NORTHERN FUNDS
497, 1995-11-28
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Northern Funds 
Prospectus
July 31, 1995
(Revised December 1, 1995)

Money Market Fund

U.S. Government
Money Market Fund

Municipal Money
Market Fund

U.S. Government Select
Money Market Fund

California Municipal
Money Market Fund

U.S. Government Fund

Fixed Income Fund

Intermediate
Tax-Exempt Fund

Tax-Exempt Fund

International Fixed
Income Fund

Income Equity Fund

Growth Equity Fund

Select Equity Fund

Small Cap
Growth Fund

International Growth
Equity Fund

International Select
Equity Fund

Technology Fund

Supplement Dated December 1, 1995
to Prospectus dated July 31, 1995
(revised December 1, 1995)

The Technology Fund described in this Prospectus is not yet open to investors.
For information on availability, call the Northern Funds Center at 
1-800-595-9111.



The Northern Trust Company
50 S. LaSalle Street                                 Investment Adviser,
Chicago, Illinois 60675                              Transfer Agent and
1-800-595-9111                                       Custodian

 The shares offered by this Prospectus represent interests in Northern Funds, a
no-load management investment company consisting of seventeen funds (the
"Funds") designed to offer investors a range of investment opportunities.
 Each Fund is advised by The Northern Trust Company ("Northern Trust").
Shares are sold and redeemed without any purchase or redemption charge by
Northern Funds, although Northern Trust and other institutions may charge their
customers for their services in connection with investments.
 Northern Funds consists of the following portfolios:

Money Market Funds:                          Equity Funds:
  Money Market Fund                            Income Equity Fund
  U.S. Government Money Market Fund            Growth Equity Fund
  Municipal Money Market Fund                  Select Equity Fund
  U.S. Government Select Money Market Fund     Small Cap Growth Fund
  California Municipal Money Market Fund       International Growth Equity Fund
Fixed Income Funds:                            International Select Equity Fund
  U.S. Government Fund                         Technology Fund
  Fixed Income Fund
  Intermediate Tax-Exempt Fund
  Tax-Exempt Fund
  International Fixed Income Fund

 This Prospectus provides information about the Funds that you should know
before investing. It should be read and retained for future reference. Further
information is included in a statement of additional information dated July 31,
1995 (the "Additional Statement"), which is incorporated by reference herein.
For a free copy, write to Northern Funds' distributor, Sunstone Financial 
Group,Inc., at 207 E. Buffalo Street, Suite 400, Milwaukee, Wisconsin 53202 
or call 1-414-271-5885. As of the date of this Prospectus, no shares of the 
Technology Fund have been sold. The California Municipal Money Market Fund is 
not available in certain states. Please call 1-800-595-9111 to determine 
availability in your state.
 SHARES OF NORTHERN FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED, ENDORSED OR OTHERWISE SUPPORTED BY, THE NORTHERN TRUST COMPANY, ITS
PARENT COMPANY OR ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED OR GUARANTEED 
BY THE U.S. GOVERNMENT, FEDERAL DEPOSIT INSURANCE CORPORATION, FEDERAL RESERVE
BOARD, OR ANY OTHER GOVERNMENTAL AGENCY.
 THERE CAN BE NO ASSURANCE THAT THE MONEY MARKET FUND, U.S. GOVERNMENT MONEY
MARKET FUND, MUNICIPAL MONEY MARKET FUND, U.S. GOVERNMENT SELECT MONEY MARKET
FUND OR CALIFORNIA MUNICIPAL MONEY MARKET FUND (TOGETHER, THE "MONEY MARKET
FUNDS") WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS 
A CRIMINAL OFFENSE.

  The date of this Prospectus is July 31, 1995 (as revised December 1, 1995).


                               TABLE OF CONTENTS

Highlights

Expense Summary

Financial Highlights

Investment Information
  Money Market Funds
     Money Market Fund
     U.S. Government Money Market Fund
     Municipal Money Market Fund
     U.S. Government Select Money Market Fund
     California Municipal Money Market Fund
     Other Information
  Fixed Income Funds
     U.S. Government Fund and Fixed Income Fund
     Intermediate Tax-Exempt Fund and Tax-Exempt Fund
     International Fixed Income Fund
  Equity Funds
     Income Equity Fund
     Growth Equity Fund
     Select Equity Fund
     Small Cap Growth Fund
     International Growth Equity Fund
     International Select Equity Fund
     Technology Fund
     Other Information
  Municipal Money Market Funds - Additional Risks and Considerations Regarding
     California Investments
  Municipal Money Market Fund - Orange County Notes
  Technology Fund - Additional Risks and Considerations
  International Funds - Further Information
  Fundamentals of Fixed Income Investing

Additional Investment Information, Risks and Considerations
  Description of Securities and Investment Techniques
  Investment Restrictions

Opening an Account and Purchasing Shares
  Purchasing Shares Directly from the Funds
  Purchasing Shares Through Northern Trust and Other Institutions
  Additional Purchase Information

Redeeming and Exchanging Shares
  Redeeming and Exchanging Directly from the Funds
  Redeeming and Exchanging Through Northern Trust and Other Institutions
  Additional Redemption and Exchange Information

Distributions and Taxes
  Distributions
  Taxes
  Tax Table

Management
  Board of Trustees
  Investment Adviser, Transfer Agent and Custodian
  Administrator and Distributor
  Service Organizations
  Expenses

Further Information
  Determining Share Price
  Advertising Performance
  Voting Rights
  Shareholder Reports
  Retirement Plans
  Miscellaneous

HIGHLIGHTS

Q:What is Northern Funds?

A:Northern Funds is an open-end management investment company (commonly known
  as a mutual fund) that offers investors the opportunity to invest in
  different investment portfolios, each having separate investment objectives
  and policies. Northern Funds presently consists of seventeen portfolios,
  including money market, domestic and international fixed income and equity
  portfolios.

  Money Market Funds
  
  Money Market Fund seeks to maximize current income to the extent consistent
  with the preservation of capital and maintenance of liquidity by investing
  exclusively in high-quality money market instruments.

  U.S. Government Money Market Fund seeks to maximize current income to the
  extent consistent with the preservation of capital and maintenance of
  liquidity by investing exclusively in obligations of the U.S. Government, its
  agencies and instrumentalities and related repurchase agreements.

  Municipal Money Market Fund seeks, to the extent consistent with the
  preservation of capital and prescribed portfolio standards, a high level of
  income exempt from regular federal income tax by investing primarily in
  municipal instruments.

  U.S. Government Select Money Market Fund seeks to maximize current income to
  the extent consistent with the preservation of capital and maintenance of
  liquidity by investing solely in obligations of the U.S. Government, its
  agencies and instrumentalities.

  California Municipal Money Market Fund seeks to provide to its shareholders,
  to the extent consistent with the preservation of capital and prescribed
  portfolio standards, a high level of income exempt from regular federal
  income tax and California state personal income tax.

  Fixed Income Funds

  U.S. Government Fund seeks a high level of current income from investment in
  U.S. Government securities while maintaining a dollar-weighted average
  maturity between one and ten years.

  Fixed Income Fund seeks a high level of current income from investment in
  fixed income securities while maintaining a dollar-weighted average maturity
  between seven and twelve years.

  Intermediate Tax-Exempt Fund seeks a high level of current income exempt from
  regular federal income tax by investing in municipal instruments while
  maintaining a dollar-weighted average maturity between three and ten years.

  Tax-Exempt Fund seeks a high level of current income exempt from regular
  federal income tax by investing in municipal instruments while maintaining a
  dollar-weighted average maturity between ten and thirty years.

  International Fixed Income Fund seeks to maximize total return consistent
  with reasonable risk by investing primarily in bonds and other fixed income
  securities of foreign issuers while maintaining a dollar-weighted average
  maturity between three and eleven years.

  Equity Funds

  Income Equity Fund seeks a high level of current income by investing
  principally in convertible and other equity securities with long-term capital
  appreciation as a secondary objective.

  Growth Equity Fund seeks long-term capital appreciation by investing
  principally in common and preferred stocks and convertible securities of
  growth companies.

  Select Equity Fund seeks long-term capital appreciation by investing
  principally in common stocks of growth companies.

  Small Cap Growth Fund seeks long-term capital appreciation by investing
  principally in equity securities of companies with market capitalizations
  that are below the median capitalization of stocks listed on the New York
  Stock Exchange.
  
  International Growth Equity Fund seeks long-term capital appreciation by
  investing principally in equity securities of foreign issuers.

  International Select Equity Fund seeks long-term capital appreciation by
  investing principally in common stocks of foreign issuers that Northern Trust
  believes to be growing more rapidly than their respective markets.

  Technology Fund seeks long-term capital appreciation by investing principally
  in equity securities and securities convertible into common stock.

  Each portfolio is described in further detail in this Prospectus.

Q:Who advises the Funds?

A:The Northern Trust Company ("Northern Trust"), the principal subsidiary of
  Northern Trust Corporation, serves as investment adviser to Northern Funds.
  Northern Trust also serves as the Funds' transfer agent and custodian.
  Northern Trust administered over $500 billion in assets as of March 31, 1995
  in various capacities, including approximately $88 billion for which Northern
  Trust had investment management responsibility. See "Management."

Q:How does one buy and redeem shares?

A:Shares of the Funds are distributed by Sunstone Financial Group, Inc. Shares
  may be purchased directly from Northern Funds or through a qualified account
  at Northern Trust or certain other institutions. Shares are sold and redeemed
  without any purchase or redemption charge by Northern Funds, although
  Northern Trust and other institutions may charge their customers for their
  services in connection with investments. The minimum initial investment for
  purchases directly with Northern Funds is $2,500 ($500 for an IRA; $250 for a
  spousal IRA; and $250 under the Automatic Investment Plan). The minimum for
  subsequent investments is $50. Northern Trust or other organizations may
  impose particular customer account requirements such as minimum account
  sizes. Share purchase and redemption information for both purchases and
  redemptions directly with Northern Funds or through qualified accounts is
  provided below under "Opening an Account and Purchasing Shares" and
  "Redeeming and Exchanging Shares."

Q:What shareholder services are available?

A:Northern Funds offers the advantage of automatic dividend reinvestment in
  shares of the same Fund or in another Northern Fund, exchange privileges
  among Northern Funds should your investment goals change, telephone exchange
  and redemption privileges, an Automatic Investment Plan (with a reduced
  minimum initial investment) and a Systematic Withdrawal Plan. See "Opening
  an Account and Purchasing Shares" and "Redeeming and Exchanging Shares."
  Shares of Northern Funds may be purchased in connection with a variety of
  tax-sheltered retirement plans. See "Further Information - Retirement
  Plans."

Q:When are distributions made?

A:Dividends from the net investment income of the Money Market Funds, the U.S.
  Government Fund, the Fixed Income Fund, the Intermediate Tax-Exempt Fund and
  the Tax-Exempt Fund are declared daily and paid monthly. Dividends of the
  International Fixed Income Fund are declared daily and paid quarterly.
  Dividends of the other Funds are declared and paid as follows: Income Equity
  Fund - monthly; Growth Equity Fund - quarterly; Select Equity Fund, Small Cap
  Growth Fund, International Growth Equity Fund, International Select Equity
  Fund and Technology Fund - annually.

  Net realized capital gains of each Fund are distributed at least annually.
  See "Distributions and Taxes."

Q:What are the potential risks presented by the Funds' investment practices?
A:Investing in the Funds involves the risks common to any investment in
  securities. The market value of fixed income securities, which constitutes a
  major part of the investments of several of the Funds, will generally vary
  inversely with changes in prevailing interest rates as described below under
  "Investment Information - Fundamentals of Fixed Income Investing." The
  fixed income funds will invest in securities rated investment grade or
  comparable unrated securities. However, the international funds may invest up
  to 5%, and the equity funds may invest up to 10% of their total assets (35%
  for the Income Equity Fund), in convertible securities rated below investment
  grade. Several of the Funds may invest a substantial portion of their assets
  in foreign securities directly, and indirectly through the purchase of
  European Depository Receipts ("EDRs") and American Depository Receipts
  ("ADRs"). These Funds may also enter into foreign currency exchange
  contracts. Foreign securities may be subject to certain risks in addition to
  those inherent in U.S. investments, including the possible imposition of
  exchange control regulations, freezes on convertibility of currency and
  adverse changes in foreign currency exchange rates. The International Fixed
  Income Fund, as well as Northern Funds' two other international investment
  portfolios, may concentrate its investments in issuers located in certain
  industrialized countries and may also invest in issuers located in emerging
  countries. Certain risks are presented by the Municipal Money Market Fund and
  the California Municipal Money Market Fund as a result of their investments
  in California Municipal Instruments. See "Municipal Money Market Funds -
  Additional Risks and Considerations Regarding California Investments" and
  "Municipal Money Market Fund - Orange County Notes." In addition, the
  California Municipal Money Market and International Fixed Income Funds are
  non-diversified funds which means their portfolios can be dependent upon the
  performance of a smaller number of securities than is the case with the other
  Funds which are diversified funds. Each Fund (other than the Money Market
  Funds) may engage in certain transactions involving puts and calls. Further,
  certain of the Funds may invest in the stocks of smaller companies which
  present greater risk and price volatility. The Funds may lend their
  securities and enter into repurchase agreements and reverse repurchase
  agreements with qualifying banks and broker/dealers which may involve
  leveraging. The Funds may also purchase eligible securities on a "when-
  issued" basis and may purchase or sell securities on a "forward
  commitment" or "delayed settlement" basis. The Funds may invest up to 15%
  (10% in the case of the Money Market Funds) of their net assets in illiquid
  securities.

  The Funds may also purchase "derivative" instruments. "Derivative"
  instruments are instruments that derive value from the performance of
  underlying assets, interest or currency exchange rates, or indices, and
  include (but are not limited to) interest rate and currency swaps, futures
  contracts, options, forward currency contracts and structured debt
  obligations (including collateralized mortgage obligations and other types of
  asset-backed securities, "stripped" securities and various floating rate
  instruments, including "inverse" floaters). Derivative instruments present,
  to varying degrees, market risk that the performance of the underlying
  assets, exchange rates or indices will decline; credit risk that the dealer
  or other counterparty to the transaction will fail to pay its obligations;
  volatility and leveraging risk that, if interest or exchange rates change
  adversely, the value of the "derivative" instrument will decline more than
  the assets, rates or indices on which it is based; liquidity risk that a Fund
  will be unable to sell a "derivative" instrument when it wants because of
  lack of market depth or market disruption; pricing risk that the value of a
  "derivative" instrument (such as an option) will not correlate exactly to
  the value of the underlying assets, rates or indices on which it is based;
  and operations risk that loss will occur as a result of inadequate systems
  and controls, human error or otherwise. Some "derivative" instruments are
  more complex than others, and for those instruments that have been developed
  recently, data is lacking regarding their actual performance over complete
  market cycles. Northern Trust will evaluate the risks presented by the
  "derivative" instruments purchased by the Funds, and will determine, in
  connection with its day-to-day management of the Funds, how they will be used
  in furtherance of the Funds' investment objectives. It is possible, however,
  that Northern Trust's evaluations will prove to be inaccurate or incomplete
  and, even when accurate and complete, it is possible that the Funds will,
  because of the risks discussed above, incur loss as a result of their
  investments in "derivative" instruments.

  The foregoing is a summary of certain of the potential risks presented by the
  Funds' investment practices. Details regarding these and other risks
  presented by the policies of the Funds are described under "Additional
  Investment Information, Risks and Considerations."

EXPENSE SUMMARY

The following tables will help you understand the expenses you will bear
directly or indirectly as a shareholder of the Funds. Shareholder Transaction
Expenses are charges you pay when buying or selling Fund shares. Annual
Operating Expenses are paid out of a Fund's assets and include fees for
portfolio management, maintenance of shareholder accounts, general Fund
administration, accounting and other services. Examples based on this
information are also provided.

                                                               U.S.
                                                              Gov't. California
                                        U.S. Gov't. Municipal Select  Municipal
                                 Money     Money     Money    Money     Money
                                 Market   Market     Market   Market    Market
                                 ------   ------     ------   ------    ------
Shareholder Transaction Expenses
  Maximum Sales Charge Imposed
    on Purchases................  None      None      None     None      None
  Sales Charge Imposed on
    Reinvested Distributions....  None      None      None     None      None
  Deferred Sales Charge Imposed
    on Redemptions..............  None      None      None     None      None
  Redemption Fees<F1>...........  None      None      None     None      None
  Exchange Fees.................  None      None      None     None      None

Annual Operating Expenses
(as a percentage of average net
 assets)
  Management Fees (after fee
    reductions and waivers)....  0.40%     0.40%     0.40%    0.25%     0.30%
  12b-1 Fees...................  0.00%     0.00%     0.00%    0.00%     0.00%
  Other Expenses (after fee
    reductions and
    reimbursements)............  0.15%     0.15%     0.15%    0.15%     0.15%
                                 -----     -----     -----    -----     ----- 
Total Operating Expenses <F2>
  After Fee Reductions, Waivers
    and Reimbursements           0.55%     0.55%     0.55%    0.40%     0.45%
                                 =====    =====      =====    =====     =====

Example of Expenses <F3>
  Based on the foregoing
   table, you would pay the
   following expenses on a
   $1,000 investment, assuming
   a 5% annual return and
   redemption at the end of
   each time period:
  One Year.....................     $6        $6        $6       $4        $5
  Three Years..................    $18       $18       $18      $13       $15
  Five Years...................    $32       $32       $32      $23       $26
  Ten Years....................    $71       $71       $71      $52       $58

<F1> A fee of $15.00 may be applicable for each wire redemption.
<F2> The table and example shown do not reflect any charges that may be imposed
 by Northern Trust or other institutions on
 their customers.
<F3> The example should not be considered a representation of past or future
 expenses or rates of return. Actual operating expenses
 and investment return may be more or less than those shown.



The above information for the Money Market Fund, U.S. Government Money Market
Fund and Municipal Money Market Fund reflects the expenses these Funds incurred
for Northern Funds' fiscal year ended March 31, 1995 as restated to reflect
current voluntary fee reductions. The information for the U.S. Government 
Select Money Market Fund and California Municipal Money Market Fund reflect the
estimated annualized expenses these Funds expect to pay during the remainder of
the current fiscal year. Without fee reductions, waivers, and reimbursements,
"Management Fees" would be 0.60% for each Fund; "Other Expenses" would be
0.36%, 0.41%, 0.35%, 0.33% and 0.30%, respectively, for the Money Market, U.S.
Government Money Market, Municipal Money Market, U.S. Government Select Money
Market and California Municipal Money Market Funds; and "Total Operating
Expenses" would be 0.96%, 1.01%, 0.95%, 0.93% and 0.90%, respectively. In
addition, during the last fiscal year these Funds did not, and during the
current fiscal year the Funds do not expect to, pay any 12b-1 fees (otherwise
payable at an annual rate of up to 0.25%) under Northern Funds' Distribution 
and Service Plan. For more expense information, see "Management."

                                                                       Inter-
                                                                      national
                                  U.S.     Fixed Intermediate  Tax-    Fixed
                               Government Income  Tax-Exempt  Exempt   Income
                               ---------- ------ -----------  ------- --------
Shareholder Transaction Expenses
  Maximum Sales Charge Imposed
    on Purchases...............  None    None      None       None      None
  Sales Charge Imposed on
    Reinvested Distributions...  None    None      None       None      None
  Deferred Sales Charge Imposed
    on Redemptions.............  None    None      None       None      None
  Redemption Fees <F4>.........  None    None      None       None      None
  Exchange Fees................  None    None      None       None      None

Annual Operating Expenses
(as a percentage of average net
 assets)
  Management Fees (after fee
    reductions and waivers)...  0.75%   0.75%     0.70%      0.70%     0.90%
  12b-1 Fees..................  0.00%   0.00%     0.00%      0.00%     0.00%
  Other Expenses (after fee
    reductions and
    reimbursements)...........  0.15%   0.15%     0.15%      0.15%     0.25%
                                -----   -----     -----      -----     -----
Total Operating Expenses <F5>
  After Fee Reductions, Waivers
    and Reimbursements........  0.90%   0.90%     0.85%      0.85%     1.15%
                                =====   =====     =====      =====     =====

Example of Expenses <F6>
  Based on the foregoing table,
   you would pay the following
   expenses on a $1,000
   investment, assuming a 5%
   annual return and redemption
    at the end of each time
    period:
  One Year....................     $9      $9        $9         $9       $12
  Three Years.................    $30     $30       $28        $28       $38
  Five Years..................    $51     $51       $48        $48       $65
  Ten Years...................   $114    $114      $108       $108      $144

<F4> A fee of $15.00 may be applicable for each wire redemption.
<F5> The table and example shown do not reflect any charges that may be imposed
 by Northern Trust or other institutions on
 their customers.
<F6> The example should not be considered a representation of past or future
 expenses or rates of return. Actual operating expenses
 and investment return may be more or less than those shown.



