Multi-Manager High Yield Opportunity Fund

Multi-Manager High Yield Opportunity

as of March 31, 2013

The high-yield market as measured by the BofA Merrill Lynch High Yield Master II Constrained Index posted a 2.89% return during the quarter. Financials were the best-performing group, returning 3.50% and more than 15% over the trailing 12-month period. Lower-quality issues continued to perform well during the period, and demand for high-yield issues remains high. For the trailing 12 months, the BofA Merrill Lynch High Yield Master II Constrained Index returned 13.06%.

The Multi-Manager High Yield Opportunity Fund outperformed during the quarter with a return of 3.13%, compared with the benchmark return of 2.89%. The Fund’s overweight exposure to lower-rated securities once again added value, as lower-quality issues continued to outperform.

Higher-beta sub-advisers Loomis Sayles and DDJ both outperformed during the quarter, which was within expectations given market conditions. Neuberger Berman’s performance was more in line with the market, reflecting their more conservative portfolio profile.

If you're looking for a total-return-oriented high yield fund that's designed to provide competitive performance in a broad range of market environments, you may want to consider the Multi-Manager High Yield Opportunity Fund. The highly diversified, multi-style Fund can invest in high yield corporate securities as well as foreign bonds, emerging markets, bank loans, convertibles, preferreds, mortgages, REITs, equities, munis and closed-end high yield funds. Despite the Fund's opportunistic investment strategy, it can be used as the primary high yield allocation in portfolios.

Strive to maintain a highly diversified, opportunistic investment strategy that can invest in high yield corporate securities as well as foreign bonds, emerging markets, bank loans, convertibles, preferreds, mortgages, REITs, equities, municipals and closed-end high yield funds.
Select complementary manager from a broad universe of investment managers.
Blend managers into a single fund in an effort to provide an attractive combination of risk and return.

Not FDIC insured | May lose value | No bank guarantee

†Northern tax-exempt fixed income funds' 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, 53.7% for California and 43.4% for national municipal funds.

**Per share paid out March 25 with a record date of March 22. The amount shown represents dividends paid for net investment income and excludes distributions from capital gain income.

*View investment term definitions

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.