Multi-Manager Large Cap Fund

Multi-Manager Large Cap

as of June 30, 2010

U.S. large-cap equities as measured by the Russell 1000® Index returned -11.44% during the second quarter, underperforming small- and mid-cap indices. The more traditionally defensive telecommunications services, utilities and consumer staples sectors were the top performers for the quarter, as investors worried about a potential "double dip" recession. Financial stocks were the biggest decliners, falling more than 13% during the period. From a style perspective, value stocks finished slightly ahead of growth stocks, with the Russell 1000 Value Index returning -11.15%, compared with the Russell 1000 Growth Index return of -11.75%.

The Multi-Manager Large Cap Fund returned -10.87% for the three-month period, compared with the benchmark return of -11.44%. Stock selection drove relative outperformance, particularly within the information technology sector. Much of the relative strength in the technology area was attributable to sub-adviser Metropolitan West, which significantly outperformed the benchmark within that sector. Delaware Investments also added value among technology stocks. Delaware's more defensive strategy helped the Fund during the quarter as the sub-adviser added relative value in difficult markets. The Fund's overall sector positioning had little impact on results.

During the three-month period, markets displayed increased caution by investors. Following robust returns in 2009, the Russell 1000 Index has declined 6.40% year-to-date. Markets have become far more discriminating, making a sound investment process more critical than ever. We continue to employ a disciplined multi-manager approach, seeking managers with unique and differentiated styles in order to offer attractive risk/reward characteristics for Fund shareholders.

If you're a long-term investor looking to diversify your investments by pursuing the growth potential of large-company stocks, then this Fund may be right for you.

Invest in large-cap stocks through a variety of external large-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.