The above information for the U.S. Government Fund, Fixed Income Fund,
Intermediate Tax-Exempt Fund, Tax-Exempt Fund and International Fixed Income
Fund reflects the expenses these Funds incurred for Northern Funds' fiscal year
ended March 31, 1995. Without fee reductions, waivers and reimbursements,
"Management Fees" would be 0.75% for the Intermediate Tax-Exempt and Tax-
Exempt Funds; "Other Expenses" would be 0.37%, 0.43%, 0.34%, 0.36% and 1.52%,
respectively, for the U.S. Government, Fixed Income, Intermediate Tax-Exempt,
Tax-Exempt and International Fixed Income Funds; and "Total Operating
Expenses" would be 1.12%, 1.18%, 1.09%, 1.11% and 2.42%, respectively. In
addition, during the last fiscal year these Funds did not, and during the
current fiscal year the Funds do not expect to, pay any 12b-1 fees (otherwise
payable at an annual rate of up to 0.25%) under Northern Funds' Distribution 
and Service Plan. For more expense information, see "Management."


                                                  Small  Int'l. Int'l.  Tech-
                           Income Growth  Select   Cap   Growth Select  nology
                           Equity Equity  Equity Growth  Equity Equity   Fund
                           ------ ------  ------ ------  ------ ------  -----
Shareholder Transaction
 Expenses
  Maximum Sales Charge
    Imposed on Purchases     None   None   None    None   None    None   None
  Sales Charge Imposed on
    Reinvested
    Distributions            None   None   None    None   None    None   None
  Deferred Sales Charge
    Imposed on
    Redemptions              None   None   None    None   None    None   None
  Redemption Fees <F7>       None   None   None    None   None    None   None
  Exchange Fees              None   None   None    None   None    None   None

Annual Operating Expenses
 (as a percentage of average
 net assets)
  Management Fees (after
   fee reductions and
   waivers)                 0.85%  0.85%  0.85%   0.85%  1.00%   1.00%  1.00%
  12b-1 Fees                0.00%  0.00%  0.00%   0.00%  0.00%   0.00%  0.00%
  Other Expenses (after 
   fee reductions and
   reimbursements)          0.15%  0.15%  0.15%   0.15%  0.25%   0.25%  0.25%
                            -----  -----  -----   -----  -----   -----  -----
Total Operating Expenses <F8>
  After Fee Reductions,
    Waivers and
    Reimbursements          1.00%  1.00%  1.00%   1.00%  1.25%   1.25%  1.25%
                            =====  =====  =====   =====  =====   =====  =====

Example of Expenses <F9>
  Based on the foregoing
   table, you would pay
   the following expenses
   on a $1,000 investment,
   assuming a 5% annual
   return and redemption
   at the end of each time
   period:
  One Year................    $10    $10    $10     $10    $13     $13    $13
  Three Years.............    $33    $33    $33     $33    $41     $41    $41
  Five Years..............    $57    $57    $57     $57    $71     $71    N/A
  Ten Years...............   $126   $126   $126    $126   $155    $155    N/A

<F7> A fee of $15.00 may be applicable for each wire redemption.
<F8> The table and example shown do not reflect any charges that may be imposed
 by Northern Trust or other institutions on
 their customers.
<F9> The example should not be considered a representation of past or future
 expenses or rates of return. Actual operating expenses
 and investment return may be more or less than those shown.



The above information for the Income Equity Fund, Growth Equity Fund, Select
Equity Fund, Small Cap Growth Fund, International Growth Equity Fund and
International Select Equity Fund reflects the expenses these Funds incurred for
Northern Funds' fiscal year ended March 31, 1995. The information for the
Technology Fund reflects the estimated expenses this Fund expects to pay 
during the current fiscal year. Without the fee reductions, waivers and 
reimbursements, "Management Fees" would be 1.00%, 1.00%, 1.20%, 1.20%, 1.20%, 
1.20% and 1.20%,respectively, of the average daily net assets of the Income 
Equity, Growth Equity, Select Equity, Small Cap Growth, International Growth
Equity,International Select Equity and Technology Funds; "Other Expenses" 
would be 0.55%, 0.40%, 1.41%, 0.56%, 0.51%, 0.55% and 0.36%, respectively; 
and "Total Operating Expenses" would be 1.55%, 1.40%, 2.61%, 1.76%, 1.71%, 
1.75% and 1.56%, respectively. In addition, during the last fiscal year 
these Funds did not, and during the current fiscal year the Funds do not 
expect to, pay any 12b-1 fees (otherwise payable at an annual rate of up 
to 0.25%) under Northern Funds' Distribution and Service Plan. For more 
expense information, see "Management."


FINANCIAL HIGHLIGHTS

The "Financial Highlights" in the following tables set forth selected per
share data and ratios for each of the Funds for the period ended March 31, 
1995, except for the Technology Fund which had not yet commenced operations. 
The information has been audited by Northern Funds' independent auditors and 
should be read in conjunction with the financial statements and related notes
incorporated by reference into the Additional Statement. Information about the
performance of the Funds is contained in Northern Funds' annual report to
shareholders, which may be obtained without charge by calling the Northern 
Funds Center, at 1-800-595-9111 or writing P.O. Box 75986, Chicago, Illinois 
60690-6319.

MONEY MARKET FUNDS

                                 Period Ending March 31, 1995
                                          (Audited)

                                                               U.S.
                                                              Gov't. California
                                       U.S. Gov't.Municipal   Select  Municipal
                                Money     Money     Money     Money     Money
                                Market    Market    Market    Market   Market
                              Fund<F10> Fund<F10> Fund<F10> Fund<F11> Fund<F12>
                               --------  -------- ---------  -------- --------

Net Asset Value, Beginning
 of Period                     $ 1.00    $ 1.00    $ 1.00    $ 1.00    $ 1.00
Income from Investment
 Operations:
  Net investment income           0.04      0.04      0.03      0.02      0.01
                                 -----     -----     -----     -----     -----
Less Distributions:
  Dividends from net investment
   income                       (0.04)    (0.04)    (0.03)    (0.02)    (0.01)
                                ------    ------    ------    ------    ------
Net Asset Value, End of Period  $ 1.00    $ 1.00    $ 1.00    $ 1.00     $1.00
                                ======    ======    ======    ======     =====


Total Return <F13>               4.69%     4.61%      2.99%    5.86%     3.80%

Supplemental Data and Ratios:
  Net assets, in thousands,
    end of period             $894,279  $227,543   $927,747  $82,162  $161,316
  Ratio of net expenses to
    average net
    assets <F13> <F14>           0.45%     0.45%      0.45%    0.30%     0.35%
  Ratio of net investment
    income to average net
    assets <F13> <F14>           4.94%     4.93%      3.10%    5.84%     3.78%


<F10> Commenced investment operations on April 11, 1994.

<F11> Commenced investment operations on December 12, 1994.

<F12> Commenced investment operations on November 29, 1994.

<F13> Annualized.

<F14> Net of voluntary fee waivers and reimbursements. Without fee waivers and
 reimbursements, the ratio of expenses to average net assets would have been
 0.96% for the Money Market Fund; 1.01% for the U.S. Government Money Market
 Fund; 0.95% for the Municipal Money Market Fund; 1.32% for the U.S. Government
 Select Money Market Fund; and 1.07% for the California Municipal Money Market
 Fund; and the ratio of net investment income to average net assets would have
 been 4.43% for the Money Market Fund; 4.37% for the U.S. Government Money
 Market Fund; 2.60% for the Municipal Money Market Fund; 4.82% for the U.S.
 Government Select Money Market Fund; and 3.06% for the California Municipal
 Money Market Fund.


FIXED INCOME FUNDS

                                 Period Ending March 31, 1995
                                          (Audited)
                                                                      Inter-
                              U.S.      Fixed  Intermediate Tax-    national
                           Government   Income  Tax-Exempt Exempt  Fixed Income
                           Fund<F15>  Fund<F15> Fund<F15> Fund<F15>  Fund<F15>
                           ---------  --------  --------  ---------  ---------

Net Asset Value, Beginning
 of Period                   $10.00    $10.00    $10.00    $10.00     $10.00
Income (Loss) from Investment
  Operations:
  Net investment income        0.50      0.62      0.40      0.48       0.58
  Net realized and unrealized
   gains (losses) on
   investments and foreign
   currency transactions     (0.16)    (0.22)      0.03      0.08       0.64
                             ------    ------     -----     -----      -----
Total income from investment
  operations                   0.34     0.40       0.43      0.56       1.22
                             ------    ------     -----     -----      -----
Less Distributions:
  Dividends from net          
    investment income        (0.50)    (0.62)    (0.40)    (0.48)     (0.56)
  Dividends in excess of net
    investment income             -         -         -         -     (0.02)
                             ------    ------    ------    ------     ------
Total distributions          (0.50)    (0.62)    (0.40)    (0.48)     (0.58)
                             ------    ------    ------    ------     ------
Net Asset Value, End of
 Period                      $9.84     $9.78    $10.03     $10.08    $10.64
                             =====     =====    ======     ======    ======

Total Return                  3.49%     4.16%     4.38%     5.78%    12.77%

Supplemental Data and Ratios:
  Net assets, in thousands,
    end of period          $116,443   $65,929  $221,251  $118,690   $13,028
  Ratio of net expenses to
    average net assets <F16>   0.90%    0.90%     0.85%     0.85%     1.15%
  Ratio of net investment
   income to average net
   assets<F16>                5.20%     6.48%     4.09%     4.95%     5.96%

Portfolio Turnover Rate      42.29%    55.27%    78.87%    54.94%    43.24%

<F15> Commenced investment operations on April 1, 1994.

<F16> Net of voluntary fee waivers and reimbursements. Without fee waivers and
 reimbursements, the ratio of expenses to average net assets would have been
 1.12% for the U.S. Government Fund; 1.18% for the Fixed Income Fund; 1.09% for
 the Intermediate Tax-Exempt Fund; 1.11% for the Tax-Exempt Fund; and 2.42% for
 the International Fixed Income Fund; and the ratio of net investment income to
 average net assets would have been 4.98% for the U.S. Government Fund; 6.20%
 for the Fixed Income Fund; 3.85% for the Intermediate Tax-Exempt Fund; 4.69%
 for the Tax-Exempt Fund; and 4.69% for the International Fixed Income Fund.


EQUITY FUNDS

                                 Period Ending March 31, 1995
                                          (Audited)

                                                   Small     Int'l.   Int'l.
                      Income    Growth    Select    Cap      Growth   Select
                      Equity    Equity    Equity   Growth    Equity   Equity
                     Fund<F17> Fund<F17>Fund<F18> Fund<F17> Fund<F17>Fund<F19>
                     ---------  -------  -------   --------  -------- --------

Net Asset Value,
 Beginning of
 Period               $10.00    $10.00    $10.00  $10.00     $10.00   $10.00
Income (Loss) from
 Investment
 Operations:
   Net investment
    income              0.29      0.08      0.06    0.11       0.04     0.04
   Net realized and
    unrealized gains
    (losses)
     on investments,
    futures contracts
     and foreign
     currency
     transactions     (0.08)      0.60      0.75  (0.05)     (0.31)   (0.23)
                      ------     -----     -----  ------     ------   ------
Total from investment
 operations             0.21      0.68      0.81    0.06     (0.27)   (0.19)
                      ------     -----     -----  ------     ------   ------
Less Distributions:
  Dividends from net
   investment income   (0.26)   (0.07)    (0.04)  (0.08)     (0.03)   (0.03)
  Dividends in excess
   of accumulated
    net realized gains
    (losses) on
    investment
    transactions           -         -         -       -     (0.09)        -
                       ------   ------    ------  ------     ------   ------
Total distributions    (0.26)   (0.07)    (0.04)  (0.08)     (0.12)   (0.03)
                       ------   ------    ------  ------     ------   ------
Net Asset Value,
 End of Period        $ 9.95    $10.61    $10.77  $ 9.98     $ 9.61   $ 9.78
                       ======   ======    ======   ======    ======   ======

Total Return           2.21%     6.90%     8.18%   0.57%   (2.65)%   (1.95)%

Supplemental Data
 and Ratios:
  Net assets, in
   thousands,
   end of period     $38,954  $113,185   $15,123 $76,627  $114,673   $71,958
  Ratio of net expenses
   to average
   net assets<F20><F21>  1.00%   1.00%     1.00%   1.00%     1.25%     1.25%
    Ratio of net
     investment income
     to average net
      assets<F20><F21>  3.08%    0.86%     0.82%   1.36%     0.47%     0.47%

Portfolio Turnover
 Rate                 45.68%    82.90%    48.88%  82.46%   158.31%    97.69%



<F17> Commenced investment operations on April 1, 1994.

<F18> Commenced investment operations on April 6, 1994.

<F19> Commenced investment operations on April 5, 1994.

<F20> Annualized.

<F21> Net of voluntary fee waivers and reimbursements. Without fee waivers and
 reimbursements, the ratio of expenses to average net assets would have been
 1.55% for the Income Equity Fund; 1.40% for the Growth Equity Fund; 2.61% for
 the Select Equity Fund; 1.76% for the Small Cap Growth Fund; 1.71% for the
 International Growth Equity Fund; and 1.75% for the International Select
 Equity Fund; and the ratio of net investment income (loss) to average net
 assets would have been 2.53% for the Income Equity Fund; 0.46% for the Growth
 Equity Fund; (0.79)% for the Select Equity Fund; 0.60% for the Small Cap
 Growth Fund; 0.01% for the International Growth Equity Fund; and (0.03)% for
 the International Select Equity Fund.


INVESTMENT INFORMATION

The investment objectives and policies of each of the Funds are described 
below. Additional information regarding the securities, investment techniques 
and restrictions of each Fund are described under "Additional Investment
Information, Risks and Considerations."

Money Market Funds

Money Market Fund. The investment objective of the Money Market Fund is to seek
to maximize current income to the extent consistent with the preservation of
capital and the maintenance of liquidity by investing exclusively in high-
quality money market instruments. In pursuing its investment objective, the
Money Market Fund may invest in a broad range of government, bank and 
commercial obligations that are available in the money markets. In particular, 
the Fund may invest in:

  (A) U.S. dollar-denominated obligations of U.S. banks with total assets in
excess of $1 billion (including obligations of foreign branches of such banks);

  (B) U.S. dollar-denominated obligations of foreign commercial banks with 
total assets in excess of $5 billion;

  (C) high-quality commercial paper and other obligations issued or guaranteed
by U.S. and foreign corporations and other issuers rated (at the time of
purchase) A-2 or higher by Standard & Poor's Ratings Group ("S&P"), Prime-2 or
higher by Moody's Investors Service, Inc. ("Moody's"), Duff 2 or higher by
Duff & Phelps Credit Co. ("Duff"), F-2 or higher by Fitch Investors Service,
Inc. ("Fitch") or TBW-2 or higher by Thomson BankWatch, Inc. ("TBW"), as 
well as high-quality corporate bonds rated (at the time of purchase) AA or 
higher by S&P, D&P, Fitch or TBW or Aa or higher by Moody's;

  (D) unrated notes, paper and other instruments that are of comparable quality
as determined by Northern Trust under guidelines established by Northern Funds'
Board of Trustees and are subsequently ratified by the Board;

  (E) asset-backed securities (including interests in pools of assets such as
mortgages, installment purchase obligations and credit card receivables);

  (F) securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies or instrumentalities and custodial receipts with
respect thereto;

  (G) dollar-denominated securities issued or guaranteed by one or more foreign
governments or political subdivisions, agencies or instrumentalities thereof;

  (H) repurchase agreements relating to the above instruments; and

  (I) securities issued or guaranteed by state or local governmental bodies.

U.S. Government Money Market Fund. The investment objective of the U.S.
Government Money Market Fund is also to seek to maximize current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity by investing exclusively in high-quality money market instruments. 
The U.S. Government Money Market Fund seeks to achieve its investment objective 
by investing in:

  (A) securities issued or guaranteed as to principal and interest by the U.S.
Government or by any of its agencies or instrumentalities (including the
International Bank for Reconstruction and Development);

  (B) repurchase agreements relating to the above instruments; and

  (C) custodial receipts with respect to securities issued or guaranteed as to
principal and interest by the U.S. Government or by any of its agencies or
instrumentalities.

Municipal Money Market Fund. The investment objective of the Municipal Money
Market Fund is to seek, to the extent consistent with the preservation of
capital and prescribed portfolio standards, a high level of income exempt from
regular federal income tax by investing primarily in municipal instruments. The
Municipal Money Market Fund seeks to achieve its investment objective by
investing exclusively in:

  (A) fixed and variable rate notes and similar debt instruments rated MIG-2,
VMIG-2 or Prime-2 or higher by Moody's, SP-2 or A-2 or higher by S&P, AA or
higher by D&P or F-2 or higher by Fitch;

  (B) tax-exempt commercial paper and similar debt instruments rated Prime-2 or
higher by Moody's, A-2 or higher by S&P, Duff 2 or higher by D&P or F-2 or
higher by Fitch;

  (C) municipal bonds rated Aa or higher by Moody's or AA or higher by S&P, D&P
or Fitch;

  (D) unrated notes, paper or other instruments that are of comparable quality
as determined by Northern Trust under guidelines established by Northern Funds'
Board of Trustees; and

  (E) municipal bonds and notes which are guaranteed as to principal and
interest by the U.S. Government or an agency or instrumentality thereof or 
which otherwise depend directly or indirectly on the credit of the United 
States.

U.S. Government Select Money Market Fund. The investment objective of the U.S.
Government Select Money Market Fund is to seek to maximize current income to 
the extent consistent with the preservation of capital and maintenance of 
liquidity by investing exclusively in high-quality money market instruments. 
The U.S. Government Select Money Market Fund seeks to achieve its investment 
objective by investing solely in securities issued or guaranteed as to 
principal and interest by the U.S. Government or by any of its agencies 
or instrumentalities. In making investment decisions, Northern Trust will 
seek to acquire, during normal market conditions, only those U.S. Government 
securities the interest on which is generally exempt from state income 
taxation. Securities generally eligible for this exemption include those 
issued by the U.S. Treasury and certain U.S. Government agencies and 
instrumentalities, including the Tennessee Valley Authority, Federal Home 
Loan Bank, Federal Farm Credit Banks Funding Corp. and the Student 
Loan Marketing Association. The Fund intends to limit investments to 
only the foregoing exempt U.S. Government securities. However,under 
extraordinary circumstances, such as when appropriate exempt securities
are unavailable, the Fund may make investments in non-exempt U.S. Government
securities, and may hold uninvested cash. See "Distributions and Taxes" below
for certain tax considerations.

California Municipal Money Market Fund. The investment objective of the
California Municipal Money Market Fund is to seek to provide, to the extent
consistent with the preservation of capital and prescribed portfolio standards,
a high level of income exempt from regular federal income tax and California
state personal income tax. The California Municipal Money Market Fund seeks to
achieve its investment objective by investing in:

  (A) fixed and variable rate notes and similar debt instruments rated MIG-2,
VMIG-2 or Prime-2 or higher by Moody's, SP-2 or A-2 or higher by S&P, AA or
higher by Duff or F-2 or higher by Fitch;

  (B) tax-exempt commercial paper and similar debt instruments rated Prime-2 or
higher by Moody's, A-2 or higher by S&P, Duff 2 or higher by D&P or F-2 or
higher by Fitch;
  (C) municipal bonds rated Aa or higher by Moody's or AA or higher by S&P, 
  Duff or Fitch;

  (D) unrated notes, paper or other instruments that are of comparable quality
as determined by Northern Trust under guidelines established by Northern Funds'
Board of Trustees; and

  (E) municipal bonds and notes which are guaranteed as to principal and
interest by the U.S. Government or an agency or instrumentality thereof or 
which otherwise depend directly or indirectly on the credit of the United 
States.

Other Information. All securities acquired by the Money Market Funds will be
determined at the time of purchase by Northern Trust, under guidelines
established by Northern Funds' Board of Trustees, to present minimal credit
risks and will be "Eligible Securities" as defined by the Securities and
Exchange Commission (the "SEC"). Eligible Securities are (a) securities that
either (i) have short-term debt ratings at the time of purchase in the two
highest rating categories by at least two unaffiliated nationally recognized
statistical rating organizations ("NRSROs") (or one NRSRO if the security is
rated by only one NRSRO), or (ii) are comparable in priority and security with
an instrument issued by an issuer which has such ratings, and (b) securities
that are unrated (including securities of issuers that have long-term but not
short-term ratings) but are of comparable quality as determined in accordance
with guidelines approved by the Board of Trustees.
  Each Money Market Fund is managed so that the average maturity of all
instruments in the Fund (on a dollar-weighted basis) will not exceed 90 days. 
In no event will the Money Market Funds purchase any securities which mature 
more than 397 days from the date of purchase (except for certain variable and
floating rate instruments and securities collateralizing repurchase 
agreements). Securities in which the Money Market Funds invest may not 
earn as high a level of income as longer term or lower quality securities, 
which generally have greater market risk and more fluctuation in market value.
  As a matter of fundamental policy, changeable only with the approval of the
holders of a majority of the outstanding shares of a Fund, at least 80% of the
annual gross income of the Municipal Money Market Fund and the California
Municipal Money Market Fund will be derived from debt instruments, the interest
on which is, in the opinion of bond counsel or counsel for the issuers, exempt
from regular income tax ("Municipal Instruments"), except in extraordinary
circumstances such as when Northern Trust believes that market conditions
indicate that the Fund should adopt a temporary defensive posture by holding
uninvested cash or investing in taxable short-term securities ("Taxable
Investments"). In addition, as a non-fundamental policy, under normal market
conditions at least 65% of the value of the California Municipal Money Market
Fund's total assets will be invested in Municipal Instruments the interest on
which, in the opinion of bond counsel for the issuers, is exempt from 
California state personal income tax ("California Municipal Instruments"). 
These opinions may contain various assumptions, qualifications or exceptions 
that are reasonably acceptable to Northern Trust. The Municipal Money Market 
and California Municipal Money Market Funds are not limited in the amount of 
their assets that may be invested in "private activity bonds" the interest 
on which may be treated as an item of tax preference to shareholders under 
the federal alternative minimum tax. Taxable Investments will consist 
exclusively of instruments that may be purchased by the Money Market Fund. 
Under normal market conditions, Taxable Investments will not exceed 20% 
of the value of the total assets of either Fund; during temporary defensive 
periods, however, all or any portion of a Fund's assets may be invested 
in such instruments.
  The California Municipal Money Market Fund is classified as a non-diversified
investment company under the Investment Company Act of 1940 (the "1940 Act").
Investment return on a non-diversified portfolio typically is dependent upon 
the performance of a smaller number of securities relative to the number held 
in a diversified portfolio. Consequently, the change in value of any one 
security may affect the overall value of a non-diversified portfolio more 
than it would a diversified portfolio.

