<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
(RULE 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only
(as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
NORTHERN INSTITUTIONAL FUNDS
-----------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
<PAGE>
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
NORTHERN INSTITUTIONAL FUNDS
February 7, 2000
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Northern Institutional Funds (the "Trust"), to be held on March 21, 2000 at
9:30 a.m., Chicago time, at the offices of The Northern Trust Company, Directors
Room, 6th Floor, 50 South LaSalle Street, Chicago, Illinois 60675.
At this important meeting, you will be asked to consider and take action on the
election of Trustees (Proposal 1) and the ratification of the selection of
independent public auditors, Ernst & Young LLP (Proposal 2). In addition, as
described more fully in the Proxy Statement, you will be asked to approve
certain amendments relating to the fundamental investment policies of the
Trust's investment portfolios (the "Portfolios") (Proposals 3 (A)-(F)).
Proposals 3 (A)-(F) recommend amendments that are intended to modernize,
standardize and clarify certain of the Portfolios' fundamental investment
policies. The Trust believes that these proposals are important and will allow
the Portfolios to improve their operations.
You should carefully read the Proxy Statement, which discusses each proposal in
detail. The formal Notice of Special Meeting of Shareholders and the Proxy
Statement setting forth in detail the matters to come before the meeting are
attached, and a form of Proxy is enclosed for your use for each Portfolio in
which you are invested.
The Trustees have unanimously recommended that Shareholders approve each
proposal to be acted upon at the meeting.
Your continuing interest in the affairs of the Portfolios is gratefully
acknowledged. Whether or not you expect to attend the meeting, it is important
that your Shares be represented. Therefore, I urge you to vote FOR the nominees
for election as Trustees and each of the other proposals contained in the Proxy
Statement.
Sincerely,
/s/ Lloyd A. Wennlund
Lloyd A. Wennlund
Managing Director of
Mutual Funds
Northern Trust Global Investments
ATTENTION INVESTMENT MANAGERS: IF YOU HAVE THE AUTHORITY TO VOTE SHARES OF THE
PORTFOLIO(S) TO WHICH THESE PROXY MATERIALS RELATE, PLEASE VOTE. IF YOU DO NOT
HAVE THIS AUTHORITY, PLEASE FORWARD THESE MATERIALS TO YOUR CLIENT AT YOUR
EARLIEST CONVENIENCE. NORTHERN INSTITUTIONAL FUNDS OFFERS INVESTORS ACCESS TO
THE INSTITUTIONAL INVESTMENT ADVISORY SERVICES OF THE NORTHERN TRUST COMPANY AND
NORTHERN TRUST QUANTITATIVE ADVISORS, INC. THE NORTHERN TRUST COMPANY ALSO
SERVES AS CO-ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT TO NORTHERN
INSTITUTIONAL FUNDS.
<PAGE>
NORTHERN INSTITUTIONAL FUNDS
<TABLE>
<S> <C> <C>
MONEY MARKET PORTFOLIOS FIXED INCOME PORTFOLIOS EQUITY PORTFOLIOS
GOVERNMENT SELECT PORTFOLIO U.S. GOVERNMENT SECURITIES PORTFOLIO BALANCED PORTFOLIO
GOVERNMENT PORTFOLIO SHORT-INTERMEDIATE BOND PORTFOLIO EQUITY INDEX PORTFOLIO
DIVERSIFIED ASSETS PORTFOLIO INTERMEDIATE BOND PORTFOLIO DIVERSIFIED GROWTH PORTFOLIO
TAX-EXEMPT PORTFOLIO U.S. TREASURY INDEX PORTFOLIO FOCUSED GROWTH PORTFOLIO
MUNICIPAL PORTFOLIO BOND PORTFOLIO MID CAP GROWTH PORTFOLIO
INTERNATIONAL BOND PORTFOLIO SMALL COMPANY INDEX PORTFOLIO
SMALL COMPANY GROWTH
PORTFOLIO
INTERNATIONAL EQUITY
INDEX PORTFOLIO
INTERNATIONAL GROWTH
PORTFOLIO
</TABLE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 21, 2000
A Special Meeting of Shareholders (the "Meeting") of each investment portfolio
referred to above (the "Portfolios") of Northern Institutional Funds (the
"Trust") will be held on March 21, 2000, at 9:30 a.m. (Chicago time) at the
offices of The Northern Trust Company, Directors Room, 6th Floor, 50 South
LaSalle Street, Chicago, Illinois 60675 for the following purposes:
(1) With respect to the Trust, to elect twelve Trustees;
(2) With respect to the Trust, to ratify or reject the selection of
Ernst Young LLP as independent auditors of the Trust for the fiscal year
ending November 30, 2000;
(3) With respect to each Portfolio to approve amendments to the
Portfolio's fundamental investment policies; and
(4) To transact such other business as may properly come before the
Meeting and any adjournment thereof.
YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF THE PROPOSALS
RELATING TO THE TRUST AND YOUR PORTFOLIO(S).
Shareholders of record of each Portfolio at the close of business on
January 25, 2000 will be entitled to vote at the Meeting or any adjournment. The
Proxy Statement and the accompanying Proxy Card(s) are being mailed to
shareholders on or about February 7, 2000.
<PAGE>
It is important that you return your signed and dated Proxy Card(s) promptly,
regardless of the size of your holdings, so that a quorum may be assured.
By Order of the Board of Trustees
of Northern Institutional Funds
Linda J. Hoard
Secretary
February 7, 2000
PLEASE COMPLETE, DATE AND SIGN THE PROXY CARD(S) FOR THE SHARES HELD BY YOU AND
RETURN THE PROXY CARD(S) IN THE ENVELOPE PROVIDED SO THAT YOUR VOTE CAN BE
RECORDED. A PROXY CARD IS ENCLOSED FOR EACH PORTFOLIO IN WHICH YOU ARE INVESTED.
NO POSTAGE IS REQUIRED IF THE ENVELOPE IS MAILED IN THE UNITED STATES. YOUR
PROMPT RESPONSE MAY SAVE THE TRUST THE NECESSITY AND EXPENSE OF FURTHER
SOLICITATIONS. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON.
<PAGE>
NORTHERN INSTITUTIONAL FUNDS
<TABLE>
<S> <C> <C>
MONEY MARKET PORTFOLIOS FIXED INCOME PORTFOLIOS EQUITY PORTFOLIOS
GOVERNMENT SELECT PORTFOLIO U.S. GOVERNMENT SECURITIES BALANCED PORTFOLIO
GOVERNMENT PORTFOLIO PORTFOLIO EQUITY INDEX PORTFOLIO
DIVERSIFIED ASSETS PORTFOLIO SHORT-INTERMEDIATE BOND PORTFOLIO DIVERSIFIED GROWTH PORTFOLIO
TAX-EXEMPT PORTFOLIO INTERMEDIATE BOND PORTFOLIO FOCUSED GROWTH PORTFOLIO
MUNICIPAL PORTFOLIO U.S. TREASURY INDEX PORTFOLIO MID CAP GROWTH PORTFOLIO
BOND PORTFOLIO SMALL COMPANY INDEX PORTFOLIO
INTERNATIONAL BOND PORTFOLIO SMALL COMPANY GROWTH
PORTFOLIO
INTERNATIONAL EQUITY
INDEX PORTFOLIO
INTERNATIONAL GROWTH
PORTFOLIO
</TABLE>
PROXY STATEMENT
GENERAL
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES
BY AND ON BEHALF OF THE BOARD OF TRUSTEES (THE "TRUSTEES") OF NORTHERN
INSTITUTIONAL FUNDS (THE "TRUST"). These proxies will be used at a Special
Meeting of Shareholders of the investment portfolios of the Trust listed above
(the "Portfolios"). The Special Meeting will be held at the offices of The
Northern Trust Company, Directors Room, 6th Floor, 50 South LaSalle Street,
Chicago, Illinois 60675, on March 21, 2000, at 9:30 a.m. (Chicago time) for the
purposes set forth in the accompanying Notice of Meeting. The Special Meeting
and any adjournment is referred to as the "Meeting."
The Trustees have fixed the close of business on January 25, 2000 as the record
date (the "Record Date") for determining the Shareholders of each Portfolio
entitled to notice of and to vote at the Meeting. Shareholders of record of each
Portfolio on the Record Date are entitled to one vote per Share at the Meeting.
Appendix A sets forth the number of Shares of beneficial interest of each
Portfolio outstanding as of January 25, 2000. Appendix B sets forth the persons
who owned beneficially more than 5% of the Shares of any Portfolio as of that
date.
Proxies will be solicited by mail and may also be solicited in person or by
telephone, fax or personal interview by officers of The Northern Trust Company
("Northern Trust") and PFPC Inc. ("PFPC"), as well as by the Trustees. In
addition, employees of Northern Trust, its affiliates, correspondent banks,
brokers and similar record holder may solicit proxies by these means, and may
forward proxy materials and printed direction forms to the customers on whose
behalf they hold record ownership of Shares of the Portfolios.
