<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:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] 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:
- --------------------------------------------------------------------------------
[ ] 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:
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(4) Date Filed:
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-2-
<PAGE>
[PRELIMINARY COPY]
NORTHERN INSTITUTIONAL FUNDS
January , 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 [address].
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). We
believe that these proposals are important and will allow us to improve the
Portfolios' operations.
Proposals 3 (A)-(F) recommend amendments that are intended to modernize,
standardize and clarify certain of the Portfolios' fundamental investment
policies.
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.
The continuing interest of Shareholders 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,
[Name and Title]
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. The Northern Institutional Funds offer investors access
to the institutional investment advisory services of The Northern Trust
Company and Northern Trust Quantitative Advisers, Inc. The Northern Trust
Company also serves as co-administrator, custodian and transfer agent to The
Northern Institutional Funds.
<PAGE>
[PRELIMINARY COPY]
NORTHERN INSTITUTIONAL FUNDS
Money Market Portfolios Fixed Income Portfolios Equity Portfolios
Government Select U.S. Government Equity Index Portfolio
Portfolio Securities Portfolio Diversified Growth
Government Portfolio Short-Intermediate Bond Portfolio
Diversified Assets Portfolio Focused Growth Portfolio
Portfolio Intermediate Bond Mid Cap Growth Portfolio
Tax-Exempt Portfolio Portfolio Small Company Index
Municipal Portfolio U.S. Treasury Index Portfolio
Portfolio Small Company Growth
Bond Portfolio Portfolio
International Bond International Equity
Portfolio Index Portfolio
International Growth
Portfolio
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 [location] 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 (except the Mid Cap Growth 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 Proxy Card(s) are being mailed to Shareholders on or about
January , 2000.
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
January , 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>
[PRELIMINARY COPY]
NORTHERN INSTITUTIONAL FUNDS
Money Market Fixed Income Portfolios Equity
Portfolios U.S. Government Securities Portfolios
Government Select Portfolio Equity Index Portfolio
Portfolio Short-Intermediate Bond Diversified Growth
Government Portfolio Portfolio Portfolio
Diversified Assets Intermediate Bond Portfolio Focused Growth Portfolio
Portfolio U.S. Treasury Index Mid Cap Growth Portfolio
Tax-Exempt Portfolio Portfolio Small Company Index
Municipal Portfolio Bond Portfolio Portfolio
International Bond Small Company Growth
Portfolio Portfolio
International Equity Index
Portfolio
International Growth
Portfolio
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") to 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 [location],
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 , 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 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 Portfolios. Northern Trust
may engage an independent proxy solicitation firm to assist it in soliciting
proxies.
This Proxy Statement and accompanying Proxy(ies) are being first mailed to
Shareholders on or about January , 2000.
1
<PAGE>
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 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
-------- ----------------------
<C> <S> <C>
1. Election of twelve The Trust with all Portfolios voting as a
Trustees. single class.
2. Ratification of the The Trust with all Portfolios voting as a
selection of Ernst & single class.
Young LLP as independent
auditors for the fiscal
year ending November 30,
2000.
3.(A)-(F) Approval of amended Each Portfolio (except the Mid Cap
fundamental investment Growth Portfolio) voting separately.
policies.
</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, P.O. Box 75986, Chicago, Illinois 60675-5986
or by telephone at 1-800-595-9111.
PROPOSAL 1
ELECTION OF TRUSTEES
(All Portfolios)
The Northern Trust Company and Northern Trust Quantitative Advisers, Inc.
serve as investment advisers to the Trust and to the 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.
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 a Trustee 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 Mr. Dixon will serve until [date]). 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.
2
<PAGE>
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 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>
Name, Age and Principal Occupation or Employment During First Became
Positions With Trust Last Five Years Trustee
-------------------- ----------------------------------------- ------------
<C> <S> <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); Ryerson Tull, Inc. (a metals
distribution company); and 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 1989 to July 1993; Member of
Advisory Board of Real-Time USA, Inc.;
Member of the Board of Managers of The
Liberty Hampshire Company, LLC; Vice
Chairman and Director of Energenics L.L.C.
Director: University Eldercare, Inc.;
Financial Pacific Company. Trustee:
Dominican University.