Fixed Income Funds

U.S. Government Fund and Fixed Income Fund. The investment objective of both 
the U.S. Government Fund and the Fixed Income Fund is to seek a high level of
current income.
  The U.S. Government Fund seeks to achieve its objective by investing 
primarily (at least 65% of the value of its total assets during normal 
market conditions) in securities issued or guaranteed by the U.S. 
Government, its agencies and instrumentalities and repurchase agreements 
relating to such securities. These securities may include mortgage-related 
securities. The Fund's dollar-weighted average maturity will be between 
one and ten years.
  The Fixed Income Fund seeks to achieve its objective by investing in a broad
range of fixed income securities while maintaining a dollar-weighted average
maturity between seven and twelve years. The Fund will invest primarily (at
least 65% of the value of its total assets during normal market conditions) in
fixed income securities rated investment grade or better at the time of 
purchase (within the four highest rating categories of S&P, Duff, Fitch or 
Moody's) or, if unrated, of comparable quality as determined by Northern Trust.
These securities may be of all types and in any proportion, including 
obligations of the U.S. Government, its agencies or instrumentalities, 
obligations of foreign governments, obligations of U.S. and foreign 
corporations, obligations of U.S.and foreign banks and repurchase 
agreements relating to such obligations. The Fund may purchase bonds, 
debentures, mortgage and other asset-related securities, zero coupon 
bonds and convertible debentures. The Fund may also invest in short-term 
obligations that are permissible investments for the Money Market Fund. 
The obligations of a foreign issuer will not be purchased by the Fixed 
Income Fund if, as a result of the purchase, more than 20% of the Fund's
total assets will be invested in the obligations of issuers within a single
foreign country.
  Each Fund may utilize options, interest rate swaps and futures contracts and
the Fixed Income Fund may enter into forward currency contracts as described
more fully under "Additional Investment Information, Risks and
Considerations."

Intermediate Tax-Exempt Fund and Tax-Exempt Fund. The investment objective of
the Intermediate Tax-Exempt Fund is to seek a high level of current income
exempt from regular federal income tax by investing in a broad range of
Municipal Instruments while maintaining a dollar-weighted average maturity
between three and ten years. The Tax-Exempt Fund seeks a high level of current
income exempt from regular federal income tax by investing in a broad range of
Municipal Instruments while maintaining a dollar-weighted average maturity
between ten and thirty years.
  Municipal Instruments purchased by the Funds will be investment grade or
better at the time of purchase (within the four highest rating categories of
S&P, Duff, Fitch or Moody's) or, if unrated, of comparable quality as 
determined by Northern Trust. Short-term obligations will be limited to those
obligations that are permissible investments for the Municipal Money Market 
Fund.
  As a matter of fundamental policy, changeable only with the approval of the
holders of a majority of the outstanding shares of a Fund, at least 80% of each
Fund's annual gross income will be derived from Municipal Instruments, except 
in extraordinary circumstances, such as when Northern Trust believes that 
market conditions indicate that a Fund should adopt a temporary defensive 
posture by holding uninvested cash or investing in Taxable Investments. 
("Private activity bonds,"the interest from which may be treated as an 
item of tax preference to shareholders under the federal alternative minimum
tax ("AMT obligations"), will not be counted in determining a Fund's
investments in Municipal Instruments for this purpose.) Under normal
market conditions, Taxable Investments will not exceed 20% of the value
of the total assets of a Fund; during temporary defensive periods, 
however, all or any portion of a Fund's assets may be invested in such 
instruments. Taxable Investments will consist exclusively of instruments 
that may be purchased by the Fixed Income Fund. So long as other suitable 
Municipal Instruments are available for investment, neither Fund intends 
to invest in AMT obligations. Certain Municipal Instruments purchased by 
the Funds (such as "moral obligation" bonds) may be issued by issuers 
with a "moral" but not legal obligation to provide for the payment of 
the bonds. See "Additional Investment Information, Risks and Considerations 
- - Description of Securities and Investment Techniques - Municipal 
Instruments."

International Fixed Income Fund. The investment objective of the International
Fixed Income Fund is to seek to maximize total return consistent with 
reasonable risk. In pursuing its investment objective, the Fund invests 
primarily (at least 65% of the value of its total assets under normal market 
conditions) in a broad range of fixed income securities of foreign issuers. 
The Fund's dollar-weighted average maturity will range between three and 
eleven years.
  Securities purchased by the Fund will be rated investment grade or better at
the time of purchase (within the four highest rating categories of S&P, Duff,
Fitch or Moody's) or, if unrated, be of comparable quality as determined by
Northern Trust. These securities may include bonds, debentures, mortgage and
other asset-related securities, zero coupon bonds and convertible debentures
(i.e., debentures that may convert into other fixed income debt) of foreign
governments, their agencies, instrumentalities and political subdivisions;
supranational organizations (e.g., the European Investment Bank and Inter-
American Development Bank); and foreign corporations and banks. The Fund may
also invest in obligations of the U.S. Government, its agencies and
instrumentalities (including repurchase agreements collateralized by such
obligations) and of U.S. corporations and banks. Currently, a substantial
portion of the Fund's assets are invested in foreign governmental obligations.
Commercial paper and other short-term obligations acquired by the Fund will be
rated within the two highest rating categories at the time of purchase or, if
unrated, will be determined by Northern Trust to be of comparable quality.
  The International Fixed Income Fund may invest up to 5% of its total assets 
in non-investment grade convertible securities that are rated B or higher by at
least one major rating agency at the time of purchase or, if unrated, are
determined to be of comparable quality by Northern Trust. See "Additional
Investment Information, Risks and Considerations-Description of Securities and
Investment Techniques - Convertible Securities."The International Fixed Income
Fund may make indirect investments in foreign securities through the purchase 
of EDRs and ADRs and may enter into forward currency contracts and utilize 
options, swaps and futures contracts as more fully described under "Additional
Investment Information, Risks and Considerations." Pending investment, as a
temporary defensive measure and to meet anticipated redemption requests, the
International Fixed Income Fund may also invest, in accordance with its
investment policies, in various short-term obligations that are permissible
investments for the Money Market Fund, as well as other similar foreign
denominated short-term obligations.
  The International Fixed Income Fund is classified as a non-diversified
investment company under the 1940 Act. Investment return on a non-diversified
portfolio typically is dependent upon the performance of a smaller number of
securities relative to the number held in a diversified portfolio. 
Consequently,the change in value of any one security may affect the overall 
value of the International Fixed Income Fund more than it would the other 
Funds.

Equity Funds

Income Equity Fund. The investment objective of the Income Equity Fund is to
seek a high level of current income with long-term capital appreciation as a
secondary objective. The Fund seeks to achieve its objective by investing, 
under normal market conditions, at least 65% of the value of its total assets 
in income-producing convertible and other equity securities. Investments are
selected based on factors such as current income, prospects for growth and
possible capital appreciation. The Fund expects to make significant investments
in convertible securities and, at times, may be fully invested in such
securities. Generally, convertible securities will be rated investment grade or
better at the time of purchase or, if unrated, will be determined to be of
comparable quality by Northern Trust. Investment-grade securities are rated BBB
or higher by S&P, Duff or Fitch or Baa or higher by Moody's. Up to 35% of the
Fund's total assets may, however, be invested in non-investment grade
convertible securities (commonly referred to as "high risk" or "junk" bonds)
that are rated B or higher by at least one major rating agency or, if unrated,
are determined to be of comparable quality by Northern Trust. See "Additional
Investment Information, Risks and Considerations - Description of Securities 
and Investment Techniques - Convertible Securities."
  The Fund may also invest, under normal market conditions, up to 35% of its
total assets in a broad range of bonds and other fixed income securities rated
investment grade or better at the time of purchase. These fixed income
securities will be limited to the types that are permissible investments for 
the Fixed Income Fund. The Fund may utilize interest rate swaps as described 
more fully under "Additional Investment Information, Risks and 
Considerations."

Growth Equity Fund. The investment objective of the Growth Equity Fund is to
seek long-term capital appreciation. Any income received is incidental to this
objective. The Fund seeks to achieve its objective by investing primarily (at
least 65% of the value of its total assets under normal market conditions) in
equity securities (i.e.,common and preferred stocks and convertible securities)
of "growth companies" that Northern Trust believes have demonstrated above
average sales and earnings growth and return on equity relative to their peers
and the general market. Investments are selected based on factors such as
financial condition, market share, product leadership, earnings growth rates as
compared with those of relevant competitors, market valuation in comparison to
other stocks and the stock's own historical norms, improving relative price
trend and other investment criteria. The Fund will have broad sector exposure
and emphasis will be on issue selection rather than sector rotation.

Select Equity Fund. The investment objective of the Select Equity Fund is to
seek long-term capital appreciation. Any income received is incidental to this
objective. The Fund will pursue its objective by investing, under normal market
conditions, at least 65% of the value of its total assets in common stocks of
companies believed by Northern Trust to have superior quality and growth
characteristics. The Fund is not sector-weighted, and will purchase securities
of companies primarily based on their performance in the following areas over a
five year period: growth of sales, growth of earnings per share, consistency of
earnings per share growth, return on equity, and low debt relative to total
capital. As companies which perform relatively well in some or all of these
categories often retain their earnings to finance current and future growth,
they generally pay low or no dividends. The Fund intends to invest primarily in
the securities of companies which together with their predecessors have been in
continuous operation for at least five years and have stock market
capitalizations in excess of $500 million.

Small Cap Growth Fund. The investment objective of the Small Cap Growth Fund is
to seek long-term capital appreciation. Any income received is incidental to
this objective. In seeking to attain its investment objective, the Fund will
invest, under normal market conditions, at least 65% of the value of its total
assets in equity securities of companies with market capitalizations, at the
time of purchase, that are below the median capitalization of stocks listed on
the New York Stock Exchange. In selecting stocks, Northern Trust will consider
the relationship between price and book value, and other factors such as 
trading volume and bid-ask spreads in an effort to allow the Fund to achieve
cost-effective diversification.
  While Northern Trust believes that smaller companies can provide greater
growth potential than larger, more mature firms, investing in the securities of
such companies also involves greater risk, portfolio price volatility and cost.
Historically, small capitalization stocks, which will be the Fund's primary
investments, and stocks of recently organized companies, in which the Fund may
also invest, have been more volatile in price than the larger capitalization
stocks included in the Standard & Poor's 500 Stock Index (the "S&P 500").
Among the reasons for this greater price volatility are the lower degree of
market liquidity (the securities of companies with small stock market
capitalizations may trade less frequently and in limited volume) and the
greater sensitivity of small companies to changing economic conditions. For 
example,these companies are associated with higher investment risk due to
the greater business risks of small size and limited product lines, markets,
distribution channels and financial and managerial resources.
  The values of small company stocks will frequently fluctuate independently of
the values of larger company stocks. Small company stocks may decline in price
as large company stock prices rise, or rise in price as large company stock
prices decline. You should, therefore, expect that the net asset value of the
Fund's shares will be more volatile than, and may fluctuate independently of,
broad stock market indices such as the S&P 500.
  The additional costs associated with the acquisition of small company stocks
include brokerage costs, market impact costs (that is, the increase in market
prices which may result when the Fund purchases thinly traded stock) and the
effect of the bid-ask spread in small company stocks. These costs will be borne
by all shareholders and may negatively impact investment performance.

International Growth Equity Fund. The investment objective of the International
Growth Equity Fund is to seek long-term capital appreciation. Any income
received is incidental to this objective. The Fund seeks to achieve its
objective by investing principally in common and preferred stocks and 
securities convertible into common stock of foreign issuers. The Fund will, 
under normal market conditions, invest at least 65% of the value of its total 
assets in equity securities. The Fund emphasizes stocks of companies that
Northern Trust believes to be growing more rapidly than their respective 
markets and that have low debt ratios and above-average returns on equity. 
The Fund is country-weighted but not sector-weighted and selects investments 
based on such factors as financial condition, market share, product 
leadership, earnings growth rates as compared with those of relevant 
competitors in the same local market, market valuation in comparison to 
other stocks and the stock's own historical norms, improving relative price 
trend and other investment criteria. The Fund will normally limit its 
equity investments to the securities of companies which together with 
their predecessors have been in continuous operation for at least
five years and have stock market capitalizations in excess of $200 million. The
Fund invests in securities listed on foreign and domestic securities exchanges
and securities traded in foreign and domestic over-the-counter markets. See
"International Funds - Further Information."

International Select Equity Fund. The investment objective of the International
Select Equity Fund is to seek long-term capital appreciation. Any income
received is incidental to this objective. The Fund will pursue its objective by
investing primarily (at least 65% of the value of its total assets under normal
market conditions) in equity securities of foreign issuers that Northern Trust
believes to be growing more rapidly than their respective markets, including
stocks of companies that have medium to smaller stock market capitalizations
(generally less than $1 billion) and that transact a significant level of their
business in countries growing in excess of the world averages. The Fund is
neither country-weighted nor sector-weighted and will invest in stocks of
companies primarily based on their performance in the following areas over a
five-year period: growth of sales, growth of earnings per share, consistency of
earnings per share growth, return on equity and low debt relative to total
capital. As companies which perform relatively well in some or all of these
categories often retain their earnings to finance current and future growth,
they generally pay low or no dividends. The Fund will normally limit its equity
investments to the securities of companies which together with their
predecessors have been in continuous operation for at least five years and have
stock market capitalizations in excess of $200 million. The Fund invests in
securities listed on foreign and domestic securities exchanges and securities
traded in foreign and domestic over-the-counter markets. See "International
Funds - Further Information."

Technology Fund. The Technology Fund's investment objective is to seek long-
term capital appreciation by investing principally in equity securities and
securities convertible into common stock of companies that develop, produce or
distribute products and services related to advances in technology. In addition,
the Fund will, under normal market conditions, invest at least 65% of the value
of its total assets in securities of companies principally engaged in 
technology business activities. Northern Trust will consider an issuer 
principally engaged in technology business activities if such issuer is 
listed on the Hambrecht and Quist Technology Index (the "H&Q Index"), 
the SoundView Technology Index (the "SoundView Index"), the technology 
grouping of the S&P 500 or any other comparable technology index. 
The H&Q Index is an index of computer and chip makers, biotechnology 
concerns and other high-tech companies, and the SoundView Index is an 
unweighted index consisting of more than 100 technology companies.
  The Fund emphasizes stocks of companies that Northern Trust believes have the
potential to outperform the market over the next one- to two-year period.
Investments are selected based on factors such as financial condition, market
share, product leadership or market niches, earnings growth rates as compared
with those of relevant competitors, market valuation in comparison to other
stocks and the stock's own historical norms, improving relative price trend and
other investment criteria. Companies in which the Fund may invest include
industrial and business machines; communications; computers, software and
peripheral products; electronics; electronic media; environmental services;
office equipment and supplies; television and video equipment and services; and
satellite technology and equipment. For the purposes of the Fund's industry
concentration policy all of the foregoing companies will be deemed part of the
technology industry. See "Additional Investment Information, Risks and
Considerations - Investment Restrictions." Certain of the policies of the Fund
present additional risks which are described under "Technology Fund -
Additional Risks and Considerations."

Other Information. The Growth Equity, Income Equity, Select Equity, Small Cap
Growth, International Growth Equity, International Select Equity and Technology
Funds may purchase warrants and rights that entitle the holder to buy equity
securities at a specific price for a specific period of time. (Warrants and
rights will not be counted in determining a Fund's investments in equity
securities.) In addition to investing in foreign securities directly, the
International Growth Equity and International Select Equity Funds may make
indirect investments in foreign securities through the purchase of EDRs and
ADRs. Each of the Growth Equity, Income Equity, Select Equity, Small Cap Growth
and Technology Funds may invest up to 10% of its net assets in foreign
securities directly and indirectly through the purchase of EDRs, and up to 25%
of its net assets in ADRs, in addition to short-term investments in foreign 
time deposits as discussed below. The Income Equity Fund may enter into 
interest rate swaps and the International Growth Equity and International 
Select Equity Funds may enter into currency swaps. The Funds may purchase 
convertible securities, enter into forward currency contracts and utilize 
options and futures contracts as more fully described under "Additional 
Investment Information, Risks and Considerations." Pending investment, 
as a temporary defensive measure and to meet anticipated redemption 
requests, the Funds may also invest, in accordance with their respective 
investment policies, in various short-term obligations that are permissible 
investments for the Money Market Fund and, with respect to the 
International Growth Equity and International Select Equity Funds, other
similar foreign denominated short-term obligations.

Municipal Money Market Funds - Additional Risks and Considerations Regarding
California Investments

The investments of the Municipal Money Market Fund and California Municipal
Money Market Fund in California Municipal Instruments raise additional
considerations. Payment of the interest on and the principal of these
instruments is dependent upon the continuing ability of California issuers to
meet their obligations.
  Each Fund's investments include obligations of California governmental 
issuers which rely in whole or in part, directly or indirectly, on real 
property taxes as a source of revenue. "Proposition Thirteen" and similar 
California constitutional and statutory amendments and initiatives in recent 
years have restricted the ability of California taxing entities to increase 
real property tax revenues. Other initiative measures approved by California 
voters in recent years, through limiting various other taxes, have resulted 
in a substantial reduction in state revenues. Decreased state revenues may 
result in reductions in allocations of state revenues to local governments.
  Because of the complex nature of the various initiatives mentioned above,
possible ambiguities and inconsistencies in their terms and the scope of 
various exemptions and exceptions, as well as the impossibility of predicting 
the level of future appropriations for state and local California governmental
entities, it is not possible to determine the impact of these initiatives and 
related measures on the ability of California governmental issuers to pay 
interest or repay principal on their obligations. There have, however, been 
certain adverse developments with respect to California Municipal Instruments 
over the past several years.
  In addition to the various initiatives discussed above, economic factors such
as the reduction in defense spending, a decline in tourism and high levels of
unemployment have had an adverse impact on the economy of California. These
economic factors have reduced revenues to the state government at a time when
expenses such as education costs, welfare costs and other expenses have been
rising. These economic factors have also adversely impacted the ability of 
state and local California governmental entities to repay debt.
  In addition to the risk of nonpayment on California Municipal Instruments, if
these obligations decline in quality and are downgraded by the NRSROs, they may
become ineligible for purchase by the Funds under current SEC regulations. 
Since there are large numbers of buyers of these instruments that are similarly
restricted, the supply of California Municipal Instruments that are eligible 
for purchase by the Funds could become inadequate at certain times.
  Investors should consider the greater risk inherent in the California
Municipal Money Market Fund's concentration in such obligations versus the
safety that comes with a less geographically concentrated investment portfolio,
and should compare the yield available on a portfolio of California Municipal
Instruments with the yield of a more diversified portfolio including non-Cali
fornia securities before making an investment decision.
  A more detailed description of special factors affecting investment in
California Municipal Instruments is set forth in the Additional Statement.

Municipal Money Market Fund - Orange County Notes

As of the date of this Prospectus, approximately 0.68% of the assets of the
Municipal Money Market Fund ($6.95 million) were invested in notes issued by
Orange County, California, which has filed for bankruptcy. Northern Trust, on
behalf of the Fund and certain other accounts, is participating in the
bankruptcy proceedings. The principal amount of these notes was originally
payable on July 19, 1995, but the payment date has been extended to June 30,
1996. To date, the market value of the Municipal Money Market Fund has not been
materially affected by the notes, which are illiquid. There is no assurance,
however, that the principal amount of the notes will in fact be paid on 
June 30, 1996 or thereafter. It is also uncertain whether interest payable 
on the notes is exempt from regular federal income tax. These and related 
uncertainties may result in a loss to the Fund.