<PAGE>
This Proxy Statement and accompanying Proxy(ies) are being first mailed to
Shareholders on or about February 7, 2000.
The following table summarizes the proposals to be voted on at the Meeting and
indicates those Shareholders who are being solicited with respect to each
proposal. In connection with each of the matters set forth in the attached
Notice of Meeting, each Portfolio will either vote together with the other
Portfolios or separately as indicated. Classes of Shares representing interests
in the same Portfolio do not have separate class voting rights on the proposals
listed.
SUMMARY OF VOTING ON PROPOSALS
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
---------------------------------------- ----------------------------------------
<S> <C> <C>
1. Election of twelve Trustees. The Trust with all Portfolios voting as
a single class.
2. Ratification of the selection of The Trust with all Portfolios voting as
Ernst & Young LLP as independent a single class.
auditors for the fiscal year ending
November 30, 2000.
3. Approval of amended fundamental
investment policies.
(A) Investment policy on commodities. Each Portfolio, except the Small Company
Growth and Mid Cap Growth Portfolios,
voting separately.
(B) Investment policies on borrowing and Each Portfolio voting separately.
lending.
(C) Investment policy on mortgaging. Each Portfolio except the Mid Cap Growth
Portfolio, voting separately.
(D) Investment policy on puts and calls. Each Portfolio, except the Municipal
Small Company Growth and Mid Cap Growth
Portfolios, voting separately.
(E) Investment policy on municipal Tax-Exempt Portfolio only, voting
instruments. separately.
(F) Investment policy on issuers with less Tax-Exempt Portfolio only, voting
than three years operations. separately.
</TABLE>
The Trust will furnish, without charge, copies of the Portfolios' November 30,
1999 Annual Shareholders Report to any Shareholder upon request addressed to
Northern Institutional Funds, c/o The Northern Trust Company, P.O. Box 75943,
Chicago, Illinois 60675-5943 or by telephone at 1-800-637-1380.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
PROPOSAL 1
ELECTION OF TRUSTEES........................................ 1
Information Concerning Nominees......................... 1
Interests of Certain Non-Interested Nominees............ 5
Information Concerning Meetings of Trustees and
Committees.............................................. 6
Remuneration of Trustees................................ 7
Officers................................................ 7
Required Vote........................................... 8
PROPOSAL 2
RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT
AUDITORS.................................................... 9
Required Vote........................................... 9
PROPOSALS 3(A)-(F)
AMENDMENT OF THE PORTFOLIOS' FUNDAMENTAL
INVESTMENT POLICIES......................................... 10
General................................................. 10
PROPOSAL 3(A)
INVESTMENT POLICY ON COMMODITIES............................ 11
PROPOSAL 3(B)
INVESTMENT POLICIES ON BORROWING AND LENDING................ 12
PROPOSAL 3(C)
INVESTMENT POLICY ON MORTGAGING............................. 15
PROPOSAL 3(D)
INVESTMENT POLICY ON PUTS AND CALLS......................... 15
PROPOSAL 3(E)
INVESTMENT POLICY ON MUNICIPAL INVESTMENTS.................. 16
PROPOSAL 3(F)
INVESTMENT POLICY ON ISSUERS WITH LESS THAN
THREE YEARS OPERATIONS...................................... 17
Board of Trustees' Recommendation....................... 17
Required Vote........................................... 18
ADDITIONAL INFORMATION...................................... 18
Other Business.......................................... 18
Proxies and Voting at the Meeting....................... 18
Manner and Cost of Proxy Solicitation................... 19
Shareholder Proposals................................... 20
Information About Distributor and Co-Administrator...... 20
Information About the Trust............................. 20
APPENDIX A.................................................. A-1
APPENDIX B.................................................. B-1
APPENDIX C.................................................. C-1
</TABLE>
i
<PAGE>
PROPOSAL 1
ELECTION OF TRUSTEES
(ALL PORTFOLIOS)
The Northern Trust Company and Northern Trust Quantitative Advisors, Inc. serve
as investment advisers to the Trust and to Northern Funds, each a mutual fund
group. Different individuals currently serve as the Trustees of the Trust and
Northern Funds. The Trustees of the Trust and Northern Funds have determined
that it would be in the best interest of these two fund groups for the same
individuals to serve as the Trustees of both groups.
Therefore, Shareholders will be asked at the Meeting to elect twelve Trustees,
six of whom are currently Trustees of the Trust, five of whom are currently
Trustees of Northern Funds and the twelfth is the President of Northern Trust
Global Investments, a business unit of the Northern Trust Corporation.
Each elected Trustee will hold office for an indefinite term until the earliest
of: (1) the election of his or her successor; (2) the date a Trustee resigns or
is removed by the Board of Trustees or Shareholders, in accordance with the
Trust's Agreement and Declaration of Trust; or (3) in accordance with the
current resolutions of the Board of Trustees (which may be changed by the
Trustees without Shareholder vote) on the last day of the fiscal year of the
Trust (currently November 30) in which the Trustee attains the age of 72 years
(except that the policy has been waived with respect to Mr. Dixon). Normally,
there will be no meetings of Shareholders for the purpose of electing Trustees
except as required by the Investment Company Act of 1940 (the "1940 Act"). See
"Additional Information--Shareholder Proposals." The Trustees may, as permitted
by the 1940 Act, appoint additional Trustees without Shareholder approval.
All Shares represented by valid Proxies will be voted in the election of
Trustees for each Nominee named below, unless authority to vote for a particular
Nominee is withheld. Each Nominee has consented to being named in this Proxy
Statement and to serve if elected. If a Nominee withdraws from the election or
is otherwise unable to serve, the named proxies will vote for the election of
such substitute Nominee as the Board of Trustees may recommend, unless the Board
decides to reduce the number of Trustees serving on the Board.
INFORMATION CONCERNING NOMINEES
The following table sets forth certain information about each Nominee, including
each Nominee's principal occupation or employment during
1
<PAGE>
the past five years. Messrs. Cline, Condon, Dixon, Dolan, English, Springer and
Strubel and Ms. Guthman are deemed "non-interested" persons of the Trust as
defined in the 1940 Act (the "Non-Interested Trustees").
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FIRST
NAME, AGE AND OR EMPLOYMENT BECAME
POSITIONS WITH TRUST DURING LAST FIVE YEARS TRUSTEE
- ---------------------------------------- ---------------------------------------- ----------------------------------------
<S> <C> <C>
Richard G. Cline, 64 Chairman, Hawthorne Investors, Inc. (a 1997
Trustee management advisory services and private
investment company) since January 1996;
Chairman, Hussman International, Inc. (a
refrigeration company) since 1998;
Chairman and Chief Executive Officer of
NICOR Inc. (a diversified public utility
holding company) from 1986 to 1995, and
President, 1992-1993; Chairman, Federal
Reserve Bank of Chicago from 1992 to
1995, and Deputy Chairman from 1995 to
1996. Director: Whitman Corporation (a
diversified holding company); Kmart
Corporation (a retailing company); Ry-
erson Tull, Inc. (a metals distribution
company); University of Illinois
Foundation.
Edward J. Condon, Jr., 59 Chairman of The Paradigm Group, Ltd. (a 1994
Trustee financial advisor) since July 1993; Vice
President and Treasurer of Sears,
Roebuck and Co. (a retail corporation)
from February l989 to July 1993; Mem-
ber of Advisory Board of Real-Time USA,
Inc. (a software development company);
Member of the Board of Managers of The
Liberty Hampshire Company, LLC (a
receivables funding company); Vice
Chairman and Director of Energenics
L.L.C. (a waste to energy recycling
company). Director: University Eldercare
Inc. (an Alzheimer's disease research
and treatment company); Financial
Pacific Company (a small business
leasing company). Trustee: Dominican
University.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FIRST
NAME, AGE AND OR EMPLOYMENT BECAME
POSITIONS WITH TRUST DURING LAST FIVE YEARS TRUSTEE
- ---------------------------------------- ---------------------------------------- ----------------------------------------
<S> <C> <C>
Wesley M. Dixon, Jr., 72 Director of Kinship Corporation (a fi- To be elected in 2000
Proposed Trustee nancial services company) from 1985 to
1996; Vice Chairman and Director of G.D.
Searle & Co. (manufacture and sale of
food products and pharmaceuticals) from
1977 to 1985 and President of G.D.
Searle & Co. prior thereto. Trustee:
Northern Funds.
William J. Dolan, Jr., 67 Partner of Arthur Andersen & Co. S. C. To be elected in 2000
Proposed Trustee (accounting firm) from 1966 to 1989;
Financial Consultant, Ernst & Young LLP
(accounting firm) from 1992 to 1993 and
1997. Former Director: Household Bank;
First Central National Life Insurance
Company. Trustee: Northern Funds.
