May 28, 1996
VIA EDGAR
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Northern Funds - Registration Nos. 33-73404; 811-8236
Dear Sir or Madam:
On behalf of the above-named registrant, we hereby file the Northern Money
Market, U.S. Government Money Market and Municipal Money Market Funds Annual
Report to Shareholders for the period ended March 31, 1996; pursuant to Rule
30b2-1 and Section 24(b) under the Investment Company Act of 1940, as ammended.
Please telephone the undersigned at (414)271-5885 should you have any
questions regarding this filing.
Sincerely,
/s/ Elyce D. Dilworth
Elyce D. Dilworth
Senior Financial Analyst
EDD/kg
cc: Jim Grassi (paper copy)
Jeff Dalke (paper copy)
ANNUAL
REPORT
March 31, 1996
Money Market Fund
U.S. Government
Money Market Fund
Municipal Money
Market Fund
Northern Funds
NOTICE TO INVESTORS
NOT FDIC-INSURED
May lose value
No bank guarantee
Northern Funds are not insured or guaranteed by the U.S. government, nor can
there be any assurance that the money market funds will be able to maintain a
stable net asset value of $1.00 per share.
Shares of Northern Funds are distributed by Sunstone Financial Group, Inc., an
independent third-party distributor, and sold by The Northern Trust Company and
its affiliates.
Table of Contents
Abbreviations and Other Information (i)
Letter to Shareholders 1
Economic and Market Overviews 2
Portfolio Commentaries 3
Money Market Funds
Statements of Assets and Liabilities 5
Statements of Operations 6
Statements of Changes in Net Assets 7
Financial Highlights 8
Schedules of Investments
Money Market Fund 9
U.S. Government Money Market Fund 12
Municipal Money Market Fund 13
Notes to the Financial Statements 20
Independent Auditor's Report 22
Abbreviations and Other Information
With respect to the Schedules of Investments, the percentage shown for each
investment category reflects the value of investments in that category as a
percentage of total net assets.
Interest rates represent either the stated coupon rate, annualized yield on date
of purchase for discounted notes, or, for floating rate securities, the current
reset rate.
Prerefunding is a procedure in which a bond issuer floats a second bond in order
to pay off the first bond at the first call date. The proceeds from the sale of
the second bond are safely invested, usually in Treasury securities, that will
mature at the first call date of the first bond issue. Those first bonds are
said to be prerefunded after this operation has taken place.
Maturity dates represent the stated date on the security, the next interest
reset date for floating rate securities or the prerefunded date for these types
of securities.
Explanation of Abbreviations
Used Throughout the Schedules of Investments
ADP Automated Data Processing
AMBAC American Municipal Bond Assurance Corp.
BTP Banker's Trust Partnership
CGIC Capital Guaranty Insurance Co.
Colld. Collateralized
COP Certificates of Participation
CP Commercial Paper
FFCB Federal Farm Credit Bank
FGIC Financial Guaranty Insurance Corp.
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
G.O. General Obligation
Gtd. Guaranteed
IDA Industrial Development Authority
IDR Industrial Development Revenue
JPMP J.P. Morgan Partnership
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
P-Floats Puttable Floating Rate Security
RAN Revenue Anticipation Note
RAW Revenue Anticipation Warrant
SLMA Student Loan Marketing Association
Soc Gen Societe Generale
TOB Tender Option Bond
TOCR Tender Option Custodial Receipt
TRAN Tax and Revenue Anticipation Note
VRDN Variable Rate Demand Note
Northern Funds
May 1996
Dear Shareholder:
We are pleased to provide you with this Northern Funds Annual Report for your
money market fund investment for the year ended March 31, 1996. In it, you'll
find information about your investment, enabling you to better monitor its
management and performance.
Our report to you includes economic and market overviews, commentaries from the
managers of your money market fund portfolios, a listing of securities held in
each portfolio, and each fund's operating results.
Please read this report carefully and retain it in your files for future
reference.
To avoid duplication, we have sent only one copy of the report per mailing
address. If you would like to receive duplicate copies, please call the Northern
Funds Center at 1-800-595-9111. We will send additional copies and adjust our
records accordingly for future mailings.
Thank you for your investment in Northern Funds. Please let us know if there's
anything we can do to serve you better.
Sincerely,
/s/ James M. Snyder
James M. Snyder
Chief Investment Officer
NORTHERN FUNDS
POST OFFICE BOX 75986
CHICAGO, IL 60690-6319
PHONE (800) 595-9111
FAX (312) 557-0411
Economic and Market Overviews
REVIEW AND OUTLOOK OF THE ECONOMY
Most U.S. investors will remember our fiscal year ended March 31, 1996 fondly,
as a slowing economy and declining interest rates paved the way for a
spectacular surge in stock prices and a solid bond market rally. By fiscal year
end, long-term U.S. bond prices had risen by more than 10%, while the U.S. stock
market posted a 32% total return, as measured by the Standard & Poor's 500 Stock
Index.
As the decline in interest rates spread across the globe, bond markets in other
developed nations enjoyed positive returns despite a sell-off during the first
three months of calendar 1996. Equity investors, however, experienced mixed
results as European exchanges were less responsive to falling interest rates
than their U.S. counterparts. While a handful posted returns in excess of 20%,
most international markets registered single-digit gains. In Japan, equities
ended the fiscal year up 12% as stocks finally responded to an improving economy
and lower interest rates.
Currencies were even more volatile than interest rates or stock prices during
the year. The U.S. dollar fell sharply at first, declining 15% against core
European currencies and more than 20% against the yen before aggressive Bank of
Japan intervention pushed the greenback higher. While all of the dollar's
losses against the yen were erased, it ended the year marginally lower against
major European currencies.
A primary factor in the volatility of the currency, stock and bond markets was
the markets' hope for progress in Washington to trim the budget deficit.
Potential good news on that front was discounted off and on throughout 1995, as
eventual progress was less than what the optimists had hoped for. Nonetheless,
politics and economics - slowing growth and low inflation - combined to provide
a near ideal environment over the past twelve months for financial assets,
particularly in the U.S.
REVIEW AND OUTLOOK OF THE MONEY MARKET
Short-term interest rates moved irregularly lower during the twelve-month period
ending March 31, 1996 as sluggish economic growth, low inflation and a pre-
sumption of longer-term fiscal restraint in Washington contributed to the market
rally. The Federal Reserve eased rates on three occasions, bringing the Federal
Funds rate from 6.0% to 5.25%. Short-term rates continued to fall during early
1996 as the return on one-year Treasury notes fell below 4.8%.
The last half of February 1996 saw a dramatic turnaround after non-farm
employment data was released. Investors reacted to the surprising drop in the
unemployment rate and the yield on one-year and two-year Treasuries jumped to
5.4% and 5.8%, respectively, more than 60 and 100 basis points above the mid-
February lows. Given this economic backdrop, the Federal Reserve's Open Market
Committee opted to maintain the targeted Federal Funds rate at its March 26
meeting.
In the municipal market, limited supply and reserve-building in anticipation of
April 1995 tax payments kept interest rates relatively steady. While outflows
from tax-exempt money market funds are anticipated as payments are made to the
Internal Revenue Service, municipal money market rates could hold firm if the
new issue calendar remains light.
Despite a background of campaign rhetoric from now until fall, we believe the
direction of inflation and the strength of the economy will continue to be the
primary drivers of investor expectations and interest rates. Therefore, we see
little reason for significant additional increases in short-term rates over the
next several months. We agree with most forecasters that the increase in non-
farm employment in February overstated the actual strength of the economy and we
anticipate no more than moderate employment gains in the months ahead.
Now that the General Motors strike has been settled, the expectation of a
sluggish economy has been removed from our forecast, although we doubt that
growth beyond moderate levels will prevail. The Federal Reserve may no longer
be in the mood to ease interest rates, but we don't look for tightening anytime
soon, especially if inflation rates remain as docile as we anticipate.
While a strong rally appears unlikely, we feel that short-term interest rates
have probably moved to the high end of a new trading range. Rates approaching
6% on two-year Treasury notes represent attractive real returns in an
environment of 3%, or lower, inflation.
Looking ahead, we view the upward slope in the yield curves as an opportunity to
add high quality exposure to our portfolios at attractive yields. We anticipate
significant volatility during fiscal 1997 and will continue to employ our
disciplined investment strategies and maintain our emphasis on quality
securities.
PORTFOLIO COMMENTARIES
MONEY MARKET FUND
During the latter part of calendar 1995 and the first quarter of calendar 1996,
it was expected that the money market would experience lower interest rates.
Instead, the beginning of calendar 1996 has seen an upswing in rates. At
present, the portfolio is heavily weighted (68%) in tier-one commercial paper
(issues rated in the highest commercial paper rating category by at least two
nationally recognized statistical rating organizations (NRSROs)) where yields
are presently most attractive. The remainder is invested in certificates of
deposit, repurchase agreements, variable-rate notes, Treasury bills and other
high-quality securities. Quality remains the primary factor in selecting issues
for the portfolio with yield being a secondary consideration. Looking ahead to
the coming year, our strategy will be to act defensively as we anticipate
Federal Reserve actions that may affect the performance of the Fund. As always,
we will continue to focus on providing our shareholders with the quality,
liquidity and yield they are seeking in a money market fund.
