Short-Intermediate Tax-Exempt
Timothy P. Blair

Timothy P. Blair

With Northern Trust since 1992
Began Career in 1992

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You may find this Fund attractive if you are in investor who is seeking higher current income, but potentially less price volatility than the Intermediate Tax-Exempt Fund, with income exempt from regular federal income tax. It is well suited for income-oriented investors in higher tax brackets who are willing to accept some risk of principal in exchange for higher yield potential. Income from the Fund may be subject to federal alternative minimum tax (AMT), state and local taxes. We focus on producing conservative tax-free income while managing portfolio risk. The Fund's average maturity ranges from one year to less than six years. We believe investing in a broad range of municipal securities with short to intermediate-term maturities can provide greater stability of principal than is generally available from longer-term, higher-yielding bonds.

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
NSITX0.89%1.36%
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Short-Intermediate Tax-Exempt Risk Reward Spectrum
Updated Daily as of September 9, 2010
SymbolNSITX Distribution Rate*1.22%
CUSIP665162525 Tax-Equivalent Distribution Rate* 1.87%
Share Price$ 10.64 Updated Monthly as of July 31, 2010
Share Price Change$ -0.01Total Net Assets$1,409,947,743
YTD Total Return2.29% Updated Monthly as of July 31, 2010
Inception Date8/22/200730-Day SEC
Yield*		0.89%
  Tax-Equivalent
30-Day SEC
Yield*		1.36%
Total Returns for Month Ended July 31, 2010
 Short-Intermediate Tax-ExemptBarclays Capital 1-5 Yr Blend Muni Bond IndexMorningstar Muni National Short Category Average
Month0.78%0.91%0.72%
3-Month1.30%1.64%1.27%
Year to Date1.86%2.60%2.09%
1 Year3.13%4.40%3.80%
Avg. Annual
Since Inception		4.39%5.90% N/A
 
Total Returns for Quarter Ended June 30, 2010
 Short-Intermediate Tax-ExemptBarclays Capital 1-5 Yr Blend Muni Bond IndexMorningstar Muni National Short Category Average
Month0.12%0.25%0.14%
3-Month0.83%1.21%0.93%
Year to Date1.07%1.68%1.38%
1 Year3.47%4.74%3.98%
Avg. Annual
Since Inception		4.23%5.66% 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 RatioNet Expense Ratio*
Short-Intermediate Tax-Exempt
(NSITX)		0.79%0.70%
*Includes contractual expense reimbursements that, if not extended, will end on July 31, 2011.
 20092008
Short-Intermediate Tax-Exempt4.80%3.92%
Barclays Capital 1-5 Yr Blend Muni Bond Index5.83%5.44%
Morningstar Category Avg.
Muni National Short		5.91%0.86%
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 Holdings280
Average Duration†2.2 YRS
Average Maturity2.8 YRS
Weighted Average Coupon3.21%
Income**$0.0127
Dividend ScheduleMonthly
Dividend Income Last Quarter$0.0369
Capital Gain Income Last QuarterN/A
BenchmarkBarclays Capital 1-5 Year Blend Municipal Bond Index
Morningstar CategoryMuni National Short
Maturity Distribution    Fund
0 - 1 Year    43.4%
2 - 5 Years    41.1%
6 - 10 Years    14.2%
11 - 20 Years    1.3%
TOTAL 100.0%
Quality DistributionFundBenchmark
AAA24.4% 23.0%
AA33.5% 53.9%
A4.9% 17.8%
BBB0.0% 5.3%
SP1/MIG119.9% 0.0%
Not rated0.2% 0.0%
Short-Term17.1% 0.0%
TOTAL100.0% 100.0%
Sector WeightingsFundBenchmark
General Obligation35.0%25.9%
Revenue27.1%36.8%
Short-Term23.3%0.0%
Insured9.5%7.9%
Government Backed5.1%29.4%
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.

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 1-5 Year Blend Municipal Bond Index is an unmanaged index of investment grade (Baa3 or better) tax-exempt bonds with maturities of at least one year and less than six years. 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.
 
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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 38.0% for Arizona, 41.0% for California and 35.0% for national municipal funds.

**Per share paid out July 26 with a record date of July 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.

©2010 Northern Funds | Northern Funds are distributed by Northern Funds Distributors, LLC, not affiliated with Northern Trust.