(LOGO)
NORTHERN FUNDS
MONEY MARKET FUNDS MONEY MARKET FUND U.S. GOVERNMENT MONEY MARKET FUND
U.S. GOVERNMENT SELECT MONEY MARKET FUND MUNICIPAL MONEY MARKET FUND
CALIFORNIA MUNICIPAL MONEY MARKET FUND FIXED INCOME FUNDS
U.S. GOVERNMENT FUND INTERMEDIATE TAX-EXEMPT FUND
FLORIDA INTERMEDIATE TAX-EXEMPT FUND FIXED INCOME FUND TAX-EXEMPT FUND
CALIFORNIA TAX-EXEMPT FUND INTERNATIONAL FIXED INCOME FUND EQUITY FUNDS
INCOME EQUITY FUND STOCK INDEX FUND GROWTH EQUITY FUND
SELECT EQUITY FUND SMALL CAP FUND INTERNATIONAL GROWTH EQUITY FUND
INTERNATIONAL SELECT EQUITY FUND TECHNOLOGY FUND
ANNUAL REPORT
March 31, 1998
TABLE OF CONTENTS
PAGE
Abbreviations and Other Information.........................................1
Economic and Market Overviews...............................................2
Portfolio Commentaries......................................................5
Money Market Funds
Statements of Assets and Liabilities....................................15
Statements of Operations............................................... 16
Statements of Changes in Net Assets.................................... 17
Financial Highlights................................................... 19
Schedules of Investments
Money Market Fund................................................... 22
U.S. Government Money Market Fund................................... 26
U.S. Government Select Money Market Fund............................ 27
Municipal Money Market Fund......................................... 28
California Municipal Money Market Fund.............................. 41
Fixed Income Funds
Statements of Assets and Liabilities....................................44
Statements of Operations............................................... 45
Statements of Changes in Net Assets.................................... 46
Financial Highlights................................................... 48
Schedules of Investments
U.S. Government Fund................................................ 51
Intermediate Tax-Exempt Fund........................................ 52
Florida Intermediate Tax-Exempt Fund................................ 57
Fixed Income Fund................................................... 59
Tax-Exempt Fund..................................................... 61
California Tax-Exempt Fund.......................................... 65
International Fixed Income Fund..................................... 68
Equity Funds
Statements of Assets and Liabilities................................... 70
Statements of Operations............................................... 71
Statements of Changes in Net Assets.................................... 72
Financial Highlights................................................... 74
Schedules of Investments
Income Equity Fund.................................................. 78
Stock Index Fund.................................................... 81
Growth Equity Fund.................................................. 89
Select Equity Fund.................................................. 91
Small Cap Fund...................................................... 93
International Growth Equity Fund................................... 112
International Select Equity Fund................................... 114
Technology Fund.................................................... 116
Notes to the Financial Statements........................................ 118
Report of Independent Public Accountants................................. 125
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 or next puttable dates for floating rate securities or the
prerefunded date for these types of securities.
EXPLANATION OF ABBREVIATIONS USED THROUGHOUT THE SCHEDULES OF INVESTMENTS
ACES Automatically Convertible Equity Securities
ADP Automated Data Processing
ADR American Depository Receipt
AMBAC American Municipal Bond Assurance Corp.
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
BTP Banker's Trust Partnership
CAPMAC Capital Markets Assurance Corp.
COLLD. Collateralized
COP Certificate of Participation
CP Commercial Paper
CVP Central Valley Project
DECS Dividend Enhanced Convertible Stock
FFCB Federal Farm Credit Bank
FGIC Financial Guaranty Insurance Corp.
FHA Federal Housing Authority
FHLB Federal Home Loan Bank
FHLMC Freddie Mac
FMC Fidelity Mortgage Corp.
FNMA Fannie Mae
FRN Floating Rate Note
FSA Financial Security Assurance
G.O. General Obligation
GNMA Government National Mortgage Association
GTD. Guaranteed
HDA Housing Development Authority
HFA Housing Finance Authority
HUD Housing and Urban Development
I.O. Interest Only Stripped Security
IDA Industrial Development Authority
IDR Industrial Development Revenue
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
MTN Medium Term Note
NYS New York Shares
P-FLOATSPuttable Floating Rate Security
P.O. Principal Only Stripped Security
PCR Pollution Control Revenue
PFA Public Finance Authority
PRIDES Preferred Redeemable Increased Dividend Securities
PRSV Preservation Project
PSF Permanent School Fund
RAN Revenue Anticipation Note
REMIC Real Estate Mortgage Investment Conduit
SAILS Stock Appreciation Income Linked Securities
SFM Single Family Mortgage
SLMA SLM Holding Corp.
S.O. Special Obligation
SOC GEN Societe Generale
STRYPES Structured Yield Product Exchangeable for Stock
TOB Tender Option Bond
TOC Tender Option Certificate
TOCR Tender Option Custodial Receipt
TRACES Treasury-Backed ACES
TRAN Tax and Revenue Anticipation Note
TRB Tax Revenue Bond
VRDN Variable Rate Demand Note
<F1> Non-Income Producing Security
------------------
NOT FDIC-INSURED
------------------
May lose value
No bank guarantee
------------------
Northern Funds(SM) 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 an independent third party, Sunstone
Distribution Services, LLC, and sold by The Northern Trust Company and its bank
affiliates.
ECONOMIC AND MARKET OVERVIEWS
REVIEW AND OUTLOOK OF THE ECONOMY _
MODERATE GROWTH WITH LOW INFLATION EXPECTED FOR 1998
In 1997, the economy turned in a stellar performance, posting the strongest
growth, the lowest unemployment rate, and the lowest inflation rate since the
start of this business expansion in the spring of 1991. Growth last year was
well-balanced, with personal consumption, business fixed investment, residential
investment, and exports all making substantial positive contributions. Although
economic activity is expected to moderate in 1998 from its 1997 pace, we believe
it is likely to be above its 7-year compound annual rate of about 2.5%.
The principal factor responsible for expected 1998 moderation in U.S. economic
growth is the fallout from the Asian economic difficulties. We believe this will
dampen U.S. export growth, which, in turn, will ripple through other sectors of
our economy. In part because of weaker Asian demand for our products and in part
because of the rapid growth in manufacturing capacity that has occurred here in
recent years, business equipment spending is expected to slow down this year.
Continued relatively strong consumer spending and residential construction
activity is forecast to be an offset to weaker exports and a more moderate pace
of capital spending. Household sector spending will be supported by rising
incomes, increased job security, increased wealth from the equity markets, and
low interest rates. The unemployment rate is expected to remain around its 1997
level of 4.7% as growth in both the supply of and demand for labor moderates.
From the perspective of the U.S. economy, the magnitude and duration of the
Asian drag on export growth depends critically on Japanese economic conditions.
The Japanese economy, which was one of the fastest growing in the industrialized
world in 1996, nearly ground to a halt in 1997 because of continued banking
system problems and an abrupt shift toward a restrictive fiscal policy. The
Japanese government is taking steps to shore-up its banking system. That
government also has announced its plans for the largest fiscal stimulus package
in recent years _ approximately 3% of its Gross Domestic Product ("GDP"). These
steps are likely to result in some positive growth for the Japanese economy late
in 1998.
We believe continental European economic activity should continue along its
stronger 1997 path. Although European fiscal policies are unlikely to turn
expansionary, neither are they likely to become more restrictive in 1998, given
that the charter member countries of the new European Monetary Union ("EMU")
have been chosen. Thus, what has been a drag on European economic activity could
become a neutral factor. At the same time, some of those charter member
countries will be experiencing more accommodative monetary policies as their
short-term interest rates are adjusted down to the Franco-German level in
preparation for the January 1, 1999 start of the EMU. This is expected to
further bolster European economic growth. So, toward the end of 1998, there is
likely to be something occurring which has been absent through most of this
business expansion _ a synchronization of accelerating economic growth in Europe
and Japan, with continued solid growth in the U.S.
Inflation is anticipated to stay low this year. With sluggish economic growth in
Asia, commodity prices are not expected to spike higher. We believe the lagged
effects of the recent appreciation of the U.S. dollar will continue to hold down
the prices of goods here. This will offset the rising prices of services, which
are less affected by foreign competition. Although significant increases in
energy prices are not expected, these prices may be near a cycle low as
producers cut back on their output and global demand picks up later this year.
Also toward the end of this year, the lagged effects from the prior dollar
appreciation, which had been holding down inflation, are likely to be waning.
This could set the stage for a drift up in inflation in 1999, especially if
European and Japanese economic activity is picking up at the end of 1998, as
expected.
The Federal Reserve was preparing to tighten monetary policy in the fourth
quarter of last year because it feared that if the economy continued to grow as
rapidly as it did in 1997, inflation was likely to rise. However, the Fed "held
its fire" as the Asian economic crisis intensified in the fall on the assumption
that these events would slow U.S. economic activity, thus acting as a substitute
for Fed tightening. Our export growth is slowing because of the Asian weakness.
But in the first quarter of this year, exceptionally strong domestic demand has
more than offset weakening foreign demand. Some of the strength in first quarter
domestic demand may be "borrowed" from subsequent quarters because of the
unusually mild winter experienced in many parts of the country. Assuming that
economic activity does moderate from its first quarter pace, the Fed is expected
to keep monetary policy on hold through most of this year. However, the risks
are rising that the Fed might engage in some "fine-tuning" tightening either
late this year or early next year.
THE FIXED INCOME MARKETS
The past year has been a rewarding one for investors in the debt markets. The
atypical combination of solid economic growth and declining inflation kept the
Federal Reserve on the sidelines, while a much improved U.S. fiscal situation
and fallout from Asia's financial crisis allowed interest rates to stay on a
downward path. The yield curve flattened considerably over the period as longer
rates declined 1.25% and shorter rates moved lower by 0.75%.
After raising the Fed funds rate in March 1997 to discourage a resurgence of
inflation fears, monetary policymakers watched for signals of anticipated
economic moderation. Before stronger U.S. economic growth could trigger a
further tightening, low actual inflation and weakness in the Asian countries
caused them pause. Despite a few quarters of strong domestic growth, Federal
Reserve policymakers are continuing their vigil as we end the current period.
Low nominal Treasury yields in combination with the phenomenal performance of
equity markets have left many investors apathetic about the return prospects of
U.S. bonds. This disposition is evidenced by the huge disparity between the
cash flows surging into equity mutual funds and the trickle moving into bond
funds. While nominal yields have contracted considerably in recent years, it's
important to remember that inflation has moved sharply lower, too. In fact, the
decline in inflation has been so great that real yields through March 31, 1998
(i.e., nominal yields less inflation), have been quite generous. At quarter's
end, the real yield on the 10-year Treasury note was 4.3%. This compares
favorably against its average for the past five years of 3.7% and the past 45
years of 2.7%. In addition, relative to real yields in the rest of the
industrialized world, we believe quarter-end U.S. real bond yields are
attractive. As the positive factors underpinning the favorable growth dynamic
in the U.S. come to be better appreciated, we expect today's generous real bond
yields to decline. Based on this outlook, we are maintaining our constructive
view of the U.S. bond market and have positioned our bond portfolios to benefit
from a further decline in interest rates.
Our premise that real yields are attractive is based on the expectation that
inflation will remain subdued. We have long argued the secular case for low
inflation: intense global competition, high levels of capital investment, rapid
technological innovation and global financial market discipline. Prudent
monetary and fiscal policies have also been important factors supporting this
outlook. In fact, the trend of fiscal improvement has been so positive that a
U.S. budget surplus is expected this year. Not surprisingly, news of this
surplus has broadened the perceived policy options available to elected
officials in Washington. The list of possible uses for the surplus includes tax
cuts, retiring the national debt, entitlement reform and, of course, increased
spending. While the debate on what to do with budget surpluses has only just
begun, we are encouraged by the scope and seriousness of discussions exploring
the issue of entitlement reform. The fact that our elected officials have
chosen to focus on entitlement reform so soon after balancing the budget
indicates that fiscal prudence still resonates strongly with voters. This
suggests that entitlement reform will be an important issue in future election
campaigns, which is good news for bond investors.
Nonetheless, from a cyclical standpoint, we acknowledge, as we have for several
years, the ongoing risk that strong U.S. and/or global growth could lead to
temporary price pressures and somewhat higher interest rates. While an adverse,
knee-jerk market reaction is possible, we believe current bond valuations more
than compensate investors for this threat. On a global basis, there exists
abundant capacity to handle any short-term surge in the demand for goods and
services. Should stronger demand persist for a longer time period, many medium-
term opportunities exist for further efficiency and productivity improvements.
Additionally, driven by financial markets, enormous pressure for economic and
political reforms continues to be applied across the globe. Ultimately, we
expect this global push to unleash many new productive efficiencies. If recent
history is any guide, the benefits produced by these changes may occur much
sooner than the bond market currently expects.
THE EQUITY MARKETS
The U.S. market faces three important issues in 1998, namely earnings prospects,
the Asian flu and valuation concerns. After a strong start to the year, the
market is priced for perfection and is subject to downside risk if undetected
shocks hit the system. The largest identifiable risk would be an earnings
shortfall. Even though analysts have been revising estimates down for the past
four months, they still think earnings can grow 10% in 1998 while we expect the
gain to be 5% or less. Wage pressures are rising, margins are at record levels,
price increases remain elusive and lower commodity prices are pressuring large
segments of the economy. After six years of double digit gains, a slowdown is
likely in 1998, leading the earnings optimists to be disappointed.
Events in Asia will contribute to earnings pressure this year as our exports to
Asia will falter, particularly in big ticket items, while strong price
competition is occurring in product categories that compete with Asian-made
goods. We expect Asian growth to be near zero in 1998, and since it accounts
for 30% of world output, overall global growth should slow. While these events
are good news for the inflation outlook and perhaps bond prices, they are not
bullish for earnings. Valuations measures remain stretched as they have been
for the past two years. While valuation alone never creates market tops or
bottoms, it does serve to cap the potential upside from present levels. The
strong underlying fundamentals of reasonable growth, low rates, low inflation
and good or at least adequate earnings growth continues to fuel demand for
equities. However, in the long term, stocks move in line with GDP growth and
earnings growth despite short-term de-couplings. We think stocks are fairly to
modestly over-priced but admit they could remain in this state for some time as
long as the underlying props discussed above remain intact. Investors will need
to live with both high valuations and higher volatility to continue to
participate in the great bull market under way.
THE GLOBAL MARKETS
The outlook for Europe remains positive while large question marks still exist
in Japan and the rest of Asia. The convergence triggered by EMU has caused
growth to surge in southern Europe and interest rates to fall, helping growth in
even core Europe. Coupled with restructuring and consolidation via mergers,
profits in Europe have been on a sustained upward trend. This has resulted in
strong market performance over the past six months. While a healthy pause or
consolidation is due over the next quarter or two, accelerating economic growth
and good profits could sustain the European rally well into 1999. Finally, the
advent of an equity culture is causing record demand for stocks as the bond
alternative looks less attractive in the current low interest rate environment.
Japan remains a mystery as growth and profits are faltering even in an
environment of very low interest rates and increased government fiscal spending.
Problems in Asia are contributing to Japan's lack of progress since these are
important export markets. While the markets in the rest of Asia are bouncing
back after a very poor 1997 performance, we are not confident that either 1998
or 1999 will see much of a recovery. Thus, we think Asia is likely to be "dead
money" for most of 1998, but a decent investment, as opposed to a trading
opportunity, is possible later this year or early next.
The dollar has been firm to strong for the past three years, a trend we see
continuing in 1998. However, a rising trade deficit could signal the end of its
rally, particularly if our GDP growth slows to the 2%-2.5% range. Investors in
foreign markets are still facing this dollar headwind, but a less rapid ascent
or even a modest dip could unfold later this year depending on trade
developments and the successful implementation of monetary union in Europe.
NORTHERN FUNDS Annual Report
PORTFOLIO COMMENTARIES
MONEY MARKET FUND
The maturity structure of the Fund continues to anticipate interest rate action
by the Federal Reserve. The portfolio is heavily weighted in Tier One
commercial paper (rated in the highest rating category by at least two
nationally recognized statistical rating organizations (NRSROs)) where yields
are attractive. The remainder is invested in certificates of deposit,
repurchase agreements, variable rate notes, Treasury bills and other high-
quality instruments. Quality and yield remain the primary factors in selecting
issues for the portfolio. During the upcoming year, the Fund will be managed in
an effort to take advantage of interest rate changes that occur. The barbell
strategy is implemented to take advantage of any backup in the market. 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
U.S. GOVERNMENT SELECT
MONEY MARKET FUND
Beginning in June 1997, the Funds adopted a barbell maturity structure. This
strategy afforded the Funds with sufficient liquidity to remain competitive in a
rising rate environment while adding yield and hedging against possible
deflation with longer-term securities. In the U.S. Government Money Market
Fund, we have substantially increased our exposure to repurchase agreements both
overnight and in the short-term markets. In the U.S. Government Select Money
Market Fund, we invest in those government agencies which are exempt from state
and local taxation. Looking ahead, we will maintain our emphasis on quality,
liquidity and yield.
Valerie J. Lokhorst
Portfolio Manager
MUNICIPAL MONEY
MARKET FUND
CALIFORNIA MUNICIPAL
MONEY MARKET FUND
The largest single factor affecting the short-term money market arena during the
last year was supply. During 1997, we had a large amount of floating rate
product come into the market. This kept floating rate yields at relatively high
levels for most of 1997, causing the yield curve in short-term municipals to be
very flat. As a result, the barbell strategy we employed was less effective than
it has been in the past. The Funds are designed for people and corporations in
the highest tax bracket, with the California Municipal Money Market Fund
remaining an attractive investment for California taxpayers. Supply will
continue to be a big factor again in 1998, but this time the lack of supply may
keep yields depressed for most of the year. The first quarter of calendar 1998
saw yields in short-term municipals at very low levels compared to taxables.
The Federal Reserve will also play a role in the market in 1998, but what, or
how significant, that role will be remains to be seen.
Brad Snyder
Portfolio Manager
MONEY MARKET FUNDS 7-DAY YIELDS<F2>
PERIOD ENDED MAY 12, 1998
U.S. U.S. CALIFORNIA
GOVERNMENT GOVERNMENT MUNICIPAL
MONEY SELECT MUNICIPAL MONEY
MONEY MARKET MARKET MONEY MARKET MONEY MARKET MARKET
FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------
Current 5.09% 5.01% 4.97% 3.33% 3.25%
- -------------------------------------------------------------------------------
Effective 5.22% 5.14% 5.10% 3.39% 3.30%
- -------------------------------------------------------------------------------
<F2> Yield calculations reflect 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, U.S.
Government Select Money Market, Municipal Money Market and California
Municipal Money Market Funds would have been 5.05%, 4.94%, 4.92%, 3.28% and
3.19%, 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<F3> COMPARISONS
AVERAGE MONTHLY RATES
<TABLE>
<CAPTION>
IBC'S
MONEY
FUND
AVERAGE TM/
CALIFORNIA
STATE-
U.S. GOV'T. CALIFORNIA SPECIFIC
IBC'S U.S. GOV'T IBC'S SELECT IBC'S MUNICIPAL IBC'S MUNICIPAL STOCK
MONEY MONEY FUND MONEY MONEY FUND MONEY MONEY FUND MONEY MONEY FUND MONEY BROKER &
MARKET AVERAGE TM/ MARKET AVERAGE TM/ MARKET AVERAGE TM/ MARKET AVERAGE TM/ MARKET GENERAL
FUND ALL TAXABLE FUND GOVERNMENT FUND GOVERNMENT FUND ALL TAX-FREE FUND PURPOSE
- ------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998
March 5.13% 5.03% 5.09% 4.86% 5.03% 4.86% 2.92% 2.80% 2.75% 2.68%
February 5.16% 5.05% 5.13% 4.87% 5.04% 4.87% 2.82% 2.77% 2.58% 2.65%
January 5.25% 5.10% 5.19% 4.90% 5.15% 4.90% 3.06% 2.99% 2.91% 2.87%
- ------------------------------------------------------------------------------------------------------------------------
1997
December 5.27% 5.12% 5.16% 4.92% 5.24% 4.92% 3.33% 3.23% 3.27% 3.12%
November 5.19% 5.05% 5.14% 4.85% 5.17% 4.85% 3.33% 3.24% 3.35% 3.14%
October 5.16% 5.01% 5.09% 4.83% 5.01% 4.83% 3.24% 3.11% 3.12% 3.00%
September 5.15% 5.02% 5.10% 4.84% 5.18% 4.84% 3.28% 3.15% 3.26% 3.11%
August 5.19% 5.04% 5.11% 4.85% 5.17% 4.85% 3.10% 2.96% 3.07% 2.92%
July 5.20% 5.02% 5.07% 4.82% 5.16% 4.82% 3.24% 3.08% 3.20% 2.90%
June 5.22% 5.02% 5.06% 4.82% 5.13% 4.82% 3.41% 3.28% 3.47% 3.15%
May 5.19% 4.98% 5.02% 4.78% 5.11% 4.78% 3.53% 3.37% 3.58% 3.29%
April 5.07% 4.94% 4.95% 4.75% 5.05% 4.75% 3.33% 3.17% 3.28% 3.08%
- ------------------------------------------------------------------------------------------------------------------------
<F3>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 Averages TM which are composites of professionally managed money market investments
with similar investment objectives.
</TABLE>
U.S. GOVERNMENT FUND
Performance of the Fund during fiscal 1998 reflected a general increase in
Treasury prices. Despite a continuation of the debate regarding the
growth/inflation trade-off, interest rates decreased to their lowest levels in
several years as an improving inflation environment took center stage.