Mary Ann Flynn
Portfolio Manager
U.S. GOVERNMENT MONEY MARKET FUND
The direction of interest rates had a major effect on the performance of the
Fund last year. As we entered a new environment of falling rates over the
course of calendar 1995, the average maturity of the Fund was adjusted to take
advantage of the inverted yield curve. Although we continued to maintain the
portfolio's barbell structure, the attractive yields offered by overnight
securities influenced us to invest heavily in these issues. The overall
composition of the portfolio changed very little throughout the year, as we
maintained our heavy concentration in securities issued by agencies of the
government which have continued to outperform U.S. Treasuries. Since the Fund
invests exclusively in securities that are backed or issued by the U.S.
government, the quality of our portfolio continues to be of the highest order.
In the year ahead, we will closely monitor the actions taken by the Federal
Reserve and are positioning the Fund somewhat defensively in order to take
advantage of any interest rate movements.
Edward Kyritz, III
Portfolio Manager
MUNICIPAL MONEY MARKET FUND
The Fund was able to outperform its peer group last year as we lengthened the
average maturity of the portfolio to take advantage of the declining interest
rate environment that developed as 1995 progressed. We entered the first
quarter of 1996 with the same barbelled structure that served us well for most
of 1995, and plan to maintain this strategy during what we believe will be a
period of fairly stable interest rates in the months ahead. We will continue to
monitor the economy and the Fed's interest rate policy closely and are poised to
react should we see significant departures from our expectations.
Brad Snyder
Portfolio Manager
Money Market Funds 7-Day Yields <F1>
Period Ended May 10, 1996
Money Market U.S. Government Municipal
Fund Money Market Fund Money Market Fund
- --------------------------------------------------------------------------
Current 4.89% 4.77% 3.37%
- --------------------------------------------------------------------------
Effective 5.01% 4.88% 3.44%
- --------------------------------------------------------------------------
<F1>Yield calculations refelect fee waivers in effect, represent past
performance and will fluctuate. In the absence of fee waivers, current 7-day
yields for the Money Market, U.S. Government Money Market and Municipal Money
Market Funds would have been 4.81%, 4.62% and 3.29%, respectively. An investment
in any one of the money market funds is neither insured nor guaranteed by the
U.S. government nor is there any assurance the funds will be able to maintain a
stable net asset value of $1.00 per share.
Money Market Funds Yield<F2> Comparisons
Average Monthly Rates
IBC's IBC's Municipal IBC's
Money Fund U.S. Gov't. Money Fund Money Money Fund
Money Average TM/ Money Average TM/ Market Average TM/
Market Fund All Taxable Market Fund Government Fund All Tax-Free
----------- ----------- ----------- ---------- -------- ------------
1996
- -----
March 4.91% 4.76% 4.77% 4.60% 2.98% 2.79%
February 5.00% 4.83% 4.85% 4.64% 3.05% 2.85%
January 5.23% 5.05% 5.07% 4.85% 3.12% 2.97%
1995
- ----
December 5.30% 5.19% 5.18% 5.01% 3.68% 3.52%
November 5.46% 5.23% 5.28% 5.05% 3.56% 3.29%
October 5.44% 5.22% 5.30% 5.04% 3.52% 3.24%
September 5.46% 5.25% 5.36% 5.08% 3.53% 3.28%
August 5.47% 5.27% 5.42% 5.09% 3.48% 3.22%
July 5.54% 5.36% 5.51% 5.18% 3.32% 3.10%
June 5.66% 5.48% 5.63% 5.32% 3.52% 3.32%
May 5.77% 5.51% 5.66% 5.34% 4.01% 3.74%
April 5.77% 5.53% 5.69% 5.35% 3.86% 3.59%
<F2>Yield calculations for Northern Funds reflect fee waivers in effect,
represent past performance and will fluctuate; in the absence of fee waivers,
performance would be reduced. An investment in any one of the money market funds
is neither insured nor guaranteed by the U.S. government nor is there any
assurance the funds will be able to maintain a stable net asset value of $1.00
per share.
We compare our funds to the IBC's Money Fund AveragesTM which are composites of
professionally managed money market investments with similar investment
objectives.
STATEMENTS OF ASSETS AND LIABILITIES March 31, 1996
U.S. GOVERNMENT MUNICIPAL
MONEY MONEY MONEY
MARKET MARKET MARKET
Amounts in thousands, except per share data FUND FUND FUND
- -------------------------------------------------------------------------------
ASSETS:
Investments, at amortized cost $1,034,049 $182,703 $1,102,078
Repurchase agreements, at cost
which approximates
market value 90,000 35,578 --
Cash -- 1 17
Income receivable 2,105 160 10,999
Receivable for fund shares sold 3,549 -- --
Receivable for securities sold -- -- 1,319
Receivable from Adviser 33 11 35
Deferred organization costs, net of
accumulated amortization 82 31 93
Prepaid and other assets 17 9 16
--------- -------- ----------
Total Assets 1,129,835 218,493 1,114,557
--------- -------- ----------
LIABILITIES:
Dividends payable 4,743 868 2,866
Payable for fund shares redeemed 63,039 546 1,612
Payable for securities purchased -- 9,939 7,090
Accrued investment advisory fees 79 14 74
Accrued administration fees 15 1 14
Accrued transfer agent fees 20 4 18
Accrued registration fees and other
liabilities 126 16 94
---------- -------- ----------
Total Liabilities 68,022 11,388 11,768
---------- -------- ----------
Net Assets $1,061,813 $207,105 $1,102,789
========== ======== ==========
ANALYSIS OF NET ASSETS:
Capital stock $1,061,760 $207,090 $1,102,683
Accumulated undistributed net
investment income 53 15 106
========== ======== ==========
Net Assets $1,061,813 $207,105 $1,102,789
SHARES OUTSTANDING ($.0001 PAR VALUE,
UNLIMITED AUTHORIZATION) 1,061,810 207,105 1,102,719
NET ASSET VALUE, REDEMPTION
AND OFFERING PRICE PER SHARE $1.00 $1.00 $1.00
See Notes to the Financial Statements.
STATEMENTS OF OPERATIONS Year ended March 31, 1996
U.S. GOVERNMENT MUNICIPAL
MONEY MONEY MONEY
MARKET MARKET MARKET
Amounts in thousands FUND FUND FUND
----- -------------- ---------
INVESTMENT INCOME:
Interest income $58,354 $13,852 $39,357
------- ------- -------
EXPENSES:
Investment advisory fees 5,938 1,433 5,993
Administration fees 1,485 358 1,498
Transfer agent fees 990 239 999
Custody and accounting fees 255 91 259
Registration fees 160 31 151
Professional fees 36 20 35
Trustees' fees 28 9 28
Amortization of organization costs 27 10 30
Other 82 22 78
------- ------ -------
Total Expenses 9,001 2,213 9,071
Less: Voluntary waivers of
investment advisory and
administration fees (3,026) (719) (3,045)
Less: Reimbursement of expenses
by Adviser (1,165) (342) (1,188)
------- ------ -------
Net Expenses 4,810 1,152 4,838
------- ------ -------
NET INVESTMENT INCOME 53,544 12,700 34,519
------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $53,544 $12,700 $34,519
======= ======= =======
See Notes to the Financial Statements.
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
U.S. GOVERNMENT MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
-------------------- ---------------------- -----------------------
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
March 31, March 31, March 31, March 31, March 31, March 31,
Amounts in thousands 1996 1995<F3> 1996 1995<F3> 1996 1995<F3>
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 53,544 $ 23,694 $ 12,700 $ 6,035 $ 34,519 $ 17,630
----------- ---------- ---------- --------- ----------- ----------
Net Increase in Net Assets Resulting
from Operations 53,544 23,694 12,700 6,035 34,519 17,630
----------- ---------- ---------- --------- ----------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 4,176,187 3,122,961 1,141,048 1,161,715 4,716,758 3,480,667
Shares from reinvestment of dividends 3,537 296 979 405 1,505 159
Shares redeemed (4,012,194) (2,228,986) (1,162,463) (934,580) (4,543,236) (2,553,135)
----------- ---------- ---------- --------- ----------- -----------
Net Increase (Decrease) in Net Assets Resulting
from Capital Share Transactions 167,530 894,271 (20,436) 227,540 175,027 927,691
----------- ---------- ---------- --------- ----------- ----------
DISTRIBUTIONS PAID:
From net investment income (53,540) (23,694) (12,702) (6,033) (34,504) (17,575)
In excess of net investment income - <F3> - - - -
----------- ---------- ---------- --------- ----------- ----------
TOTAL DISTRIBUTIONS PAID (53,540) (23,695) (12,702) (6,033) (34,504) (17,575)
----------- ---------- ---------- --------- ----------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 167,534 894,270 (20,438) 227,542 175,042 927,746
NET ASSETS:
Beginning of period 894,279 9 227,543 1 927,747 1
----------- ---------- ---------- --------- ----------- ----------
End of period $ 1,061,813 $ 894,279 $ 207,105 $ 227,543 $ 1,102,789 $ 927,747
=========== ========== ========== ========= =========== ==========
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN
EXCESS OF) NET INVESTMENT INCOME $ 53 $ (1) $ 15 $ 2 $ 106 $ 55
=========== ========== ========== ========= =========== ==========
<FN>
<F3> Commenced investment operations on April 11, 1994.
