Tax-Exempt Fund

Tax-Exempt

Northern Funds Center by E-mail

Timothy T.A. McGregor

With Northern Trust since 1989
Began Career in 1985

View all holdings as of
June 30, 2010

View all holdings as of
March 31, 2010

Fact Sheet

Review fund performance
View fund performance for equity, fixed income and money market funds.

Choosing a Fund
Use our Risk/Reward spectrum to navigate your way to the mutual fund that is right for you.

For those investors who favor current income exempt from regular federal income tax, this Fund may be ideal for you. It is particularly well suited for income-oriented investors in higher tax brackets willing to assume some risk. Income from the Fund may be subject to federal alternative minimum tax (AMT), state and local taxes. Our approach is to invest in a broad range of investment-grade municipal instruments with an average maturity of 10 and 30 years. We believe a well-managed portfolio of longer-term municipal securities may increase investors' current tax-free income.

Fund Objective: Current Tax-Exempt Income

Ticker Symbol	30 Day SEC Yield Monthly as of July 31, 2010	30 Day Tax Equivalent SEC Yield Monthly as of July 31, 2010
NOTEX	3.34%	5.14%

	View All Northern Funds

http://www-ac.northerntrust.com/content//media/attachment/data/image/0906/document/black_star4.gif

Among 253 municipal national long funds derived from a weighted average of the fund's 3-, 5- and 10-year risk-adjusted returns as of 7/31/2010.

Northern Tax-Exempt received 4 stars for the 3-year rating among 253 municipal national long funds, 4 stars for the 5-year rating among 232 funds and 4 stars for the 10-year rating among 199 funds.

Past performance is no guarantee of future results. Ratings reflect fee waivers in effect; in their absence, ratings may have been lower.

Star ratings are based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The overall rating is a weighted average of the 3-, 5-, and 10-year (if applicable) returns. 5 stars = top 10% of funds in an asset category; 4 stars = next 22.5% of funds; 3 stars = next 35%; 2 stars = next 22.5% and 1 star = next 10%. A fund must be in existence three years to be rated. Ratings are subject to change monthly.

©2010 Morningstar, Inc. All Rights Reserved. Morningstar and/or its content providers are the proprietors of this information; do not permit its unauthorized copying or distribution; do not warrant it to be accurate, complete or timely; and are not responsible for damages or losses arising from its use.

Updated Daily as of September 3, 2010
Symbol	NOTEX	Distribution Rate*	3.25%
CUSIP	665162863	Tax-Equivalent Distribution Rate*	5.00%
Share Price	$ 10.92	Updated Monthly as of July 31, 2010
Share Price Change	$ -0.02	Total Net Assets	$1,117,355,621
YTD Total Return	6.03%	Updated Monthly as of July 31, 2010
Inception Date	4/1/1994	30-Day SEC Yield*	3.34%
		Tax-Equivalent 30-Day SEC Yield*	5.14%

Total Returns for Month Ended July 31, 2010
	Tax-Exempt Fund	Barclays Capital Municipal Bond Index	Morningstar Muni National Long Category Average
Month	1.14%	1.25%	1.14%
3-Month	1.65%	2.07%	1.63%
Year to Date	3.57%	4.60%	4.40%
1 Year	8.04%	9.15%	10.38%
3-Year Avg. Annual	5.31%	5.67%	3.69%
5-Year Avg. Annual	4.37%	4.75%	3.40%
10-Year Avg. Annual	5.36%	5.62%	4.55%
Avg. Annual Since Inception	5.42%	Pending%	N/A

Total Returns for Quarter Ended June 30, 2010
	Tax-Exempt Fund	Barclays Capital Municipal Bond Index	Morningstar Muni National Long Category Average
Month	–0.19%	0.06%	-0.15%
3-Month	1.47%	2.03%	1.74%
Year to Date	2.40%	3.31%	3.22%
1 Year	8.25%	9.61%	10.70%
3-Year Avg. Annual	5.13%	5.50%	3.48%
5-Year Avg. Annual	4.04%	4.40%	3.10%
10-Year Avg. Annual	5.39%	5.63%	4.58%
Avg. Annual Since Inception	5.38%	5.89%	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. The contractual reimbursement arrangement is expected to continue until at least July 31, 2011. After this date, the contractual arrangements may be terminated if it is determined to be in the best interest of the Fund and its shareholders. 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. The 30-day SEC yield more closely reflects the current earnings of the Fund than the total returns.

Disclosure

	Gross Expense Ratio	Net Expense Ratio*
Tax-Exempt (NOTEX)	0.85%	0.75%
*Includes contractual expense reimbursements that, if not extended, will end on July 31, 2011.

	2009	2008	2007	2006	2005
Tax-Exempt	12.36%	-1.79%	2.97%	4.21%	3.15%
Barclays Capital Municipal Bond Index	12.91%	-2.47%	3.36%	4.84%	3.51%
Morningstar Category Avg. Muni National Long	17.30%	-9.45%	1.27%	4.57%	3.10%
Performance quoted represents past performance and does not guarantee future results.

as of July 31, 2010

Read the most recent Fund Commentary (as of June 30, 2010)

Number of Holdings	212
Average Duration†	5.8 YRS
Average Maturity	17.0 YRS
Weighted Average Coupon	4.47%
Income**	$0.0320
Dividend Schedule	Monthly
Dividend Income Last Quarter	$0.0966
Capital Gain Income Last Quarter	N/A
Benchmark	Barclays Capital Municipal Bond Index
Morningstar Category	Muni National Long

Maturity Distribution		Fund
0 - 1 Year		10.8%
2 - 5 Years		4.7%
6 - 10 Years		10.3%
11 - 20 Years		29.9%
21 - 30 Years		40.7%
30+ Years		3.6%
TOTAL		100.0%

Quality Distribution	Fund	Benchmark
AAA	34.0%	15.8%
AA	39.5%	53.5%
A	14.8%	22.2%
BBB	1.1%	8.5%
SP1/MIG1	5.0%	0.0%
Not rated	1.5%	0.0%
Short-Term	4.1%	0.0%
TOTAL	100.0%	100.0%

Sector Weightings	Fund	Benchmark
Revenue	67.5%	54.9%
General Obligation	24.0%	24.1%
Short-Term	4.0%	0.0%
Government Backed	3.2%	9.2%
Insured	1.3%	11.8%
TOTAL	100.0%	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.

Tax-Free/AMT Risk: Tax-exempt funds’ income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax.

Barclays Capital Municipal Bond Index is an unmanaged index of investment grade (Baa3 or better) tax-exempt bonds with a remaining maturity of at least one year. It is not possible to invest directly in an index.

Quality Distribution: Credit quality ratings reported for the fund primarily originate from data compiled by InvestorTools within their Perform system. They are based on converting the available Moody's, Standard & Poor's, and/or Fitch ratings to a common numerical basis and averaging that result. If none of these three rating agencies has assigned a rating the Fund will assign a rating of NR (non-rated security). The ratings, expressed in Standard & Poor's nomenclature, range from AAA (extremely strong capacity to meet its financial commitment) to D (in default). 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.