Wesley M. Dixon, Jr. 72 Director of Earl Kinship Capital To be elected
Proposed Trustee Corporation since 1985; Vice Chairman and in 2000
Director of G.D. Searle & Co. (manufacture
and sale of food products and
pharmaceuticals) from 1977 to 1983 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
Proposed Trustee (accounting firm) from 1966 to 1989. in 2000
Financial Consultant, Ernst & Young from
1992 to 1993 and 1997. Director: Household
Bank; First Central National Life Insurance
Company. Trustee: Northern Funds.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name, Age and Principal Occupation or Employment During First Became
Positions With Trust Last Five Years Trustee
-------------------- ----------------------------------------- ------------
<S> <C> <C>
John W. English, 66 Private Investor; Vice President and Chief 1994
Trustee Investment Officer of The Ford Foundation
(a charitable trust) from 1981 until 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;
Duke Management Company; John Ringling
Centre Foundation.
Raymond E. George, Jr., 69* Senior Vice President and Senior Fiduciary To be elected
Proposed Trustee Officer of The Northern Trust Company from in 2000
1990 until his retirement in October 1993.
Trustee: Northern Funds.
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 Transformation from
1992-1993, and Midwestern Director of
Marketing from 1988-1992, IBM Corporation.
Director: MBIA Insurance Corporation of
Illinois; MB Financial Corp. (a stock
savings and loan holding company).
Michael E. Murphy, 63** President of Sara Lee Foundation since To be elected
Proposed Trustee November 1997; Vice Chairman and Chief in 2000
Administrative Officer of Sara Lee
Corporation (consumer products) from
November 1994 to October 1997; Vice
Chairman and Chief Financial and
Administrative Officer of Sara Lee
Corporation from July 1993 to November
1994. Director: Payless Shoe Source, Inc.;
True North Communications, Inc.; American
General Corporation; GATX Corporation;
Bassett Furniture Industries, Inc. Trustee:
Northern Funds.
Mary Jacobs Skinner, Esq., 42*** Partner in the law firm of Sidley & Austin. To be elected
Proposed Trustee Trustee: Northern Funds. in 2000
William H. Springer, 70 Vice Chairman of Ameritech (a 1984
Trustee telecommunications 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>
Name, Age and
Positions With Principal Occupation or Employment During First Became
Trust Last Five Years Trustee
-------------- ----------------------------------------- ------------
<S> <C> <C>
Richard P. Strubel, President and Chief Operating Officer, 1982
60 UNext.com since 1999; Managing Director of
Trustee Tandem Partners, Inc. (a privately held
management services firm) from 1990 to
1999; President and Chief Executive
Officer, Microdot, Inc. (a privately held
manufacturing firm) from 1984 to 1994.
Director: Gildan Activewear, Inc.;
Children's Memorial Medical Center.
Trustee: University of Chicago; Goldman
Sachs Trust; Goldman Sachs Variable
Insurance Trust.
Stephen B. Timbers, President of Northern Trust Global To be elected
55**** Investments, Northern Trust Corporation in 2000
Proposed Trustee since 1998; President, Chief Executive
Officer and Director of Zurich Kemper
Investments from 1996 to 1998; President,
Chief Operating Officer and Director of
Kemper Corporation from 1992 to 1996;
President and Director of Kemper Funds from
1990 to 1998. Director: LTV Corporation.
</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.
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 have been and are expected to be in the
ordinary course of business and the term 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. 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 during such year.
The Board of Trustees has appointed an Audit Committee whose members are Mr.
Condon and Mr. Strubel, who serves as 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.
5
<PAGE>
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 .
Remuneration of Trustees
Trustees, other than Mr. Timbers (if elected), are entitled to remuneration
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
Aggregate Compensation
Compensation Pension or Retirement from the
from the Benefits Accrued as Part Portfolio
Name of Trustee* Portfolios of 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 Fund 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 and Principal Occupation(s) During Past Five First Became
Age Years Officer
------------------ ----------------------------------------- ------------
<C> <S> <C>
Senior Vice President for Distribution 1999
Jylanne M. Dunne, 39 Services at PFPC, formerly First Data
President Investor Services Group, Inc.
Richard H. Rose, 43 Vice President and Division Manager of 1999
Vice President Mutual Fund Administration at PFPC.
Brian R. Curran, 32 Director of Fund Administration at PFPC 1999
Treasurer since 1997; Director of Fund
Administration at State Street Bank and
Trust Co. from February 1997 to October
1997; Senior Auditor at Price Waterhouse
L.L.P. February 1994 to February 1997.
Client Treasury Manager of Mutual Fund 1999
Administration at PFPC since 1997;
Judith E. Clear, 33 Compliance Manager at Citizens Trust from
Assistant Treasurer 1994 to 1996.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation(s) During Past First Became
Name, Position and Age Five Years Officer
---------------------- --------------------------------------- ------------
<C> <S> <C>
Linda J. Hoard, 52 Counsel at PFPC since 1998; Attorney 1999
Secretary Consultant for Fidelity Investments,
Investors Bank & Trust Company and PFPC
from September 1994 to June 1998.