Technology Fund - Additional Risks and Considerations

The Technology Fund's concentration in technology securities presents special
risk considerations. Technology companies may produce or use products or
services that prove commercially unsuccessful, become obsolete or become
adversely impacted by government regulation. Competitive pressures in the
technology industry may affect negatively the financial condition of technology
companies, and the Fund's concentration in technology securities may subject it
to more volatile price movements than a more diversified securities portfolio.
In certain instances, technology securities may experience dramatic price
movements precipitated by investors' excessive optimism or pessimism with 
little or no basis in fundamental economic conditions. As a result of these and 
other reasons, investments in the technology industry can experience sudden and 
rapid appreciation and depreciation. Investors should, therefore, expect that 
the net asset value of the Fund's shares will be more volatile than, and may 
fluctuate independently of, broad stock market indices such as the S&P 500.
  In addition, it is expected that more than 25% of the Technology Fund's total
assets will normally be invested in technology companies which develop or sell
computers, software and peripheral products. In addition to the risks 
associated with other technology companies, these companies are often dependent 
on the existence and health of other products or industries and face highly 
competitive pressures, product licensing, trademark and patent uncertainties 
and rapid technological changes which may have a significant effect on their
financial condition. For example, an increasing number of companies and new 
product offerings can lead to price cuts and slower selling cycles, and many 
of these companies may be dependent on the success of a principal product, 
may rely on sole source providers and third-party manufacturers, and may 
experience difficulties in managing growth.
  The Technology Fund may invest in the stocks of both large and small
companies. While Northern Trust believes that smaller companies can provide
greater growth potential than larger, more mature firms, investing in the
securities of small companies also involves greater risk and portfolio price
volatility as described above under "Investment Information - Small Cap Growth
Fund."

International Funds - Further Information

The International Fixed Income, International Growth Equity and International
Select Equity Funds (the "International Funds") will be invested at all times
in the securities of issuers located in at least three different foreign
countries. These countries may include, but are not limited to, Argentina,
Australia, Austria, Belgium, Brazil, Canada, Chile, Columbia, Denmark, Finland,
France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel,
Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand,
Norway, the Philippines, Poland, Portugal, Peru, Singapore, South Africa, South
Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Kingdom
and Venezuela. Criteria for determining the appropriate distribution of
investments among various countries and regions include prospects for relative
economic growth, expected levels of inflation, government policies influencing
business conditions, the outlook for currency relationships, and the range of
investment opportunities available to international investors.
  Because the securities markets in the following countries are highly
developed, liquid and subject to extensive regulation, the International Growth
Equity and the International Select Equity Funds may invest more than 25% of
their respective total assets in the securities of issuers located in Japan and
the United Kingdom, and the International Fixed Income Fund may invest more 
than 25% of its total assets in the securities of issuers located in Canada, 
France, Germany, Japan, the United Kingdom and the United States. Investment 
in a particular country of 25% or more of a Fund's total assets will make a 
Fund's performance more dependent upon the political and economic circumstances
of a particular country than a mutual fund that is more widely diversified 
among issuers in different countries. For example, efforts by the member 
countries of the European Community to eliminate internal barriers to the 
free movement of goods, persons, services and capital have encountered 
opposition arising from the conflicting economic, political and cultural 
interests and traditions of the member countries and their citizens. The 
reunification of the former German Democratic Republic (East Germany) 
with the Federal Republic of Germany (West Germany) and other political 
and social events in Europe have caused considerable economic and social 
dislocations. Similarly, events in the Japanese economy as well as social 
developments and natural disasters have affected Japanese securities and 
currency markets, and have disrupted the relationship of the Japanese yen 
with other currencies and with the U.S. dollar. Future political, economic 
and social developments can be expected to produce continuing effects on 
securities and currency markets. Investment in foreign securities, including 
securities of issuers located in the countries listed above, involves other 
risks which are described under "Additional Investment Information, 
Risks and Considerations."
  Certain investments by the International Funds will involve risks associated
with investments in emerging market countries. In addition, securities issued 
in certain countries are currently accessible to the International Funds only
through investment in other investment companies that are specifically
authorized to invest in such securities. Further information about these 
matters is provided under "Additional Investment Information, Risks and
Considerations."

Fundamentals of Fixed Income Investing

Even though interest-bearing securities are investments which often offer a
stable stream of income, the prices of fixed income securities are affected by
changes in the prevailing level of interest rates. These securities experience
appreciation when interest rates decline and depreciation when interest rates
rise. A bond fund portfolio consisting of fixed income securities will react in
a similar manner. Generally, the longer the maturity of a fixed income 
security, the higher its yield and the greater its price volatility. 
Conversely, the shorter the maturity, the lower the yield but the greater 
the price stability. The values of fixed income securities also may be 
affected by changes in the credit rating or financial condition of the 
issuing entities. A security's rating normally depends on the likelihood 
that the borrower will meet each interest and principal installment on a 
timely basis. As a result, lower-rated bonds typically yield more than 
higher-rated bonds of the same maturity. Credit ratings evaluate the safety 
of principal and interest payments, not market risk, and rating agencies 
may or may not make timely changes in a rating to reflect economic or 
company conditions that affect a security's market value. As a result, 
the ratings of rating services are used by Northern Trust only as 
indicators of investment quality. For a more complete discussion of 
ratings, see Appendix A to the Additional Statement.

ADDITIONAL INVESTMENT
INFORMATION, RISKS AND
CONSIDERATIONS

Description of Securities and Investment Techniques

Convertible Securities. Each Equity Fund and the International Fixed Income 
Fund may invest in convertible securities including convertible bonds, 
debentures, and preferred stock. A convertible security may be converted 
either at a stated price or rate within a specified period of time into a 
specified number of shares of common stock. By investing in convertible 
securities, a Fund seeks the opportunity, through the conversion feature, 
to participate in a portion of the capital appreciation of the common stock 
into which the securities are convertible, while earning higher current income 
than is available from the common stock. Convertible securities acquired by a 
Fund will usually be rated investment grade by S&P, Moody's, Duff or Fitch or, 
if unrated, will be of comparable quality as determined by Northern Trust. 
A Fund may, however, acquire convertible securities rated below investment 
grade when Northern Trust believes that their investment characteristics make 
them desirable, so long as (a) under normal market and economic conditions, 
less than 10% of the Fund's total assets (35% in the case of the Income 
Equity Fund and 5% in the case of the International Fixed Income Fund, 
International Growth Equity Fund and International Select Equity Fund) 
are invested in non-investment grade convertible securities; and (b) any 
such security will be rated B or higher by at least one major rating agency. 
As of March 31, 1995, the Equity Income Fund had the following percentages 
of its portfolio assets invested in convertible securities with the following 
ratings: 4.2% AAA, 5.6% AA, 19.1% A, 33.6% BBB, 1.6% BB and 8.1% B. For a 
description of applicable securities ratings, see Appendix A to the 
Additional Statement.   Non-investment grade securities (those that are 
rated Ba or lower by Moody's or BB or lower by S&P, Duff or Fitch) are 
commonly referred to as "junk" bonds. Particular risks associated with 
lower-rated convertible securities are: (a) the relative youth and growth 
of the market for such securities; (b) the sensitivity of such securities 
to interest rate and economic changes; (c) the lower degree of protection 
of principal and interest payments; (d) the relatively low trading market 
liquidity for the securities; (e) the impact that legislation may have on 
the high yield bond market (and, in turn, on a Fund's net asset value and 
investment practices); and (f) the creditworthiness of the issuers of 
such securities. During an economic downturn or substantial period of
rising interest rates, leveraged issuers may experience financial stress which
would adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain additional
financing. An economic downturn could also disrupt the market for lower-rated
convertible securities and adversely affect the value of outstanding securities
and the ability of the issuers to repay principal and interest. If the issuer 
of a convertible security held by a Fund defaulted, the Fund could incur 
additional expenses to seek recovery. Adverse publicity and investor 
perceptions, whether or not based on fundamental analysis, may also 
decrease the values and liquidity of lower-rated securities held by a 
Fund, especially in a thinly traded market. For purposes of determining 
the percentage of a Fund's assets that is invested in equity securities, 
only that portion of the value of convertible securities attributable to 
their fixed income characteristics will be deemed to be a fixed income 
investment. The remaining value will be deemed to be an equity investment.

Warrants. Each Equity Fund may invest up to 5% of their respective net assets at
the time of purchase in warrants and similar rights (in addition to those that
have been acquired in units or attached to other securities). Warrants 
represent rights to purchase securities at a specific price for a specific 
period of time. A Fund may also purchase bonds that are issued in tandem 
with warrants entitling the holder to purchase common stock at a specified 
price during a specified period. The prices of warrants do not necessarily 
correlate with the prices of the underlying securities.

Municipal Instruments. The Tax-Exempt Funds intend to invest primarily in
Municipal Instruments. Municipal Instruments include debt obligations issued by
or on behalf of states, territories and possessions of the United States and
their political subdivisions, agencies, authorities and instrumentalities.
Municipal Instruments include both "general" and "revenue" obligations.
General obligations are secured by the issuer's pledge of its full faith, 
credit and taxing power for the payment of principal and interest. Revenue 
obligations are payable only from the revenues derived from a particular 
facility or class of facilities or, in some cases, from the proceeds of a 
special excise tax or other specific revenue source such as lease revenue 
payments from the user of the facility being financed. Industrial development 
bonds are in most cases revenue securities and are not payable from the 
unrestricted revenues of the municipal issuer. Consequently, the credit 
quality of an industrial revenue bond is usually directly related to the 
credit standing of the private user of the facility involved.
  The Tax-Exempt Funds may also invest in "moral obligation" bonds, which are
normally issued by special purpose public authorities. If the issuer of a moral
obligation bond is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund (if such a fund has been established),
the restoration of which is a moral commitment but not a legal obligation of 
the state or municipality which created the issuer.
  Within the principal classifications of Municipal Instruments described above
there are a variety of categories, including municipal bonds, municipal notes,
municipal leases, custodial receipts and participation certificates. Municipal
notes include tax, revenue and bond anticipation notes of short maturity,
generally less than three years, which are issued to obtain temporary funds for
various public purposes. Municipal leases are obligations issued by state and
local governments or authorities to finance the acquisition of equipment and
facilities. Certain municipal lease obligations may include "non-
appropriation" clauses which provide that the municipality has no obligation to
make lease or installment purchase payments in future years unless money is
appropriated for such purpose on a yearly basis. Custodial receipts are
underwritten by securities dealers or banks and evidence ownership of future
interest payments, principal payments or both on certain municipal securities.
Participation certificates are obligations issued by state or local governments
or authorities to finance the acquisition of equipment and facilities. They may
represent participations in a lease, an installment purchase contract, or a
conditional sales contract. Municipal leases (and participations in such 
leases) present the risk that a municipality will not appropriate funds for 
the lease payments. Northern Trust, under the supervision of Northern Funds' 
Board of Trustees, will determine the credit quality of any unrated municipal
leases on an ongoing basis, including an assessment of the likelihood that 
the leases will not be cancelled.
  The Tax-Exempt Funds (other than the Municipal Money Market Fund and
California Municipal Money Market Fund) may also hold tax-exempt derivative
instruments that have interest rates that reset inversely to changing short-
term rates and/or have imbedded interest rate floors and caps that require 
the issuer to pay an adjusted interest rate if market rates fall below or 
rise above a specified rate. These derivative instruments represent beneficial
interests in Municipal Instruments that are marketed by investment banking 
firms under various names such as FLOATsSM, RITEsSM, SAVRsSM and RIBsSM. 
These instruments represent relatively recent innovations in the municipal 
bond markets, and the trading market for these instruments is less developed 
than the markets for traditional types of Municipal Instruments. It is 
uncertain how these instruments will perform under different economic and 
interest-rate scenarios. Because certain of these instruments are leveraged, 
their market values may be more volatile than other types of Municipal 
Instruments and may present greater potential for capital gain or loss. 
On the other hand, the imbedded option features of other derivative 
instruments could limit the amount of appreciation a Fund can realize on 
its investment, could cause a Fund to hold a security it might otherwise 
sell or could force the sale of a security at inopportune times or for 
prices that do not reflect current market value. The possibility of 
default by the issuer or the issuer's credit provider may be greater for these
derivative instruments than for other types of instruments. In some cases it 
may be difficult to determine the fair value of a derivative instrument because
of a lack of reliable objective information and an established secondary market
for some instruments may not exist. In many cases, the Internal Revenue Service
has not ruled on whether the interest received on a tax-exempt derivative 
instrument is tax-exempt and, accordingly, purchases of such instruments 
are based on the opinion of counsel to the sponsors of the instruments. 
Neither the Funds nor Northern Trust will review the proceedings related 
to the creation of any tax-exempt derivatives or the basis for such opinions.
  Each Tax-Exempt Fund may acquire "stand-by commitments" relating to the
Municipal Instruments held by it. Under a standby commitment, a dealer agrees
to purchase, at the Fund's option, specified Municipal Instruments at a
specified price. A stand-by commitment may increase the cost, and thereby reduce
the yield, of the Municipal Instruments to which the commitment relates. The
Funds will acquire stand-by commitments solely to facilitate portfolio liquidity
and do not intend to exercise their rights for trading purposes.
  Municipal Instruments purchased by the Tax-Exempt Funds may be backed by
letters of credit issued by domestic or foreign banks. Foreign letters of credit
may involve certain risks in addition to those of domestic obligations. Foreign
banks and foreign branches of domestic banks may be subject to less stringent
reserve requirements, and to different accounting, auditing and recordkeeping
requirements than domestic banks.
  The Tax-Exempt Funds do not intend to invest 25% or more of the value of their
respective total assets in industrial development bonds or similar obligations
where the non-governmental entities supplying the revenues from which such bonds
or obligations are to be paid are in the same industry. Each Fund may, however,
invest 25% or more of its total assets in Municipal Instruments the interest on
which is paid solely from revenues of similar projects. In addition, although
the Funds, other than the California Municipal Money Market Fund, do not expect
to do so during normal market conditions, each may invest more than 25% of the
value of its total assets in Municipal Instruments whose issuers are in the same
state. The California Municipal Money Market Fund expects to invest principally
in California Municipal Instruments. When a substantial portion of a Fund's
assets is invested in instruments which are used to finance facilities involving
a particular industry, whose issuers are in the same state or which are
otherwise related, there is a possibility that an economic, business or
political development affecting one instrument would likewise affect the related
instruments.
  Funds in addition to the Tax-Exempt Funds may make limited investments (up to
10% of their net assets) from time to time in Municipal Instruments or other
securities issued by state and local governmental bodies when Northern Trust
believes such an investment strategy is in the best interest of Northern Funds'
shareholders. Dividends paid by Funds other than the Tax-Exempt Funds on such
investments will be taxable to shareholders.

Foreign Securities. The International Funds intend to invest primarily in the
securities of foreign issuers. In addition, each Equity Fund and the Fixed
Income Fund may invest a portion of their assets in such securities, including
(except with respect to the Fixed Income Fund) eurodollar convertible
securities, which are fixed income securities that are issued in U.S. dollars
outside the United States and are convertible into or exchangeable for equity
securities of the same or a different issuer. The Money Market Fund may also
invest in dollar-denominated obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities. These obligations may be issued by supranational entities,
including international organizations (such as the European Coal and Steel
Community) designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies.
  Investment in foreign securities involves special risks. These include market
risk, interest rate risk and the risks of investing in securities of foreign
issuers and of companies whose securities are principally traded outside the
United States and in investments denominated in foreign currencies. Market risk
involves the possibility that stock prices will decline over short or even
extended periods. The stock markets tend to be cyclical, with periods of
generally rising prices and periods of generally declining prices. These cycles
will affect the value of a Fund that invests in foreign stocks. The holdings of
a Fund that invest in fixed income securities will be sensitive to changes in
interest rates and the interest rate environment. Generally, the prices of bonds
and debt securities fluctuate inversely with interest rate changes. In addition,
the performance of investments in securities denominated in a foreign currency
will depend on the strength of the foreign currency against the U.S. dollar and
the interest rate environment in the country issuing the currency. Absent other
events which could otherwise affect the value of a foreign security (such as a
change in the political climate or an issuer's credit quality), appreciation in
the value of the foreign currency generally can be expected to increase the
value of a foreign currency-denominated security in terms of U.S. dollars. A
rise in foreign interest rates or decline in the value of the foreign currency
relative to the U.S. dollar generally can be expected to depress the value of a
foreign currency-denominated security.
  There are other risks and costs involved in investing in foreign securities
which are in addition to the usual risks inherent in domestic investments.
Investment in foreign securities involves higher costs than investment in U.S.
securities, including higher transaction and custody costs as well as the
imposition of additional taxes by foreign governments. Foreign investments also
involve risks associated with the level of currency exchange rates, less
complete financial information about the issuers, less market liquidity, more
market volatility and political instability. Future political and economic
developments, the possible imposition of withholding taxes on dividend income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions might adversely affect an investment in foreign securities.
Additionally, foreign banks and foreign branches of domestic banks are subject
to less stringent reserve requirements, and to different accounting, auditing
and recordkeeping requirements.
  The Money Market Fund, the Fixed Income Fund, each Equity Fund and each
International Fund may invest in foreign debt, or the securities of foreign
governments. Several risks exist concerning such investments, including the risk
that foreign governments may default on their obligations, may not respect the
integrity of such debt, may attempt to renegotiate the debt at a lower rate, and
may not honor investments by United States entities or citizens.
  In addition, the International Funds may invest their assets in countries with
emerging economies or securities markets. These countries are located in the
Asia-Pacific region, Eastern Europe, Latin and South America and Africa.
Political and economic structures in many of such countries may be undergoing
significant evolution and rapid development, and such countries may lack the
social, political and economic stability characteristic of more developed
countries. Some of these countries may have in the past failed to recognize
private property rights and have at times nationalized or expropriated the
assets of private companies. As a result, the risks described above, including
the risks of nationalization or expropriation of assets, may be heightened. In
addition, unanticipated political or social developments may affect the values
of a Fund's investments in those countries and the availability to a Fund of
additional investments in those countries. The small size and inexperience of
the securities markets in certain of such countries and the limited volume of
trading in securities in those countries may make a Fund's investments in such
countries illiquid and more volatile than investments in Japan or most Western
European countries, and a Fund may be required to establish special custodial or
other arrangements before making certain investments in those countries. There
may be little financial or accounting information available with respect to
issuers located in certain of such countries, and it may be difficult as a
result to assess the value or prospects of an investment in such issuers.
  Although a Fund (other than the Money Market Fund) may invest in securities
denominated in foreign currencies, its portfolio securities and other assets are
valued in U.S. dollars. Currency exchange rates may fluctuate significantly over
short periods of time causing, together with other factors, a Fund's net asset
value to fluctuate as well. Currency exchange rates generally are determined by
the forces of supply and demand in the foreign exchange markets and the relative
merits of investments in different countries, actual or anticipated changes in
interest rates and other complex factors, as seen from an international
perspective. Currency exchange rates also can be affected unpredictably by the
intervention or the failure to intervene by U.S. or foreign governments or
central banks, or by currency controls or political developments in the U.S. or
abroad. To the extent that a Fund's total assets, adjusted to reflect the Fund's
net position after giving effect to currency transactions, are denominated in
the currencies of foreign countries, the Fund will be more susceptible to the
risk of adverse economic and political developments within those countries. In
addition, through the use of forward currency exchange contracts and other
instruments, the respective net currency positions of the International Funds
may expose them to risks independent of their securities positions. Although the
net long and short foreign currency exposure of the International Funds will not
exceed their respective total asset values, to the extent that a Fund is fully
invested in foreign securities while also maintaining currency positions, it may
be exposed to greater risk than it would have if it did not maintain the
currency positions. The Funds are also subject to the possible imposition of
exchange control regulations or freezes on convertibility of currency.
  The International Fixed Income Fund may invest in debt securities denominated
in the European Currency Unit ("ECU"), which is a "basket" consisting of
specified amounts in the currencies of certain of the twelve member states of
the European Community. The specific amounts of currencies comprising the ECU
may be adjusted by the Council of Ministers of the European Community from time
to time to reflect changes in relative values of the underlying currencies. The
Fund may also invest in securities denominated in other currency "baskets."
  Investors should understand that the expense ratios of the International Funds
can be expected to be higher than those of Funds investing primarily in domestic
securities. The costs attributable to investing abroad are usually higher for
several reasons, such as the higher cost of investment research, higher cost of
custody of foreign securities, higher commissions paid on comparable
transactions on foreign markets and additional costs arising from delays in
settlements of transactions involving foreign securities.
  Dividends and interest payable on a Fund's foreign portfolio securities may be
subject to foreign withholding taxes. To the extent such taxes are not offset by
credits or deductions allowed to investors under U.S. federal income tax law,
they may reduce the net return to the shareholders. See "Distributions and
Taxes."

American Depository Receipts. Each Equity Fund and each International Fund can
invest in ADRs. ADRs are receipts typically issued by a United States bank or
trust company evidencing ownership of the underlying foreign securities and are
denominated in U.S. dollars. Some institutions issuing ADRs may not be sponsored
by the issuer.
  A non-sponsored depository may not provide the same shareholder information
that a sponsored depository is required to provide under its contractual
arrangement with the issuer.

European Depository Receipts. Each Equity Fund and each International Fund can
also invest in EDRs. EDRs are receipts issued by a European financial
institution evidencing ownership of underlying foreign securities and are
usually denominated in foreign currencies. EDRs may not be denominated in the
same currency as the securities they represent. Generally, EDRs, in bearer form,
are designed for use in the European securities markets.

