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N o rt H W e st e r N Mu t ua l




                                  Your goals. Your Future.
                           ...
tHe MissioN oF
tHe NortHWesterN Mutual FiNaNcial NetWork
is to develop enduring relationships with our clients by providin...
OU R VISION OF FINa N CIa L S eCURITY


We view investing through a lens that focuses on your financial       Confidence a...
TH e SIGNaTUR e aDV I S O RY P RO CeS S



Our financial advisors appreciate that careful planning today is
essential to r...
Identify Goals – Your advisor will guide you through a
comprehensive financial profile that will help determine your
time ...
IS THe SIGNaTURe PORTFOLIOS PROGRaM RIGHT FOR YOU?



Northwestern Mutual Signature Portfolios is an investment           ...
TH e SIGNaTURe PORTF O LIO S a DVa N TaG e



With more than 10,000 mutual funds available in today’s                     ...
Comprehensive Reporting – You will receive detailed reporting on
your account, including:

    •	Quarterly	account	stateme...
TH e BLeND OF RISk & ReT URN TH aT’ S RIG H T FO R YO U



The Northwestern Mutual Signature Portfolios program           ...
MODeL P ORTFOLIO CO N S T RUCT IO N



Constructing an appropriate portfolio extends beyond determining              The N...
SI GNaTURe ReSeaRCH M eTH O D O LO G Y



Independent and reliable investment research and analysis is                    ...
ReSeARCh MethodoLoGY FoR MutuAL FuNd eVALuAtIoN ANd SeLeCtIoN                                       MutuAL FuNd FAMILY
   ...
Mak ING TH e RIGHT CH O I CeS                                                        AdVISoRY PRoGRAM oPtIoNS

Make S aLL ...
This brochure is intended to provide general information and is for educational purposes only. This is not intended to pro...
Signature Portfolio Brochure
Signature Portfolio Brochure
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Signature Portfolio Brochure

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Signature Portfolio Brochure

