2009
FALL FOCUS
INVESTMENT CONFERENCE
Fund FOCUS
Mutual Fund Update
Peter Jacobs
Senior Vice President
Mutual Fund Product Management
Northern Trust Global Investments
For Financial Professional Use Only
© 2009 Northern Trust Corporation
northerntrust.com
Agenda

Northern Funds Product Line Update

Updates on Existing Funds


Northern Tax-Exempt Funds

Northern Multi-Manager Funds

NIF Global Tactical Asset Allocation

NIF Money Market Funds
New Funds

NIF Treasury Portfolio (money market fund)

Ultra-Short Duration Funds
Northern Ultra-Short Fixed Income Fund
Northern Tax-Advantaged Ultra-Short Fixed Income Fund
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2009 Fall FOCUS Investment Conference
Northern Funds Product Line Update
Growth of Funds and Assets – YTD 2009
Northern Funds and Northern Institutional Funds
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Number of Funds
Mutual Fund
Assets under Management
9-30-08
61
$85 billion
9-30-09
67
$93 billion

12-month AUM Growth: +9% vs. negative growth for the industry

Perspective: Mutual fund AUM of $93 billion is less than 15% of
Northern Trust’s total investment AUM

Primary sources of AUM growth:

Money market funds

Bond funds – Bond Index Fund; High Yield Fund; Municipal Funds
2009 Fall FOCUS Investment Conference
Update: Tax-Exempt Funds
Tax-exempt bond funds have been Northern’s top-selling mutual
fund category YTD, with more than $2 billion in sales YTD.
Why?
Bond Ladders >>> Bond Funds

Active management can capitalize on opportunities:
 Higher
income potential by capturing cap gains; managing maturities; yield
curve changes; positioning strategies (barbell, bullet, etc.) vs. ladders static
 Designed
to provide steady stream of monthly income vs. sporadic income
of individual bonds
 Risk
management: Active manager may increase income or protect capital
vs. ladders are locked in
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
Low transaction costs – size matters

Easy transition from ladders to funds – low minimum of $2,500 and
instant diversification

Seasoned, skilled management – same lead manager since inception
2009 Fall FOCUS Investment Conference
Update: Tax-Exempt Funds
More Northern Municipal Bond Funds – Advantages:

Competitive Fees

Excellent historical performance
3
of 6 tax-exempt funds qualifying for Morningstar ratings have
received either a 4-star or 5-star overall rating; the others are 3-star*
 The
3 investment grade tax-exempt funds with 10-year track records
are in the upper 1/3 of their Lipper categories*
3
of 6 tax-exempt funds with 3-year records are in the upper 10%
of their Lipper categories*
Past performance is no guarantee of future results.
Ratings reflect fee waivers in effect; in their absence, ratings may have been lower.
Due to ongoing market volatility, the Fund may have experienced negative returns for the time periods shown.
Star ratings are based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance
(including the effects of sales charges and redemption fees), placing more emphasis on downward variations and rewarding
consistent performance. The overall rating is a weighted average of the 3-, 5-, and 10-year (if applicable) returns. 5 stars = top
10% of funds in an asset category; 4 stars = next 22.5% of funds; 3 stars = next 35%; 2 stars = next 22.5% and 1 star = next 10%.
A fund must be in existence three years to be rated. Ratings are subject to change monthly.
* as of August 31, 2009
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2009 Fall FOCUS Investment Conference
Update: Multi-Manager Funds
Northern’s answer to open architecture includes seven mutual funds
managed by multiple outside managers, selected by Northern Trust
Global Advisors (NTGA), our manager-of-managers investment group.

NTGA, since 1979, has 102 employees in 5 offices
with $30 billion AUM (as of 6/30/09)
 Manager
research
 Manager
selection
 Key:
Manager combinations
 Manager
oversight

Important today: due diligence in manager selection / oversight

Seven Multi-Manager Funds = >$5 billion in AUM in three years
 Acceptance
 Northern
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from Northern Trust and fiduciary clients
corporate support and commitment
2009 Fall FOCUS Investment Conference
Update: Multi-Manager Funds
Northern Multi-Manager Funds:

Northern Multi-Manager Large Cap Fund

Northern Multi-Manager Mid Cap Fund

Northern Multi-Manager Small Cap

Northern Multi-Manager International Equity Fund
New funds since last year’s FOCUS conference:
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
Northern Multi-Manager Global Real Estate Fund

Northern Multi-Manager Emerging Markets Equity Fund

Northern Multi-Manager High Yield Opportunity Fund
2009 Fall FOCUS Investment Conference
Update: NIF Global Tactical Asset Allocation Fund
Simple, but sophisticated, solution to global asset allocation
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
Converted from NIF-Balanced Portfolio in April, 2008.

Represents best thinking of Northern Trust Global Investments

Asset allocation based on Investment Policy Committee’s process

15 asset classes in a fund-of-funds structure; rebalanced daily

15 asset classes via one NASDAQ symbol and one CUSIP number

Competitive performance since conversion (April, 2008)
2009 Fall FOCUS Investment Conference
Update: NIF Money Market Portfolios
Guarantee Program and Proposed SEC Changes
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
U.S. Treasury Temporary Guarantee Program expired on
September 18. Non-event in the markets.

