<PAGE>
-------------------------------
/ OMB APPROVAL /
-------------------------------
/ OMB Number: 3235-0360 /
/ Expires: June 30, 2000 /
/ Estimated average burden /
/ hours per response.....0.05 /
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-17f-2
Certificate of Accounting of Securities and Similar
Investments in the Custody of
Management Investment Companies
Pursuant to Rule 17f-2 [17 CFR 270.17f-2]
<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------------------
1. Investment Company Act File Number: Date examination completed:
811-08236 October 31, 1999
------------------------------------------------------------------------------------------------------------
2. State identification Number:
-----------------------------------------------------------------------------------------------------
AL AK AZ AR CA CO
-----------------------------------------------------------------------------------------------------
CT DE DC FL GA HI
-----------------------------------------------------------------------------------------------------
ID IL IN IA KS KY
-----------------------------------------------------------------------------------------------------
LA ME MD MA MI MN
-----------------------------------------------------------------------------------------------------
MS MO MT NE NV NH
-----------------------------------------------------------------------------------------------------
NJ NM NY NC ND OH
-----------------------------------------------------------------------------------------------------
OK OR PA RI SC SD
-----------------------------------------------------------------------------------------------------
TN TX UT VT VA WA
-----------------------------------------------------------------------------------------------------
WV WI WY PUERTO RICO
-----------------------------------------------------------------------------------------------------
Other (specify):
------------------------------------------------------------------------------------------------------------
3. Exact name of investment company as specified in registration statement:
Northern Funds
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
4. Address of principal executive office (number, street, city, state, zip code):
50 South LaSalle, Chicago, Illinois 60675
------------------------------------------------------------------------------------------------------------
INSTRUCTIONS
</TABLE>
This Form must be completed by investment companies that have custody of
securities or similar investments.
Investment Company
1. All items must be completed by the investment company.
2. Give this Form to the independent public accountant who, in compliance
with Rule 17f-2 under the Act and applicable state law, examines
securities and similar investments in the custody of the investment
company.
Accountant
3. Submit this Form to the Securities and Exchange Commission and
appropriate state securities administrators when filing the certificate
of accounting required by Rule 17f-2 under the Act and applicable state
law. File the
<PAGE>
original and one copy with the Securities and Exchange Commission's
principal office in Washington, D.C., one copy with the regional office for
the region in which the investment company's principal business operations
are conducted, and one copy with the appropriate state administrator(s), if
applicable.
THIS FORM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT
SEC 2198 (4-00)
<PAGE>
Independent Auditors' Report
----------------------------
To the Board of Directors of
the Northern Funds and the
Securities and Exchange Commission:
We have examined management's assertion about the Northern Funds' (the "Funds")
compliance with the requirements of subsections (b) and (c) of Rule 17f-2 under
the Investment Company Act of 1940 ("the Act") as of March 31, 2000 included in
the accompanying Management Statement Regarding Compliance with Certain
Provisions of the Investment Company Act of 1940. Management is responsible for
the Funds' compliance with those requirements. Our responsibility is to express
an opinion on management's assertion about the Funds' compliance based on our
examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Funds' compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. Included among our procedures were the following tests
performed as of March 31, 2000, and with respect to agreement of security
purchases and sales, for the period from January 31, 2000 (the date of our last
examination) through March 31, 2000.
. Securities included on the safekeeping reports of The Northern Trust Company
(the "Company") for the Northern Funds which were designated as being located
in the vaults of the Company, 50 S. LaSalle St., Chicago, IL; and The Northern
Trust Company of New York, 80 Broad St., New York, New York were counted and
inspected by us.
. Securities included on the safekeeping reports of the Company which were
designated as being held by institutions in book entry form (which include
securities owned by the Northern Funds) were confirmed by us at March 31,
2000, with those institutions which use the book entry method of accounting
for securities; i.e., the Federal Reserve Bank of Chicago, Participants Trust
Company, and the Depository Trust Company.