See Notes to the Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
U.S. GOVERNMENT MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
---------------------- ---------------------- --------------------
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
March 31, March 31, March 31, March 31, March 31, March 31,
1996 1995<F4> 1996 1995<F4> 1996 1995<F4>
---------- ---------- ---------- ---------- ---------- ---------
Selected per share data
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.05 0.04 0.05 0.04 0.03 0.03
----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS PAID:
From net investment income (0.05) (0.04) (0.05) (0.04) (0.03) (0.03)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
TOTAL RETURN<F5> 5.57% 4.55% 5.46% 4.47% 3.54% 2.90%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of period $1,061,813 $894,279 $207,105 $227,543 $1,102,789 $927,747
Ratio to average net assets of: <F6>
Expenses, net of waivers and reimbursements 0.49% 0.45% 0.49% 0.45% 0.49% 0.45%
Expenses, before waivers and reimbursements 0.91% 0.96% 0.94% 1.01% 0.91% 0.95%
Net investment income, net of waivers and
reimbursements 5.42% 4.94% 5.33% 4.93% 3.46% 3.10%
Net investment income, before waivers and
reimbursements 5.00% 4.43% 4.88% 4.37% 3.04% 2.60%
<FN>
<F4>Commenced investment operations on April 11, 1994.
<F5>Total return is not annualized for periods less than a full year.
<F6>Annualized for periods less than a full year.
</TABLE>
See Notes to the Financial Statements.
SCHEDULES OF INVESTMENTS March 31, 1996
MONEY MARKET FUND
Principal
Amount Value
(000s) (000s)
- --------- ------
BANKERS' ACCEPTANCES - 0.8%
$ 8,000 SunTrust Bank, Atlanta,
5.323%, 4/11/96 $ 7,988
-------
Total Bankers' Acceptances
(cost $7,988) 7,988
-------
COMMERCIAL PAPER - 70.5%
Asset Backed Securities - 9.1%
4,800 Asset Securitization Cooperative Corp.,
5.328%, 5/9/96 4,773
Cooperative Association of Tractor
Dealers, Inc.
4,600 5.59%, 4/4/96 4,598
1,000 5.293%, 4/18/96 998
3,200 5.812%, 4/19/96 3,191
9,000 5.427%, 4/22/96 8,972
1,000 5.257%, 5/7/96 995
1,000 5.27%, 5/24/96 992
6,000 5.391%, 6/10/96 5,938
4,600 5.386%, 7/12/96 4,531
Jet Funding Corp.
2,000 5.318%, 4/30/96 1,992
3,000 5.373%, 5/31/96 2,973
4,000 5.578%, 6/28/96 3,946
883 McKenna Triangle Corp.,
5.295%, 4/19/96 881
6,300 Pooled Account Receivables Corp.,
5.422%, 4/16/96 6,286
Sheffield Receivables Corp.
850 5.281%, 4/1/96 850
25,000 5.582%, 4/11/96 24,961
Stellar Capital Corp.
1,500 5.483%, 6/10/96 1,484
3,500 5.495%, 6/25/96 3,455
5,445 Thames Asset Global Securitization,
5.324%, 4/11/96 5,437
10,000 Tri-Lateral Capital (USA), Inc.,
5.302%, 5/24/96 9,923
-------
97,176
-------
Brokerage Services - 1.8%
19,000 Lehman Brothers Holdings, Inc.,
5.324%, 4/1/96 19,000
-------
Chemicals and Allied Products - 1.4%
14,500 Abbott Laboratories,
5.322%, 4/10/96 14,481
-------
Communications - 12.3%
10,000 Ameritech Capital Funding,
5.423%, 6/18/96 9,886
AT&T Corp.
40,000 5.79%, 4/18/96 39,894
2,135 5.249%, 4/26/96 2,127
5,000 5.60%, 5/13/96 4,968
GTE Corp.
2,000 5.343%, 4/2/96 2,000
25,000 5.352%, 4/10/96 24,967
25,000 Lucent Technologies, Inc.,
5.311%, 6/14/96 24,731
NYNEX Corp.
2,000 5.503%, 4/1/96 2,000
15,000 5.514%, 4/12/96 14,975
5,000 5.372%, 6/25/96 4,937
-------
130,485
-------
Construction Machines and
Computer Equipment - 3.2%
12,394 Caterpillar Financial Services Corp.,
5.324%, 4/12/96 12,374
22,000 International Business Machines
Credit Corp., 5.605%, 4/26/96 21,916
-------
34,290
-------
Domestic Depository Institutions - 1.6%
5,000 Barnett Banks, Inc.,
5.219%, 5/3/96 4,977
5,000 Republic New York Corp.,
5.35%, 5/15/96 4,968
7,000 SunTrust, Inc.,
5.344%, 5/8/96 6,962
-------
16,907
-------
Electric Services - 1.4%
15,000 Vattenfall Treasury, Inc.,
5.235%, 7/29/96 14,747
-------
Electronic and Other
Electrical Equipment - 5.0%
8,700 Cooper Industries, Inc.,
5.323%, 4/4/96 8,696
20,000 General Electric Capital Corp.,
5.391%, 6/17/96 19,775
15,000 Whirlpool Corp.,
5.218%, 5/23/96 14,888
10,000 Whirlpool Financial Corp.,
5.347%, 5/7/96 9,947
-------
53,306
-------
Food and Beverages - 3.3%
6,000 Coca-Cola Enterprises, Inc.,
5.203%, 5/10/96 5,967
9,000 Cofco Capital Corp.,
5.368%, 6/20/96 8,894
20,000 Nestle Capital Corp.,
5.323%, 4/11/96 19,971
-------
34,832
-------
Foreign Depository Institutions - 7.2%
12,000 Abbey National North America,
5.223%, 6/17/96 11,869
20,000 BEX America Finance, Inc.,
5.804%, 4/1/96 20,000
5,000 Britannia Building Society,
5.086%, 8/6/96 4,913
15,000 Central Hispano N.A. Capital Corp.,
5.196%, 5/21/96 14,893
10,000 Spintab-Swedmortgage AB,
5.723%, 4/17/96 9,975
10,000 UNIfunding, Inc.,
5.371%, 4/22/96 9,969
5,000 Woolwich Building Society,
5.804%, 4/2/96 4,999
-------
76,618
-------
Holding and Other
Investment Offices - 1.1%
7,296 AESOP Funding Corp.,
5.431%, 4/26/96 7,268
3,000 Briarcliff Capital Corp.,
5.324%, 4/11/96 2,996
2,000 CSW Credit, Inc.,
5.492%, 5/17/96 1,986
-------
12,250
-------
Hotels and Lodging - 0.3%
3,300 Hilton Hotels, Inc.,
5.641%, 5/14/96 3,278
-------
Manufacturing Industries - 4.7%
Hanson Finance (U.K.) PLC
45,000 5.325%, 4/8/96 44,954
5,000 5.327%, 4/11/96 4,993
-------
49,947
-------
Measuring, Analyzing and
Control Instruments - 0.6%
Xerox Credit Corp.
1,300 5.241%, 5/31/96 1,289
5,000 5.368%, 6/20/96 4,941
-------
6,230
-------
Nondepository Personal
Credit Institutions - 3.8%
Countrywide Funding Corp.
30,000 5.424%, 4/17/96 29,928
10,000 5.522%, 4/23/96 9,966
-------
39,894
-------
Real Estate - 1.4%
15,000 Hahn Issuing Corp.,
5.436%, 4/26/96 14,944
-------
Tobacco - 1.9%
B.A.T. Capital Corp.
10,000 5.324%, 4/11/96 9,985
10,000 5.324%, 4/12/96 9,984
-------
19,969
-------
Transportation Parts
and Equipment - 10.4%
15,000 American Honda Finance Corp.,
5.526%, 4/29/96 14,936
BMW US Capital Corp.
