUS$84.6bn7Multi-strategy private equity investing;direct investment and fund-of-fundsUS$10.4bnAward-winning global, emergingmarkets and regional fixed incomesolutions specialistUS$167.0bnU.S. & Global real estate investmentmanagementUS$7.8bnGlobal equityinvestment managementUS$63.4bn3
  6. 6. AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short Duration FundTeam & Track RecordInvestment Philosophy & ProcessStrategy & Portfolio StructureSummary5
  7. 7. The Short Duration Credit OpportunityShort duration credit (SDC) is an attractive, risk‐adjusted investment opportunity;• Lower volatility of SDC is a direct result of reduced sensitivity to both:− A rise in the general level of interest rates− An increase in credit spreads• A blended approach further enhances this efficiency• A blended approach further enhances this efficiency• Appropriate for moderate to lower risk appetites• SDC yields and prospective returns are attractive versus treasuries• SDC has shorter duration than the high yield and investment grade marketswithout material yield compromise6
  8. 8. Cumulative default rates over time*Defaults inyears 5-8: 7.46%Defaults inyears 1-4: 15.13%High Yield1015202530Cumulativedefaultrate(in%)*Source: S&P, based on global default rates from 1981 – 2010. Data for general market not for the fund.● The increase in defaults over the first 4 years was the highest● After several years, annual default rates decreased (i.e. annual defaultrates should be lower for bonds with a shorter residual time to maturity)years 1-4: 15.13%Investment Grade050 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15CumulativedefaultrateTime horizon (in years)7
  9. 9. Yearly Performance Short Duration Credit:the attraction of a blended approach2000 3.75 3.91 4.23 4.54 -15.87 - 6.28 - 6.22 4.982001 14.76 13.58 11.22 8.89 -13.94 6.53 - 16.67 5.442002 5.13 5.28 5.54 5.76 -5.12 0.71 - 2.89 6.032003 17.87 16.18 12.85 9.61 26.4 28.10 - 20.29 4.90US HY***Euro HY1M-3,5Y***US HY1-3Y***Euro IG Non-Financial 1-3Y**Credit Short Duration*80% H Y/ 20% IG 70% H Y/ 30% IG 50% H Y/ 50% IG 30% H Y/ 70% IGEuro HY***As at 31 December 2012 .* Combination of BofAML High Yield US Corporates Cash Pay 1-3 Y (hedged into Euro) and iBoxx € Corporate Non-Financial 1-3 Y; ** iBoxx € Corporate Non-Financial 1-3Y; ***BofAML Euro High YieldNon-Financials BB1-B3 1 mo-3.5 Y; comparative index history of the Compass Fund Euro High Yield Bond Fund (currently: BofAML Euro High Yield Fixed Floating Rate Constrained Bond ex Financials); BofAML High Yield USCorporates Cash Pay 1-3 Y (hedged into Euro); BofAML US High Yield Cash Pay (hedged into Euro). Source: Bloomberg, DB Index Quant, Meriten Investment Management. Past performance is not a guide to futureperformance.2004 8.62 8.07 6.97 5.87 14.73 11.40 - 9.05 4.252005 1.39 1.49 1.70 1.90 6.8 1.63 - 2.37 2.212006 6.94 6.33 5.13 3.93 8.9 9.06 - 10.74 2.172007 1.91 2.09 2.45 2.81 -2.09 0.77 - 2.96 3.342008 -12.06 - 9.99 - 5.84 - 1.71 -33.68 -27.85 -15.44 -14.71 6.182009 37.73 34.05 26.90 20.04 73.08 56.35 31.83 45.57 9.122010 11.03 10.05 8.09 6.15 14.51 14.42 7.75 13.43 2.652011 3.81 3.68 3.41 3.13 -1.26 4.46 3.76 4.07 2.702012 9.21 8.64 7.49 6.36 23.19 14.88 14.82 10.36 4.69Positive returns in all years bar 20088
  10. 10. Yearly Performance Short Duration Credit:the attraction of a blended approach2 Years 10 Years 2 Years 10 Years2000 3.75 3.91 4.23 4.54 0.25% -0.52% -1.07% N/A2001 14.76 13.58 11.22 8.89 -0.88% 0.08% -2.11% -0.07%2002 5.13 5.28 5.54 5.76 -0.90% -0.73% -1.47% -1.21%2003 17.87 16.18 12.85 9.61 -0.14% 0.05% 0.24% 0.44%2004 8.62 8.07 6.97 5.87 -0.13% -0.64% 1.19% -0.05%US TreasuriesYield Change**Credit Short Duration*German Bunds80% H Y/ 20% IG 70% H Y/ 30% IG 50% H Y/ 50% IG 30% H Y/ 70% IGAs at December 2012.*Combination of BofAML High Yield US Corporates Cash Pay 1-3 Y (hedged into Euro) and iBoxx € Corporate Non-Financial 1-3 Y; **Yield changes Germany based on Rex Bond Sub Index Current 2 Yand Rex Bond Sub Index Current 10 Y, Yield Changes USA based on BofAML US Treasury Current 2 Y and BofAML US Treasury Current 10 Y. Source: Bloomberg, DB Index Quant, Meriten Investment Management. Pastperformance is not a guide to future performance.2004 8.62 8.07 6.97 5.87 -0.13% -0.64% 1.19% -0.05%2005 1.39 1.49 1.70 1.90 0.38% -0.38% 1.38% 0.18%2006 6.94 6.33 5.13 3.93 1.00% 0.63% 0.42% 0.31%2007 1.91 2.09 2.45 2.81 0.22% 0.46% -1.75% -0.67%2008 -12.06 - 9.99 - 5.84 - 1.71 -1.91% -1.10% -2.31% -1.79%2009 37.73 34.05 26.90 20.04 -0.97% -0.01% 0.38% 1.59%2010 11.03 10.05 8.09 6.15 -0.27% -0.20% -0.57% -0.53%2011 3.81 3.68 3.41 3.13 -0.64% -1.10% -0.36% -1.43%2012 9.21 8.64 7.49 6.36 -0.23% -0.55% 0.01% -0.14%Strong performance in a rising yield environment9
  11. 11. Duration effectIndexedPrice development80.082.585.087.590.092.595.097.5100.0102.5105.0107.5110.0Jun-11Jul-11Aug-11Sep-11Oct-11Nov-11Dec-11Jan-12Feb-12Mar-12Apr-12May-12Jun-12Jul-12Aug-12Sep-12Oct-12Nov-12Dec-12Indexed price development Lafarge 02/13 vs 03/20*LGFP 5.448 12/04/2013 CorpLGFP 4.75 03/23/2020 Corp75.077.580.082.585.087.590.092.595.097.5100.0102.5105.0Jul-11Aug-11Sep-11Oct-11Nov-11Dec-11Jan-12Feb-12Mar-12Apr-12May-12Jun-12Jul-12Aug-12Sep-12Oct-12Nov-12Dec-12Indexed price development FIAT 02/13 vs 07/18**FIAT 6.625 02/15/2013 CorpFIAT 7.375 07/09/2018 Corp10020030040050060070080090010001100Jul-11Aug-11Sep-11Oct-11Nov-11Dec-11Jan-12Feb-12Mar-12Apr-12May-12Jun-12Jul-12Aug-12Sep-12Oct-12Nov-12Dec-12Spread development FIAT 02/13 vs 07/18**FIAT 6.625 02/15/2013 CorpFIAT 7.375 07/09/2018 Corp100200300400500600700800Jun-11Jul-11Aug-11Sep-11Oct-11Nov-11Dec-11Jan-12Feb-12Mar-12Apr-12May-12Jun-12Jul-12Aug-12Sep-12Oct-12Nov-12Dec-12Spread development Lafarge 02/13 vs 03/20*LGFP 5.448 12/04/2013 CorpLGFP 4.75 03/23/2020 Corp* Source: Bloomberg. As at December 2012. Notice: Past performance is not a guide to future performance. This information is provided for illustrative purposes only and should not be construed as investment advice.Spreaddevelopment+81+102-93-1910
  12. 12. Risk and return in selected periods(as of 31/05/2013)Performance and risk of alternative portfolios structures (in %)Portfolio*80%HY/20%IG 70%HY/30%IG 50%HY/50%IG 30%HY/70%IGPeriod1 year 3.49 9.64 14.19 11.46 17.77 8.38 7.76 6.53 5.303 years (annualised) 3.33 8.50 11.43 8.88 11.31 7.45 6.93 5.90 4.875 years (annualised) 5.00 9.56 9.59 7.49 10.59 8.76 8.34 7.45 6.5110 years (annualised) 3.97 8.06 8.42 - 9.17 7.29 6.90 6.10 5.26PeriodEuro HYCredit Short DurationPerformanceRisk**IGNon-Fin1-3 YUS HY1-3 YUS HYEuro HY1M-3,5Y*Represented by the following indices or index combinations: iBoxx € Corporate Non Financial 1-3 Year Index; BofA Merrill Lynch High Yield US Corporates Cash Pay 1- 3 Year Index; BofA Merrill Lynch High Yield US CorporatesCash Pay Index; BofAML Euro High Yield Non-Financials BB1-B3 1 mo-3.5 Y; comparative index history of the Compass Fund Euro High Yield Bond Fund (currently: BofAML Euro High Yield Fixed Floating Rate ConstrainedBond ex Financials); Credit Short Duration by combining BofAML High Yield US Corporates Cash Pay 1-3 Y (hedged into euro) and iBoxx € Corporate Non-Financial 1-3 Y. ** Standard deviation of monthly rates of return; Source:Bloomberg, DB Index Quant, Meriten Investment Management; Past performance is not a guide to future performance.● Return generated by Credit Short Duration in nearly all periods > 5%● Allocation between high yield/investment grade offers risk reduction potential● On a 5 year view a 70%HY/30%IG portfolio would have delivered 80% returns as Euro HY with 60% of the volatility● On a 3 year view a 70%HY/30%IG portfolio would have delivered ⅔ returns as Euro HY with only ⅓ of the volatilityPeriod1 year 1.17 1.46 2.49 1.74 2.90 1.16 1.04 0.88 0.883 years (annualised) 1.20 3.46 6.37 4.38 8.46 2.84 2.53 1.96 1.485 years (annualised) 2.02 12.94 14.22 8.89 15.91 10.56 9.37 7.02 4.7410 years (annualised) 1.63 9.40 10.59 - 11.87 7.67 6.81 5.11 3.47Risk**11
  13. 13. 0.60 0.610.640.690.720.800.940.59 0.590.650.720.77 0.770.901.13Highest Sharpe Ratios by combining High Yield and InvestmentGrade short duration (as of 31/05/2013)10 Years (annualised)5 Years (annualised)0.59 0.59Euro HY US HY US HY 1-3Y 80%HY/20%IG* 70%HY/30%IG* EU HY 1M-3,5Y 50%HY/50%IG* 30%HY/70%IG**Combination of BofAML High Yield US Corporates Cash Pay 1-3 Y (hedged into Euro) and iBoxx € Corporate Non-Financial 1-3 Y; Data for EU HY 1-3.5 based on BofAML Euro High Yield Non-Financials BB1-B3 1 mo-3.5 Y;Data for Euro HY based on BofAML Euro High Yield Fixed Floating Rate Constrained Bond Index ex Financials; Data for US HY 1-3Y based on BofAML High Yield US Corporates Cash Pay 1-3 Y Index (hedged into Euro); Datafor US HY based on BofAML US High Yield Cash Pay Index(hedged into Euro) Source: Bloomberg, DB Index Quant, Meriten Investment Management. Past performance is not a guide to future performance.12
