Smart Shoppers

October 2003

To Northern Mid Cap Growth Fund managers Andrew Flynn and Deborah Koch, spicing up a portfolio starts with knowing where to shop.

"The smallish end of the mid-cap group is our secret sauce," says Flynn, referring to companies between $1 billion and $5 billion in market value. "Many of those stocks are just starting to attract the attention of investors yet are still small enough to provide real upside potential."

After a period of subpar performance, growth stocks of all flavors have led the equity market’s steady rise in recent months. To Flynn and Koch, the sector’s resurgence is a logical reaction to an improving but still fuzzy economic outlook.

"In this uncertain environment, investors crave predictability," Flynn says. "Consistency is a hallmark of growth companies."

The recent acceleration in economic activity also helped to drive money back into the growth sector.

"Now that the economy is finally improving, many investors believe that growth stocks will post the best earnings," Koch says.

But while strong profits growth is a prerequisite for inclusion in the Fund’s portfolio, Koch and Flynn want to see much more.

"We look for companies that are the very best at what they do and are positioned to retain that dominance," says Koch. "Then we pore over financial statements to check accounting methodology and profitability levels against their competition."

Finally, there’s the matter of price.

"Fast-growing companies almost always sell for a little more than the overall market," says Flynn. "But as former analysts, Deborah and I each have a passion for the fundamental research that goes into calculating a stock’s proper valuation. We also are very fortunate to have a talented research team at Northern Trust to help us find the best companies to add to the mix."

For, as every chef knows, a fine and satisfying meal is only as good as the ingredients.

Want more information?
For more information on the Northern Mid Cap Growth Fund, contact your Relationship Manager, or call the Northern Funds Center at 800/595-9111.

Northern Mid Cap Growth Fund

Performance as of September 30, 2003

Total Returns

Mid-sized company stocks are generally more volatile than large-company stocks. Past performance is no guarantee of future results, share prices and yields will fluctuate, and you may have a gain or loss when you redeem shares.