. We reviewed the Company's reconciliations, which were prepared by personnel of
the Company, of the Company's safekeeping reports to the above-noted
confirmations from the Federal Reserve Bank of Chicago, Participants Trust
Company, and the Depository Trust Company and, where appropriate, tested
certain reconciling items, noting the propriety of their resolution. On a
test basis, we agreed securities shown on the Company's safekeeping reports to
such
<PAGE>
confirmations from the Federal Reserve Bank of Chicago, Participants
Trust Company, and the Depository Trust Company to the Company's safekeeping
report.
. We reviewed the Company's reconciliations, which were prepared by personnel of
the Company, of the Company's safekeeping reports, to the statements of
holdings received by the Company from its global subcustodians. We agreed all
securities on the books and records of the Northern Funds to the securities
designated as securities of the Northern Funds on the Company's safekeeping
reports. We reviewed reconciling items between the Company's safekeeping
reports and the global subcustodians' records, noting the propriety of their
resolution.
. We received independent confirmations from various mutual fund companies
indicating the shares of mutual funds owned by the Northern Funds. We agreed
the shares to the Company's safekeeping reports.
. We reviewed March 31, 2000 deposit tickets for Eurodollar deposits for the
Company. We tied the total deposits to the Eurodollar reconciliations
obtained from the Company. We agreed all Eurodollar deposits on the books and
records of the Northern Funds to the Eurodollar deposits designated as
deposits of the Northern Funds on the Company's reconciliations.
. We reviewed the broker statement received by the Company, which indicated the
futures position as of March 31, 2000, and agreed the position to the Northern
Funds books and records.
. We reviewed custodian reports from various financial corporations indicating
the Company's holdings in commercial paper notes and agreed these holdings to
the Northern Funds books and records.
. We reviewed the most recent independent public accountants' report on internal
controls for the Northern Trust Corporation for the year ended December 31,
1999.
. On a scope basis, we agreed security purchases and sales or maturities to the
broker confirmations and books and records of the Northern Funds noting they
had been properly recorded.
We believe that our examination provides a reasonable basis for our opinion.
Our examination does not provide a legal determination on the Funds' compliance
with specified requirements.
In our opinion, management's assertion that the Northern Funds were in
compliance with the requirements of subsections (b) and (c) of Rule 17f-2 of the
Investment Company Act of 1940 as of March 31, 2000 with respect to securities
reflected in the investment accounts of the Funds is fairly stated, in all
material respects.
<PAGE>
This report is intended solely for the information and use of the Board of
Directors and management of the Northern Funds and the Securities and Exchange
Commission and should not be used for any other purpose.
Arthur Andersen LLP
Chicago, Illinois
September 5, 2000
<PAGE>
Management Statement Regarding Compliance with
Certain Provisions of the Investment Company Act of 1940
We, as members of management of the Northern Funds (the "Funds"), are
responsible for complying with the requirements of subsection (b) and (c) of
Rule 17f-2, "Custody of Investments by Registered Management Investment
Companies," of the Investment Company Act of 1940. We are also responsible for
establishing and maintaining effective internal controls over compliance with
those requirements. We have performed an evaluation of the Funds' compliance
with the requirements of subsection (b) and (c) of Rule 17f-2 as of March 31,
2000, and from January 31, 2000 through March 31, 2000.
Based on this evaluation, we assert that the Funds were in compliance with the
requirements of subsection (b) and (c) of Rule 17f-2 of the Investment Company
Act of 1940 as of March 31, 2000, and from January 31, 2000 through March 31,
2000, with respect to securities and similar investments reflected in the
investment accounts of the Funds.