SEC proposed amendments designed to further stabilize money
market funds and to increase safety & liquidity for shareholders

Northern Trust already adheres, in large part, to SEC proposals;
don’t expect changes to significantly impact NIF money funds.
2009 Fall FOCUS Investment Conference
Update: NIF Money Market Portfolios
Current Product Positioning

Remain conservatively positioned
 High
credit quality
 Strong
liquidity
 Secondary

Rate Forecast: Expect Fed Funds to remain near 0% into 2010,
then rise based on performance of the economy

Recent Northern Credit Policy Enhancements
 Enhanced
 Master
 Result:
credit review process
Eligible List – to ensure names satisfy higher standards
 Revised
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emphasis on yield
limits to reduce amount and maturity to all but strongest names
Raise average credit quality and improve diversification
2009 Fall FOCUS Investment Conference
New Funds
NIF Treasury Portfolio (money market fund)
Why Developed?
- To provide a US Treasury alternative
- To meet client demand
Investment Objective:
Seeks to preserve capital, maintain liquidity and generate income,
by investing exclusively in money market instruments issued by, or
guaranteed by, the U.S. government
Investment Strategy:
To invest in securities issued by the U.S. Treasury or guaranteed as
to principal and interest by the U.S. government
Benchmark Index:
iMoneyNet Treasury and Repo Institutional – includes only
institutional government funds that hold U.S. Treasuries and
repurchase agreements backed by the U.S. Treasury
Average Maturity:
Under normal market conditions, 20-60 days
Dividend Distribution:
Monthly
Net Expenses:
0.20%* on Shares Class (currently waived down to 0.15%)
Current Assets (9-30-09):
$2.2 billion
* Includes voluntary fee waivers and expense reimbursements that may change or end at any time, along with contractual
expense reimbursements that, if not extended, will end on December 31, 2009. It does not include additional expenses
related to the Treasury Guarantee Program. Unaudited as of August 31, 2009.
An investment in the Money Market Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Although the Money Market Funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Money Market Funds.
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2009 Fall FOCUS Investment Conference
New Funds
Northern Ultra-Short Fixed Income Fund
Why Developed?
- In response to client frustration with low yields on money funds
- To seek higher yield than money fund, but with NAV fluctuation
Investment Objective:
Seeks to maximize total return to the extent consistent with
preservation of capital
Investment Strategy:
Invests in investment grade domestic debt securities, all US$
denominated, using yield curve, sector and security selection
Average Maturity:
6-18 months
Dividend Distribution:
Monthly
Net Expenses:
0.25%*
Current Assets (9-30-09):
$68 million
The Fund is not a money market fund, which maintains a $1.00 NAV, and the Fund’s share price will fluctuate with
its returns.
Bond Risk: Bond funds will tend to experience smaller fluctuations in value than stock funds. However, investors in any bond
fund should anticipate fluctuations in price, especially for longer-term issues and in environments of rising interest rates.
* Net expenses include voluntary expense reimbursements by Northern Funds investment advisers that may change or end at
any time
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2009 Fall FOCUS Investment Conference
New Funds
Northern Tax-Advantaged Ultra-Short Fixed Income Fund
Why Developed?
- In response to client frustration with low yields on money funds
- To seek higher yield than money fund, but with NAV fluctuation
- To maximize after-tax return
Investment Objective:
Seeks to maximize total return, adjusted for the maximum federal
tax rate, to the extent consistent with preservation of capital
Investment Strategy:
Invests in investment grade domestic debt securities, taxable and
tax-exempt, all US$ denominated; using yield curve, sector
selection and security selection
Average Maturity:
6-18 months
Dividend Distribution:
Monthly
Net Expenses:
0.25%*
Current Assets (9-30-09):
$110 million
The Fund is not a money market fund, which maintains a $1.00 NAV, and the Fund’s share price will fluctuate
with its returns.
Bond Risk: Bond funds will tend to experience smaller fluctuations in value than stock funds. However, investors in any
bond fund should anticipate fluctuations in price, especially for longer-term issues and in environments of rising interest
rates.
* Net expenses include voluntary expense reimbursements by Northern Funds investment advisers that may change or end
at any time
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2009 Fall FOCUS Investment Conference
Important Disclosure Information
Information has been obtained from sources believed to be reliable, but its accuracy and interpretation
are not guaranteed. Information is subject to change without notice. No information provided herein
shall constitute, or be construed as, an offer to sell or a solicitation of an offer to acquire any security,
investment product or service, nor shall any such security, product or service be offered or sold in any
jurisdiction where such offer or solicitation is prohibited by law or regulation. This material is provided
for informational purposes only and does not constitute a recommendation of any investment strategy
or product described herein. Northern Trust typically offers its investment products and services
through its various affiliates including Northern Trust Investments, N.A., Northern Trust Global
Investments Ltd., Northern Trust Global Advisors, Inc., Northern Trust Bank, FSB, and Northern Trust
Securities, Inc. Not all products may be suitable for or available to all investors.
Investing involves risk, including the possible loss of principal.
Investment products and services are offered through Northern Trust Securities, Inc., member FINRA
and SIPC and a wholly owned subsidiary of Northern Trust Corporation. Please carefully read the
prospectus and consider the investment objectives, risks, charges and expenses of Northern
Funds and Northern Institutional Funds before investing. Call 800-595-9111 to obtain a
prospectus, which contains this and other information about the funds. Northern Funds and
Northern Institutional Funds are distributed by Northern Funds Distributors, LLC, Boston, MA, not
affiliated with Northern Trust.
Not FDIC-Insured
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|
No bank guarantee
2009 Fall FOCUS Investment Conference
|
May lose value
2009
FALL FOCUS
INVESTMENT CONFERENCE
Thank you.
Peter Jacobs
Mutual Fund Product Management
Northern Trust Global Investments
© 2009 Northern Trust Corporation
northerntrust.com