  1. 1. N o rt H W e st e r N Mu t ua l Your goals. Your Future. Your portFolio. 61-1137 (1006) (REV 0310)
  2. 2. tHe MissioN oF tHe NortHWesterN Mutual FiNaNcial NetWork is to develop enduring relationships with our clients by providing expert guidance for a lifetime of financial security. “Financial security” means bringing to our clients a feeling of confidence that they will realize their financial goals through the actions they are taking today; actions that are based upon a process that examines both risk protection and wealth accumulation needs. it is an integral part of our investment philosophy.
  3. 3. OU R VISION OF FINa N CIa L S eCURITY We view investing through a lens that focuses on your financial Confidence also comes from having the right tools, resources, security, that feeling of confidence that you will realize your and investment programs available to help you accomplish your financial goals through the actions you are taking today. Investing financial goals. The Northwestern Mutual Signature Portfolios for financial security is about working with a trusted advisor program is built on strong beliefs in investment fundamentals who gives you confidence that your financial goals, dreams, and and the flexibility to establish an investment strategy that is needs can be fulfilled. That kind of confidence cannot be found by tailored to you. Your financial advisor will take you through working with just anyone. It comes from working with financial the process of determining your financial profile, developing a advisors of Northwestern Mutual Investment Services, LLC (NMIS) diversified asset allocation, and constructing a personalized investment and Northwestern Mutual Wealth Management Company. policy statement. That’s just the beginning ... your portfolio will Your advisor is committed to developing an enduring be continually monitored and adjusted as needed. Your financial relationship with you by providing expert guidance for a advisor will meet with you to help keep your long-term financial lifetime of financial security. goals in focus. It’s what you expect from a company that carries the Northwestern Mutual name.
  4. 4. TH e SIGNaTUR e aDV I S O RY P RO CeS S Our financial advisors appreciate that careful planning today is essential to reach your goals for tomorrow. They are professionals who often hold advanced degrees in business, law, and accounting, as well as industry-recognized certifications including: Review • Certified Financial Planner™ and Monitor • Chartered Financial Consultant Identify Goals Our advisors understand the complexity of issues faced by individuals like you and the importance of following a sound process. Your financial advisor will act in your best interests by THE SIGNATURE following a comprehensive process not just at the time of sale, ADVISORY but throughout your relationship, working with you to meet your PROCESS long-term goals. Select Investments Create Personalized Investment Policy Statement
  5. 5. Identify Goals – Your advisor will guide you through a comprehensive financial profile that will help determine your time horizon, potential income needs, risk tolerance, and your attitudes toward investing. Create Personalized Investment Policy Statement – Based on the information gained from your financial profile, your advisor will determine an appropriate asset allocation strategy. This strategy is formalized through an Investment Policy Statement that helps provide the discipline to follow your investment plan and make decisions free from emotion. Select Investments – Choose from a variety of portfolio options containing professionally researched and selected mutual funds. Review and Monitor – advanced account servicing tools help your advisor analyze whether your account remains in line with your Investment Policy Statement. Your financial advisor will meet with you to review any significant changes to your personal or financial situation and help determine whether these changes impact your portfolio.
  6. 6. IS THe SIGNaTURe PORTFOLIOS PROGRaM RIGHT FOR YOU? Northwestern Mutual Signature Portfolios is an investment • Are you looking for a professionally researched and management program offered through Northwestern Mutual constructed portfolio with investments that have been Investment Services, LLC and the Northwestern Mutual Wealth assembled to work well in combination with one another? Management Company. The program gives you access to comprehensive, fully diversified investment portfolios of select • Do you believe in an institutional style of investing – following mutual funds and exchange traded funds (eTFs). a written plan, consistent process, and emotion-free decision- making? Your financial advisor will work together with you to determine if the Signature Portfolios program is an appropriate vehicle for you. • Are you seeking an approach to investment management where Together you will explore important questions such as: we monitor, rebalance, and trade your portfolio for you? • Do you have a moderate to long-term investment horizon of at answering “yes” to some or all of these questions suggests that you least five years? may benefit from the Northwestern Mutual Signature Portfolios program. • Would you like objective investment guidance from a professional advisor without paying per-trade commissions?
  7. 7. TH e SIGNaTURe PORTF O LIO S a DVa N TaG e With more than 10,000 mutual funds available in today’s The Northwestern Mutual Wealth Management Company may marketplace, choosing the right funds, in the right combination, also review and recommend mutual funds and eTFs independent can be a daunting task. Mutual fund wrap solutions do this of Morningstar associates’ process. for you by offering professionally constructed portfolios of researched investment options. They also provide the added Professionally Constructed Portfolios – Morningstar associates benefit of systematic rebalancing – all for one asset-based annual and Northwestern Mutual Wealth Management Company fee. This convenient asset-based fee structure, rather than a per-trade incorporate the funds identified through the Signature Research commission, puts you and your advisor on the same side of the table Process into combinations that work well together in order to by allowing for the objective recommendation of