  14. 14. 5.454.666.67Short duration credit stands out in today’s low rate environmentYield*Modified Duration*2.761.730.911.423.65BNY Mellon Compass Fund EuroCredit Short Duration FundHigh Yield ex Financials** iBoxx Euro Corporate Non-Financial iBoxx Euro Sovereign Germany* To maturity. Source: Meriten Investment Management, as of 31/05/2013; ** BofAML Euro High Yield Fixed Floating Rate ex Financials Constrained Index; Past performance is not a guide to future performance.13
  15. 15. Breakeven AnalysisECSD and EHY vs Short term German Government BondsWith a modified duration of 1.42 ECSD willoutperform short term German governmentbonds if spreads rise less than 340 bp.Yield YieldWhat if spreads rise?With a modified duration of 3.68 Euro HighYield will outperform short term Germangovernment bonds if spreads rise less than185 bp.Source: Meriten Investment Management, as of 31/05/2013; Projected performance is based on model data. Unlike an actual performance record, projected results do not represent actual tradingand may not reflect the impact that market factors might have. Such forecasts are not a reliable indicator of future performance and that are no guarantees that the performance will reflect themodel.BNY Mellon Compass Fund EuroCredit Short Duration Fund2.76%iBoxx Euro Sovereign Germany1-3 Years0.09%Spread over iBoxx EuroSovereign Germany 1-3 Years267 bpsBNY Mellon Compass FundEuro High Yield Bond Fund5.73%iBoxx Euro Sovereign Germany1-3 Years0.02%Spread over iBoxx EuroSovereign Germany 1-3 Years564 bps14
  16. 16. AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short Duration FundTeam & Track RecordInvestment Philosophy & Process15Investment Philosophy & ProcessStrategy & Portfolio StructureSummary
  17. 17. BNY Mellon Compass Fund Euro Credit Short Duration FundFirmMeriten Investment Management is a wholly owned subsidiary of Bank of New York Mellon CorporationFirm AuM: €24.3 billion, €9.2 billion in credit (end of March 2013)47 Investment professionals – 13 within credit teamAttractive track record of credit management with more than 12 years with no default in their entire historyFund ObjectiveAchieve a high level of income and capital growth by investing primarily in corporate bonds denominated in Euro’s with a rating of at leastB3 or B- and a maximum residual maturity of 3.5 years. A minimum of 20% of the assets will be invested in sub-investment grade bonds¹ As at 31/05/2013. 2 Based on the iBoxx € Corporate 1- 3 Jahre Index (Investment Grade) / based on the BofA Merrill Lynch Euro High Yield Non-Financials BB1-B3 1 mo-3.5 Yrs Index (HighYield). As of 31/05/2013. Please note that no representation or warranty is given that return targets will be achieved. Past performance is not a guide to future performance.Key facts Investment policy/guidelinesLaunch date: 01 June 2011 A portfolio of high yield and investment grade corporate bondsPortfolio duration: Approx 1.42 ¹ Maximum maturity of any one bond: 3.5 yearsVolatility ex-ante: Approx 1.97% ¹ Market capitalisation: €399bn (Investment Grade),€61 bn (HY Non-Financials) 2Current yield: Approx 2.76% ¹ ( 80% HY / 20% IG) Issuer limit: 5%Minimum rating B3/B- Sector limit: 25%Liquidity: DailyB3 or B- and a maximum residual maturity of 3.5 years. A minimum of 20% of the assets will be invested in sub-investment grade bonds(High Yield). Issuers are principally from countries with investment grade rating.16
  18. 18. Assets under Management in “Euro Credit Short Duration”Successful in challenging markets6007008009001000millions €Total AuM CompassFund17BNY Mellon Compass Fund Euro Credit Short Duration Fund was launched June 1st 20110100200300400500Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13Source: Meriten Investment Management, as of 31/05/2013; Past performance is not a guide to future performance.
  19. 19. 100105110115120125EuroCredit Short Duration-Fund* EuroHigh Yield-Market** EuroEquity-Market***BNY Mellon Compass Fund Euro Credit Short Duration FundStable performance in turbulent times707580859095Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13*BNY Mellon Compass Fund Euro Credit Short Duration Fund (cumulated performance net of fees); **BofAML Euro High Yield Fixed-Floating Rate ex FNCL 3% Cap (HEAE) Index (the indexdoesn’t serve as the comparative index of the fund); ***EURO STOXX 50 (the index doesn’t serve as the comparative index of the fund); Source: Datastream, Meriten Investment Management; asof 31/05/2013; Past performance should not be taken as an indication or guarantee of future performance.18
  20. 20. 9.16%3.06%8.03%5.49%Performance BNY Mellon Compass Fund Euro Credit Short Duration Fund(gross of fees, RF-B share class)Calender year performance Standard periods performance-0.25%2.22%2011* 2012 2013 YTD0.09%1.44%3.06%2.22%1 month 3 months 6 months YTD 1 year sinceinception*(p.a.)* Inception: 01/06/2011; as of 31/05/2013; TER: 0.53% (as of 31/10/2012) Past performance is not a guide to future performance. Source: JPMorgan/Meriten Investment ManagementPerformance ratios since inception*Performance (p.a.) Volatility Sharpe Ratio5.49% 2.96% 1.6619
  21. 21. Performance analysisBNY Mellon Compass Fund Euro Credit Short Duration Fund (30/12/2012 - 31/05/2013)Sector/Segment Weighting* ContributionCompass Euro Credit Short Duration 100,00 2,30High Yield 88,45 1,94Auto_Parts 14,42 0,24Bank 3,30 0,06BasicResources 13,70 0,17FoodBeverages 1,88 0,01HealthCare 9,55 0,36IndGoodServ 16,14 0,31Oil_Gas 1,75 0,05Packaging 2,67 0,01Retail 0,87 0,06Technology 3,55 0,03Telecom 3,22 0,04Travel_Leisure 2,14 0,29UtilitySuppliers 7,78 0,16Chemicals 4,69 0,12Telecom-Cable 2,79 0,02Corporate Bond IG 20,05 0,27Automobiles & Parts 1,54 0,01Banks 4,92 0,08Chemicals 0,10 0,00Construction & Materials 1,30 0,02Financial Services 0,65 0,01Food & Beverage 1,16 0,01Industrial Goods & Services 0,84 0,01Media 0,17 0,00Oil & Gas 1,36 0,01Personal & Household Goods 0,38 0,00Retail 0,76 0,01Telecommunications 3,50 0,05Utilities 3,37 0,05Cash 0,88 0,09Others** -9,38 0,00* Average weighting. **This position contains synthetical receivables & liabilities; Source: Meriten Investment Management, Bloomberg; Past performance is not a guide to future performance.Investments are subject to risk and there is no guarantee that the Funds investment objectives will be achieved. Portfolio holdings are subject to change at any time and without notice; are forinformation purposes only and should not be construed as investment recommendations. Performance numbers are based on gross of fee data20
  22. 22. Low volatilityEx-ante volatility of the BNY Mellon Compass Fund Euro Credit Short Duration Fund(share class RF-B) since inception3.5%4.0%4.5%Inception: 01/06/2011; as of 31/05/2013; Note: Past performance is not a guide to future performance. Source: Barclays POINT* Time horizon: 1 year / Confidence: 95%1.5%2.0%2.5%3.0%Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-1321
  23. 23. AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short Duration FundTeam & Track Record22Investment Philosophy & ProcessStrategy & Portfolio StructureSummary
  24. 24. Investment Management TeamAlexis RenaultCorporate CreditHenning LenzHeike ChristianGunther WestenAsset Allocation/Fund ManagementFixed Income Asset AllocationUlrich FaupelOrder DeskChief Investment OfficerUwe FuitenTeam AssistantsDagmar RustHigh YieldMichael Grunow,CFA*Frank KreuzhagenIris SeckerInvestmentGradeBastian Gries,StructuredCredit/ABSAndréSchlingloff, CFA*Alexander PaluzelliSven RudolfPeter ZimmerMarion van BürckSara SchlamannDr. Stefan Braun, CFA*Quantitative &Equity ProductsQuant. Products& ResearchKarsten Seier,Europ. Small CapsSpec. Equity Prod.As of June 2013; * CFA© and Chartered Financial Analyst© are registered trademarks owned by CFA Institute.Asset Management/ResearchAlexis RenaultCFA*Marco GemmelDennis LehnhoffMarcus StegemannFrank BlassBrigitte BehrendtAndré SchäferStephan SchümannHeikeJürgens-KreftHenning FlenderMarkus KnebelChristianSobottaClient Relation DeskIris SeckerSandra Wendel, CFA*Tim Frankenheim,CFA*Matthias Lackmann,CFA*Olga LeppMaik Ohm, CFA*Elena RomanenkoBastian Gries,CFA*Peter ZimmerO. Bogdan CovaciuMartin DreierThomas Rentsch,CFA*Ivan Romanenko,CFA*Frauke Wolkewitz,CFA*Stefan Möckel(Deputy)Tobias BritschMichael PetersPatrick UllrichKarsten Seier,CFA*Jürgen HeinzMarkus KreßDr. Renata LatochaGundula OehlkeDr. Stefan SchüderCREDITCREDIT23