Aggressive buying of longer-dated issues resulted in a flattening of the
Treasury curve. During the last 12 months, the Fund's performance has generally
followed the movement in Treasury prices. Exposure to mortgage-backed pass-
throughs enhanced the Fund's return profile. At the present time, we anticipate
U.S. GOVERNMENT LEHMAN BROS. GOVERNMENT
DATE FUND INTERMEDIATE BOND INDEX
- ---------------------------------------------------------
4/1/94 $10,000 $10,000
3/31/95 $10,349 $10,427
3/31/96 $11,141 $11,376
3/31/97 $11,585 $11,915
3/31/98 $12,616 $13,034
This chart assumes an initial gross investment of $10,000 made on 4/1/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The Lehman Brothers Intermediate Government Bond Index is made up of the
Treasury Bond Index (all public obligations of the U.S. Treasury, excluding
flower bonds and foreign-targeted issues) and the Agency Bond Index (all
publicly issued debt of U.S. small government agencies and quasi-federal
corporations, and corporate debt guaranteed by the U.S. government). It includes
only those bonds with maturities of up to ten years.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
using any price declines as an opportunity to increase the Fund's overall
interest rate exposure. We anticipate looking for opportunities to add yield
through additional purchases within the agency sector.
Monty Memler
Portfolio Manager
INTERMEDIATE TAX-EXEMPT FUND
Bond yields dropped sharply over the past 12 months as inflation was restrained,
despite stronger-than-expected economic growth. In this favorable environment,
the Fund posted a solid positive return for fiscal 1998. While the Fund's
longer-than-benchmark duration correctly positioned it for falling interest
rates, it modestly underperformed its benchmark, primarily because of limited
exposure to higher yielding market sectors. We are maintaining our overweight of
AAA-rated securities, particularly in the insured sector, because of prevailing
tight credit spreads in the marketplace. In addition, the Fund con-
INTERMEDIATE LEHMAN BROS. 5-YEAR
DATE TAX-EXEMPT FUND MUNICIPAL BOND INDEX
- ---------------------------------------------------------
4/1/94 $10,000 $10,000
3/31/95 $10,438 $10,571
3/31/96 $11,148 $11,342
3/31/97 $11,526 $11,818
3/31/98 $12,326 $12,721
This chart assumes an initial gross investment of $10,000 made on 4/1/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The Lehman Brothers 5-Year Municipal Bond Index is a total return performance
benchmark for the investment-grade, tax-exempt bond market. Securities included
in the Index must have been issued as part of a deal of at least $50 million;
have an amount outstanding of at least $3 million; have been issued within the
last five years; and have maturities of four to six years.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
tinues to take advantage of the steepness of the municipal yield curve, while
seeking beneficial trading opportunities. Looking forward, the Fund is
positioned to benefit from the generous real yields currently available in a low
inflation environment.
Eric Bergson
Portfolio Manager
FLORIDA INTERMEDIATE TAX-EXEMPT FUND
Although economic growth was stronger than anticipated, positive fiscal
developments and declining inflation over the past 12 months led to a sharp drop
in bond yields. In this environment, the Fund generated a solidly positive total
return in fiscal 1998. While the Fund's longer-than-benchmark duration correctly
positioned it for falling interest rates, it modestly underperformed its
benchmarks primarily because of limited exposure to higher yielding market
sectors. We are maintaining our overweight of AAA-rated securities, particularly
in the insured sector, because of the prevailing tight
LEHMAN BROS. MUTUAL
FLORIDA INTERMEDIATE LEHMAN BROS. FLORIDA FUND INTERMEDIATE
DATE TAX-EXEMPT FUND INTERMEDIATE TAX-EXEMPT MUNICIPAL BOND INDEX
- --------------------------------------------------------------------------------
8/15/96 $10,000 $10,000 $10,000
3/31/97 $10,263 $10,196 $10,228
3/31/98 $11,137 $11,096 $11,164
This chart assumes an initial gross investment of $10,000 made on 8/15/96
(commencement). Returns shown include the reinvestment of all dividends and
reflect fee waivers in effect; in the absence of fee waivers, performance would
be reduced. Past performance is not predictive of future results. Investment
return and principal value will fluctuate, so that shares, when redeemed, may be
worth more or less than the original cost.
The Lehman Brothers Mutual Fund Florida Intermediate Tax-Exempt Index is a total
return performance benchmark for the long-term, investment-grade, tax-exempt
bond market. Securities included are Florida bonds with a minimum credit rating
of Baa and maturities between five and ten years.
The Lehman Brothers Mutual Fund Intermediate Municipal Index is a total return
performance benchmark for the long-term, investment-grade, tax-exempt bond
market. Securities included in the Index must have been issued on or after
January 1, 1991 as part of a deal of at least $50 million; have an amount
outstanding of at least $3 million; have a fixed coupon rate; have a minimum
credit rating of Baa, and have maturities between five and ten years.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
credit spreads in the marketplace. The Fund continues to target steeper parts of
the yield curve while seeking beneficial trading opportunities. The Fund is
currently structured to capture today's generous real yields and to capitalize
on expectations of continued low inflation.
Eric Bergson
Portfolio Manager
FIXED INCOME FUND
U.S. rates fell sharply as exemplary inflation performance and concerns over the
impact of the Asian financial crisis outweighed stronger than anticipated
economic growth. The Fund generated a solid return for the fiscal year which
proved to be modestly less than its benchmark. Relative performance lagged due
to the Fund's overweight position in high-quality corporates which
underperformed Treasuries for the first time in over 10 years.
LEHMAN BROS. GOVERNMENT/
DATE FIXED INCOME FUND CORPORATE BOND INDEX
- ---------------------------------------------------------
4/1/94 $10,000 $10,000
3/31/95 $10,416 $10,459
3/31/96 $11,581 $11,601
3/31/97 $12,112 $12,118
3/31/98 $13,553 $13,620
This chart assumes an initial gross investment of $10,000 made on 4/1/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The Lehman Brothers Government/Corporate Bond Index includes all public
obligations of the U.S. Treasury, excluding flower bonds and foreign-targeted
issues; all publicly issued debt of U.S. government agencies and quasi-federal
corporations, and corporate debt guaranteed by the U.S. government; and all
publicly issued, fixed rate, nonconvertible investment-grade dollar-denominated,
SEC-registered corporate debt. Included in the latter is debt issued or
guaranteed by foreign sovereign governments, municipalities, or governmental
agencies, or international agencies.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
As we begin the new fiscal year, the Fund is positioned to capitalize on a
further decline in longer-term rates. While low nominal yields leave most
investors apathetic about bond return prospects, we consider inflation-adjusted
yields generous given our expectation that price pressures will remain muted. We
continue to overweight high-quality corporate and asset-backed sectors and
underweight Treasuries, given the favorable credit environment and attractive
incremental yield spreads.
Michael Lannan
Portfolio Manager
NORTHERN FUNDS Annual Report
TAX-EXEMPT FUND
U.S. bond markets had a rewarding year, benefiting from subdued domestic
inflation, a much improved budget situation and constructive fallout from the
financial crisis in Asia. Longer maturity municipal bonds performed strongly in
this environment. The Fund's positive duration exposure and curve positioning
strategies, reflective of our favorable outlooks for inflation and fiscal
reform, aided performance as both ideas played out even better than we
anticipated. This caused interest rates to move sharply below levels from a year
ago. These lower rates and the pending deregulation of the
LEHMAN BROS.
DATE TAX-EXEMPT FUND MUNICIPAL BOND INDEX
- ---------------------------------------------------------
4/1/94 $10,000 $10,000
3/31/95 $10,578 $10,746
3/31/96 $11,404 $11,647
3/31/97 $11,897 $12,284
3/31/98 $13,132 $13,600
This chart assumes an initial gross investment of $10,000 made on 4/1/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The Lehman Brothers Municipal Bond Index is a total return performance bench
mark for the long-term, investment-grade, tax-exempt bond market. Securities
included in the Index must have been issued as part of a deal of at least $50
million; have an amount outstanding of at least $3 million; have been issued
within the last five years; and have maturities of at least one year.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
public power industry triggered a plethora of municipal debt refundings and
issuer restructurings, which also contributed to the Fund's positive return.
Although the Fund's exposure to higher yielding securities was steadily raised
over the period, our ongoing quality bias versus the benchmark, in an economic
environment conducive to significant spread tightening, held the Fund's overall
returns slightly below that of the benchmark. The Fund remains positioned to
capture today's generous real yields and is structured to benefit from an
environment of moderating growth, subdued inflation and reduced issuance of new
municipal bonds.
Peter Flood
Portfolio Manager
CALIFORNIA TAX-EXEMPT FUND
Although economic growth was stronger than anticipated, positive fiscal
developments and declining inflation over the past 12 months led to a sharp drop
in bond yields. In this environment, the Fund generated a solidly positive total
return in fiscal 1998. The Fund's longer-than-benchmark duration correctly
positioned it for falling interest rates. Its concentration in discount
securities in 15- to 20-years helped it outperform its benchmarks, despite being
underweighted in higher
LEHMAN BROS. LEHMAN BROS.
CALIFORNIA MUTUAL FUND INTERMEDIATE CALIFORNIA
DATE TAX-EXEMPT FUND MUNICIPAL BOND INDEX MUNICIPAL INDEX
- --------------------------------------------------------------------------------
4/8/97 $10,000 $10,000 $10,000
9/30/97 $10,766 $10,563 $10,703
3/31/98 $11,186 $10,915 $11,136
This chart assumes an initial gross investment of $10,000 made on 4/8/97 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The Lehman Brothers Mutual Fund Intermediate Municipal Index includes eligible
municipal bonds with maturities of five to ten years. The Index is rule based
and market value weighted. Bonds eligible to be included in this Index are
investment grade tax-exempt bonds (Baa or better), with a fixed coupon rate,
issued after December 31, 1990 as part of a transaction of at least $50 million.
They must also have an outstanding par value greater that $3 million and a
remaining maturity of at least 1 year. Taxable municipal bonds, bonds with
floating rates, derivatives, and certificates of participation are excluded.
The Lehman Brothers California Exempt Municipal Index includes investment grade
(Baa or better) tax-exempt California bonds. The Index is rule based and market
value weighted. To be included in the Index, the original transaction size must
have been greater than $50 million. Each bond must have been issued since
December 31, 1990 and have an outstanding par value greater than $3 million, and
a remaining maturity of at least 1 year. Taxable municipal bonds, bonds with
floating rates, derivatives, and certificates of participation are excluded.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
yielding market sectors. We are maintaining our overweight of AAA-rated
securities, particularly in the insured sector, because of the prevailing tight-
credit spreads in the marketplace. The Fund continues to target steeper parts of
the yield curve while seeking beneficial trading opportunities. The Fund is
currently structured to capture today's generous real yields and to capitalize
on expectations of continued low inflation.
Eric Boeckmann
Portfolio Manager
INTERNATIONAL FIXED INCOME FUND
Non-U.S. bond yields fell sharply due to excellent inflation performance and
lackluster economic growth. Peripheral European rates dropped most significantly
in anticipation of a single European currency, which included Spain and Italy.
Stellar local market gains, however, were significantly offset by currency
weakness for unhedged U.S.-based investors. The Deutschmark lost nearly 10% and
the Yen fell 7% versus the U.S. dollar. The Fund outperformed its benchmark for
fiscal 1998 by a significant margin due to its underweight Japan and overweight
U.S., U.K. and peripheral European positions.
INTERNATIONAL J.P. MORGAN INTERNATIONAL
DATE FIXED INCOME FUND GOVERNMENT BOND INDEX
- ---------------------------------------------------------
4/1/94 $10,000 $10,000
3/31/95 $11,277 $11,827
3/31/96 $11,935 $12,348
3/31/97 $12,101 $12,452
3/31/98 $12,659 $12,807
This chart assumes an initial gross investment of $10,000 made on 4/1/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The J.P. Morgan International Government Bond Index is a daily, market
capitalization-weighted international fixed income total return index consisting
of 12 countries: Australia, Belgium, Canada, France, Germany, Japan,
Netherlands, the United Kingdom, Italy, Spain, Denmark and Sweden. The
constituent indices are fully invested. The Index is represented in U.S.
dollars. Each component is converted into U.S. dollars and then aggregated.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
As we begin the new fiscal year, the Fund is positioned to capitalize on further
rate declines in certain markets. While low nominal yields leave most investors
apathetic about bond return prospects, we generally consider inflation-adjusted
yields quite generous given our expectation that price pressures will remain
muted. From an individual country standpoint, we consider the U.S. and the U.K.
particularly attractive and Japan unattractive. The Fund remains invested in
very high-quality sovereign and corporate obligations.
Michael Lannan
Portfolio Manager
- ------------------------------------------------------------------------------
INVESTORS ARE REMINDED THAT, WHILE INVESTING GLOBALLY CAN BE REWARDING,
INVESTMENTS IN FOREIGN SECURITIES INVOLVE CERTAIN RISKS AND CONSIDERATIONS IN
ADDITION TO THOSE INHERENT WITH INVESTING IN U.S. COMPANIES, SUCH AS CURRENCY
FLUCTUATIONS AND POLITICAL INSTABILITY.
- ------------------------------------------------------------------------------
INCOME EQUITY FUND
With a total return of 31.0%, the Fund had an excellent year in fiscal 1998,
exceeding its targeted index by over 500 basis points. Financial market
conditions were again quite favorable, with a stock market that saw every
correction as a chance to buy, and a bond market that lowered five to ten year
interest rates by 100 basis points or more. The Fund was positioned somewhat
cautiously as the fiscal year began, causing it to lag its benchmark slightly,
but by summer heavy new issue
MERRILL LYNCH
INVESTMENT GRADE
DATE INCOME EQUITY FUND CONVERTIBLE BOND INDEX
- ---------------------------------------------------------
4/1/94 $10,000 $10,000
3/31/95 $10,221 $10,444
3/31/96 $12,307 $13,142
3/31/97 $14,081 $14,261
3/31/98 $18,446 $17,933
This chart assumes an initial gross investment of $10,000 made on 4/1/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The Merrill Lynch Investment Grade Convertible Bond Index consists of all con-
vertible bonds and preferreds (domestic and Euro), rated AAA to BBB3 with at
least $2.5 million par value outstanding per issue.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
volume had caused values among convertible issues to become more reasonable.
This allowed the addition of several new positions at attractive levels.
Specific sectors that helped power returns, especially in the second half, were
cable television, financials, and, very selectively, technology. Investor
expectations for the market continue to be high, and the trends in earnings and
interest rates in the coming year will be crucial to investment results. Going
forward, we will continue to seek total returns consistent with the equity
market, but with a higher current yield, and less volatility than a 100%
straight stock portfolio.
Theodore T. Southworth
Portfolio Manager
NORTHERN FUNDS Annual Report
STOCK INDEX FUND
The Fund is designed to replicate the performance of the Standard & Poor's 500R
Composite Stock Index in an efficient, cost-effective manner. The Fund provided
a return that closely matched that of the S&P 500R. Strong performing sectors
for the year were consumer services and capital goods. There were 38 additions
to the S&P 500R for the year ending March 1998, 11 of which happened since
January 1, 1998.
S&P 500R COMPOSITE
DATE STOCK INDEX FUND STOCK INDEX
- ---------------------------------------------------------
10/7/96 $10,000 $10,000
3/31/97 $10,821 $10,867
3/31/98 $15,918 $16,084
This chart assumes an initial gross investment of $10,000 made on 10/7/96 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The S&P 500R Composite Stock Index is an unmanaged index of 500 selected common
stocks, most of which are listed on the New York Stock Exchange. The Index is
heavily weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- -------------------------------------------------------------------------------
During the next 12 months, we will continue to follow an indexing strategy
designed to replicate, before expenses, the performance of the S&P 500R.
Judy Yang
Portfolio Manager
- -------------------------------------------------------------------------------
The Stock Index Fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's, nor does Standard & Poor's guarantee the accuracy and/or completeness of
the S&P 500R Composite Stock Index or any data included therein. Standard &
Poor's makes no warranty, express or implied, as to the results to be obtained
by the Fund, owners of the Fund, any person or any entity from the use of the
S&P 500R or any data included therein. Standard & Poor's makes no express or
implied warranties and expressly disclaims all such warranties of
merchantability of fitness for a particular purpose for use with respect to the
S&P 500R or any data included therein.
- -------------------------------------------------------------------------------
GROWTH EQUITY FUND
The Fund slightly outperformed its benchmark for fiscal 1998, aided in part by
its emphasis on large capitalization companies with strong revenue and earnings
growth. The Fund was positioned to take advantage of the higher growth sectors
of the market by focusing on health care, technology and financial services.
Lower growth sectors such as utilities, basic industry and capital goods were
underweighted. We decreased our weighting in smaller capitalization companies
and the
S&P 500R COMPOSITE
DATE GROWTH EQUITY FUND STOCK INDEX
- ---------------------------------------------------------
4/1/94 $10,000 $10,000
3/31/95 $10,690 $11,561
3/31/96 $13,393 $15,274
3/31/97 $14,962 $18,303
3/31/98 $22,153 $27,088
This chart assumes an initial gross investment of $10,000 made on 4/1/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The S&P 500R Composite Stock Index is an unmanaged index of 500 selected common
stocks, most of which are listed on the New York Stock Exchange. The Index is
heavily weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
technology sector in the second half of the fiscal year, a move that helped to
boost performance. While we were late getting into oil service stocks, the shift
into the energy sector helped to boost performance in the fourth quarter of
fiscal 1998. We will continue to use a combination of fundamental factors in
managing the Fund, the most important being growth of revenues and earnings.
The Fund remains positioned in companies with strong historical records of
growth. However, our goal will be to sell or reduce holdings when relative
valuations become stretched too high or when there are signs of slowing earnings
growth or other fundamental deterioration.
John Zielinski
Portfolio Manager
SELECT EQUITY FUND
Stocks performed well last year as solid corporate earnings gains, remarkably
low inflation and declining interest rates caused investors to push most major
stock market indices to all-time highs. The Select Equity Fund outperformed its
benchmark as our focus on companies with strong earnings gains and a shift
toward larger capitalization stocks proved to be a winning strategy. For some
time, the Fund held large positions relative to the S&P 500R in the financial,
health care
S&P 500R COMPOSITE
DATE SELECT EQUITY FUND STOCK INDEX
- ---------------------------------------------------------
4/6/94 $10,000 $10,000
3/31/95 $10,818 $11,496
3/31/96 $13,598 $15,189
3/31/97 $15,725 $18,201
3/31/98 $23,542 $26,937
This chart assumes an initial gross investment of $10,000 made on 4/6/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The S&P 500R Composite Stock Index is an unmanaged index of 500 selected common
stocks, most of which are listed on the New York Stock Exchange. The Index is
heavily weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
and technology sectors. As the year progressed, we found companies with
attractive characteristics in a broader array of sectors. Our technology and
financial holdings now represent a smaller share of the portfolio, as they were
partially displaced by other opportunities. Health care remains a major
emphasis. Another change last year was a shift toward larger companies, as the
stock market has clearly favored them over smaller firms. We continue to believe
owning the stocks of good quality companies that are growing their businesses
leads to superior long-term investment results. Our challenge in fiscal 1999 is
to identify those quality growth companies that will be best rewarded by the
marketplace. Large companies continue to outperform smaller ones, but we suspect
this can not continue much longer.
Robert Streed
Portfolio Manager
SMALL CAP FUND
The Fund's value orientation was the primary factor in its outperformance of its
benchmark, the Russell 2000 Index, for fiscal 1998. We employed quantitative
methodologies to identify undervalued small cap stocks for the Fund. Going
DATE SMALL CAP FUND RUSSELL 2000 INDEX
- ---------------------------------------------------------
4/1/94 $10,000 $10,000
3/31/95 $10,057 $10,532
3/31/96 $12,479 $13,563
3/31/97 $14,036 $14,261
3/31/98 $20,031 $20,214
This chart assumes an initial gross investment of $10,000 made on 4/1/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The Russell 2000 Index is an index of the smallest 2,000 companies in the
Russell 3000 Index, as ranked by total market capitalization. The Russell 2000
Index is widely regarded in the industry to accurately capture the universe of
small-cap stocks.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
forward, we will continue the quantitative approach, taking risk only in the
areas we feel we can provide "value-added" and neutralizing all other portfolio
risk factors relative to the benchmark.
Susan French
Portfolio Manager
NORTHERN FUNDS Annual Report
INTERNATIONAL GROWTH EQUITY FUND
The Fund outpaced its benchmark during fiscal 1998 due to strong performance
from Europe where it is overweighted, and as a result of continued poor Asian
performance where the Fund is well underweighted. Europe exceeded expectations
with robust earnings growth, even as events in Asia ex-Japan deteriorated badly
last year. Assets in Asia were reduced in mid- to late-1997 and redeployed in
Europe. Emerging market exposure was substantially reduced, but overall results
for dollar-based investors were still penalized by the strong currency. As the
INTERNATIONAL MORGAN STANLEY
DATE GROWTH EQUITY FUND EAFE INDEX
- ---------------------------------------------------------
4/1/94 $10,000 $10,000
3/31/95 $9,735 $10,608
3/31/96 $10,573 $11,915
3/31/97 $10,849 $12,089
3/31/98 $13,165 $14,337
This chart assumes an initial gross investment of $10,000 made on 4/1/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The Morgan Stanley EAFE Index is composed of a sample of companies represen-
tative of the market structure of 20 European and Pacific Basin countries. The
Index represents the evolution of an unmanaged portfolio consisting of all
domestically listed stocks.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
current year begins, the portfolio is well underweighted in Asia and is
essentially out of emerging markets in Latin America. The Fund continues to hold
a strong presence in Europe as potential benefits from the common currency are
yet to be fully realized.
Robert LaFleur
Portfolio Manager
- ------------------------------------------------------------------------------
INVESTORS ARE REMINDED THAT, WHILE INVESTING GLOBALLY CAN BE REWARDING,
INVESTMENTS IN FOREIGN SECURITIES INVOLVE CERTAIN RISKS AND CONSIDERATIONS IN
ADDITION TO THOSE INHERENT WITH INVESTING IN U.S. COMPANIES, SUCH AS CURRENCY
FLUCTUATIONS AND POLITICAL INSTABILITY.
