Timothy T.A. McGregor, CFA<SUP>&#174;</SUP>

Timothy T.A. McGregor, CFA®

With Northern Trust since 1989
Began Career in 1985


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For those investors who favor current income exempt from regular federal income tax, this Fund may be ideal for you. It is particularly well suited for income-oriented investors in higher tax brackets willing to assume some risk. Income from the Fund may be subject to federal alternative minimum tax (AMT), state and local taxes. Our approach is to invest in a broad range of investment-grade municipal instruments with an average maturity of 10 and 30 years. We believe a well-managed portfolio of longer-term municipal securities may increase investors' current tax-free income.

Fund Objective: Current Tax-Exempt Income
Ticker Symbol 30-Day SEC Yield
Monthly as of March 31, 2014
30-Day Tax-Equivalent SEC Yield
Monthly as of March 31, 2014
NOTEX3.52%6.21%
Updated Daily as of April 16, 2014
SymbolNOTEX Distribution Rate*3.58%
CUSIP665162863 Tax-Equivalent Distribution Rate* 5.51%
Share Price$ 10.54 Updated Monthly as of March 31, 2014
Share Price Change$ 0.01Total Net Assets$745,286,450
YTD Total Return5.26% Updated Monthly as of March 31, 2014
Inception Date4/1/199430-Day SEC
Yield*
3.52%
  Tax-Equivalent
30-Day SEC
Yield*
6.21%
Total Returns for Quarter Ended March 31, 2014
 Tax-Exempt FundBarclays U.S. Municipal IndexMorningstar Muni National Long Category Average
Month0.43%0.17%0.34%
3-Month4.09%3.32%3.98%
Year to Date4.09%3.32%3.98%
1 Year0.30%0.39%-1.10%
3-Year Avg. Annual6.43%5.79%6.17%
5-Year Avg. Annual5.63%5.71%6.33%
10-Year Avg. Annual4.27%4.45%3.79%
Avg. Annual
Since Inception
5.24%5.62% N/A
 
Performance quoted represents past performance and does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown here.

The Advisor has agreed to reimburse certain expenses of the Fund (excluding acquired fund fees and expenses; a portion of the compensation paid to each Trustee who is not an officer, director or employee of Northern Trust Corporation or its subsidiaries; expenses related to third-party consultants engaged by the Board of Trustees of the Trust; membership dues paid to the Investment Company Institute and Mutual Fund Directors Forum; extraordinary expenses; and interest, if any) to the extent the "Total Annual Fund Operating Expenses" exceed 0.45%. The contractual limitation may not be terminated before July 31, 2014 without the approval of the Board of Trustees. In the absence of fee waivers, yield, total return, growth since inception and dividends would have been reduced. Total return is based on net change in NAV assuming reinvestment of distributions.
Disclosure
 Gross Expense RatioNet Expense Ratio
Tax-Exempt
(NOTEX)
0.87%0.47%
Includes contractual expense reimbursements that, if not extended, will end on
July 31, 2014.
 20132012201120102009
Tax-Exempt-3.64%7.94%11.85%0.21%12.36%
Barclays U.S. Municipal Index-2.55%6.78%10.70%2.38%12.91%
Morningstar Category Avg.
Muni National Long
-4.59%8.87%10.64%1.65%17.30%
Performance quoted represents past performance and does not guarantee future results.
Number of Holdings150
Average Duration†4.7 YRS
Average Maturity16.9 YRS
Weighted Average Coupon4.40%
Income**$0.0366
Dividend ScheduleMonthly
Dividend Income Last Quarter$0.0949
Capital Gain Income Last Quarter$0.1408
BenchmarkBarclays U.S. Municipal Index
Morningstar CategoryMuni National Long
Maturity Distribution    Fund
0 - 1 Year    7.2%
2 - 5 Years    4.3%
6 - 10 Years    10.8%
11 - 20 Years    34.2%
21 - 30 Years    41.0%
31+ Years    2.5%
TOTAL 100.0%
Quality DistributionFundBenchmark
AAA23.7% 13.0%
AA50.6% 49.7%
A17.5% 31.6%
BBB1.4% 5.7%
Committed Cash6.8% 0.0%
TOTAL100.0% 100.0%
Sector WeightingsFundBenchmark
Revenue69.2%67.3%
General Obligation15.4%27.9%
Committed Cash6.8%0.0%
Insured5.9%0.3%
Government-Backed2.7%4.5%
TOTAL100.0% 100.0%
All data is as of date indicated and subject to change.

Bond Risk: Bond funds will tend to experience smaller fluctuations in value than stock funds. However, investors in any bond fund should anticipate fluctuations in price, especially for longer-term issues and in environments of rising interest rates.

Tax-Free/AMT Risk: Tax-exempt funds’ income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax.

Barclays U.S. Municipal Index is an unmanaged index of investment grade (Baa3 or better) tax-exempt bonds with a remaining maturity of at least one year. It is not possible to invest directly in an index.

Quality Distribution: Credit quality ratings are based on converting the available Moody's, Standard & Poor's, and/or Fitch ratings to a common numerical basis and averaging that result. If none of these three rating agencies has assigned a rating the Fund will assign a rating of not rated. The ratings, expressed in Standard & Poor's nomenclature, range from AAA (extremely strong capacity to meet its financial commitment) to D (in default). Short-term ratings, expressed in Standard & Poor's nomenclature, range from A-1 (obligor's capacity to meet its financial commitment on the obligation is strong) to A-3 (exhibits adequate protection parameters). The Standard & Poor's short-term municipal rating of SP1 reflects a strong capacity to pay principal and interest (an issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation). The Moody's short-term municipal rating of MIG1 denotes superior credit quality (excellent protection is afforded by established cash flows, highly reliable liquidity support or demonstrated broad-based access to the market for refinancing). Committed Cash includes any traded cash (forward settling trades), the sweep vehicle and commercial paper. The ratings represent the rating agencies' opinions of the quality of the securities they rate. Ratings are relative and subjective and are not absolute standards of quality.

Distribution Calculations: All distribution calculations (Maturity Distribution, Sector Weightings and Quality Distribution) are measured on a trade date basis and are adjusted for uninvested cash from the market value used to compute the percentage calculations.

 
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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 February 24 with a record date of February 21. The amount shown represents dividends paid for net investment income and excludes distributions from capital gain income.

Past performance is not indicative of future results. Institutional investor award winners are chosen by the editorial staff of Institutional Investor magazine based on their market intelligence, performance data and additional information received from the industry following a public call for nominations. Manager winners are also selected by the editors of the magazine based on the results of a survey conducted of U.S. institutional investors.

Please carefully read the prospectus and summary prospectus and consider the investment objectives, risks, charges and expenses of Northern Funds before investing. Call 800-595-9111 to obtain a prospectus and summary prospectus, which contains this and other information about the funds.

©2014 Northern Funds | Northern Funds are distributed by Northern Funds Distributors, LLC, not affiliated with Northern Trust.