  25. 25. BNY Mellon Compass Fund Euro High Yield Bond Fund6 Months YTD 1 Year3 Years(p.a.)5 Years(p.a.)10 Years(p.a.)sinceinception(p.a.)Fund +6.01 +3.61 +18.69 +11.70 +9.22 +8.67 +7.82Comp. Index +5.71 +3.57 +17.79 +11.31 +10.59 +9.17 +5.21-505101520%Periods ending 31 May 201350709011013015017019021023025027029006/0012/0006/0112/0106/0212/0206/0312/0306/0412/0406/0512/0506/0612/0606/0712/0706/0812/0806/0912/0906/1012/1006/1112/1106/1212/12Monthly performance to 31 May 2013FundComp. IndexMorningstar: TM-Rating (as of 5/2013)(A-Shares, registered funds in Germany)● The performance shown is the BNY Mellon Compass Fund Euro High YieldBond Fund managed by Meriten Investment Management against the givencomparative index● Comparative Index: BofA Merrill Lynch Euro High Yield Fixed Floating RateConstrained Bond Index ex Financials; before 01/11/2009 BofA Merrill LynchEuro High Yield Fixed Floating Rate Constrained Bond Index; before08/09/2008 the corresponding fixed rate constrained index; before December2002 the corresponding unconstrained index● Inception was 30 Jun 00, and funds were managed against the given indexfrom 30 Sep 00● The returns shown are based on gross monthly performance data in Euro● A share class: TER per 31/10/2012 = 0.82%2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001Fund +22.36 -1.01 +14.19 +51.56 -30.20 -0.23 +10.01 +6.60 +16.06 +22.04 +2.75 +0.53Comp. Index +23.20 -1.26 +14.51 +73.08 -33.68 -2.09 +8.90 +6.80 +14.73 +26.40 -5.12 -13.94Excess Return -0.83 +0.25 -0.33 -21.52 +3.48 +1.86 +1.11 -0.20 +1.33 -4.36 +7.87 +14.47-40-20020406080%Annual returnsComp. Index +5.71 +3.57 +17.79 +11.31 +10.59 +9.17 +5.21active return +0.30 +0.03 +0.89 +0.39 -1.37 -0.49 +2.6106/0012/0006/0112/0106/0212/0206/0312/0306/0412/0406/0512/0506/0612/0606/0712/0706/0812/0806/0912/0906/1012/1006/1112/1106/1212/12Past performance is no guide to future performance. Investments are subject to risk and there is no guarantee that the Funds investment objectives will be achieved. Source: Meriten InvestmentManagement/JPMorgan/Bank of America Merrill Lynch/Morningstar/S&P. Standard & Poors Fund Ratings represent an opinion only, not a recommendation to buy or sell24
  26. 26. BNY Mellon Compass Fund Euro Corporate Bond Fund6Months YTD 1 Year3 Years(p.a.)5 Years(p.a.)10 Years(p.a.)sinceinception(p.a.)Fund +3.39 +2.15 +10.11 +6.21 +6.88 +4.82 +5.57Comp. Index +2.73 +1.79 +8.99 +6.01 +6.54 +4.53 +5.21active return +0.66 +0.37 +1.12 +0.20 +0.34 +0.29 +0.36024681012%Periods ending 31 May 201310011012013014015016017018019003/0209/0203/0309/0303/0409/0403/0509/0503/0609/0603/0709/0703/0809/0803/0909/0903/1009/1003/1109/1103/1209/1203/13Monthly performance to 31 May 2013FundComp. Index• The performance shown is the BNY Mellon Compass FundEuro Corporate Bond Fund managed by Meriten InvestmentManagement in a consistent manner against the given index• The Comparative Index shown is the iBoxx Euro CorporateOverall Index. Prior to 20th March 2006 the iBoxx Non-Financial Index was used• Inception is 13 March 02• The returns shown are based on monthly performance data,gross of fees, in Euro• A share class: TER per 31/10/2012 = 0.57%2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002**Fund +14.23 +1.29 +3.82 +18.19 -3.45 -0.20 +0.47 +3.72 +7.65 +7.84 +8.69Comp. Index +13.56 +1.72 +4.73 +16.02 -3.99 -0.22 +0.34 +3.44 +7.53 +7.79 +7.43active return +0.67 -0.42 -0.91 +2.16 +0.55 +0.02 +0.14 +0.28 +0.12 +0.05 +1.26-505101520%Annual returns03/0209/0203/0309/0303/0409/0403/0509/0503/0609/0603/0709/0703/0809/0803/0909/0903/1009/1003/1109/1103/1209/1203/13Past performance is no guide to future performance. Investments are subject to risk and there is no guarantee that the Funds investment objectives will be achieved.** since inception (not annualised); Source: Meriten Investment Management/JPMorgan/Morningstar25
  27. 27. AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short Duration FundTeam & Track Record26Investment Philosophy and ProcessStrategy & Portfolio StructureSummary
  28. 28. Investment philosophyInvestment philosophy and approach address the asymmetric risk/return profile of short duration corporate credit.Focus on the preservation of investors’ capital and compounding returns through disciplined fundamental credit researchOur aims:Preserve capital in challenging marketsAchieving capital appreciation and income in positive markets without taking unnecessary riskAchieving capital appreciation and income in positive markets without taking unnecessary riskIdentification of bonds where liquidity will remain sufficient until maturityDisciplined implementation to minimise risk“Successful management throughout the cycle”27
  29. 29. Investment Process• Qualitative analysis• Model/scenario analysis•• Systematic monitoringof issuer risks& portfolio risks• Sector weights• Issuer weights•• Fundamental factors• Technical factorsMonitoring /riskmanagementPortfolioconstructionSectoranalysisCredit andrelative valueanalysis• Liquidity analysis• Relative value analysis& portfolio risks• Sell discipline• Performancemeasurement andattribution• Allocation HY/IG• Segment beta28
  30. 30. Credit analysisA financial model of the company* (1)Peugeot (Manufacturing & Sales Companies) Name of the company :GAAP Analysts Cash deposit : 1,00%Currency EUR Interest cost : 5,00%Financial year end 31. DezLast change of the model 16.03.2009Income Statement (costs positive, income negative,revenues positive) 2004 2005 2006 2007 2008 2009-H1 2009-H2 2009 2010-H1Revenues 54 745 54 887 53 789 57 132 52 705 22 720 24 165 46 885 27 620Change in Revenues 3,9% 0,3% -2,0% 6,2% -7,7% -22,3% 3,0% -11,0% 21,6%Gross Profit 14 427 14 271 13 473 13 782 12 223 4 517 5 406 9 923 6 491Gross Margin 26,4% 26,0% 25,0% 24,1% 23,2% 19,9% 22,4% 21,2% 23,5%S G & A (incl. R&D) 9 408 9 751 9 272 9 079 8 566 3 904 4 012 7 916 4 106S G & A as a % of sales 17,2% 17,8% 17,2% 15,9% 16,3% 17,2% 16,6% 16,9% 14,9%EBITDA 5 019 4 520 4 201 4 703 3 657 613 1 394 2 007 2 385EBITDA margin 9,2% 8,2% 7,8% 8,2% 6,9% 2,7% 5,8% 4,3% 8,6%Depreciation and Amortization 3 056 3 187 3 686 3 559 3 664 1 683 1 511 3 194 1 517Recurring operating income 1 963 1 333 515 1 144 - 7 - 1 070 - 117 - 1 187 868Operating income margin 3,6% 2,4% 1,0% 2,0% 0,0% -2,5%Non recurring items 69 340 808 632 917 506 219 725 - 69Operating income reported 1 963 1 333 - 293 512 - 923 - 1 576 - 336 - 1 912 7992010e 2011e 2012e 2013e 2014e 2015e50 636 53 168 55 826 56 384 56 948 57 5188,0% 5,0% 5,0% 1,0% 1,0% 1,0%11 646 13 558 14 515 14 660 14 806 14 95523,0% 25,5% 26,0% 26,0% 26,0% 26,0%7 595 9 570 10 049 10 149 10 251 10 35315,0% 18,0% 18,0% 18,0% 18,0% 18,0%4 051 3 988 4 466 4 511 4 556 4 6018,0% 8,0% 8,0% 8,0% 8,0% 8,0%3 599 3 477 3 419 3 405 3 401 3 404452 511 1 047 1 105 1 155 1 1970,9% 1,0% 1,9% 2,0% 2,0% 2,1%452 511 1 047 1 105 1 155 1 197WMAM ExpectationsMeriten Expectations*All figures from 2010 to 2015 are fictitious, they are only intended to clarify the credit analysis model; This information is provided for illustrative purposes only and should not be construed asinvestment advice; Source: Meriten Investment Management. Past performance is not a guide to future performance.Operating income reported 1 963 1 333 - 293 512 - 923 - 1 576 - 336 - 1 912 799Interest expense, net including pension expenses (excludingFX change on debt) 70 73 73 39 285 225 294 519 240Share of net earnings of campanies at equity - 55 49 48 57 24 49 73 136Profit before Tax 1 697 922 - 397 473 - 1 208 - 1 801 - 1 627 695Tax expenses 347 189 101 218 156 72 72 168Effective Tax rate 20,4% 20,5% -25,4% 46,1% -12,9% 30,0%Net Income before minorities 1 350 589 - 328 405 - 858 - 1 240 - 459 - 1 699 527Net Income Margin -1,6% -5,5% -3,6% 1,9%Dividend 323 233 154 163Retained earnings 1 027 356 - 482Cash-Flow Statement (negative = decrease) 2004 2005 2006 2007 2008 2009-H1 2009-H2 2009 2010-H1Funds from operations 4 602 4 258 4 027 4 446 3 216 388 1 028 1 416 1 977Change in Working Capital 1 052 - 289 424 920 - 2 924 2 332 284 2 616 - 339Other operating cash flow (reported OCF-calculated OCF down fromEBITDA) - 412 - 580 - 1 016 - 931 - 836Cash Flow from operating activities reported 5 242 3 389 3 435 4 435 - 544 3 482Capital Expenditure inclusive intangibles (net ) (-) - 3 662 - 3 853 - 3 400 - 2 689 - 3 072 - 1 660 - 1 126 - 2 786 - 1 211capex as a % of sales -6,7% -7,0% -6,3% -4,7% -5,8% -5,9% -4,4%Non cash interest expenses 0Dividends Paid (-) / Dividend received (+) - 323 - 233 - 154 - 163 - 191 133 133 135Recurring Free Cash Flow 1 669 - 117 897 2 514 - 2 971 1 060 319 1 379 562Cash restructuring expense (-) - 550 - 91Other extraordinary cash expense (-)Acquisitions and Sale of Assets (- and +) - 147 15 - 18 4 - 27 - 7 2Capital increase / Buy back of shares (+ and -) - 282 - 198 - 39 - 23 - 43 281Free cash flow after exceptionals and Acquisit/CI 1 240 - 300 840 2 495 - 3 041 1 060 319 1 103 473Total Period debt repayment (-) - 714 11 205 - 559 929 - 1 552Financing surplus / Funding requirements 526 - 289 1 045 1 936 - 2 112 - 449452 511 1 047 1 105 1 155 1 197473 432 402 368 343 317- 21 79 645 738 812 88070 24 193 221 244 26430,0% 30,0% 30,0% 30,0% 30,0% 30,0%- 91 55 451 516 568 616-0,2% 0,1% 0,8% 0,9% 1,0% 1,1%2010e 2011e 2012e 2013e 2014e 2015e3 508 3 532 3 871 3 922 3 969 4 020375 253 266 56 56 573 673 3 785 4 137 3 978 4 026 4 077- 2 988 - 3 190 - 3 350 - 3 383 - 3 417 - 3 451-5,9% -6,0% -6,0% -6,0% -6,0% -6,0%0 0 0 0 0 0133 0 - 100 - 100 - 100 - 1001 029 595 687 495 509 526- 210819 595 687 495 509 526- 3 045 - 1 735 - 435 - 3 451 - 3 066 - 777- 2 226 - 1 140 252 - 2 956 - 2 557 - 25129