investment options. construct models with diversified asset allocations. These models are monitored on an ongoing basis, along with the underlying The Northwestern Mutual Signature Portfolios program is a funds, to ensure they continue to work together as an efficient mutual fund wrap solution that offers investors the following portfolio that maximizes return for the amount of risk you are specific advantages: willing to take. Professional Investment Advice – Your financial advisor is Goal Level Management – The goal level management feature your partner in identifying and prioritizing your financial needs allows for two or more accounts that share a common investment and investment objectives. Your advisor will help you create a goal (such as retirement or education) to be managed together to a personalized asset allocation and provide guidance in selecting common asset allocation. a professionally constructed model that is appropriate for you. Periodic meetings with your advisor will help you follow your Systematic Portfolio Rebalancing – Due to various factors investment plan and keep you informed of your portfolio’s progress. including market appreciation/depreciation, deposits, or withdrawals, your account may move away from the asset Independent & Proprietary Research – Our research process allocation and investment strategy as outlined in your Investment starts with identifying appropriate mutual funds for the program. Policy Statement. Therefore, Signature Portfolios includes Morningstar associates, a wholly owned subsidiary of Morningstar, systematic rebalancing that will re-align your portfolio with your Inc., conducts this research and analysis, resulting in a selection of personalized asset allocation. This relieves you of the ongoing funds that satisfy a variety of return, style, and expense characteristics. decisions involved in managing an investment portfolio.
  8. 8. Comprehensive Reporting – You will receive detailed reporting on your account, including: • Quarterly account statements (monthly, if there is activity in the account) - Current value of holdings - Detailed trading activity (buys, sells, dividends, and reinvestments) • Quarterly Performance Reporting - Your portfolio’s current asset allocation - Your portfolio’s performance versus benchmark goals Flexible Fee Payment – Signature Portfolios is a fee-based account in which you pay a quarterly fee, based on the value of your assets, rather than a commission. Your fee will be deducted from the money market position within your account. If you have multiple Signature program accounts, you can designate one account to pay the fees for all accounts in the Signature programs.1 NMIS Gateway™ Platinum/ProCash Plus™ – You are eligible to open a separate NMIS Gateway Platinum or ProCash Plus account, free of charge, through our brokerage firm: Northwestern Mutual Investment Services, LLC. The NMIS Gateway Platinum and ProCash Plus programs allow you to have unlimited checkwriting, direct deposit, and other account features and benefits within a separate brokerage account outside the Signature Portfolios program.1 The NMIS Gateway Platinum account also offers an awards program and debit card. 1 Certain rules and restrictions apply.
  9. 9. TH e BLeND OF RISk & ReT URN TH aT’ S RIG H T FO R YO U The Northwestern Mutual Signature Portfolios program Stocks and Bonds: Risk Versus Return recommends portfolio asset allocations that are based 1970–2009 upon an efficient frontier. Your financial advisor will help 12% Return you create an efficient asset allocation and recommend a professionally constructed model portfolio that is appropriate for your situation. Maximum risk portfolio: 100% Stocks ASSet ALLoCAtIoN 11 asset allocation is the process of diversifying your portfolio 80% Stocks, 20% Bonds 60% Stocks, 40% Bonds among various asset classes (i.e., Large-Cap, Small-Cap, Fixed Income, etc.). Different asset classes have historically responded differently to economic activity and market 50% Stocks, 50% Bonds 10 trends. Varying combinations of asset classes within Minimum risk portfolio: 28% Stocks, 72% Bonds an account may help provide investors with a balance between expected risks and expected returns that are most appropriate for them. 100% Bonds 9 the eFFICIeNt FRoNtIeR 10% Risk 11 12 13 14 15 16 17 18 19 The goal of asset allocation is to produce an “efficient Each point on the curve represents a diversified portfolio composed of in this example are represented by the Standard & Poor’s 500®, which is an portfolio,” one in which your expected return is maximized varying asset class mixes. Keep in mind that an investment cannot be unmanaged group of securities and considered to be representative of the at a given risk level – or – your risk is minimized at a made directly in an index, and past performance is no guarantee of future stock market in general, and bonds by the 20-year U.S. government bond. results. This chart is for illustrative purposes only and not indicative of any Risk and return are based on annual data over the period 1970–2009 given return level. If all the “efficient portfolios” for a set investment. No investment strategy can guarantee a profit or protect against and are measured by standard deviation and arithmetic mean, respectively. of investment alternatives at given levels of risk are joined a loss. The data assumes reinvestment of all income and does not account Standard deviation measures the fluctuation of returns around the arith- for taxes, transaction costs, management fees, or other expenses that would metic average return of the investment. The higher the standard deviation, together, they form an “efficient frontier.” reduce the return on an actual portfolio. the greater the variability (and thus risk) of the investment returns. An invest- Diversification does not eliminate the risk of experiencing investment losses. ment cannot be made directly in an index. The data assumes reinvestment Risk is measured by standard deviation. Standard deviation is a statistical of all income and does not account for taxes or transaction costs. The associated chart depicts an efficient frontier. each measure of the extent to which returns of an asset vary from its average. Bonds and other debt obligations are affected by changes in interest rates, portfolio along