Forward Currency Exchange Contracts. The Equity Funds, the International Funds
and the Fixed Income Fund may enter into forward currency exchange contracts in
an effort to hedge all or any portion of their portfolio positions.
Specifically, foreign currency contracts may be used for this purpose to reduce
the level of volatility caused by changes in foreign currency exchange rates or
when such transactions are economically appropriate for the reduction of risks
in the ongoing management of the Fund. The International Funds may also enter
into foreign currency exchange contracts to seek to increase total return when
Northern Trust anticipates that a foreign currency will appreciate or depreciate
in value, but securities denominated in that currency do not in Northern Trust's
view present attractive investment opportunities and are not held by the Fund.
In addition, the International Funds may engage in cross-hedging by using
forward contracts in one currency to hedge against fluctuations in the value of
securities denominated in a different currency if Northern Trust believes that
there is a pattern of correlation between the two currencies. A forward currency
exchange contract is an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of contract. Although the
contracts may be used to minimize the risk of loss due to a decline in the value
of the hedged currency, at the same time they tend to limit any potential gain
that might be realized should the value of such currency increase. In connection
with its forward currency exchange contracts, a Fund will create a segregated
account of liquid assets, such as cash, U.S. Government securities or other
liquid high grade debt obligations, or will otherwise cover its position in
accordance with applicable requirements of the SEC.

Options and Futures Contracts. To the extent consistent with its investment
objective, each Fund (other than the Money Market Funds) may write covered call
options, buy put options, buy call options and write secured put options for the
purpose of hedging or earning additional income, which may be deemed speculative
or, with respect to the International Funds, cross-hedging. These options may
relate to particular securities, financial instruments, foreign currencies,
stock or bond indices or (in the case of the International Fixed Income Fund)
the yield differential between two securities, and may or may not be listed on a
securities exchange and may or may not be issued by the Options Clearing
Corporation. A Fund will not purchase put and call options where the aggregate
premiums on outstanding options exceed 5% of its net assets at the time of
purchase, and will not write options on more than 25% of the value of its net
assets (measured at the time an option is written). Options trading is a highly
specialized activity that entails greater than ordinary investment risks. In
addition, unlisted options are not subject to the protections afforded
purchasers of listed options issued by the Options Clearing Corporation, which
performs the obligations of its members if they default.
  To the extent consistent with its investment objective, each Fund (other than
the Money Market Funds) may also invest in futures contracts and options on
futures contracts for hedging purposes or to maintain liquidity. The value of a
Fund's futures contracts may equal or exceed 100% of the Fund's total assets,
although a Fund will not purchase or sell a futures contract unless immediately
afterwards the aggregate amount of margin deposits on its existing futures
positions plus the amount of premiums paid for related futures options is 5% or
less of its net assets.
  Futures contracts obligate a Fund, at maturity, to take or make delivery of
certain securities, the cash value of a securities index or a stated quantity of
a foreign currency. A Fund may sell a futures contract in order to offset an
expected decrease in the value of its portfolio that might otherwise result from
a market decline or currency exchange fluctuation. A Fund may do so either to
hedge the value of its securities portfolio as a whole, or to protect against
declines occurring prior to sales of securities, in the value of the securities
to be sold. In addition, a Fund may utilize futures contracts in anticipation of
changes in the composition of its holdings or in currency exchange rates.
  A Fund may purchase and sell call and put options on futures contracts traded
on an exchange or board of trade. When a Fund purchases an option on a futures
contract, it has the right to assume a position as a purchaser or a seller of a
futures contract at a specified exercise price anytime during the option period.
When a Fund sells an option on a futures contract, it becomes obligated to sell
or buy a futures contract if the option is exercised. In connection with a
Fund's position in a futures contract or related option, the Fund will create a
segregated account of liquid high grade assets or will otherwise cover its
position in accordance with applicable SEC requirements.
  The primary risks associated with the use of futures contracts and options
are: (a) the imperfect correlation between the change in market value of the
instruments held by a Fund and the price of the futures contract or option; (b)
possible lack of a liquid secondary market for a futures contract and the
resulting inability to close a futures contract when desired; (c) losses caused
by unanticipated market movements, which are potentially unlimited; and (d)
Northern Trust's ability to predict correctly the direction of securities
prices, interest rates, currency exchange rates and other economic factors. For
further discussion of risks involved with domestic and foreign futures and
options, see "Futures Contracts and Related Options" and Appendix B in the
Additional Statement.
  Northern Funds intends to comply with the regulations of the Commodity Futures
Trading Commission exempting the Funds from registration as a "commodity pool
operator."

Interest Rate and Currency Swaps. In order to protect their value from interest
rate fluctuations, the U.S. Government, Fixed Income, Intermediate Tax-Exempt,
Tax-Exempt, International Fixed Income and Income Equity Funds may enter into
interest rate swaps. The Funds expect to enter into interest rate swaps
primarily to preserve a return or spread of a particular investment or portion
of their respective holdings and to protect against an increase in the price of
securities the Funds anticipate purchasing at a later date. Interest rate swaps
involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments). In order to protect against currency
fluctuations, the International Funds may also enter into currency swaps.
Currency swaps involve the exchange of the rights of a Fund and another party to
make or receive payments in specified currencies.
  The net amount of the excess, if any, of a Fund's obligations over its
entitlements with respect to each interest rate or currency swap will be accrued
on a daily basis and an amount of liquid assets, such as cash, U.S. Government
securities or other liquid high grade debt securities, having an aggregate net
asset value at least equal to such accrued excess will be maintained in a
segregated account by Northern Funds' custodian. A Fund will not enter into any
interest rate or currency swap unless the unsecured commercial paper, senior
debt, or claims paying ability of the other party is rated either A or A-1 or
better by S&P, Duff or Fitch, or A or P-1 or better by Moody's.

United States Government Obligations. To the extent consistent with their
respective investment objectives, each Fund may invest in a variety of U.S.
Treasury obligations consisting of bills, notes and bonds, which principally
differ only in their interest rates, maturities and issuance dates. The Funds
may also invest in other securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities. Obligations of certain agencies and
instrumentalities, such as the Government National Mortgage Association
("GNMA"), are supported by the full faith and credit of the U.S. Treasury;
others, such as those of the Export-Import Bank of the United States, are
supported by the right of the issuer to borrow from the Treasury; others, such
as those of the Federal National Mortgage Association ("FNMA"), are supported
by the discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Student Loan Marketing
Association ("SLMA"), are supported only by the credit of the
instrumentalities. No assurance can be given that the U.S. Government would
provide financial support to its agencies or instrumentalities if it is not
obligated to do so by law. Obligations of the International Bank for
Reconstruction and Development (also known as the World Bank) are supported by
subscribed, but unpaid, commitments of its member countries. There is no
assurance that these commitments will be undertaken or complied with in the
future.
  Securities guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities are deemed to include (a) securities for which the
payment of principal and interest is backed by an irrevocable letter of credit
issued by the U.S. Government or an agency or instrumentality thereof, and (b)
participations in loans made to foreign governments or their agencies that are
so guaranteed. The secondary market for certain of these participations is
limited. Such participations will therefore be regarded as illiquid. No
assurance can be given that the U.S. Government would provide financial support
to its agencies or instrumentalities if it is not obliged to do so by law.

Stripped Obligations. To the extent consistent with their respective investment
objectives, the Funds may purchase Treasury receipts and other "stripped"
securities that evidence ownership in either the future interest payments or the
future principal payments on U.S. Government and other obligations. These
participations, which may be issued by the U.S. Government (or a U.S. Government
agency or instrumentality) or by private issuers such as banks and other
institutions, are issued at a discount to their "face value," and may include
stripped mortgage-backed securities ("SMBS"). Stripped securities,
particularly SMBS, may exhibit greater price volatility than ordinary debt
securities because of the manner in which their principal and interest are
returned to investors. The International Fixed Income Fund also may purchase
"stripped" securities that evidence ownership in the future interest payments
or principal payments on obligations of foreign governments.
  SMBS are usually structured with two or more classes that receive different
proportions of the interest and principal distributions from a pool of mortgage-
backed obligations. A common type of SMBS will have one class receiving all of
the interest, while the other class receives all of the principal. However, in
some cases, one class will receive some of the interest and most of the
principal while the other class will receive most of the interest and the
remainder of the principal. If the underlying obligations experience greater
than anticipated prepayments of principal, a Fund may fail to fully recoup its
initial investment. The market value of the class consisting entirely of
principal payments can be extremely volatile in response to changes in interest
rates. The yields on a class of SMBS that receives all or most of the interest
are generally higher than prevailing market yields on other mortgage-backed
obligations because their cash flow patterns are also volatile and there is a
greater risk that the initial investment will not be fully recouped.
  SMBS issued by the U.S. Government (or a U.S. Government agency or
instrumentality) may be considered liquid under guidelines established by
Northern Funds' Board of Trustees if they can be disposed of promptly in the
ordinary course of business at a value reasonably close to that used in the
calculation of a Fund's per share net asset value.

Custodial Receipts for Treasury Securities. To the extent consistent with their
respective investment objectives, the Funds, other than the U.S. Government
Select Money Market Fund, may purchase participations in trusts that hold U.S.
Treasury securities (such as TIGRs and CATs) or other obligations where the
trust participations evidence ownership in either the future interest payments
or the future principal payments on the obligations. These participations are
normally issued at a discount to their "face value," and can exhibit greater
price volatility than ordinary debt securities because of the way in which their
principal and interest are returned to investors. Investments by a Fund (other
than the U.S. Government Money Market Fund) in such participations will not
exceed 5% of the value of that Fund's total assets. Investments by the U.S.
Government Money Market Fund in such participations will not exceed 35% of the
value of that Fund's total assets.

Asset-Backed Securities. The U.S. Government Fund and U.S. Government Money
Market Fund may purchase securities that are secured or backed by mortgages and
that are issued by the U.S. Government, its agencies or instrumentalities. The
other Funds may purchase asset-backed securities that are secured or backed by
mortgages or other assets (e.g., automobile loans and credit card receivables)
and are issued by the U.S. Government, GNMA, FNMA, Federal Home Loan Mortgage
Corporation, and private issuers such as commercial banks, financial companies,
finance subsidiaries of industrial companies, savings and loan associations,
mortgage banks and investment banks. The Funds will not purchase non-mortgage
asset-backed securities that are not rated investment grade by S&P, Duff, Fitch
or Moody's.
  Non-mortgage asset-backed securities invoke certain risks that are not
presented by mortgage-backed securities. Primarily, these securities do not have
the benefit of the same security interest in the underlying collateral. Credit
card receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
have given debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the balance due. Most issuers of automobile receivables
permit the servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
related automobile receivables. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have an
effective security interest in all of the obligations backing such receivables.
Therefore, there is a possibility that recoveries on repossessed collateral may
not, in some cases, be able to support payments on these securities.
  The Funds may acquire several types of mortgage-backed securities, including
guaranteed mortgage pass-through certificates, which provide the holder with a
pro rata interest in the underlying mortgages, and collateralized mortgage
obligations ("CMOs"), which provide the holder with a specified interest in
the cash flow of a pool of underlying mortgages or other mortgage-backed
securities. Issuers of CMOs ordinarily elect to be taxed as pass-through
entities known as real estate mortgage investment conduits ("REMICs"). CMOs
are issued in multiple classes, each with a specified fixed or floating interest
rate and a final distribution date. The relative payment rights of the various
CMO classes may be structured in a variety of ways. The Funds will not purchase
"residual" CMO interests, which normally exhibit greater price volatility.
  The yield characteristics of asset-backed securities differ from traditional
debt securities. A major difference is that the principal amount of the
obligations may be prepaid at any time because the underlying assets (i.e.,
loans) generally may be prepaid at any time. As a result, if an asset-backed
security is purchased at a premium, a prepayment rate that is faster than
expected will reduce yield to maturity, while a prepayment rate that is slower
than expected will have the opposite effect of increasing yield to maturity.
Conversely, if an asset-backed security is purchased at a discount, faster than
expected prepayments will increase, while slower than expected prepayments will
decrease, yield to maturity. In calculating the average weighted maturity of a
Fund, the maturity of asset-backed securities will be based on estimates of
average life.
  Prepayments on asset-backed securities generally increase with falling
interest rates and decrease with rising interest rates; furthermore, prepayment
rates are influenced by a variety of economic and social factors. In general,
the collateral supporting non-mortgage asset-backed securities is of shorter
maturity than mortgage loans and is less likely to experience substantial
prepayments. Like other fixed income securities, when interest rates rise the
value of an asset-backed security generally will decline; however, when interest
rates decline, the value of an asset-backed security with prepayment features
may not increase as much as that of other fixed income securities.

Corporate and Bank Obligations. To the extent consistent with their respective
investment objectives, the Funds, other than the U.S. Government Select Money
Market Fund, may invest in debt obligations of domestic or foreign corporations
and banks, and may acquire commercial obligations issued by Canadian
corporations and Canadian counterparts of U.S. corporations, as well as
Europaper, which is U.S. dollar-denominated commercial paper of a foreign
issuer. Bank obligations may include certificates of deposit, notes, bankers'
acceptances and fixed time deposits. These obligations may be general
obligations of the parent bank or may be limited to the issuing branch or
subsidiary by the terms of specific obligation or by government regulation. For
purposes of determining the permissibility of an investment in bank obligations,
the total assets of a bank are determined on the basis of the bank's most recent
annual financial statements.

Exchange Rate-Related Securities. The Income Equity, International Fixed Income
and Fixed Income Funds may invest in securities for which the principal
repayment at maturity, while paid in U.S. dollars, is determined by reference to
the exchange rate between the U.S. dollar and the
currency of one or more foreign countries ("Exchange Rate-Related
Securities"). The interest payable on these securities is denominated in U.S.
dollars and is not subject to foreign currency risk and, in most cases, is paid
at rates higher than most other similarly rated securities in recognition of the
foreign currency risk component of Exchange Rate-Related Securities.
  Investments in Exchange Rate-Related Securities entail certain risks. There is
the possibility of significant changes in rates of exchange between the U.S.
dollar and any foreign currency to which an Exchange Rate-Related Security is
linked. In addition, there is no assurance that sufficient trading interest to
create a liquid secondary market will exist for a particular Exchange Rate-
Related Security due to conditions in the debt and foreign currency markets.
Illiquidity in the forward foreign exchange market and the high volatility of
the foreign exchange market may, from time to time, combine to make it difficult
to sell an Exchange Rate-Related Security prior to maturity without incurring a
significant price loss.

Guaranteed Investment Contracts. The Fixed Income Fund and the Money Market Fund
may make limited investments in guaranteed investment contracts ("GICs")
issued by highly rated U.S. insurance companies. Under these contracts, a Fund
makes cash contributions to a deposit fund of the insurance company's general
account. The insurance company then credits to the Fund, on a monthly basis,
interest which is based on an index (such as the Salomon Brothers CD Index), but
is guaranteed not to be less than a certain minimum rate. The Funds do not
expect to invest more than 5% of their respective net assets in GICs at any time
during the current fiscal year.

Variable and Floating Rate Instruments. In accordance with their respective
investment objectives, the Funds may purchase rated and unrated variable and
floating rate instruments. These instruments may include variable amount master
demand notes that permit the indebtedness to vary in addition to providing for
periodic adjustments in the interest rate. A Fund may purchase variable and
floating rate instruments with stated maturities in excess of its maturity
limitations provided that the Fund may demand payment of the principal of the
instrument at least once within the applicable maturity limitation on not more
than thirty days' notice (unless the instrument is issued or guaranteed by the
U.S. Government or an agency or instrumentality thereof). Unrated instruments
will be determined by Northern Trust to be of comparable quality at the time of
purchase to rated instruments purchasable by the Funds.
  The Funds (other than the Money Market Funds) may also invest in leveraged
inverse floating rate debt instruments ("inverse floaters"). The interest rate
of an inverse floater resets in the opposite direction from the market rate of
interest to which it is indexed. An inverse floater may be considered to be
leveraged to the extent that its interest rate varies by a magnitude that
exceeds the magnitude of the change in the index rate of interest. The higher
degree of leverage inherent in inverse floaters is associated with greater
volatility in their market values.
  The absence of an active secondary market with respect to particular variable
and floating rate instruments could make it difficult for a Fund to dispose of
the instruments if the issuer defaulted on its payment obligation or during
periods that the Fund is not entitled to exercise demand rights, and a Fund
could, for these or other reasons, suffer a loss with respect to such
instruments. Variable and floating rate instruments (including inverse floaters)
will be subject to a Fund's limitation on illiquid investments when the Fund may
not demand payment of the principal amount within seven days and a reliable
trading market is absent. See "Illiquid Securities."

Repurchase Agreements. Each Fund, other than the U.S. Government Select Money
Market Fund, may agree to purchase portfolio securities from financial
institutions subject to the seller's agreement to repurchase them at a mutually
agreed upon date and price ("repurchase agreements"). Although the securities
subject to a repurchase agreement may bear maturities exceeding one year,
settlement for the repurchase agreement will never be more than one year after a
Fund's acquisition of the securities and normally will be within a shorter
period of time. Securities subject to repurchase agreements are held either by
Northern Funds' custodian or subcustodian
(if any), or in the Federal Reserve/Treasury Book-Entry System. The seller under
a repurchase agreement will be required to maintain the value of the securities
subject to the agreement in an amount exceeding the repurchase price (including
accrued interest). Default by the seller would, however, expose a Fund to
possible loss because of adverse market action or delay in connection with the
disposition of the underlying obligations.

Reverse Repurchase Agreements and Other Borrowings. Each Fund is authorized to
make limited borrowings as described below under "Investment Restrictions." If
the securities held by a Fund should decline in value while borrowings are
outstanding, the net asset value of the Fund's outstanding shares will decline
in value by proportionately more than the decline in value suffered by the
Fund's securities. Borrowings may be made through reverse repurchase agreements
under which a Fund sells portfolio securities to financial institutions such as
banks and broker/dealers and agrees to repurchase them at a particular date and
price. The Funds may use the proceeds of reverse repurchase agreements to
purchase other securities either maturing, or under an agreement to resell, on a
date simultaneous with or prior to the expiration of the reverse repurchase
agreement. The Funds (other than the Municipal Money Market, U.S. Government
Select Money Market, California Municipal Money Market, Income Equity, Growth
Equity, Select Equity and Small Cap Growth Funds) may utilize reverse repurchase
agreements when it is anticipated that the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction. This use of reverse repurchase agreements may be
regarded as leveraging and, therefore, speculative. Reverse repurchase
agreements involve the risks that the interest income earned in the investment
of the proceeds will be less than the interest expense, that the market value of
the securities sold by a Fund may decline below the price of the securities the
Fund is obligated to repurchase and that the securities may not be returned to
the Fund. During the time a reverse repurchase agreement is outstanding, a Fund
will maintain a segregated account with Northern Funds' custodian containing
cash, U.S. Government or other appropriate liquid high-grade debt securities
having a value at least equal to the repurchase price. A Fund's reverse
repurchase agreements, together with any other borrowings, will not exceed, in
the aggregate, 33 1/3% of the value of its total assets. In addition, whenever
borrowings exceed 5% of the Fund's total assets, the Fund will not make any
investments.

Securities Lending. Each Fund may seek additional income from time to time by
lending securities on a short-term basis to banks, brokers and dealers. The
securities lending agreements will require that the loans be secured by
collateral in cash, cash equivalents, U.S. Government securities or irrevocable
bank letters of credit maintained on a current basis equal in value to at least
the market value of the loaned securities. A Fund may not make such loans in
excess of 33 1/3% of the value of its total assets. Securities loans involve
risks of delay in receiving additional collateral or in recovering the loaned
securities, or possibly loss of rights in the collateral if the borrower of the
securities becomes insolvent.

Forward Commitments, When-Issued Securities and Delayed-Delivery Transactions.
Each Fund may purchase or sell securities on a when-issued or delayed-delivery
basis and make contracts to purchase or sell securities for a fixed price at a
future date beyond customary settlement time. Securities purchased or sold on a
when-issued, delayed-delivery or forward commitment basis involve a risk of loss
if the value of the security to be purchased declines, or the value of the
security to be sold increases, before the settlement date. Although a Fund will
generally purchase securities with the intention of acquiring them, a Fund may
dispose of securities purchased on a when-issued, delayed-delivery or a forward
commitment basis before settlement when deemed appropriate by Northern Trust.

Investment Companies. In connection with the management of its daily cash
positions, each Fund may invest in securities issued by other investment
companies which invest in short-term, high-quality debt securities and determine
their net asset value per share based on the amortized cost or penny-rounding
method of valuation. The International Funds may also purchase shares of
investment companies investing primarily in foreign securities, including so-
called "country funds." Country funds have portfolios consisting exclusively
of securities of issuers located in one or more specified foreign countries. As
a shareholder of another investment company, a Fund will bear, along with other
shareholders, its pro rata portion of the other investment company's expenses
including advisory fees. These expenses would be in addition to the advisory
fees and other expenses the Fund bears directly in connection with its own
operations. Investments in other investment companies will be subject to the
limits imposed by the 1940 Act.

