NIF Balanced Portfolio Becomes the NIF Global Tactical Asset Allocation Portfolio

The following was excerpted from a letter to NIF Balanced Portfolio investors.

At Northern Trust, we are continually reviewing our existing product lineup for improve-ments. After analyzing the Balanced Portfolio, we have determined that restructuring its investment strategy will help to provide diversification and risk management benefits that will potentially improve the risk/reward trade-off over time. This should better position the Portfolio in the competitive marketplace to attract assets.

A New Name and Investment Strategy
In connection with this change, effective April 1, 2008, the Portfolio will be renamed the Northern Institutional Funds Global Tactical Asset Allocation Portfolio.

While the investment objective of the Portfolio has not changed — the Portfolio will continue to seek to provide long-term capital appreciation and current income — we have restructured its investment strategy. This new strategy will be phased in and will be fully implemented by April 10, 2008.

The GTAA Investment Strategy
The Balanced Portfolio was a traditional balanced fund that invested in stocks, bonds and cash. The new investment strategy is a more sophisticated multi-asset class allocation — a true global tactical asset allocation (GTAA).

Using Northern Trust's Investment Policy Committee's GTAA process, the Portfolio will make allocations to a range of underlying asset classes that are periodically adjusted based on their expected ability to deliver desired performance. The 15 asset classes in the new strategy will include small-, mid- and large-capitalization common stocks; real estate securities; commodity-related securities; securities of foreign issuers, including emerging markets; and fixed-income securities, including high yield securities and money market instruments.

The Portfolio intends to allocate among these asset classes via other mutual funds and exchange-traded funds, which will reduce the need for the Portfolio to purchase individual securities. While the majority of the mutual funds in the investment portfolio will be funds in the Northern Family of Funds, some will be nonaffiliated funds.

Also as part of its investment strategy, the Portfolio will invest significantly in funds that invest in companies as represented in either the MSCI EAFE Index, MSCI Emerging Markets Index or other diversified foreign indices. The Portfolio expects its foreign investments to be allocated among funds that are diversified among various regions, countries (including the U.S., but in no less than three different countries), industries and capitalization ranges. The Portfolio may invest in funds that invest in equity and debt of issuers in both developed and emerging markets.

The Role of the Investment Policy Committee
Northern Trust's Investment Policy Committee is responsible for developing tactical asset allocation recommendations with respect to the Portfolio based on various criteria, including, for example, market factors such as gross domestic product and inflation; fixed-income market factors such as sovereign yields, credit spreads and currency trends; and equity market factors such as domestic and foreign operating earnings and valuation levels.

Northern Trust will monitor the Portfolio daily to ensure it is invested pursuant to the current asset allocation model. Northern Trust will review the asset allocation model at least monthly, or more frequently as needed, to adjust the allocations based on changing market conditions. There is no limit in the number of underlying funds in which the Portfolio may invest. Please note that the Portfolio is not required to maintain any minimum or maximum investment in any asset class, and the Portfolio may at time invest more than 25% of its assets in one underlying fund or asset class.

Peter J. Flood, New Fund Manager
To further support this revised structure, a new portfolio manager, Peter J. Flood, will lead the Portfolio's management team. Mr. Flood is currently head of Northern Trust's fixed income strategy group. Since joining Northern Trust in 1979, Mr. Flood's responsibilities have included managing various fixed income portfolios as well as leading portfolio and research teams.

For More Information
The prospectus contains additional information regarding the Portfolio's new investment strategy. You can also speak to one of our Northern Institutional Funds Center investment representatives from 7:00 a.m. to 7:00 p.m. Monday through Friday by calling 800-637-1380.