www.fixedology.northerntrustinvestments.com
Seldom have investors shown so much interest in fixed-income investing. There's nothing thrilling about Treasuries or bond yields - and maybe that explains investors' new-found curiosity!
Start the conversation with your clients: Download this fast-paced client-use Fixedology presentation.
30. Bond Investing Has Avoided Deep Negative Returns
All-Stock, All-Bond Performance â 1970 to 2008
50%
40%
30%
20%
Annual Total Return
10%
0%
â10%
â20%
â30% Bonds Stocks
â40%
â50%
2000
2006
2004
2008
2002
1990
1992
1980
1984
1998
1996
1986
1988
1982
1972
1970
1978
1994
1976
1974
Past performance is not a guarantee of future results.
This chart compares the performance of an all-domestic stock portfolio and an all-bond portfolio for the period from January 1, 1970, through December 31, 2008.
Source: ChartSource, Standard & Poorâs Financial Communications. Domestic stocks are represented by the total returns of Standard & Poorâs Composite Index of 500
Stocks, an unmanaged index that is generally considered representative of the U.S. stock market. Bonds are represented by a composite of the total returns of long-term
U.S. government bonds, derived from yields published by the Federal Reserve, and the Barclays Long-Term Government Bond index (prior to November 2008, the
Barclays indexes were compiled by Lehman Brothers).
50. Bonds Beat Stocks, Cash and Inflation
Major Asset Classes, Annualized Total Returns â 1988 to 2008
Bonds
Stocks
9.79% 9.58% Cash
10
8.43% 8.07% Inflation
8
6
Annual Total Return
4.53%
4 3.49% 3.30%
2.82% 2.52% 2.67%
2
0
â2 â1.38%
â2.19%
â4
Past 20 Years Past 10 Years Past 5 Years
Past performance is not a guarantee of future results.
This chart compares the annualized total returns of stocks, bonds and inflation, through December 31, 2008, over the past 5-, 10- and 20-year periods.
Source: ChartSource, Standard & Poorâs Financial Communications. Stocks are represented by the total returns of Standard & Poorâs Composite Index of 500 Stocks,
an unmanaged index that is generally considered representative of the U.S. stock market. Bonds are represented by the total returns of the composite of long-term
government bonds (10+ years), constructed from yields published by the Federal Reserve, and the Barclays Long-Term Government Bond index. Cash is represented by
the composite of the yield of 3-month Treasury bills published by Federal Reserve and the total return of the Barclays 3-Month Treasury Bill index. Inflation is represented
by the change in the Consumer Price Index. Note that prior to November 2008, the Barclays indexes were calculated by Lehman Brothers.
58. IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and
cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. For more information about this notice
see http://www.northerntrust.com/circular230
Risk Considerations
Equity Risk: Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities.
The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes.
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.
U.S. Government Guarantee: U.S. Government guarantees apply only to the underlying securities of certain âgovernment fundâ portfolios and not the fundâs shares.
High-Yield Risk: Although a high yield fundâs yield may be higher than that of fixed income funds that purchase higher-rated securities, the potentially higher yield is a function of
the greater risk that a high yield fundâs share price will decline.
Tax-Free/AMT Risk: Tax-exempt fundsâ income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax.
Regional Investment Risk: The geographical concentration of a regional fundâs portfolio holdings may involve increased risk.
Diversification alone does not guarantee a profit nor protect against a loss.
There are risks involved in investing including possible loss of principal. There is no guarantee that the investment objectives of any fund or strategy will be met.
Risk controls and models do not promise any level of performance or guarantee against loss of principal.
Before investing you should carefully consider the fundâs investment objectives, risks, charges and expenses. This and other information
is in the prospectus, a copy of which may be obtained by calling 877-867-1259. Please read the prospectus carefully before you invest.
Shares of Northern Funds are distributed by Northern Funds Distributors, LLC, Boston, MA 02110, not affiliated with Northern Trust.
NOT FDIC INSURED May lose value / No bank guarantee
59. Fixed.ology SM
T H E L A N G UAG E O F F I X E D I N C O M E
For information on a variety of fixed-income investing topics, visit
northerntrustinvestments.com/fixedology