  31. 31. Credit analysisA financial model of the company* (2)Liquidity at year end 2004 2005 2006 2007 2008 2009-H1 2009-H2 2009 2010-H1Period End Cash 5 158 6 351 6 339 5 185 2 040 6 801 7 843 7 843 9 084Total committed facilities 2 400 2 400Liquidity (cash only) 6 801 7 843 7 843 9 084Liquidity at Period End (cash + unused lines) 5 158 6 351 6 339 5 185 4 440 9 201 15 108 15 108 11 484Balance sheet 2004 2005 2006 2007 2008 2009-H1 2009-H2 2009 2010-H1Equity 13 703 14 406 14 106 14 555 13 277 12 600 12 446 12 447 13 845Intangibles and Goodwill 5 400 5 563 5 435 5 373 5 298 5 563 5 677 5 677 6 095Equity after goodwill and intangibles 8 303 8 843 8 671 9 182 7 979 7 037 6 769 6 770 7 750Tangibles (Net fixed assets) + intangibles 17 770 18 795 18 643 18 537 18 125 18 382 17 995 17 995 18 803Total assets 40 752 43 152 42 581 40 861 36 009 39 107 38 739 38 740 43 833Total cash Debt of industrial companies 6 852 9 124 8 676 6 385 6 309 10 016 11 021 11 021 12 087lease + pension deficit 1 249 1 334 1 334 1 334Cash of the industrial companies 5 158 6 351 6 339 5 185 2 040 6 801 7 842 7 843 9 084Peugeot (Manufacturing & Sales Companies) Name of the company :GAAP Analysts Cash deposit : 1,00%Currency EUR Interest cost : 5,00%Financial year end 31. DezLast change of the model 16.03.20092 01 0 e 2 01 1 e 2 0 1 2e 2 01 3 e 20 1 4 e 2 0 15 e7 8 4 3 7 84 3 7 8 4 3 7 8 43 7 84 3 7 84 35 6 1 7 4 47 7 4 7 2 9 1 7 73 - 7 8 4 - 1 0 3 51 2 8 8 2 1 1 74 2 11 9 9 4 9 0 38 6 48 1 6 23 02 01 0 e 2 01 1 e 2 0 1 2e 2 01 3 e 20 1 4 e 2 0 15 e1 2 4 8 9 1 2 54 5 12 8 9 6 1 3 31 2 1 3 7 8 1 1 4 2 9 75 6 7 7 5 67 7 5 6 7 7 5 6 77 5 67 7 5 67 76 8 12 6 86 8 7 2 19 7 63 5 8 104 8 6201 7 3 8 4 1 7 09 7 17 0 2 7 1 7 00 5 1 7 0 2 1 1 7 0 6 84 1 8 3 9 4 3 93 1 46 1 2 8 4 6 58 9 4 7 0 5 5 4 7 5 2 51 0 2 0 2 9 60 7 8 9 2 0 8 4 25 7 91 6 7 39 01 3 34 1 33 4 1 3 34 1 33 4 1 334 1 3347 8 4 3 7 84 3 7 8 4 3 7 8 43 7 84 3 7 84 3W M A M E x p e cta tio n sMeriten Expectations*All figures from 2010 to 2015 are fictitious, they are only intended to clarify the credit analysis model; This information is provided for illustrative purposes only and should not be construed asinvestment advice; Source: Meriten Investment Management. Past performance is not a guide to future performance.Cash of the industrial companies 5 158 6 351 6 339 5 185 2 040 6 801 7 842 7 843 9 084Net cash debt including off B/S 5 518 4 549 4 513 4 512Net cash debt 1 694 2 773 2 337 1 200 4 269 3 215 3 179 3 178 3 003Market Cap 0 0 0 0 0 0Enterprise Value 1 694 2 773 2 337 1 200 4 269 3 179 3 178Ratios 2004 2005 2006 2007 2008 2009-H1 2009-H2 2009 2010-H1Net debt / Equity 12,36% 19,25% 16,57% 8,24% 32,15% 25,52% 25,54% 25,53% 21,69%Equity / Total assets 33,63% 33,38% 33,13% 35,62% 36,87% 32,22% 32,13% 32,13% 31,59%Tangible fixed assets to net debt 1049,00% 677,79% 797,73% 1544,75% 424,57% 571,76% 566,06% 566,24% 626,14%Net cash debt / EBITDA 0,3 0,6 0,6 0,3 1,2 2,6 1,1 1,6 0,8Net cash debt including off B/S / EBITDA 1,5 2,2FCF / Net debt 98,52% -4,22% 38,38% 209,50% -69,59% 32,97% 10,03% 43,39% 18,71%Funds from operations/ net debt 271,66% 153,55% 172,31% 370,50% 75,33% 12,07% 32,34% 44,56% 65,83%EBITDA / Net Interest expenses 71,7 61,9 57,5 120,6 12,8 0,0 0,0 3,9 0,0EBITDA / Net cash Interest expenses 71,7 61,9 57,5 120,6 12,8 2,7 4,7 3,9 9,9Enterprise Value / EBITDA 0,3 0,6 0,6 0,3 1,2 0,0 2,3 1,6 0,07 8 4 3 7 84 3 7 8 4 3 7 8 43 7 84 3 7 84 33 693 3 0 98 2 411 1 9 16 1 40 7 8812 3 5 9 1 76 4 1 0 7 7 5 82 73 - 4 5 30 0 0 0 0 02 3 5 9 1 76 4 1 0 7 7 5 82 73 - 4 5 32 01 0 e 2 01 1 e 2 0 1 2e 2 01 3 e 20 1 4 e 2 0 15 e1 8 .89 % 14 .0 6 % 8 .35 % 4.3 7 % 0 .5 3 % -3 .17 %2 9 .85 % 28 .5 6 % 2 7 .96 % 28 .5 7 % 2 9 .2 9% 30 .0 8 %7 3 6 .84 % 9 69 .2 5 % 1 5 8 1.0 8 % 2 92 0 .2 1% 2 31 8 1 .86 % -3 7 7 1.6 7 %0 .6 0 .4 0.2 0 .1 0 .0 -0 .14 3 .61 % 33 .7 5 % 6 3 .79 % 84 .9 4 % 69 3 .1 0% -1 1 6 .2 3 %1 4 8 .71 % 2 00 .2 4 % 3 5 9 .4 2 % 6 73 .5 0 % 54 0 6 .25 % -8 8 8 .3 7 %8 .6 9 .2 11 .1 1 2 .3 1 3 .3 14 .58 .6 9 .2 11 .1 1 2 .3 1 3 .3 14 .50 .6 0 .4 0.2 0 .1 0.0 -0 .1Analysis of the liquidity situation until maturity – Key for Credit Short Duration• Liquidity development• Viability of Refinancing• Financial covenants• Free cash flow generation30
  32. 32. Portfolio constructionCredit risks are managed at two levels Basis for decision• Allocation between high yield and investment grade• Cyclical vs. non-cyclical names• Mainly fundamentals, taking into accountrelevant top-down factors such as:- Business climate indicators- Lending standards- Expected default rates• Complemented by quantitative tools(monthly and weekly analysis of signals)Portfolio Construction: Managing the credit risk of the portfolio31
  33. 33. Portfolio constructionQuantitative tool supports allocation and beta managementSignals and OAS: Current signal NEGATIVEEU USA 1 Month 3 Months 1 Month 3 MonthsPOSITIVE NEGATIVE NEGATIVE POSITIVE NEGATIVE NEGATIVE-1 1 1 -1 1 1NEUTRAL NEGATIVECyclical Momentum Volatility200Combined Momentum Combined VolatilityCombined CyclicalNEUTRAL15002000250000,511,52bpssignalstrengthsignal "spreads increase" signal "Spreads decrease" SpreadTool combines fundamental and technical indicatorsPOSITIVE means decrease in spreadNEGATIVE means increase in spreadCombined Total (4-Weeks-Moving Average)200Combined Cyclical Combined Momentum Combined Volatility0 2Spread Direction: Signal Strength: Signal ScoreNEGATIVE LOW 0.67005001000-2-1,5-1-0,50199819992000200120022003200420052006200720082009201020112012bpssignalstrengthSource: Meriten Investment Management; as of 07/05/2012;Note: This information is provided for illustrative purposes only and should not be construed as investment advice. Past performance is not a guide to future performance.32
  34. 34. Active allocation between both segments depending on theeconomic cycle60%70%80%90%100%weightAllocation between HY and IG since inceptionHY IGSource: Meriten Investment Management; as of 31/05/2013; Please note: portfolio holdings are subject to change at any time without notice.0%10%20%30%40%50%60%Jun 11 Aug 11 Oct 11 Dec 11 Feb 12 Apr 12 Jun 12 Aug 12 Oct 12 Dec 12 Feb 13 Apr 1333
  35. 35. Risk managementSingle issue level Portfolio level• Continuous review of whether information on thecompany and its environment require a change to theoriginal view• Max 5% per issuer, max 25% per sector• Review e.g. in the financial model • Weekly internal performance analysis in order to identifypotential vulnerabilities at an early stage• Review of the liquidity situation of the company • Portfolio risk analysed by Portfolio Management with thesupport of high-performance software (Barclays Point)Risk management and monitoringsupport of high-performance software (Barclays Point)• Sell discipline: Only in case of high probability of default • Risk analysis performed by Risk Controllingindependently of Portfolio Management (Quantaxsystem)34
  36. 36. AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short Duration FundTeam & Track RecordInvestment Philosophy and Process35Strategy & Portfolio StructureSummary
  37. 37. BNY Mellon Compass Fund Euro Credit Short Duration FundFund StrategyCurrent allocation at 80% HY / 20 % IGThorough monitoring of bonds from peripheral countries for risk managementLonger maturities for non-cyclical namesAs of June 2013; Please note: portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations.This information should not be construed as a recommendation to purchase or sell any security; Return targets cannot be guaranteed.Exposure in cyclical high yield names is mainly limited until 2014Maintenance of a yield above 4% as a target, but most important target remains the capital preservation/ growth withavoidance of unnecessary risksMaintenance of a high part of short-term bonds with a remaining life time less than 2 years for fund volatilitymanagement purposesStrong focus on volatility figuresEx-ante volatility target of less than 4% (currently 2.0%)Ex-post volatility figure of 3.0% since inception (01/06/2011)36
  38. 38. Portfolio structure (1)BNY Mellon Compass Fund Euro Credit Short Duration FundSector structure (*1)Rating structure (*1)Yield to maturity (*2) 2.76%Duration 1.42No. of bonds 105No. of issuers 74Important indicators17.4%16.5%12.9%11.0%9.9%6.8%5.5%Industrial Goods & ServicesAutomobiles & PartsBasic ResourcesUtilitiesHealth CareBanksTelecommunications0.4%18.5%53.0%25.9%2.2%A BBB BB B LiquidityPlease note: portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations. This information should not beconstrued as a recommendation to purchase or sell any security; Return targets cannot be guaranteed. This information should not be construed as a recommendation to purchase or sell any security; Returntargets cannot be guaranteed. Source: Meriten Investment Management; as of 31/05/2013(*1) : excluding CDS, (*2) including CDS3.4%3.3%2.9%2.4%2.2%2.1%1.0%0.3%0.1%2.2%Food & BeverageOil & GasChemicalsTechnologyPackagingTravel & LeisureRetailConstruction & MaterialsMediaLiquidity37