15,000 5.351%, 4/8/96 14,984
3,070 5.337%, 4/25/96 3,059
22,500 5.34%, 6/11/96 22,266
5,000 Chrysler Financial Corp.,
5.773%, 4/4/96 4,998
Ford Motor Credit Corp.,
10,000 5.602%, 4/1/96 10,000
10,000 5.098%, 6/10/96 9,903
General Motors Acceptance
Corp. Canada
5,000 5.395%, 4/10/96 4,993
25,000 5.457%, 4/19/96 24,932
-------
110,071
-------
Total Commercial Paper
(cost $748,425) 748,425
-------
CORPORATE BONDS - 6.6%
25,000 AT&T Capital Corp., FRN,
5.457%, 1/23/97 25,000
10,000 GE Engine Receivables Trust, FRN,
5.526%, 4/24/96 10,000
10,000 International Business Machines
Credit Corp., 5.11%, 2/24/97 9,990
25,000 PNC Bank N.A.,
5.65%, 9/18/96 24,997
-------
Total Corporate Bonds
(cost $69,987) 69,987
-------
EURODOLLAR TIME DEPOSITS - 0.7%
4,954 Bank of Ireland, Grand Cayman Islands,
5.625%, 4/1/96 4,954
3,000 Union Bank of Switzerland, London
Branch, 5.50%, 4/1/96 3,000
-------
Total Eurodollar Time Deposits
(cost $7,954) 7,954
-------
FOREIGN CERTIFICATES OF
DEPOSIT - 12.8%
18,000 Australia & New Zealand Bank,
London Branch, 5.23%, 7/29/96 18,001
15,000 Bank of Nova Scotia, New York Branch,
5.21%, 4/25/96 15,001
4,000 Bank of Tokyo, London Branch,
5.40%, 4/9/96 4,000
25,000 Landesbank Hessen-Thueringen
Girozentrale, 5.50%, 3/20/97 25,031
Mitsubishi Bank Ltd., London Branch
2,000 5.38%, 4/11/96 2,000
25,000 5.34%, 4/23/96 25,000
15,000 Rabobank Nederland, New York Branch,
5.60%, 5/1/96 15,000
2,000 Sanwa Bank, Ltd., New York Branch,
5.45%, 4/4/96 2,000
5,000 Societe Generale, London Branch,
5.16%, 7/31/96 5,001
20,000 Societe Generale, New York Branch,
5.54%, 3/21/97 20,016
5,000 Sumitomo Bank Ltd., New York Branch,
5.43%, 4/1/96 5,000
-------
Total Foreign Certificates of Deposit
(cost $136,050) 136,050
-------
GUARANTEED INVESTMENT
CONTRACT - 1.4%
15,000 Transamerica Life Insurance and
Annuity Co., 5.402%, 3/21/97 15,000
-------
Total Guaranteed Investment Contract
(cost $15,000) 15,000
-------
MUNICIPAL INVESTMENTS - 3.7%
Arizona Educational Loan
Marketing Corp.
10,000 5.461%, 4/8/96 9,989
10,000 5.559%, 4/8/96 9,989
8,930 Minneapolis-St.Paul Metro Airport
Taxable G.O. Bonds, 5.428%, 7/1/96 8,930
10,215 State of Texas-Veterans Land Bond,
5.363%, 5/1/96 10,215
-------
Total Municipal Investments
(cost $39,123) 39,123
-------
U.S. GOVERNMENT
OBLIGATION - 0.9%
10,000 U.S. Treasury Bill,
5.352%, 3/6/97 9,522
-------
Total U.S. Government Obligation
(cost $9,522) 9,522
-------
REPURCHASE AGREEMENTS - 8.5%
40,000 Bear Stearns & Co., Inc.,
dated 3/29/96, repurchase price
$40,018 (Colld. by FHLMC Securities),
5.40%, 4/1/96 40,000
50,000 Donaldson, Lufkin & Jenrette
Securities, Inc., dated 3/29/96, repurchase
price $50,025 (Colld. by FHLMC and
FNMA Securities), 5.92%, 4/1/96 50,000
-------
Total Repurchase Agreements
(cost $90,000) 90,000
-------
Total Investments - 105.9%
(cost $1,124,049) 1,124,049
Liabilities less Other Assets - (5.9)% (62,236)
----------
NET ASSETS - 100.0% $1,061,813
==========
See Notes to the Financial Statements.
Schedules of Investments March 31, 1996
U.S. Government Money Market Fund
Principal
Amount Value
(000s) (000s)
- --------- ------
U.S. GOVERNMENT AGENCIES - 88.2%
Federal Farm Credit Bank - 2.4%
$ 5,000 FFCB Discount Note,
5.11%, 5/2/96 $ 4,978
-------
Federal Home Loan Bank - 22.6%
FHLB Discount Notes
10,000 5.495%, 5/16/96 9,933
8,380 5.298%, 5/20/96 8,320
2,685 5.171%, 5/21/96 2,666
15,000 5.223%, 7/8/96 14,792
10,000 5.142%, 7/12/96 9,858
1,175 5.19%, 7/26/96 1,156
-------
46,725
-------
Federal Home Loan Mortgage
Corporation - 18.9%
FHLMC Discount Notes
5,450 5.306%, 4/22/96 5,433
20,000 5.114%, 5/7/96 19,899
10,000 5.27%, 5/13/96 9,938
4,000 5.176%, 7/9/96 3,944
-------
39,214
-------
Federal National Mortgage
Association - 41.9%
FNMA Discount Notes
10,000 5.344%, 4/8/96 9,990
25,000 5.113%, 4/12/96 24,961
20,000 5.303%, 4/19/96 19,948
10,000 5.31%, 5/6/96 9,949
10,000 5.128%, 5/14/96 9,939
5,000 5.523%, 7/2/96 5,000
2,000 5.325%, 12/26/96 1,999
5,000 FNMA Floating Medium Term Note,
5.48%, 6/20/96 5,000
-------
86,786
-------
Student Loan Marketing
Association - 2.4%
5,000 SLMA Floating Rate Note,
5.27%, 8/9/96 4,999
-------
Total U.S. Government Agencies
(cost $182,702) 182,702
-------
Number
of Shares Value
(000s) (000s)
- --------- ------
OTHER - 0.0%
1 Dreyfus Prime Money Market Fund $ 1
-------
Total Other
(cost $1) 1
-------
Principal
Amount
(000s)
- ---------
REPURCHASE AGREEMENTS - 17.2%
$20,000 Bear Stearns & Co., Inc.,
dated 3/29/96, repurchase price $20,009
(Colld. by U.S. Treasury Securities),
5.40%, 4/1/96 20,000
15,000 Donaldson, Lufkin & Jenrette Securities,
Inc., dated 3/29/96, repurchase price
$15,007 (Colld. by FHLMC and FNMA
Securities), 5.92%, 4/1/96 15,000
578 Lehman Government Securities, Inc.,
dated 3/29/96, repurchase price $578
(Colld. by U.S. Treasury Securities),
5.00%, 4/1/96 578
-------
Total Repurchase Agreements
(cost $35,578) 35,578
-------
Total Investments - 105.4%
(cost $218,281) 218,281
-------
Liabilities less Other Assets - (5.4)% (11,176)
-------
NET ASSETS - 100.0% $207,105
========
See Notes to the Financial Statements.
Schedules of Investments March 31, 1996
MUNICIPAL MONEY MARKET FUND
Principal
Amount Value
(000s) (000s)
- --------- ------
MUNICIPAL INVESTMENTS - 99.1%
Alabama - 1.1%
$ 700 City of Greenville IDR VRDN, Series: 1992,
Allied-Signal Project (FMC Corp. Gtd.),
3.55%, 4/5/96 $ 700
1,400 City of Mobile PCR VRDN, Series: 1994 A,
Alabama Power Project (Alabama Power
Company Gtd.), 3.75%, 4/1/96 1,400
3,000 City of Selma IDR VRDN, Series: 1996 A,
Meadowcraft Inc. (NationsBank of Florida
LOC), 3.70%, 4/5/96 3,000
7,000 City of Stevenson Environmental
Improvement Revenue Bond IDR VRDN,
Series: 1996, Mead Corp. Project (Soc Gen
LOC), 3.95%, 4/1/96 7,000
------
12,100
------
Alaska - 1.2%
1,400 Alaska Housing Finance Agency VRDN,
Series: 1994, Merrill P-Floats PT-37
(FNMA Securities Colld.), 3.35%, 4/1/96 1,400
1,675 North Slope Borough G.O., Series: B
(CGIC Gtd.), 5.20%, 6/30/96 1,680
9,700 Valdez Marine Terminal CP, Series: 1994 B,
ARCO Transportation Project (Atlantic
Richfield Co. Gtd.), 3.40%, 4/5/96 9,700
------
12,780
------
Arizona - 1.6%
1,100 Industrial Community of Arizona Special
Fund CP Refunding Program
(FGIC Insured), 3.45%, 5/22/96 1,100
5,050 Maricopa County PCR CP, Series: 1985 F,
Southern California Edison Project (Southern
California Edison Co. Gtd.), 3.45%, 7/16/96 5,050
12,000 Maricopa County PCR VRDN, Series: A,
El Paso Electric Project (Westpac Banking
Corp. LOC), 3.75%, 4/5/96 12,000
------
18,150
------
California - 17.4%
5,580 California Housing Finance Agency, Series:
1988 D, Home Mortgage Revenue TOB,
3.60%, 8/1/96 5,580
2,000 California Housing Revenue Agency VRDN,
Series: 1995 E (Bayerische Landesbank
LOC), 3.50%, 2/1/97 2,000
4,000 California Pollution Control Finance
Authority, Series: 1984 A (San Diego Gas
and Electric Gtd.), 4.00%, 9/1/96 4,000
4,500 California School Cash Reserve Program
Authority TRAN, Series: 1995 A
(California School Cash Reserve Program
Pool), 4.75%, 7/3/96 4,509
11,950 California Statewide Community
Development Authority TRAN, Series: A
(Statewide Communities Program Pool
Residual Fund Insured), 4.75%, 7/5/96 11,972
4,500 City of Chino TRAN,
4.50%, 7/31/96 4,507
8,000 City of Huntington Beach TRAN,
4.75%, 10/4/96 8,019
3,000 City of Los Angeles Community
Redevelopment VRDN, Series: 1985,
Southpark Apartments Project (Industrial
Bank of Japan LOC), 3.45%, 4/5/96 3,000
3,246 City of Los Angeles IDR VRDN, Series:
BTP-129 (Colld. by U.S. Government
Securities), 3.25%, 12/12/96 3,246
3,200 City of Los Rios Community College District
TRAN, 4.75%, 9/19/96 3,211
5,000 City of Oakland TRAN, Series: A,
4.50%, 7/31/96 5,009
12,230 City of San Marcos Public Facilities Authority
Revenue Bond, Series: 1989, Civic Center
Project, Series: BTP-187 (Colld. by U.S.