- ------------------------------------------------------------------------------
INTERNATIONAL SELECT EQUITY FUND
The Fund enjoyed a good year, outperforming its benchmark, even as dollar-based
returns were still penalized by the strong currency. Strong market returns in
Europe and good stock selection in both Europe and emerging markets contributed
to the Fund's gains. The portfolio weathered the sharp downturn in Asia and
other emerging markets late in 1997, as it had moved to reduce its holdings
starting in mid-1997. The
MORGAN STANLEY EAFE
INTERNATIONAL INDEX PLUS EMERGING
DATE SELECT EQUITY FUND MARKETS FREE INDEX
- ---------------------------------------------------------
4/5/94 $10,000 $10,000
3/31/95 $9,805 $10,432
3/31/96 $10,804 $11,767
3/31/97 $10,593 $12,061
3/31/98 $13,108 $13,969
This chart assumes an initial gross investment of $10,000 made on 4/5/94 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The Morgan Stanley EAFE Blended with Emerging Markets Free Index is composed of
companies representative of the market structure of 20 developed European and
Pacific Basin countries and 18 emerging market countries. The Index represents
stock market trends by representing the evolution of an unmanaged portfolio
comprising a broad selection of domestically listed companies. Stock selection
also takes into consideration the trading capabilities of foreigners in emerging
market countries. The Morgan Stanley EAFE Index represents 90% of the benchmark;
the Morgan Stanley Emerging Markets Free Index, 10%.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
sharp falls in the more volatile global markets penalized a few holdings, but in
general the Fund avoided the devastating losses in Asia in the wake of the 1997
currency crisis. In fiscal 1999, the Fund will remain focused on rapidly growing
companies, which we believe will be more prevalent in Europe and Latin America
due to the economic problems in large parts of Asia. This company-specific
approach leads to an overweight in the high growth markets of southern Europe
and Latin America and to a small presence in Asia and Japan.
Robert LaFleur
Svein Backer
Portfolio Managers
- ------------------------------------------------------------------------------
INVESTORS ARE REMINDED THAT, WHILE INVESTING GLOBALLY CAN BE REWARDING,
INVESTMENTS IN FOREIGN SECURITIES INVOLVE CERTAIN RISKS AND CONSIDERATIONS IN
ADDITION TO THOSE INHERENT WITH INVESTING IN U.S. COMPANIES, SUCH AS CURRENCY
FLUCTUATIONS AND POLITICAL INSTABILITY.
- ------------------------------------------------------------------------------
TECHNOLOGY FUND
The Fund's strong return for fiscal 1998 resulted as technology companies
continued to deliver better-than-average earnings growth over the past year.
Driven by this earnings expansion and the very strong bull market advance in the
stock market in general, technology stocks advanced sharply. In the first half
of the year, we overweighted semiconductor-related issues because these
companies were rebounding from a sharp inventory correction that occurred in
1996. The problems in
S&P 500R COMPOSITE MORGAN STANLEY HIGH
DATE TECHNOLOGY FUND STOCK INDEX TECHNOLOGY INDEX
- --------------------------------------------------------------------------------
4/1/96 $10,000 $10,000 $10,000
3/31/97 $12,082 $11,983 $11,232
3/31/98 $18,439 $17,735 $17,218
This chart assumes an initial gross investment of $10,000 made on 4/1/96 (com-
mencement). Returns shown include the reinvestment of all dividends and reflect
fee waivers in effect; in the absence of fee waivers, performance would be
reduced. Past performance is not predictive of future results. Investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost.
The Morgan Stanley High-Technology 35 Index is a broad-market technology
indicator dedicated exclusively to the electronics-based technology sector. The
35 stocks in the Index include the most highly capitalized American companies
drawn from nine technology subsectors: computer services/design software, server
software, PC software and new media, networking and telecom equipment, server
hardware, PC hardware and peripherals, specialized systems and semi-conductors.
Capitalization ranges from $1 billion to $54 billion.
The S&P 500R Composite Stock Index is an unmanaged index of 500 selected common
stocks, most of which are listed on the New York Stock Exchange. The Index is
heavily weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
the Asian markets cut short that recovery, and as a result, we reduced our
exposure to semiconductor and semiconductor capital equipment stocks during the
fourth calendar quarter and reestablished an overweighted position in
telecommunications equipment and data networking stocks. Throughout the year, we
maintained an overweight in the applications software group due to the strong
growth characteristics in this area. Going forward, we continue to look for
high-growth technology companies that we believe will continue to meet or exceed
investor expectations over time. We believe technology stocks could perform
nicely if the broad stock market continues its bull market advance throughout
1998. However, a sharp price correction in the broad market could cause
technology shares to fall dramatically. As a result, we will be paying close
attention to such factors as personal computer unit sales and pricing trends,
software and semiconductor product upgrades and telecommunications spending
trends. Readings of these indicators will provide us with clues as to how to
best meet the objectives of the Fund.
John Leo
Jim Burkart
George Gilbert
Portfolio Managers
NORTHERN FUNDS Annual Report
STATEMENTS OF ASSETS AND LIABILITIES MARCH 31, 1998
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
U.S.
U.S. GOV'T. CALIFORNIA
GOV'T. SELECT MUNICIPAL MUNICIPAL
MONEY MONEY MONEY MONEY MONEY
MARKET MARKET MARKET MARKET MARKET
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA FUND FUND FUND FUND FUND
- -------------------------------------------- ------- ------ ------ ------ ------
<C> <C> <C> <C> <C>
ASSETS:
Investments, at amortized cost $2,917,130 $245,667 $309,664 $1,810,177 $225,235
Repurchase agreements, at cost which
approximates market value 350,000 171,125 _ _ _
Cash _ _ _ _ 83
Income receivable 16,807 1,446 723 12,825 2,241
Receivable for fund shares sold 76,612 21,610 5,052 39,511 5,348
Receivable for securities sold _ _ _ 8,190 _
Receivable from Adviser 26 8 6 17 4
Deferred organization costs,
net of accumulated amortization 27 10 6 31 6
Prepaid and other assets 74 20 25 50 7
- ------------------------------------------------------------------------------------------------------------------------------
Total Assets 3,360,676 439,886 315,476 1,870,801 232,924
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Due to custodian 57 _ _ _ _
Dividends payable 14,182 1,765 1,310 4,544 516
Payable for fund shares redeemed 49,685 21,007 7,682 51,615 7,520
Accrued investment advisory fees 216 28 20 121 15
Accrued transfer agent fees 54 7 5 30 4
Accrued administration fees 19 3 2 14 2
Accrued custody and accounting fees 14 2 1 11 2
Accrued registration fees and other liabilities 419 32 31 123 22
- ------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 64,646 22,844 9,051 56,458 8,081
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets $3,296,030 $417,042 $306,425 $1,814,343 $224,843
==============================================================================================================================
ANALYSIS OF NET ASSETS:
Capital stock $3,295,926 $417,011 $306,411 $1,814,017 $224,831
Accumulated undistributed net investment income 101 27 14 180 13
Accumulated undistributed net
realized gains (losses) 3 4 _ 146 (1)
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets $3,296,030 $417,042 $306,425 $1,814,343 $224,843
==============================================================================================================================
SHARES OUTSTANDING ($.0001 PAR VALUE,
UNLIMITED AUTHORIZATION) 3,296,023 417,038 306,425 1,814,127 224,844
NET ASSET VALUE, REDEMPTION AND
OFFERING PRICE PER SHARE $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------
See Notes to the Financial Statements.
</TABLE>
STATEMENTS OF OPERATIONS YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
U.S.
U.S. GOV'T. CALIFORNIA
GOV'T. SELECT MUNICIPAL MUNICIPAL
MONEY MONEY MONEY MONEY MONEY
MARKET MARKET MARKET MARKET MARKET
AMOUNTS IN THOUSANDS FUND FUND FUND FUND FUND
- -------------------------------------------- ------- ------ ------ ------ ------
<C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $136,282 $19,260 $12,166 $56,875 $7,781
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 14,236 2,046 1,307 9,097 1,287
Administration fees 3,559 512 327 2,274 376
Transfer agent fees 2,373 341 218 1,516 214
Custody and accounting fees 540 115 79 358 87
Registration fees 452 35 44 132 10
Professional fees 40 20 18 33 18
Amortization of organization costs 28 11 4 31 4
Trustees' fees and expenses 28 7 5 23 5
Other 138 70 17 93 18
- ------------------------------------------------------------------------------------------------------------------------------
Total Expenses 21,394 3,157 2,019 13,557 2,019
Less voluntary waivers of:
Investment advisory fees (4,745) (682) (633) (3,033) (568)
Administration fees (2,372) (294) (203) (1,345) (244)
Less: Reimbursement of expenses by Adviser (1,227) (305) (182) (841) (166)
- ------------------------------------------------------------------------------------------------------------------------------
Net Expenses 13,050 1,876 1,001 8,338 1,041
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 123,232 17,384 11,165 48,537 6,740
- ------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAINS (LOSSES) ON:
Investments 3 4 1 255 (1)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $123,235 $17,388 $11,166 $48,792 $6,739
==============================================================================================================================
See Notes to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
U.S. GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
---------------------------- --------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31,
AMOUNTS IN THOUSANDS 1998 1997 1998 1997
- -------------------------------------------- ---------------------------- --------------------------
<C> <C> <C> <C>
OPERATIONS:
Net investment income $ 123,232 $ 64,325 $ 17,384 $ 11,819
Net realized gains on investments 3 1 4 _
- ----------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations 123,235 64,326 17,388 11,819
- ----------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 11,527,035 7,318,021 1,747,441 1,755,453
Shares from reinvestment of dividends 15,289 6,771 3,063 2,684
Shares redeemed (9,853,484) (6,779,419) (1,647,725) (1,650,983)
- ----------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting
from Capital Share Transactions 1,688,840 545,373 102,779 107,154
- ----------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS PAID:
From net investment income (123,232) (64,325) (17,384) (11,819)
- ----------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 1,688,843 545,374 102,783 107,154
NET ASSETS:
Beginning of year 1,607,187 1,061,813 314,259 207,105
- ----------------------------------------------------------------------------------------------------------------
End of year $3,296,030 $1,607,187 $417,042 $314,259
================================================================================================================
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME $101 $77 $27 $21
================================================================================================================
</TABLE>
See Notes to the Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
U.S. GOVERNMENT CALIFORNIA
SELECT MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------------------- ------------------------- -----------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
AMOUNTS IN THOUSANDS 1998 1997 1998 1997 1998 1997
- --------------------------------------------- ------------------------- ------------------------- -----------------------
<C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 11,165 $ 5,924 $ 48,537 $ 37,048 $ 6,740 $ 5,177
Net realized gains (losses) on investments 1 (1) 255 (109) (1) _
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations 11,166 5,923 48,792 36,939 6,739 5,177
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 1,006,456 483,126 7,708,423 6,319,359 1,249,341 1,517,961
Shares from reinvestment of dividends 3,723 2,092 5,789 2,651 1,007 337
Shares redeemed (871,883) (402,489) (7,320,165) (6,004,649) (1,226,493) (1,482,396)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting
from Capital Share Transactions 138,296 82,729 394,047 317,361 23,855 35,902
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS PAID:
From net investment income (11,165) (5,924) (48,537) (37,048) (6,740) (5,177)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 138,297 82,728 394,302 317,252 23,854 35,902
NET ASSETS:
Beginning of year 168,128 85,400 1,420,041 1,102,789 200,989 165,087
- ----------------------------------------------------------------------------------------------------------------------------------
End of year $306,425 $168,128 $1,814,343 $1,420,041 $224,843 $200,989
==================================================================================================================================
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME $14 $10 $180 $153 $13 $9
==================================================================================================================================
See Notes to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
U.S. GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
--------------------------------------------- -----------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998 1997 1996 1995<F2> 1998 1997 1996 1995<F2>
- --------------------------------------- --------------------------------------------- -----------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.05 0.05 0.05 0.04 0.05 0.05 0.05 0.04
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.05) (0.05) (0.05) (0.04) (0.05) (0.05) (0.05) (0.04)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===================================================================================================================================
TOTAL RETURN<F3> 5.31% 5.05% 5.57% 4.55% 5.22% 4.93% 5.46% 4.47%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of year $3,296,030 $1,607,187 $1,061,813 $894,279 $417,042 $314,259 $207,105 $227,543
Ratio to average net assets of<F4>:
Expenses, net of waivers and
reimbursements 0.55% 0.55% 0.49% 0.45% 0.55% 0.55% 0.49% 0.45%
Expenses, before waivers and
reimbursements 0.90% 0.90% 0.91% 0.96% 0.93% 0.96% 0.94% 1.01%
Net investment income, net of
waivers and reimbursements 5.19% 4.94% 5.42% 4.94% 5.10% 4.82% 5.33% 4.93%
Net investment income, before
waivers and reimbursements 4.84% 4.59% 5.00% 4.43% 4.72% 4.41% 4.88% 4.37%
- -----------------------------------------------------------------------------------------------------------------------------------
<F2> For the period April 11, 1994 (commencement of operations) through March 31, 1995.
<F3> Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, and a
complete redemption of the investment at net asset value at the end of the period. Total return is not annualized for periods
less than one year.
<F4> Annualized for periods less than a full year.
See Notes to the Financial Statements.
</TABLE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
U.S. GOVERNMENT
SELECT MUNICIPAL
MONEY MARKET MONEY MARKET
FUND FUND
--------------------------------------------- -----------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998 1997 1996 1995<F2> 1998 1997 1996 1995<F3>
- --------------------------------------- --------------------------------------------- -----------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.05 0.05 0.05 0.02 0.03 0.03 0.03 0.03
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.05) (0.05) (0.05) (0.02) (0.03) (0.03) (0.03) (0.03)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===================================================================================================================================
TOTAL RETURN<F5> 5.24% 5.07% 5.55% 1.75% 3.27% 3.14% 3.54% 2.90%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of year $306,425 $168,128 $85,400 $82,162 $1,814,343 $1,420,041 $1,102,789 $927,747
Ratio to average net assets of<F6>:
Expenses, net of waivers and
reimbursements 0.46% 0.40% 0.33% 0.30% 0.55% 0.55% 0.49% 0.45%
Expenses, before waivers and
reimbursements 0.93% 0.97% 1.00% 1.32% 0.89% 0.90% 0.91% 0.95%
Net investment income, net of
waivers and reimbursements 5.13% 4.95% 5.43% 5.84% 3.20% 3.08% 3.46% 3.10%
Net investment income, before
waivers and reimbursements 4.66% 4.38% 4.76% 4.82% 2.86% 2.73% 3.04% 2.60%
- -----------------------------------------------------------------------------------------------------------------------------------
<F2> For the period December 12, 1994 (commencement of operations) through March 31, 1995.
<F3> For the period April 11, 1994 (commencement of operations) through March 31, 1995.
<F4> For the period November 29, 1994 (commencement of operations) through March 31, 1995.
<F5> Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, and a
complete redemption of the investment at net asset value at the end of the period. Total return is not annualized for periods
less than one year.
<F6> Annualized for periods less than a full year.
See Notes to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
CALIFORNIA
MUNICIPAL
MONEY MARKET
FUND
--------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998 1997 1996 1995<F4>
- --------------------------------------- --------------------------------------------
<C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.03 0.04 0.01
- ---------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.03) (0.03) (0.04) (0.01)
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00
=======================================================================================
TOTAL RETURN<F5> 3.20% 3.19% 3.63% 1.27%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of year $224,843 $200,989 $165,087 $161,316
Ratio to average net assets of<F6>:
Expenses, net of waivers and
reimbursements 0.49% 0.45% 0.39% 0.35%
Expenses, before waivers and
reimbursements 0.94% 0.94% 0.94% 1.07%
Net investment income, net of
waivers and reimbursements 3.14% 3.13% 3.55% 3.78%
Net investment income, before
waivers and reimbursements 2.69% 2.64% 3.00% 3.06%
- ---------------------------------------------------------------------------------------
<F2> For the period December 12, 1994 (commencement of operations) through March 31, 1995.
<F3> For the period April 11, 1994 (commencement of operations) through March 31, 1995.
<F4> For the period November 29, 1994 (commencement of operations) through March 31, 1995.
<F5> Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, and a
complete redemption of the investment at net asset value at the end of the period. Total return is not annualized for periods
less than one year.
<F6> Annualized for periods less than a full year.
See Notes to the Financial Statements.
</TABLE>
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MONEY MARKET FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 11.4%
DOMESTIC CERTIFICATES OF DEPOSIT - 4.1%
Bankers Trust New York Corp.
$25,000 5.91%, 7/14/98 $ 24,998
25,000 5.64%, 1/22/99 24,987
25,000 CrestarBank,
5.60%, 2/2/99 24,997
25,000 Huntington National Bank, Columbus,
5.92%, 9/18/98 24,997
35,000 Union Bank of California,
5.72%, 6/10/98 35,003
-----------
134,982
-----------
FOREIGN CERTIFICATES OF DEPOSIT - 7.3%
Banque Nationale de Paris, New York Branch
35,000 5.71%, 2/18/99 34,940
24,000 5.82%, 3/30/99 23,974
Barclays Bank, New York Branch
15,000 6.00%, 6/25/98 14,998
32,000 5.63%, 2/25/99 31,980
Canadian Bank Imperial Bank of
Commerce, New York Branch
25,000 5.63%, 4/7/98 25,000
25,000 5.65%, 4/7/98 25,000
10,000 5.99%, 10/21/98 9,997
10,000 National Westminster Bank, New York
Branch, 6.00%, 6/26/98 9,999
Societe Generale, New York Branch
26,000 5.92%, 7/17/98 25,998
15,000 5.90%, 8/21/98 14,997
10,000 5.64%, 1/7/99 10,003
15,000 5.74%, 3/5/99 14,996
-----------
241,882
-----------
Total Certificates of Deposit
(cost $376,864) 376,864
-----------
COMMERCIAL PAPER - 51.4%
ASSET BACKED SECURITIES - 21.9%
15,000 ABC Funding,
5.86%, 6/1/98 14,856
Amsterdam Funding Corp.
10,705 5.61%, 4/10/98 10,690
1,917 5.62%, 4/10/98 1,914
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
ASSET BACKED SECURITIES - 21.9% (CONT'D.)
$15,000 Atlantic Asset Securitization Corp.,
5.61%, 4/9/98 $14,981
11,500 Avco Financial Services Canada Ltd.,
5.63%, 5/29/98 11,397
Certain Funding Corp.
52,760 5.59%, 4/15/98 52,646
17,000 5.56%, 5/12/98 16,894
1,190 5.62%, 5/28/98 1,179
4,680 5.63%, 6/16/98 4,625
Concord Minutemen Capital Co.
12,558 5.64%, 4/14/98 12,532
12,034 5.63%, 4/20/98 11,998
11,867 5.63%, 4/23/98 11,827
12,793 5.64%, 4/23/98 12,749
8,400 5.64%, 5/7/98 8,353
2,500 Cooperative Association of Tractor
Dealers, Series A, 5.57%, 4/23/98 2,492
12,500 Corporate Receivables Corp.,
5.56%, 4/8/98 12,487
46,000 CPI Funding, 5.84%, 5/26/98 45,601
CXC, Inc.
12,500 5.55%, 4/2/98 12,498
12,500 5.56%, 4/3/98 12,496
25,000 Diageo PLC, 5.52%, 7/6/98 24,641
1,817 Eureka Securitization, Inc.,
5.60%, 5/14/98 1,805
12,407 Kitty Hawk Funding Corp.,
5.65%, 5/28/98 12,297
2,371 KZH Crescent I Corp.,
5.63%, 4/20/98 2,364
3,292 KZH Crescent II Corp.,
5.63%, 4/21/98 3,282
4,811 KZH Crescent III Corp.,
5.64%, 4/24/98 4,794
11,019 KZH Crescent IV Corp.,
5.67%, 4/20/98 10,986
Lexington Parker Capital Co. LLC
40,000 5.61%, 4/1/98 40,000
7,747 5.61%, 5/21/98 7,687
12,107 5.57%, 8/11/98 11,866
60,000 New Center Asset Trust,
6.00%, 4/1/98 60,000
11,923 Old Line Funding Corp.,
5.62%, 4/16/98 11,895
3,142 Park Avenue Receivables Corp.,
5.60%, 5/7/98 3,125
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
ASSET BACKED SECURITIES - 21.9% (CONT'D.)
$47,469 Pooled Account Receivables Corp.,
5.62%, 4/16/98 $ 47,358
ROSE, Inc.
5,480 5.58%, 4/27/98 5,458
11,000 5.57%, 4/28/98 10,955
10,000 SALTS (II) Cayman Islands Corp.,
5.74%, 6/18/98 10,000
34,000 SALTS (III) Cayman Islands Corp.,
5.73%, 7/23/98 34,000
40,000 Sheffield Receivables Corp.,
6.15%, 4/1/98 40,000
28,500 Special Purpose Accounts Receivable
Cooperative Corp., 5.60%, 5/22/98 28,277
8,000 Sunkyong America, Inc.,
5.57%, 6/8/98 7,917
20,000 Thames Asset Global Securitization,
5.58%, 5/26/98 19,832
20,000 Twin Towers, Inc.,
5.64%, 4/14/98 19,959
Windmill Funding Corp.
25,000 5.61%, 4/8/98 24,973
6,101 5.60%, 5/8/98 6,066
-----------
721,752
-----------
BROKERAGE SERVICES - 1.4%
Salomon Smith Barney Holdings, Inc.
25,000 5.58%, 4/14/98 24,950
22,000 5.57%, 7/7/98 21,679
-----------
46,629
-----------
COMMUNICATIONS - 2.2%
9,500 GTE Financial Corp.,
5.69%, 4/27/98 9,461
21,000 GTE Funding Corp.,
5.65%, 6/23/98 20,730
44,000 MCI Communications Corp.,
6.10%, 4/1/98 44,000
-----------
74,191
-----------
ELECTRONIC AND OTHER ELECTRICAL
COMPONENTS _ 3.9%
12,500 Duke Capital Corp.,
5.54%, 5/15/98 12,416
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
ELECTRONIC AND OTHER ELECTRICAL
COMPONENTS _ 3.9% (CONT'D.)
General Electric Capital Corp.