Teresa M.R. Hamlin, 34 Counsel at PFPC since 1994; Paralegal 1999
Assistant Secretary 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 THE 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
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 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.
7
<PAGE>
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.
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. This uniformity will facilitate comparison of different
Portfolios' investment policies as well as administration of the policies. The
proposals would 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
provide the Portfolios the flexibility to implement an interfund lending
program if the Trustees determine this is desirable in the future and,
generally, to assure 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.
PROPOSAL 3(A)
INVESTMENT POLICY ON COMMODITIES
(All Portfolios except the 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.
8
<PAGE>
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. Its elimination is not expected to have a material effect on
the Portfolios' investment practices.
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.
PROPOSAL 3(B)
INVESTMENT POLICIES ON BORROWING AND LENDING
(All Portfolios except the Municipal, Small Company Growth and Mid Cap Growth
Portfolios)
The Board of Trustees is recommending that Shareholders approve amendments
to the Portfolios' fundamental investment policies on borrowing and lending
to: (1) permit the Portfolios to implement an interfund lending program if and
when approved by the Trustees and the SEC; and (2) ensure that the Portfolios
have the maximum borrowing flexibility allowed by law. This proposal applies
to each Portfolio except the Municipal, Small Company Growth and Mid Cap
Growth Portfolios, which currently have policies like the ones proposed below.
Interfund Lending Program. Under their current investment policies, the
Portfolios are permitted to borrow from banks but not (with limited
exceptions) from other Portfolios or persons. Under an interfund lending
program, a Portfolio could borrow from other affiliated investment companies
if it made good sense. For example, if available cash is insufficient to meet
Shareholder redemptions, it may be advantageous for a Portfolio to borrow
money for a short time instead of raising cash by selling portfolio
securities, which could be disruptive to the Portfolio's investment strategy.
In this circumstance, an interfund lending program could benefit a Portfolio
by facilitating its flexibility to use the most cost-effective alternative to
satisfy these short-term borrowing requirements. In particular, a Portfolio
needing cash may be able to obtain lower interest rates through an interfund
lending program, and a Portfolio lending the cash may be able to obtain a
higher interest rate than it may obtain on alternative short-term investments
(such as the rates on repurchase agreements). In this manner, an interfund
lending program could match the borrowing and lending needs of different
Portfolios. Specifically, the interfund lending program could allow the
Portfolios' investment adviser, on any given day, to match the Portfolios
wishing to borrow money to satisfy redemption requests and the Portfolios with
available money to lend. By arranging loans between the matched Portfolios
instead of banks, the Portfolios may be able to borrow money more cost-
effectively and lend money more profitably. Interfund lending would be
permitted only if the terms are at least as favorable as the terms a Portfolio
could otherwise negotiate with a third party and if a transaction is conducted
in accordance with safeguards imposed by the SEC on interfund lending
programs.
When one Portfolio lends money to another Portfolio, the lending Portfolio
will be subject to the credit risk that the borrowing Portfolio may fail to
repay the loan. However, the Portfolios presently face similar risks when
lending money to unaffiliated companies. The Trustees believe that the risks
presented by an interfund lending program will be minimal. If a Portfolio
borrows or lends money through the program, the borrowing or lending activity
must be consistent with the Portfolio's investment objective and investment
policies.
The Trustees have not decided whether to implement an interfund lending
program for the Portfolios. However, in order to avoid the expense of another
possible Shareholder meeting in the future to consider this issue, the
Trustees are recommending that Shareholders approve an amendment to the
Portfolios' fundamental investment policies at the Meeting to provide the
flexibility for interfund lending.
9
<PAGE>
In order for the Portfolios to engage in an interfund lending program,
regulatory approval of the SEC will also be required because, among other
reasons, the program may be considered to be among affiliated parties. If the
proposed amendments to the Portfolio's fundamental investment policies are
approved by Shareholders, the proposed interfund lending program will be
implemented only to the extent permitted by rule or by order of the SEC. If
SEC permission is not granted, the Portfolios will not be able to implement
the interfund lending program even though Shareholders have approved the
proposal. No prediction can be made as to whether the SEC would grant such
permission. It should be noted, however, that even if an interfund lending
program is approved by Shareholders and the SEC, the Portfolios will retain
the ability to borrow from banks.
Other 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.
