Mutual Fund Summary Prospectus (497k)
July 30 2013 - 11:54AM
Edgar (US Regulatory)
NORTHERN FUNDS
Multi-Manager Small Cap Fund
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Summary
Prospectus
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July 31, 2013
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Ticker:
NMMSX
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Before you invest, you may want to review the Funds complete Prospectus, which contains more
information about the Fund and its risks. You can find the Funds complete Prospectus and other information about the Fund online at www.northernfunds.com/prospectus. You can also get this information at no cost by calling
800-595-9111
or by sending an
e-mail
request to northern-funds@ntrs.com. If you purchase shares of the Fund through a financial
intermediary (such as a bank or a broker-dealer), the complete Prospectus and other information are also available from your financial intermediary. The Funds complete Prospectus and Statement of Additional Information, both
dated July 31, 2013, as supplemented, are incorporated by reference into this summary prospectus and may be obtained, free of charge, at the website, phone number or
e-mail
address noted above.
INVESTMENT OBJECTIVE
The Fund seeks to provide long-term capital appreciation through a diversified portfolio of primarily smaller market capitalization equity securities.
Any income received is incidental to this objective.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
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Shareholder Fees
(fees paid directly from your investment)
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None
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Annual Fund Operating Expenses
(expenses that you pay each year as a
percentage of the value of your investment)
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Management Fees
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1.10%
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Other Expenses
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0.31%
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Administration Fees
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0.15%
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Transfer Agency Fees
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0.10%
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Other Operating Expenses
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0.06%
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Acquired Fund Fees & Expenses
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0.01%
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Total Annual Fund Operating Expenses
(1)
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1.42%
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Expense
Reimbursement
(2)
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(0.11)%
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Total Annual Fund Operating Expenses After Expense Reimbursement
(1)
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1.31%
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(1)
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The Total Annual Fund Operating Expenses and Total Annual Fund Operating Expenses
After Expense Reimbursement will not correlate to the Funds ratios of average net assets to (1) expenses before reimbursements and credits and (2) expenses net of reimbursements and credits, respectively, included in the Funds
Financial Highlights in the Funds complete Prospectus, which do not reflect indirect expenses, such as Acquired Fund Fees and Expenses.
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(2)
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The Northern Trust Company of Connecticut and Northern Trust Investments, Inc. have contractually agreed to reimburse a portion of the operating expenses of
the Fund (other than acquired fund fees and expenses; a portion of the compensation paid to each Trustee who is not an officer, director or employee of Northern Trust Corporation or its subsidiaries; expenses related to third-party consultants
engaged by the Board of Trustees of the Funds; membership dues paid to the Investment Company Institute and Mutual Fund Directors Forum; and extraordinary expenses and interest, if any) to the extent the Total Annual Fund Operating
Expenses exceed 1.30%. This contractual limitation may not be terminated before July 31, 2014 without the approval of the Funds Board of Trustees. Northern Trust Investments, Inc. and The Northern Trust Company of Connecticut serve
as the investment advisers to the Fund and Northern Trust Investments, Inc. serves as administrator to the Fund. The Northern Trust Company, an affiliate of Northern Trust Investments, Inc. and The Northern Trust Company of Connecticut, serves as
transfer agent, custodian and sub-administrator to the Fund.
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EXAMPLE
The following Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds operating
expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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1 Year
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3 Years
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5 Years
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10 Years
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$133
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$439
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$766
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$1,692
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PORTFOLIO TURNOVER.