Government Securities), 3.75%, 3/6/97 12,230
10,000 County of Los Angeles Housing Authority
VRDN, Series: A, Sand Canyon Villas
Project (Industrial Bank of Japan LOC),
3.60%, 4/5/96 10,000
4,000 County of Orange Apartment Development
Revenue Bond VRDN, Series: 1985 Z, Bear
Brand Apartments Project (Fuji Bank
LOC), 3.85%, 4/5/96 4,000
5,500 County of Orange Apartment Development
VRDN, Park Place Irvine-Phase IB
Project (New England Mutual Gtd.),
3.50%, 4/5/96 5,500
5,680 County of Orange TRAN, Series: A,
4.50%, 6/30/96 <F7> 5,685
5,400 County of Riverside Housing Authority
VRDN, Series: 1989 B, Amanda Park Project
(Fuji Bank LOC), 4.12%, 4/5/96 5,400
6,000 County of Riverside School Financing
Authority TRAN (Riverside County
Pool Loan 1996), 4.75%, 7/18/96 6,010
6,000 County of Sacramento Multifamily Housing
Revenue Bond VRDN, Series: 1985 A (Dai-
Ichi Kangyo Bank LOC), 3.45%, 4/5/96 6,000
3,000 County of San Bernardino COP VRDN,
Series: B, PaineWebber Muni Trust, Series:
1994 PW-13 (Colld. by U.S. Government
Securities), 3.55%, 4/5/96 3,000
14,000 County of Santa Clara TRAN,
4.50%, 8/2/96 14,027
5,000 County of Sonoma TRAN,
4.25%, 11/1/96 5,011
200 Irvine Ranch Water District VRDN, Districts
2, 102, 103 and 206 Program, Series: 1993 B
(Morgan Guaranty Trust Co. LOC),
3.50%, 4/1/96 200
12,710 San Diego Local Government 1995 Pooled
TRAN, Series: BTP-169 (Bank of Tokyo LOC),
3.20%, 5/6/96 12,710
3,955 San Diego Public Facility Finance Authority
Sewer VRDN, Merrill Soc Gen Muni
Trust-14 (AMBAC Insured), 3.30%, 4/5/96 3,955
2,900 Sonoma Valley Unified School District
TRAN, 4.75%, 9/27/96 2,910
4,000 State of California G.O. VRDN, Citibank
TOB, Series: 5027 C (FGIC Insured),
3.42%, 4/5/96 4,000
10,805 State of California RAW, Series: 1994 C
(Westdeutsche Landesbank Girozentral
LOC), 3.57%, 4/5/96 10,805
25,500 State of California RAW, Series: C
(Westdeutsche Landesbank Girozentral
LOC), 5.75%, 4/25/96 25,518
-------
192,014
-------
Colorado - 0.4%
2,000 Moffat County PCR VRDN, Series: 1984
(National Rural Utility Cooperative Finance
Gtd.), 3.40%, 4/5/96 2,000
1,000 Platte River Power Authority Revenue CP,
Electric Revenue (Platte River Power
Authority LOC), 3.35%, 5/8/96 1,000
1,000 Regional Transportation District VRDN,
Series: A (Bank of Tokyo LOC),
3.60%, 4/5/96 1,000
------
4,000
------
Connecticut - 1.4%
5,710 State of Connecticut G.O. Economic
Recovery Notes, Series: BTP-171,
3.20%, 9/12/96 5,710
10,000 State of Connecticut Revenue Bond,
Series: 1993 C, Special Assessment
Unemployment Program (FGIC Insured),
3.90%, 7/1/96 10,000
------
15,710
------
District of Columbia - 0.5%
6,000 District of Columbia Hospital Revenue
Bond VRDN, Columbia Hospital for
Women Project (Bank of Tokyo LOC),
3.70%, 4/5/96 6,000
------
Delaware - 0.4%
4,325 State of Delaware Economic Development
Authority PCR VRDN (FMC Corp. Gtd.),
3.55%, 4/5/96 4,325
------
Florida - 7.9%
3,800 County of Broward School District G.O.
VRDN, Series: 1992, PW Muni Sec Trust-16
(Colld. by U.S. Government Securities),
3.55%, 4/5/96 3,800
22,100 County of Dade Solid Waste IDR VRDN,
Series: 1990 A, Montenay Dade Ltd. Project
(Banque Paribas LOC), 3.60%, 4/5/96 22,100
1,600 County of Hillborough IDA VRDN, Tampa
Electric Co. Project (Tampa Electric
Company Gtd.), 3.70%, 4/1/96 1,600
2,800 County of Indian River Hospital District
CP, Series: 1990 (Kredietbank LOC),
3.45%, 5/8/96 2,800
2,600 County of Palm Beach Housing Finance
Authority VRDN, Series: 1988 C, Mahogany
Bay Multifamily Revenue Refunding Project
(New England Mutual Gtd.), 3.55%, 4/5/96 2,600
6,600 County of Palm Beach Housing Finance
Authority VRDN, Series: 1988 D, Multifamily
Cotton Bay Revenue Refunding Project
(New England Mutual Gtd.), 3.55%, 4/5/96 6,600
295 County of Putnam PCR VRDN, Series:
1984 S, Seminole Electric Project (National
Rural Utility Cooperative Finance Co. Gtd.),
3.40%, 4/5/96 295
County of Sarasota Public Hospital District
CP, Sarasota Memorial Hospital Project
(Sumitomo Bank Ltd. LOC)
2,450 Series: A, 3.60%, 6/19/96 2,450
1,000 Series: B, 3.60%, 6/19/96 1,000
13,860 Florida State Board of Education Capital
Outlay VRDN, BTP-52 ADP Class B,
3.50%, 4/5/96 13,860
16,900 Florida State Board of Education VRDN,
Series: 1993 E, 3.52%, 4/5/96 16,900
7,585 Florida Department of Environmental
Protection Revenue Bond VRDN, Series:
1994 A, BTP-64 (MBIA Insured),
3.50%, 4/5/96 7,585
1,050 Fort Lauderdale G.O., Unlimited Series:
1987 (Colld. by U.S. Government
Securities), 8.00%, 7/1/96 1,065
4,365 Orlando Utility Commission VRDN,
Merrill Soc Gen Muni Trust-18
(Orlando Utilities Commission Sub Lien),
3.40%, 4/5/96 4,365
------
87,020
------
Georgia - 2.0%
2,000 County of Burke Development Authority
CP, Series: 1992 A, Oglethorpe Power
Corp. Project (Credit Suisse LOC),
3.35%, 5/22/96 2,000
1,500 County of Burke Development Authority
PCR VRDN, Series: 1995, Plant Vogtle
Project (Georgia Power Gtd.),
3.75%, 4/1/96 1,500
1,400 County of Elbvert Development Authority
IDR VRDN, Series: 1992, Allied-Signal
Project (FMC Corp. Gtd.),
3.55%, 4/5/96 1,400
1,300 County of Fulton Development Authority
IDR VRDN, General Motors Project
(General Motors Corp. Gtd.),
3.55%, 4/5/96 1,300
5,145 State of Georgia G.O. VRDN, Series: 1992 C,
BTP-79, 3.45%, 12/12/96 5,145
7,900 State of Georgia G.O. VRDN, Series: 1993 F,
JPMP-35, 3.40%, 4/5/96 7,900
3,000 State of Georgia G.O. VRDN, Series: 1994 D,
JPMP-19, 3.40%, 4/5/96 3,000
------
22,245
------
Idaho - 0.1%
1,350 Idaho Housing Agency, Series: D-2,
Housing Revenue TOB, 4.125%, 7/1/96 1,350
------
Illinois - 4.6%
1,000 Chicago Park District Tax Anticipation
Warrants, Series: A, 5.00%, 10/30/96 1,008
2,700 City of Naperville IDR VRDN, General
Motors Project (General Motors Corp. Gtd.),
3.55%, 4/5/96 2,700
6,000 City of Savanna IDR VRDN, Series: 1994,
Metform Corp. Project (First National Bank
of Chicago LOC), 3.60%, 4/5/96 6,000
6,000 Illinois Development Finance Authority
Housing Revenue Bond VRDN, Series: 1994,
F.C. Harris Pavilion Project (FNMA Colld.),
3.40%, 4/5/96 6,000
1,400 Illinois Development Finance Authority
Solar Press Inc. Project (First National Bank
of Chicago LOC), 3.60%, 4/5/96 1,400
4,605 Illinois Educational Facilities Authority
VRDN, Series: 1987, The Art Institute of
Chicago (Bank of Tokyo LOC),
3.70%, 4/5/96 4,605
1,300 Illinois Health Facility Authority VRDN,
Series: 1994, Riverside Health System
(LaSalle National Bank LOC),
3.45%, 4/5/96 1,300
5,000 Illinois Health Facility Authority VRDN,
Series: 1995 A, Lifelink Corp. Obligated
Group (American National Bank & Trust
LOC), 3.45%, 4/5/96 5,000
4,145 Illinois Housing Development Authority
Housing Revenue Bond, Series: 1987 D,
3.60%, 8/1/96 4,145
7,000 Illinois Student Assistance Commission
VRDN, Series: 1996 A (Bank of America
LOC), 3.60%, 4/5/96 7,000
11,285 Village of Schaumburg Multifamily Housing
Revenue VRDN, Series: 1989, Treehouse II
Apartments Project (Sumitomo Bank Ltd.