John W. English, 66 Private Investor; Vice President and 1994
Trustee Chief Investment Officer of The Ford
Foundation (a charitable trust) from
1981 to 1993. Trustee: The China Fund,
Inc.; Select Sector SPDR Trust; WM
Funds; American Red Cross in Greater New
York; Mote Marine Laboratory; and United
Board for Christian Higher Education in
Asia. Director: University of Iowa
Foundation; Blanton-Peale Institutes of
Religion and Health; Community
Foundation of Sarasota County. Former
Director: Duke Management Company
(manager of the Duke University
endowment fund); John Ringling Centre
Foundation (a non-profit historical
preservation organization).
Raymond E. George, Jr., 69* Senior Vice President and Senior Fiduci- To be elected in 2000
Proposed Trustee ary Officer of The Northern Trust Com-
pany from 1990 until his retirement in
October 1993. Trustee: Northern Funds.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FIRST
NAME, AGE AND OR EMPLOYMENT BECAME
POSITIONS WITH TRUST DURING LAST FIVE YEARS TRUSTEE
- ---------------------------------------- ---------------------------------------- ----------------------------------------
<S> <C> <C>
Sandra Polk Guthman, 55 President and Chief Executive Officer of 1997
Trustee Polk Bros. Foundation (an Illinois
not-for-profit corporation) from 1993 to
present; Director of Business Trans-
formation 1992-1993, and Midwestern
Director of Marketing 1988-1992, IBM
Corporation. Director: MBIA Insurance
Corporation of Illinois (a municipal
bond insurance company); MB Financial
Corp. (a bank holding company).
Michael E. Murphy, 63** President of Sara Lee Foundation since To be elected in 2000
Proposed Trustee November 1997; Vice Chairman and Chief
Administrative Officer of Sara Lee
Corporation (consumer products) from
November 1994 to October 1997; Vice
Chairman and Chief Financial and Ad-
ministrative Officer of Sara Lee Corpo-
ration from July 1993 to November 1994.
Director: Payless Shoe Source, Inc. (a
retail shoe store business); True North
Communications, Inc. (a global
advertising and communications holding
company); American General Corporation
(a diversified financial services
company); GATX Corporation (a railroad
holding company); Bassett Furniture
Industries, Inc. Trustee: Northern
Funds.
Mary Jacobs Skinner, Esq., 42*** Partner in the law firm of Sidley & Aus- To be elected in 2000
Proposed Trustee tin. Trustee: Northern Funds.
William H. Springer, 70 Vice Chairman of Ameritech (a tele- 1984
Trustee communications holding company) from
February 1987 until his retirement in
August 1992; Vice chairman, Chief
Financial and Administrative officer of
Ameritech prior to 1987. Director:
Walgreen Co. (a retail drug store
business); Baker, Fentress & Co. (a
closed-end, non-diversified management
investment company). Trustee: Goldman
Sachs Trust; Goldman Sachs Variable
Insurance Trust.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FIRST
NAME, AGE AND OR EMPLOYMENT BECAME
POSITIONS WITH TRUST DURING LAST FIVE YEARS TRUSTEE
- ---------------------------------------- ---------------------------------------- ----------------------------------------
<S> <C> <C>
Richard P. Strubel, 60 President and Chief Operating Officer 1982
Trustee UNext.com since 1999 (a provider of
educational services via the Internet);
Managing Director of Tandem Partners,
Inc. (a privately held management ser-
vices firm) from 1990 to 1999; Presi-
dent and Chief Executive Officer of
Microdot, Inc. (a privately held manu-
facturing firm) from 1984 to 1994. Di-
rector: Gildan Activewear, Inc. (an ath-
letic clothing marketing and manufac-
turing company); Children's Memorial
Medical Center. Trustee: University of
Chicago; Goldman Sachs Trust; Goldman
Sachs Variable Insurance Trust.
Stephen B. Timbers, 55**** President of Northern Trust Global In- To be elected in 2000
Proposed Trustee vestments, a unit of Northern Trust
Corporation, and Executive Vice Presi-
dent, The Northern Trust Company since
1998; President, Chief Executive Officer
and Director of Zurich Kemper
Investments from 1996 to 1998; Presi-
dent, Chief Operating Officer and Di-
rector of Kemper Corporation from 1992
to 1996; President and Director of
Kemper Funds from 1990 to 1998. Di-
rector: LTV Corporation (a steel pro-
ducer); Northern Quantitative Advi-
sors, Inc.
</TABLE>
- ------------
* Mr. George is deemed to be an "interested' Trustee because he owns shares
of Northern Trust Corporation.
** Mr. Murphy is deemed to be an "interested" Trustee because he owns shares
of Northern Trust Corporation.
*** Ms. Skinner is deemed to be an "interested" Trustee because her law firm
provides legal services to Northern Trust.
**** Mr. Timbers is deemed to be an "interested" Trustee because he is an
officer, director, employee and shareholder of Northern Trust Corporation
and/or Northern Trust and Northern Trust Quantitative Advisors, Inc.
INTERESTS OF CERTAIN NON-INTERESTED NOMINEES
Messrs. Cline, George and Murphy have certain banking, custodial, investment
management and financing arrangements with Northern Trust and its affiliates.
Other Nominees and the organizations with which they are associated have had in
the past, and may have in the future, similar arrangements. The Trust has been
advised that such arrangements
5
<PAGE>
have been and are expected to be in the ordinary course of business and the
terms of such arrangements have been and are expected to be substantially the
same as the prevailing terms for comparable transactions for other customers.
Appendix C sets forth information regarding the Shares of the Portfolios owned
beneficially, directly or indirectly, by the Nominees and the officers of the
Trust.
INFORMATION CONCERNING MEETINGS OF TRUSTEES AND COMMITTEES
Six meetings of the Trustees were held during the fiscal year ended
November 30, 1999. For that year, no incumbent Trustee attended fewer than
seventy-five percent of all meetings of the Board of Trustees and of any
committee of which he or she was a member that were held while the Trustee was
in office.
The Board of Trustees has appointed an Audit Committee whose members are Mr.
Condon and Mr. Strubel (Chairman). The functions performed by the Audit
Committee are to: (1) consider matters pertaining to the Trust's books of
account, financial records and internal accounting controls; (2) act as the
principal liaison between the Board of Trustees and the Trust's independent
auditors and make recommendations to the Board regarding the auditor's
engagement and compensation; (3) ensure receipt from the independent accountants
of a formal written statement delineating relationships between the independent
accountants and the Trust; (4) meet with the independent auditors to review the
scope and results of the audit; and (5) review annually the program established
by the Trust and its service providers for monitoring compliance with their
respective Codes of Ethics and internal conflict of interest guidelines. The
Audit Committee held two meetings during the fiscal year ended November 30,
1999.
The Board of Trustees also has a standing nominating committee consisting of all
of the Non-Interested Trustees. The Nominating Committee is responsible for the
selection and nomination of candidates to serve as Non-Interested Trustees. The
Nominating Committee has selected and nominated the Non-Interested Trustees who
are Nominees for election at the meeting. The Board of Trustees, including the
Non-Interested Trustees, are prepared to review nominations from Shareholders to
fill any future vacancies of the Board in written communications delivered to
the Trust at its address on page 20.
6
<PAGE>
REMUNERATION OF TRUSTEES
Trustees, other than Mr. Timbers (if elected), are entitled to remuneration from
the Trust for their services. Currently, the Chairman of the Board earns a
quarterly retainer of $10,125 and each other Trustee earns a quarterly retainer
of $6,750. Each Trustee, including the Chairman of the Board, earns an
additional fee of $2,500 for each meeting attended, plus reimbursement of
expenses incurred as a Trustee. In addition, each member of the Audit Committee
earns a fee of $2,500 for each meeting attended and the Audit Committee Chairman
earns a quarterly retainer of $1,500. These fees may be changed by the Trustees
in the future at their discretion.
The following table sets forth certain information about the compensation of
each Trustee for the fiscal year ended November 30, 1999.
<TABLE>
<CAPTION>
AGGREGATE PENSION OR AGGREGATE
COMPENSATION RETIREMENT BENEFITS COMPENSATION
FROM THE ACCRUED AS PART OF FROM THE PORTFOLIO
NAME OF TRUSTEE* PORTFOLIOS PORTFOLIO EXPENSES COMPLEX**
- ---------------- ------------ ------------------- ------------------
<S> <C> <C> <C>
Richard G. Cline................... $39,500 $0 $39,500
Edward J. Condon................... $44,500 $0 $44,500
John W. English.................... $39,500 $0 $39,500
Sandra P. Guthman.................. $39,500 $0 $39,500
William H. Springer................ $53,000 $0 $53,000
Richard P. Strubel................. $50,500 $0 $50,500
</TABLE>
- ------------
* This table does not include $44,500 paid during the fiscal year ended
November 30, 1999 to a former Trustee who retired.
** The Portfolio Complex includes the Trust and Northern Funds.
OFFICERS
The following table sets forth information with respect to the officers of the
Trust. Each officer is elected by the Trustees. Each officer serves until his or
her successor is duly elected by the Trustees or until his or her death,
resignation, removal or disqualification.