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs
and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual portfolio operating expenses or in the Example, affect the Funds performance. During the most recent fiscal year, the
Funds portfolio turnover rate was 59.67% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
In seeking long-term capital appreciation, the Fund will invest, under normal circumstances, at least 80% of its net assets in
equity securities of small capitalization companies. Small capitalization companies generally are considered to be those whose market capitalization is, at the time the Fund makes an investment, generally within the range of the capitalization of
companies in the Russell 2000
®
Index or the S&P SmallCap
600
®
Index. Securities of companies whose capitalization no longer meets this definition after purchase may
continue to be considered securities of small capitalization companies and held in the Fund. As of May 31, 2013, the market capitalization of the companies in Russell 2000 Index was between $129 million and $3.3 billion. As of May 31,
2013, the market capitalization of the companies in the S&P SmallCap 600 Index was between $70.0 million and $3.7 billion. The sizes of companies in the Indices change with market conditions. In addition, changes to the composition of the
Russell 2000 Index and the S&P SmallCap 600 Index can change the market
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NF SUM MMSC (7/13)
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SUMMARY PROSPECTUS
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1
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MULTI-MANAGER SMALL CAP FUND
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capitalization ranges of the companies in the Indices. The Fund is not limited to the equity securities included in the Russell 2000 Index or the S&P SmallCap 600 Index and may invest in
other equity securities that meet the sub-advisers criteria discussed below.
While the Fund invests at least 80% of its net assets in
equity securities of small capitalization companies, it may also invest up to 20% of its net assets in equity securities of companies that have market capitalizations that are higher or lower than the ranges of the Russell 2000 Index or the S&P
SmallCap 600 Index.
The Fund utilizes a multi-manager approach whereby the Funds assets are allocated to one or more
sub-advisers, at the discretion of the Funds investment advisers. Each sub-adviser acts independently from the others and utilizes its own distinct investment style in selecting securities. However, each sub-adviser must operate within the
constraints of the Funds investment objective, strategies and restrictions. The Fund utilizes two principal styles intended to complement each other:
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Value style
whereby the sub-advisers seek to identify companies whose improving businesses are not fully recognized by the market and whose
securities are thus selling at valuations less than should be expected.
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Growth style
whereby the sub-advisers seek to identify companies that are exhibiting rapid growth in their businesses.
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When determining the allocations and reallocations to sub-advisers, the Funds investment advisers will consider a
variety of factors, including but not limited to the sub-advisers style, historical performance, and the characteristics of each sub-advisers allocated assets (including capitalization, growth and profitability measures, valuation
metrics, economic sector exposures, and earnings and volatility statistics). The Funds investment advisers seek, through their selection of sub-advisers and their allocation determinations, to reduce portfolio volatility and provide an
attractive combination of risk and return for the Fund.
The Fund may make significant investments in initial public offerings
(IPOs).
The sub-advisers may engage in active trading, and will not consider portfolio turnover a limiting factor in making
decisions for the Fund.
Frank Russell Company does not endorse any of the securities in the Russell 2000 Index. Standard &
Poors Financial Services LLC does not endorse any of the securities in the S&P SmallCap 600. They are not sponsors of the Multi-Manager Small Cap Fund and are not affiliated with the Fund in any way.
PRINCIPAL RISKS
MARKET RISK
is the risk that the value of equity securities owned by the Fund may decline, at times sharply and unpredictably, because of economic
changes or other events that affect individual issuers or large portions of the market. It includes the risk that a particular style of investing, such as growth or value, may underperform the market generally.
MANAGEMENT RISK
is the risk that a
strategy used by the Funds investment advisers or sub-advisers may fail to produce the intended results.
MULTI-MANAGER RISK
is the risk that the sub-advisers investment styles will not always be complementary, which could affect the performance of
the Fund.
SMALL CAP STOCK
RISK
is the risk that stocks of smaller companies may be subject to more abrupt or erratic market movements than stocks of larger, more established companies. Small companies may have
limited product lines or financial resources, or may be dependent upon a small or inexperienced management group, and their securities may trade less frequently and in lower volume than the securities of larger companies, which could lead to higher
transaction costs. Generally the smaller the company size, the greater the risk.
PORTFOLIO
TURNOVER RISK
is the risk that high portfolio turnover is likely to lead to increased Fund expenses that may result in lower investment returns. High portfolio turnover also is likely to
result in higher short-term capital gains taxable to shareholders.