LOC), 4.00%, 4/5/96 11,285
-------
50,443
-------
Indiana - 3.4%
1,500 City of Fort Wayne Hospital Authority
VRDN, Series: 1985 D, Park View Hospital
Program (Fuji Bank LOC), 4.25%, 4/5/96 1,500
5,000 City of Gary Environmental Improvement
PCR CP, Series: 1986, U.S. Steel Corp. Project
(Bank of New York LOC), 3.35%, 4/8/96 5,000
1,500 City of Greencastle IDR VRDN,
Crown Equipment Corp. Project (Society
National Bank LOC), 3.55%, 4/5/96 1,500
3,000 City of Indianapolis IDR VRDN, Ogden
Martin Systems (Swiss Bank Corp. LOC),
3.90%, 4/1/96 3,000
6,900 Indiana Development Finance Authority
VRDN, Series: 1994 A, Red Gold Inc. Project
(Harris Trust and Savings Bank LOC),
3.55%, 4/5/96 6,900
19,950 Indiana State Development Finance
Authority CP, Series: 1990 A, Pure Air on
Lake Project (Fuji Bank LOC),
3.90%, 4/4/96 19,950
-------
37,850
Iowa - 1.8%
2,220 City of LeClaire Electric Revenue Bond,
Series: 1986 (Colld. by U.S. Government
Securities), 4.13%, 9/1/96 2,221
7,040 Iowa Finance Authority Single Family
Housing Revenue Bond, Series: B, Mortgaged
Backed Securities Program (FGIC Colld.),
3.20%, 2/27/97 7,040
3,400 Iowa Finance Authority Waste Disposal
Revenue Bond VRDN, Series: 1995 A, Cedar
River Paper Co. Project (Swiss Bank Corp.
LOC), 3.80%, 4/1/96 3,400
7,500 Iowa School Corp. Warrant Certificates,
Series: A (CGIC Insured), 4.75%, 6/28/96 7,511
-------
20,172
-------
Kansas - 0.0%
300 City of Topeka Sewer System VRDN,
Series: 1984 (MBIA Insured),
3.65%, 4/1/96 300
-------
Kentucky - 0.5%
City of Danville Municipal Pooled Lease
Program (PNC Bank LOC)
2,605 3.35%, 5/10/96 2,605
3,000 3.60%, 5/15/96 3,000
-------
5,605
-------
Louisiana - 2.3%
6,600 Ascension Parish PCR VRDN,
Allied-Signal Project (FMC Corp. Gtd.),
3.55%, 4/5/96 6,600
1,915 Louisiana Public Facilities Authority PCR
VRDN, Series: 1992, Allied-Signal Project
(FMC Corp. Gtd.), 3.55%, 4/5/96 1,915
2,200 Parish of Caddo IDR VRDN, General
Motors Project (General Motors
Corp. Gtd.), 3.55%, 4/5/96 2,200
Parish of West Baton Rouge PCR CP,
Dow Chemical Project (Dow Chemical
Corp. Gtd.)
5,900 3.35%, 5/16/96 5,900
4,900 3.30%, 5/21/96 4,900
4,000 Plaquemines Port, Harbor & Terminal CP,
Series: D, Electro-Coal Transfer Co. Project
(Tampa Electric Co. Gtd.), 3.50%, 5/14/96 4,000
-------
25,515
-------
Maryland - 2.8%
4,850 City of Baltimore IDA VRDN, Series: 1986,
Capital Acquisition Program (Dai-Ichi
Kangyo Bank LOC), 3.70%, 4/5/96 4,850
3,000 County of Howard Multifamily Housing
Revenue Bond, Sherwood Crossing Ltd.
(GNMA Securities Colld.), 4.25%, 6/1/96 3,000
3,600 County of Montgomery VRDN, Series: 1993
A, Single Family Housing Program, Merrill
P-Floats FA-40, 3.35%, 4/5/96 3,600
10,000 Maryland Health and Higher Education
Authority VRDN, Series: A, Helix Health Inc.
(NationsBank, N.A. LOC), 3.50%, 4/5/96 10,000
4,215 Maryland Health and Higher Education
Authority VRDN, Series: D, Pooled Loan
Program (NationsBank, N.A. LOC),
3.50%, 4/5/96 4,215
977 Maryland State Community Development
Authority, Merrill P-Floats PT-12,
3.35%, 4/1/96 977
4,400 Maryland State Economic Development
Authority VRDN (NationsBank, N.A. LOC),
3.50%, 4/5/96 4,400
-------
31,042
-------
Massachusetts - 0.5%
4,000 Massachusetts Health & Education
Facilities VRDN, Series: P, Merrill General
Trust SG-27, 3.45%, 4/5/96 4,000
1,240 Massachusetts Housing Finance Authority,
Single Family TOCR, 4.00%, 6/1/96 1,240
-------
5,240
-------
Michigan - 2.2%
2,435 Michigan Job Development Authority IDR
VRDN, Fisher Big Wheel Corp. Project
(Bayerische Vereinsbank LOC),
3.50%, 4/5/96 2,435
1,100 Michigan Strategic Fund IDR VRDN,
Allied-Signal Project (FMC Corp.
Gtd.), 3.50%, 4/5/96 1,100
Michigan Strategic Fund PCR CP (Dow
Chemical Gtd.)
2,500 3.35%, 4/9/96 2,500
6,800 3.40%, 4/11/96 6,800
2,895 Michigan Strategic Fund VRDN, Four 'D'
Investment Company Project (Comerica
Bank LOC), 3.45%, 4/5/96 2,895
8,175 Mona Shores Public School G.O. VRDN,
Merrill Soc Gen Muni Trust-26
(FGIC Insured), 3.45%, 4/5/96 8,175
-------
23,905
-------
Minnesota - 0.4%
4,000 Minnetonka Multifamily Housing VRDN,
Series: 1995, Cliffs at Ridgedale Project
(FNMA Colld.), 3.45%, 4/5/96 4,000
-------
Mississippi - 0.5%
5,300 Jackson County PCR VRDN, Series: 1994,
Chevron Inc. Project (Chevron Oil Gtd.),
3.85%, 4/1/96 5,300
-------
Missouri - 3.1%
8,254 Missouri Health and Education Facilities
Authority VRDN, Washington University
Project (Washington University Gtd.),
3.45%, 4/5/96 8,254
14,000 Missouri Higher Education Loan Authority
VRDN, Series: 1991 B (MBIA Insured),
3.60%, 4/5/96 14,000
8,860 Missouri State TOCR G.O. VRDN, Series: A,
3.70%, 4/5/96 8,860
2,830 St. Charles County PCR VRDN, Series:
1988 A, Cedar Ridge Apartments Project
(Bank One LOC), 3.45%, 4/5/96 2,830
-------
33,944
-------
Montana - 1.0%
6,200 City of Forsyth PCR VRDN, Series: 1986,
Portland General Electric Co. Project
(Banque Nationale de Paris LOC),
3.80%, 4/1/96 6,200
1,600 City of Forsyth PCR VRDN, Series: 1988 A,
Pacificorp Project (Industrial Bank of
Japan LOC), 3.90%, 4/1/96 1,600
3,200 Montana Board of Investment VRDN,
Series: 1989 A, Colstrip Energy L.P. Project
(Fuji Bank LOC), 3.55%, 4/5/96 3,200
-------
11,000
-------
New York - 5.8%
5,900 City of New York G.O. TRAN, Series:
1996 A, 4.50%, 4/11/96 5,901
10,000 County of Nassau RAN, Series: 1996 A,
4.00%, 3/5/97 10,055
Marine Midland Premium Loan Trust
VRDN (Hong Kong & Shanghai
Bank LOC)
18,507 Series: 1991 A, 3.60%, 4/5/96 18,507
1,291 Series: 1991 B, 3.70%, 4/5/96 1,291
4,000 New York State Environmental Facilities
PCR VRDN, Eagle Trust-Weekly, Series:
943204 (CGIC Insured), 3.47%, 4/5/96 4,000
20,392 New York State Medical Care Finance
Agency Revenue Bond, Series: BTP-175
(Colld. by U.S. Government Securities),
3.85%, 12/17/96 20,392
3,580 Pooled Puttable Floating Option VRDN,
Series: PPT2, 3.50%, 4/1/96 3,580
-------
63,726
-------
North Carolina - 0.7%
2,500 Mecklenburg County PCR IDR VRDN,
Series: 1996, SteriGenics Int'l. Project
(Comerica Bank LOC), 3.70%, 4/5/96 2,500
2,000 Mecklenberg County VRDN, Series: 1996,
YMCA of Charlotte Project (Wachovia
Bank of North Carolina LOC),
3.50%, 4/5/96 2,000
3,000 North Carolina State Port Authority VRDN,
Series: 1996, Morehead City Terminals Inc.