The Northern Trust Company
By: /s/ Stuart Schuldt
------------------
Stuart Schuldt, Vice President
By: /s/ Brian Ovaert
----------------
Brian Ovaert, Senior Vice President
<PAGE>
-------------------------------
/ OMB APPROVAL /
-------------------------------
/ OMB Number: 3235-0360 /
/ Expires: June 30, 2000 /
/ Estimated average burden /
/ hours per response.....0.05 /
-------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-17f-2
Certificate of Accounting of Securities and Similar
Investments in the Custody of
Management Investment Companies
Pursuant to Rule 17f-2 [17 CFR 270.17f-2]
<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------------------
1. Investment Company Act File Number: Date examination completed:
811-08236 March 31, 2000
------------------------------------------------------------------------------------------------------------
2. State identification Number:
-----------------------------------------------------------------------------------------------------
AL AK AZ AR CA CO
-----------------------------------------------------------------------------------------------------
CT DE DC FL GA HI
-----------------------------------------------------------------------------------------------------
ID IL IN IA KS KY
-----------------------------------------------------------------------------------------------------
LA ME MD MA MI MN
-----------------------------------------------------------------------------------------------------
MS MO MT NE NV NH
-----------------------------------------------------------------------------------------------------
NJ NM NY NC ND OH
-----------------------------------------------------------------------------------------------------
OK OR PA RI SC SD
-----------------------------------------------------------------------------------------------------
TN TX UT VT VA WA
-----------------------------------------------------------------------------------------------------
WV WI WY PUERTO RICO
-----------------------------------------------------------------------------------------------------
Other (specify):
------------------------------------------------------------------------------------------------------------
3. Exact name of investment company as specified in registration statement:
Northern Funds
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
4. Address of principal executive office (number, street, city, state, zip code):
50 South LaSalle, Chicago, Illinois 60675
------------------------------------------------------------------------------------------------------------
INSTRUCTIONS
</TABLE>
This Form must be completed by investment companies that have custody of
securities or similar investments.
Investment Company
1. All items must be completed by the investment company.
2. Give this Form to the independent public accountant who, in compliance
with Rule 17f-2 under the Act and applicable state law, examines
securities and similar investments in the custody of the investment
company.
Accountant
3. Submit this Form to the Securities and Exchange Commission and
appropriate state securities administrators when filing the certificate
of accounting required by Rule 17f-2 under the Act and applicable state
law. File the
<PAGE>
original and one copy with the Securities and Exchange Commission's
principal office in Washington, D.C., one copy with the regional office
for the region in which the investment company's principal business
operations are conducted, and one copy with the appropriate state
administrator(s), if applicable.
THIS FORM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT
SEC 2198 (4-00)
<PAGE>
Independent Auditors' Report
----------------------------
To the Board of Directors of
the Northern Funds and the
Securities and Exchange Commission:
We have examined management's assertion about the Northern Funds' (the "Funds")
compliance with the requirements of subsections (b) and (c) of Rule 17f-2 under
the Investment Company Act of 1940 ("the Act") as of October 31, 1999 included
in the accompanying Management Statement Regarding Compliance with Certain
Provisions of the Investment Company Act of 1940. Management is responsible for
the Funds' compliance with those requirements. Our responsibility is to express
an opinion on management's assertion about the Funds' compliance based on our
examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Funds' compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. Included among our procedures were the following tests
performed as of October 31, 1999, and with respect to agreement of security
purchases and sales, for the period from March 31, 1999 (the date of our last
examination) through October 31, 1999. All procedures were performed without
prior notice to management:
. Securities included on the safekeeping reports of The Northern Trust Company
(the "Company") for the Northern Funds which were designated as being located
in the vaults of the Company, 50 S. LaSalle St., Chicago, IL; and The Northern
Trust Company of New York, 80 Broad St., New York, New York were counted and
inspected by us.
. Securities included on the safekeeping reports of the Company which were
designated as being held by institutions in book entry form (which include
securities owned by the Northern Funds) were confirmed by us at October 31,
1999, with those institutions which use the book entry method of accounting
for securities; i.e., the Federal Reserve Bank of Chicago, Participants Trust
Company, and the Depository Trust Company.