$ 75,000 6.20%, 4/1/98 $ 75,000
40,000 5.56%, 7/17/98 39,358
-----------
126,774
-----------
FOREIGN DEPOSITORY INSTITUTIONS _ 4.2%
30,000 Abbey National North America,
5.76%, 6/17/98 29,641
30,000 Banco Real S.A., Grand Cayman,
5.81%, 4/16/98 29,929
30,000 Halifax Building Society,
5.76%, 6/16/98 29,645
40,000 Lloyds Bank PLC, 5.51%, 7/13/98 39,387
10,000 Nacional Financiera, S.N.C.,
Grand Cayman, 5.86%, 5/13/98 9,934
-----------
138,536
-----------
INSURANCE SERVICES _ 1.4%
14,966 AON Corp., 5.63%, 4/28/98 14,904
10,000 SAFECO Corp., 5.60%, 5/2/98 9,922
Torchmark, Inc.
10,000 5.58%, 4/15/98 9,979
10,000 5.59%, 4/23/98 9,966
-----------
44,771
-----------
NONDEPOSITORY BUSINESS
CREDIT INSTITUTIONS _ 6.3%
25,000 Beta Finance Corp.,
5.51%, 7/14/98 24,613
90,000 Countrywide Home Loans,
5.61%, 5/27/98 89,226
Finova Capital Corp.
1,000 5.66%, 4/9/98 999
5,000 5.55%, 4/16/98 4,989
20,000 5.59%, 4/29/98 19,914
10,000 5.54%, 5/8/98 9,944
35,000 5.57%, 5/8/98 34,802
3,000 5.57%, 5/22/98 2,977
5,000 5.59%, 5/27/98 4,957
10,000 5.63%, 6/25/98 9,869
6,000 5.63%, 6/26/98 5,920
-----------
208,210
-----------
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
TRANSPORTATION PARTS AND
EQUIPMENT _ 9.8%
Chrysler Financial Corp.
$25,000 5.62%, 4/30/98 $ 24,888
37,500 5.61%, 5/4/98 37,308
25,000 5.58%, 5/27/98 24,786
Ford Credit Canada Ltd.
12,500 5.59%, 4/1/98 12,500
25,000 5.56%, 4/3/98 24,992
20,000 5.60%, 4/6/98 19,984
25,000 5.63%, 4/8/98 24,973
20,000 5.68%, 4/9/98 19,975
10,000 5.61%, 4/13/98 9,982
10,000 5.61%, 5/14/98 9,934
15,000 5.51%, 7/16/98 14,763
10,000 Ford Motor Credit Corp.,
6.13%, 4/1/98 10,000
General Motors Acceptance Corp.
10,000 5.88%, 4/15/98 9,978
6,000 5.83%, 4/16/98 5,986
20,000 5.58%, 5/28/98 19,826
10,000 5.63%, 6/10/98 9,892
10,000 5.62%, 6/23/98 9,872
5,000 5.59%, 7/30/98 4,909
15,000 5.57%, 8/12/98 14,700
12,500 5.57%, 8/13/98 12,248
-----------
321,496
-----------
WHOLESALE TRADE _ DURABLE GOODS _ 0.3%
10,000 Sinochem American Holdings, Inc.,
5.60%, 4/28/98 9,958
-----------
Total Commercial Paper
(cost $1,692,317) 1,692,317
-----------
CORPORATE BONDS _ 7.0%
10,000 Bank One Milwaukee,
5.60%, 1/29/99 9,996
20,000 Bayerische Landesbank,
5.81%, 8/14/98 20,018
Beta Finance Corp.
10,000 6.00%, 10/27/98 10,000
40,000 5.56%, 2/4/99 40,000
CIT Group Holdings
3,000 6.19%, 4/15/98 3,003
10,000 5.83%, 4/30/98 10,006
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CORPORATE BONDS _ 7.0% (CONT'D.)
$ 11,760 Communaute Urbaine de Lille,
5.88%, 4/3/98 $ 11,760
10,000 First National Bank of Boston,
5.69%, 4/9/98 10,000
26,000 First Wachovia Bank,
6.20%, 4/6/98 26,000
1,526 GE Engine Receivables 1995-1 Trust,
5.68%, 4/6/98 1,526
5,938 GE Engine Receivables 1996-1 Trust,
5.68%, 4/6/98 5,938
14,000 Huntington National Bank, Columbus,
5.88%, 9/22/98 13,995
20,000 Key Bank N.A.,
6.25%, 4/13/98 20,000
20,000 Morgan Guaranty Trust Co.,
6.00%, 6/22/98 19,998
5,000 Penney (J.C.) & Co., Inc.,
5.95%, 11/15/98 4,980
18,600 Physicians Plus Medical Group,
5.75%, 4/2/98 18,600
6,000 SunTrust Banks, Inc.,
5.89%, 7/14/98 5,999
-----------
Total Corporate Bonds
(cost $231,819) 231,819
-----------
EURODOLLAR TIME DEPOSITS _ 10.0%
40,000 Banco Central Hispanoamericano,
Grand Cayman, 6.25%, 4/1/98 40,000
60,494 Banque Paribas, Grand Cayman,
6.25%, 4/1/98 60,494
120,000 Credit Suisse First Boston,
Grand Cayman, 6.25%, 4/1/98 120,000
30,000 Creditanstalt A.G., Grand Cayman,
6.13%, 4/1/98 30,000
45,000 Key Bank N.A., Grand Cayman,
6.13%, 4/1/98 45,000
25,000 Postipankki Ltd., Grand Cayman,
6.13%, 4/1/98 25,000
10,000 Societe Generale, Grand Cayman,
6.00%, 4/1/98 10,000
-----------
Total Eurodollar Time Deposits
(cost $330,494) 330,494
-----------
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
GUARANTEED INVESTMENT
CONTRACTS _ 2.6%
$50,000 General American Life Insurance Co.,
5.89%, 4/23/98 $ 50,000
20,000 Integrity Life Insurance Co.,
6.11%, 4/1/98 20,000
15,000 Transamerica Life Insurance and
Annuity Co., 5.68%, 3/19/99 15,000
-----------
Total Guaranteed Investment Contracts
(cost $85,000) 85,000
-----------
MUNICIPAL INVESTMENTS _ 6.1%
14,000 Flint, Michigan Hospital Building
Authority, 5.70%, 4/2/98 14,000
9,000 Hydro-Quebec Corp., Province of Quebec,
5.82%, 4/15/98 9,000
15,415 Integris Health, Inc., 5.73%, 4/1/98 15,415
30,000 Los Angeles County, California
Pension Obligation, 5.74%, 4/2/98 30,000
4,431 Municipal Electric Authority of Georgia,
5.53%, 4/9/98 4,431
12,500 New Jersey Economic Development
Authority, 5.69%, 4/3/98 12,500
5,400 Schreiber Industrial Park-North Co.,
Virginia, 5.65%, 4/2/98 5,400
9,360 Seattle, Washington Limited Tax G.O.,
Series C, 5.50%, 4/1/98 9,360
10,000 Stanislaus County, California
Pension Obligation, 5.79%, 4/1/98 10,000
10,215 State of Texas-Veterans Land Bond,
5.79%, 4/1/98 10,215
13,300 Texas Municipal Power Agency,
5.68%, 4/13/98 13,300
12,745 Virginia HDA Multi-Family Housing Bond,
5.79%, 4/1/98 12,745
Virginia State HDA
Multi-Family Housing Bond,
Series A
32,820 5.55%, 4/1/98 32,820
18,300 5.60%, 4/1/98 18,300
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MUNICIPAL INVESTMENTS _
6.1% (CONT'D.)
$ 3,150 Waukesha, Wisconsin Health
Systems, Inc., 5.70%, 4/2/98 $ 3,150
-----------
Total Municipal Investments
(cost $200,636) 200,636
-----------
REPURCHASE AGREEMENTS _ 10.6%
250,000 Donaldson, Lufkin & Jenrette Securities,
Inc., dated 3/31/98, repurchase price
$250,041 (Colld. by U.S. Government
Securities), 5.90%, 4/1/98 250,000
100,000 UBS Securities, Inc., dated 3/31/98,
repurchase price $100,017 (Colld. by
U.S. Government Securities),
5.95%, 4/1/98 100,000
-----------
Total Repurchase Agreements
(cost $350,000) 350,000
-----------
Total Investments _ 99.1%
(cost $3,267,130) 3,267,130
Other Assets less Liabilities _ 0.9% 28,900
-----------
NET ASSETS _ 100.0% $3,296,030
===========
SCHEDULES OF INVESTMENTS MARCH 31, 1998
U.S. GOVERNMENT MONEY MARKET FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES _ 58.9%
FANNIE MAE _ 5.5%
$ 9,000 FNMA Discount Note,
5.53%, 4/29/98 $ 8,961
FNMA MTN
5,000 5.89%, 5/21/98 4,999
3,000 5.63%, 8/14/98 2,998
6,000 5.38%, 2/9/99 5,993
-----------
22,951
-----------
FEDERAL FARM CREDIT BANK _ 3.3%
FFCB Bonds
3,000 5.75%, 7/1/98 2,999
7,000 5.70%, 9/2/98 6,997
3,380 FFCB Discount Note,
5.70%, 12/1/98 3,365
340 FFCB MTN,
5.53%, 4/29/98 340
-----------
13,701
-----------
FEDERAL HOME LOAN BANK _ 37.6%
FHLB Bonds
6,000 5.72%, 7/7/98 5,999
12,000 5.715%, 7/21/98 11,999
2,595 5.69%, 10/2/98 2,594
3,800 5.70%, 10/23/98 3,799
3,400 5.792%, 10/23/98 3,399
3,200 5.775%, 10/30/98 3,200
5,400 5.50%, 3/19/99 5,395
5,550 5.50%, 3/26/99 5,545
115,000 FHLB Discount Note,
5.90%, 4/1/98 115,000
-----------
156,930
-----------
OVERSEAS PRIVATE INVESTMENT
CORP. _ 4.3%
18,000 FRN, 5.52%, 4/1/98 18,000
-----------
SLM HOLDING CORP. _ 8.2%
SLMA MTN
6,000 5.86%, 6/10/98 5,999
3,000 5.63%, 8/6/98 2,999
1,600 5.60%, 8/11/98 1,599
6,000 5.79%, 9/16/98 6,000
4,000 5.72%, 11/20/98 3,998
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
SLM HOLDING CORP. _ 8.2% (CONT'D.)
SLMA MTN (cont'd.)
$ 5,500 5.74%, 12/17/98 $ 5,496
8,000 5.40%, 2/10/99 7,993
-----------
34,084
-----------
Total U.S. Government Agencies
(cost $245,666) 245,666
-----------
NUMBER
OF SHARES
(000S)
- ----------
OTHER _ 0.0%
1 Dreyfus Prime Money Market Fund
(cost $1) 1
-----------
PRINCIPAL
AMOUNT
(000S)
- ---------
REPURCHASE AGREEMENTS - 41.0%
$100,000 HSBC Securities, Inc., dated 3/31/98,
repurchase price $116,250 (Colld. by U.S.
Government Securities), 5.85%, 4/1/98 100,000
50,000 SBC Warburg, Inc., dated 3/31/98,
repurchase price $58,125 (Colld. by U.S.
Government Securities), 5.85%, 4/1/98 50,000
21,125 SBC Warburg, Inc., dated 3/31/98,
repurchase price $24,616 (Colld. by U.S.
Government Securities), 5.95%, 4/1/98 21,125
-----------
Total Repurchase Agreements
(cost $171,125) 171,125
-----------
Total Investments - 99.9%
(cost $416,792) 416,792
Other Assets less Liabilities - 0.1% 250
-----------
NET ASSETS - 100.0% $417,042
==========
SCHEDULES OF INVESTMENTS MARCH 31, 1998
U.S. GOVERNMENT SELECT MONEY MARKET FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 101.1%
FEDERAL FARM CREDIT BANK - 2.5%
FFCB Discount Notes
$ 7,500 5.75%, 7/1/98 $ 7,497
230 5.70%, 12/1/98 230
-----------
7,727
-----------
FEDERAL HOME LOAN BANK - 90.7%
FHLB Bonds
4,000 5.96%, 6/9/98 4,000
5,000 5.715%, 7/21/98 5,000
600 5.70%, 10/23/98 600
4,000 5.435%, 2/2/99 3,994
5,200 5.52%, 3/23/99 5,196
3,000 5.50%, 3/26/99 2,997
FHLB Discount Notes
4,540 5.58%, 4/1/98 4,540
2,328 5.65%, 4/1/98 2,328
84,094 5.90%, 4/1/98 84,094
9,350 5.47%, 4/22/98 9,320
31,000 5.493%, 4/24/98 30,891
19,500 5.43%, 5/1/98 19,412
12,750 5.44%, 5/1/98 12,692
14,382 5.44%, 5/6/98 14,306
10,250 5.41%, 5/8/98 10,193
11,000 5.42%, 5/8/98 10,939
8,500 5.43%, 5/11/98 8,449
9,000 5.424%, 5/13/98 8,943
10,000 5.424%, 5/15/98 9,934
12,820 5.43%, 5/15/98 12,735
2,413 5.43%, 5/20/98 2,395
7,000 5.43%, 5/22/98 6,946
1,440 5.69%, 10/2/98 1,439
2,200 5.70%, 10/23/98 2,200
2,200 5.792%, 10/23/98 2,199
2,200 5.775%, 10/30/98 2,200
-----------
277,942
-----------
SLM HOLDING CORP. - 7.9%
SLMA MTN
3,000 5.86%, 6/10/98 2,999
3,000 5.60%, 8/11/98 2,997
6,000 5.79%, 9/16/98 5,999
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
SLM HOLDING CORP. - 7.9% (CONT'D.)
SLMA MTN (cont'd.)
$ 6,000 5.82%, 9/16/98 $ 6,002
2,500 5.72%, 11/20/98 2,499
3,500 5.74%, 12/17/98 3,498
-----------
23,994
-----------
Total U.S. Government Agencies
(cost $309,663) 309,663
-----------
NUMBER
OF SHARES
(000S)
- ----------
OTHER - 0.0%
1 Dreyfus Prime Money Market Fund
(cost $1) 1
-----------
Total Investments - 101.1%
(cost $309,664) 309,664
Liabilities less Other Assets - (1.1)% (3,239)
-----------
NET ASSETS - 100.0% $306,425
===========
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MUNICIPAL INVESTMENTS - 99.3%
ALABAMA _ 1.0%
$ 1,800 Ashland City Industrial Development
Board IDR (AMT), Russell Corp. Project
(SunTrust Banks, Inc. LOC),
3.80%, 4/7/98 $ 1,800
3,700 Board of Trustees of University of Alabama
Revenue Bond, Series 1997, University
of Alabama at Birmingham Hospital,
3.70%, 4/7/98 3,700
2,575 Columbia City Industrial Development
Board IDR (AMT), Russell Corp. Project
(SunTrust Banks, Inc. LOC), 3.80%, 4/7/98 2,575
2,575 Geneva County Industrial Development
Board IDR (AMT), Russell Corp. Project
(SunTrust Banks, Inc. LOC), 3.80%, 4/1/98 2,575
700 Greenville City IDR VRDN,
Series 1992, Allied-Signal Project
(FMC Corp. Gtd.), 3.85%, 4/7/98 700
2,600 Selma City IDR VRDN,
Series 1996 A, Meadowcraft, Inc. Project
(NationsBank LOC), 3.85%, 4/7/98 2,600
4,300 Stevenson City Environment
Improvement IDR VRDN, Series 1996
(AMT), Mead Corp. Project (Soc Gen LOC),
3.85%, 4/1/98 4,300
-----------
18,250
-----------
ALASKA - 1.2%
8,025 Alaska Housing Finance Corp.,
Series PT-37, Merrill P-Floats
(Banque Nationale de Paris LOC),
3.67%, 4/1/98 8,025
14,500 Alaska Industrial Development and
Export Authority VRDN, Series 1996 B
(AMT) (Seafirst Bank LOC),
3.75%, 4/7/98 14,500
-----------
22,525
-----------
ARIZONA - 0.8%
1,325 Apache County IDR VRDN
(AMT), Imperial Components, Inc.
Project (Harris Trust & Savings Bank LOC),
3.85%, 4/7/98 1,325
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
ARIZONA - 0.8% (CONT'D.)
$ 12,835 Maricopa County PCR VRDN, Series A,
El Paso Electric Project (Westpac Banking
Corp. LOC), 3.70%, 4/7/98 $12,835
-----------
14,160
-----------
ARKANSAS - 0.3%
3,250 Lowell City IDR VRDN, Series 1996
(AMT), Little Rock Newspapers, Inc.
Project (Bank of New York LOC),
3.80%, 4/7/98 3,250
2,200 West Memphis City IDR VRDN (AMT),
Proform Co. LLC Project
(First Bank LOC), 3.90%, 4/7/98 2,200
-----------
5,450
-----------
CALIFORNIA - 2.4%
California State G.O. Bond
(FGIC Insured)
200 Series CR-152, 3.62%, 4/7/98 200
800 Series 5027C, 3.62%, 4/7/98 800
3,000 California State G.O. Bond,
Series SG-91, Merrill Floating Rate Receipts,
3.70%, 4/7/98 3,000
9,000 California State HFA Home Mortgage
Revenue FRN, Series E (AMT),
3.55%, 7/1/98 9,000
4,600 California State RAN, Series 1997,
4.00%, 4/1/98 4,600
8,500 Irvine Ranch County Consolidated
Water Districts 2, 102, 103-3, 203 & 206
VRDN, Series 1993 B (Morgan Guaranty
Trust Co. LOC), 3.70%, 4/1/98 8,500
2,746 Los Angeles City IDR VRDN,
Series BTP-129 (Colld. by U.S. Government
Securities), 3.90%, 10/8/98 2,746
5,000 Los Angeles County TRAN, Series A,
4.50%, 6/30/98 5,008
9,420 Riverside County TRAN, Series A,
4.50%, 6/30/98 9,432
-----------
43,286
-----------
COLORADO - 1.5%
15,038 Arapahoe County Capital Improvements TOB,
Series E BTP-255, Project E-470,
3.80%, 4/7/98 15,038
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
COLORADO - 1.5% (CONT'D.)
$ 4,500 Colorado HFA VRDN (AMT), Metal Sales
Manufacturing Corp. Project (Star Bank
LOC), 3.90%, 4/1/98 $ 4,500
4,800 Denver City and County, Series 1997A
(AMT), Airport Systems Sub Revenue Bonds,
3.60%, 5/15/98 4,800
2,000 Pitkin County IDR, Series 1994 B (AMT),
Aspen Skiing Project (First National Bank
of Chicago LOC), 3.90%, 4/1/98 2,000
-----------
26,338
-----------
DELAWARE - 0.2%
1,325 Delaware State Economic Development
Authority PCR VRDN, Allied-Signal Corp.
Project (FMC Corp. Gtd.), 3.85%, 4/7/98 1,325
2,200 Delaware State Economic Development
Authority, Series 1996 A (AMT), Ciba-Geigy
Project (Union Bank of Switzerland LOC),
3.90%, 4/1/98 2,200
-----------
3,525
-----------
DISTRICT OF COLUMBIA - 2.9%
23,300 District of Columbia Metro Airport
Authority, Series 1997 C (AMT), Airport
Systems Revenue Bond, 3.70%, 4/7/98 23,300
District of Columbia Metro Airport
Authority Passenger Facility
4,500 3.90%, 4/16/98 4,500
5,000 3.90%, 4/16/98 5,000
20,000 3.60%, 5/22/98 20,000
-----------
52,800
-----------
FLORIDA - 2.5%
5,500 Broward County HFA Revenue VRDN,
Sanctuary Park Apts. Multifamily Project
(PNC Bank LOC), 3.80%, 4/1/98 5,500
5,000 Dade County Solid Waste Systems Revenue
Bond BAN, 4.75%, 9/1/98 5,011
4,545 Duval County HFA Mortgage Revenue
VRDN, Series 1996-3A (AMT), Clipper
Trust Certificate, 3.87%, 4/7/98 4,545
1,500 Escambia County PCR, Series 1997 A Gulf
Power Co. Project, 3.90%, 4/1/98 1,500
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
FLORIDA - 2.5% (CONT'D.)
Florida State Board of Education Capital
Outlay VRDN
$3,660 Series BTP-52 ADP Class B,
3.85%, 4/7/98 $ 3,660
6,594 Series BTP-233, 3.90%, 10/8/98 6,594
3,900 Florida State Board of Education VRDN,
Series 1994 E, Eagle Trust, 3.82%, 4/7/98 3,900
7,585 Florida State Department of
Environmental Protection VRDN,
Series 1994 A BTP-64 (MBIA Insured),
3.85%, 4/7/98 7,585
4,400 Florida State Housing Finance Agency,
Series 2 (AMT), 3.90%, 4/7/98 4,400
1,300 Highlands County Health Facilities
VRDN, Series 1996 A, Adventist Health
System (CAPMAC Insured),
3.85%, 4/7/98 1,300
400 Jacksonville City Capital Project, Series 1
(AMBAC Insured), 3.70%, 4/7/98 400
900 Jacksonville City PCR, Series 1997 NN,
Florida Power and Lighting Co. Project,
3.80%, 4/1/98 900
-----------
45,295
-----------
GEORGIA - 3.6%
6,600 Burke County Development Authority
PCR, Series 1997 (AMT), Georgia Power
Co. Plant Vogtle Project, 3.85%, 4/1/98 6,600
5,300 Clayton County IDA IDR VRDN (AMT),
Blue Circle Aggregates, Inc. Project
(Denmark Danske Bank LOC),
3.80%, 4/7/98 5,300
3,000 Clayton County Housing Authority
Revenue VRDN (AMT), Williamsburg South
Apartments Project (PNC Bank LOC),
3.90%, 4/7/98 3,000
5,200 DeKalb County Housing Authority
Revenue VRDN, Series 1995 (AMT), Cedar
Creek Apartment Project (General Electric
Capital Corp. LOC), 3.90%, 4/7/98 5,200
2,500 Floyd County IDA (AMT), Marglens
Industries, Inc. Project (SunTrust Banks,
Inc. LOC), 3.80%, 4/7/98 2,500
4,000 Fulton County Development Authority,
Series 1997, Woodward Academy, Inc.
Project (SunTrust Banks, Inc. LOC),
3.70%, 4/7/98 4,000
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
GEORGIA - 3.6% (CONT'D.)