IPO RISK
is the risk that the market value of shares of IPOs will fluctuate considerably or decline shortly after the IPO, due to factors such as the absence of a prior public market, unseasoned trading, the
small number of shares available for trading and limited information about the issuer.
SECTOR RISK
is the risk that companies in
similar businesses may be similarly affected by particular economic or market events, which may, in certain circumstances, cause the value of securities of all companies in a particular sector of the market to decrease. While the Fund may not
concentrate in any one industry, the Fund may invest without limitation in a particular market sector.
TECHNOLOGY SECURITIES RISK
is the risk that securities of technology companies may be subject to greater price volatility than securities of
companies in other sectors. These securities may fall in and out of favor with investors rapidly, which may cause sudden selling and dramatically lower market prices. Technology securities also may be affected adversely by changes in technology,
consumer and business purchasing patterns, government regulation and/or obsolete products or services. In addition, a rising interest rate environment tends to negatively affect technology companies.
As with any mutual fund, it is possible to lose money on an investment in the Fund. An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation, any other government agency, or The Northern Trust Company, its affiliates, subsidiaries or any other bank.
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MULTI-MANAGER SMALL CAP FUND
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2
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SUMMARY PROSPECTUS
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FUND PERFORMANCE
The bar chart and table that follow provide an indication of the risks of investing in the Fund by showing (A) changes in the performance of the Fund from year to year, and (B) how the average
annual total returns of the Fund compare to those of a broad-based securities market index.
The Funds past performance, before and after
taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance information for the Fund is available and may be obtained on the Funds Web site at www.northernfunds.com or by calling 800-595-9111.
CALENDAR YEAR TOTAL RETURN*
* Year to date total return for the six months ended June 30, 2013 is 16.22%. For the periods shown in the bar chart
above, the highest quarterly return was 22.06% in the second quarter of 2009, and the lowest quarterly return was (26.27)% in the fourth quarter of 2008.
AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 2012)
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Inception
Date
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1-Year
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5-Year
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Since
Inception
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Multi-Manager Small Cap Fund
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6/22/06
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Return before taxes
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14.31%
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1.88%
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2.90%
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Return after taxes on distributions
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13.84%
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1.45%
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2.27%
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Return after taxes on distributions and sale of Fund shares
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9.93%
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1.54%
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2.30%
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Russell 2000
®
Index (reflects no deduction for fees, expenses, or
taxes)
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16.35%
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3.56%
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4.72%
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After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect
the impact of state and local taxes. Actual after-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements,
such as 401(k) plans or individual retirement accounts.
In calculating the federal income taxes due on redemptions, capital gains taxes resulting
from redemptions are subtracted from the redemption proceeds and the tax benefits from capital losses resulting from the redemptions are added to the redemption proceeds. Under certain circumstances, the addition of the tax benefits from capital
losses resulting from redemptions may cause the Returns After Taxes on Distributions and Sale of Fund Shares to be greater than the Returns After Taxes on Distributions or even the Returns Before Taxes.
MANAGEMENT
INVESTMENT ADVISERS AND SUB-ADVISERS.
The Northern Trust Company of Connecticut and Northern Trust Investments, Inc., each a subsidiary of Northern
Trust Corporation, serve jointly as the investment advisers of the Multi-Manager Small Cap Fund. Cardinal Capital Management, L.L.C., Denver Investment Advisors LLC, Hotchkis and Wiley Capital Management, LLC, Riverbridge Partners, LLC and Summit
Creek Advisors, LLC each serves as a sub-adviser of the Fund.
PORTFOLIO MANAGERS
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Title
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Portfolio Manager
of Fund since:
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The Northern Trust Company of Connecticut
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Christopher E. Vella, CFA
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Senior Vice President and Chief Investment Officer
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January 2012
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Jessica K. Hart
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Senior Vice President
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June 2009
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Cardinal Capital Management, L.L.C.
