Multi-Manager Emerging Markets Debt Opportunity
as of June 30, 2014
Fund Commentary
In the second quarter, global performance across emerging market fixed-income sectors continued to be positive. Emerging market debt as measured by the blended benchmark of 50% JP Morgan EMBI Global Diversified Index and 50% JP Morgan GBI EM Global Diversified Index generated a total return of 4.39%. Appreciation of select emerging market currencies versus the U.S. dollar also was a positive factor for the market. Adjustments made by several emerging market countries in response to the sell-off late last year through early 2014 boosted the countries’ credibility among investors and helped to stabilize the market. Emerging market debt returned 4.76% as measured by the JP Morgan EMBI Global Diversified Index. Latin American bonds led the way in terms of performance, while credit spreads for the Index narrowed 24 basis points (0.24%) to 257 basis points (2.57%) by the end of the quarter.

During the three-month period, the Multi-Manager Emerging Markets Debt Opportunity Fund returned 4.29%, compared with the blended benchmark return of 4.39%. The Fund is underweight Asia, which benefited relative results. Market-level exposure to Latin America aided returns, with Latin American bonds the strongest performers in the Index.

Of the two sub-advisers, Bluebay was the weaker performer. Their underweight exposure to Mexican interest rates, which rallied across the yield curve, detracted from results, as did their underweight in Argentinian hard currency markets. At the end of the period, the Fund had an exposure of approximately 5% in emerging market corporate bonds.
Investor Profile

If you're a long-term investor looking to diversify your investments by pursuing the income potential of emerging or frontier markets debt issuers, then this Fund may be right for you. It is intended for investors who are aware that foreign markets may involve additional risks, such as social and political instability, reduced market liquidity and currency volatility.

  • Invest at least 80% of net assets in fixed income securities that provide exposure to issuers tied to emerging or frontier markets. The Fund's investments provide exposure to a blend of local and hard currency emerging markets debt and opportunistically invest in emerging market corporate bonds.
  • Select complementary managers from a broad universe of investment managers.
  • Blend managers into a single fund in an effort to provide an attractive combination of risk/return.
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Not FDIC insured | May lose value | No bank guarantee

†Northern tax-exempt fixed income funds' and Northern High Yield Fixed Income Fund's Average Duration is calculated using the modified duration formula. Other Northern fixed income funds show the option-adjusted duration. Duration is a measure of a bond fund's sensitivity to changes in interest rates.

*Distribution rate and tax-equivalent distribution rate represent the annualization of the Fund's distributions for the prior month ending on the date shown, including capital gain distributions. The 30-day SEC yield and tax-equivalent 30-day SEC yield represent the annualization of the Fund's net investment income, excluding capital gain income. The tax-equivalent distribution rate and tax-equivalent 30-day SEC yield are based on an assumed tax rate of 47.9% for Arizona, 55.7% for California and 43.4% for national municipal funds.

**Per share paid out May 27 with a record date of May 23. The amount shown represents dividends paid for net investment income and excludes distributions from capital gain income.

*View investment term definitions

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