  39. 39. Portfolio structure (2)BNY Mellon Compass Fund Euro Credit Short Duration FundMaturity structure21.0%16.4%12.3%12.0%8.2%4.8%4.5%4.1%FranceGermanyItalyPortugalSpainUSALuxembourgMexicoCountry of Risk Structure (*1)4.1%3.6%2.8%2.1%1.9%1.5%0.9%0.9%0.8%0.2%2.2%MexicoDenmarkUKHungaryFinlandJapanNetherlandsIrelandRussiaSwitzerlandLiquidity11.7%42.1%25.5%18.6%2.2%2013 2014 2015 2016 LiquidityPlease note: portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations. This informationshould not be construed as a recommendation to purchase or sell any security; Return targets cannot be guaranteed. This information should not be construed as a recommendation to purchase orsell any security; Source: Meriten Investment Management; as of 31/05/2013(*1) : excluding CDS38
  40. 40. Portfolio structure (3)BNY Mellon Compass Fund Euro Credit Short Duration FundTop ten holdings (*1)PHOENIX PHARMA 4.5%PEUGEOT 4.3%CEMEX 4.1%HEIDELBERG CEMENT 3.9%FIAT 3.7%ISS 3.4%Please note: portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations. This informationshould not be construed as a recommendation to purchase or sell any security; Return targets cannot be guaranteed. This information should not be construed as a recommendation to purchase orsell any security; Source: Meriten Investment Management; as of 31/05/2013 (*1) : excluding CDSISS 3.4%CEGEDIM 3.3%LAFARGE 3.2%EDP 3.1%WENDEL 3.0%39
  41. 41. AgendaBNY Mellon Investment ManagementThe case for Euro Credit Short DurationThe BNY Mellon Compass Fund Euro Credit Short Duration FundTeam & Track RecordInvestment Philosophy and Process40Strategy & Portfolio StructureSummary
  42. 42. SummaryAttractive risk/return profileAttractive risk/return profileLow Interest rate and spread duration riskLow Interest rate and spread duration risk !4% yield medium to long term target with a volatility of less than 4%4% yield medium to long term target with a volatility of less than 4%Active allocation between IG and HY assets offers additional return potentialActive allocation between IG and HY assets offers additional return potential!!!Defensive, stable returns in all market conditionsDefensive, stable returns in all market conditions !Why Euro Credit Short Duration?Key aims:Note: Past performance is not a guide to future performance.Fundamental forward looking credit analysis forms the core of a bottom-up-oriented investment processFundamental forward looking credit analysis forms the core of a bottom-up-oriented investment processExcellent track record in credit management of more than 12 yearsExcellent track record in credit management of more than 12 yearsNo defaults since launch of high yield products in the year 2000!No defaults since launch of high yield products in the year 2000!A strong team: 13 European corporate bond specialistsA strong team: 13 European corporate bond specialistsProprietary quantitative tool supports the asset allocation and risk decisions in the portfolioProprietary quantitative tool supports the asset allocation and risk decisions in the portfolioWhy Euro Credit Short Duration with Meriten Investment Management?!!!!!41
  43. 43. Appendix
  44. 44. Credit Outlook: Key topicsOpportunitiesLow expected defaultLow corporate leverageLoose lending standardsLow market volatilityRisksUncertain growth outlookLess quantitative easingGreece and Cyprus news flowCountry rating downgrades(Spain, UK, US, France,…)Budget deficit periphery countriesSource: Meriten Investment Management; 06/2013Low market volatilityExpansionary monetary policySearch for yieldBudget deficit periphery countriesElection (Germany)Tightening government spendingFiscal cliff USASpread tightening Spread widening43
  45. 45. 304050607080Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13Economic SentimentImprovement since May 2013US Chicago Purchasing Manager Index60708090100110120Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 1344Source: Bloomberg; 05/2013European Commission Economic Sentiment Indicator EU27
  46. 46. -150-100-50050100Feb 06 Feb 07 Feb 08 Feb 09 Feb 10 Feb 11 Feb 12 Feb 13Citigroup Economic Surprise IndexReduction in USA, slight improvement in EuropeUSA45Source: Bloomberg; Citigroup; 05/2013Europe-200-150-100-50050100150Feb 06 Feb 07 Feb 08 Feb 09 Feb 10 Feb 11 Feb 12 Feb 13
  47. 47. Percentage of issuers• Default rates per end of April 2013 globally 2.6% (USA: 3.1%, Europe: 2.0%)• Peak of default rate cycle: December 2009 (global: 13.00%, Europe: 10.30%)• Forecast per end of April 2014: 2.5% global (long term average 4.5%)Global speculative grade default rates by Moody’sStrong improvements since 200914161846Source: Meriten Investment Management, Moody‘s, Bloomberg, 04/2013024681012193019321934193619381940194219441946194819501952195419561958196019621964196619681970197219741976197819801982198419861988199019921994199619982000200220042006200820102012Forecast per end of2013: global 2.9%Forecast per end ofApril 2014:global 2.5%
  48. 48. „Fiscal Cliffs“ also in EuropeBudget Balances, in % GDP (2012-14: prognosis EU Commission)-15-10-50Greece Ireland Portugal France Italy Spain Germany3.3%pts 3.1%pts4.0%pts7.3%pts(cumulatedtargetedimprovementfrom 2009 to2014)3.6%pts9.7%pts12.1%pts• Consolidation is necessary but does not suffice to end the crisis• Consolidation targets appear increasingly unachievable in the time prescribed• Reform enthusiasm has cooled in many countries – the question of democratic legitimation of all the bailout measures andconditions moves into the foreground• Political risks are increasing the more, and the more rapidly living standards decline• Multiplier effect between 0.9 and 1.747Source: Meriten Investment Management, Ecowin, 05/2013-202009 2010 2011 2012E 2013E 2014E2014)
  49. 49. 4505005506006507005Y CDS Italy 5Y CDS ISPIM4805305806306805Y CDS Spain 5Y CDS Banco SantanderRisk premiums of corporate bonds significantly influenced by thedevelopment of risk premiums of respective countriesExample from SpainBSP BSPExample from Italy10015020025030035040005/11 09/11 01/12 05/12 09/12 01/13 05/1318023028033038043005/11 09/11 01/12 05/12 09/12 01/13 05/1348This information is provided for illustrative purposes only and should not be construed as investment advice.Source: Bloomberg, Meriten Investment Management; 05/2013Spain:-1 BPSItaly:+107 BPSISPIM:+149 BPSBancoSantander:+51 BPS
  50. 50. 7008009001,0001,1005Y CDS Spain ONO 12/20184505005506006507005Y CDS Spain Telefonica 09/2017Risk premiums of corporate bonds significantly influenced by thedevelopment of risk premiums of respective countriesBSP BSPONO:Examples from Spain4920030040050060005/11 09/11 01/12 05/12 09/12 01/13 05/1310015020025030035040005/11 09/11 01/12 05/12 09/12 01/13 05/13This information is provided for illustrative purposes only and should not be construed as investment advice.Source: Bloomberg, Meriten Investment Management; 05/2013Spain:-1 BPSONO:+131 BPSTelefonica:+36 BPSSpain:-1 BPS
  51. 51. Expansionary monetary policy supports risky asset classesPolicy rates of major central banks, %50150250350450550January 2007 = 1000246800 02 04 06 08 10 12Central banks: balance sheet totals (% GDP)50• Policy rates likely to stay very low for a long time• Quantitative easing like OMT (ECB) and QE3 (Fed) dampens systemic risk …• … and fuels the rally of risky assetsSource: Meriten Investment Management, Ecowin, 05/2013502007 2008 2009 2010 2011 2012 2013ECB Fed BoJ BoE00 02 04 06 08 10 12Fed EZB BoE SNB
  52. 52. European HY bond fund flowsFund flow data shows recent inflows in high yield51This information is provided for illustrative purposes only and should not be construed as investment advice.Source: BNP Paribas, Bloomberg, Meriten Investment Management; 02/2013
  53. 53. Profit and leverage ratios of companiesCorporate Profits at a high levelCorporate profits & wage share, in % of GVA*Low leverage in USA, increase in EuropeNet debt/ EBITDA ratio w. scenario forecasts**1,61,822,22,42,6S&P Non-FinancialsEuroStoxx Non-Financials64%66%68%70%12%16%20%24%28%32%Profits52• The credit quality of companies has improved significantly over the last three years.• The earnings season for Q1 2013 showed some weakness for cyclical companies, while non-cyclical company results were inline with expectations. The outlook continues to be cautious for 2013 especially for the European business units.Source: Citi, CIRA, Haver Analytics, Bloomberg; * As of end of 09/2012; ** As of end of 09/201211,21,41,698 99 00 01 02 03 04 05 06 07 08 09 10 11 1260%62%64%0%4%8%12%1970 1980 1990 2000 2010Wages
  54. 54. Percentage of Commercial and Industrial Lenders Tightening• Recently easing of lending standards• So far no indication of significantly rising default rates1015205075100Percentage Moody’s global default rates (right-hand scale)C&I Lenders Tightening Standards (FED)Survey Change in Lending to Business (ECB)Default RatesForecast per end ofSource: Meriten Investment Management, Moody‘s, Fed, ECB, Bloomberg; 04/201353-505-2502519901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012Forecast per end of2013: global 2.9%Forecast per end ofApril 2014:global 2.5%
  55. 55. The Corporate Credit CycleUS ahead of Europe54This information is provided for illustrative purposes only and should not be construed as investment advice.Source: BNP Paribas, Bloomberg, Meriten Investment Management; 02/2013. Past performance is not a guide to future performance.
