signature portfolio brochure

Your goals. Your Future. Your portFolio.

61-1137 (1006) (REV 0310)

NortHWesterN Mutual

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.

We view investing through a lens that focuses on your financial security, that feeling of confidence that you will realize your financial goals through the actions you are taking today. Investing for financial security is about working with a trusted advisor who gives you confidence that your financial goals, dreams, and needs can be fulfilled. That kind of confidence cannot be found by working with just anyone. It comes from working with financial advisors of Northwestern Mutual Investment Services, LLC (NMIS) and Northwestern Mutual Wealth Management Company. Your advisor is committed to developing an enduring relationship with you by providing expert guidance for a lifetime of financial security.

Confidence also comes from having the right tools, resources, and investment programs available to help you accomplish your financial goals. The Northwestern Mutual Signature Portfolios program is built on strong beliefs in investment fundamentals and the flexibility to establish an investment strategy that is tailored to you. Your financial advisor will take you through the process of determining your financial profile, developing a diversified asset allocation, and constructing a personalized investment policy statement. That’s just the beginning ... your portfolio will be continually monitored and adjusted as needed. Your financial advisor will meet with you to help keep your long-term financial goals in focus. It’s what you expect from a company that carries the Northwestern Mutual name.

OUR VISION OF FINaNCIaL SeCURITY

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:

• CertifiedFinancialPlanner™

• CharteredFinancialConsultant

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 following a comprehensive process not just at the time of sale, but throughout your relationship, working with you to meet your long-term goals.

THe SIGNaTURe aDVISORY PROCeSS

Identify Goals

Create Personalized Investment Policy

Statement

SelectInvestments

Review and Monitor

THE SIGNATUREADVISORY PROCESS

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.

Northwestern Mutual Signature Portfolios is an investment management program offered through Northwestern Mutual Investment Services, LLC and the Northwestern Mutual Wealth Management Company. The program gives you access to comprehensive, fully diversified investment portfolios of select mutual funds and exchange traded funds (eTFs).

Your financial advisor will work together with you to determine if the Signature Portfolios program is an appropriate vehicle for you. Together you will explore important questions such as:

•Doyouhaveamoderatetolong-terminvestmenthorizonofatleast five years?

•Wouldyoulikeobjectiveinvestmentguidancefromaprofessional advisor without paying per-trade commissions?

•Areyoulookingforaprofessionallyresearchedandconstructed portfolio with investments that have been assembled to work well in combination with one another?

•Doyoubelieveinaninstitutionalstyleofinvesting–followinga written plan, consistent process, and emotion-free decision-making?

•Areyouseekinganapproachtoinvestmentmanagementwherewe monitor, rebalance, and trade your portfolio for you?

answering “yes” to some or all of these questions suggests that you may benefit from the Northwestern Mutual Signature Portfolios program.

IS THe SIGNaTURe PORTFOLIOS PROGRaM RIGHT FOR YOU?

With more than 10,000 mutual funds available in today’s marketplace, choosing the right funds, in the right combination, can be a daunting task. Mutual fund wrap solutions do this for you by offering professionally constructed portfolios of researched investment options. They also provide the added benefit of systematic rebalancing – all for one asset-based annual fee. This convenient asset-based fee structure, rather than a per-trade commission, puts you and your advisor on the same side of the table by allowing for the objective recommendation of investment options.

The Northwestern Mutual Signature Portfolios program is a mutual fund wrap solution that offers investors the following specific advantages:

Professional Investment Advice – Your financial advisor is your partner in identifying and prioritizing your financial needs and investment objectives. Your advisor will help you create a personalized asset allocation and provide guidance in selecting a professionally constructed model that is appropriate for you. Periodic meetings with your advisor will help you follow your investment plan and keep you informed of your portfolio’s progress.

Independent & Proprietary Research – Our research process starts with identifying appropriate mutual funds for the program. Morningstar associates, a wholly owned subsidiary of Morningstar, Inc., conducts this research and analysis, resulting in a selection of funds that satisfy a variety of return, style, and expense characteristics.

