Bradley Camden, CFA<SUP>&#174;</SUP>

Bradley Camden, CFA®

With Northern Trust since 2005
Began Career in 2002

Michael T. Doyle

Michael T. Doyle

With Northern Trust since 1999
Began Career in 1999

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The Short Bond Fund seeks to maximize total return consistent with reasonable risk by investing primarily in a broad range of bonds and other fixed income securities. This Fund maintains a dollar-weighted average maturity between one and three years. Dividends, if any, are declared and paid monthly. Capital gains, if any, are distributed at least annually.

Fund Objective: Total Return
Ticker SymbolDistribution Rate
Daily as of 07/28/14
30-Day SEC Yield
Monthly as of June 30, 2014
Updated Daily as of July 28, 2014
SymbolBSBAX Distribution Rate*1.22%
CUSIP665162368 Tax-Equivalent Distribution Rate* N/A
Share Price$ 19.10 Updated Monthly as of June 30, 2014
Share Price Change$ 0.00Total Net Assets$491,503,690
YTD Total Return0.79% Updated Monthly as of June 30, 2014
Inception Date1/11/199330-Day SEC
30-Day SEC
Total Returns for Quarter Ended June 30, 2014
 Short Bond FundBarclays 1-3 Yr US Gov/Credit IndexMorningstar Short-Term Bond Category Average
Year to Date0.94%0.56%1.26%
1 Year2.32%1.14%2.24%
3-Year Avg. Annual1.79%1.00%1.85%
5-Year Avg. Annual2.59%1.73%3.21%
10-Year Avg. Annual3.14%2.96%3.08%
Avg. Annual
Since Inception
4.42%4.37% 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 0.40%. The contractual limitation may not be terminated before July 31, 2015 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.
 Gross Expense RatioNet Expense Ratio
Short Bond
Includes contractual expense reimbursements that, if not extended, will end on July 31, 2014.
Short Bond0.59%3.07%2.27%3.69%4.95%
Barclays 1-3 Yr US Gov/Credit Index0.64%1.26%1.59%2.80%3.83%
Morningstar Category Avg.
Short-Term Bond
Performance quoted represents past performance and does not guarantee future results.
Number of Holdings368
Average Duration†1.9 YRS
Average Maturity2.6 YRS
Weighted Average Coupon2.41%
Yield to Maturity1.08%
Dividend ScheduleMonthly
Dividend Income Last Quarter$0.0704
Capital Gain Income Last QuarterN/A
BenchmarkBarclays 1-3 Year U.S. Government /Credit Index
Morningstar CategoryShort-Term Bond
Maturity Distribution    Fund
0-1yr    5.5%
1yr-2yrs    37.9%
2yrs-3yrs    39.7%
3yrs-5yrs    9.8%
5yrs-7yrs    4.8%
7yrs-10yrs    2.1%
30yrs-35yrs    0.1%
35yrs+    0.1%
TOTAL 100.0%
Quality DistributionFundBenchmark
US Tsy (incl GNMA MBS)36.8% 64.5%
US Agcy (incl FN/FH MBS)1.6% 7.9%
AAA18.0% 5.7%
AA4.8% 4.5%
A13.8% 9.7%
BBB14.8% 7.7%
BB5.6% 0.0%
B3.9% 0.0%
CCC0.2% 0.0%
Committed Cash0.5% 0.0%
TOTAL100.0% 100.0%
Sector WeightingsFundBenchmark
Commercial MBS13.3%0.0%
Foreign Agencies1.6%3.0%
Committed Cash0.5%0.0%
Foreign Local Govt0.0%0.7%
TOTAL100.0% 100.0%
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.

Barclays 1-3 Year U.S. Government/Credit Index is an unmanaged index of securities issued by the U.S. government and corporate bonds with maturities of one to three years. It is not possible to invest directly in an index.

Quality Distribution: Credit quality ratings are based on the conservative average of Moody's, Standard & Poor’s and Fitch ratings. If ratings from all three rating agencies disagree, the model assigns the middle rating to the security. If two of the three agree, the model assigns the rating from those two to the security. 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). 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.

Characteristics: Benchmark and Fund analytics have been calculated using a third party vended model. All material has been obtained from sources believed to be reliable, but the accuracy, completeness and interpretation cannot be guaranteed. Information contained herein is current as of the date appearing in this material only and is subject to change without notice. Certain benchmark calculations may not match the published benchmark characteristics.

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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 May 27 with a record date of May 23. The amount shown represents dividends paid for net investment income and excludes distributions from capital gain income.

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.