<TABLE>
<CAPTION>
NAME, POSITION PRINCIPAL OCCUPATION(S) FIRST BECAME
AND AGE DURING PAST FIVE YEARS OFFICER
- ---------------------------------------- ---------------------------------------- ------------
<S> <C> <C>
Jylanne M. Dunne, 39 Senior Vice President for Distribution 1999
President Services at PFPC, formerly First Data
Investor Services Group, Inc.
Richard H. Rose, 43 Vice President and Division Manager of 1999
Vice President Mutual Fund Administration at PFPC.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NAME, POSITION PRINCIPAL OCCUPATION(S) FIRST BECAME
AND AGE DURING PAST FIVE YEARS OFFICER
- ---------------------------------------- ---------------------------------------- ------------
<S> <C> <C>
Brian R. Curran, 32 Vice-President at PFPC since 1997; 1999
Treasurer Director of Fund Administration at State
Street Bank and Trust Co. ("State
Street") from February 1997 to October
1997; Senior Auditor at Price Waterhouse
LLP February 1994 to February 1997.
Judith E. Clear, 33 Client Treasury Manager of Mutual Fund 1999
Assistant Treasurer Administration at PFPC since 1997;
Compliance Manager at Citizens Trust
from 1994 to 1996.
Suzanne E. Anderson, 27 Client Treasury Manager of Mutual Fund 2000
Assistant Treasurer Administration at PFPC since 1998;
Manager of Fund Administration at State
Street from October 1996 to August 1998;
Fund Administrator at State Street from
October 1995 to October 1996; Mutual
Fund Accountant at The Boston Company
prior thereto.
Linda J. Hoard, 52 Vice-President at PFPC since 1998; 1999
Secretary Attorney Consultant for Fidelity
Investments, Investors Bank & Trust
Company and PFPC from September 1994 to
June 1998.
Teresa M.R. Hamlin, 34 Vice-President at PFPC since 1994; 1999
Assistant Secretary Paralegal Manager at The Boston Company
Advisors (an investment adviser) prior
thereto.
Therese Hogan, 36 Director of the State Regulation 1999
Assistant Secretary Department at PFPC.
</TABLE>
The Trust's officers are employees of PFPC, the Trust's co-administrator.
Certain of these officers hold comparable positions with other investment
companies for which PFPC or an affiliate provides administrative services. As a
result of the responsibilities assumed by PFPC and the Trust's investment
adviser, custodian and transfer agent, the Trust itself requires no employees.
The Trust's officers do not receive any compensation from the Trust for serving
as such.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" EACH NOMINEE LISTED ABOVE.
REQUIRED VOTE
Because your Portfolio is a portfolio of the Trust, your vote will be counted
together with the votes of Shareholders of the other portfolios of the Trust,
voting as a single class in the election of Trustees. Election of each Nominee
of the Trust requires a plurality of the Shares of the entire Trust
8
<PAGE>
voted at the Meeting. The twelve Nominees who receive the highest number of
votes cast at the Meeting will be elected as Trustees. Cumulative voting is not
permitted.
PROPOSAL 2
RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT AUDITORS
(ALL PORTFOLIOS)
As directed by the Trustees and required by the 1940 Act, the ratification or
rejection of the selection of the independent auditors for the Trust's fiscal
year ending November 30, 2000 is to be voted upon at the Meeting. It is intended
that the persons named in the accompanying Proxy(ies) will vote for Ernst &
Young LLP, unless contrary instructions are given. If the selection of the
Trust's independent auditors is not ratified by the Shareholders at the Meeting,
the Board will reconsider such selection.
The Trust's financial statements for the fiscal year ended November 30, 1999
were audited by Ernst & Young LLP. In connection with its audit, Ernst & Young
LLP reviewed the Trust's annual reports to Shareholders and its filings with the
Securities and Exchange Commission ("SEC"). In addition to audit services,
Ernst & Young LLP reviews the Trust's federal and state tax returns, and
provides consultation and assistance on accounting, internal controls and
related matters.
At a meeting held on January 24, 2000, the Audit Committee of the Board of
Trustees met with representatives of Ernst & Young LLP to review the services of
the independent auditors. At a meeting on the same date, the Trustees
unanimously selected Ernst & Young LLP as the Trust's independent auditors for
its fiscal year ending November 30, 2000. A representative of Ernst & Young LLP
is expected to be available at the Meeting by telephone should any matter arise
requiring consultation with the auditors, and the auditors have been given the
opportunity to make a statement if they so desire.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION
OF ERNST & YOUNG LLP AS THE TRUST'S INDEPENDENT AUDITORS.
REQUIRED VOTE
Because your Portfolio is a portfolio of the Trust, your vote will be counted
together with the votes of Shareholders of the other portfolios of the Trust,
voting as a single class on the ratification of independent auditors.
9
<PAGE>
Ratification of the independent auditors of the Trust requires the approval of a
majority of the Shares of the Trust present and entitled to be voted at the
Meeting.
PROPOSALS 3(A)-(F)
AMENDMENT OF THE PORTFOLIOS' FUNDAMENTAL INVESTMENT POLICIES
GENERAL
The Trustees recommend to Shareholders that they approve proposals to amend
certain of the Portfolios' fundamental investment policies. These investment
policies may be changed by a Portfolio only with the approval of a 1940 Act
Majority (as defined below) of the outstanding Shares of that Portfolio.
One reason for the proposals is to adopt insofar as possible a uniform statement
of fundamental investment policies for the mutual funds advised by Northern
Trust and Northern Trust Quantitative Advisors, Inc. This uniformity will
facilitate comparison of different Portfolios' investment policies as well as
administration of the policies. The proposals will also result in a clearer and
simpler statement of these policies.
Another reason for amending the Portfolios' investment policies is to delete
restrictions that were adopted in response to state "Blue Sky" laws and
regulations limiting certain types of investment company practices and
investments. States no longer have the power to enforce these restrictions, and
the elimination of the restrictions may increase investment management
flexibility for the Portfolios.
An additional reason for amending the Portfolios' investment policies is to
ensure that the Portfolios have the maximum borrowing flexibility that is
possible under the 1940 Act.
The following is a summary of the proposed changes to the Portfolios'
fundamental policies. The policies are summarized individually below and will be
voted upon separately. In order to fully achieve the benefits set forth above,
the Trustees recommend that Shareholders approve each of the proposals.
10
<PAGE>
PROPOSAL 3(A)
INVESTMENT POLICY ON COMMODITIES
(ALL PORTFOLIOS EXCEPT SMALL COMPANY GROWTH AND MID CAP GROWTH PORTFOLIOS)
The 1940 Act requires that the Portfolios have a fundamental investment policy
regarding investments in commodities. While the Portfolios do not invest in
physical commodities or commodity contracts, the Portfolios (other than the
Portfolios identified below) may enter into financial futures contracts, options
on futures and, in certain cases, currency contracts. Any financial futures
contract or related option is currently considered to be a commodity contract.
As a result of the continuing development of new types of investment products,
it is possible that other types of financial instruments may also be deemed to
be commodity contracts in the future.
Except for the Small Company Growth and Mid Cap Growth Portfolios (which
currently have a policy like the one proposed below), the Portfolios' current
fundamental investment policy regarding commodities provides that no Portfolio
may purchase or sell commodities or commodity contracts or oil or gas or other
mineral exploration or development programs, except that each Portfolio (other
than the Government Select, Government, Diversified Assets, Tax-Exempt and
Municipal Portfolios) may, to the extent appropriate to its investment policies,
purchase securities of companies engaging in whole or in part in such
activities, and enter into futures contracts and related options and enter into
forward currency contracts in accordance with its investment objectives and
policies.
The proposed amended fundamental investment policy is intended to provide a
standardized policy for all of the Portfolios. It is also intended to ensure
that the Trust's non-money market Portfolios are able to continue to enter into
financial futures contracts and related options for hedging and other
permissible purposes in the future, and to clarify that other types of financial
instruments and contracts are permitted.
In addition, the proposed policy eliminates the existing restriction regarding
investments in oil, gas and other mineral exploration or development programs.
This restriction was previously imposed by state law and is no longer required.
11
<PAGE>
As amended, each Portfolio's fundamental investment policy with respect to
commodities would be as follows:
The Portfolio may not invest in commodities or commodity contracts, except
that the Portfolio may invest in currency and financial instruments and
contracts that are commodities or commodity contracts.
As discussed in the Portfolios' Prospectuses, investments in currency and
financial instruments and contracts that are commodity contracts can present
various leverage and other investment risks that may result in losses exceeding
the amount invested by a Portfolio. The amended fundamental investment policy is
not, however, expected to have a material effect on the Portfolios' current
practices relating to these types of investments.
PROPOSAL 3(B)
INVESTMENT POLICIES ON BORROWING AND LENDING
(ALL PORTFOLIOS)
The Board of Trustees is recommending that Shareholders approve amendments to
the Portfolios' fundamental investment policies on borrowing and lending.
