Newton Dreyfus International Equity
Separately Managed Accounts
QUARTERLY INVESTMENT GUIDE
SECOND QUARTER 2016
People
Dreyfus
With over 60 years of investment expertise,
Dreyfus has built a strong reputation for
professional asset management, quality
and integrity. Dreyfus Investments is a
division of MBSC Securities Corporation,
a subsidiary of The Dreyfus Corporation.
Dreyfus Investments offers an array of
separately managed accounts with a
range of asset classes and investment
styles from which to choose, all managed
by a distinguished list of world-class
institutional managers specializing in
distinct areas of investment expertise.
Dreyfus and Newton are both part of
BNY Mellon.
Newton Investment Management (North
America) Limited (Newton)* has been
managing investments on behalf of
individual investors and institutions
since 1978 and currently manages over
$69.2 billion for pension funds, charities
and institutions. Over 80% of Newton’s
institutional clients appoint it to manage
money on a global basis. As such, Newton’s
10-member global equity team manages
over $24 billion in global equity mandates.
Newton strongly believes in the powerful
effect of constant interaction, challenge
and information sharing among investment
professionals. This is why the entire team
of investment professionals is located
in one open-plan office in London. This
single-office location, coupled with the
flat structure and performance-driven
culture of the team, encourages creative
thinking, fluid communication and swift
implementation of ideas for the benefit
of all clients.
Philosophy
Newton’s investment philosophy is structured
around the central tenet of its business:
“No company, market or economy can
be considered in isolation. Each must be
understood in a global context.” Newton firmly
believes that in a rapidly shrinking world,
only by understanding events, trends and
competitive pressures worldwide can the
prospects for stocks be properly evaluated.
Process
Newton’s investment strategy combines
a bottom-up stock selection process with
a global thematic framework, a process
which has remained unchanged since the
firm’s inception more than 30 years ago.
The process begins with the development
of key investment themes that Newton
identifies as the current forces driving
global change. These themes can be
economic, industrial or social and are
evaluated for their long-term effect
on companies. Newton’s analysts
then interpret these themes and seek
stocks that they believe are attractively
valued, have strong fundamentals and
may benefit from one or more of the
investment themes.
Risk management and monitoring by the
Portfolio Analytics Team and Portfolio
Analysis Group provide a “quality control”
step to help protect a client’s interest
by regularly reviewing and identifying
inherent portfolio risks. This helps ensure
that the manager takes only intended and
appropriate risks in accordance with the
client’s objective.
Newton’s career analysts research
opportunities by global industry and
sector rather than by region. They are the
primary generators of investment ideas
and follow a separate career path than
portfolio managers. Portfolio managers are
then charged with the task of constructing
seamlessly integrated portfolios, in
accordance with the objectives of each
client, to reflect Newton’s best ideas.
Newton’s investment approach is
pragmatic in that it is not wedded to any
particular style bias — attractively valued
companies do not always fall into “growth”
or “value” categories. As a result, Newton
does not always fit neatly into a “style
box,” but instead strives to add value
under varying market conditions.
Newton’s international portfolios typically
hold between 55 and 80 companies with no
constraint on sector or industry adherence
relative to the benchmark. This means that
at times the portfolios may be significantly
overweight or underweight in certain
sectors. Additionally, portfolios may invest
as much as 25% outside the countries
that constitute the MSCI EAFE Index,
including up to 20% in emerging markets.
The portfolios consist primarily of ADRs,
as well as U.S. dollar-denominated
ordinary shares.
*“Newton” and/or the “Newton Investment Management” brand refers to the following group of affiliated companies: Newton Investment Management Limited,
Newton Investment Management (North America) Limited (NIMNA Ltd) and Newton Investment Management (North America) LLC (NIMNA LLC). NIMNA LLC
personnel are supervised persons of NIMNA Ltd and NIMNA LLC does not provide investment advice, all of which is conducted by NIMNA Ltd. NIMNA LLC and
NIMNA Ltd are the only Newton companies to offer services in the U.S. Newton is a wholly owned subsidiary of the Bank of New York Mellon Corporation.
Newton Dreyfus International Equity
TOP 10 HOLDINGS AS OF 6/30/16
Company
LEG Immobilien AG
Japan Tobacco Inc.
