FGR Funds in the Netherlands

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1 I N N OVAT I V E I N V E S T M E N T S T R U C T U R E S E X P E R T LY D E L I V E R E D FGR Funds in the Netherlands

2 HARNESSING THE POWER O F PA S S I V E M A N AG E M E N T In order to optimize your investment portfolio s performance, you may be looking for cost-efficient investments that perform in line with the market. Northern Trust offers investors global access to experienced index fund managers at low cost. Our series of Dutch-domiciled, tax-efficient FGR funds may help you maximize your portfolio s potential.

3 NORTHERN TRUST S INNOVATIVE PASSIVE FGR FUND RANGE By investing in Northern Trust s passive Fonds voor Gemene Rekening (FGR), you gain an important tool to manage your portfolio s asset allocation and deliver cost-efficient market exposure. Our funds are some of the first FGR funds in the Netherlands available for tracking broad index benchmarks, a capability previously available only in an active fund management capacity. Northern Trust s passive FGR funds provide greater transparency and lower costs than actively managed funds. As the FGR funds are Dutch-domiciled, they are subject to standard Dutch fiscal treatment. For Dutch investors, this may be beneficial over foreign domiciled funds. These advantages are explained in the table. Please refer to the prospectus, its supplements, and the Key Investor Information document for details on risks for each fund before you make a decision to invest. BENEFITS OF THE NORTHERN TRUST FGR FUNDS Transparency Cost Savings Dutch Treaty Network Performance Advantage Enjoy confidence in the level of transparency within these funds as a result of Northern Trust s aim to hold the underlying stocks within the benchmark. However, we may from time to time invest small portions of the portfolio in index futures in order to better match the benchmark. Additionally, because these funds do not incorporate securities lending, they have limited counterparty risk. As these products operate as index funds, they benefit from passive structure efficiencies and are therefore naturally low in cost. The funds are Dutch-domiciled and are therefore subject to the standard Dutch fiscal treatment. In contrast to foreign funds, which must use a foreign treaty network, this treatment allows the funds to use the Dutch Treaty Network. A treaty network is a cluster of agreements between a country (like the Netherlands) and other countries that allows the funds to reclaim part of the withholding taxes paid in other countries. Depending on each individual investor s fiscal situation, an investor may take advantage of tax efficiencies provided through the funds. Investors generally have to pay an average of 25-30% withholding tax, substantially diluting their potential income. With Northern Trust s new FGR suite, the fund is able to recoup part of that tax for our investors, providing the potential to increase our investors dividend income. northerntrust.com/fgr Innovative Investment Structures Expertly Delivered 1 of 4

4 WHAT IS PASSIVE INVESTING? Passive investing, commonly known as indexing, is a way of gaining low-cost market exposure. Instead of hiring a particular fund manager to actively select stocks or bonds for investment, a passively managed index fund buys all (or a representative sample) of the securities in a specific benchmark, such as the S&P 500 Index, in order to provide diversification and track the benchmark performance as closely as possible. Passive funds can be used across all asset classes and can be broad-based or specific to sectors, styles, or regions. At the opposite end of the spectrum is active investing, where fund managers aim to outperform a benchmark by selecting certain stocks or bonds that they believe will outperform in the future. They tend to charge a premium vs. passive investing. Passive investing can provide investors a cost efficient way to closely track the price development of an underlying index. Specific advantages to passively managed index funds include: Diversification: Investing in all or a representation of stocks in a market index can maximize diversification, impacting performance. Lower costs: The average management fee of a passive fund is generally lower than that for an active fund invested in the same market or sector. Transparency: Passive funds are straightforward and transparent in their investment objectives. FOCUSED ON PERFORMANCE AND SECURITY Northern Trust s passive FGR funds provide greater transparency and lower costs than actively managed funds. Along with tax efficiency, the investment philosophy and process of Northern Trust s FGR fund range can contribute to the performance of your portfolio. With the choice of three index benchmarks the MSCI Europe, MSCI North America and FTSE EPRA/NAREIT our FGR fund options allow you to choose from a diverse array of market exposure selections that may fit with your existing portfolio. The overall investment objectives of our FGR funds are to closely match the risk and return of the relevant index with net dividends reinvested. 2 of 4 Innovative Investment Structures Expertly Delivered northerntrust.com/fgr