PROPOSED CHANGES. Under the proposed amended borrowing investment policy a
Portfolio will be permitted to: (1) borrow from banks, affiliated investment
companies and other persons (if permitted by the SEC) in amounts up to 33 1/3%
of its total assets or such other percentage permitted by law; and (2) borrow up
to an additional 5% of its total assets for temporary purposes. In addition, the
amended borrowing policy states expressly that a Portfolio may obtain short-term
credits as necessary for the clearance of portfolio securities transactions and
may purchase securities on margin. A restriction in the Portfolios' current
policy will be removed in order to allow the Portfolios to purchase securities
when borrowings exceed 5% of the value of their assets. Finally, the amended
policy expressly provides that a Portfolio will not issue senior securities to
the extent such issuance would violate applicable law.
The Trust is proposing that these changes be made to allow the Portfolios to
borrow money to the maximum extent permitted by law. The Trust is requesting
shareholder approval on this proposal for several reasons. The Trust believes
that each Portfolio will benefit from the flexibility of being able to borrow
money from lenders other than banks. Additionally, each Portfolio may receive
more favorable loan terms and incur fewer
12
<PAGE>
transaction costs because of this flexibility. The Trust believes that the
proposed amendments to each Portfolio's investment restrictions will more
clearly reflect current regulatory practice and will expand their borrowing
opportunities.
In addition, the Trust believes these changes will provide each Portfolio with
the flexibility to borrow from other Portfolios and other affiliated investment
companies. Pursuant to its Agreement and Declaration of Trust and Bylaws, the
Trust is not required to submit these potential interfund borrowing arrangements
for shareholder approval, and therefore shareholders are not being asked to
approve these arrangements. Instead, before a Portfolio may engage in interfund
borrowing it will require an exemptive order from the SEC, as well as Trustee
approval. The Portfolios currently do not have such an exemptive order and are
not currently seeking one.
It should be noted that under the proposed amended policy, borrowings are not
limited to extraordinary or emergency purposes or to enable the Trust to meet
redemption requests, but may be used for investment leverage purposes. Leverage
involves the risk that if the securities held by a Portfolio decline in value
while borrowings are outstanding, the net asset value of the Portfolio's
outstanding shares will decline in value by proportionately more than the
decline in value of the securities.
CURRENT AND PROPOSED FUNDAMENTAL INVESTMENT POLICIES. Except for the Municipal,
Small Company Growth and Mid Cap Growth Portfolios, which currently have a
borrowing policy like the one proposed below, the Portfolios' current
fundamental investment policy relating to borrowing is as follows:
BORROWING. No Portfolio may borrow money (other than pursuant to
reverse repurchase agreements for each Portfolio except the Tax-Exempt
Portfolio), except (a) as a temporary measure, and then only in amounts not
exceeding 5% of the value of the Portfolio's total assets or (b) from banks,
provided that immediately after any such borrowing all borrowings of the
Portfolio do not exceed one-third of the Portfolio's total assets. No
purchases of securities will be made if borrowings subject to this
restriction exceed 5% of the value of the Portfolio's assets. The exceptions
in (a) and (b) to this restriction are not for investment leverage purposes
but are solely for extraordinary or emergency purposes or to facilitate
management of the Portfolios by enabling the Trust to meet redemption
requests when the liquidation of portfolio instruments is deemed to be
disadvantageous or not possible. If due to market fluctuations or other
reasons the total assets of a Portfolio fall below 300% of its
13
<PAGE>
borrowings, the Trust will promptly reduce the borrowings of such Portfolio
in accordance with the 1940 Act. In addition, as a matter of fundamental
policy: (1) the Government Select, Government and Diversified Assets
Portfolios may not enter into reverse repurchase agreements exceeding
aggregate one-third of their respective total assets; (2) the Government
Select, Government, Diversified Assets and Tax-Exempt Portfolios may not
purchase securities on margin (except delayed delivery or when-issued
transactions or such short-term credits as are necessary for the clearance
of transactions); and (3) the International Bond, International Equity Index
and International Growth Portfolios will not issue senior securities except
as stated in their Prospectus or Statement of Additional Information.
As amended, the fundamental investment policies relating to borrowing for each
Portfolio will provide as follows:
BORROWING. No Portfolio may borrow money, except that to the extent
permitted by applicable law (a) a Portfolio may borrow from banks, other
affiliated investment companies and other persons, and may engage in reverse
repurchase agreements and other transactions which involve borrowings, in
amounts up to 33 1/3% of its total assets (including the amount borrowed) or
such other percentage permitted by law, (b) a Portfolio may borrow up to an
additional 5% of its total assets for temporary purposes, (c) a Portfolio
may obtain such short-term credits as may be necessary for the clearance of
purchases and sales of portfolio securities, and (d) a Portfolio may
purchase securities on margin. If due to market fluctuations or other
reasons a Portfolio's borrowings exceed the limitations stated above, the
Trust will promptly reduce the borrowings of such Portfolio in accordance
with the 1940 Act. In addition, as a matter of fundamental policy, a
Portfolio will not issue senior securities to the extent such issuance would
violate applicable law.
In addition, it is proposed that each Portfolio adopt a related amendment
investment policy relating to lending to provide explicitly that each Portfolio
may make loans to its affiliates (including affiliated investment companies) to
the extent permitted by law. As amended, the fundamental investment policy
relating to lending for each Portfolio will provide as follows:
LENDING. No Portfolio may make loans, except through (a) the purchase
of debt obligations in accordance with the Portfolio's investment objective
and policies, (b) repurchase agreements with
14
<PAGE>
banks, brokers, dealers and other financial institutions, (c) loans of
securities, and (d) loans to affiliates of the Portfolio to the extent
permitted by law.
PROPOSAL 3(C)
INVESTMENT POLICY ON MORTGAGING
(ALL PORTFOLIOS EXCEPT THE MID CAP GROWTH PORTFOLIO)
To comply with state securities laws in effect at the time of their
organization, the Portfolios adopted a fundamental investment policy limiting
their ability to mortgage or pledge assets. More particularly, this policy
provides that the Portfolios may not "mortgage, pledge, or hypothecate any
assets (other than, excluding the Tax-Exempt Portfolio, pursuant to reverse
repurchase agreements) except to secure permitted borrowings."
The Trustees believe that because this fundamental investment policy is no
longer required and is obsolete, the investment policy should be eliminated.
PROPOSAL 3(D)
INVESTMENT POLICY ON PUTS AND CALLS
(ALL PORTFOLIOS EXCEPT THE MUNICIPAL, SMALL COMPANY GROWTH AND MID CAP GROWTH
PORTFOLIOS)
To comply with state securities laws in effect at the time of their
organization, most of the Portfolios also adopted a fundamental investment
policy limiting their ability to write certain put and call options. More
particularly, this policy provides that these Portfolios may not "write puts,
calls or combinations thereof, except (for Portfolios other than the Government
Select, Government, Diversified Assets and Tax-Exempt Portfolios) for
transactions in options on securities, financial instruments, currencies and
indices of securities (and, in the case of the International Bond and
International Growth Portfolios, yield curve options); futures contracts;
options on futures contracts; forward currency contracts; short sales of
securities against the box; interest rate swaps (and, in the case of the
International Bond Portfolio, currency swaps) and pair-off transactions (except
in the case of the International Bond and International Growth Portfolios)."
This investment policy does not, however, apply to the following Portfolios that
commenced operations after the time that states lost their authority to regulate
mutual fund investments: Municipal Portfolio, Mid
15
<PAGE>
Cap Growth Portfolio and Small Company Growth Portfolio. In addition, this
restriction does not apply to any type of option, futures contract, forward
contract, short sale, swap or pair-off transaction unless it involves a put,
call or combination thereof written by a Portfolio.
The Trustees believe that because this investment policy is no longer required,
is obsolete and is inconsistent with the investment policy of those Portfolios
that have been recently organized, the investment restriction should be
eliminated for all of the Portfolios.
The elimination of this fundamental investment policy is not expected to have a
material effect on the Portfolios' investment practices.
PROPOSAL 3(E)
INVESTMENT POLICY ON MUNICIPAL INVESTMENTS
(TAX-EXEMPT PORTFOLIO ONLY)
As a matter of fundamental policy, the Tax-Exempt Portfolio is required to
derive at least 80% of its annual gross income from municipal instruments except
in extraordinary circumstances. Municipal instruments are debt instruments, the
interest on which is, in the opinion of counsel (if any), exempt from Federal
income tax. Interest earned on AMT obligations ("private activity bonds") which
may be treated as an item of tax preference to shareholders under the Federal
alternative minimum tax is not deemed to be derived from municipal instruments
for purposes of determining whether the Tax-Exempt Portfolio meets this policy.
The Trustees recommend that the Shareholders of the Tax-Exempt Portfolio approve
the amendment of its fundamental policy to provide that this Portfolio will
invest at least 80% of its net assets in municipal instruments. Under the
amended policy, investments in AMT obligations will be treated the same way as
these investments are treated today; that is, these investments will not be
counted in determining whether the Tax-Exempt Portfolio meets its 80% policy.