Georgia HFA Conventional Mortgage TOB
(AMT), Various Programs
$ 9,180 Series 1990 C, 3.85%, 6/1/98 $ 9,180
1,480 Series 1990 D, 3.85%, 6/1/98 1,480
15,655 Georgia Municipal Electric Authority VRDN,
Subordinated Series 1985 B (G.O. of
Participants Insured) (Credit Suisse/First
Boston LOC), 3.65%, 4/7/98 15,655
2,000 Gwinett County IDR, Series 1998 (AMT),
Network Publications, Inc. (NationsBank
LOC), 3.80%, 4/7/98 2,000
4,150 Henry County Development Authority,
Series 1997 (AMT), Atlas Roofing Corp.
Project (SunTrust Banks, Inc. LOC),
3.80%, 4/7/98 4,150
5,000 Savannah City Economic Development
Authority, Series 1997 (AMT), Kaolin
Terminals Project (NationsBank LOC),
3.80%, 4/7/98 5,000
2,000 Whitfield County IDA, Series 1998 (AMT),
H&S Whitting, Inc. Project (NationsBank
LOC), 3.80%, 4/7/98 2,000
-----------
66,065
-----------
HAWAII - 0.8%
5,000 Hawaii State Department of Budget and
Finance, Series A (AMT), Hawaiian Electric
Co. Project (MBIA Insured),
3.85%, 4/7/98 5,000
10,000 Honolulu City and County G.O. Bonds,
Series 1997 C (Citibank Trust LOC),
3.92%, 4/7/98 10,000
-----------
15,000
-----------
ILLINOIS - 11.0%
3,500 Arlington Heights IDR VRDN, Series 1997
(AMT), 3E Graphics and Printing Project
(Harris Trust & Savings Bank LOC),
3.80%, 4/7/98 3,500
9,580 Aurora City Rental Housing Revenue Bonds,
Series PA-328, Fox Valley Project (Merrill
Lynch Gtd.), 3.87%, 4/7/98 9,580
2,215 Bedford Park City IDR VRDN, Series 1997,
Cintas Sales Corp. Project (PNC Bank
LOC), 3.90%, 4/7/98 2,215
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
ILLINOIS - 11.0% (CONT'D.)
$ 7,000 Bolingbrook City Multifamily Housing
VRDN, Series 1997 A (AMT), Amberton
Apartments Project (LaSalle National
Bank LOC), 3.75%, 4/7/98 $ 7,000
11,320 Chicago City Building Acquisition
Certificates, Series 1997 SSP-7
(FSA Insured), 3.825%, 4/7/98 11,320
2,655 Chicago City IDR, Series B (AMT),
Guernsey Bel, Inc. Project (Harris Trust
& Savings Bank LOC), 3.85%, 4/7/98 2,655
4,500 Chicago City Midway Airport Revenue
VRDN, Series 1995 (AMT), American
Trans Air, Inc. Project (National
Bank of Detroit LOC), 3.85%, 4/7/98 4,500
2,400 Chicago City O'Hare International
Airport Revenue VRDN, Series 1988 A
(AMT) (Bayerische Landesbank LOC),
3.75%, 4/7/98 2,400
9,495 Chicago City Public Building Commission,
Series A PA-155, Merrill P-Floats (MBIA
Insured), 3.75%, 4/7/98 9,495
1,855 Des Plaines City IDR VRDN,
Series 1996 (AMT), Finzer Roller, Inc.
Project (Harris Trust & Savings Bank LOC),
3.85%, 4/7/98 1,855
3,750 Frankfort City IDR, Series 1996 (AMT),
Bimba Manufacturing Co. Project
(Harris Trust & Savings Bank LOC),
3.85%, 4/7/98 3,750
5,000 Fulton County IDR VRDN, Series 1998,
(AMT), Drives, Inc. Project (Harris Trust &
Savings Bank LOC), 3.80%, 4/7/98 5,000
1,755 Illinois Development Finance Authority
IDR VRDN (AMT), Bimba Manufacturing
Co. Project (Harris Trust & Savings Bank
LOC), 3.85%, 4/7/98 1,755
5,950 Illinois Development Finance Authority
IDR VRDN, Enterprise Office Campus
(FNMA LOC), 3.75%, 6/1/98 5,950
4,100 Illinois Development Finance Authority
VRDN (AMT), Series 1997,
Ciccone Food Products Project
(Harris Trust & Savings Bank LOC),
3.80%, 4/7/98 4,100
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
ILLINOIS - 11.0% (CONT'D.)
$ 2,400 Illinois Development Finance Authority
IDR VRDN, Series 1997 A (AMT), Randall
Metals Corp. Project (LaSalle National
Bank LOC), 3.95%, 4/7/98 $ 2,400
1,400 Illinois Development Finance Authority
VRDN, Series 1990 (AMT), Solar Press, Inc.
Project (First National Bank of Chicago
LOC), 3.80%, 4/7/98 1,400
1,700 Illinois Development Finance Authority
VRDN, WBEZ Alliance, Inc. Project
(LaSalle National Bank LOC),
3.70%, 4/7/98 1,700
4,000 Illinois Educational Facilities Authority
VRDN, Series 1996, The Art Institute of
Chicago Project, 3.75%, 4/7/98 4,000
3,300 Illinois Educational Facilities Authority,
Cultural Pooled Financing Project
(American National Bank LOC),
3.75%, 4/7/98 3,300
7,600 Illinois Educational Facilities Authority
VRDN, National College of Education
Project (Harris Trust & Savings Bank LOC),
3.75%, 4/7/98 7,600
7,000 Illinois Health Facility Authority, Series
1985B, Evanston Hospital Corp.,
3.60%, 8/31/98 7,000
2,300 Illinois Health Facility Authority, Series
1996, Proctor Hospital Corp. (Bank One
LOC), 3.70%, 4/7/98 2,300
4,700 Illinois Health Facility Authority, Series E,
Franciscan Eldercare (LaSalle National Bank
LOC), 3.75%, 4/7/98 4,700
9,585 Illinois Health Facility Authority, Series A,
Loyola University Health (MBIA Insured),
3.50%, 4/7/98 9,585
2,000 Illinois Health Facility Authority VRDN,
Revolving Pooled Loan Facility (First
National Bank of Chicago LOC),
3.70%, 4/7/98 2,000
15,000 Illinois Housing Development Authority
Homeowner Mortgage (AMT),
Series 1997 B-2, 4.15%, 7/7/98 15,000
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
ILLINOIS - 11.0% (CONT'D.)
$15,806 Illinois Metropolitan Pier and Exposition
Authority Dedicated Sales TRB,
Series BTP-230-A, Inc. Project
(Harris Trust & Savings Bank LOC),
3.70%, 9/22/98 $ 15,806
7,500 Ladd Village IDR VRDN, Series 1996
(AMT), O'Neal Metals (NationsBank
LOC), 3.85%, 4/7/98 7,500
2,000 Lisle Village Multifamily Housing VRDN,
Series 1996, Four Lakes Phase V Project
(FNMA Insured), 3.70%, 4/7/98 2,000
3,560 Metropolitan Pier and Exposition Authority,
Series 1996 A, McCormick Place Project
(AMBAC Insured), 3.80%, 4/7/98 3,560
3,150 Niles Village IDR VRDN, Series 1996
(AMT), Lewis Spring and Manufacturing
Co. Project (Harris Trust & Savings Bank
LOC), 3.85%, 4/7/98 3,150
5,000 Palos Hill County Multifamily Housing,
Series 1998 (AMT), Green Oaks Project,
(LaSalle National Bank LOC),
3.85%, 4/7/98 5,000
9,400 Pooled Puttable Float Option (AMT),
Series PT6, Various State and Housing
Agencies, 4.075%, 8/6/98 9,401
3,000 Rockford City IDR, Series 1998 (AMT),
Ring Can Corp. Project (SunTrust Banks,
Inc. LOC), 3.80%, 4/7/98 3,000
2,375 Romeoville City IDR, Series 1997 (AMT),
Metropolitan Industries, Inc. Project
(Harris Trust & Savings Bank LOC),
3.85%, 4/7/98 2,375
6,000 Savanna City IDR VRDN, Series 1994
(AMT), Metform Corp. Project (First
National Bank of Chicago LOC),
3.80%, 4/7/98 6,000
6,200 Schaumburg City Multifamily Housing,
Series 1989 Treehouse II Apartments Project
(Barclays Bank LOC), 3.75%, 4/7/98 6,200
-----------
200,052
-----------
INDIANA - 1.5%
2,790 Anderson City Economic Development
VRDN, Series 1996 (AMT), Gateway
Village Project (FHLB LOC),
3.80%, 4/1/98 2,790
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
INDIANA - 1.5% (CONT'D.)
$1,500 Greencastle City IDR VRDN, Series 1996
(AMT), Crown Equipment Corp. Project
(Mellon Bank LOC), 3.95%, 4/7/98 $ 1,500
2,840 Hammond City Economic Development
VRDN, Series 1996 A (AMT), Annex at
Douglas Point Project (FHLB LOC),
3.80%, 4/7/98 2,840
8,000 Indiana Bond Bank, Advanced Funding
Program, Series A-2, 4.00%, 1/20/99 8,024
Indiana Development Finance Authority
IDR VRDN (AMT), Red Gold, Inc. Project
(Harris Trust & Savings Bank LOC)
5,100 Series 1994 A, 3.85%, 4/7/98 5,100
3,200 Series 1994 B, 3.85%, 4/7/98 3,200
2,900 Indiana State Development Finance
Authority VRDN, Indiana Historical Society,
Inc. Project (NBD Bank LOC),
3.70%, 4/7/98 2,900
-----------
26,354
-----------
IOWA - 1.5%
6,085 Iowa Finance Authority SFM,
Series 1997 A, 3.67%, 4/1/98 6,085
2,240 Iowa Finance Authority SFM, Series A
(GNMA/FNMA Insured),
3.65%, 2/24/99 2,240
3,475 Iowa Finance Authority, Series B (AMT),
SFM Backed Program
(GNMA/FNMA Insured), 3.70%, 2/24/99 3,475
Iowa Finance Authority Waste Disposal
Revenue VRDN (AMT), Cedar River Paper
Co. Project (Swiss Bank Corp. LOC)
1,100 Series 1993 A, 3.95%, 4/1/98 1,100
3,600 Series 1995 A, 3.95%, 4/1/98 3,600
5,000 Series 1996 A, 3.95%, 4/1/98 5,000
6,000 Series 1997 A, 3.95%, 4/1/98 6,000
-----------
27,500
-----------
KANSAS - 0.8%
7,000 Topeka City Temporary Notes,
Series A, 4.00%, 7/15/98 7,002
8,000 Wichita City G.O. Temporary Notes,
Series 194, 4.25%, 8/27/98 8,018
-----------
15,020
-----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
KENTUCKY - 5.6%
$ 3,951 Carroll County Solid Waste Disposal
Revenue VRDN (AMT), North American
Stainless Project (Banco Bilbao Vizcaya
LOC), 3.95%, 4/7/98 $ 3,951
3,265 Clark County Industrial Building IDR
VRDN, Series 1996 (AMT), Bluegrass Art
Cast Project (Bank One LOC),
3.85%, 4/7/98 3,265
Daviess County Waste Disposal Facility
IDR VRDN (AMT), Scott Paper Co. Project
(Kimberly-Clark Corp. Gtd.)
21,800 Series 1993 A, 3.85%, 4/1/98 21,800
15,300 Series 1993 B, 3.85%, 4/1/98 15,300
11,900 Series 1994 A, 3.85%, 4/1/98 11,900
2,500 Greenville City IDR VRDN,
Wetterau, Inc. Project (PNC Bank LOC),
3.80%, 4/7/98 2,500
10,000 Kentucky Interlocal School Transportation
Association TRAN, 4.09%, 6/30/98 10,001
9,500 Kentucky Rural Water Finance Corp.
Notes, Series 1996, Public Construction
Project, 4.375%, 4/1/98 9,500
12,000 Louisville and Jefferson Counties VRDN
(AMT), Regional Airport Authority System,
Series 1997 A-1 (National City Bank of
Louisville LOC), 3.90%, 4/7/98 12,000
12,000 Mayfield City Lease Revenue VRDN,
Series 1996, Kentucky League of Cities
Pooled Project (PNC Bank LOC),
3.80%, 4/7/98 12,000
-----------
102,217
-----------
LOUISIANA - 0.5%
2,100 Ascension Parish VRDN, Series 1995
(AMT), BASF Corp. Project, 3.95%, 4/1/98 2,100
2,900 Louisiana Public Facility Authority
Hospital, Series 1997, Willis-Knighton
Medical Center (AMBAC Insured),
3.70%, 4/7/98 2,900
4,000 South Louisiana Port Commission, Series
1997 (AMT), Holnam, Inc. Project
(ABN Amro Holding LOC),
3.75%, 4/7/98 4,000
-----------
9,000
-----------
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MAINE - 1.0%
$ 2,000 Fort Fairfield County Revenue Bond (AMT),
Atlantic Custom Processors (PNC Bank
LOC), 3.95%, 4/7/98 $ 2,000
5,000 Maine Public Utility Finance Bank
Revenue VRDN, Series 1996 (AMT), Maine
Public Service Co. Project (Bank of New
York LOC), 3.80%, 4/7/98 5,000
10,400 Maine State Housing Authority (AMT),
Multifamily Development, Park Village
Apartment Project (GE Capital Corp. LOC),
3.85%, 4/7/98 10,400
-----------
17,400
-----------
MARYLAND - 2.0%
2,200 Baltimore City Economic Development
VRDN, Series 1985, Mt. Washington
Pediatric Hospital, Inc. (Mellon Bank LOC),
3.85%, 4/7/98 2,200
2,000 Cecil County Economic Development
VRDN (AMT), Steel Techs, Inc. Facility
(PNC Bank LOC), 3.95%, 4/7/98 2,000
10 Maryland State Community
Development Administration, Series
PT-12, Merrill P-Floats (Commerzbank A.G.
LOC), 3.67%, 4/1/98 10
2,975 Maryland State Economic Development
Corp. VRDN (AMT), Unsite Design, Inc.
(Mellon Bank N.A. LOC), 3.95%, 4/7/98 2,975
2,375 Maryland State Health and Higher
Educational Facilities Authority Revenue
VRDN, Series A (NationsBank LOC),
3.65%, 4/1/98 2,375
3,000 Maryland State IDA, Townsend Culinary,
Inc. Project (SunTrust Banks, Inc. LOC),
3.90%, 4/7/98 3,000
24,000 Montgomery County CP BAN, Series 1995,
3.60%, 4/9/98 24,000
-----------
36,560
-----------
MASSACHUSETTS - 0.3%
3,095 Massachusetts State HFA VRDN, Series
1996-5A (AMT), Clipper Trust Certificate
(AMBAC Insured), 3.77%, 6/1/98 3,095
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MASSACHUSETTS - 0.3% (CONT'D.)
$ 2,200 Massachusetts State HFA VRDN, Series
PA-132 (AMT), Harbor Point Project
(AMBAC Insured), 3.85%, 4/7/98 $ 2,200
-----------
5,295
-----------
MICHIGAN - 1.3%
6,000 Detroit City School District State School
Aid Notes, Series 1997, 4.50%, 5/1/98 6,003
1,100 Michigan Strategic Fund PCR, Series
1995 CC, Detroit Edison Project (Barclays
Bank PLC LOC), 3.80%, 4/1/98 1,100
6,900 Michigan Strategic Fund Ltd. VRDN, Series
1992 (AMT), Dow Chemical Co. Project
(Dow Chemical Gtd.), 3.90%, 4/1/98 6,900
2,330 Michigan Strategic Fund Ltd. VRDN (AMT),
Kruger Commodities, Inc. Project (Harris
Trust & Savings Bank LOC), 3.85%, 4/7/98 2,330
4,000 Michigan State TRAN, Series 1997 B,
4.50%, 7/2/98 4,006
3,300 Midland County Economic Development
Corp., Series 1993 A (AMT), Dow Chemical
Corp. Project, 3.95%, 4/1/98 3,300
-----------
23,639
-----------
MINNESOTA - 0.2%
3,060 Stearns County Housing and
Redevelopment Authority VRDN
(AMT), Cold Spring Granite Co. Project
(First Bank LOC), 3.90%, 4/7/98 3,060
-----------
MISSISSIPPI - 0.7%
9,325 Mississippi State G.O. Refunding
Bonds, Series BTP-207, 3.80%, 4/7/98 9,325
3,310 Mississippi State Home Single Family
Revenue Bonds, Series G-CL5 (AMT),
PT-146, P-Floats, 3.85%, 4/7/98 3,310
-----------
12,635
-----------
MISSOURI - 2.2%
7,500 Missouri Higher Education Loan Authority,
Series 1990 B (National Westminster LOC),
3.80%, 4/7/98 7,500
17,200 Missouri Higher Education Loan Authority
VRDN, Series 1990 A (AMT) (National
Westminster LOC), 3.80%, 4/7/98 17,200
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MISSOURI - 2.2% (CONT'D.)
$ 1,000 Missouri Higher Education Loan Authority
VRDN, Series 1991 B (AMT)
(MBIA Insured), 3.85%, 4/7/98 $ 1,000
6,140 Missouri Housing Development VRDN,
Series 1994 A (AMT), Merrill P-Floats
PA-116 (Colld. by U.S. Government
Securities), 3.85%, 4/7/98 6,140
8,000 St. Louis City TRAN, Series 1997,
4.50%, 6/30/98 8,012
-----------
39,852
-----------
MONTANA - 2.6%
Montana Board of Housing SFM VRDN,
Merrill P-Floats
3,920 Series 1996-A-2, PT-87, 3.85%, 4/7/98 3,920
4,000 Series 1997, PA-158, 3.85%, 4/7/98 4,000
39,200 Montana Board of Investment Resources
Recovery Revenue VRDN (AMT), Colstrip
Energy L.P. Project (Credit Locale de
France LOC), 3.80%, 4/7/98 39,200
-----------
47,120
-----------
NEBRASKA - 0.4%
2,000 Nebraska Investment Finance Authority
SFM TOB, Series B (FGIC Insured),
3.70%, 7/15/98 2,000
5,700 Omaha Public Power District
Electric Revenue Bond, Series A,
4.05%, 2/1/99 5,722
-----------
7,722
-----------
NEVADA - 2.1%
20,100 Clark County Nevada Airport Improvement
Refunding Revenue Bond, Series 1993 A
(MBIA Insured), 3.65%, 4/7/98 20,100
18,065 Nevada State G.O. VRDN, Series 1997
SGB31 (FGIC Insured), 3.80%, 4/7/98 18,065
-----------
38,165
-----------
NEW HAMPSHIRE - 1.0%
18,000 New Hampshire State Business Finance
Authority, Series A (AMT), United
Illuminating Co. (Barclays Bank of New
York LOC), 3.80%, 4/7/98 18,000
-----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
NEW JERSEY - 0.7%
$13,515 New Jersey Transportation Trust Fund
Authority, Series 1996 B PT-161, P-Floats,
3.70%, 2/26/99 $13,515
-----------
NEW YORK - 1.0%
589 Marine Midland Premium Loan Trust
Variable Rate COP, Series 1991 A (Hong
Kong and Shanghai Banking Corp. LOC),
3.65%, 4/7/98 589
3,200 New York City Municipal Water Finance
Authority, Water and Sewer System
Revenue Bonds, Series 1994 E
(MBIA Insured), 3.72%, 4/7/98 3,200
4,800 New York City G.O. VRDN, Series 1993 B
(FGIC Insured), 3.80%, 4/1/98 4,800
1,400 New York City G.O., Sub-Series A-7
(Morgan Guaranty Trust LOC),
3.85%, 4/1/98 1,400
1,100 New York City RAN, Series 26 LB Trust
Receipts (Soc Gen LOC),
4.00%, 4/1/98 1,100
4,600 New York State Environmental Facilities
Corp. PCR VRDN, Weekly Optional Put,
Eagle Trust No. 94302 (FSA Insured),
3.70%, 4/7/98 4,600
2,420 Pooled VRDN, P-Floats, Series PPT2
(Backed by Alaska HFC & South Dakota
HFA), 3.58%, 4/11/98 2,420
-----------
18,109
-----------
NORTH CAROLINA - 1.8%
2,500 Brunswick County PCR IDR VRDN,
Series 1996 (AMT), Armada Project
(NationsBank LOC), 3.80%, 4/7/98 2,500
5,900 Capital Regional Airport Commission
Passenger Facility Charge Revenue VRDN
(AMT) (First Union National Bank of
Charlotte LOC), 3.80%, 4/7/98 5,900
8,100 Catawba County PCR IDR, Series 1996
(AMT), Hooker Furniture Corp. Project
(NationsBank LOC), 3.80%, 4/7/98 8,100
2,500 Mecklenburg County PCR IDR VRDN,
Series 1996 (AMT), SteriGenics
International Project (Comerica Bank
LOC), 3.90%, 4/7/98 2,500
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
NORTH CAROLINA - 1.8% (CONT'D.)
$ 8,135 Mecklenburg County Variable Lease,
Series 1996, YMCA of Charlotte Project
(Wachovia Bank LOC), 3.65%, 4/7/98 $ 8,135
2,500 North Carolina Medical Care Commission,
Series A, Pooled Financing Project
(NationsBank LOC), 3.85%, 4/1/98 2,500
3,800 North Carolina State Ports Authority
VRDN, Series 1996 (AMT), Morehead
City Terminals, Inc. (NationsBank LOC),
3.80%, 4/7/98 3,800
-----------
33,435
-----------
OHIO - 3.3%
6,710 Dublin Inn Tax-Exempt Mortgage Bond
Trust, Series 1987, Six Month Demand
Adj. Rate Certificate (Huntington National
Bank LOC), 4.57%, 9/1/98 6,710
4,000 Ohio State Air Quality Development
Authority, Series A, Pollution Control-
Duquesne Light (Union Bank of
Switzerland LOC), 3.95%, 7/10/98 4,000
9,000 Ohio State Air Quality Development
Authority VRDN, Series A, Ohio Edison
Project (Toronto Dominion Bank LOC),
3.65%, 2/1/99 9,000
4,755 Ohio State HFA VRDN, Series 1989 A
(AMT), 3.80%, 4/7/98 4,755
1,940 Ohio State Higher Education Facility
Revenue TOB, Series BTP-29 ADP, Class B
(MBIA Insured), 3.85%, 4/7/98 1,940
5,875 Ohio State Infrastructure Improvement
VRDN, Series 1994, BTP-170,
3.75%, 10/22/98 5,875
8,910 Ohio State Public Facilities Commission,
Series 2A BTP-237, Higher Education
Facilities Project (AMBAC Insured),
4.15%, 4/8/98 8,910
2,900 Ohio State Water Development Authority
PCR VRDN, Philip Morris Cos. Project
(Philip Morris Cos., Inc. Gtd.),
4.00%, 4/7/98 2,900
13,000 Student Loan Funding Corp., Series 1983 A,
Ohio Student Loan (Bank of America
LOC), 3.70%, 4/7/98 13,000
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
OHIO - 3.3% (CONT'D.)