The Northwestern Mutual Wealth Management Company may also review and recommend mutual funds and eTFs independent of Morningstar associates’ process.

Professionally Constructed Portfolios – Morningstar associates and Northwestern Mutual Wealth Management Company incorporate the funds identified through the Signature Research Process into combinations that work well together in order to construct models with diversified asset allocations. These models are monitored on an ongoing basis, along with the underlying funds, to ensure they continue to work together as an efficient portfolio that maximizes return for the amount of risk you are willing to take.

Goal Level Management – The goal level management feature allows for two or more accounts that share a common investment goal (such as retirement or education) to be managed together to a common asset allocation.

Systematic Portfolio Rebalancing – Due to various factors including market appreciation/depreciation, deposits, or withdrawals, your account may move away from the asset allocation and investment strategy as outlined in your Investment Policy Statement. Therefore, Signature Portfolios includes systematic rebalancing that will re-align your portfolio with your personalized asset allocation. This relieves you of the ongoing decisions involved in managing an investment portfolio.

THe SIGNaTURe PORTFOLIOS aDVaNTaGe

Comprehensive Reporting – You will receive detailed reporting on your account, including:

•Quarterlyaccountstatements(monthly,ifthereisactivityinthe account)

- Current value of holdings

- Detailed trading activity (buys, sells, dividends, and reinvestments)

•QuarterlyPerformanceReporting

- 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.

1Certain rules and restrictions apply.

Each point on the curve represents a diversified portfolio composed of varying asset class mixes. Keep in mind that an investment cannot be made directly in an index, and past performance is no guarantee of future results. This chart is for illustrative purposes only and not indicative of any investment. No investment strategy can guarantee a profit or protect against a loss. The data assumes reinvestment of all income and does not account for taxes, transaction costs, management fees, or other expenses that would reduce the return on an actual portfolio.

Diversification does not eliminate the risk of experiencing investment losses. Risk is measured by standard deviation. Standard deviation is a statistical measure of the extent to which returns of an asset vary from its average. Risk and return are based on annual data over the period 1970-2009. The portfolios presented in the image are based on modern portfolio theory.

Source: © 2010 Morningstar, Inc. All rights reserved. Used with permission.

Note: Government bonds are guaranteed by the full faith and credit of the United States government as to the timely payment of principal and interest. Stocks are not guaranteed and have been more volatile than bonds. Stocks

in this example are represented by the Standard & Poor’s 500®, which is an unmanaged group of securities and considered to be representative of the stock market in general, and bonds by the 20-year U.S. government bond. Risk and return are based on annual data over the period 1970–2009 and are measured by standard deviation and arithmetic mean, respectively. Standard deviation measures the fluctuation of returns around the arith-metic average return of the investment. The higher the standard deviation, the greater the variability (and thus risk) of the investment returns. An invest-ment cannot be made directly in an index. The data assumes reinvestment of all income and does not account for taxes or transaction costs.

Bonds and other debt obligations are affected by changes in interest rates, inflation risk, and the creditworthiness of their issuers. High yield bonds generally have greater price swings and higher default risks than investment grade bonds. Return of principal is not guaranteed. In contrast to owning individual bonds, there are ongoing fees and expenses associated with owning shares of bond funds. When interest rates rise, bond prices fall. With a fixed income fund, when interest rates rise, the value of the fund’s existing bonds drops, which could negatively affect the overall fund.

The Northwestern Mutual Signature Portfolios program recommends portfolio asset allocations that are based upon an efficient frontier. Your financial advisor will help you create an efficient asset allocation and recommend a professionally constructed model portfolio that is appropriate for your situation.

ASSet ALLoCAtIoN

asset allocation is the process of diversifying your portfolio 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 trends. Varying combinations of asset classes within an account may help provide investors with a balance between expected risks and expected returns that are most appropriate for them.

the eFFICIeNt FRoNtIeR

The goal of asset allocation is to produce an “efficient portfolio,” one in which your expected return is maximized at a given risk level – or – your risk is minimized at a given return level. If all the “efficient portfolios” for a set of investment alternatives at given levels of risk are joined together, they form an “efficient frontier.”