the efficient frontier represents the most Risk and return are based on annual data over the period 1970-2009. The inflation risk, and the creditworthiness of their issuers. High yield bonds portfolios presented in the image are based on modern portfolio theory. efficient combination of asset classes on the basis of risk and generally have greater price swings and higher default risks than investment grade bonds. Return of principal is not guaranteed. In contrast to owning return. any restrictions or customization to your portfolio Source: © 2010 Morningstar, Inc. All rights reserved. Used with permission. individual bonds, there are ongoing fees and expenses associated with could move your asset allocation away from the efficient Note: Government bonds are guaranteed by the full faith and credit of the owning shares of bond funds. When interest rates rise, bond prices fall. With United States government as to the timely payment of principal and interest. a fixed income fund, when interest rates rise, the value of the fund’s existing frontier – potentially causing higher risk and lower returns. Stocks are not guaranteed and have been more volatile than bonds. Stocks bonds drops, which could negatively affect the overall fund.
  10. 10. MODeL P ORTFOLIO CO N S T RUCT IO N Constructing an appropriate portfolio extends beyond determining The Northwestern Mutual Wealth Management Company your place on the efficient frontier. Individual investment options research area also assembles “market index models” which must be selected to fill each piece of that asset allocation. Not only do consist of a blend of indexed securities. The models are designed those investment options need to stand on their own merits, but the to closely track to their associated blended benchmarks by combination of those investment options must be considered as well. holding funds that are managed to track the performance of particular market indices. The Signature Portfolios program offers you the advantage of professionally constructed model portfolios. Morningstar Indexed securities typically have lower expense ratios when associates and the Northwestern Mutual Wealth Management compared to actively managed mutual funds. These portfolios Company research and assemble various funds in combinations may also be desirable for clients seeking a tax-sensitive approach. that diversify such factors as management style, sub-asset classes, and industry sectors. The portfolios constructed by Morningstar at each asset associates are known as “customized” model portfolios, and allocation point the portfolios constructed by the Northwestern Mutual Wealth along the efficient Management Company are known as “multi-manager” and “market index” model portfolios. frontier, there are corresponding Morningstar assembles “customized” model portfolios with three portfolio options strategies – one comprised of a core group of mutual funds, one based on the constructed with an extended number of mutual funds, and a customized, multi- strategy that may be appropriate for tax-sensitive investors. manager, and market index strategies. The Northwestern Mutual Wealth Management Company although no research area assembles “multi-manager” model portfolios using a blend of mutual funds, including a number of funds investment strategy from the Russell Investment Group. These multi-manager can guarantee a profit models cover two strategies – one aimed at providing a style- or protect against a loss, your financial advisor will guide you to neutral combination of funds and one that may be appropriate a model portfolio and strategy that is appropriate for you based for tax-sensitive investors. on your financial objectives.
  11. 11. SI GNaTURe ReSeaRCH M eTH O D O LO G Y Independent and reliable investment research and analysis is MutuAL FuNd SeLeCtIoNS critical in helping you and your financial advisor make informed Morningstar associates and the Northwestern Mutual Wealth investment decisions. Morningstar associates, an industry Management Company have developed a quantitative and qualitative leader in mutual fund research, and Russell Investment Group evaluation methodology that identifies funds that satisfy a number of have been engaged to provide independent investment research return, style, and expense characteristics. and portfolio construction recommendations for the Signature Portfolios program. Morningstar associates provides independent investment research and ongoing analysis for certain mutual fund options available within The Northwestern Mutual Wealth Management Company the Signature Portfolios program. The chart on the following page research area screens the eTFs and other securities used in the illustrates the four-step process used to evaluate and select these funds. market index models on an ongoing basis to ensure they have appropriate performance, risk, and expense measures relative to Certain investment options in the Signature Portfolios program peers and benchmarks. are monitored by the Northwestern Mutual Wealth Management Company’s Investment Committee based on fund research and The research and analysis used to select investment options for due diligence guidelines developed by Northwestern Mutual the program, combined with the expert guidance of your financial Wealth Management Company. Russell Investments mutual funds advisor, helps you rest easy knowing that you have an experienced and indexed securities are included in the program as a result of investment team working with you. this process. Russell funds are advised by an affiliate of Northwestern Mutual. Certain securities within the Signature Portfolios program, including Russell funds, do not undergo the same screening and ongoing quantitative analysis applied to investments evaluated by Morningstar associates.