$ 2,500 Union County IDR VRDN (AMT),
Union Aggregates Co. Project
(PNC Bank LOC), 3.95%, 4/7/98 $ 2,500
-----------
59,590
-----------
OKLAHOMA - 1.0%
11,195 Oklahoma Water Resources Board,
Series 1994 A, State Loan Program
(Swiss Bank Corp. LOC), 3.55%, 9/1/98 11,195
7,245 Tulsa City Airport Improvement
VRDN, Series B-1 (AMT) (MBIA Insured),
3.82%, 4/7/98 7,245
-----------
18,440
-----------
OREGON - 1.3%
1,100 Metropolitan Service District Riedel
Oregon Compost Waste Disposal VRDN
(AMT) (US National Bank LOC),
4.00%, 4/7/98 1,100
4,820 Multnomah County School District
G.O. Bond, Series 1996 BTP-208,
3.90%, 6/1/98 4,820
3,900 Oregon State Economic Development
Revenue, Series 176 (AMT), Cascade Steel
Rolling Mills Project (Commerzbank A.G.
LOC), 3.80%, 4/7/98 3,900
6,600 Oregon State Economic Development
Revenue, Series 181 (AMT), Oregon Metal
Slitters, Inc. (Key Bank N.A. LOC),
3.80%, 4/7/98 6,600
5,000 Portland City Multifamily Revenue
VRDN, Series 1996 (AMT), Union Station
Project - Phase B (US National Bank LOC),
3.90%, 4/7/98 5,000
1,590 Portland City Sewer System Revenue,
Series PA-169, Merrill P-Floats (FGIC
Insured), 3.80%, 4/7/98 1,590
-----------
23,010
-----------
PENNSYLVANIA - 11.0%
4,000 Allegheny County Environment
Improvement IDA, Series 1987, USX Corp.
Project (Commerzbank LOC),
3.60%, 6/4/98 4,000
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
PENNSYLVANIA - 11.0% (CONT'D.)
$ 3,930 Allegheny County Hospital Development
Authority, Series B-1, Presbyterian
University Hospital (PNC Bank LOC),
3.70%, 4/1/98 $ 3,930
4,925 Allegheny County IDA VRDN, Series
1991, Eye and Ear Properties Corp.
(Pittsburgh National Bank LOC),
3.70%, 4/1/98 4,925
3,000 Allegheny County IDA VRDN, Series A,
Sewickley Academy Project (PNC Bank
LOC), 3.80%, 4/7/98 3,000
3,700 Chester County IDA, Series 1997 A (AMT),
KAC III Realty Corp. Project (PNC Bank
LOC), 3.95%, 4/7/98 3,700
22,500 Delaware Valley Regional Finance
Authority VRDN, Series 1997 A, Merril
Lynch P-Floats (Midland Bank PLC LOC),
3.80%, 5/21/98 22,500
36,900 Emmaus County General Authority
Bond, Series 1996, Variable Rate Loan
Program (FSA Insured), 3.75%, 4/7/98 36,900
3,600 Pennsylvania Economic Development
Finance Authority IDR VRDN, Series
1996 A1-8 (AMT) (PNC Bank LOC),
3.95%, 4/7/98 3,600
Pennsylvania Higher Education
Assistance Agency VRDN (AMT),
Student Loan Program (SLMA LOC)
22,900 Series 1994 A, 3.80%, 4/7/98 22,900
20,500 Series 1995 A, 3.80%, 4/7/98 20,500
8,500 Series 1997 A, 3.80%, 4/7/98 8,500
6,700 Pennsylvania Higher Education Facilities
Authority Revenue Bond VRDN, Series I
(Allied Irish Bank PLC LOC),
4.50%, 11/1/98 6,724
9,900 Pennsylvania Intergovernmental Coop
Authority, BTP-288, Philadelphia City
Funding Program (FGIC Insured),
3.80%, 4/7/98 9,900
20,000 Philadelphia City School District TRAN,
Series 1997 (Commerzbank LOC),
4.50%, 6/30/98 20,026
5,000 Philadelphia City TRAN, Series 1997 A,
4.50%, 6/30/98 5,006
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
PENNSYLVANIA - 11.0% (CONT'D.)
$ 2,600 Quakertown Hospital Authority VRDN,
Hospital Group Pooled Financing (PNC
Bank LOC), 3.75%, 4/7/98 $ 2,600
6,900 Schuylkill County IDA VRDN, Gilberton
Power Project (Mellon Bank LOC),
3.70%, 4/7/98 6,900
10,000 York City General Authority Pooled
Financing, Series 1996 (First Union
National Bank LOC), 3.80%, 4/1/98 10,000
1,410 Washington County Hospital Authority
VRDN, Series B1-E, Eye & Ear Hospital
(PNC Bank LOC), 3.70%, 4/1/98 1,410
2,125 Washington County IDA VRDN (AMT),
Accutrex Products, Inc. (Mellon Bank
LOC), 3.95%, 4/7/98 2,125
-----------
199,146
-----------
SOUTH CAROLINA - 0.7%
5,400 Cherokee County IDR VRDN, Series 1989
(AMT), Oshkosh Truck Corp. Project
(NationsBank LOC), 3.80%, 4/7/98 5,400
Lexington County IDR VRDN,
Allied-Signal Project (FMC Corp. Gtd.)
200 Series 1992, 3.85%, 4/7/98 200
900 Series 1992 A, 3.85%, 4/7/98 900
5,800 South Carolina Jobs Economic Development
Authority (AMT), Greenville YMCA Project
(NationsBank LOC), 3.75%, 4/7/98 5,800
-----------
12,300
-----------
SOUTH DAKOTA - 0.8%
8,410 South Dakota Economic Development
Finance Authority VRDN, Series 1996
(AMT), Hastings Filters, Inc. Project
(Harris Trust & Savings Bank LOC),
3.85%, 4/7/98 8,410
South Dakota Housing Development
Authority Homeowner Mortgage VRDN
(AMT), Merrill P-Floats
2,320 Series PA-119, 3.85%, 4/7/98 2,320
4,300 Series PT-73-A, 3.80%, 4/7/98 4,300
-----------
15,030
-----------
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
TENNESSEE - 3.9%
Clarksville Tennessee Public Building
Authority, Tennessee Muni Bond Fund
(NationsBank LOC)
$4,200 Series 1995, 3.70%, 4/7/98 $ 4,200
5,500 Series 1997, 3.70%, 4/7/98 5,500
1,500 Dickson County IDR VRDN, Series
1996 (AMT), Tennessee Bun Co. LLC
Project (PNC Bank LOC), 3.95%, 4/7/98 1,500
1,200 Greeneville IDR VRDN, Series 1993, Pet,
Inc. Project (Credit Suisse LOC),
3.80%, 4/7/98 1,200
2,000 Hendersonville County IDR VRDN,
Multifamily Housing Windsor Park Project
(FNMA Insured), 3.70%, 4/7/98 2,000
6,000 Jackson City Waste Facility IDR VRDN,
Series 1995 (AMT), Florida Steel Corp.
Project (NationsBank LOC), 3.80%, 4/7/98 6,000
5,000 Memphis City G.O. VRDN, Series 1996,
Soc Gen Series SGB-23, 3.80%, 4/7/98 5,000
1,000 Morristown City IDR VRDN, Series 1997,
BOS Automotive Products, Inc. (Bayerische
Vereinsbank LOC), 3.80%, 4/7/98 1,000
4,000 Nashville and Davidson Counties Health
and Education Facilities Board VRDN,
Series 1996-A, Adventist Health Systems
Sunbelt (SunTrust Bank LOC),
3.75%, 4/7/98 4,000
5,000 Nashville and Davidson Counties
Housing VRDN (AMT), Old Hickory Towers
Project (FHLB LOC), 3.90%, 4/7/98 5,000
8,400 Shelby County G.O. Bond, Series 1996 B,
Soc Gen Trust SGB-21 (FSA Insured),
3.80%, 4/7/98 8,400
4,890 Shelby County G.O., Series B BTP-216,
3.75%, 10/22/98 4,890
5,000 Shelby County G.O., Unlimited Series B
BTP-263, 3.80%, 4/7/98 5,000
1,000 Shelby County Health and Education
Authority (AMT), Arbor Lake Project
(PNC Bank LOC), 3.95%, 4/7/98 1,000
8,550 Tennessee State G.O. TOB,
Series 1997 BTP-242, 3.80%, 4/7/98 8,550
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
TENNESSEE - 3.9% (CONT'D.)
$ 7,500 Tennessee State Housing Development
Agency, Series 1997-2 (AMT),
Homeownership Program, 4.00%, 6/4/98 $ 7,500
-----------
70,740
-----------
TEXAS - 12.5%
2,525 Austin City Independent School District
Building VRDN, Series 1996 SG-68 (PSF of
Texas Gtd.), 3.80%, 4/7/98 2,525
6,000 Austin City VRDN, Series A (AMT), Airport
Systems Notes (Morgan Guaranty Trust
LOC), 3.75%, 4/7/98 6,000
6,755 Brazos Higher Education Authority,
Series C-1 (AMT) (SLMA Gtd.),
4.95%, 6/1/98 6,769
2,700 Brazos River Authority, Series 1997 (AMT),
Houston Light and Power Co. Project
(AMBAC Insured), 3.90%, 4/1/98 2,700
1,500 Brazos River Harbor Navigation District,
Dow Chemical, 3.45%, 4/9/98 1,500
Brazos River Harbor Navigation District
VRDN (AMT), BASF Corp. Project
(BASF Corporation Gtd.)
5,300 Series 1996, 3.95%, 4/1/98 5,300
5,200 Series 1997, 3.95%, 4/1/98 5,200
5,000 Calhoun County Navigation IDR VRDN
(AMT), Formosa Plastics Corp. U.S.A.
(Bank of America LOC), 3.80%, 4/7/98 5,000
6,500 Denton County Independent School
District G.O., Series B (PSF of Texas Gtd.),
3.90%, 8/15/98 6,500
3,500 El Paso City Housing Finance Corp.
VRDN, Series 1993 (AMT), Viva Apartments
Project (General Electric Corp. LOC),
3.95%, 4/7/98 3,500
15,000 Greater East Texas Student Loan Corp.,
Series A (SLMA Gtd.), 3.60%, 3/1/99 15,000
Gulf Coast Waste Disposal Authority
VRDN (AMT), Amoco Oil Co. Project
(Amoco Oil Company Gtd.)
2,300 Series 1991, 3.80%, 4/1/98 2,300
1,800 Series 1994, 3.85%, 4/1/98 1,800
11,785 Harris County Health Facility, Series
1997 B, Sisters of Charity, Inc.,
3.85%, 4/7/98 11,785
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
TEXAS - 12.5% (CONT'D.)
$ 3,800 Harris County Toll Road Unlimited Tax
VRDN, Series 1994 A, Citicorp Eagle Trust
No. 954302, 3.82%, 4/7/98 $ 3,800
3,455 Houston City Water and Sewer System TOB,
Series 1992 C BTP-54 (MBIA Insured),
3.85%, 4/7/98 3,455
3,300 Hurst, Euless and Bedford Cities
Independent School Districts Floating Rate
Receipts, Series SG-98, 3.80%, 4/7/98 3,300
North Texas Higher Education Authority
VRDN (AMT), Student Loan Program
(SLMA LOC)
14,500 Series 1993 A, 3.80%, 4/7/98 14,500
5,000 Series 1996 A, 3.80%, 4/7/98 5,000
2,300 Panhandle-Plains Higher Education
Authority VRDN, Student Loan
Revenue, Series A (SLMA LOC),
3.75%, 4/7/98 2,300
7,245 Pearland City Independent School
District G.O., Series 1997 SG-106
(PSF Gtd.), 3.80%, 4/7/98 7,245
9,400 Port Development of Corpus Christi
Solid Waste Disposal (AMT), Koch Refining
Co. Project, 3.80%, 4/7/98 9,400
Port Development of Corpus Christi
Solid Waste Disposal (AMT),
Koch Refining Co. Project
9,750 Series 1996, 3.80%, 4/7/98 9,750
24,100 Series 1997, 3.80%, 4/7/98 24,100
14,450 Port of Corpus Christi, Series 1992,
Union Pacific Resources Project,
3.80%, 5/4/98 14,450
2,600 Port of Houston Authority (AMT),
Unlimited Tax G.O. (FGIC Insured),
5.50%, 10/1/98 2,620
15,000 Port of Port Arthur Navigation District,
Series 1998 (AMT), Star Enterprise Project
(Bank of Montreal LOC), 3.75%, 4/7/98 15,000
2,500 Sabine River Authority PCR VRDN,
Series 1995 C (AMT), Texas Utilities Electric
Co. Project (Union Bank of Switzerland
LOC), 4.05%, 4/1/98 2,500
1,200 Sabine River Authority PCR VRDN,
Series 1996 B (AMT), Texas Utilities Electric
Co. Project (AMBAC Insured),
3.90%, 4/1/98 1,200
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
TEXAS - 12.5% (CONT'D.)
$ 9,880 San Antonio City Electric and Gas
Revenue VRDN, Merrill Lynch Trust
Receipts, Series 1997 SG-107,
3.80%, 4/7/98 $ 9,880
1,600 Sherman Independent School District
G.O., Series 1985 A SG-80 (PSF Gtd.),
3.80%, 4/7/98 1,600
2,080 Tarrant County G.O. LTD, Certificates of
Obligation, 5.50%, 7/15/98 2,092
6,545 Texas Department of Housing and
Community Affairs SFM, Series PA-128
(AMT), 3.85%, 4/7/98 6,545
5,000 Texas State TRAN, Series 1997 A,
4.75%, 8/31/98 5,018
6,580 Texas Veterans Housing Program,
Series 1994 D PT-83 (AMT),
3.775%, 2/11/99 6,580
-----------
226,214
-----------
UTAH - 1.4%
8,300 Salt Lake City Subordinated Airport
Revenue Bonds, Series 1996 A (AMT)
(Union Bank of Switzerland LOC),
3.70%, 4/7/98 8,300
16,200 Utah State Board of Regents VRDN, Series
1996 Q (AMT), Student Loan Program
(AMBAC Insured), 3.80%, 4/7/98 16,200
-----------
24,500
-----------
VIRGINIA - 1.6%
4,200 Botetourt County IDR VRDN (AMT),
Valley Forge Company Project (Harris
Trust & Savings Bank LOC),
3.50%, 4/7/98 4,200
2,000 Charles County Solid Waste Disposal
Facility IDR (AMT), Chambers
Development, Inc. Project (Morgan
Guaranty LOC), 3.85%, 4/7/98 2,000
9,500 Grant County Disposal Revenue Bond,
Series 1996 (AMT), Virginia Electric
Power Co. Project, 3.55%, 6/11/98 9,500
4,200 Halifax County, IDA VRDN, Series 1998
(AMT), D-Scan, Inc. Project (NationsBank
LOC), 3.80%, 4/7/98 4,200
1,700 Louisa Town IDA, Virginia Electric
Power Co. Project, 3.70%, 6/17/98 1,700
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
VIRGINIA - 1.6% (CONT'D.)
$ 3,200 Norfolk City G.O. VRDN, Citicorp Eagle
Trust No. 944601, 3.82%, 4/7/98 $ 3,200
3,900 Virginia State G.O. VRDN, Series 1994,
Citicorp Eagle Trust No. 954601,
3.77%, 4/7/98 3,900
-----------
28,700
-----------
WASHINGTON - 2.7%
2,850 Algona Economic Development Corp.
(AMT), Peter Pan Seafoods Project (Seattle
First National Bank LOC), 3.75%, 4/7/98 2,850
5,700 Grandview City Public Corp. IDR, Series
1989 (AMT), Shonan USA Project (Bank
of America LOC), 3.80%, 4/7/98 5,700
1,800 Kent City Economic Development Corp.
IDR VRDN, Associated Grocers Project
(Seattle-First National Bank LOC),
4.02%, 4/7/98 1,800
5,340 Seattle City Municipal Light and Power
Revenue Bonds, Series A BTP-272,
3.70%, 10/23/98 5,340
Spokane County School District #081, G.O.
7,990 BTP-283, 3.65%, 3/18/99 7,990
4,455 BTP-286, 3.65%, 3/18/99 4,455
17,519 Washington Public Power Supply System
Revenue, Series 1990 B, Nuclear Project
No. 2, Prerefunded BTP-85 (Colld. in U.S.
Government Securities), 3.75%, 10/15/98 17,519
2,800 Washington State Housing Finance
Commission VRDN, Series 5A-S (AMT),
Single Family Program, 3.90%, 12/15/98 2,800
-----------
48,454
-----------
WEST VIRGINIA - 0.3%
1,300 Brooke County IDR, Series 1997 (AMT),
Star-Kist Foods, Inc. Project,
3.95%, 4/7/98 1,300
3,000 Marion County Waste Disposal IDR
VRDN, Series 1990 B (AMT), Granttown
Project (National Westminster Bank LOC),
3.80%, 4/7/98 3,000
2,000 Ritchie County IDR VRDN (AMT),
Simonton Building Products, Inc. Project
(PNC Bank LOC), 3.95%, 4/7/98 2,000
-----------
6,300
-----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
WISCONSIN - 3.2%
$ 1,625 Elkhorn City Area School District
BAN, 4.25%, 4/1/98 $ 1,625
8,000 Manitowoc City Public School District
BAN, 4.00%, 10/1/98 8,004
3,300 Milwaukee City Redevelopment VRDN,
Series 1996 (AMT), Starline
Manufacturing, Inc. (Harris Trust &
Savings Bank LOC), 3.85%, 4/7/98 3,300
4,290 Pewaukee City IDR VRDN, Series 1992
(AMT), HUSCO International, Inc. Project
(Bank One LOC), 3.80%, 4/7/98 4,290
1,900 Wisconsin Health and Education
Revenue Bond, Series 1994 A, Sinai
Samaritan Medical Center Project
(M&I Bank LOC), 3.75%, 4/7/98 1,900
5,345 Wisconsin Health and Education
Revenue Bond, Series 1997, Froedtert
Memorial Lutheran Hospital Trust
(M&I Bank LOC), 3.75%, 4/7/98 5,345
5,000 Wisconsin Housing and Economic
Development Authority Revenue
Floating Rate Trust Receipts, Series
1997 FR/RI-18 (AMT), 3.95%, 4/7/98 5,000
7,620 Wisconsin Housing and Economic
Development Authority Revenue, Series
B (AMT), Home Ownership Revenue
Program, 3.60%, 9/1/98 7,620
12,545 Wisconsin Housing and Economic
Development Authority Revenue
TOB, Home Ownership Revenue
Program, 3.65%, 4/7/98 12,545
8,210 Wisconsin State G.O. Bond, Series
1996 A BTP-209, 3.75%, 10/22/98 8,210
-----------
57,839
-----------
WYOMING - 0.2%
3,000 Gillette City PCR, Pacific Project,
3.70%, 4/3/98 3,000
-----------
Total Municipal Investments
(cost $1,800,607) 1,800,607
-----------
SCHEDULES OF INVESTMENTS MARCH 31, 1998
MUNICIPAL MONEY MARKET FUND (continued)
NUMBER
OF SHARES VALUE
(000s) (000s)
- -----------------------------------------------------------------------
OTHER - 0.5%
396 AIM Tax-Free Money Market Fund $ 396
300 Dreyfus Tax Exempt Cash
Management Fund 300
419 Federated Tax Free Trust Money Market
Fund No. 15 419
500 Federated Tax Free Trust
Money Market Fund No. 73 500
7,616 Provident Municipal Cash Fund (AMT) 7,616
339 Provident Municipal Fund 339
-----------
Total Other
(cost $9,570) 9,570
-----------
Total Investments - 99.8%
(cost $1,810,177) 1,810,177
Other Assets less Liabilities - 0.2% 4,166
-----------
NET ASSETS - 100.0% $1,814,343
===========
See Notes to the Financial Statements.
SCHEDULES OF INVESTMENTS MARCH 31, 1998
CALIFORNIA MUNICIPAL MONEY MARKET FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MUNICIPAL INVESTMENTS - 99.8%
CALIFORNIA - 98.9%
$ 5,000 California Community College Finance
Authority TRAN, Series A,
4.50%, 6/30/98 $ 5,008
760 California HFA Multifamily Housing
Mortgage Revenue Bond, Series B
(FHA Insured), 3.60%, 4/7/98 760
800 California State Community Development
Authority Revenue Refunding Bond,
Series 1995 A-1 (Colld. by FNMA Securities),
3.45%, 4/1/98 800
2,855 California State Department of Water
Resources and Sewer VRDN, Series SG-5,
CVP, Merrill Soc Gen Muni Trust,
3.62%, 4/7/98 2,855
1,700 California State Economic Development
Financing Authority FRN, Series 1996,
Volk Enterprises Project
(Harris Trust & Savings Bank LOC),
3.35%, 4/7/98 1,700
3,450 California State G.O. TOCR, Weekly Put,
Series 1998 A (MBIA Insured),
3.65%, 4/7/98 3,450
1,500 California State G.O. VRDN, CR-153,
3.62%, 4/1/98 1,500
18,000 California State G.O. VRDN,
Series 1997 H, 3.77%, 6/30/98 18,000
3,900 California State G.O. VRDN TOB,
Series CR-152, 3.96%, 4/7/98 3,900
California State G.O. VRDN, Weekly
Optional Put
2,300 Series CR-152, 3.62%, 4/7/98 2,300
1,200 Series CR-153, 3.65%, 4/7/98 1,200
1,480 California State HFA Revenue Bond,
P-Floats PT-14, 3.62%, 4/7/98 1,480
1,860 California State HFA SFM Bond,
Series G (FSA Insured),
3.60%, 4/7/98 1,860
California State HFA SFM Revenue Bond
(AMT) (Harris Trust & Savings Bank LOC)
2,400 Series C, 3.55%, 2/1/99 2,400
6,000 Series E, 3.55%, 3/12/99 6,000
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CALIFORNIA - 98.9% (CONT'D.)