The associated chart depicts an efficient frontier. each portfolio along the efficient frontier represents the most efficient combination of asset classes on the basis of risk and return. any restrictions or customization to your portfolio could move your asset allocation away from the efficient frontier – potentially causing higher risk and lower returns.

THe BLeND OF RISk & ReTURN THaT’S RIGHT FOR YOU

Stocks and Bonds: Risk Versus Return1970–2009

12% Return

11

10

9

Maximum risk portfolio:100% Stocks

60% Stocks, 40% Bonds


100% Bonds

Minimum risk portfolio:28% Stocks, 72% Bonds

91161514131211 17 1810% Risk


MODeL PORTFOLIO CONSTRUCTION

Constructing an appropriate portfolio extends beyond determining your place on the efficient frontier. Individual investment options must be selected to fill each piece of that asset allocation. Not only do those investment options need to stand on their own merits, but the combination of those investment options must be considered as well.

The Signature Portfolios program offers you the advantage of professionally constructed model portfolios. Morningstar associates and the Northwestern Mutual Wealth Management Company research and assemble various funds in combinations that diversify such factors as management style, sub-asset classes, and industry sectors. The portfolios constructed by Morningstar associates are known as “customized” model portfolios, and the portfolios constructed by the Northwestern Mutual Wealth Management Company are known as “multi-manager” and “market index” model portfolios.

Morningstar assembles “customized” model portfolios with three strategies – one comprised of a core group of mutual funds, one constructed with an extended number of mutual funds, and a strategy that may be appropriate for tax-sensitive investors.

The Northwestern Mutual Wealth Management Company research area assembles “multi-manager” model portfolios using a blend of mutual funds, including a number of funds from the Russell Investment Group. These multi-manager models cover two strategies – one aimed at providing a style-neutral combination of funds and one that may be appropriate for tax-sensitive investors.

The Northwestern Mutual Wealth Management Company research area also assembles “market index models” which consist of a blend of indexed securities. The models are designed to closely track to their associated blended benchmarks by holding funds that are managed to track the performance of particular market indices.

Indexed securities typically have lower expense ratios when compared to actively managed mutual funds. These portfolios may also be desirable for clients seeking a tax-sensitive approach.

at each asset allocation point along the efficient frontier, there are corresponding portfolio options based on the customized, multi-manager, and market index strategies. although no investment strategy can guarantee a profit or protect against a loss, your financial advisor will guide you to a model portfolio and strategy that is appropriate for you based on your financial objectives.

Independent and reliable investment research and analysis is critical in helping you and your financial advisor make informed investment decisions. Morningstar associates, an industry leader in mutual fund research, and Russell Investment Group have been engaged to provide independent investment research and portfolio construction recommendations for the Signature Portfolios program.

The Northwestern Mutual Wealth Management Company research area screens the eTFs and other securities used in the market index models on an ongoing basis to ensure they have appropriate performance, risk, and expense measures relative to peers and benchmarks.

The research and analysis used to select investment options for the program, combined with the expert guidance of your financial advisor, helps you rest easy knowing that you have an experienced investment team working with you.

MutuAL FuNd SeLeCtIoNS

Morningstar associates and the Northwestern Mutual Wealth Management Company have developed a quantitative and qualitative evaluation methodology that identifies funds that satisfy a number of return, style, and expense characteristics.

Morningstar associates provides independent investment research and ongoing analysis for certain mutual fund options available within the Signature Portfolios program. The chart on the following page illustrates the four-step process used to evaluate and select these funds.

Certain investment options in the Signature Portfolios program are monitored by the Northwestern Mutual Wealth Management Company’s Investment Committee based on fund research and due diligence guidelines developed by Northwestern Mutual Wealth Management Company. Russell Investments mutual funds and indexed securities are included in the program as a result of this process.