Northern Trust believes that this revision will simplify calculations of the
Tax-Exempt Portfolio's holdings. A policy based upon a percentage of the
Portfolio's net assets will be easier to monitor and control than a policy based
upon a percentage of income since the Portfolio's income can vary due to a
variety of factors. SHAREHOLDERS SHOULD NOTE THAT THE PROPOSED AMENDMENT TO THE
TAX-EXEMPT PORTFOLIO'S FUNDAMENTAL POLICY DOES NOT INVOLVE ANY CHANGE IN THE
INVESTMENT OBJECTIVE OF THE PORTFOLIO.
16
<PAGE>
Therefore, the Board of Trustees recommends that Shareholders approve the
proposal to amend the Tax-Exempt Portfolio's fundamental policy to provide as
follows:
As a matter of fundamental policy, at least 80% of the net assets of the
Tax-Exempt Portfolio will be invested in debt instruments, the interest on
which is, in the opinion of bond counsel or counsel for issuers, if any,
exempt from regular Federal income tax, except in extraordinary
circumstances such as when the Investment Adviser believes that market
conditions indicate that the Portfolio should adopt a temporary defensive
posture by holding uninvested cash or investing in taxable securities.
PROPOSAL 3(F)
INVESTMENT POLICY ON ISSUERS WITH LESS THAN THREE YEARS OPERATIONS
(TAX-EXEMPT PORTFOLIO ONLY)
To comply with state securities laws in effect at the time of its organization,
the Tax-Exempt Portfolio adopted a fundamental investment restriction which
provides that this Portfolio may not "acquire direct ownership of industrial
development bonds if, as a result of such acquisition, more than 5% of the value
of its total assets would be invested in industrial development bonds where
payment of principal and interest is the responsibility of companies (including
their predecessors) with less than three years of operating history and such
bonds are not guaranteed as to principal and interest by companies (including
their predecessors) with three years or more of operating history." This
restriction is no longer required, is obsolete and is inconsistent with the
investment restrictions of all of the other Portfolios. Consequently, the
Trustees recommend that it be eliminated.
BOARD OF TRUSTEES' RECOMMENDATION
The Trustees believe that each proposed amendment to the Portfolios' fundamental
investment policies will more clearly reflect current regulatory practice, will
increase investment management flexibility and will clarify and simplify the
policies.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF EACH PORTFOLIO VOTE
"FOR" THE APPROVAL OF THE PROPOSED AMENDED INVESTMENT POLICIES.
17
<PAGE>
REQUIRED VOTE
Approval of Proposals 3(A)-(F) as to each Portfolio requires the affirmative
vote of a majority of the Shares of that Portfolio outstanding and entitled to
vote. For this purpose, a majority of the outstanding Shares of a Portfolio
means the vote of the lesser of (1) 67% or more of the Shares of the Portfolio
present at the Meeting, if the holders of more than 50% of the Shares of the
Portfolio are present or represented by proxy, or (2) more than 50% of the
outstanding Shares of the Portfolio (a "1940 Act Majority"). If a proposed
amendment is not approved with respect to a Portfolio, the corresponding current
fundamental investment policy will continue in effect and unchanged for that
Portfolio.
ADDITIONAL INFORMATION
OTHER BUSINESS
As of the date of this Proxy Statement, the Trustees are not aware of any
matters to be presented for action at the Meeting other than those described
above. Should other business properly be brought before the Meeting, it is
intended that the accompanying Proxy(ies) will be voted thereon in accordance
with the judgment of the persons named as proxies.
PROXIES AND VOTING AT THE MEETING
A Proxy is revocable by a Shareholder at any time before it is exercised by
written notice to the Trust (addressed to the Secretary at the Trust's principal
office), by executing a superseding Proxy or by attending the Meeting and voting
in person. All valid Proxies received prior to the Meeting (including any
adjournment thereof) will be voted at the Meeting. Matters on which a choice has
been provided will be voted as indicated on a Proxy and, if no instruction is
given, the persons named as proxies will vote the Shares represented thereby in
favor of the matters set forth in each proposal and will use their best judgment
in connection with the transaction of such other business as may properly come
before the Meeting.
In the event that at the time any session of the Meeting is called to order a
quorum is not present in person or by Proxy, the persons named as proxies may
vote those Proxies which have been received to adjourn the Meeting to a later
date. In the event that a quorum is present but sufficient votes in favor of any
of the proposals have not been received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of Proxies with respect to such proposal(s). Any such adjournment will require
the affirmative vote of a majority of the Shares of the Trust (or the affected
Portfolio) present and voting in person
18
<PAGE>
or by proxy at the session of the Meeting to be adjourned. The persons named as
proxies will vote those Proxies which they are entitled to vote in favor of any
such proposal in favor of such an adjournment, and will vote those Proxies
required to be voted against any such proposal against any such adjournment. A
Shareholder vote may be taken on one or more of the proposals in this Proxy
Statement with respect to one or more Portfolios prior to such adjournment if
sufficient votes for their approval have been received and it is otherwise
appropriate.
A third of the Shares entitled to vote will be a quorum for the transaction of
business with respect to Proposals 1 and 2, and a majority of the Shares
entitled to vote will be a quorum with respect to Proposals 3(A)-(F), but any
lesser number will be sufficient for adjournments. Abstentions will be treated
as Shares that are present at the Meeting, but will not be counted as a vote at
the Meeting. Accordingly, an abstention from voting on a proposal has the same
effect as a vote against Proposals 2 and 3(A)-(F). If a broker or nominee
holding Shares in "street name" indicates on the Proxy that it does not have
discretionary authority to vote as to a particular proposal, those Shares will
not be considered as present at the Meeting with respect to the proposal.
Accordingly, a "broker non-vote" may affect the Trust's ability to achieve a
quorum at the Meeting, and will also have the same effect as a vote against
Proposals 3(A)-(F).
Appendix B hereto sets forth the persons who owned beneficially more than 5% of
the Shares of any Portfolio as of January 25, 2000, the Record Date for the
Meeting. For purposes of the 1940 Act, any person who owns directly or through
one or more controlled companies more than 25 percent of the voting securities
of a company is presumed to "control" such company. (As shown in Appendix B, on
the Record Date Northern Trust was the beneficial owner of a majority of the
outstanding Shares of various Portfolios because it possessed sole or shared
voting power and/or investment power with respect to Shares on behalf of its
customer accounts.) Northern Trust has advised the Trust that it intends to vote
the Shares over which it has voting power "FOR" and "WITHHOLD ALL" in the
election of each Trustee named in Proposal 1 in the same proportions as the
total votes that are cast "FOR" and "WITHHOLD ALL" in such election by the other
Shareholders of the Trust. Northern Trust has further advised the Trust that it
intends to vote the Shares over which it has voting power "FOR" each of the
other proposals listed in this Proxy Statement. (In certain instances, the votes
cast by Northern Trust will be sufficient to approve the proposal regardless of
the votes cast by other Shareholders of a Portfolio.)
MANNER AND COST OF PROXY SOLICITATION
Proxies will be solicited by mail and may also be solicited in person or by
telephone, fax or personal interview by officers of Northern Trust, PFPC
19
<PAGE>
and by the Trustees. In addition, employees of Northern Trust, its affiliates,
correspondent banks, brokers and similar record holders may solicit proxies by
these means, and may forward proxy materials and printed direction forms to the
customers on whose behalf they hold record ownership of Shares of the Trust.
Each Portfolio will bear its allocable portion of proxy solicitation expenses,
including the cost of preparing and assembling materials used in connection with
the solicitation of Proxies. Northern Trust will bear all other mailing expenses
associated with the solicitation of Proxies and will reimburse correspondent
banks, brokers and other similar record holders that have not entered into
Shareholder Servicing Agreements for their reasonable expenses incurred in
forwarding proxy materials to beneficial owners.
SHAREHOLDER PROPOSALS
Under Delaware law, the Trust is not required, nor does it intend, to hold
annual meetings of Shareholders each year for the election of Trustees and other
business. Instead, meetings will be held only when and if required (for example,
whenever less than a majority of the Board of Trustees holding office has been
elected by the Shareholders or when the Trustees have received a written request
to call a meeting for the purpose of voting on the question of the removal of
any Trustee from the holders of record of at least 10% of the outstanding
Shares). Any Shareholders desiring to present a proposal for consideration at
the next meeting for Shareholders of their Portfolio must submit the proposal in
writing so that it is received by the appropriate Portfolio within a reasonable
time before any meeting. These proposals should be sent to the Trust at its
address stated below under "Information About the Trust."
INFORMATION ABOUT DISTRIBUTOR AND CO-ADMINISTRATOR
Northern Funds Distributors LLC, the Trust's distributor, has offices at Four
Falls Corporate Center, 6th Floor, West Conshohocken, Pennsylvania 19428. PFPC
Inc., the Trust's co-administrator, has offices at 4400 Computer Drive,
Westborough, Massachusetts 01581.