Wolters Kluwer NV
Recruit Holdings Co. Ltd.
Don Quijote Co. Ltd.
TechnoPro Holdings Inc.
Novartis AG
Vodafone Group PLC
Nestlé S.A.
Roche Holding Ltd. Genusssch.
Total
Percent of
Portfolio
3.8%
3.6%
3.6%
3.3%
2.8%
2.8%
2.7%
2.7%
2.7%
2.6%
30.6%
Based on a model wrap account and
subject to change; actual individual
accounts may vary. There can be
no assurance that the securities
purchased will remain in the portfolio
or that other securities have not
been purchased. The holdings
listed should not be considered
recommendations to purchase or sell
a particular security. It should not be
assumed that securities bought or
sold in the future will be profitable
or will equal the performance of the
securities in this list. Upon request,
Newton will provide a list of all
securities purchased and sold during
the past year.
SECTOR ALLOCATION AS OF 6/30/16
Consumer Staples
Consumer Discretionary
Information Technology
Telecommunication Services
Health Care
Industrials
Utilities
Energy
Materials
Financials*
Cash
Relative Position to Benchmark (%)
Portfolio
MSCI EAFE
19.2%
16.5%
7.4%
6.4%
11.4%
12.0%
1.7%
2.6%
2.7%
17.2%
3.0%
13.3%
12.1%
5.3%
5.2%
12.4%
13.3%
3.9%
5.3%
6.8%
22.3%
0.0%
Underweight
Overweight
5.9
4.4
2.1
1.3
-1.0
-1.3
-2.3
-2.8
-4.2
-5.1
-12
-10
-8
-6
-4
-2
0
2
3.0
4
6
8
10
Source: Newton. Based on a model wrap account and subject to change; actual individual accounts may vary. The MSCI EAFE Index (Europe, Australasia, Far East)
is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S.
and Canada. An investor cannot invest directly in any index. Unlike the MSCI EAFE Index, which does not contain any ADRs, Newton Dreyfus International Equity
wrap accounts are composed primarily of ADRs.
*Included in the portfolio’s Financials classification is the iShares MSCI Japan ETF holding, only a fraction of which is comprised of Financials stocks.
REGIONAL ALLOCATION AS OF 6/30/16
Emerging
Japan
Europe Non-Eurozone
North America
Other
Europe Eurozone
Asia Pacific ex-Japan
Emerging Market (Subtotal)
Developed Market (Subtotal)
Relative Position to Benchmark (%)
Portfolio
MSCI EAFE
7.1%
24.3%
34.3%
0.0%
0.0%
28.7%
2.7%
7.1%
90.0%
0.0%
23.3%
34.2%
0.1%
0.8%
29.6%
12.1%
0.0%
100.0%
Underweight
Overweight
7.1
1.1
0.1
-0.1
-0.8
-0.9
-9.4
-10.0
-12
-10
7.1
-8
-6
-4
-2
0
2
4
6
8
10
Source: Newton. Based on a model wrap account and subject to change; actual individual accounts may vary. The MSCI EAFE Index (Europe, Australasia, Far East)
is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S.
and Canada. An investor cannot invest directly in any index. Unlike the MSCI EAFE Index, which does not contain any ADRs, Newton Dreyfus International Equity
wrap accounts are composed primarily of ADRs.
LEARN MORE
For more information about Newton Dreyfus International Equity portfolios,
please call Dreyfus at 1-877-334-6899.
Asset allocation and diversification cannot ensure a profit or protect against loss.
Equity investments are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees.
Investing internationally involves special risks including currency fluctuation, political, economic and social instability, a lack of comprehensive company
information, differing auditing and legal standards and less market liquidity. These risks are enhanced when investing in less-developed, emerging markets.
MBSC Securities Corporation (“MBSC”), through certain of its Dreyfus-branded divisions, including Dreyfus Investments, sponsors, manages or provides
administrative services to various wrap programs. MBSC is a subsidiary of The Dreyfus Corporation (“Dreyfus”), which in turn is a subsidiary of BNY Mellon.
BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. Newton Investment Management (North America) Limited provides certain
investment management services with respect to a wrap program sponsored by MBSC.
© 2016 MBSC Securities Corporation
MARK-2016-07-23-0267
DSA-NIEIG-0616A