Illiquid Securities. Each Fund may invest up to 15% (10% in the case of the
Money Market Funds) of the value of its net assets in illiquid securities.
Illiquid securities generally include repurchase agreements and time deposits
with notice/termination dates in excess of seven days, SMBS issued by private
issuers, interest rate and currency swaps, unlisted over-the-counter options,
GICs and certain securities which are subject to trading restrictions because
they are not registered under the Securities Act of 1933 (the "1933 Act").
  If otherwise consistent with its investment objective and policies, each Fund
may purchase commercial paper issued pursuant to Section 4(2) of the 1933 Act
and securities that are not registered under the 1933 Act but can be sold to
"qualified institutional buyers" in accordance with Rule 144A under the 1933
Act. These securities will not be considered illiquid so long as Northern Trust
determines, under guidelines approved by Northern Funds' Board of Trustees, that
an adequate trading market exists. This practice could increase the level of
illiquidity during any period that qualified institutional buyers become
uninterested in purchasing these securities. The ability to sell to qualified
institutional buyers under Rule 144A is a relatively recent development, and it
is not possible to predict how this market will ultimately develop.

Portfolio Transactions and Turnover. Northern Trust's Advisory Agreement
provides that in selecting brokers or dealers to place orders for transactions
(a) involving common and preferred stocks, Northern Trust shall use its best
judgment to obtain the best overall terms available and (b) involving bonds and
other fixed income obligations, Northern Trust shall attempt to obtain best net
price and execution. In assessing the best overall terms available for any
transaction, Northern Trust is to consider all factors it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis. In evaluating the best overall terms available and in
selecting the broker or dealer to execute a particular transaction, Northern
Trust may consider the brokerage and research services provided to the Funds
and/or other accounts over which Northern Trust or an affiliate of Northern
Trust exercises investment discretion. These brokerage and research services may
include industry and company analyses, portfolio services, quantitative data,
market information systems and economic and political consulting and analytical
services.
  The portfolio turnover rates of the Funds will vary from year to year, and may
be affected by changes in country and currency weightings, as well as changes in
the holdings of specific issuers. Investments in issuers in smaller or emerging
markets may also contribute to portfolio turnover for the International Funds.
High portfolio turnover (100% or more) may result in the realization of short-
term capital gains which are taxable to shareholders as ordinary income. In
addition, higher turnover rates can result in corresponding increases in
commissions and other transaction costs. Northern Trust will not consider
turnover rate a limiting factor in making investment decisions. The portfolio
turnover rates of each Fund (other than the Money Market Funds and the
Technology Fund) for Northern Funds fiscal year ended March 31, 1995 are stated
under "Financial Highlights." Northern Funds expects that the annual turnover
rate of the Technology Fund will generally not exceed 150%.

Miscellaneous. After its purchase by a Fund, a rated security may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. Northern Trust will consider such an event in determining
whether the Fund should continue to hold the security. Except for the
convertible securities described above, Northern Trust expects to sell promptly
any securities that are non-investment grade which exceed 5% of a Fund's net
assets, or are below "high quality" in the case of the Money Market Funds,
where it has determined that such sale is in the best interest of the Fund.
Because Northern Trust and the Board of Trustees of Northern Funds have
determined that their current sale would not be in the Fund's best interests, as
of the date of this Prospectus, the Municipal Money Market Fund held notes
issued by Orange County, California that were below "high quality." See
"Investment Information - Municipal Money Market Fund - Orange County Notes."
  For a description of applicable securities ratings, see Appendix A to the
Additional Statement. Investment grade securities rated BBB by S&P, Duff or
Fitch, or Baa by Moody's have certain speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than in the case of higher
rated securities.
  The Funds do not intend to purchase certificates of deposit of Northern Trust
or its affiliate banks, commercial paper issued by Northern Trust's parent
holding company or other securities issued or guaranteed by Northern Trust, its
parent holding company or their subsidiaries or affiliates.

Investment Restrictions

A Fund's investment objective may be changed by Northern Funds' Board of
Trustees without shareholder approval. Shareholders will, however, be notified
of any changes. Any such change may result in a Fund having an investment
objective different from the objective which the shareholder considered
appropriate at the time of investment in the Fund. No assurance can be provided
that a Fund will achieve its investment objective.
  Each Fund has also adopted certain fundamental investment restrictions that
may be changed only with the approval of a majority of a Fund's outstanding
shares. The following description summarizes several of the Funds' fundamental
restrictions, which are set forth in full in the Additional Statement.
  No Fund may:
  1. purchase securities (except U.S. Government securities and repurchase
agreements collateralized by such securities) if more than 5% of its total
assets at the time of purchase will be invested in the securities of any one
issuer, except that up to 25% (50% for the California Municipal Money Market
Fund) of a Fund's total assets may be invested without regard to this 5%
limitation;
  2. subject to the foregoing 25% exception, purchase more than 10% of the
outstanding voting securities of any issuer;
  3. invest 25% or more of its total assets at the time of purchase in
securities of issuers whose principal business activities are in the same
industry, except for the Technology Fund which may not, except during temporary
defensive periods, purchase the securities of any issuer, if, as a result of
such purchase, less than 25% of the assets of the Fund would be invested in the
securities of issuers principally engaged in technology business activities; and
  4. borrow money except in amounts up to 33 1/3% of the value of its total
assets at the time of borrowing.
  Restrictions 1 and 2 do not apply to the International Fixed Income Fund.
Instead, as a non-fundamental investment restriction, the International Fixed
Income Fund will not hold any securities (except U.S. Government securities and
repurchase agreements collateralized by such securities) that would cause, at
the end of any tax quarter, more than 5% of its total assets to be invested in
the securities of any one issuer, except that up to 50% of the Fund's total
assets may be invested without regard to this limitation so long as no more than
25% of the Fund's total assets are invested in any one issuer (except the U.S.
Government, its agencies and instrumentalities).
  In addition, in accordance with current SEC regulations, the Money Market,
U.S. Government Money Market and U.S. Government Select Money Market Funds
intend, as a non-fundamental policy, to limit investments in the securities of
any single issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and repurchase agreements
collateralized by such securities) to not more than 5% of the value of their
respective total assets at the time of purchase, except for 25% of the value of
their total assets which may be invested in any one issuer for a period of up 
to three Business Days. The Money Market, U.S. Government Money Market and 
U.S. Government Select Money Market Funds will also limit their investments in
Eligible Securities that are not in the highest rating category as determined 
by two NRSROs (or one NRSRO if the security is rated by only one NRSRO) or, if
unrated, are not of comparable quality, to 5% of their total assets, with
investments in any one such issuer being limited to no more than 1% of its 
total assets or $1 million, whichever is greater, measured at the time of 
purchase.

OPENING AN ACCOUNT AND
PURCHASING SHARES
An investment account may be opened and shares purchased directly from Northern
Funds by following the instructions below under "Purchasing Shares Directly 
from the Funds." If you maintain certain accounts at Northern Trust or 
another institution (such as a bank or broker/dealer) that has entered
into an agreement with Northern Funds to provide services to its customers, you
may purchase shares through your institution in accordance with its procedures.
See "Purchasing Shares Through Northern Trust and Other Institutions" below
for more details. If you have any questions or need any assistance in opening 
an investment account or purchasing shares, call 1-800-595-9111.

Purchasing Shares Directly
from the Funds

For your convenience, there are a number of ways to invest directly with
Northern Funds. When establishing an investment account directly with Northern
Funds, the minimum initial investment in a Fund is $2,500 ($500 for an IRA; 
$250 for a spousal IRA; $250 under the Automatic Investment Plan; and $500 for
employees of the Northern Trust and its affiliates). The minimum subsequent
investment is $50 (except for reinvestments of distributions for which there is
no minimum). The Funds reserve the right to waive these minimums.

By Mail. You may purchase shares by mail by sending a Purchase Application, a
copy of which accompanies this Prospectus, together with a check or money order
payable to Northern Funds in the envelope provided or by addressing your
envelope to Northern Funds at P.O. Box 75986, Chicago, Illinois 60690-6319.
Additional requirements may be imposed. If using overnight delivery use the
following address: 801 South Canal Street, Chicago, Illinois 60607, Attn:
Northern Funds. Your check must be drawn on a bank located in the U.S. and must
be payable in U.S. dollars. When making subsequent investments, enclose your
check with the return remittance portion of the confirmation of your previous
investment, or indicate on your check or a separate piece of paper your name,
address and account number.
  A $20 fee will be charged by the Transfer Agent if any check used for
investment does not clear. In addition, you will be responsible for any loss
suffered by a Fund. If you purchase shares by check and subsequently request the
redemption of those shares, Northern Funds may delay the payment of redemption
proceeds until the Transfer Agent is satisfied that the check has cleared, which
may take up to 15 days from the purchase date. If you anticipate redemptions
soon after purchase, you may wish to wire funds to avoid delays. Northern Funds
will not accept payment in cash or third party checks for the purchase of
shares.

By Wire. You may make initial or subsequent investments in shares of the Funds
by wiring federal funds. If you are opening an account with a wire purchase, you
must call 1-800-595-9111 for instructions prior to wiring funds. You must
promptly complete a Purchase Application and forward it to the Transfer Agent in
the envelope provided herewith, or by addressing your envelope to Northern Funds
at P.O. Box 75986, Chicago, Illinois 60690-6319. Additional requirements may be
imposed. Redemptions will not be paid until your completed application has been
received by the Transfer Agent. If you wish to add to an existing account by
wire purchase, you may wire federal funds to:
   The Northern Trust Company
   Chicago, Illinois
   ABA Routing No. 0710-00152,
   (Reference 10 Digit Fund Account Number)
   (Reference Shareholder's Name)

Direct Deposit. You may purchase additional shares through the Direct Payroll
Deposit Plan offered by Northern Funds. Through this plan, periodic investments
(minimum $50) are made automatically from your payroll check into your existing
Fund account. In order to participate in the plan, your employer must have
direct deposit capabilities through the Automated Clearing House ("ACH")
available to its employees. The plan may be used for other direct deposits, 
such as social security checks, military allotments, and annuity payments. 
Further details about this service may be obtained from the Transfer Agent 
by calling 1-800-595-9111. Northern Funds reserves the right, at any time 
and without prior notice, to limit or terminate the Direct Payroll Deposit 
privilege or its use in any manner by any person.

Automatic Investment. Northern Funds offers an Automatic Investment Plan that
allows you to automatically purchase shares on a regular, monthly basis ($250
initial minimum, $50 monthly minimum additions). Under this plan the Transfer
Agent originates an ACH request to your financial institution which forwards
funds periodically to the Transfer Agent to purchase shares. The plan can be
established with any financial institution that participates in the ACH funds
transfer system. No service fee is currently charged by Northern Funds for
participation in the plan. You may establish the plan by completing the
appropriate section on the Purchase Application when opening an account. You may
also establish the plan after an account is opened by completing an Automatic
Investment Plan Application which may be obtained by calling 1-800-595-9111. If
an investor discontinues participation in the plan, the Funds reserve the right
to redeem the investor's account involuntarily, upon 60 days' written notice, if
the account's net asset value is $1,000 or less.

Directed Reinvestments. In addition to having your income dividends and/or
capital gains distributions reinvested in shares of the Fund from which such
distributions are paid, you may elect the directed reinvestment option and have
dividends and capital gains distributions automatically invested in another
Northern Fund. In addition, systematic withdrawals from one account and
reinvestments in another account may be established. See "Redeeming and
Exchanging Directly from the Funds - Systematic Withdrawals." Reinvestments
can only be directed to an existing Northern Funds account (which must meet the
minimum investment requirement). Directed reinvestments may be used to invest
funds from a regular account to another regular account, from a qualified plan
account to another qualified plan account, or from a qualified plan account to a
regular account. Directed reinvestments from a qualified plan account to a
regular account may have adverse tax consequences including imposition of a
penalty tax and therefore you should consult your own tax adviser before
commencing these transactions.

By Exchange. You may open a new account or add to an existing account by
exchanging shares of one Fund for shares of any other Fund offered by Northern
Funds. See "Redeeming and Exchanging Shares" for details.

Purchasing Shares Through Northern Trust and Other Institutions

Northern Trust customers may purchase shares through their qualified accounts
and should consult with their account officer for additional information and
instructions. Customers of other institutions (together with Northern Trust,
"Service Organizations"), such as banks or broker/dealers that have entered
into agreements with Northern Funds, should contact their account officers for
appropriate purchase instructions. Northern Trust or another Service
Organization may impose particular customer account requirements in connection
with investments in the Funds, such as minimum account size or minimum account
thresholds above which excess cash balances may be invested in Fund shares. To
determine whether you may purchase shares through your institution, contact your
institution directly or call 1-800-595-9111. Purchases (and redemptions) placed
through Northern Trust or another Service Organization are processed only on
days that both Northern Funds and the particular institution are open for
business.
  Depending on the terms of the particular account used to purchase Fund shares,
Northern Trust or other institutions may impose charges against the account.
These charges could include asset allocation fees, account maintenance fees,
sweep fees, compensating balance requirements or other charges based upon
account transactions, assets or income. The charges will reduce the net return
on an investment in a Fund. For further discussion of Service Organizations and
the procedures for purchasing (and redeeming) shares through them, see
"Management - Service Organizations."

Additional Purchase Information

Effective Time and Price of Purchases - Non-Money Market Funds. A purchase order
for Fund shares received by the Transfer Agent by 3:00 p.m. (Chicago Time) on a
Business Day (as defined below under "Further Information - Miscellaneous")
will be priced at the net asset value determined on that day, provided that
either: (a) the order is accompanied by payment of the purchase price; or (b)
the order is placed by Northern Trust or a Service Organization that is acting
on behalf of itself or its qualified customer accounts and undertakes to make
payment on the next Business Day in the form of federal funds or other
immediately available funds. If an order in proper form with proper payment is
not received by the Transfer Agent by such time, the order will be processed at
the next determined net asset value after the Transfer Agent has received both
an order in proper form and such payment.

Effective Time and Price of Purchases - Money Market Funds. A purchase order for
Fund shares received by the Transfer Agent by 1:00 p.m. (Chicago Time) on a
Business Day will be executed that day, provided immediately available funds
have been received by the Transfer Agent by that time. If your purchase order or
immediately available funds are not received by the Transfer Agent by 1:00 p.m.
(Chicago Time), then your purchase order will be executed on the next Business
Day following the Business Day on which your order and immediately available
funds are received by the Transfer Agent. Purchase orders that are accompanied
by payment in any form other than immediately available funds will be executed
on the next Business Day after the Business Day on which both the order and
payment in proper form are received by the Transfer Agent.

Miscellaneous Purchase Information. You will be responsible for all losses and
expenses of the Funds as a result of a check that does not clear or an ACH
transfer that is rejected. Northern Funds may decline to accept a purchase order
when, in the judgment of Northern Funds or its investment adviser, it would not
be in the best interest of existing shareholders to accept the order. Federal
regulations require that you provide a social security number or other certified
taxpayer identification number upon opening or reopening an account. Purchase
Applications without such a number or an indication that a number has been
applied for will not be accepted. If a number has been applied for, the number
must be provided and certified within sixty days of the date of the Purchase
Application. Payment for shares of a Fund may, in the discretion of Northern
Trust, be made in the form of securities that are permissible investments for
the respective Fund. For further information, see the Additional Statement.
Additions or changes to any information in your account registration (for
example, a change in registration from a joint account to an individual account)
may be made by submitting a written request to the Transfer Agent accompanied by
a signature guarantee by a financial institution that is a participant in the
Stock Transfer Agency Medallion Program ("STAMP") or such other means or
evidence of authority as may be acceptable to the Transfer Agent. Additional
requirements may be imposed. In the interests of economy and convenience,
certificates representing shares of the Funds are not issued. Northern Funds may
reproduce this Prospectus in an electronic format which may be available on the
Internet. If you have received this Prospectus in its electronic format you, or
your representative, may contact the Transfer Agent for a free paper copy of
this Prospectus by writing to the Northern Funds Center at P.O. Box 75986,
Chicago, Illinois 60690-6319 or by calling 1-800-595-9111.

REDEEMING AND
EXCHANGING SHARES

You can arrange to withdraw your investment in the Funds by selling some or all
of your shares. This process is known as "redeeming" your shares. The
procedures for redeeming shares differ depending on whether you purchase your
shares directly from Northern Funds or through Northern Trust or another Service
Organization. If you purchase your shares through an account at Northern Trust
or another Service Organization, you will redeem them in accordance with the
instructions pertaining to that account.

Redeeming and Exchanging Directly from the Funds

When you purchase your shares directly from Northern Funds, you may redeem or
exchange shares by the methods described below. You may also use any of these
methods if you purchase your shares through an account at Northern Trust or
another Service Organization and you appear on Northern Funds' records as the
registered holder. You may call 1-800-595-9111 if you have any questions
regarding redemptions or exchanges.
  Northern Funds imposes no charges when you redeem or exchange shares.
Remember, however, when shares are purchased through Northern Trust or another
Service Organization, a fee may be charged by those institutions for providing
services in connection with your investment.

By Mail. You may redeem shares in any number or dollar amount by sending a
written request to Northern Funds, P.O. Box 75986, Chicago, Illinois 60690-6319.
The redemption request must state the number of shares or the dollar amount to
be redeemed and identify the Fund account number. If the redemption proceeds
are to be sent elsewhere than the address of record, each request must be
accompanied by a signature guarantee by a financial institution that
participates in STAMP or such other means or evidence of authority as may be
acceptable to the Transfer Agent. In addition, written requests for redemptions
exceeding $50,000 must be accompanied by a signature guarantee by a financial
institution that participates in STAMP or such other means or evidence of
authority as may be acceptable to the Transfer Agent. Additional requirements
may be imposed. A signature notarized by a notary public is unacceptable.
Northern Funds reserves the right to require signature guarantees in other
circumstances based on the amount of the redemption request or other factors,
and may impose additional requirements.

By Wire. If you authorize wire redemptions on your Purchase Application, shares
can be redeemed and the proceeds sent by federal wire transfer to a previously
designated account. You will be charged $15 for each wire redemption unless the
designated account is maintained at Northern Trust or an affiliated bank. The
minimum amount that may be redeemed by this method is $250. Northern Funds
reserves the right to change this minimum or to terminate the wire redemption
privilege at any time without notice. To change bank instructions, a written
request accompanied by a signature guarantee by a financial institution that
participates in STAMP, or such other means or evidence of authority acceptable
to the Transfer Agent, must be sent to Northern Funds, P.O. Box 75986, Chicago,
Illinois 60690-6319. Additional requirements may be imposed.

By Check. You may also redeem shares of the Money Market Funds by redemption
check in amounts of $250 or more once the checkwriting privilege has been
established. When the check is presented to the Transfer Agent for payment, the
Transfer Agent, as your agent, will cause the particular Fund involved to redeem
a sufficient number of your shares to cover the amount of the check. Dividends
are earned until the check clears the Transfer Agent. You can establish the
checkwriting privilege by checking the appropriate box on the Purchase
Application, or if your Fund account is already opened, by completing the
appropriate form which may be obtained by calling the Transfer Agent at 1-800-
595-9111. When establishing checkwriting for an account that is already opened,
the form must be signed by each person whose name appears on the account
accompanied by signature guarantees by a financial institution that participates
in STAMP or such other means or evidence of authority as may be acceptable to
the Transfer Agent. Additional requirements may be imposed.
  You may place stop payment requests on checks by calling the Transfer Agent at
1-800-595-9111. A $20 fee will be charged for each stop payment request. If
there are insufficient shares in your account to cover the amount of your
redemption by check, the check will be returned, marked "insufficient funds,"
and a fee of $20 will be charged to the account. You may not use checks to close
an account or redeem shares purchased within the past fifteen days. Checks you
write will not be returned to you, although copies are available upon request.
Northern Funds reserves the right, at any time without prior notice, to suspend,
limit or terminate the checkwriting privilege or its use in any manner by any
person.

Systematic Withdrawals. Northern Funds offers a Systematic Withdrawal Plan. If
you own shares of a Fund with a minimum value of $10,000, you may elect to have
a fixed sum redeemed at regular intervals ($250 minimum amount per withdrawal)
and distributed in cash or reinvested in one or more of the other Funds offered
by Northern Funds. See "Purchasing Shares Directly from the Funds - Directed
Reinvestments." An application form and additional information may be obtained
from the Transfer Agent by calling 1-800-595-9111.

Exchange Privilege. Northern Funds offers an exchange privilege that permits you
to exchange shares of one Fund for shares of another Fund offered by Northern
Funds. To establish the exchange privilege, you must check the appropriate box
on the Purchase Application or, if your Fund account is already opened, you may
send a written request to the Transfer Agent, and must establish or maintain
accounts with an identical title in each Fund involved in an exchange
transaction. In addition, the shares being exchanged must have a value of at
least $1,000 ($2,500 if a new account is being established by the exchange).
  Since an excessive number of exchanges may be disadvantageous to Northern
Funds, Northern Funds reserves the right, at any time without prior notice, to
suspend, limit or terminate the exchange privilege of any shareholder who makes
more than eight exchanges of shares in a year and/or two exchanges of shares in
a calendar quarter. A shareholder may continue making exchanges until notified
that the exchange privilege has been suspended, limited or terminated. Questions
regarding the exchange privilege may be directed to 1-800-595-9111 or to your
account officer at your Service Organization. Exchanges will be processed only
when the shares being acquired can be legally sold in the state of the
investor's residence.
  Exchanges may have tax consequences. No exchange fee is currently imposed by
Northern Funds on exchanges. Northern Funds reserves, however, the right to
impose a charge in the future.