  56. 56. 1,5002,0002,500152025Percent Base pointsUSAEurope(rhs)Default rates (lhs)Default rates and spreadsGlobal default rates in comparison to US* and Euro High Yield** spreadsUSA Long-term average: 559 bps (end of 1986 – end of 05/2013)5505001,0000510198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013436 bps**** Spread BofA Merrill Lynch US High Yield Master II Constrained Index compared to US Treasuries; ** Spread BofA Merrill Lynch Euro High Yield Bond Fixed Floating Rate Constrained Index exFinancials; before 2007 the BofA Merrill Lynch Euro High Yield Bond Fixed Rate Constrained Index; *** Index composition 06/2013;Source: Moody’s, Meriten Investment Management; As of 05/2013462 bps***US Average : 559 bpForecast per end ofApril 2014:global 2.5%US and Europe spread move parallel since 2002
  57. 57. Development of short-duration corporate bond spreads100015002000250030003500US HY 1 - 3 Years* Euro HY1 Month - 3.5 Years**Euro Corporates Non-Financial1 - 3 Years***Base points* Spread BofA Merrill Lynch High Yield US Corporates Cash Pay 1-3 Years Index over US Treasuries; ** BofA Merrill Lynch Euro High Yield Non-Financials BB1-B3 1 mo-3.5 Yrs Index over USTreasuries (inception at 31/12/2008); *** Spread iBoxx € Corporate Non-Financial 1- 3 Years Index over benchmark bonds; Source: Bank of America Merrill Lynch, Bloomberg, DB Index Quant; asof 31/05/2013 Please note: Past Performance is no guide to future performance.0500Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12Average(1999-2013)High Low 31/05/2013Euro CorporatesNon-Financial 1-3 Years109 367 28 79US HY1-3 Years766 3280 188 502Euro HY1 Month - 3,5 Years**533 1798 248 248base points56
  58. 58. Conclusion• The credit quality of companies has improved significantly over the last three years and is at a solid level.• The earnings season for Q1 2013 has started showing some weakness for cyclical companies, while non-cyclical company results were in line with expectations. The outlook continues to be cautious for 2013especially for the European business units.• Our core scenario remains a moderate global growth in 2013.• The market is supported by technicals such as the search for yield and inflows in the market.• No sign of significantly rising default rates.• No sign of significantly rising default rates.• The volatility has decreased since the EU actions for crisis management. However, the volatility could increaseagain due to the sovereign debt risk in Europe, the still uncertain growth outlook and less quantitative easing.• Spreads are slightly below their long term average.This information is provided for illustrative purposes only and should not be construed as investment advice.The achievement of targets can not be guaranteed. Past performance is not indicative of future performance.57
  59. 59. Corporate CreditCorporate Credit – Investment GradeMatthias Lackmann, CFA*• Responsibilty/ sectors covered:Telecommunications, media, technology• Industry experience: 6 yearsOlga Lepp• Responsibilty/ sectors covered:Automobiles & parts, construction & buildingmaterials, retail, personal & houshold goodsHenning LenzHead of Corporate Credit Team• Responsibilty/ sectors covered:Corporate credit strategy• Industry experience: 22 yearsBastian Gries, CFA*Head of Investment Grade Team• Responsibilty/ sectors covered:Investment grade fund strategy, banks,food & beverages* CFA© and Chartered Financial Analyst© are registered trademarks owned by CFA Institute.Maik Ohm, CFA*• Responsibilty/ sectors covered:Industrial goods & -services, chemicals,travel & leisure, insurance companies• Industry experience: 8 yearsTim Frankenheim, CFA*• Responsibilty/ sectors covered:Banks, healthcare, commodities• Industry experience: 10 years• Industry experience: 5 yearsElena Romanenko• Responsibilty/ sectors covered:Utilities, oil & gas, financial services• Industry experience: 8 yearsfood & beverages• Industry experience: 12 years58
  60. 60. Corporate CreditCorporate Credit – High YieldAlexis Renault, CFA*Head of High Yield TeamResponsibilty/ sectors covered:High yield fund strategy, media, chemicals,automobiles & partsThomas Rentsch, CFA*Responsibilty/ sectors covered:Utilities, energy, commoditiesIndustry experience: 8 yearsHenning LenzHead of Corporate Credit TeamResponsibilty/ sectors covered:Corporate credit strategyIndustry experience: 22 yearsMartin DreierResponsibilty/ sectors covered:Financial services, industrial goods & -servicesIndustry experience: 11 yearsThe sector personal & household goods is covered by all team members.* CFA© and Chartered Financial Analyst© are registered trademarks owned by CFA Institute.automobiles & partsIndustry experience: 18 yearsOvidiu-Bogdan CovaciuResponsibilty/ sectors covered:Retail, food & beverages, technology,commodities, healthcareIndustry experience: 7 yearsIndustry experience: 8 yearsFrauke Wolkewitz, CFA*Responsibilty/ sectors covered:Travel & leisure, telecommunications – fixedline, cable TVIndustry experience: 11 yearsIvan Romanenko, CFA*Responsibilty/ sectors covered: Financialservices, packagingIndustry experience: 6 years59
  61. 61. AppendixMeriten Investment Management GmbH – Composite Performance (1)Glossary / GIPS® Compliance Verification Statement*Definition of the FirmWestLB Mellon Asset Management Kapitalanlagegesellschaft mbH ("WMAM KAG") manages segregated andmutual funds in accordance with the German Investment Act (Investmentgesetz; InvG). The definition of thefirm within the meaning of the Global Investment Performance Standards (GIPS) includes the funds establishedby WMAM KAG as well as its advisory or investment management services rendered to invest-ment fundsmanaged by third parties.History and ownership structureWestLB Mellon Asset Management Kapitalanlagegesellschaft mbH is a subsidiary of WestLB Mellon AssetManagement Holding Ltd., jointly and equally owned by WestLB AG and Bank of New York Mellon Corpo-ration, Inc., (BNY Mellon).The joint venture was formed on 1 April 2006. Prior to this, WMAM KAG operated under the name WestAMKAG. Since 1998, all investment activities of WestLB were combined in WestAM. However, the experience ofWestLB in institutional asset management dates back to 1969.The change in the ownership structure seen in 2006 has not led to any changes to the investment processesapplied.FeesManagement fees for institutional clients are generally negotiated on a case-by-case basis and depend on theproduct and the complexity of the individual mandate. Usually, fees range from 10 to 60 basis points.The current fee schedule for the mutual funds is available under www.wmam.com.GIPS® Compliance Verification StatementErnst & Young GmbH Wirtschaftsprüfungsgesellschaft confirms to the entity named WestLB Mellon AssetManagement Kapitalanlagegesellschaft mbH that for the period from 1 January 2000 through 31 December2011(1) the entity complied with all composite structure requirements of the GIPS® on a firm-wide basis, and(2) the entity designed its processes and procedures to calculate and present performance results incompliance with the GIPS®.Eschborn/Frankfurt am Main, 4 June 2012 Ernst & Young GmbH* This GIPS disclosure was approved before the name change from WestLB Mellon Asset Management to Meriten Investment Management.applied.Application of GIPS2007 is the first year in which WMAM KAG claimed compliance with the GIPS (“Compliance”). The compli-anceclaim refers to the aforementioned definition of the firm and the period between 2000 and 2011.Calculation method and valuationReturns are calculated monthly on a time-weighted basis (BVI method). Annual performance figures aredetermined by linking the monthly returns geometrically.Portfolios are valued at least on a monthly basis at market values (trade date). Performance is including in-terest claims and capital gains.Gross-of-fee returns are calculated gross of all costs and fees (management fee, custodian fee, auditing andpublishing fees etc.) with the exception of transaction costs. Net-of-fee returns are calculated net of all fees.The dispersion shown is measured as standard deviation of annual returns of all portfolios represented withinthe Composite for the full year.Additional information regarding the methods used for calculating returns and determining valuations isavailable upon request.WirtschaftsprüfungsgesellschaftMiscellaneousUnless a launch date is given for a composite, the composite was created upon producing the presentations forthe first time in 2007.Unless reference is made to currency conversion, all funds contained in the composite are denominated in thesame currency.Carve-outs were created for the first time in 2007. Cash is allocated to the respective carve-out returns basedon a fixed percentage of the portfolio’s assets. Detailed information is available upon request.A complete list of all composites is available upon request. As of 1 January 2010, the entire composite structurewas reorganised, resulting in some composites being aggregated that had previously been presentedseparately. An overview of the composites concerned is available upon request. In addition, notes to this effecthave been included in the respective composite presentations.60
  62. 62. AppendixMeriten Investment Management GmbH – Composite Performance (2)Relevant Composites*CompositeBenchmarkPerformance TypeEffective DateStart DateCurrencyCompositeBench-markDifference Quantity NAV (Mio) % of AuMJun 11 - Dec 11 -0,30 N/A N/A 4 168 0,72 N/ACompositeBench-markDifference CompositeBench-markJun 11 - Dec 11 -0,30 N/A N/A 4,26 N/A N/A N/AWestLB Mellon Asset Management KAG - Composite PerformanceN/ACorporate Bond - Short DurationDispersion*Gross Performance31 Dez 201101 Jun 2011EURPerformance in %YearMandates (period-end)TrackingError in %Time PeriodPerformance p.a.** in %InformationRatioVolatility in %CompositeBenchmarkPerformance TypeEffective DateStart DateCurrencyCompositeBench-markDifference Quantity NAV (Mio) % of AuM2011 -0,18 -0,16 -0,01 3 133 0,57 N/A2010 13,70 12,61 1,08 2 120 0,49 N/A2009 43,15 60,18 -17,04 2 107 0,47 N/A2008 -25,15 -32,21 7,06 1 66 0,30 N/ASep 07 - Dec 07 1,06 -0,16 1,22 1 100 0,34 N/ACompositeBench-markDifference CompositeBench-mark1 Year -0,18 -0,16 -0,01 10,09 10,89 1,20 -0,012 Years 6,53 6,03 0,50 8,97 9,09 1,18 0,423 Years 17,56 21,67 -4,11 10,97 12,49 3,22 -1,28Sep 07 - Dec 11 4,87 4,67 0,20 13,35 15,84 4,18 0,05WestLB Mellon Asset Management KAG - Composite PerformanceBofAML Euro Fixed & Floating Rate High Yield Non-Financial BB-B 3% Constrained(HEAG) (since Jan 01, 2010)European High Yield non CCC (Non-Financial)Dispersion*Gross Performance31 Dez 201101 Sep 2007EURPerformance in %YearMandates (period-end)TrackingError in %Time PeriodPerformance p.a.