$ 2,900 California State Housing Finance Agency
Multi-Units Housing Revenue,
Series 1992 A CR-231 (MBIA Insured),
3.70%, 4/7/98 $ 2,900
10,500 California State Merlots, Series T
(FGIC Insured), 3.70%, 4/1/98 10,500
California State Pollution Control
Financing Authority FRN,
Southern California Edison Project
3,500 Series 1986 A, 3.90%, 4/1/98 3,500
100 Series 1986 B, 3.90%, 4/1/98 100
7,000 California State Pollution Control
Financing Authority, Series 1997 B
(AMT), Air Products Manufacturing Corp.,
3.60%, 4/1/98 7,000
1,900 California State Pollution Control
Financing Authority, Series 1997 A
(AMT), Arco Project, 3.60%, 4/7/98 1,900
3,600 California State Pollution Control
Financing Authority PCR FRN,
Series A (AMT), Pacific Gas & Electric Co.
(Swiss Bank Corp. LOC),
3.40%, 4/7/98 3,600
2,700 California State Pollution Control
Financing Authority PCR FRN,
Series B (AMT), Pacific Gas & Electric Co.
(Deutsche Bank A.G. LOC),
3.75%, 4/1/98 2,700
5,560 California State Pollution Control
Financing Authority PCR FRN,
Series 1997 C (AMT), Pacific Gas &
Electric Co. (Kredietbank LOC),
3.75%, 4/1/98 5,560
1,600 California State Pollution Control
Financing Authority PCR FRN,
Series F, Pacific Gas & Electric Co.
(Banque Nationale de Paris LOC),
3.70%, 4/1/98 1,600
6,400 California State RAN, Series 1997-8,
4.50%, 6/30/98 6,410
600 California Statewide Community
Development Authority Refunding FRN,
Series 1993 A, House Ear Institute Project
(Morgan Guaranty Trust Co. LOC),
3.70%, 4/1/98 600
SCHEDULES OF INVESTMENTS MARCH 31, 1998
CALIFORNIA MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CALIFORNIA - 98.9% (CONT'D.)
$ 6,900 Chula Vista City IDR Bond, Series 1996 B,
San Diego Gas & Electric Co.,
3.95%, 4/1/98 $ 6,900
13,685 Contra Costa County Home Mortgage
Variable Rate COP, Series 1997 A
(Colld. by U.S. Government Securities),
3.77%, 4/7/98 13,685
2,200 Foothill/Eastern Transportation Corridor
Agency Toll Road Revenue Bond,
Series 1995 B (Morgan Guaranty Trust
Co. LOC), 3.30%, 4/7/98 2,200
2,100 Irvine City Improvement Assessment
Dist. No. 89-10 Refunding Bond
(National Westminster PLC LOC),
3.80%, 4/1/98 2,100
900 Irvine Ranch Consolidated County Water
District VRDN (Landesbank Hessen
Thuringen Girozentral LOC),
3.80%, 4/1/98 900
2,100 Irvine Ranch Consolidated Water Districts
105, 140, 240 & 250 Improvement Bond
(Commerzbank A.G. LOC),
3.80%, 4/1/98 2,100
6,100 Irvine Ranch Consolidated Water Districts
2, 102, 103-3, 203 & 206 VRDN,
Series 1993 B (Morgan Guaranty Trust
Co. LOC), 3.70%, 4/1/98 6,100
Kern County Public Facilities Project COP
(Union Bank of Switzerland LOC)
1,800 Series C, 3.30%, 4/7/98 1,800
2,800 Series D, 3.30%, 4/7/98 2,800
6,600 Livermore County TRAN,
4.50%, 10/29/98 6,624
4,200 Los Angeles City Housing Revenue
Bond Clipper Trust Certificates,
Series 1996-6A (AMT),
3.77%, 4/3/98 4,200
1,700 Los Angeles City Multifamily Refunding
Bond, Series 1995 D (AMT), Coral Wood
Court Project (Union Bank of California
LOC), 3.65%, 4/1/98 1,700
1,025 Los Angeles Convention and Exhibition
Center VRDN, Merrill P-Floats,
Series 1993 PA-88 (MBIA Insured),
3.62%, 4/7/98 1,025
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CALIFORNIA - 98.9% (CONT'D.)
$2,500 Los Angeles County Community
Redevelopment Agency TOC, BTP-129,
3.80%, 6/1/98 $2,500
Los Angeles County Metropolitan
Transportation Authority Municipal Trust
Receipts, Union Station Project
(FSA Insured)
3,900 Soc Gen Trust SGB-1,
3.70%, 4/7/98 3,900
3,900 Soc Gen Trust SGB-2,
3.70%, 4/7/98 3,900
5,000 Los Angeles County TRAN, Series A,
4.50%, 6/30/98 5,008
4,000 Metropolitan Water District Southern
California CP, Series B,
3.35%, 8/12/98 4,000
2,500 Moreno Valley Unified School District
TRAN, 4.50%, 6/30/98 2,503
1,900 Orange County Apartment Development
Authority VRDN, Series 1988 A,
Vista Verde Apartments
(Wells Fargo & Co. LOC),
3.70%, 4/7/98 1,900
9,500 Orange County Apartment Development
Authority VRDN, Series B,
Aliso Creek Project
(Wells Fargo & Co. LOC),
3.75%, 4/7/98 9,500
1,600 Orange County Limited Obligation
Improvement Bond, Irvine Coast
Assessment District 88-1,
(Societe Generale LOC),
3.70%, 4/1/98 1,600
1,800 Orange County Sanitation Districts
1-3, 5-7, 11, 13 & 14 COP
(National Westminster PLC LOC),
3.80%, 4/1/98 1,800
1,650 Oxnard School District TRAN,
4.50%, 8/13/98 1,653
4,390 Regents of the University of California
VRDN, Series C-SG24, Merrill Soc Gen
Muni Trust, 3.62%, 4/7/98 4,390
5,000 Regents of the University of California
VRDN, Series D (MBIA Insured),
Multiple Purpose Projects,
3.60%, 4/1/98 5,000
SCHEDULES OF INVESTMENTS MARCH 31, 1998
CALIFORNIA MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CALIFORNIA - 98.9% (CONT'D.)
$ 835 Riverside County Community
Multifamily Mortgage Revenue FRN,
Series A, Ambergate Apartments
(Union Bank of California LOC),
3.55%, 4/8/98 $ 835
5,475 Riverside County Public Facilities COP,
Series B (National Westminster PLC LOC),
3.55%, 4/7/98 5,475
2,000 Riverside County TRAN, Series A,
4.50%, 6/30/98 2,003
3,000 San Francisco City and County Airport
Variable Rate Receipts, Susquehanna
Structured Product SSP-4
(AMBAC Insured), 3.65%, 4/1/98 3,000
2,975 San Francisco City and County Variable
Rate Receipts, Series 1996-AA6
(FGIC Insured), 3.72%, 4/1/98 2,975
3,000 San Luis Obispo County TRAN,
4.50%, 7/8/98 3,005
4,830 San Marcos City Public Facility Authority
Revenue Bond, Series BTP-188, Civic
Center Projects (Colld. by U.S.
Government Securities),
3.60%, 9/2/98 4,830
845 Santa Clara County Housing Authority
Multifamily VRDN, Series A (AMT),
Avenida Espana Gardens
(Union Bank of California LOC),
3.60%, 4/7/98 845
-----------
222,339
-----------
PUERTO RICO - 0.9%
2,000 Puerto Rico Industrial Medical &
Environmental PCR Bond,
Series 1983 A, Merck & Co., Inc.,
3.99%, 12/1/98 2,003
-----------
Total Municipal Investments
(cost $224,342) 224,342
-----------
See Notes to the Financial Statements.
NUMBER
OF SHARES VALUE
(000s) (000s)
- -----------------------------------------------------------------------
OTHER - 0.4%
768 Federated Tax-Exempt
Money Market Fund No. 80 $ 768
-----------
125 Provident Institutional California
Money Fund 125
-----------
Total Other
(cost $893) 893
-----------
Total Investments - 100.2%
(cost $225,235) 225,235
Liabilities less Other Assets - (0.2)% (392)
-----------
NET ASSETS - 100.0% $224,843
===========
STATEMENTS OF ASSETS AND LIABILITIES MARCH 31, 1998
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
FLORIDA INT'L.
U.S. INTERMEDIATE INTERMEDIATE FIXED CALIFORNIA FIXED
AMOUNTS IN THOUSANDS, GOV'T. TAX-EXEMPT TAX-EXEMPT INCOME TAX-EXEMPT TAX-EXEMPT INCOME
EXCEPT PER SHARE DATA FUND FUND FUND FUND FUND FUND FUND
- -------------------------------------------- ------- ------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost $224,657,
$289,659, $24,546, $174,786, $165,727,
$40,357 and $13,647, respectively) $227,457 $296,936 $25,000 $179,729 $172,577 $41,176 $13,261
Cash and foreign currencies 6 _ 1 82 4,375 1 103
Income receivable 1,991 3,661 416 1,968 2,140 478 303
Receivable for securities sold _ 1,516 _ _ 2,036 _ _
Receivable for fund shares sold 132 261 5 296 1,481 _ _
Receivable from Adviser 4 5 2 4 3 5 1
Deferred organization costs, net of
accumulated amortization 14 23 _ 11 15 _ 7
Prepaid and other assets 14 16 5 14 12 3 9
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 229,618 302,418 25,429 182,104 182,639 41,663 13,684
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 161 152 13 128 96 21 _
Payable for securities purchased _ 3,080 _ _ 15,286 1,632 _
Payable for fund shares redeemed 53 598 75 13 _ 44 _
Accrued investment advisory fees 28 34 3 22 19 5 2
Accrued transfer agent fees 4 5 _ 3 3 1 _
Accrued administration fees 2 3 _ 1 1 _ _
Accrued custody and accounting fees 1 2 1 1 1 3 1
Accrued registration fees and
other liabilities 17 15 8 19 13 14 6
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 266 3,889 100 187 15,419 1,720 9
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $229,352 $298,529 $25,329 $181,917 $167,220 $39,943 $13,675
===================================================================================================================================
ANALYSIS OF NET ASSETS:
Capital stock $225,523 $289,757 $24,641 $176,789 $158,293 $39,109 $14,042
Accumulated undistributed
(distributions in excess of)
net investment income 79 58 _ (90) (77) _ (66)
Accumulated undistributed net realized
gains on investments, forward foreign
currency contracts and foreign currency
transactions 950 1,437 234 275 2,154 15 93
Net unrealized appreciation (depreciation)
on investments 2,800 7,277 454 4,943 6,850 819 (386)
Net unrealized losses on translation
of assets and liabilities denominated
in foreign currencies _ _ _ _ _ _ (8)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $229,352 $298,529 $25,329 $181,917 $167,220 $39,943 $13,675
===================================================================================================================================
SHARES OUTSTANDING ($.0001 PAR VALUE,
UNLIMITED AUTHORIZATION) 22,489 28,805 2,420 17,455 15,581 3,711 1,388
NET ASSET VALUE, REDEMPTION AND
OFFERING PRICE PER SHARE $10.20 $10.36 $10.47 $10.42 $10.73 $10.76 $9.85
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
STATEMENTS OF OPERATIONS YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
FLORIDA INT'L.
U.S. INTERMEDIATE INTERMEDIATE FIXED CALIFORNIA FIXED
GOV'T. TAX-EXEMPT TAX-EXEMPT INCOME TAX-EXEMPT TAX-EXEMPT INCOME
AMOUNTS IN THOUSANDS FUND FUND FUND FUND FUND FUND<F2> FUND
- -------------------------------------------- ------- ------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $12,516 $13,230 $956 $9,747 $7,793 $922 $950<F3>
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 1,528 2,115 152 1,105 1,110 142 139
Administration fees 306 423 30 221 222 28 23
Transfer agent fees 204 282 20 147 148 19 15
Custody and accounting fees 72 91 47 64 64 48 74
Registration fees 20 40 12 29 16 16 8
Professional fees 18 19 17 17 17 44 16
Amortization of organization costs 14 22 _ 12 16 _ 8
Trustees' fees and expenses 5 6 2 4 4 2 2
Other 16 22 5 12 13 4 5
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 2,183 3,020 285 1,611 1,610 303 290
Less voluntary waivers of:
Investment advisory fees _ (141) (10) _ (74) (10) _
Administration fees (181) (245) (19) (136) (130) (21) (13)
Less: Reimbursement of expenses
by Adviser (169) (237) (83) (149) (148) (111) (99)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Expenses 1,833 2,397 173 1,326 1,258 161 178
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 10,683 10,833 783 8,421 6,535 761 772
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on:
Investments 1,575 1,878 240 465 3,166 16 225
Forward foreign currency contracts _ _ _ _ _ _ 12
Foreign currency transactions _ _ _ _ _ _ (158)
Net change in unrealized appreciation
(depreciation) on investments 4,821 6,039 538 6,956 4,567 819 (139)
Net change in unrealized gains on
translation of assets and liabilities
denominated in foreign currencies _ _ _ _ _ _ 4
- -----------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments 6,396 7,917 778 7,421 7,733 835 (56)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $17,079 $18,750 $1,561 $15,842 $14,268 $1,596 $716
===================================================================================================================================
<F2> For the period April 8, 1997 (commencement of operations) through March 31, 1998.
<F3> Net of $13 in non-reclaimable foreign withholding taxes.
See Notes to the Financial Statements.
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
FLORIDA
INTERMEDIATE INTERMEDIATE
U.S. GOVERNMENT TAX-EXEMPT TAX-EXEMPT
FUND FUND FUND
------------------------- ------------------------- ------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
AMOUNTS IN THOUSANDS 1998 1997 1998 1997 1998 1997<F2>
- ------------------------------------------------ ------------------------- ------------------------- ------------------------
<C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 10,683 $ 8,540 $ 10,833 $ 9,847 $ 783 $ 245
Net realized gains (losses) on
investments, forward foreign currency
contracts and foreign currency transactions 1,575 (347) 1,878 (441) 240 _
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency transactions 4,821 (1,738) 6,039 (1,011) 538 (84)
Net change in unrealized gains (losses) on
translation of assets and liabilities
denominated in foreign currencies _ _ _ _ _ _
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations 17,079 6,455 18,750 8,395 1,561 161
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 67,042 51,631 65,294 71,873 15,147 18,631
Shares from reinvestment of dividends 748 1,442 655 2,492 151 36
Shares redeemed (26,587) (16,979) (39,967) (50,113) (5,548) (3,776)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Capital Share
Transactions 41,203 36,094 25,982 24,252 9,750 14,891
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS PAID:
From net investment income (10,684) (8,500) (10,833) (9,864) (783) (245)
From net realized gains (167) (793) _ (1,852) (6) _
In excess of net investment income _ (50) _ _ _ _
In excess of net realized gains _ (347) _ (440) _ _
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (10,851) (9,690) (10,833) (12,156) (789) (245)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 47,431 32,859 33,899 20,491 10,522 14,807
NET ASSETS:
Beginning of year 181,921 149,062 264,630 244,139 14,807 _
- -----------------------------------------------------------------------------------------------------------------------------------
End of year $229,352 $181,921 $298,529 $264,630 $25,329 $14,807
===================================================================================================================================
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS
IN EXCESS OF) NET INVESTMENT INCOME $79 $(94) $58 $40 $_ $_
===================================================================================================================================
<F2> For the period August 15, 1996 (commencement of operations) through March 31, 1997.
<F3> For the period April 8, 1997 (commencement of operations) through March 31, 1998.
See Notes to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
INTERNATIONAL
FIXED CALIFORNIA FIXED
INCOME TAX-EXEMPT TAX-EXEMPT INCOME
FUND FUND FUND FUND
------------------------ ---------------------- ---------- ----------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31 MAR. 31, MAR. 31, MAR. 31, MAR. 31,
AMOUNTS IN THOUSANDS 1998 1997 1998 1997 1998<F3> 1998 1997
- ----------------------------------------- ------------------------ ---------------------- ---------- ----------------------
<C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 8,421 $ 6,209 $ 6,535 $ 5,981 $ 761 $ 772 $ 894
Net realized gains (losses) on
investments, forward foreign currency
contracts and foreign currency transactions 465 (226) 3,166 248 16 79 97
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency transactions 6,956 (1,313) 4,567 (786) 819 (139) (785)
Net change in unrealized gains (losses) on
translation of assets and liabilities
denominated in foreign currencies _ _ _ _ _ 4 (9)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations 15,842 4,670 14,268 5,443 1,596 716 197
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 80,530 42,687 39,663 26,848 43,601 2,030 4,412
Shares from reinvestment of dividends 1,132 2,244 1,345 829 125 233 302
Shares redeemed (29,639) (20,929) (16,734) (14,872) (4,617) (4,701) (3,077)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Capital Share
Transactions 52,023 24,002 24,274 12,805 39,109 (2,438) 1,637
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS PAID:
From net investment income (8,216) (6,154) (6,458) (6,007) (761) (824) (892)
From net realized gains (86) (1,090) (1,159) (665) (1) (139) (159)
In excess of net investment income (90) (96) (77) (317) _ (66) _
In excess of net realized gains _ (227) _ _ _ _ (22)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (8,392) (7,567) (7,694) (6,989) (762) (1,029) (1,073)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 59,473 21,105 30,848 11,259 39,943 (2,751) 761
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 122,444 101,339 136,372 125,113 _ 16,426 15,665
- -----------------------------------------------------------------------------------------------------------------------------------
End of year $181,917 $122,444 $167,220 $136,372 $39,943 $13,675 $16,426
===================================================================================================================================
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS
IN EXCESS OF) NET INVESTMENT INCOME $(90) $(100) $(77) $(88) $_ $(66) $196
===================================================================================================================================
<F2> For the period August 15, 1996 (commencement of operations) through March 31, 1997.
<F3> For the period April 8, 1997 (commencement of operations) through March 31, 1998.
See Notes to the Financial Statements.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
INTERMEDIATE
U.S. GOVERNMENT TAX-EXEMPT
FUND FUND
--------------------------------------- --------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998 1997 1996 1995 1998 1997 1996 1995
- ------------------------------------------- --------------------------------------- --------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF YEAR $ 9.88 $10.06 $ 9.84 $10.00 $10.07 $10.22 $10.03 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.54 0.51 0.51 0.50 0.40 0.40 0.41 0.40
Net realized and unrealized gains (losses)
on investments 0.32 (0.11) 0.29 (0.16) 0.29 (0.06) 0.26 0.03
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.86 0.40 0.80 0.34 0.69 0.34 0.67 0.43
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.53) (0.51) (0.51) (0.50) (0.40) (0.40) (0.41) (0.40)
From net realized gains (0.01) (0.05) (0.07) _ _ (0.07) (0.07) _
In excess of net investment income _ _ _ _ _ _ _ _
In excess of net realized gains _ (0.02) _ _ _ (0.02) _ _
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (0.54) (0.58) (0.58) (0.50) (0.40) (0.49) (0.48) (0.40)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.20 $9.88 $10.06 $9.84 $10.36 $10.07 $10.22 $10.03
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN<F3> 8.90% 3.98% 7.65% 3.49% 6.95% 3.39% 6.81% 4.38%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of year $229,352 $181,921 $149,062 $116,443 $298,529 $264,630 $244,139 $221,251
Ratio to average net assets of<F4>:
Expenses, net of waivers and reimbursements 0.90% 0.90% 0.90% 0.90% 0.85% 0.85% 0.85% 0.85%
Expenses, before waivers and reimbursements 1.07% 1.09% 1.10% 1.12% 1.07% 1.07% 1.08% 1.09%
Net investment income, net of waivers and
reimbursements 5.24% 5.19% 5.07% 5.20% 3.84% 3.90% 4.01% 4.09%
Net investment income, before waivers
and reimbursements 5.07% 5.00% 4.87% 4.98% 3.62% 3.68% 3.78% 3.85%
Portfolio Turnover Rate 47.41% 83.41% 112.00% 42.29% 61.83% 61.39% 137.85% 78.87%
- -----------------------------------------------------------------------------------------------------------------------------------
<F2> For the period August 15, 1996 (commencement of operations) through March 31, 1997.
<F3> Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, and a
complete redemption of the investment at net asset value at the end of the period. Total return is not annualized for periods
less than one year.
<F4> Annualized for periods less than a full year.