Telephone Privilege. This privilege permits you to redeem or exchange shares by
telephone. To establish the telephone privilege, you must check the appropriate
box on the Purchase Application, or if your Fund account is already opened, you
may send a written request to the Transfer Agent. The request must be signed by
each owner of the account and accompanied by signature guarantees as provided
below or such other means or evidence of authority as may be acceptable to the
Transfer Agent. Once you have established the telephone privilege, you may use
the telephone privilege by calling the Transfer Agent at 1-800-595-9111.
  The Transfer Agent has adopted procedures in an effort to establish reasonable
safeguards against fraudulent telephone transactions. The proceeds for
redemption orders will be sent by check, by wire transfer or by transfer to an
account maintained at Northern Trust or an affiliated bank. All checks will be
made payable to the shareholder of record and mailed only to the shareholder's
address of record. The address of record for redemption checks may be changed
only by a written request accompanied by signature guarantees by a financial
institution that participates in STAMP or such other means or evidence of
authority as may be acceptable to the Transfer Agent and sent to Northern Funds,
P.O. Box 75986, Chicago, Illinois 60690-6319. Additionally, the Transfer Agent
utilizes recorded lines for telephone transactions and will request a form of
personal identification if such identification has been furnished to the
Transfer Agent. Neither Northern Funds nor its Transfer Agent will be
responsible for the authenticity of instructions received by telephone that are
reasonably believed to be genuine. To the extent that Northern Funds fails to
use reasonable procedures to verify the genuineness of telephone instructions,
it or its service providers may be liable for instructions that prove to be
fraudulent or unauthorized. In all other cases, you will bear the risk of loss.
  Northern Funds reserves the right to refuse a telephone redemption if it
believes it is advisable to do so. Procedures for redeeming shares by telephone
may be modified or terminated by Northern Funds at any time without notice.
During periods of substantial economic or market change, telephone redemptions
may be difficult to place. If you are unable to contact the Transfer Agent by
telephone, shares may also be redeemed by mail as described above under the
discussion of redemptions by mail.

Redeeming and Exchanging Through Northern Trust and Other Institutions

If you purchase your shares through an account at Northern Trust or another
Service Organization, you will redeem or exchange them in accordance with the
instructions pertaining to that account. If you are listed on the books of
Northern Funds as the shareholder of record, you may also redeem and exchange
your shares using any of the methods described above under "Redeeming and
Exchanging Directly from the Funds." Questions regarding these redemptions or
exchanges should be directed to your account representative at Northern Trust or
another Service Organization. Although Northern Funds imposes no charges when
you redeem, when shares are purchased through Northern Trust or another Service
Organization a fee may be charged by those institutions for providing services
in connection with your account.

Additional Redemption and Exchange Information

Effective Time and Price of Redemptions and Exchanges. Redemption orders for
shares of a non-Money Market Fund are processed at the net asset value next
determined at 3:00 p.m. (Chicago Time) after receipt in good order by the
Transfer Agent by 3:00 p.m. (Chicago Time) on a Business Day. Redemption orders
for shares of a Money Market Fund are processed at the net asset value next
determined at 1:00 p.m. (Chicago Time) after receipt in good order by the
Transfer Agent by 1:00 p.m. (Chicago Time) on a Business Day. Good order means
that the request must include the following information: the account number and
Fund name; the amount of the transaction (as specified in dollars or number of
shares); the signatures of all account owners exactly as they are registered on
the account (except for telephone and wire redemptions); required signature
guarantees (if applicable); and other supporting legal documents that might be
required in the case of estates, corporations, trusts and certain other
accounts. Call 1-800-595-9111 for the additional documentation that may be
required of these entities. Exchange orders are likewise processed at the net
asset value per share next determined after receipt in good order by the
Transfer Agent on a Business Day.

Payment of Redemption Proceeds - Non-Money Market Funds. The non-Money Market
Funds will make payment for redeemed shares typically within one or two Business
Days, but no later than the seventh day after receipt by the Transfer Agent of a
request in good order on a Business Day, except as otherwise provided by the
rules of the SEC. However, if any portion of the shares to be redeemed
represents an investment made by check, the Funds may delay the payment of the
redemption proceeds until the Transfer Agent is reasonably satisfied that the
check has been collected, which could take up to fifteen days from the purchase
date. This procedure does not apply to shares purchased by money order or wire
payment. During the period prior to the time the shares are redeemed, dividends
on such shares will accrue and be payable.

Payment of Redemption Proceeds - Money Market Funds. If received by the Transfer
Agent by 1:00 p.m. (Chicago Time) on a Business Day, a redemption request
normally will result in proceeds being sent on the next Business Day, unless
payment in immediately available funds on the same Business Day is specifically
requested. Proceeds for redemption orders received on a non-Business Day will
normally be sent on the second Business Day after receipt in good order.
However, if any portion of the shares to be redeemed represents an investment
made by check, Northern Funds may delay the payment of the redemption proceeds
until the Transfer Agent is reasonably satisfied that the check has been
collected, which could take up to fifteen days from the purchase date. Northern
Funds reserves the right to defer crediting, sending or wiring redemption
proceeds for up to seven days after receiving the redemption order if, in its
judgment, an earlier payment could adversely affect a Fund.

Miscellaneous Redemption Information. All redemption proceeds will be sent by
check unless Northern Trust or the Transfer Agent is directed otherwise. The ACH
system may be utilized for payment of redemption proceeds. Redemptions may not
be processed if a shareholder has failed to submit a completed and signed 
Purchase Application. Northern Funds may require any information reasonably 
necessary to ensure that a redemption has been duly authorized.
  To relieve Northern Funds of the cost of maintaining uneconomical accounts,
Northern Funds reserves the right to redeem the shares held in any account if at
the time of any redemption of shares in the account, the net asset value of the
remaining shares in the account falls below $1,000. Before such involuntary
redemption would occur, you would be given at least 60 days' written notice and,
during that period, you could make an additional investment to restore the
account to at least the minimum amount, in which case there would be no such
redemption. Involuntary redemptions will not be made because the value of shares
in an account falls below the minimum amount solely because of a decline in a
Fund's net asset value. Any involuntary redemption would be at net asset value.
Northern Funds also reserves the right to redeem shares involuntarily if it is
otherwise appropriate to do so under the 1940 Act (see "Amortized Cost
Valuation" in the Additional Statement).

DISTRIBUTIONS AND TAXES

Distributions

Each Money Market Fund's net investment income is declared as a dividend on each
Business Day on the shares that are outstanding at 1:00 p.m. (Chicago Time) on
the declaration date. Net investment income includes interest accrued on the
Fund's assets less the Fund's estimated expenses. Dividends from net investment
income are paid monthly. Net realized short-term capital gains, after reduction
for capital loss carry-forwards, if any, of a Fund may be distributed from time
to time during Northern Funds' fiscal year (but not less frequently than
annually). The Money Market Funds do not expect to realize net long-term capital
gains.
  Dividends from the net investment income of each of the U.S. Government, Fixed
Income, Intermediate Tax-Exempt and Tax-Exempt Funds are declared daily on each
Business Day and paid monthly. Dividends from the net investment income of the
International Fixed Income Fund are declared daily on each Business Day and paid
quarterly. Shares of these five Funds are entitled to the dividends declared by
a Fund beginning on the next Business Day after the purchase order is executed.
  Dividends from the net investment income of the other Funds are declared and
paid as follows:

                                   Dividends
     Fund                      Declared and Paid
Income Equity.....................  Monthly
Growth Equity....................  Quarterly
Select Equity.....................  Annually
Small Cap Growth..................  Annually
International Growth Equity.......  Annually
International Select Equity.......  Annually
Technology........................  Annually

  The net realized capital gains of each Fund are distributed at least annually.
  Dividends and capital gain distributions, if any, will reduce the net asset
value of a Fund (other than a Money Market Fund or a Fixed Income Fund) by the
amount of the dividend or capital gain distribution. Dividends and capital gain
distributions, if any, are automatically reinvested (without any sales charge or
portfolio transaction fee) in additional shares of the same Fund at their net
asset value determined on the payment date. You may, however, notify the
Transfer Agent in writing that you elect to have dividends and/or capital gain
distributions paid in cash or reinvested in shares of another Fund offered by
Northern Funds at their net asset value determined on the payment date (provided
you maintain an account in such Fund). This election will become effective for
distributions paid two days after its receipt by the Transfer Agent.
  Net loss, if any, from certain foreign currency transactions or instruments
that is otherwise taken into account with respect to the International Fixed
Income Fund in calculating net investment income or net realized capital gains
for accounting purposes may not be taken into account in determining the amount
of dividends to be declared and paid, with the result that a portion of the
Fund's dividends may be treated as a return of capital, nontaxable to the extent
of a shareholder's tax basis in his or her shares.

Taxes

As with any investment, you should consider the tax implications of an
investment in Northern Funds. The following is only a short summary of the
important tax considerations generally affecting the Funds and their
shareholders. You should consult your tax adviser with specific reference to
your own tax situation. Northern Funds will send written notices to shareholders
annually regarding the tax status of distributions made by the Funds. The Funds
will determine annually the percentages of their respective net investment
income which are exempt from tax, which constitute an item of tax preference for
purposes of the federal alternative minimum tax, and which are fully taxable and
will apply these percentages uniformly to all dividends declared from net
investment income during that year. These percentages may differ significantly
from the actual percentages for any particular day.

Federal Taxes. Each Fund intends to qualify as a "regulated investment
company" under the Internal Revenue Code (the "Code"), meaning that to the
extent a Fund's earnings are distributed to shareholders as required by the
Code, the Fund itself is not required to pay federal income taxes.
  To qualify, a Fund will pay as dividends at least 90% of its investment
company taxable income and at least 90% of its net tax-exempt income (if any)
each year. Investment company taxable income includes taxable interest,
dividends and short-term capital gains less expenses. Dividends based on either
investment company taxable income (which includes income resulting from
investments in options and futures contracts) or the excess of net short-term
capital gain over net long-term capital loss are treated as ordinary income in
determining gross income for tax purposes, whether or not the dividends are
received in cash or additional shares. (Federal income taxes for distributions
to an IRA or other qualified retirement account are deferred under the Code.)
  Dividends paid by the Intermediate Tax-Exempt, Tax-Exempt, Municipal Money
Market and California Municipal Money Market Funds (together, the "Tax-Exempt
Funds") (but not the other Funds) that are derived from interest on Municipal
Instruments ("exempt-interest dividends") may be treated by you as excludable
from your gross income (unless because of your particular situation exclusion
would be disallowed). You should note that income that is not subject to federal
income taxes may nevertheless have to be considered along with other adjusted
gross income in determining whether any Social Security payments received by you
are subject to federal income taxes. You should also note that a portion of the
exempt-interest dividends paid by the Intermediate Tax-Exempt Fund and Tax-
Exempt Fund may be, and a portion of such dividends by the Municipal Money
Market and California Municipal Money Market Funds generally will be, an item of
tax preference for both corporate and individual taxpayers in determining
federal alternative minimum and environmental tax liability. (Corporate
taxpayers will be required to take into account all exempt-interest dividends
from the Tax-Exempt Funds in determining certain adjustments for alternative
minimum tax and environmental tax purposes.)
  Any distribution based on the excess of long-term capital gain over net short-
term capital loss will be taxable as a long-term capital gain, no matter how
long you hold Fund shares. If you hold shares for six months or less, and during
that time receive a distribution that is taxable as a long-term capital gain,
any loss realized on the sale of those shares will be treated as a long-term
loss to the extent of the earlier capital gain distribution.
  Before purchasing shares you should consider the effect of any capital gain
distributions and, for those Funds that do not declare dividends daily, any net
income dividends that are expected to be declared or that have been declared but
not yet paid. The per share price will be reduced by the amount of the payment,
so that a shareholder will, in effect, have paid full price for the shares and
then received a portion of the price back as a taxable distribution. This is
because at any given time the value of your shares includes the undistributed
net gains, if any, realized by a Fund on the sale of portfolio securities, and
undistributed dividends and interest received, less the Fund's expenses. Because
such gains and dividends are included in the price of your shares, when they are
distributed, the price of your shares is reduced by the amount of the
distribution. Accordingly, if your distribution is reinvested in additional
shares, the distribution has no effect on the value of your investment; while
you own more shares, the price of each share has been reduced by the amount of
the distribution. Likewise, if you take your distribution in cash, the value of
your shares after the record date plus the cash received is equal to the value
of the shares before the record date.
  Any dividends declared in October, November or December and payable to
shareholders during those months will be deemed to have been paid by a Fund and
received by shareholders on December 31, so long as the dividends are actually
paid, as expected, in January of the following year.
  Shareholders may realize a taxable gain or loss when redeeming, transferring
or exchanging their shares (or in using the Systematic Withdrawal Plan to direct
reinvestments), depending on the difference in the prices at which the shares
were originally purchased and when redeemed, transferred or exchanged.
  Dividends and certain interest income earned by a Fund from foreign securities
may be subject to foreign withholding taxes or other taxes. So long as more than
50% of the value of a Fund's total assets at the close of any taxable year
consists of stock or securities of foreign corporations, the Fund may elect, for
U.S. federal income tax purposes, to treat certain foreign taxes paid by it,
including generally any withholding taxes and other foreign income taxes, as
paid by its shareholders. It is possible that one or more of the International
Funds will make this election in certain years. Should a Fund make the election,
the amount of such foreign taxes paid by the Fund will be included in its
shareholders' income pro rata (in addition to taxable distributions actually
received by them), and each shareholder will be entitled either (a) to credit
his proportionate amounts of such taxes against his U.S. federal income tax
liabilities, or (b) if he itemizes deductions, to deduct such proportionate
amounts from his U.S. federal taxable income.
  If a Fund invests in certain "passive foreign investment companies"
("PFICs"), it would be subject to federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such investments even if it distributes the income to its
shareholders. If a Fund elects to treat the PFIC as a "qualified electing
fund" ("QEF") and the PFIC furnishes certain financial information in the
required form, the Fund instead would be required to include in income each 
year its allocable share of the ordinary earnings and net capital gains of 
the QEF, whether or not received, and such amounts would be subject to the 
various distribution requirements described above. In addition, a Fund could,
as an alternative, treat unrealized gains as though they were realized for tax
purposes.
  Northern Funds will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of the dividends and distributions paid to any investor (i)
who has provided either an incorrect Social Security Number or Taxpayer
Identification Number or no number at all, (ii) who is subject to withholding by
the Internal Revenue Service for failure to properly include on his return
payments of interest or dividends, or (iii) who has failed to certify to
Northern Funds, when required to do so, that he is not subject to backup
withholding or that he is an "exempt recipient."

State and Local Taxes Generally.  Because your state and local taxes may be
different than the federal taxes described above, you should see your tax
adviser. In particular, dividends may be taxable under state or local law as
dividend income even though all or part of those dividends come from interest on
obligations that, if held by you directly, would be free of such income taxes.
Additionally, although the U.S. Government Select Money Market Fund intends to
invest principally in U.S. Government securities the interest on which is
generally exempt from state income taxation, you should see your tax adviser to
determine whether distributions from the Fund are exempt in your state.

State and Local Taxes - California Municipal Money Market Fund. If, at the close
of each quarter of the California Municipal Money Market Fund's taxable year, at
least 50% of the value of its total assets consists of California Municipal
Instruments and certain specified federal obligations, and if the Fund qualifies
as a regulated investment company for federal tax purposes, then the Fund will
be qualified to pay dividends exempt from California state personal income tax
to its shareholders. If the Fund so qualifies, dividends derived from interest
attributable to California Municipal Instruments and such federal obligations
will be exempt from California state personal income tax. (Such treatment may
not apply, however, to investors who are "substantial users" or "related
persons" with respect to facilities financed by portfolio securities held by
the Fund.) For this purpose, federal obligations are any obligations the
interest on which is excludable from income under the United States Constitution
or the laws of the United States. Any dividends paid to shareholders subject to
California state franchise tax or California state corporate income tax may be
taxed as ordinary or capital gain dividends to such shareholders notwithstanding
that all or a portion of such dividends are exempt from California state
personal income tax.
  Except as noted with respect to the California state personal income tax,
dividends may be taxable under state or local law as dividend income even though
all or part of those dividends come from interest on obligations that, if held
by you directly, would be free of such income taxes. Moreover, to the extent, if
any, that dividends paid by the Fund to its shareholders are derived from
taxable interest or from capital gains, such dividends will be subject to
federal income tax and California state personal income tax, if applicable,
whether or not such dividends are reinvested. Future legislative or
administrative changes or court decisions may materially affect the tax
consequences of investing in the Fund.

Tax Table

You may find it particularly useful to compare the tax-free yields of the Tax-
Exempt Funds to the equivalent yields from taxable investments. For an investor
in a low tax bracket, it may not be helpful to invest in a tax-exempt investment
if a higher after-tax yield can be achieved from a taxable instrument.
  The following table illustrates the difference between hypothetical tax-free
yields and tax-equivalent yields for different tax brackets. You should be
aware, however, that tax brackets can change over time and that your tax adviser
should be consulted for specific yield calculations.

                                  Federal
                                  Marginal         Tax-Exempt Yields
Taxable Income                    Tax Rate 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%


Single Return      Joint Return       Equivalent Taxable Yields
$      0-$ 22,750 $      0-$ 38,000  15% 4.71%  5.29% 5.88% 6.47% 7.06%  7.65%
$ 22,751-$ 55,100 $ 38,001-$ 91,850  28% 5.56%  6.25% 6.94% 7.64% 8.33%  9.03%
$ 55,101-$115,000 $ 91,851-$140,000  31% 5.80%  6.52% 7.25% 7.97% 8.70%  9.42%
$115,001-$250,000 $140,001-$250,000  36% 6.25%  7.03% 7.81% 8.59% 9.38% 10.16%
Over $250,000      Over $250,000   39.6% 6.62%  7.45% 8.28% 9.11% 9.93% 10.76%


The tax-exempt yields used here are hypothetical and no assurance can be made
that the Funds will attain any particular yield. A Fund's yield fluctuates as
market conditions change. The tax brackets and related yield calculations are
based on the 1994 federal marginal tax rates indicated in the table. The table
does not reflect the phase out of personal exemptions and itemized deductions
which will apply to certain higher income taxpayers. In addition, the brackets
do not take into consideration the California state personal income tax.








MANAGEMENT

Board of Trustees
The business and affairs of Northern Funds are managed under the direction of
its Board of Trustees. The Additional Statement contains the name of each
Trustee and other background information.