SIGNaTURe ReSeaRCH MeTHODOLOGY

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.

Quantitative Analysis

Qualitative Reviewand Analysis

Portfolio Building

OngoingMentoring


Qualitative Reviewand Analysis

Portfolio Building

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QuALItAtIVe ANALYSIS

PoRtFoLIo BuILdING

oNGoING MoNItoRING

QuANtItAtIVe ANALYSIS

CLIENT PORTFOLIO

QuANtItAtIVe ANALYSIS Fund Scoring System:

•Risk&return

•Managertenure

• Peergroupcomparison

• Performanceconsistency

•Expenses

PoRtFoLIo BuILdING “Bottom-up” Process:

•Assesshowwellfundswork together in a portfolio

•Determineoverallcorrelationof managers and its effects on risk

QuALItAtIVe ANALYSIS “Top-down” process:

•Evaluatemanagerperformance

•Turnover

•Portfolioconcentration

•Styleormarketcapdrift

•Sectorbets/markettiming

oNGoING MoNItoRING Seek to identify possible style drift, performance concerns, or funds that require further qualitative analysis

ReSeARCh MethodoLoGY FoR MutuAL FuNd eVALuAtIoN ANd SeLeCtIoN MutuAL FuNd FAMILY ChoICeS

The Signature Portfolios program

gives you access to the expertise

of some of the most respected

investment management

companies. Below is a sampling

of some of the fund families

available in the Signature Portfolios

program:

AllianceBernstein Investments

PIMCo Funds

American Century Investments®

American Funds®

Fidelity® Advisor Funds

Franklin templeton Investments

MFS Investment Management®

Russell Investments

Vanguard® Funds

Fund family availability subject to change.

Signature Portfolios is a program offered by Northwestern Mutual Investment Services, LLC and Northwestern Mutual Wealth Management Company, which are wholly owned subsidiaries of The Northwestern Mutual Life Insurance Company (Northwestern Mutual).

For 25 years, a FORTUNe® Magazine survey has named Northwestern Mutual “america’s most admired” life insurance company. What’s more, Northwestern Mutual’s well-earned reputation is based on its financial strength, its long-standing commitment to the principles of mutuality, and its history of consistently delivering long-term value to its policyowners. Northwestern Mutual maintained the highest available ratings for financial strength from all four major rating agencies.*

Talk to your financial advisor today to learn more about Signature Portfolios and other products and services. Before opening a Northwestern Mutual Signature Portfolios account, review the information contained in the Northwestern Mutual Signature Portfolios Program Disclosure Brochure. You will also need to agree to the terms of the Northwestern Mutual Signature Portfolios Client agreement. We look forward to having an opportunity to help you pursue your financial goals.

* These third-party ratings are a measure of an insurance company’s financial strength and do not apply to the performance of any investments in the Signature Portfolios program. Investments in the Signature Portfolios program are not guaranteed, and their value can be less than your original investment.

MakING THe RIGHT CHOICeS

MakeS aLL THe DIFFeReNCe

AdVISoRY PRoGRAM oPtIoNS

Clients with significant investable assets often

require more tailored investment services and

therefore may benefit from the level of professional

advice and personal service that is available through

our advisory programs:

Signature Annuities is an investment advisory

program that combines the benefits of a tax-deferred

variable annuity with the expert guidance and personal

service of a financial advisor.

Signature Choice is an advisory investment program

for investors who desire a high level of professional

advice in the areas of asset allocation, the selection

of securities, and portfolio rebalancing.

Signature Managed Accounts is an investment

advisory program that provides investors access

to third-party asset management and specialized

portfolio managers to create a highly customized

investment portfolio of individual securities.

Private Client Services is a fully discretionary, highly

customized portfolio management solution that

utilizes internal separate account equity and fixed

income management capabilities, along with other

investment vehicles such as mutual funds, ETFs,

options, and futures strategies, to manage a client’s

portfolio according to an established individualized

investment policy.

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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