(NationsBank Corp. LOC), 3.65%, 4/5/96 3,000
-------
7,500
-------
North Dakota - 0.5%
5,775 North Dakota Housing Finance Authority
Revenue Bond, Series: 1988 A (North
Dakota Housing Finance Agency-SFMR),
3.50%, 7/1/96 5,774
-------
Ohio - 2.4%
5,875 State of Ohio G.O. VRDN, Series: 1994,
BTP-170, 3.50%, 4/5/96 5,875
1,940 State of Ohio Higher Education VRDN,
Series: 1990 A, Partnership BTP-29 ADP
Class B (MBIA Insured), 3.55%, 4/5/96 1,940
4,800 State of Ohio Higher Education VRDN,
Series: 1994 A, Partnership BTP-69 ADP
Class B (AMBAC Insured),
3.55%, 4/5/96 4,800
1,000 State of Ohio Water Development
Authority Revenue Bond (MBIA Insured),
4.55%, 12/1/96 1,003
13,400 State of Ohio Water Development
Authority PCR VRDN, Series: B,
General Motors Project (General
Motors Corp. Gtd.), 3.55%, 4/5/96 13,400
-------
27,018
-------
Oregon - 1.1%
4,000 City of Klamath Falls Electric Revenue
Bond (Colld. by U.S. Government
Securities), 4.40%, 5/1/96 4,000
8,450 City of Medford Hospital Facility
Authority VRDN, Series: 1991, Rogue
Valley Project (Banque Paribas LOC),
3.50%, 4/5/96 8,450
-------
12,450
-------
Pennsylvania - 8.4%
3,000 City of Littlestown IDA VRDN, Hanover
House Industries Project (NationsBank,
N.A. LOC), 3.50%, 4/5/96 3,000
18,500 City of Philadelphia TRAN, Series: A,
4.50%, 6/27/96 18,523
2,000 County of Allegheny Environmental
Improvement IDA CP, Series: 1986, USX
Corp. Project (Dresdner Bank LOC),
3.35%, 4/8/96 2,000
800 County of Allegheny Hospital Development
Authority VRDN, Health Facilities Authority
Central Blood Bank Project (PNC Bank
LOC), 3.45%, 4/5/96 800
13,940 Delaware Valley Regional Finance
Authority VRDN, Series: 1985 A-D
(Midland Bank PLC LOC), 3.50%, 4/5/96 13,940
32,500 Pennsylvania Higher Education Assistance
Agency VRDN, Series: 1995 A
(SLMA LOC), 3.50%, 4/5/96 32,500
7,390 Pennsylvania Intergovernmental
Cooperative Authority VRDN, Merrill
Soc Gen Muni Trust-16 (MBIA Insured),
3.40%, 4/5/96 7,390
15,000 School District of Philadelphia TRAN,
4.50%, 6/28/96 15,019
-------
93,172
-------
Puerto Rico - 0.6%
7,000 Puerto Rico Industrial Medical &
Environmental Pollution Control
Facilities Revenue Bond, Series: 1983 A
(Merck & Co. Gtd.), 4.00%, 12/1/96 7,000
-------
South Carolina - 0.4%
2,800 County of Cherokee IDR VRDN, Oshkosh
Truck Project (NationsBank of North
Carolina, N.A. LOC), 3.60%, 4/3/96 2,800
200 County of Lexington IDR VRDN, Series:
1992, Allied-Signal Project (Allied-Signal,
Inc. Gtd.), 3.55%, 4/5/96 200
900 County of Lexington IDR VRDN, Series:
1992 A, Allied-Signal Project (FMC Corp.
Gtd.), 3.55%, 4/5/96 900
-------
3,900
-------
South Dakota -- 0.6%
6,410 South Dakota Economic Development
Finance Authority VRDN, Series: 1996,
Hastings Filters Inc. Project (Harris Trust
& Savings Bank LOC), 3.55%, 4/5/96 6,410
-------
Tennessee - 1.8%
2,200 City of Greenville Industrial Development
Board IDR VRDN, Series: 1993, Pet Inc.
Project (PNC Bank LOC), 3.45%, 4/5/96 2,200
4,000 City of Jackson Waste Facility IDR
VRDN, Series: 1995, Florida Steel Corp.
Project (NationsBank of Florida LOC),
3.50%, 4/5/96 4,000
4,000 County of Hamilton IDR VRDN, Series:
1995, Tennessee Aquarium Project
(NationsBank Tennessee LOC),
3.50%, 4/5/96 4,000
4,300 County of Montgomery Public Building
Authority VRDN, Series: 1995 (NationsBank
Tennessee LOC), 3.50%, 4/5/96 4,300
5,000 County of Nashville & Davidson Housing
Revenue Bond, Old Hickory Towers Project
(FHLB Indianapolis LOC), 3.60%, 4/5/96 5,000
-------
19,500
-------
Texas - 13.2%
Brazos River Harbor Navigation District
CP, Dow Chemical Co. Project
(Dow Chemical Co. Gtd.)
2,000 Series: 1988, 3.50%, 7/17/96 2,000
1,000 Series: 1990, 3.35%, 5/16/96 1,000
2,900 Series: 1992, 3.55%, 7/12/96 2,900
1,500 Series: 1992, 3.50%, 7/17/96 1,500
City of Corpus Christi Port Authority CP,
Union Pacific Resource Project (Union
Pacific Corp. Gtd.)
15,410 Series: 1989, 3.80%, 6/12/96 15,410
11,100 Series: 1989, 3.70%, 6/13/96 11,100
16,650 Series: 1992, 3.80%, 6/12/96 16,650
2,330 City of Dallas Water & Sewer CP, Series: A
(Industrial Bank of Japan LOC),
3.60%, 6/20/96 2,330
2,000 City of Houston Water and Sewer System
CP, Series: A, 3.25%, 6/20/96 2,000
3,455 City of Houston Water and Sewer System
VRDN, Series: 1992 C, BTP-54
(MBIA Insured), 3.55%, 4/5/96 3,455
12,000 County of Calhoun Navigation IDA IDR
VRDN, Formosa Plastics Corp. Project (Bank
of America LOC), 3.50%, 4/5/96 12,000
1,200 County of Harris Health Facilities
Development Corp. VRDN, Series: B,
St. Lukes Episcopal Hospital Project,
3.85%, 4/1/96 1,200
8,000 County of Harris Toll Road Unlimited
VRDN, Series: 1994 A, Citicorp Eagle Trust
#954302, 3.52%, 4/5/96 8,000
5,000 Greater Texas Student Loan Corp. Revenue
Refunding Bond, Series: A (SLMA LOC),
3.35%, 3/1/97 5,000
3,100 Gulf Coast Waste Disposal Authority VRDN,
Series: 1994, Amoco Oil Co. Project (Amoco
Oil Co. Gtd.), 3.85%, 4/1/96 3,100
1,000 North Central Health Facility Development
Corp. VRDN, Presbyterian Medical Center
Project (MBIA Insured), 3.80%, 4/1/96 1,000
3,800 North Texas Higher Educational Authority
VRDN, Series: 1993 A, Student Loan
Marketing Series (SLMA LOC), 3.50%, 4/5/96 3,800
11,500 North Texas Higher Educational Authority
VRDN, Series: 1993 A, SLMA (AMBAC
Insured), 3.55%, 4/5/96 11,500
2,300 Pooled Puttable Floating Option VRDN,
Series: PP2 (AMBAC, FGIC & MBIA
Insured), 3.35%, 4/5/96 2,300
7,000 Port Development Corp. Marine Terminal
IDR CP, Series: 1985 A, Mitsui & Co. Project
(Industrial Bank of Japan), 3.45%, 5/7/96 7,000
27,000 State of Texas TRAN, Series: A,
4.75%, 8/30/96 27,074
5,049 Texas Turnpike Authority, Dallas Toll
Revenue VRDN, Series: 1990 BTP-60 ADP
Class: B (AMBAC Insured), 3.55%, 4/5/96 5,049
-------
145,368
-------
Utah - 0.3%
2,500 Intermountain Power Agency Revenue
Bond, Series: F (Junior LOC),
3.80%, 6/15/96 2,500
1,000 Intermountain Power Agency Revenue
Bond, Series: F, 6.40%, 7/1/96 1,007
-------
3,507
-------
Virginia - 2.5%
2,000 City of Alexandria Housing &
Redevelopment VRDN (First Union
National Bank, Charlotte LOC),
3.70%, 4/5/96 2,000
14,500 City of Norfolk G.O., Eagle Trust
#944601, 3.52%, 4/5/96 14,500
2,000 County of Chesterfield IDA PCR CP,
Virginia Electric Power Co. Project
(Virginia Electric Power Co. Gtd.),
3.50%, 5/24/96 2,000
8,900 State of Virginia G.O. VRDN, Series: 1994,
Citicorp Eagle Trust #954601,
3.52%, 4/5/96 8,900
-------
27,400
-------
Washington - 1.2%
2,500 Kent Economic Development Corporation
IDR VRDN, Associated Grocers Project
(Seattle First National Bank LOC),
3.89%, 4/5/96 2,500
3,700 Washington Health Care Facilities
Authority VRDN, Series: 1993, Sisters of
St. Joseph (MBIA Insured), 3.45%, 4/5/96 3,700
6,595 Washington Public Power System VRDN,
Merrill Soc Gen Muni Trust-15
(MBIA Insured), 3.45%, 4/5/96 6,595
-------
12,795
-------
West Virginia - 0.3%
3,000 Marion County Waste Disposal IDR
VRDN, Series: C, Granttown Project
(National Westminster Bank LOC),
3.50%, 4/5/96 3,000
-------
Wisconsin - 2.2%
Housing & Economic Development
Authority, Home Ownership Revenue
Bond (Wisconsin Housing & Economic
Development Home Ownership
Insured)
13,810 3.35%, 9/1/96 13,810
6,305 3.50%, 9/1/96 6,305
4,290 Pewaukee Industrial Development
Revenue Bond VRDN, Husco
International Inc. Project (Bank One
Milwaukee LOC), 3.55%, 4/3/96 4,290
-------
24,405
-------
Total Municipal Investments
(cost $1,092,935) 1,092,935
---------
Number
of Shares
(000s)
- ---------
OTHER - 0.8%
1,000 AIM Tax-Free Money Market Fund 1,000
300 Dreyfus Tax Exempt Cash
Management Fund 300
1,159 Federated Tax Free Trust Money
Market Fund #15 1,159
500 Federated Tax Free Trust Money
Market Fund #73 500
5,659 Provident Municipal Cash Fund 5,659
525 Provident Municipal Fund 525
-------
Total Other
(cost $9,143) 9,143
-------
Total Investments - 99.9%
(cost $1,102,078) 1,102,078
Other Assets less Liabilities - 0.1% 711
---------
NET ASSETS - 100.0% $1,102,789
=========
<F7> Security ineligible under Rule 2a-7. The Adviser is continuously
monitoring the status of the security and has determined that it is in the best
interest of the shareholders to continue to hold the security.