Investment Adviser, Transfer Agent and Custodian

Northern Trust, with offices at 50 S. LaSalle Street, Chicago, Illinois 60675,
serves as Northern Funds' investment adviser, transfer agent and custodian. As
transfer agent, Northern Trust provides various administrative servicing
functions, and any shareholder inquiries may be directed to it.
  Northern Trust, a member of the Federal Reserve System, is an Illinois state-
chartered commercial bank and the principal subsidiary of Northern Trust
Corporation, a bank holding company. Northern Trust was formed in 1889 with
capitalization of $1 million. As of June 30, 1995, Northern Trust Corporation
and its subsidiaries had approximately $19.3 billion in assets, $11.2 billion in
deposits and employed over 6,500 persons.
  Northern Trust and its affiliates administered in various capacities
(including as master trustee, investment manager or custodian) almost $550
billion in assets as of June 30, 1995 including over $91 billion for which
Northern Trust had investment management responsibility.
  Subject to the general supervision of Northern Funds' Board of Trustees,
Northern Trust is responsible for making investment decisions for the Funds and
placing purchase and sale orders for portfolio securities. Northern Trust is
also responsible for monitoring and preserving the records required to be
maintained under the regulations of the SEC (with certain exceptions unrelated
to its activities for Northern Funds). In making investment recommendations for
the Funds, investment advisory personnel must not inquire or take into
consideration whether issuers of securities proposed for purchase or sale for
the Funds' accounts are customers of Northern Trust's commercial banking
department. These requirements are designed to prevent investment advisory
personnel for the Funds from knowing which companies have commercial business
with Northern Trust and from purchasing securities where they know the proceeds
will be used to repay loans to the bank.
  As compensation for its advisory services and its assumption of related
expenses, Northern Trust is entitled to a fee, computed daily and payable
monthly, at an annual rate of .60% of the average daily net assets of each of
the Money Market Funds; .75% of the average daily net assets of each of the U.S.
Government, Fixed Income, Intermediate Tax-Exempt and Tax-Exempt Funds; .90% of
the average daily net assets of the International Fixed Income Fund; 1.00% of
the average daily net assets of each of the Income Equity and Growth Equity
Funds; and 1.20% of the average daily net assets of each of the Select Equity,
Small Cap Growth, International Growth Equity, International Select Equity and
Technology Funds. Although these advisory fee rates (except for the Money
Market Funds) are higher than the rates payable by most mutual funds, the Board
of Trustees believes they are comparable to the rates payable by other fixed
income, equity and international funds.
  Northern Trust also receives compensation as Northern Funds' custodian and
transfer agent. The fees payable by the Funds for these services are described
in the Additional Statement.
  The Money Market, Fixed Income and Equity Funds are advised by Northern
Trust's Investment Services Group. James M. Snyder, Vice President of Northern
Trust since 1980, Senior Vice President since 1991 and Chief Investment Officer
since 1995, oversees the management of all fixed income, equity and money market
assets managed by Northern Trust and is the head of Northern's Investment
Services Group. Mr. Snyder received his B.S. degree from Indiana University and
his M.B.A. degree from DePaul University. He is a Chartered Financial Analyst
and a member of the Investment Analysts Society of Chicago.
  The portfolio managers primarily responsible for the management of the
investment selections of the Funds (other than the Money Market Funds), together
with information as to their principal business occupations during the past five
years, are shown below.
Fixed Income Funds. Primary responsibility for the management of the Fixed
Income Fund and International Fixed Income Fund lies with Michael J. Lannan,
Second Vice President in the Fixed Income Management Division. Mr. Lannan has
had such responsibility for the Funds since they commenced operations in April,
1994. Mr. Lannan received his B.A. degree from Harvard University and his M.B.A.
degree from DePaul University. He is a member of the Institute of Chartered
Financial Analysts and the Investment Analysts Society of Chicago. Mr. Lannan
joined Northern Trust in 1986. During the past five years, Mr. Lannan has
managed various fixed income portfolios, including common and collective trust
funds invested in obligations of domestic and foreign issuers. Primary
responsibility for the management of the Intermediate Tax-Exempt Fund lies with
Eric Boeckmann, Second Vice President in Northern Trust's Fixed Income
Management Division. Mr. Boeckmann has had such responsibility for the Fund
since it commenced operations in April 1994. Mr. Boeckmann received his B.S.
degree from the University of Illinois and joined Northern Trust in 1985. During
the past five years, Mr. Boeckmann has managed various municipal bond
portfolios, including common trust funds comprised of municipal securities.
Primary responsibility for the management of the Tax-Exempt Fund lies with Peter
J. Flood, Vice President in Northern Trust's Fixed Income Management Division
and has had such responsibility for the Fund since it commenced operations in
April 1994. Mr. Flood received his S.B. degree from Loyola University and his
M.B.A. degree from the University of Chicago. Mr. Flood joined Northern Trust in
1979. During the past five years, Mr. Flood has managed various municipal bond
portfolios, including common trust funds invested in municipal securities.
Primary responsibility for the management of the U.S. Government Fund lies with
Monty M. Memler, Second Vice President. Mr. Memler has had such responsibility
for the Fund since November 16, 1994. Mr. Memler received his B.S. degree from
the University of Illinois and his M.B.A. degree from the University of Chicago.
He is a Chartered Financial Analyst and a member of the Investment Analysts
Society of Chicago. Mr. Memler joined Northern Trust in 1986. During the past
five years, Mr. Memler has managed various fixed income portfolios, including
common and collective trust funds and a mutual fund for another investment
company.

Equity Funds. Primary responsibility for the management of the Income Equity
Fund lies with Theodore T. Southworth, Vice President in the Personal Investment
Management Division since joining Northern Trust in 1984. Mr. Southworth has had
such responsibility for the Fund since November 1995. Mr. Southworth received
his B.A. degree, cum laude, from Harvard College. He is a Chartered Financial
Analyst and a member of the Investment Analysts Society of Chicago. Primary
responsibility for the management of the Growth Equity Fund lies with Theodore
Breckel, Vice President in the Personal Investment Management Division. Mr.
Breckel has had such responsibility for the Fund since February 1995. Mr.
Breckel received his A.B. and M.B.A. degrees from Indiana University and his
M.S. degree from DePaul University. He is a Chartered Financial Analyst and a
member of the Investment Analysts Society of Chicago and the Financial Analysts
Federation. He has been with Northern Trust since 1968. He has served in the
Personal Investment Management Division since 1985. Primary responsibility for
the management of the Select Equity Fund lies with Robert N. Streed, Vice
President in the Northern Investment Counselors Division. Mr. Streed has had
such responsibility for the Fund since it commenced operations in April 1994.
Mr. Streed received his B.B. degree from Western Illinois University and his
M.B.A. degree from DePaul University. He is a Chartered Financial Analyst and a
member of the Investment Analysts Society of Chicago and the Association for
Investment Management and Research. Mr. Streed joined Northern Trust in 1990.
Prior to joining Northern Trust, he was a Senior Vice President at Capital
Supervisors, Inc. where he managed an equity mutual fund and various equity
portfolios. Since joining Northern Trust, Mr. Streed has managed various equity
portfolios.
  John R. Goodwin, Vice President of Northern Trust since 1987, heads the
Structured Equity Management Division of Northern's Investment Services Group.
Mr. Goodwin received his B.S. degree from Oregon State University and his M.B.A.
degree from the University of Chicago. He is a Chartered Financial Analyst and a
member of the following organizations: the Society of Quantitative Analysts; the
International Society of Financial Analysts; the Chicago Options/Futures
Society; the Investment Analysts Society of Chicago; and the Association for
Investment Management and Research. Primary responsibility for the management of
the Small Cap Growth Fund lies with Susan J. French, Second Vice President in
the Structured Equity Management Division. Ms. French has had such
responsibility for the Fund since it commenced operations in April 1994. Ms.
French received her B.S. degree from Fairfield University and is a member of the
Investment Analysts Society of Chicago. Ms. French joined Northern Trust in
1986. During the past five years, Ms. French has managed short-term investment
funds and equity index funds including common and collective trust funds and a
mutual fund for another investment company.
  Robert A. LaFleur, Vice President of Northern Trust since 1982 and Senior Vice
President since 1990, is the Chief Investment Strategist and head of the Funds
Global Strategy Management Division of Northern's Investment Services Group. Mr.
LaFleur is responsible for developing and implementing domestic and global
investment strategies for Northern Trust and its affiliate banks. During the
past five years, Mr. LaFleur has managed international equity portfolios,
including common and collective trust funds invested principally in foreign
securities. Primary responsibility for the management of the International
Growth Equity and International Select Equity Funds lies with Mr. LaFleur. Mr.
LaFleur has had such responsibility for the Funds since the Funds commenced
operations in April 1994. Mr. LaFleur received his B.S. and M.B.A. degrees from
the University of Illinois. He is a Chartered Financial Analyst and a member of
the Financial Analysts Federation and the Chicago Society of Analysts. John B.
Leo will have primary responsibility over the management of the Technology Fund
when it commences operations. Mr. Leo received his B.S. degree from Northern
Illinois University and his M.B.A. degree from the University of Chicago. Mr.
Leo joined Northern Trust in 1984. During the past five years, Mr. Leo has
managed equity and bond portfolios.

Administrator and Distributor

Sunstone Financial Group, Inc. ("Sunstone"), 207 E. Buffalo Street, Suite 400,
Milwaukee, Wisconsin 53202, acts as administrator and distributor for Northern
Funds. Shares of the Funds are sold by Sunstone, as distributor, on a continuous
basis. As compensation for its administrative services (which include clerical,
compliance, regulatory and other services) and the assumption of related
expenses, Sunstone is entitled to a fee, computed daily and payable monthly, at
an annual rate of .15% of Northern Funds' average net assets. No compensation is
payable by Northern Funds to Sunstone for its distribution services.

Service Organizations

Northern Funds may enter into agreements with Service Organizations such as
banks, corporations, brokers, dealers and other financial institutions,
including Northern Trust, concerning the provision of support and/or
distribution services to their customers who own Fund shares. These services,
which are described more fully in the Additional Statement, may include support
services such as assisting investors in processing administrative purchase,
exchange and redemption requests; processing dividend and distribution payments
from the Funds; providing information to customers showing their positions in
the Funds; and providing subaccounting with respect to Fund shares beneficially
owned by customers or the information necessary for subaccounting. In addition,
Service Organizations may provide assistance, such as the forwarding of sales
literature and advertising to their customers, in connection with the
distribution of Fund shares. For their services, Service Organizations may
receive fees from a Fund at annual rates of up to .25% of the average daily net
asset value of the shares covered by their agreements.
  Service Organizations may charge their customers fees for providing
administrative services in connection with investments in a Fund. Under the
terms of their agreements with Northern Funds, Service Organizations are
required to provide a schedule of these fees to their customers. In addition,
investors should contact their Service Organization with respect to the
availability of shareholder services and the particular Service Organization's
procedures for purchasing and redeeming shares. It is the responsibility of
Service Organizations to transmit purchase and redemption orders and record
those orders on a timely basis in accordance with their agreements with their
customers.
  Conflict-of-interest restrictions may apply to the receipt of compensation
paid by Northern Funds in connection with the investment of fiduciary funds in
Fund shares. Institutions, including banks regulated by the Comptroller of the
Currency, Federal Reserve Board and state banking commissions, and investment
advisers and other money managers subject to the jurisdiction of the SEC, the
Department of Labor or state securities commissions, are urged to consult their
legal counsel before entering into agreements with Northern Funds.
  The Glass-Steagall Act and other applicable laws, among other things, prohibit
banks from engaging in the business of underwriting securities. Accordingly,
banks will be engaged under agreements with Northern Funds only to perform the
administrative and investor servicing functions described above, and will
represent that the services provided by them under the agreements will not be
primarily intended to result in the sale of Fund shares.
  Agreements that contemplate the provision of distribution services by Service
Organizations are governed by a Distribution and Service Plan (the "Plan")
that has been adopted by Northern Funds pursuant to Rule 12b-1 under the 1940
Act. No payments are made to Sunstone under the Plan. However, payments to
Service Organizations, including Northern Trust, under the Plan are not tied
directly to their own out-of-pocket expenses and therefore may be used as they
elect (for example, to defray their overhead expenses), and may exceed their
direct and indirect costs.

Expenses

Except as set forth above and in the Additional Statement, each Fund is
responsible for the payment of its expenses. These expenses include, without
limitation, the fees and expenses payable to Northern Trust and Sunstone,
brokerage fees and commissions, fees for the registration or qualification of
Fund shares under federal or state securities laws, expenses of the organization
of Northern Funds, taxes, interest, costs of liability insurance, fidelity
bonds, indemnification or contribution, any costs, expenses or losses arising
out of any liability of, or claim for damages or other relief asserted against
Northern Funds for violation of any law, legal, tax and auditing fees and
expenses, expenses of preparing and printing prospectuses, statements of
additional information, proxy materials, reports and notices and the printing
and distributing of the same to the Funds' shareholders and regulatory
authorities, compensation and expenses of its Trustees, payments to Service
Organizations, fees of industry organizations such as the Investment Company
Institute, and miscellaneous and extraordinary expenses incurred by Northern
Funds.
  Northern Trust and Sunstone intend to voluntarily reimburse a portion of the
Funds' expenses and/or reduce their advisory and administrative fees from the
Funds during the current fiscal year. The result of these reimbursements and fee
reductions will be to increase the performance of the Funds during the periods
for which the reductions and reimbursements are made.

FURTHER INFORMATION

Determining Share Price

Net asset value per share for purposes of purchases and redemptions is
calculated by Northern Trust on each Business Day as of 3:00 p.m. (Chicago Time)
for each non-Money Market Fund, and as of 1:00 p.m. (Chicago Time) for each
Money Market Fund. Net asset value is calculated by dividing the value of all
securities and other assets belonging to a Fund, less the liabilities charged to
a Fund, by the number of the Fund's outstanding shares.
  In seeking to maintain a net asset value of $1.00 per share with respect to
each Money Market Fund for purposes of purchases and redemptions, Northern Funds
values the portfolio securities held by each of the Money Market Funds pursuant
to the amortized cost method of valuation described in the Additional Statement
under "Amortized Cost Valuation."
  Securities held by the other Funds that are listed on a recognized U.S. or
foreign securities exchange are valued at the last quoted sales price on the
securities exchange on which the securities are primarily traded, except that
securities listed on an exchange in the United Kingdom are valued at the average
of the closing bid and ask prices. If securities listed on a U.S. exchange are
not traded on a valuation date, they will be valued at the last quoted bid
price. If securities traded on a foreign securities exchange are not traded on a
valuation date, they will be valued at the most recent quoted sales price.
Securities that are traded in the U.S. over-the-counter markets, absent a last
quoted sales price, are valued at the last quoted bid price. Securities which
are traded in the foreign over-the-counter markets are valued at the last sales
price, except that such securities traded in the United Kingdom are valued at
the average of the closing bid and ask prices. Any securities for which no
current quotations are readily available are valued at fair value as determined
in good faith by Northern Trust under the supervision of the Board of Trustees.
Temporary short-term investments are valued at amortized cost which Northern
Trust has determined, pursuant to Board authorization, approximates market
value. Securities may be valued on the basis of prices provided by independent
pricing services when those prices are believed to reflect the fair market value
of the securities.

Advertising Performance

The performance of each Fund may be compared to those of other mutual funds with
similar investment objectives and to stock, bond and other relevant indices or
to rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, the
performance of a Fund may be compared to data prepared by Lipper Analytical
Services, Inc., to the Standard & Poor's 500 Index, the Russell 2000 Small Stock
Index, the Consumer Price Index or the Dow Jones Industrial Average. In
addition, performance of the International Funds may be compared to the Morgan
Stanley Capital International Europe, Australia and Far East Index ("EAFE"),
the Morgan Stanley EAFE and Emerging Markets Free Index and the J.P. Morgan
International Government Bond Index and performance of the Fixed Income and U.S.
Government Funds may be compared to the Lehman Brothers Government Bond Index
(or its two components, the Treasury Bond Index and Agency Bond Index), the
Lehman Brothers Corporate Bond Index and the Lehman Brothers Intermediate
Government Bond Index. Performance of the Intermediate Tax-Exempt and Tax-
Exempt Funds may be compared to the Lehman Brothers Municipal Bond or 5-Year
Municipal Bond Indices, and performance of the Income Equity Fund may be
compared to the Merrill Lynch Investment Grade Convertible Bond Index.
Performance of the Technology Fund may be compared to the Hambrecht and Quist
Technology Index, the SoundView Technology Index, the technology grouping of
the Standard & Poor's 500 Index and any other comparable technology index.
Performance data as reported in national financial publications such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or
in publications of a local or regional nature, may also be used in comparing the
performance of a Fund.
  A Fund (other than the Money Market Funds) calculates its total return on an
"average annual total return" basis for various periods from the date the Fund
commences investment operations and for other periods as permitted under SEC
rules. Average annual total return reflects the average annual percentage change
in value of an investment over the measuring period. Total return may also be
calculated on an aggregate total return basis for various periods. Aggregate
total return reflects the total percentage change in value over the measuring
period. Both methods of calculating total return reflect changes in the price of
a Fund's shares and assume that any dividends and capital gain distributions are
reinvested. When considering average total return figures for periods longer
than one year, you should note that the annual total return for any one year may
be more or less than the average for the entire period. A Fund may also
advertise its total return on an aggregate, year-by-year or other basis for
various specified periods through charts, graphs, schedules or quotations.
  The yield of a Fund (other than the Money Market Funds) is computed based on
the Fund's net income during a specified 30-day (or one-month) period. More
specifically, the Fund's yield is computed by dividing its per share net income
during the relevant period by the per share net asset value on the last day of
the period and annualizing the result on a semi-annual basis. The yield of a
Money Market Fund is computed based on the Fund's net income during a specified
seven-day period. The net investment income is then "annualized." That is, the
amount of net investment income generated by the investment during the period is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective" yield of a Money Market Fund is
calculated similarly but, when annualized, the net investment income generated
by the investment is assumed to be reinvested. The "effective" yield will be
slightly higher than the "yield" because of the compounding effect of this
assumed reinvestment.
  The tax-equivalent yield for a Tax-Exempt Fund shows the amount of taxable
yield needed to produce an after-tax equivalent of a tax-free yield, and is
calculated by increasing the yield (as calculated above) by the amount necessary
to reflect the payment of federal and/or state income taxes at a stated rate.
The tax-equivalent yield for a Tax-Exempt Fund will always be higher than the
Fund's yield.
  Performance is based on historical earnings and is not intended to indicate
future performance. The investment return and principal value of an investment
in a Fund will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost. Performance data may not provide a basis for
comparison with bank deposits and other investments which provide a fixed yield
for a stated period of time. Changes in the net asset value should be considered
in ascertaining the total return to shareholders for a given period. Total
return data should also be considered in light of the risks associated with a
Fund's composition, quality, operating expenses and market conditions. Any fees
charged by Northern Trust or a Service Organization directly to its customers
in connection with investments in the Funds will not be included in Northern
Funds' calculations of performance data.

Voting Rights

Northern Funds was formed as a Massachusetts Business Trust on October 12, 1993
under an Agreement and Declaration of Trust (the "Trust Agreement"). The Trust
Agreement permits the Board of Trustees to issue an unlimited number of shares
of beneficial interest of one or more separate series representing interests in
different investment portfolios. Northern Funds currently offers seventeen
separate Funds, which are described in this Prospectus.
  Shareholders are entitled to one vote for each full share held and
proportionate fractional votes for fractional shares held. Each series entitled
to vote on a matter will vote in the aggregate and not by series, except as
required by law or when the matter to be voted on affects only the interests of
shareholders of a particular series. The Additional Statement gives examples of
situations where the law requires voting by series. Voting rights are not
cumulative and, accordingly, the holders of more than 50% of the aggregate
shares of Northern Funds may elect all of the Trustees.
  Northern Funds does not presently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law.
Pursuant to the Trust Agreement, the Trustees will promptly call a meeting of
shareholders to vote upon the removal of any Trustee when so requested in
writing by the record holders of 10% or more of the outstanding shares. To the
extent required by law, Northern Funds will assist in shareholder communications
in connection with the meeting.
  As of July 15, 1995, Northern Trust possessed sole or shared voting or
investment power for its customer accounts with respect to more than 50% of the
outstanding shares of Northern Funds.

Shareholder Reports

Shareholders of record will be provided each year with a semi-annual report
showing portfolio investments and other information as of September 30 and,
after the close of the Funds' fiscal year March 31, with an annual report
containing audited financial statements. To eliminate unnecessary duplication,
only one copy of shareholder reports will be sent to shareholders with the same
mailing address. Shareholders who desire a duplicate copy of shareholder reports
to be mailed to their residence should call 1-800-595-9111.

Retirement Plans

Shares of the Funds may be purchased in connection with certain tax-sheltered
retirement plans, including profit-sharing plans, 401(k) plans, money purchase
pension plans, target benefit plans and individual retirement accounts. Further
information about how to participate in these plans, the fees charged and the
limits on contributions can be obtained from Northern Trust. To invest through
any of the tax-sheltered retirement plans, please call Northern Trust for
information and the required separate application. To determine whether the
benefits of a tax-sheltered retirement plan are available and/or appropriate, a
shareholder should consult with a tax adviser.

Miscellaneous

The address of Northern Funds is 207 E. Buffalo Street, Suite 400, Milwaukee,
Wisconsin 53202 and the telephone number is 1-800-595-9111. Northern Funds is
registered as an open-end management investment company under the 1940 Act, and
each of the Funds (other than the California Municipal Money Market Fund and the
International Fixed Income Fund) is classified under that Act as a diversified
portfolio.
  As used in this Prospectus, "Business Day" means each day Northern Trust and
the New York Stock Exchange are open, which is Monday through Friday, except for
holidays observed by Northern Trust and/or the Exchange. In 1995, these holidays
are New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday
(except for the Money Market Funds), Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans Day, Thanksgiving and Christmas. On days when Northern
Trust or the Exchange closes early as a result of unusual weather or other
conditions, the right is reserved to advance the time by which purchase and
redemption requests must be received. In addition, on any Business Day when the
Public Securities Association ("PSA") recommends that the securities markets
close early, the Funds reserve the right to cease or to advance the deadline for
accepting purchase and redemption orders for same Business Day credit up to one
hour before the PSA recommended closing time. Purchase and redemption requests
received after the advanced closing time will be effected on the next Business
Day. Northern Trust is not required to calculate the net asset value of a Fund
on days during which no shares are tendered to a Fund for redemption and no
orders to purchase or sell shares are received by a Fund, or on days on which
there is an insufficient degree of trading in the Fund's portfolio securities
for changes in the value of such securities to materially affect the net asset
value per share.
  From time to time, Northern Funds' distributor may provide promotional
incentives to brokers whose representatives have sold or are expected to sell
shares of the Funds. At various times, the distributor may implement programs
under which a broker's sales force may be eligible to win cash or non-cash
awards for sales efforts, and may finance broker sales contests or recognition
programs conforming to criteria established by the distributor. The distributor
may also provide marketing services to brokers consisting of written
informational material relating to sales incentive campaigns conducted by such
brokers for their representatives.
  Northern Trust is sometimes referred to as "The Northern Trust Bank" in
advertisements and other literature.





No person has been authorized to give any information or to make any
representations not contained in this Prospectus or in Northern Funds'
Additional Statement in connection with the offering made by this Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by Northern Funds or its distributor. This
Prospectus does not constitute an offering by Northern Funds or by the
distributor in any jurisdiction in which such offering may not lawfully
be made.

Northern Funds
P.O. Box 75986
Chicago, IL 60690-6319
 


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