• Domestic and global allocation: In the investment decision-making process, it has been demonstrated that the most important element affecting future performance is asset allocation. Mellon Capital's Tactical Asset Allocation research has demonstrated that opportunities exist for investors to exploit relative asset class mispricings.
• Currency: Our valuation-based approach to currency management is designed to capture incremental risk-adjusted expected returns by taking advantage of differences in real interest rates across countries. We treat currency as a separate asset class with unique expected return, risk, and correlation characteristics.
• Enhanced Indexing: Opportunities exist in the capital markets to enhance index performance while obtaining the benefits of indexing. Enhanced indexing offers a cost-effective, sensible investment approach to gaining diversified market exposure and receiving competitive relative returns over the long term.
• Active Fixed Income: Our research demonstrates that the potential to generate multiple sources of alpha exists when evaluating expected returns and taking advantage of mispricing opportunities. Focusing on current valuations, as opposed to making economic forecasts, allows us to assess characteristics objectively and to seek out the best opportunities when constructing portfolios.
• Indexing: There is strong evidence that beating the market consistently is an extremely difficult challenge for investment managers employing traditional active security selection. Indexing provides a cost-effective way to achieve market returns consistently.

• Domestic and global allocation: Mellon Capital's Tactical Asset Allocation strategies are systematically implemented based on recommendations from its proprietary TAA and Global TAA^® Models. Expected returns, risks, and the correlations are entered into the model for each asset class. Given the trade-off between expected risk and return over a ten-year horizon, the model identifies the asset mix that maximizes the risk-adjusted expected return. The Global TAA Model integrates country allocation and currency hedging into the allocation process.
• Currency: We use a systematic, value-based process to identify and exploit misvaluation opportunities. Forward-looking consensus estimates for inflation and short-term interest rates are evaluated and combined with a long-term valuation signal based on purchasing power parity to determine the risks and correlations between each currency.
• Enhanced Indexing: Stock selection-based enhanced indexing uses a systematic, valuation-based investment process to exploit temporary stock mispricings. Its objective is to provide incremental outperformance over the target index while maintaining a similar level of risk.
• Active Fixed Income: We perform valuations using proprietary tools and models that identify the optimal term structure and sector allocation, while managing risk and creating performance opportunities.
• Indexing: Our indexing approach is disciplined and structured, with the singular objective of duplicating each index's fundamental characteristics and performance. Mellon Capital manages indexing strategies that track the major domestic and international market segments.

*Includes assets managed by Mellon Capital officers as dual officers or employees of The Dreyfus Corporation or The Bank of New York Mellon. AUM includes $26 billion overlay assets.

Effective January 1 2008, Mellon Equity Associates has merged into Mellon Capital Management Corporation.

Effective February 19, 2008, the Quantitative Equity Management group of The Bank of New York has integrated into Mellon Capital Management Corporation.