  12. 12. ReSeARCh MethodoLoGY FoR MutuAL FuNd eVALuAtIoN ANd SeLeCtIoN MutuAL FuNd FAMILY ChoICeS The Signature Portfolios program gives you access to the expertise O of some of the most respected QuANtItAtIVe ANALYSIS Fund Scoring System: investment management Me QuANtItAtIVe oNGoING MoNItoRING ANALYSIS • Risk & return companies. Below is a sampling Seek to identify possible style • Manager tenure drift, performance concerns, of some of the fund families • Peer group comparison or funds that require further available in the Signature Portfolios qualitative analysis • Performance consistency program: • Expenses AllianceBernstein Investments oNGoING PIMCo Funds MoNItoRING CLIENT PORTFOLIO QuALItAtIVe American Century Investments® ANALYSIS American Funds® QuALItAtIVe ANALYSIS Fidelity® Advisor Funds “Top-down” process: PoRtFoLIo BuILdING • Evaluate manager performance Franklin templeton Investments “Bottom-up” Process: PoRtFoLIo • Turnover • Assess how well funds work BuILdING MFS Investment Management® • Portfolio concentration together in a portfolio • Style or market cap drift Russell Investments • Determine overall correlation of • Sector bets/market timing managers and its effects on risk Vanguard® Funds Fund family availability subject to change. Qu g
  13. 13. Mak ING TH e RIGHT CH O I CeS AdVISoRY PRoGRAM oPtIoNS Make S aLL THe DIF Fe ReN C e Clients with significant investable assets often require more tailored investment services and therefore may benefit from the level of professional Signature Portfolios is a program offered by Northwestern Mutual advice and personal service that is available through Investment Services, LLC and Northwestern Mutual Wealth our advisory programs: Management Company, which are wholly owned subsidiaries of The Northwestern Mutual Life Insurance Company Signature Annuities is an investment advisory (Northwestern Mutual). program that combines the benefits of a tax-deferred variable annuity with the expert guidance and personal For 25 years, a FORTUNe® Magazine survey has named service of a financial advisor. Northwestern Mutual “america’s most admired” life insurance company. What’s more, Northwestern Mutual’s well-earned Signature Choice is an advisory investment program reputation is based on its financial strength, its long-standing for investors who desire a high level of professional commitment to the principles of mutuality, and its history of advice in the areas of asset allocation, the selection consistently delivering long-term value to its policyowners. of securities, and portfolio rebalancing. Northwestern Mutual maintained the highest available ratings for financial strength from all four major rating agencies.* Signature Managed Accounts is an investment Talk to your financial advisor today to learn more about Signature advisory program that provides investors access Portfolios and other products and services. Before opening a to third-party asset management and specialized Northwestern Mutual Signature Portfolios account, review the portfolio managers to create a highly customized information contained in the Northwestern Mutual Signature investment portfolio of individual securities. Portfolios Program Disclosure Brochure. You will also need to agree to the terms of the Northwestern Mutual Signature Portfolios Private Client Services is a fully discretionary, highly Client agreement. We look forward to having an opportunity to customized portfolio management solution that help you pursue your financial goals. utilizes internal separate account equity and fixed income management capabilities, along with other investment vehicles such as mutual funds, ETFs, * These third-party ratings are a measure of an insurance company’s financial options, and futures strategies, to manage a client’s strength and do not apply to the performance of any investments in the Signature Portfolios program. Investments in the Signature Portfolios program are not portfolio according to an established individualized guaranteed, and their value can be less than your original investment. investment policy.
  14. 14. This brochure is intended to provide general information and is for educational purposes only. This is not intended to provide legal or tax advice. Please consult your legal or tax professional for specific information. Investment products and trust services are not insured by the FDIC, are not deposits or other obligations of or guaranteed by Northwestern Mutual Wealth Management Company® Northwestern Mutual Investment Services, LLC or its affiliates, and are subject to investment risks, including , possible loss of the principal amount invested. You should carefully consider the investment objectives, risks, expenses, and charges of the investment company before you invest. Your financial advisor can provide you with a fund prospectus that will contain the information noted within this brochure, and other important information that you should read carefully before you invest or send money. The Northwestern Mutual Signature Portfolios program is an advisory program dually offered by Northwestern Mutual Wealth Management Company (NMWMC), a wholly owned company of The Northwestern Mutual Life Insurance Company (NM) and limited purpose federal savings bank, and Northwestern Mutual Investment Services, LLC (NMIS), member FINRA and SIPC, a wholly owned subsidary of NM, and a dually registered broker-dealer and investment adviser. Securities are offered through NMIS. NM does not guarantee or insure the account’s performance or investments made in the account and is not responsible for the investment advice given. Depending on the products and/or services being recommended or considered, refer to the appropriate disclosure brochure for important information on NMIS and/or NMWMC, their services, fees and conflicts of interest before investing or engaging in financial planning services. To obtain a copy of one or more of these brochures, contact your representative. Morningstar Associates, LLC is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Morningstar Associates provides fund selection and investment monitoring and analysis services to Northwestern Mutual Wealth Management Company, but is not serving in the capacity of investment advisor to individual investors. Morningstar Associates is not affiliated with Northwestern Mutual Wealth Management Company or its affiliates. Russell Investment Group is a Washington USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® CERTIFIED FINANCIAL PLANNER™ and federally registered , CFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements. Northwestern Mutual Financial Network is the marketing name for the sales and distribution arm of NM and its affiliates and subsidiaries. 61-1137 (1006) (REV 0310) www.northwesternmutual.com

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