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Amy K. Minella
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Managing Partner and Portfolio Manager
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February 2011
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Eugene Fox
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Partner and Portfolio Manager
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February 2011
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Robert B. Kirkpatrick, CFA
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Partner and Portfolio Manager
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February 2011
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Rachel D. Matthews
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Partner, Analyst and Portfolio Manager
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February 2011
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Denver Investment Advisors LLC
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Troy Dayton, CFA
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Partner, Director of Value Research, Portfolio Manager and Research Analyst
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June 2010
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Mark M. Adelmann, CFA
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Partner, Portfolio Manager and Research Analyst
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June 2010
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Derek R. Anguilm, CFA
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Partner, Portfolio Manager and Research Analyst
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June 2010
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Lisa Z. Ramirez, CFA
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Partner, Portfolio Manager and Research Analyst
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June 2010
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Hotchkis and Wiley Capital Management, LLC
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James B. Miles
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Portfolio Manager and Principal
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June 2010
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David E. Green, CFA
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Portfolio Manager and Principal
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June 2010
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Riverbridge Partners, LLC
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Mark A. Thompson
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Chief Investment Officer and Portfolio Manager
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March 2010
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Rick D. Moulton, CFA
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Principal and Portfolio Manager
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March 2010
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Dana L. Feick, CFA
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Principal and Associate Portfolio Manager
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March 2010
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Summit Creek Advisors, LLC
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Joseph J. Docter, CFA
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Co-Founder and Senior Portfolio Manager
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March 2013
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Adam N. Benson, CFA
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Co-Founder and Senior Portfolio Manager
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March 2013
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SUMMARY PROSPECTUS
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3
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MULTI-MANAGER SMALL CAP FUND
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PURCHASE AND SALE OF FUND SHARES
You may purchase Fund shares through your account at Northern Trust or an authorized intermediary or you may open an account directly with Northern Funds (the Trust) with a minimum initial
investment of $2,500 in the Fund ($500 for an IRA; $250 under the Automatic Investment Plan; and $500 for employees of Northern Trust and its affiliates). The minimum subsequent investment is $50 (except for reinvestments of distributions for which
there is no minimum). The Fund reserves the right to waive these minimums.
On any business day, you may sell (redeem) or exchange shares
through your account by contacting your Northern Trust account representative or authorized intermediary. If you purchase shares directly from the Trust, you may sell (redeem) or exchange your shares in one of the following ways:
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By Mail Send a written request to: Northern Funds, P.O. Box 75986, Chicago, Illinois 60675-5986.
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By Telephone Authorize the telephone privilege on your New Account Application. Call 800-595-9111 to use the telephone privilege.
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By Wire Authorize wire redemptions on your New Account Application and have proceeds sent by federal wire transfer to a previously designated
account (the minimum redemption amount by this method is $250). You will be charged $15 for each wire redemption unless the designated account is maintained at Northern Trust or an affiliated bank. Call
800-595-9111
for instructions.
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By Systematic Withdrawal If you own shares of the Fund with a minimum value of $10,000, you may elect to have a fixed sum redeemed at regular
intervals and distributed in cash or reinvested in one or more other funds of the Trust. Call 800-595-9111 for an application form and additional information. The minimum amount is $250 per withdrawal.
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By Exchange Complete the Exchange Privilege section of your New Account Application to exchange shares of one fund in the Trust for shares of
another fund in the Trust. Shares being exchanged must have a value of at least $1,000 ($2,500 if a new account is being established by the exchange, $500 if the new account is an IRA). Call 800-595-9111 for more information.
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By Internet You may initiate transactions between Northern Trust banking and Fund accounts by using Northern Trust Private Passport. For details
and to sign up for this service, go to www.northernfunds.com or contact your Relationship Manager.
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TAX INFORMATION
The Funds distributions are generally taxable to you as ordinary income, capital gains, or a combination of the two, unless you are investing
through a tax-exempt or tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Distributions may be taxable upon withdrawal from tax-deferred accounts.
PAYMENTS TO BROKERS-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase the Fund through a
broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediarys Web site for more information.
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MULTI-MANAGER SMALL CAP FUND
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4
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SUMMARY PROSPECTUS
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