. We reviewed the Company's reconciliations, which were prepared by personnel of
the Company, of the Company's safekeeping reports to the above-noted
confirmations from the Federal Reserve Bank of Chicago, Participants Trust
Company, and the Depository Trust Company and, where appropriate, tested
certain reconciling items, noting the propriety of their resolution. On a
test basis, we agreed securities shown on the Company's safekeeping reports to
such
<PAGE>
confirmations from the Federal Reserve Bank of Chicago, Participants Trust
Company, and the Depository Trust Company to the Company's safekeeping report.
. We reviewed the Company's reconciliations, which were prepared by personnel of
the Company, of the Company's safekeeping reports, to the statements of
holdings received by the Company from its global subcustodians. We agreed all
securities on the books and records of the Northern Funds to the securities
designated as securities of the Northern Funds on the Company's safekeeping
reports. We reviewed reconciling items between the Company's safekeeping
reports and the global subcustodians' records, noting the propriety of their
resolution.
. We received independent confirmations from various mutual fund companies
indicating the shares of mutual funds owned by the Northern Funds. We agreed
the shares to the Company's safekeeping reports.
. We reviewed October 31, 1999 deposit tickets for Eurodollar deposits for the
Company. We tied the total deposits to the Eurodollar reconciliations
obtained from the Company. We agreed all Eurodollar deposits on the books and
records of the Northern Funds to the Eurodollar deposits designated as
deposits of the Northern Funds on the Company's reconciliations.
. We reviewed the broker statement received by the Company, which indicated the
futures position as of October 31, 1999, and agreed the position to the
Northern Funds books and records.
. We reviewed custodian reports from various financial corporations indicating
the Company's holdings in commercial paper notes and agreed these holdings to
the Northern Funds books and records.
. We reviewed the most recent independent public accountants' report on internal
controls for the Northern Trust Corporation for the year ended December 31,
1998.
. On a scope basis, we agreed security purchases and sales or maturities to the
broker confirmations and books and records of the Northern Funds noting they
had been properly recorded.
We believe that our examination provides a reasonable basis for our opinion.
Our examination does not provide a legal determination on the Funds' compliance
with specified requirements.
In our opinion, management's assertion that the Northern Funds were in
compliance with the requirements of subsections (b) and (c) of Rule 17f-2 of the
Investment Company Act of 1940 as of October 31, 1999 with respect to securities
reflected in the investment accounts of the Funds is fairly stated, in all
material respects.
<PAGE>
This report is intended solely for the information and use of the Board of
Directors and management of the Northern Funds and the Securities and Exchange
Commission and should not be used for any other purpose.
Arthur Andersen LLP
Chicago, Illinois
August 18, 2000
<PAGE>
Management Statement Regarding Compliance with
Certain Provisions of the Investment Company Act of 1940
We, as members of management of the Northern Funds (the "Funds"), are
responsible for complying with the requirements of subsection (b) and (c) of
Rule 17f-2, "Custody of Investments by Registered Management Investment
Companies," of the Investment Company Act of 1940. We are also responsible for
establishing and maintaining effective internal controls over compliance with
those requirements. We have performed an evaluation of the Funds' compliance
with the requirements of subsection (b) and (c) of Rule 17f-2 as of October 31,
1999, and from March 31, 1999 through October 31, 1999.
Based on this evaluation, we assert that the Funds were in compliance with the
requirements of subsection (b) and (c) of Rule 17f-2 of the Investment Company
Act of 1940 as of October 31, 1999, and from March 31, 1999 through October 31,
1999, with respect to securities and similar investments reflected in the
investment accounts of the Funds.
The Northern Trust Company
By: /s/ Stuart Schuldt
------------------
Stuart Schuldt, Vice President
By: /s/ Brian Ovaert
----------------
Brian Ovaert, Senior Vice President
