Multi-Manager Mid Cap Fund

Multi-Manager Mid Cap

as of June 30, 2010

The second quarter of 2010 started strongly and then turned more unfavorable as fears of a "double-dip" recession made their way into markets. For the quarter, the Russell Midcap® Index fell -9.88%, taking year-to-date results into negative territory. Within the Index, the more defensive utility sector experienced the smallest decline, while the more cyclical materials and consumer sectors fell 13% and 12%, respectively. From a style perspective, value stocks outperformed growth stocks, with the Russell Midcap Value Index returning -9.6%, versus the Russell Midcap Growth Index return of -10.2%.

The Multi-Manager Mid Cap Fund outperformed the benchmark during the quarter, returning -9.37%, versus the benchmark return of -9.88%. The Fund's relative excess return was driven by positive stock selection, most notably in the consumer and industrial segments of the portfolio. From a sub-adviser perspective, growth managers TCW and Geneva added relative value to the Fund. TCW added value within the technology sector while Geneva saw relative strength in both consumer discretionary and industrial stocks.

Fund positioning has not changed significantly since the end of the first quarter. The Fund continues to be overweight industrial and technology stocks, and marginally underweight to the consumer area.

If you're a long-term investor looking to diversify your investments by pursuing the growth potential of mid-sized company stocks, then this Fund may be right for you. It is intended for investors who are aware that mid-sized company stocks are generally riskier than large-company stocks due to greater volatility and less liquidity.

Invest in mid-cap stocks through a variety of external mid-cap managers who have distinct investment styles and strategies.
Select complementary managers from a broad universe of investment managers.
Blend managers into a single fund in an effort to provide the best combination of risk and return.

Not FDIC insured | May lose value | No bank guarantee

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