5 AN FGR FUND STRUCTURE EXAMPLE A North American Equity FGR Fund Income from Canada Income from the United States Dutch Treaty with Canada (Canada has a 25% withholding tax; the Dutch treaty will allow the fund to reclaim 10%.) Dutch Treaty with the United States (The United States has a 30% withholding tax; the Dutch treaty will allow the fund to reclaim 15%.) FBI (tax status) Investor Investor Investor Investor Investor Investor AN INTEGRAL COMPONENT OF YOUR INVESTMENT STRATEGY Your existing portfolio can benefit from Northern Trust s FGR funds Core-satellite portfolios The transparent and low-cost nature of our passive funds can make them a key component of the low-cost, market-driven core of your portfolio. Incorporating them into your platform gives you the freedom in the satellite portion of your portfolio to add allocations to niche managers higher on the risk-reward spectrum. WHAT ARE FGR FUNDS? FGR funds are a common type of pooled investment vehicle in the Netherlands. They take advantage of the very broad Dutch tax treaty network a cluster of agreements between the Netherlands and other countries that allows the funds to reclaim withholding taxes on income to a certain extent. This in turn helps to reduce tax liability and increase investor income. High-income portfolios In today s environment of low interest rates, you may be looking for income-producing, stable alternatives. With FGR funds, you can enjoy the investment benefits of equity passive solutions without the burden of the 25-30% withholding tax that often accompany them. northerntrust.com/fgr Innovative Investment Structures Expertly Delivered 3 of 4

6 SELECTIVE INVESTORS SELECT US Northern Trust is one of the world s leading providers of asset servicing, asset management and wealth management services and one of the world s most admired companies.* Founded in 1889 and celebrating its 125th anniversary in 2014, we have a history of strength and stability second to none. In 1998, we launched our asset management business to deliver investment expertise to both personal and institutional clients, enabling them to secure their goals. Today, we are a global leader in combining high-touch client service and expertise with innovative products and technology. TO LEARN MORE Consult with your distributor to determine how Northern Trust s FGR funds can help you. P I ON EER I N G I N D EX M A N AG EM EN T Take steps to make sure your portfolio composition reflects the latest innovations in passively managed index funds. As a pioneer in the field of FOR FURTHER READING To obtain more information on Northern Trust s FGR funds please read our Key Investor Information Documents (KIIDs) and fund factsheets. indexing, Northern Trust s strong heritage of analysis, cutting-edge technology and commitment to passive management have made us one of the leading passive managers in the world. Our unique Intelligent Indexing approach is a disciplined, transparent investment process. It combines strategic market insights and sophisticated analysis to produce consistent and efficient market exposure. LO C A L FO CU S, G LO BA L R EAC H Bring global insight to bear on your portfolio. With Northern Trust as your fund provider, you benefit from our deep local expertise in the Netherlands combined with the scale and global outlook of one of the world s leading financial institutions. Our strong relationships with global and local industry bodies, including EUROSIF and the European Federation for Retirement Provisions, gives our clients access to the latest developments occurring at the forefront of the financial services industry. We combine this depth of local expertise with the broad perspective gained from our extensive office network across Europe including the United Kingdom, Luxembourg, Ireland and the Netherlands as well as the Americas, the Middle East and the Asia-Pacific region. * Fortune Magazine, of 4 Innovative Investment Structures Expertly Delivered northerntrust.com/fgr northern trust 2015

7 For investors in the Netherlands: The Funds are authorised by the Netherlands Authority for the Financial Markets in order to market its shares for sale to the public in the Netherlands and the Fund is, accordingly, a ucits (icbe) according to Section 2:72 of the Act on the Financial Supervision (Wet op het financieel toezicht). The prospectus for this Fund can be found at: Please note that the value of your investment may fluctuate. Past performance does not guarantee future results. The tax consequences of any Investment can vary considerably from one jurisdiction to another, and ultimately will depend on the tax regime of the jurisdictions within which a person is tax resident and are subject to change from time to time. Unit holders should obtain tax advice from an appropriate source in relation to the tax liability arising from the holding of Units in the Fund and any Investment returns from those Units.

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