These changes are intended to ensure that the Portfolios have the maximum
borrowing flexibility allowed by law. It should be noted, however, 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. The Portfolios'
current fundamental investment policies relating to borrowing and lending are
as follows:
(1) 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
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.
(2) Lending. No Portfolio may make loans, except (a) through the purchase
of debt obligations in accordance with the Portfolio's investment objective
and policies, (b) through repurchase agreements with banks, brokers,
dealers and other financial institutions, and (c) loans of securities.
10
<PAGE>
As amended, the Portfolios' fundamental investment policies relating to
borrowing and lending will provide as follows:
(1) 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.
(2) 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 banks, brokers, dealers and
other financial institutions, (c) loans of securities, and (d) an interfund
lending program with other affiliated funds.
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 investment policy is no longer
required and is obsolete, the investment restriction should be eliminated.
PROPOSAL 3(D)
INVESTMENT POLICY ON PUTS AND CALLS
(All Portfolios except the Municipal, Mid Cap Growth and Small Company 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's 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 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.
11
<PAGE>
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.
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. 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.
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.
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 the 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.
12
<PAGE>
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF EACH PORTFOLIO
VOTE "FOR" THE APPROVAL OF THE PROPOSED AMENDED INVESTMENT POLICIES.
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 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 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.
13
<PAGE>
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 [date], 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 the 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 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. Northern Trust may engage an independent proxy solicitation firm to
assist it in soliciting Proxies.
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 who
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.
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.
January , 2000
14
<PAGE>
APPENDIX A
As of [date], each Portfolio had the following number of Shares
outstanding:
<TABLE>
<CAPTION>
Outstanding
Portfolio Shares
- --------- -----------
<S> <C>
</TABLE>
A-1
<PAGE>
APPENDIX B
As of [date], The Northern Trust Company, 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>
</TABLE>
In addition, as of [date], 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
-------------------------------
Shareholder
Name and Percentage
Address Amounts of Shares of Shares (%)
- ----------- ----------------- -------------
<S> <C> <C>
</TABLE>
B-1
<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 Beneficial
Portfolio Owner Amount of Shares Percentage of 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>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense involved in validating your vote if you
fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on the
proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
<TABLE>
<CAPTION>
Registration Valid Signatures
------------ ----------------
<S> <C>
CORPORATE ACCOUNTS
(1) ABC Corp................................... ABC Corp.
(2) ABC Corp................................... John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer....................... John Doe
(4) ABC Corp. Profit Sharing Plan.............. John Doe, Treasurer
TRUST ACCOUNTS
(1) ABC Trust.................................. Jane B. Doe, Trustee
(2) Jane B. Doe,
Trustee
u/t/d 12/28/78................................ Jane B. Doe
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith,
Cust.
f/b/o John B. Smith, Jr. UGMA................. John B. Smith
(2) John B. Smith.............................. John B. Smith, Jr., Executor
</TABLE>
<PAGE>
[PRELIMINARY COPY]
VOTE THIS PROXY CARD TODAY
NORTHERN INSTITUTIONAL FUNDS
50 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60675
[Individual Portfolio Name]
SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF NORTHERN 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 LOCATED
AT _________________________________.
The undersigned hereby appoints __________________ and __________________ 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 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.
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.
<TABLE>
<CAPTION>
Proposal 1
Election of Trustees
<S> <C>
[_] FOR all nominees listed below (except [_] WITHHOLD AUTHORITY to vote
as marked to the contrary below). for all nominees listed below.
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through his or her name in the list below:
Richard G. Cline, Edward J. Condon, Jr., Wesley M. Dixon, Jr., William J. Dolan, Jr.,
John W. English, Raymond E. George, Jr., Sandra Polk Guthman, Michael E. Murphy, Mary
Jacobs Skinner, William H. Springer, Richard P. Strubel, Stephen B. Timbers.
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Proposal 2
To ratify or reject the selection of Ernst & Young LLP as the Trust's independent [_] [_] [_]
accountants for its fiscal year ending November 30, 2000.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
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 except the Municipal, Small Company Growth and [_] [_] [_]
Mid Cap Growth Portfolios, the investment policies on borrowing and lending;
C) With respect to all Portfolios except the Mid Cap Growth Portfolios, 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 investment; and
F) With respect to the Tax-Exempt Portfolio only, the investment policy on issuers [_] [_] [_]
with less than three years operations.
</TABLE>
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE TRUST AND THE PROXY STATEMENT DATED JANUARY __, 2000.
<TABLE>
<CAPTION>
<S> <C>
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
|-------------------------------------------------|
| |
|-------------------------------------------------|
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 as such.
DATE:____________________, 2000
</TABLE>