INFORMATION ABOUT THE TRUST
The Trust currently has its principal office at 50 South LaSalle Street,
Chicago, Illinois 60675.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
February 7, 2000
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<PAGE>
APPENDIX A
As of January 25, 2000, each Portfolio had the following number of Shares
outstanding:
<TABLE>
<CAPTION>
PORTFOLIO OUTSTANDING SHARES
- --------- ------------------
<S> <C>
Balanced Portfolio................................ 5,024,258.24
Equity Index Portfolio............................ 62,270,149.22
Diversified Growth Portfolio...................... 11,444,025.26
Focused Growth Portfolio.......................... 11,797,821.55
Mid Cap Growth Portfolio.......................... 559,995.90
Small Company Index Portfolio..................... 18,542,390.57
Small Company Growth Portfolio.................... 599,386.25
International Equity Index Portfolio.............. 4,665,052.81
International Growth Portfolio.................... 13,450,098.48
U.S. Government Securities Portfolio.............. 5,419,582.92
Short-Intermediate Bond Portfolio................. 10,217,335.96
Intermediate Bond Portfolio....................... 2,599,786.47
U.S. Treasury Index Portfolio..................... 1,192,692.01
Bond Portfolio.................................... 51,215,183.56
International Bond Portfolio...................... 1,657,872.66
Government Select Portfolio....................... 2,022,723,954.37
Government Portfolio.............................. 2,034,829,837.34
Diversified Assets Portfolio...................... 7,075,981,439.98
Tax-Exempt Portfolio.............................. 567,703,664.56
Municipal Portfolio............................... 41,645,998.25
</TABLE>
A-1
<PAGE>
APPENDIX B
As of January 25, 2000, The Northern Trust Company and/or its affiliates, 50
South LaSalle Street, Chicago, IL 60675, possessed sole or shared voting and/or
investment power for its customer accounts with respect to the outstanding
Shares of each Portfolio as follows:
<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE OF
OUTSTANDING SHARES
--------------------------------------
PERCENTAGE
PORTFOLIO AMOUNTS OF SHARES OF SHARES (%)
- --------- ----------------- ---------------
<S> <C> <C>
Balanced Portfolio...................... 2,599,398.21 52%
Equity Index Portfolio.................. 16,914,434.48 27%
Diversified Growth Portfolio............ 9,061,850.34 79%
Focused Growth Portfolio................ 9,258,840.78 78%
Mid Cap Growth Portfolio................ 531,522.90 95%
Small Company Index Portfolio........... 4,091,722.88 22%
Small Company Growth Portfolio.......... 540,968.97 90%
International Equity Index Portfolio.... 3,556,565.67 76%
International Growth Portfolio.......... 10,075,303.78 75%
U.S. Government Securities Portfolio.... 1,207,028.08 22%
Short-Intermediate Bond Portfolio....... 2,920,519.49 29%
Intermediate Bond Portfolio............. 1,406,987.07 54%
U.S. Treasury Index Portfolio........... 350,129.05 29%
Bond Portfolio.......................... 18,014,201.19 35%
International Bond Portfolio............ 1,304,089.83 79%
Government Select Portfolio............. 16,419,770.25 1%
Government Portfolio.................... 59,999,256.19 3%
Diversified Assets Portfolio............ 461,758,410.06 7%
Tax-Exempt Portfolio.................... 32,595,499.35 6%
</TABLE>
In addition, as of January 25, 2000, the following persons or entities owned
beneficially more than 5% of the outstanding Shares of the following Portfolios:
<TABLE>
<CAPTION>
AMOUNT AND
PERCENTAGE OF
OUTSTANDING SHARES
-----------------------------------
AMOUNTS PERCENTAGE
PORTFOLIO SHAREHOLDER NAME AND ADDRESS OF SHARES OF SHARES (%)
--------- ----------------------------- -------------- ---------------
<S> <C> <C> <C>
Balanced Portfolio................. Northern Trust Thrift 1,814,457.00 36.1%
Incentive Plan
50 S. LaSalle Street
Chicago, IL 60675
Sealed Air Corp. 981,398.92 19.5%
Park 80 East
Saddlebrook, NJ 07663
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
PERCENTAGE OF
OUTSTANDING SHARES
-----------------------------------
AMOUNTS PERCENTAGE
PORTFOLIO SHAREHOLDER NAME AND ADDRESS OF SHARES OF SHARES (%)
--------- ----------------------------- -------------- ---------------
<S> <C> <C> <C>
Equity Index Portfolio............. Northern Trust Thrift 8,895,407.19 14.3%
Incentive Plan
50 S. LaSalle Street
Chicago, IL 60675
Libbey-Owens-Ford 3,339,184.97 5.4%
811 Madison Ave.
P.O. Box 799
Toledo, OH 43697-0799
Meadows Foundation 4,792,751.98 7.7%
3003 Swiss Ave.
Dallas, TX 75024-6090
Diversified Growth Portfolio....... Northern Trust Pension Plan 5,420,278.59 47.4%
50 S. LaSalle Street
Chicago, IL 60675
Seiko Corp. 665,207.18 5.8%
1111 MaCarthur Blvd.
Mahwah, NJ 07430-2038
Focused Growth Portfolio........... Northern Trust Thrift 5,968,912.43 50.6%
Incentive Plan
50 S. LaSalle Street
Chicago, IL 60675
Woodmen Home Office Employees 656,946.73 5.6%
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Kitch Drutchas Wagner Kenney 645,468.29 5.5%
PC
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Doe Run Resources Corp. 712,098.96 6.0%
Retirement Plan
1801 Park 270 Drive, Suite
300
St. Louis, MO 63146
Mid Cap Growth Portfolio........... NISource-Bay Area VEBA 217,500.00 38.8%
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Schulze & Burch Employee 30,000.00 5.4%
Pension Plan
1133 W. 35th Street
Chicago, IL 60609
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
PERCENTAGE OF
OUTSTANDING SHARES
-----------------------------------
AMOUNTS PERCENTAGE
PORTFOLIO SHAREHOLDER NAME AND ADDRESS OF SHARES OF SHARES (%)
--------- ----------------------------- -------------- ---------------
<S> <C> <C> <C>
Mercy Medical Center 66,302.97 11.8%
Foundation
701 10th Street
Cedar Rapids, IA 52103
Presbytery of Chicago 28,463.00 4.7%
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Iowa Measurement 108,931.81 19.5%
Research Foundation
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Small Company Index Portfolio...... PWC Group Investment Savings 1,288,819.41 7.0%
Plan
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Saxon & Co. 1,503,407.81 8.1%
P.O. Box 7780-1888
Philadelphia, PA 19188
Lifepoint Hospitals, Inc. 1,140,652.68 6.2%
4525 Harding Rd.
Nashville, TN 37205
General Dynamics Small Cap 1,819,250.65 9.8%
Fund
3190 Fairview Park Dr.
Falls Church, VA 22042-4523
Pfizer 1,204,978.73 6.5%
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
MASCO 1,898,625.81 10.2%
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Small Company Growth Portfolio..... NALCO Foundation 32,700.00 5.5%
1 NALCO Center
Naperville, IL 60566-1074
Cavalcade Pension Trust 30,956.78 5.2%
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
PERCENTAGE OF
OUTSTANDING SHARES
-----------------------------------
AMOUNTS PERCENTAGE
PORTFOLIO SHAREHOLDER NAME AND ADDRESS OF SHARES OF SHARES (%)
--------- ----------------------------- -------------- ---------------
<S> <C> <C> <C>
Schulze & Burch Employee 48,169.56 8.0%
Pension Plan
1133 W. 35(th) Street
Chicago, IL 60609
Illinois Masonic Medical 36,162.01 6.0%
Center
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
NISource-Bay Area VEBA 109,680.28 18.3%
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Iowa Measurement Research 96,069.25 16.0%
Foundation
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
International Equity Index Northern Trust Pension Plan 1,343,092.99 28.8%
Portfolio........................ 50 S. LaSalle Street
Chicago, IL 60675
Northern Trust Thrift 1,096,079.88 23.5%
Incentive Plan
50 S. LaSalle Street
Chicago, IL 60675
NI-GAS Savings Investments & 913,668.00 19.6%
Thrift Trust
1844 Ferry Rd.
Naperville, IL 60521
Lifepoint Hospitals, Inc. 552,743.00 11.8%
4525 Harding Rd.
Nashville, TN 37205
International Growth Portfolio..... Northern Trust Pension Plan 1,418,822.80 10.6%
50 S. LaSalle Street
Chicago, IL 60675
White Cap, Inc. 889,932.88 6.6%
1140 31st Street
Downers Grove, IL 60515
Tuthill Corp. Master 779,602.30 5.8%
Retirement Trust
908 Elm St., Suite 1000
Hinsdale, IL 60521
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
PERCENTAGE OF
OUTSTANDING SHARES
-----------------------------------
AMOUNTS PERCENTAGE
PORTFOLIO SHAREHOLDER NAME AND ADDRESS OF SHARES OF SHARES (%)
--------- ----------------------------- -------------- ---------------
<S> <C> <C> <C>
Indresco 769,338.83 5.7%
2121 San Jacinto St., Suite
2500
Dallas, TX 75221
Doe Run Resources Corp. 873,683.70 6.5%
Retirement Plan
1801 Park 270 Dr., Suite 300
St. Louis, MO 63146
U.S. Government Securities Sheet Metal Work 669,621.44 12.4%
Portfolio........................ 106 N. Schmale Rd.