** in %InformationRatioVolatility in %* This GIPS disclosure was approved before the name change from WestLB Mellon Asset Management to Meriten Investment Management.The composite comprises all portfolios consistently and discretionarily managed based on the "Corporates - Short Duration". Theterm of the individual bonds is up to 3.5 years. To increase the rate of return also Sell Protection CDS with a term to maturity belowone year can be used. Details are available upon request.WestLB Mellon Asset ManagementKapitalanlagegesellschaft mbHElisabethstraße 6540217 DüsseldorfWestLB Mellon Asset Management Kapitalanlagegesellschaft mbh claims compliance with the Global InvestmentPerformance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. WestLBMellon Asset Management Kapitalanlagegesellschaft mbh has been independently verified for the periods 2000-2011. Theverification reports are available upon request.Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPSstandards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performancein compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.GIPS® is a registered trademark of CFA Institute. CFA Institute has not been involved in the preparation or review of thisreport/advertisement** Not annualised for periods shorter than one year.* Calculation is made only at three or more continuously in a composite contained funds.The composite comprises all portfolios that are consistently and discretionarily managed based on the European High Yield (Non-Financial) investment process against the BofAML Euro Fixed & Floating Rate High Yield Non-Financial BB-B 3% Constrained Index(HEAG) and therefore dont invest in CCC bonds. As a result of a change in the investment process to Non-Financials this compositewas renamed (former name: European High Yield Core (non CCC)) and the benchmark has been changed as of 1 January 2010.Prior, the composite had an asset-weighted benchmark (indices: BofAML Euro Fixed & Floating Rate High Yield BB-B 3%Constrained (HEAC) and BofAML Euro High Yield BB-B Constrained (HECO)). Further details are available upon request.The funds in the composite are administrated at several entities. Therefore it is possible that different rates for securities andcurrencies are applied within the composite. The significance of the presentation shouldnt be negatively impacted due to this.Details of differences are available on request.WestLB Mellon Asset ManagementKapitalanlagegesellschaft mbHElisabethstraße 6540217 DüsseldorfWestLB Mellon Asset Management Kapitalanlagegesellschaft mbh claims compliance with the Global InvestmentPerformance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. WestLBMellon Asset Management Kapitalanlagegesellschaft mbh has been independently verified for the periods 2000-2011. Theverification reports are available upon request.Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPSstandards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performancein compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.GIPS® is a registered trademark of CFA Institute. CFA Institute has not been involved in the preparation or review of thisreport/advertisement** Not annualised for periods shorter than one year.* Calculation is made only at three or more continuously in a composite contained funds.Benchmark History: Asset Weighted Account Derived Benchmark (inception - Dec 31, 2009)61
  63. 63. AppendixMeriten Investment Management GmbH – Composite Performance (3)Relevant Composites*CompositeBenchmarkPerformance TypeEffective DateStart DateCurrencyCompositeBench-markDifference Quantity NAV (Mio) % of AuM2011 -1,00 -1,24 0,24 10 952 4,10 0,162010 14,31 14,52 -0,21 13 1.184 4,85 0,202009 51,37 73,80 -22,43 11 1.081 4,74 0,772008 -29,94 -33,81 3,87 14 1.122 5,13 0,622007 -0,31 -2,13 1,82 16 2.106 7,09 0,212006 9,89 8,92 0,97 18 2.238 3,77 2,872005 6,68 6,83 -0,14 15 1.100 1,97 0,062004 15,95 14,75 1,20 6 367 0,75 0,182003 22,02 26,43 -4,41 5 169 0,37 0,022002 2,74 -5,21 7,95 3 47 0,11 N/A2001 0,53 -13,94 14,46 2 28 0,07 N/AJul 00 - Dec 00 1,96 -13,64 15,60 2 20 0,05 N/ACompositeBench-markDifference CompositeBench-markWestLB Mellon Asset Management KAG - Composite PerformanceBofAML Euro Fixed & Floating Rate High Yield Non-Financial 3% Constrained(HEAE) (since Jan 01, 2010)European High Yield (Non-Financial)Dispersion*Gross Performance31 Dez 201101 Jul 2000EURPerformance in %YearMandates (period-end)TrackingError in %Time PeriodPerformance p.a.** in %InformationRatioVolatility in %CompositeBenchmarkPerformance TypeEffective DateStart DateCurrencyCompositeBench-markDifference Quantity NAV (Mio) % of AuM2011 -2,81 -2,56 -0,25 3 186 0,80 0,602010 14,42 14,52 -0,10 5 352 1,44 0,47CompositeBench-markDifference CompositeBench-mark1 Year -2,81 -2,56 -0,25 11,92 12,40 1,19 -0,212 Years 5,45 5,63 -0,18 11,01 11,49 1,71 -0,10Jan 10 - Dec 11 5,45 5,63 -0,18 11,01 11,49 1,71 -0,10WestLB Mellon Asset Management KAG - Composite PerformanceAsset Weighted Account Derived Benchmark (since inception)European High Yield (incl. Financials)Dispersion*Gross Performance31 Dez 201101 Jan 2010EURPerformance in %YearMandates (period-end)TrackingError in %Time PeriodPerformance p.a.** in %InformationRatioVolatility in %* This GIPS disclosure was approved before the name change from WestLB Mellon Asset Management to Meriten Investment Management.mark mark1 Year -1,00 -1,24 0,24 10,84 11,60 1,22 0,202 Years 6,38 6,35 0,04 10,08 9,87 1,62 0,023 Years 19,65 25,26 -5,61 12,36 14,00 4,09 -1,375 Years 3,65 4,95 -1,30 14,57 16,18 3,98 -0,3310 Years 7,38 7,37 0,01 10,92 12,57 4,30 0,00Jul 00 - Dec 11 6,61 3,67 2,94 10,97 14,17 6,14 0,48The composite comprises all portfolios consistently and discretionarily managed based on the European High Yield (Non-Financial)investment process against the BofAML Euro Fixed & Floating Rate High Yield Non-Financial 3% Constrained Index (HEAE). Thecomposite contains two funds (one without a benchmark, another with an absolute return benchmark), which dont have the priorcalled index as a benchmark, but are discretionarily managed based on the core investment process. Therefore, both funds areallocated to the composite. Prior to 2010, the composite was named "European High Yield Core". After that the name and thebenchmark of the composite have been changed caused by changes in the investment process.The funds in the composite are administrated at several entities. Therefore it is possible that different rates for securities andcurrencies are applied within the composite. The significance of the presentation shouldnt be negatively impacted due to this.Details of differences are available on request.WestLB Mellon Asset ManagementKapitalanlagegesellschaft mbHElisabethstraße 6540217 DüsseldorfWestLB Mellon Asset Management Kapitalanlagegesellschaft mbh claims compliance with the Global InvestmentPerformance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. WestLBMellon Asset Management Kapitalanlagegesellschaft mbh has been independently verified for the periods 2000-2011. Theverification reports are available upon request.Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPSstandards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performancein compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.GIPS® is a registered trademark of CFA Institute. CFA Institute has not been involved in the preparation or review of thisreport/advertisement** Not annualised for periods shorter than one year.The Composite contains funds that are denominated in Non-Euro Currency. The returns have been calculated into Euro using WM-Reuters spot rates.The composite contained funds with a bundled fee. A recalculation of the included transaction cost couldnt applied, therefore thefunds have been included net of fee in the gross of fee calculation. Therefore, the composite performance is net of transaction costs.These funds have the following share in the composite market value. 2005: 3%, 2006: 2%, 2007: 3%, 2008: 4%, 2010: 9%* Calculation is made only at three or more continuously in a composite contained funds.Benchmark History: Asset Weighted Account Derived Benchmark (Jan 01, 2007 - Dec 31, 2009); BofAML Euro High YieldConstrained (HECO) (Dec 01, 2005 - Dec 31, 2006); BofAML Euro High Yield Unconstrained (inception - Nov 30, 2005)The composite comprises all portfolios consistently and discretionarily managed based on the European High Yield (incl. Financials)investment process against the BofAML Euro Fixed & Floating Rate High Yield 3% Constrained Index (HEAC) or the BofAML EuroHigh Yield Constrained Index (HECO). Before the inception of this composite the funds were allocated to the former compositeEuropean High Yield Core. As a result of changes in the investment process this composite was newly created as of 1 January 2010.The funds in the composite are administrated at several entities. Therefore it is possible that different rates for securities andcurrencies are applied within the composite. The significance of the presentation shouldnt be negatively impacted due to this.Details of differences are available on request.WestLB Mellon Asset ManagementKapitalanlagegesellschaft mbHElisabethstraße 6540217 DüsseldorfWestLB Mellon Asset Management Kapitalanlagegesellschaft mbh claims compliance with the Global InvestmentPerformance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. WestLBMellon Asset Management Kapitalanlagegesellschaft mbh has been independently verified for the periods 2000-2011. Theverification reports are available upon request.Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPSstandards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performancein compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.GIPS® is a registered trademark of CFA Institute. CFA Institute has not been involved in the preparation or review of thisreport/advertisement** Not annualised for periods shorter than one year.The Composite contains funds that are denominated in Non-Euro Currency. The returns have been calculated into Euro using WM-Reuters spot rates.* Calculation is made only at three or more continuously in a composite contained funds.62