See Notes to the Financial Statements.
Notes to the Financial Statements March 31, 1996
1. Organization
Northern Funds was organized October 12, 1993 as a Massachusetts business trust
and is registered under the Investment Company Act of 1940 as an open-end
management investment company consisting of 16 portfolios. The Money Market,
U.S. Government Money Market and Municipal Money Market Funds (collectively
"the Funds") are separate, diversified investment portfolios of Northern
Funds. Each of the Funds maintains its own investment objective. All of the
Funds commenced investment operations during April 1994.
The Funds have entered into an Investment Advisory Agreement with The Northern
Trust Company ("Northern Trust" or the "Adviser"). Northern Trust also
serves as custodian, fund accountant and transfer agent for the Funds.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles
("GAAP"). The presentation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates and assumptions.
a) VALUATION OF SECURITIES - Short-term investments held by the Funds are valued
using the amortized cost method, which approximates market value. Under this
method, investments purchased at a discount or premium are valued by amortizing
the difference between the original purchase price and maturity value of the
issue over the period to maturity. Any securities for which no current
quotations are readily available are valued at fair value as determined in good
faith by the Adviser under the supervision of the Board of Trustees.
b) REPURCHASE AGREEMENTS - During the term of a repurchase agreement, the market
value of the underlying collateral, including accrued interest, is required to
equal or exceed the market value of the repurchase agreement. The underlying
collateral for all repurchase agreements is held in a customer-only account of
Northern Trust, as custodian for the Funds, at the Federal Reserve Bank of
Chicago.
c) ORGANIZATION COSTS - Organization expenses of approximately $342,000 have
been deferred and are being amortized on a straight-line basis through 1999.
d) INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded as
of the trade date. The Funds determine the gain or loss realized from
investment transactions by using an identified cost basis method. Interest
income is recognized on an accrual basis and includes amortization of discounts
and premiums.
e) EXPENSES - The Funds are charged for those expenses that are directly
attributable to each Fund. Expenses that are not directly attributable to a
Fund are typically allocated among the Funds in proportion to their respective
net assets.
f) DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income are
declared and paid as follows:
Declaration Payment
Frequency Frequency
----------- ---------
MONEY MARKET FUND DAILY MONTHLY
U.S. GOVERNMENT MONEY
MARKET FUND DAILY MONTHLY
MUNICIPAL MONEY MARKET FUND DAILY MONTHLY
Distributions of net realized capital gains, if any, are declared at least
annually. Distributions to shareholders are recorded on the ex-dividend date.
g) FEDERAL INCOME TAXES - No provision for federal income taxes has been made
since the Funds intend to comply with the requirements of the Internal Revenue
Code available to regulated investment companies and to distribute substan-
tially all of their taxable income to their shareholders.
h) RECLASSIFICATIONS - At March 31, 1996, the Funds made reclassifications among
their capital accounts to reflect the characterization of certain income and
capital gain distributions for federal income tax purposes which may differ from
amounts determined in accordance with generally accepted accounting principles,
as follows:
Undistributed Undistributed
Net Net Paid
Investment Capital In
Income Gains Capital
------------ ------------ -------
MONEY MARKET FUND $50 $ - $(50)
U.S. GOVERNMENT MONEY
MARKET FUND 15 (15)
MUNICIPAL MONEY MARKET FUND 36 (36)
These reclassifications have no impact on the net asset value of the Funds and
are primarily due to differing treatment of certain fees and expenses. Certain
reclassifications have been made to amounts recorded at March 31, 1995 to
conform to the current financial statement presentation.
3. Investment Advisory and Other Agreements
Pursuant to its advisory agreement with the Funds, the Adviser is entitled to
receive a fee, calculated daily and payable monthly, at the annual rates
presented below as applied to each Fund's daily net assets. For the year ending
March 31, 1996, the Adviser voluntarily agreed to waive a portion of its
advisory fees as applied to each Fund's daily net assets. Northern Trust has
also agreed to reimburse the Funds as shown on the accompanying Statements of
Operations to adhere to the expense limitations presented below:
Annual Advisory
Advisory Fees After Expense
Fees Waivers Limitations
-------- --------- -----------
MONEY MARKET FUND 0.60% 0.40% 0.55%
U.S. GOVERNMENT MONEY
MARKET FUND 0.60% 0.40% 0.55%
MUNICIPAL MONEY MARKET FUND 0.60% 0.40% 0.55%
Prior to December 1, 1995, the annual advisory fees, advisory fees after waivers
and expense limitations for the Funds were as follows:
Annual Advisory
Advisory Fees After Expense
Fees Waivers Limitations
-------- ---------- -----------
MONEY MARKET FUND 0.60% 0.35% 0.45%
U.S. GOVERNMENT MONEY
MARKET FUND 0.60% 0.35% 0.45%
MUNICIPAL MONEY MARKET FUND 0.60% 0.35% 0.45%
The Funds have entered into an administrative agreement with Sunstone Financial
Group, Inc. ("Sunstone") for certain administrative services. Pursuant to its
administrative agreement with the Funds, Sunstone is entitled to receive a fee,
computed daily and payable monthly, at the annual rate of 0.15% of each Fund's
daily net assets. For the year ending March 31, 1996, Sunstone voluntarily
agreed to waive a portion of its administration fees as shown on the
accompanying Statements of Operations.
4. Bank Loans
Northern Funds maintains a $5,000,000 revolving bank credit line and a
$15,000,000 conditional revolving credit line for liquidity and other purposes.
Borrowings under this arrangement bear interest at 1% above the Fed Funds rate
and are secured by pledged securities equal to or exceeding 120% of the
outstanding balance.
There were no borrowings under this arrangement during the year ended March 31,
1996.
Independent Auditor's Report March 31, 1996
To the Shareholders and Board of Trustees:
Northern Funds Money Market Fund, U.S. Government
Money Market Fund and Municipal Money Market Fund
We have audited the accompanying statements of assets and liabilities of
Northern Funds (a Massachusetts business trust consisting of the Money Market
Fund, U.S. Government Money Market Fund and Municipal Money Market Fund),
including the schedules of investments, as of March 31, 1996, and the related
statements of operations, changes in net assets, and the financial highlights
for the periods indicated thereon. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
March 31, 1996, by physical examination of the securities held by the custodian
and by correspondence with outside depositories and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Northern Funds as of March 31,
1996, the results of their operations, changes in their net assets, and
financial highlights for the periods indicated thereon, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
May 8, 1996
This report has been prepared for the general information of Northern Funds
shareholders. It is not authorized for distribution to prospective investors
unless accompanied or preceded by a current Northern Funds prospectus, which
contains more information about Northern Funds investment policies, management
fees and expenses. Investors are reminded to read the prospectus carefully
before investing or sending money.
(C)1996 Sunstone Financial Group, Inc., Distributor
P.O. Box 75986
Chicago, IL 60690-6319
1-800-595-9111