Carol Stream, IL 60188
Illinois State Painters 309,226.24 5.7%
Welfare Fund
303 E. Ohio St.
Chicago, IL 60611
Schlumberger Ltd. Master 567,537.91 10.5%
Health Care Trust
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Electrical Insurance Trust 611,704.96 11.3%
221 N. LaSalle Street
Chicago, IL 60601-1273
Mafco 417,079.54 7.7%
625 Madison Ave.
New York, NY 10022
Lifeway Christian Resources 516,929.47 9.5%
Master Retirement Fund
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
CTA 1,424,280.00 26.3%
P.O. Box 3555
Chicago, IL 60654
Short Intermediate Bond Emerson Electric Co. Savings 859,304.00 8.4%
Portfolio........................ Plan Trust
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Northern Illinois Medical 523,700.16 5.1%
Center
4309 Medical Center
McHenry, IL 60050
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
PERCENTAGE OF
OUTSTANDING SHARES
-----------------------------------
AMOUNTS PERCENTAGE
PORTFOLIO SHAREHOLDER NAME AND ADDRESS OF SHARES OF SHARES (%)
--------- ----------------------------- -------------- ---------------
<S> <C> <C> <C>
Intermediate Bond Portfolio........ Illinois Masonic Medical 224,448.28 8.6%
Center - Board Designated
Fund
826 W. Wellington Ave.
Chicago, IL 60657
Illinois Masonic Medical 352,164.62 13.5%
Center - Restricted
Investment Fund
826 W. Wellington Ave.
Chicago, IL 60657
Illinois Masonic Medical 146,659.91 5.6%
Center - Warren Barr
Pavillion
826 W. Wellington Ave.
Chicago, IL 60657
HEB Savings & Retirement 174,499.35 6.7%
Trust
646 Main St.
San Antonio, TX 78204
Marshfield ERP 866,081.25 33.3%
1000 N. Oak Ave.
Marshfield, WI 54449-5777
Cavalcade Pension Trust 156,756.52 6.0%
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
U.S. Treasury Index Portfolio...... Belvedere National Bank & 74,371.22 6.2%
Trust
600 S. State Street
Belvedere, IL 61008-4300
The Accreditation Counsel for 84,177.53 7.1%
Graduate Medical Education
515 N. State Street
Chicago, IL 60610
Herget National Bank of Pekin 99,374.70 8.3%
33 4th Street
Pekin, IL 61554
Hubbell Defined Contribution 117,373.12 9.8%
Trust
584 Derby Milford Rd.
Orange, CT 06477-4024
The Old Second National Bank 182,353.45 15.3%
37 S. River St.
Aurora, IL 60507
Henkel Rabbi Trust 214,930.60 18.0%
200 Renaissance Blvd.
Gulph Mills, PA 19406
</TABLE>
B-6
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
PERCENTAGE OF
OUTSTANDING SHARES
-----------------------------------
AMOUNTS PERCENTAGE
PORTFOLIO SHAREHOLDER NAME AND ADDRESS OF SHARES OF SHARES (%)
--------- ----------------------------- -------------- ---------------
<S> <C> <C> <C>
Bond Portfolio..................... Lannan Foundation 2,637,281.56 5.2%
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Phycor, Inc. 2,587,467.00 5.1%
30 Burton Hills Blvd.
Nashville, TN 37215
PWC Group Investment Savings 3,302,451.00 6.4%
Plan
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
International Bond Portfolio....... Northern Trust Pension Plan 947,008.94 57.1%
50 S. LaSalle Street
Chicago, IL 60675
Doe Run Resources Corp. 248,900.70 15.0%
Retirement Plan
1801 Park 270 Dr., Suite 300
St. Louis, MO 63146
Government Select Portfolio........ Northern Trust Company - 168,777,364.70 8.3%
London
FBO Food & Agricultural
Organization
155 Bishopsgate
London ECZM 3XS
United Kingdom
Diversified Assets Portfolio....... Northern Trust Company - 682,743,801.03 9.6%
London
FBO UN World Food Programme
155 Bishopsgate
London ECZM 3XS
United Kingdom
MCCA-Western Asset Management 364,778,578.32 5.2%
c/o Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Municipal Portfolio................ Mercantile National Bank 2,846,857.00 6.8%
5243 Hohman Avenue
Hammond, IN 46325
Indiana Trust & Investment 9,092,356.00 21.8%
Management Co.
3930 Edison Lakes Parkway,
Suite 250
Mishawaka, IN 46545-5149
Trust Co. of Toledo 30,591,656.00 73.5%
6135 Trust Drive, Suite 206
Holland, OH 43528
</TABLE>
B-7
<PAGE>
APPENDIX C
As of November 30, 1999, the Nominees and officers of the Trust owned
beneficially Shares of the Portfolios as set forth below:
<TABLE>
<CAPTION>
NAME OF AMOUNT OF PERCENTAGE OF
PORTFOLIO BENEFICIAL OWNER SHARES SHARES
- --------- ----------------------------------- --------- -------------
<S> <C> <C> <C>
Tax-Exempt Portfolio Raymond E. George, Jr. 186,638 *
</TABLE>
- ------------
* Less than 1% of the Portfolio's outstanding Shares.
C-1
<PAGE>
VOTE THIS PROXY CARD TODAY
NORTHERN INSTITUTIONAL FUNDS
50 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60675
Please fold and detach card at perforation before mailing
<TABLE>
<S><C>
FUND NAME PRINTS HERE SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF NORTHERN INSTITUTIONAL FUNDS (THE "TRUST") FOR USE AT A SPECIAL MEETING OF
SHAREHOLDERS (THE "MEETING") OF THE TRUST TO BE HELD ON MARCH 21, 2000 AT 9:30 A.M. (CHICAGO TIME) IN THE OFFICES OF THE NORTHERN
TRUST COMPANY, DIRECTORS ROOM, 6TH FLOOR, 50 S. LASALLE STREET, CHICAGO, ILLINOIS 60675.
The undersigned hereby appoints Archibald King, Martin C. Gawne and Linda J. Hoard, and each of them, with full power of
substitution, as proxies of the undersigned to vote at the above-referenced Meeting, and at all adjournments thereof, all shares
of beneficial interest of the above-named Portfolio held of record by the undersigned on the record date for the Meeting, upon
the following matters, and at their discretion upon any other matter which may properly come before the Meeting.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE TRUST AND THE PROXY STATEMENT
DATED FEBRUARY 7, 2000.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
DATE:__________________, 2000
-----------------------------------------
-----------------------------------------
Signature(s), (Title(s), if applicable)
Please sign above exactly as name(s)
appear(s) hereon. Corporate or
partnership proxies should be signed in
full corporate or partnership name by
an authorized officer. Each joint owner
should sign personally. When signing
as a fiduciary, please give full title
(Continued on reverse side of card) as such.
</TABLE>
<PAGE>
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED "FOR" EACH OF THE PROPOSALS.
Please fold and detach card at perforation before mailing
Please vote by filling in the appropriate box(es) below.
<TABLE>
<S><C>
PROPOSAL 1 FOR all WITHHOLD
Election of Trustees nominees listed AUTHORITY
at left (except as to vote for all
Richard G. Cline, Edward J. Condon, Jr., Wesley M. Dixon, Jr., marked to the nominees listed
William J. Dolan, Jr., John W. English, Raymond E. George, Jr., contrary at left). at left.
Sandra Polk Guthman, Michael E. Murphy, Mary Jacobs Skinner,
William H. Springer, Richard P. Strubel, Stephen B. Timbers.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), / / / /
WRITE HIS OR HER NAME(S) ON THE LINE PROVIDED BELOW.
- -------------------------------------------------------------
PROPOSAL 2 FOR AGAINST ABSTAIN
To ratify or reject the selection of Ernst & Young LLP as the / / / / / /
Trust's Independent accountants for its fiscal year ending
November 30, 2000.
PROPOSALS 3(A)-(F)
To approve amendments to the fundamental investment policies of
the specified Portfolios:
A) With respect to all Portfolios except the Small Company
Growth and Mid Cap Growth Portfolios, the investment
policy on commodities; / / / / / /
B) With respect to all Portfolios, the investment policies on
borrowing and lending; / / / / / /
C) With respect to all Portfolios except the Mid Cap Growth
Portfolio, the investment policy on mortgaging; / / / / / /
D) With respect to all Portfolios except the Municipal, Small
Company Growth and Mid Cap Growth Portfolios, the
investment policy on puts and calls; / / / / / /
E) With respect to the Tax Exempt Portfolio only, the investment
policy on municipal investments; and / / / / / /
F) With respect to the Tax-Exempt Portfolio only, the investment
policy on issuers with less than three years operations. / / / / / /
</TABLE>