  64. 64. AppendixMeriten Investment Management GmbH – Composite Performance (4)Relevant Composites*CompositeBenchmarkPerformance TypeEffective DateStart DateCurrencyCompositeBench-markDifference Quantity NAV (Mio) % of AuM2011 1,20 1,73 -0,53 10 691 2,97 0,142010 3,91 4,74 -0,83 12 870 3,56 0,162009 16,46 15,64 0,82 13 907 3,97 1,172008 -2,44 -3,90 1,47 11 708 3,24 0,932007 -0,20 -0,23 0,03 9 479 1,61 0,072006 0,46 0,55 -0,09 8 335 0,56 0,002005 3,95 4,11 -0,16 4 172 0,31 0,662004 7,78 7,71 0,08 4 170 0,35 0,322003 6,79 6,99 -0,20 3 130 0,28 N/A2002 8,84 8,03 0,80 4 210 0,50 5,862001 6,59 6,68 -0,09 5 146 0,35 0,512000 6,12 5,76 0,35 3 80 0,19 N/AWestLB Mellon Asset Management KAG - Composite PerformanceAsset Weighted Account Derived Benchmark (since inception)Corporate Bond IG All (Financials and Non-Financials)Dispersion*Gross Performance31 Dez 201101 Jan 2000EURPerformance in %YearMandates (period-end)Performance p.a.** in % Volatility in %CompositeBenchmarkPerformance TypeEffective DateStart DateCurrencyCompositeBench-markDifference Quantity NAV (Mio) % of AuM2011 3,40 3,94 -0,55 12 560 2,41 0,452010 4,78 5,13 -0,35 14 578 2,37 0,262009 15,47 16,13 -0,66 15 875 3,84 0,762008 2,81 0,91 1,90 10 536 2,45 0,882007 0,58 0,72 -0,13 7 526 1,77 0,032006 0,41 0,52 -0,11 7 451 0,76 0,002005 3,54 3,45 0,08 10 681 1,22 0,152004 7,56 7,50 0,06 14 742 1,52 0,092003 7,61 7,82 -0,21 13 591 1,30 0,092002 9,08 7,37 1,71 10 301 0,72 N/AApr 01 - Dec 01 3,58 4,35 -0,77 2 42 0,10 N/ABench- Bench-WestLB Mellon Asset Management KAG - Composite PerformanceiBoxx Euro Corporate Non-Financial (R)Corporate Bond IG Non-FinancialDispersion*Gross Performance31 Dez 201101 Apr 2001EURPerformance in %YearMandates (period-end)TrackingError in %Time PeriodPerformance p.a.** in %InformationRatioVolatility in %* This GIPS disclosure was approved before the name change from WestLB Mellon Asset Management to Meriten Investment Management.CompositeBench-markDifference CompositeBench-mark1 Year 1,20 1,73 -0,53 5,53 5,16 0,84 -0,632 Years 2,55 3,22 -0,68 4,68 4,31 0,82 -0,823 Years 6,99 7,21 -0,22 4,86 4,69 0,93 -0,235 Years 3,58 3,39 0,19 4,77 4,87 1,02 0,1910 Years 4,54 4,41 0,14 3,86 3,93 0,80 0,17Jan 00 - Dec 11 4,84 4,71 0,14 3,66 3,73 0,75 0,18The composite contains all funds that are consistently and discretionary managed against iBoxx Euro Corporate Index or ML EMUCorporate index according to the standard investment process. The benchmark of the composite is the asset weighted average ofthe fund benchmarks. Details of the benchmark composition are available upon request.The funds in the composite are administrated at several entities. Therefore it is possible that different rates for securities andcurrencies are applied within the composite. The significance of the presentation shouldnt be negatively impacted due to this.Details of differences are available on request.TrackingError in %Time PeriodPerformance p.a.** in %WestLB Mellon Asset ManagementKapitalanlagegesellschaft mbHElisabethstraße 6540217 DüsseldorfWestLB Mellon Asset Management Kapitalanlagegesellschaft mbh claims compliance with the Global InvestmentPerformance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. WestLBMellon Asset Management Kapitalanlagegesellschaft mbh has been independently verified for the periods 2000-2011. Theverification reports are available upon request.Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPSstandards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performancein compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.GIPS® is a registered trademark of CFA Institute. CFA Institute has not been involved in the preparation or review of thisreport/advertisementInformationRatio** Not annualised for periods shorter than one year.Volatility in %* Calculation is made only at three or more continuously in a composite contained funds.CompositeBench-markDifference CompositeBench-mark1 Year 3,40 3,94 -0,55 4,10 3,68 0,59 -0,942 Years 4,09 4,53 -0,45 3,64 3,28 0,53 -0,853 Years 7,75 8,27 -0,52 3,64 3,40 0,51 -1,005 Years 5,28 5,22 0,06 4,06 4,01 0,58 0,1110 Years 5,43 5,25 0,18 3,40 3,38 0,62 0,29Apr 01 - Dec 11 5,39 5,29 0,09 3,38 3,42 0,81 0,12The composite contains all funds that are consistently and discretionary managed against iBoxx Euro Corporate Non-FinancialIndex, resp. the Senior subindex according to the Non-Financial Standard investment process.The funds in the composite are administrated at several entities. Therefore it is possible that different rates for securities andcurrencies are applied within the composite. The significance of the presentation shouldnt be negatively impacted due to this.Details of differences are available on request.Error in %Time PeriodWestLB Mellon Asset ManagementKapitalanlagegesellschaft mbHElisabethstraße 6540217 DüsseldorfWestLB Mellon Asset Management Kapitalanlagegesellschaft mbh claims compliance with the Global InvestmentPerformance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. WestLBMellon Asset Management Kapitalanlagegesellschaft mbh has been independently verified for the periods 2000-2011. Theverification reports are available upon request.Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPSstandards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performancein compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.GIPS® is a registered trademark of CFA Institute. CFA Institute has not been involved in the preparation or review of thisreport/advertisementRatio** Not annualised for periods shorter than one year.The composite contained funds with a bundled fee. A recalculation of the included transaction costs couldnt applied, therefore thefunds have been included net of fee in the gross of fee calculation. Therefore, the composite performance is net of transaction costs.These funds have the following share in the composite market value. 2010:13%* Calculation is made only at three or more continuously in a composite contained funds.63
  65. 65. Important informationThis document has been prepared by Meriten Investment Management GmbH, which isregulated by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). This documentdoes not constitute an offer or solicitation in a jurisdiction where to do so is unlawful orwhere the person making the offer or solicitation is not qualified to do so or where aperson receiving the offer or solicitation may not lawfully do so. All opinions and estimatesherein reflect those of the respective author at the time of publishing and may change atany time without notice. This presentation is solely intended for information of clients andshould not be construed as tax advice. We recommend clients requiring tax advice heretoto consult tax advisers. Although the information in this document is derived from publicsources we believe to be reliable, we do not represent, warrant or guarantee that thisinformation is accurate, complete or suitable for any purpose and it should not be used asa basis for investment decisions. All opinions and estimates herein, including forecastreturns, involve a number of assumptions that may not prove valid. Further, investments inglobal markets can be affected by a host of factors, including political and socialconditions, diplomatic relations, limitations on removal of funds or assets or imposition of(or change in) exchange control or tax regulations in such markets. All opinions andestimates contained herein reflect our view at the time of publishing and may change anytime without notice. Additionally, investments denominated in an alternative currency willIf Meriten Investment Management GmbH receives any rebates on the management fee oftarget funds or other assets, Meriten Investment Management GmbH undertakes to fully remitsuch payment to the investor or the fund. If Meriten Investment Management GmbH performsservices for an investment product of a third party, Meriten Investment Management GmbHwill be compensated by the relevant company. Typical services are investment managementor sales activities for funds established by a different investment management company.Normally, such compensation is calculated as a percentage of the management fee (up to100%) of the respective fund, calculated on the basis of such fund’s assets managed ordistributed by Meriten Investment Management GmbH. This may result in the risk that theinvestment advice given may not be consistent with the investor’s interest. The amount of themanagement fee is published in the prospectus of the respective fund. Any compensation paidto Meriten Investment Management GmbH does not increase the management fee of therelevant fund. There will be no direct charge to the investor. Further details are available uponrequest. This communication is not directed to persons in the United Kingdom and may not beused as a basis for their investment decisions. It is further intended solely for persons based incountries in which the respective funds are registered for distribution or in which suchregistration is not required. The shares of the fund have not been registered under the UnitedStates Securities Act of 1933, as amended (the “1933 Act”); they may therefore not be publicly64time without notice. Additionally, investments denominated in an alternative currency willbe subject to changes in exchange rates that may have an adverse effect on the value,price or income of the investment. Meriten Investment Management GmbH or one of itsaffiliates may: maintain a long or short position in the securities referred to herein or inrelated futures or options; purchase or sell, make a market in or engage in any othertransaction involving such securities and earn brokerage or other compensation in respectof the foregoing. Past performance should not be taken as an indication or guarantee offuture performance and no representation or warranty, express or implied, is maderegarding future performance. This document is intended solely for the information ofthose to whom it is distributed, Meriten Investment Management GmbH accepts no liabilitywhatsoever for any loss or damage of any kind arising out of the use of all or any part ofthis document. No part of this document may be reproduced or retransmitted in anymanner without the prior written permission of Meriten Investment Management GmbH.Additional information is available upon request. Investments in investment funds shouldonly be made on the basis of the current sales prospectus of the respective fund. Theprospectus and the financial reports of the funds as well as the key investor informationdocuments are available free of charge from Meriten Investment Management GmbH,Elisabethstraße 65, 40217 Düsseldorf or electronically at www.meriten.com. If the fundmakes investments in a currency differing from the shareholder’s currency, the share valuemay be subject to additional exchange rate fluctuations. The value of investments and theincome from them can fall as well as rise and investors may not get back the amountoriginally invested. This material is for professional clients only and is not intended fordistribution to, nor should it be relied on by, retail clients.States Securities Act of 1933, as amended (the “1933 Act”); they may therefore not be publiclyoffered or sold in the United States of America or to US citizens or any US residents. Thispublication is intended as marketing instrument and does not satisfy the statutoryrequirements regarding the impartiality of a financial analysis, and the financial instrumentsconcerned are not subject to any prohibition of trading in advance of the publication of thispresentation. Copyright ©2012 Morningstar, Inc. All Rights Reserved. The information, data,analyses and opinions with reference to Morningstar contained herein (1) include theconfidential and proprietary information of Morningstar, (2) may not be copied or redistributed,(3) do not constitute investment advice offered by Morningstar, (4) are provided solely forinformational purposes and therefore are not an offer to buy or sell a security, and (5) are notwarranted to be correct, complete or accurate. Except as otherwise required by law,Morningstar shall not be responsible for any trading decisions, damages or other lossesresulting from, or related to, this information, data, analyses or opinions or their use. Thisreport is supplemental sales literature, and therefore must be preceded or accompanied by aprospectus and disclosure statement.143/Q2/2013

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