Growth Equity Management

Northern Trust Global Investments is a global, multi-asset class investment manager serving corporate, institutional, and personal clients worldwide. We offer a broad array of world-class active investment management capabilities, including growth equity management:

• Our disciplined growth equity management philosophy
• Portfolio management professionals and client services
• Contact Northern Trust Global Investments

Our Disciplined Growth Equity Management Philosophy

At Northern Trust Global Investments, we combine disciplined processes with experienced management teams and rigorous research to pursue long-term growth potential. Because we believe that earnings growth drives equity prices, we seek companies that show superior growth characteristics. In striving for consistent investment results that can be replicated over time and across market segments, we follow a prudent management philosophy centered on three guiding principles:

• Multi-Dimensional Approach
• Risk Management
• Superior Risk-Adjusted Returns

Multi-Dimensional Approach

We believe that active portfolio management can identify investment opportunities at three levels: factor exposures, sector preferences, and security selection. We incorporate these three areas into a proprietary approach that goes well beyond the scope of other investment managers.

Factor Exposures

We analyze the portfolio's overall characteristics (size, earnings variability, earnings growth, momentum, and currency) relative to the market and the appropriate benchmark. Based on our views of the general market and both proprietary and academic research, factor exposures are positioned relative to the benchmark to take advantage of inefficiencies.

Sector Preferences

In determining sector preferences and weightings, we focus primarily on relative growth rates and, secondarily, on valuation levels. We also target those sectors that we believe will benefit from the factor positioning that result from our macro-level research.

Security Selection

After the team defines factor exposures and sector preferences, individual portfolio managers use quantitative screening to develop lists of potential investment candidates that possess appropriate growth characteristics, such as:

• Strong earnings growth
• Consistent revenue growth
• Comparatively low debt-to-capital ratios
• Earnings consistency
• Return on equity analysis

We then conduct fundamental research to evaluate competitive advantages, measure the source and sustainability of revenue growth, and identify a catalyst — that is, a compelling reason why a stock is likely to appreciate. Typical catalysts include positive earnings surprises and revisions, changing management dynamics, and improved market perceptions. Our ultimate goal is to discover companies that will appreciate 15% to 20% over a 12- to 18-month horizon.

Over the past five years, each dimension of our multi-dimensional approach has played a dominant role in determining market performance (see chart). While other managers focus entirely on security selection, we estimate that approximately 25% of our active return stems from factor and sector decisions.

We believe superior risk-adjusted returns are the product of a constant focus on risk control and a multi-faceted process tailored to each portfolio's objective:

Risk Management

Our disciplined, risk-oriented approach to growth equity management is designed to control risks and outperform relative to the underlying index. The process begins with a rigorous analysis of the market — resulting in an intimate understanding of its risk characteristics and return patterns. This market awareness provides the framework for well-informed investment decisions and the foundation for well-constructed portfolios. Only after we thoroughly understand the market's dynamics can we seek to consistently outperform it over an entire market cycle.

The investment management team strives to outperform the underlying index while controlling risk parameters. Specific risk management controls include:

• Following well-defined buy and sell disciplines
• Developing tools that allow for daily monitoring and measurement
• Selling or reducing portfolio positions based on changes in factor and sector decisions
• Rebalancing a security's weighting to control stock-specific risk or because of deteriorating fundamentals
• Employing a variety of proprietary and non-proprietary tools that can assess the embedded risks of our portfolios and their benchmarks, including resources available from Barra and Vestek

Superior Risk-Adjusted Returns

Portfolio managers recognize that returns are just one portion of the investment equation — risk is another. Our proprietary approach to growth investing is designed to preserve and enhance wealth by pursuing superior risk-adjusted returns. In doing so, we provide a means of objectively evaluating portfolio performance and determining whether a manager has assumed reasonable risk to achieve a given return.

This approach allows for performance measurement not only in absolute terms, but also, and more importantly, on a risk-adjusted basis. This facilitates the comparison of alternatives and evaluation of a manager's ability to consistently deliver desired results.

Portfolio Management Professionals and Client Services

As one of the nation's largest investment managers, Northern Trust Global Investments offers the resources and experience necessary to help you meet your goals.

Portfolio Management Team — Averaging more than 15 years of experience, our equity management team operates in an entrepreneurial environment with ready access to our highly regarded investment research teams, as well as other Wall Street research.

Research Teams — At the center of our investment process is thorough and extensive research conducted by:

• 27 equity research analysts, each averaging 10 years of experience
• 15 credit analysts, each averaging 14 years of experience
• An economic research team with more than 20 years of experience

Trading — Given the breadth of our investment solutions and client base, we have established trading relationships with all major brokers/dealers and many regional or specialized firms.

Client Services — High-touch client service is a hallmark of Northern Trust Global Investments. Whether your needs involve pensions, portfolio management, or financial consulting, you receive impeccable service from experts who understand your unique challenges.

Contact Northern Trust Global Investments

Northern Trust Global Investments specializes in providing value-added investment solutions that span the complete spectrum of investment choices and involve a high level of consultative support. Our focus is clear — to offer you compelling investment and risk management choices, with an in-depth understanding of your needs and goals.

For more complete information about Northern Trust Global Investments, please contact your Relationship Consultant or:

• Call the Northern Institutional Funds Center at 800/637-1380
• E-mail your request for more information or a follow-up call

Northern Trust Global Investments comprises various subsidiaries or divisions of subsidiaries of Northern Trust Corporation (NTC) that offer investment product and services to corporate and personal markets, and includes Northern Trust Investments, Inc., the investment advisor for Northern Institutional Funds. The Funds are distributed by Northern Funds Distributors, LLC, not affiliated with NTC.