Michael R. Chico, CFA<SUP>&#174;</SUP>

Michael R. Chico, CFA®

With Northern Trust since 2005
Began Career in 1995

Brian W. Hart

Brian W. Hart

With Northern Trust since 2009
Began Career in 2009

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You may find this Fund ideal, if you are a conservative investor who prefers the income and quality assurance offered by government securities. It is best suited for investors with relatively low-risk profiles and can provide a solid-core holding for income-oriented investors of all ages. Our approach is to select high-quality securities with maturities between one and 10 years, issued or guaranteed by the U.S. Government, as we manage risk exposure to achieve reasonable returns. We believe investing in a broad range of U.S. Government securities with intermediate-term maturities can provide greater stability of principal than is generally available from longer-term, higher-yielding bonds. The principal value and investment return of the Fund are neither guaranteed or insured by the U.S. Government.

Fund Objective: Current Income
Ticker SymbolDistribution Rate
Daily as of 07/22/14
30-Day SEC Yield
Monthly as of June 30, 2014
Updated Daily as of July 22, 2014
SymbolNOUGX Distribution Rate*0.73%
CUSIP665162889 Tax-Equivalent Distribution Rate* N/A
Share Price$ 9.60 Updated Monthly as of June 30, 2014
Share Price Change$ 0.01Total Net Assets$33,127,120
YTD Total Return1.42% Updated Monthly as of June 30, 2014
Inception Date4/1/199430-Day SEC
30-Day SEC
Total Returns for Quarter Ended June 30, 2014
 U.S. Government FundBarclays Intermediate U.S. Government IndexMorningstar Intermediate Government Category Average
Year to Date1.59%1.55%3.26%
1 Year1.11%1.53%3.06%
3-Year Avg. Annual1.60%1.96%2.37%
5-Year Avg. Annual2.50%2.83%3.62%
10-Year Avg. Annual3.34%3.91%4.09%
Avg. Annual
Since Inception
4.50%5.13% 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
U.S. Government
Includes contractual expense reimbursements that, if not extended, will end on
July 31, 2015.
U.S. Government-3.31%2.75%5.77%4.50%0.06%
Barclays Intermediate U.S. Government Index-1.25%1.73%6.08%4.98%-0.32%
Morningstar Category Avg.
Intermediate Government
Performance quoted represents past performance and does not guarantee future results.
Number of Holdings42
Average Duration†3.6 YRS
Average Maturity4.1 YRS
Weighted Average Coupon1.80%
Yield to Maturity1.44%
Dividend ScheduleMonthly
Dividend Income Last Quarter$0.0205
Capital Gain Income Last QuarterN/A
BenchmarkBarclays Intermediate U.S. Government Index
Morningstar CategoryIntermediate Government
Maturity Distribution    Fund
0-1yr    7.7%
1yr-2yrs    5.0%
2yrs-3yrs    22.2%
3yrs-5yrs    41.0%
5yrs-7yrs    16.2%
7yrs-10yrs    7.9%
TOTAL 100.0%
Quality DistributionFundBenchmark
US Tsy (incl GNMA MBS)84.7% 90.2%
US Agcy (incl FN/FH MBS)19.7% 9.8%
Committed Cash-4.4% 0.0%
TOTAL100.0% 100.0%
Sector WeightingsFundBenchmark
Commercial MBS14.8%0.0%
Committed Cash-4.4%0.0%
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.

Mortgage-Backed Securities Risk: Mortgage-backed investments involve risk of loss due to prepayments and, like any bond, due to default. Because of the sensitivity of mortgage-related securities to changes in interest rates, the Fund’s performance may be more volatile than if it did not hold these securities.

U.S. Government Guarantee: U.S. government guarantees apply only to the underlying securities of a Fund’s portfolio and not the Fund’s shares.

Barclays Intermediate U.S. Government Index is an unmanaged index of debt securities including all public obligations of the U.S. Treasury and all publicly issued debt of U.S. government agencies with maturities of up to 10 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.