See Notes to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
FLORIDA
INTERMEDIATE FIXED
TAX-EXEMPT INCOME
FUND FUND
------------------------ ----------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998 1997<F2> 1998 1997 1996 1995
- ------------------------------------------- ------------------------ ---------------------------------------------
<C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.03 $10.00 $ 9.86 $10.10 $ 9.78 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.40 0.24 0.59 0.57 0.58 0.62
Net realized and unrealized gains (losses)
on investments 0.44 0.03 0.56 (0.12) 0.50 (0.22)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.84 0.27 1.15 0.45 1.08 0.40
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.40) (0.24) (0.58) (0.56) (0.59) (0.62)
From net realized gains _ _ (0.01) (0.10) (0.17) _
In excess of net investment income _ _ _ (0.01) _ _
In excess of net realized gains _ _ _ (0.02) _ _
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (0.40) (0.24) (0.59) (0.69) (0.76) (0.62)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.47 $10.03 $10.42 $9.86 $10.10 $9.78
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN<F3> 8.51% 2.63% 11.90% 4.59% 11.18% 4.16%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of year $25,329 $14,807 $181,917 $122,444 $101,339 $65,929
Ratio to average net assets of<F4>:
Expenses, net of waivers and reimbursements 0.85% 0.85% 0.90% 0.90% 0.90% 0.90%
Expenses, before waivers and reimbursements 1.41% 2.31% 1.09% 1.12% 1.14% 1.18%
Net investment income, net of waivers and
reimbursements 3.86% 3.84% 5.71% 5.69% 5.79% 6.48%
Net investment income, before waivers
and reimbursements 3.30% 2.38% 5.52% 5.47% 5.55% 6.20%
Portfolio Turnover Rate 46.12% 50.77% 33.55% 87.64% 116.22% 55.27%
- ------------------------------------------------------------------------------------------------------------------------------------
NORTHERN FUNDS Annual Report
FINANCIAL HIGHLIGHTS
FIXED INCOME FUNDS
TAX-EXEMPT FUND
----------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998 1997 1996 1995
- ----------------------------------- ----------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $10.24 $10.35 $10.08 $10.00
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income 0.47 0.50 0.48 0.48
Net realized and unrealized gains
(losses) on investments 0.57 (0.06) 0.29 0.08
- --------------------------------------------------------------------------------
Total Income from Investment
Operations 1.04 0.44 0.77 0.56
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.47) (0.47) (0.48) (0.48)
From net realized gains (0.08) (0.05) (0.02) _
In excess of net investment income _ (0.03) _ _
In excess of net realized gains _ _ _ _
- --------------------------------------------------------------------------------
Total Distributions Paid (0.55) (0.55) (0.50) (0.48)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.73 $10.24 $10.35 $10.08
- --------------------------------------------------------------------------------
TOTAL RETURN<F3> 10.39% 4.32% 7.80% 5.78%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands,
end of year $167,220 $136,372 $125,113 $118,690
Ratio to average net assets of<F4>:
Expenses, net of waivers
and reimbursements 0.85% 0.85% 0.85% 0.85%
Expenses, before waivers
and reimbursements 1.09% 1.10% 1.10% 1.11%
Net investment income, net of
waivers and reimbursements 4.42% 4.61% 4.62% 4.95%
Net investment income, before
waivers and reimbursements 4.18% 4.36% 4.37% 4.69%
Portfolio Turnover Rate 74.32% 8.10% 60.50% 54.94%
- --------------------------------------------------------------------------------
<F2> For the period August 15, 1996 (commencement of operations) through March
31, 1997.
<F3> Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at net asset value at the end of the period. Total return
is not annualized for periods less than one year.
<F4> Annualized for periods less than a full year.
See Notes to the Financial Statements.
FINANCIAL HIGHLIGHTS (CONTINUED)
</TABLE>
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
INTERNATIONAL
CALIFORNIA FIXED
TAX-EXEMPT INCOME
FUND FUND
----------- ----------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998<F2> 1998 1997 1996 1995
- ----------------------------------------- ----------- ----------------------------------------------
<C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF YEAR $10.00 $10.08 $10.62 $10.64 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.41 0.43 0.56 0.78 0.58
Net realized and unrealized gains (losses) on
investments, forward foreign currency contracts and
foreign currency transactions 0.76 0.02 (0.40) (0.16) 0.64
- ------------------------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 1.17 0.45 0.16 0.62 1.22
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.41) (0.59) (0.58) (0.62) (0.56)
From net realized gains _ (0.09) (0.11) (0.02) _
In excess of net investment income _ _ _ _ (0.02)
In excess of net realized gains _ _ (0.01) _ _
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (0.41) (0.68) (0.70) (0.64) (0.58)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.76 $ 9.85 $10.08 $10.62 $10.64
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN<F3> 11.86% 4.61% 1.39% 5.84% 12.77%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of year $39,943 $13,675 $16,426 $15,665 $13,028
Ratio to average net assets of<F4>:
Expenses, net of waivers and reimbursements 0.85% 1.15% 1.15% 1.15% 1.15%
Expenses, before waivers and reimbursements 1.60% 1.87% 1.96% 2.00% 2.42%
Net investment income, net of waivers and
reimbursements 4.01% 4.98% 5.49% 5.75% 5.96%
Net investment income, before waivers
and reimbursements 3.26% 4.26% 4.68% 4.90% 4.69%
Portfolio Turnover Rate 22.22% 30.26% 37.76% 52.05% 43.24%
- ------------------------------------------------------------------------------------------------------------------------------
<F2> For the period April 8, 1997 (commencement of operations) through March 31, 1998.
<F3> Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, and a
complete redemption of the investment at net asset value at the end of the period. Total return is not annualized for periods
less than one year.
<F4> Annualized for periods less than a full year.
See Notes to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
U.S. GOVERNMENT FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 27.5%
FANNIE MAE - 5.0%
$11,750 5.25%, 1/15/03 $11,478
----------
FANNIE MAE REMIC TRUST - 15.4%
6,241 Series 1996-M7, Class A,
6.53%, 9/17/04 6,301
1,096 Series 1991-37, Class G,
8.15%, 8/25/05 1,105
8,919 Series 1997-M7, Class A,
6.589%, 5/25/07 8,972
10,000 Series 1997-M5, Class C,
6.74%, 8/25/07 10,384
368 Series 1994-40, Class C,
5.00%, 9/25/13 367
4,351 Series 1996-M4, Class A,
7.75%, 3/17/17 4,469
3,634 Series 1992-200, Class E,
6.25%, 6/25/17 3,629
54 Series 1989-15, Class D,
10.00%, 9/25/18 54
----------
35,281
----------
FREDDIE MAC - 5.2%
4,511 Series 1033, Class F,
8.00%, 5/15/05 4,530
2,568 Series 1614, Class E,
5.20%, 4/15/15 2,559
3,289 Series 1379, Class EA,
6.00%, 5/15/16 3,284
1,460 Pool #410092,
7.89%, 11/1/24 1,501
----------
11,874
----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 0.3%
3 Pool #69178, 7.25%, 6/15/98 3
519 10.00%, 4/15/19 - 2/15/21 577
----------
580
----------
TENNESSEE VALLEY AUTHORITY - 1.6%
3,700 Series B, Putable 7/15/01,
6.235%, 7/15/45 3,781
----------
Total U.S. Government Agencies
(cost $62,195) 62,994
----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
U.S. GOVERNMENT
OBLIGATIONS - 59.9%
U.S. TREASURY NOTES - 56.4%
$23,000 7.75%, 1/31/00 $ 23,852
25,175 6.625%, 6/30/01 25,887
36,940 6.625%, 7/31/01 38,008
37,900 7.50%, 2/15/05 41,672
----------
129,419
----------
U.S. TREASURY BOND - 3.5%
7,000 7.125%, 2/15/23 7,989
----------
Total U.S. Government Obligations
(cost $135,407) 137,408
----------
SHORT-TERM INVESTMENT - 11.8%
27,055 FHLB Discount Note,
5.90%, 4/1/98
(cost $27,055) 27,055
----------
Total Investments - 99.2%
(cost $224,657) 227,457
Other Assets less Liabilities - 0.8% 1,895
----------
NET ASSETS - 100.0% $229,352
==========
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERMEDIATE TAX-EXEMPT FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MUNICIPAL INVESTMENTS - 95.9%
ALABAMA - 0.1%
$ 310 Birmingham City Public Building
Authority Revenue Refunding Bond,
7.00%, 1/15/00 $ 326
----------
ALASKA - 2.9%
North Slope Borough G.O.
Refunding Bond (MBIA Insured)
1,250 Series A, 0.00%, 6/30/99 1,191
2,000 Series B, 0.00%, 6/30/00 1,825
4,400 Series A, 0.00%, 6/30/01 3,835
2,000 Series B, 0.00%, 6/30/01 1,743
----------
8,594
----------
ARIZONA - 3.3%
500 Arizona State University Revenue Bond,
Prerefunded, 7.10%, 7/1/01 554
2,000 Maricopa County Unified School District
No. 11 Peoria G.O. Bond,
5.60%, 7/1/07 2,153
5,000 Mesa City Project of 1987
G.O. Bond (MBIA Insured),
Prerefunded, 5.70%, 7/1/03 5,410
1,500 Tucson City IDA IDR Bond,
Prerefunded, 6.25%, 11/15/03 1,649
----------
9,766
----------
CALIFORNIA - 3.3%
1,675 California State G.O. Bonds,
6.10%, 11/1/01 1,793
California State Public Works Board
Lease Revenue Bond, Series A,
Various University of California Projects
2,700 5.60%, 10/1/01 2,835
1,200 5.90%, 10/1/04 1,310
1,000 Foothill/Eastern Transportation
Corridor Agency Toll Road Senior
Lien Revenue, Series A,
0.00%, 1/1/05 720
2,860 Los Angeles County COP, Correctional
Facility Project (MBIA Insured),
Prerefunded, 6.50%, 9/1/00 3,081
----------
9,739
----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
COLORADO - 4.4%
$2,500 Arapahoe County School District
No. 5 Cherry Creek G.O. Refunding
Bond, Series A, 5.25%, 12/15/04 $ 2,628
Denver City Metropolitan Major League
Baseball Stadium District Sales
TRB (FGIC Insured)
310 4.15%, 10/1/00 312
2,025 6.00%, 10/1/00 2,127
Jefferson County Colorado School District
No. R-001 G.O. Bond (FGIC Insured)
1,000 Series B, 5.00%, 12/15/99 1,020
5,750 Series A, 6.00%, 12/15/05 6,357
610 Metropolitan Wastewater Reclamation
District Gross Revenue Refunding Bond,
Series B (MBIA Insured), 6.75%, 4/1/03 680
----------
13,124
----------
FLORIDA - 13.8%
Broward County School District G.O.
Bond
380 6.75%, 2/15/00 397
1,000 6.00%, 2/15/06 1,078
3,195 Dade County Road G.O. Refunding Bond,
5.00%, 7/1/10 3,327
3,375 Dade County Water and Sewer System
Revenue Bond (FGIC Insured),
6.25%, 10/1/06 3,811
1,750 Florida State Board of Education
Capital Outlay Public Education G.O.
Bond, 5.50%, 1/1/03 1,850
Florida State Department of
Environmental Protection Revenue Bond,
PRSV 2000-A (AMBAC Insured)
2,270 5.50%, 7/1/06 2,441
3,000 5.50%, 7/1/07 3,217
9,000 Inland Protection Financing Corp. S.O.
Revenue Bond (FSA Insured),
5.00%, 7/1/00 9,221
Jacksonville Electric Authority Revenue
Refunding Bond, St. John's River
Power System
1,530 Series 6-C, 6.40%, 10/1/00 1,622
3,000 6.00%, 10/1/04 3,299
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERMEDIATE TAX-EXEMPT FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
FLORIDA - 13.8% (CONT'D.)
$1,500 Jacksonville Electric Authority S.O.
Revenue Refunding Bond, Series 6-C,
St. John's River Power System,
6.50%, 10/1/01 $ 1,607
3,610 Orlando City Utilities Commission
Water and Electric Revenue Bond,
Series A, Multi Modal, Mandatory Put,
4.25%, 10/1/01 3,630
5,000 Venice City Health Facilities Revenue
Bonds, Venice Hospital, Inc. Project,
Prerefunded, 6.00%, 12/1/04 5,566
----------
41,066
----------
GEORGIA - 8.8%
Atlanta City Airport Facilities Revenue
Refunding Bond (AMBAC Insured)
1,200 5.50%, 1/1/01 1,246
3,500 6.00%, 1/1/02 3,730
2,500 6.00%, 1/1/04 2,720
Clarke County School District
G.O. Bond (FSA Insured)
2,150 4.55%, 3/1/00 2,177
2,000 4.75%, 3/1/02 2,045
1,850 Cobb County School District G.O. Bond,
5.00%, 2/1/03 1,919
2,000 Cobb-Marietta Coliseum and Exhibition
Hall Authority Revenue Bond
(MBIA Insured),
Prerefunded, 6.75%, 10/1/01 2,207
870 Gwinnett County Water and Sewer
Authority Revenue Refunding and
Improvement Bond, Escrowed to Maturity,
8.20%, 8/1/99 921
Municipal Electric Authority of Georgia
General Resolution Project Revenue
Bond (MBIA Insured)
7,075 Series A, 5.00%, 1/1/00 7,207
1,000 Series B, 4.50%, 1/1/02 1,031
1,000 Series A, 6.00%, 1/1/07 1,108
----------
26,311
----------
ILLINOIS - 3.2%
3,000 Chicago City G.O. Bond (AMBAC Insured),
5.90%, 1/1/09 3,255
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
ILLINOIS - 3.2% (CONT'D.)
$1,000 Chicago City Wastewater Transmission
Revenue Bond (FGIC Insured),
Prerefunded, 6.30%, 1/1/03 $1,106
2,805 Illinois Educational Facilities Authority
Revenue MTN, Art Institute of Chicago,
Mandatory Put, 4.65%, 3/1/05 2,810
1,750 Illinois Educational Facilities Authority
Revenue Bond, Reserve 3, Mandatory
Put, 4.75%, 3/1/07 1,765
310 Illinois State Sales TRB, Series J,
Prerefunded, 6.90%, 6/15/99 328
310 McLean County Public Building
Commission Revenue Bond, Law and
Justice Center Project, 7.10%, 11/1/00 334
----------
9,598
----------
KANSAS - 0.6%
1,700 Kansas City G.O. Refunding
Bond, Series A (MBIA Insured),
5.20%, 9/1/06 1,784
----------
KENTUCKY - 1.4%
2,000 Kentucky State Property and Buildings
Commission Revenue Refunding Bond,
Project No. 59, 5.00%, 11/1/01 2,059
2,000 Kentucky State Turnpike
Authority Economic Development Road
Revenue Refunding Bond,
Revitalization Project,
5.50%, 1/1/01 2,072
----------
4,131
----------
MARYLAND - 2.8%
Maryland State and Local Facilities
G.O. Bond
1,650 4.30%, 7/15/03 1,664
6,840 4.125%, 2/15/04 6,813
----------
8,477
----------
MASSACHUSETTS - 4.8%
Massachusetts State Health and
Educational Facilities Authority Revenue
Bond, Series A (MBIA Insured), Caregroup, Inc.
2,385 5.00%, 7/1/05 2,465
3,000 4.75%, 7/1/12 2,900
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERMEDIATE TAX-EXEMPT FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MASSACHUSETTS - 4.8% (CONT'D.)
$2,625 Massachusetts State Municipal Wholesale
Electric Company and Power Supply
System Revenue Bond (AMBAC Insured),
5.10%, 7/1/07 $ 2,741
2,500 Massachusetts State Water Reserve
Authority General Revenue Bond, Series A,
7.25%, 4/1/01 2,693
1,115 Massachusetts State Water Reserve
Authority General Revenue Bond, Series A
(MBIA Insured) Prerefunded,
6.00%, 8/1/04 1,232
2,000 Massachusetts State Water Reserve
Authority General Revenue Bond, Series A,
Prerefunded, 6.50%, 7/15/02 2,218
----------
14,249
----------
MICHIGAN - 0.3%
870 Lansing City Limited Tax Incremental
Finance Authority G.O. Bond,
Escrowed to Maturity,
4.75%, 10/1/00 886
----------
MISSISSIPPI - 0.9%
600 Mississippi State G.O. Bond, Series E,
5.00%, 9/1/02 622
2,000 Mississippi State G.O. Refunding Bond,
6.05%, 8/15/03 2,178
----------
2,800
----------
NEBRASKA - 0.3%
1,000 Nebraska State Public Power District
Supply System Revenue Bond, Series B,
4.80%, 1/1/03 1,023
----------
NEVADA - 0.4%
150 Lake Tahoe PRSV Bond,
Prerefunded, 7.20%, 8/1/98 155
620 Las Vegas - Clark County Library District
G.O. Bond (FGIC Insured),
4.00%, 2/1/01 619
310 Nevada State Bank Municipal G.O. Bond,
Project No. 3-C, Escrowed to Maturity,
7.625%, 5/1/01 336
----------
1,110
----------
See the Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
NEW HAMPSHIRE - 0.2%
$ 620 Manchester City G.O. Refunding Bond,
Series B, 4.70%, 7/1/01 $ 632
----------
NEW JERSEY - 2.2%
3,500 New Jersey State G.O. Bond, Series E,
5.00%, 7/15/04 3,649
2,750 New Jersey State Transportation Trust Fund
Authority Transportation System Revenue
Bond, Series A, 5.50%, 6/15/09 2,957
----------
6,606
----------
NEW MEXICO - 0.6%
610 Bernalillo County G.O. Bond,
3.875%, 8/1/03 600
1,000 Santa Fe City Revenue Bond,
Series A (AMBAC Insured),
Prerefunded, 6.30%, 6/1/04 1,109
----------
1,709
----------
NEW YORK - 18.7%
3,735 Middletown City School District G.O.
Bond (FGIC Insured), 4.75%, 11/1/00 3,814
2,730 New York City G.O. Bond,
Series C-1 (AMBAC Insured),
Prerefunded, 6.40%, 8/1/02 3,011
2,000 New York City G.O. Bond,
Series C-1 (MBIA Insured),
Prerefunded, 6.375%, 8/1/02 2,204
8,405 New York City G.O. Bond, Series G,
5.00%, 8/1/04 8,601
New York City Municipal Assistance
Corp. Revenue Bonds
2,000 Series E, 5.50%, 7/1/00 2,068
2,500 Series G, 5.50%, 7/1/00 2,585
7,115 Series E, 4.70%, 7/1/02 7,263
555 New York City Transitional Financing
Authority Future Tax Secured Revenue
Bond, Series B, 4.75%, 11/15/14 530
3,500 New York State Dormitory Authority
City University Revenue Refunding Bond,
Series 2 (MBIA Insured), Prerefunded,
6.75%, 7/1/04 4,034
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERMEDIATE TAX-EXEMPT FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
NEW YORK - 18.7% (CONT'D.)
New York State Dormitory Authority
State University Revenue Refunding
Bond, Series A
$2,500 5.40%, 5/15/02 $ 2,608
2,500 5.50%, 5/15/03 2,633
1,000 New York State Dormitory Authority
State University Revenue Refunding Bond,
Series B, Prerefunded, 7.25%, 5/15/00 1,086
New York State G.O. Refunding Bond
2,500 Series B, 6.375%, 8/15/00 2,637
2,500 6.625%, 8/1/01 2,695
1,000 Series C, 6.00%, 10/1/06 1,104
1,690 New York State Power Authority and
General Purpose Revenue Bond, Series W,
Escrowed to Maturity, 6.40%, 1/1/00 1,762
4,250 New York State Urban Development
Corp. State Facilities Revenue Bond,
Prerefunded, 7.50%, 4/1/01 4,740
2,500 New York State Urban Development
Corp. Sub Lien Revenue Bond,
5.50%, 7/1/16 2,561
----------
55,936
----------
NORTH CAROLINA - 0.7%
2,000 North Carolina State G.O. Bond,
4.75%, 4/1/04 2,063
----------
OHIO - 0.3%
1,000 Ohio State Highway G.O. Bond, Series S,
4.50%, 5/15/03 1,016
----------
OKLAHOMA - 1.0%
2,850 Grand River Dam Authority Revenue
Refunding Bond (MBIA Insured),
5.70%, 6/1/05 3,080
----------
OREGON - 0.5%
540 Clackamas and Washington Counties
School District No. 003 G.O. Bond,
7.00%, 8/1/02 600
850 Washington County School District
No. 48J G.O. Refunding Bond, Series B,
4.10%, 9/1/02 851
----------
1,451
----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
PENNSYLVANIA - 2.1%
$2,200 Philadelphia City Hospitals and Higher
Educational Facilities Revenue Bond,
Series A (FGIC Insured),
Prerefunded, 6.50%, 2/15/02 $2,418
3,300 Philadelphia City Intergovernmental
Funding Special TRB (FGIC Insured),
Prerefunded, 6.75%, 6/15/05 3,787
----------
6,205
----------
PUERTO RICO - 1.4%
4,000 Puerto Rico Commonwealth Public
Improvement G.O. Refunding Bond,
5.00%, 7/1/05 4,132
----------
SOUTH CAROLINA - 2.6%
3,500 Columbia Waterworks and Sewer System
Capital Appreciation Revenue Bond,
0.00%, 2/1/03 2,855
South Carolina State Public Service
Authority Revenue Refunding Bond,
Series B (FGIC Insured)
2,650 6.50%, 1/1/04 2,941
1,700 6.50%, 1/1/05 1,905
----------
7,701
----------
TENNESSEE - 1.4%
2,000 Memphis City Electric System Revenue
Refunding Bond, 5.80%, 1/1/03 2,135
1,870 Nashville and Davidson Counties
Metropolitan Government G.O. Bond,
4.50%, 5/15/02 1,898
----------
4,033
----------
TEXAS - 6.3%
2,570 Carrollton Farmers Branch Independent
School District G.O. Bond (PSF Gtd.),
5.00%, 2/15/10 2,612
2,000 El Paso City Independent School District
Capital Appreciation G.O. Bond
(PSF Gtd.), 0.00%, 2/15/02 1,693
7,450 Harris County Revenue Refunding
Senior Sub Lien Toll Road Bond
(AMBAC Insured), 4.95%, 8/15/06 7,723
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERMEDIATE TAX-EXEMPT FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
TEXAS - 6.3% (CONT'D.)
$1,340 Harris County Revenue Refunding
Sub Lien Toll Road Bond (MBIA Insured),
0.00%, 8/15/99 $ 1,271
San Antonio City Electric and Gas
Revenue Refunding Bond
5,000 5.25%, 2/1/01 5,156
165 7.00%, 2/1/01 172
145 San Antonio City Electric and Gas
Revenue Refunding Bond, Series A,
Prerefunded, 7.00%, 2/1/99 151
----------
18,778
----------
UTAH - 2.1%
1,740 Jordan School District G.O. Bond,
5.00%, 6/15/04 1,811
4,125 Utah State G.O. Bond, Series F,
5.50%, 7/1/04 4,419
----------
6,230
----------
VIRGINIA - 1.8%
2,000 Portsmouth City G.O. Refunding Bond
(FGIC Insured), 4.40%, 8/1/04 2,012
3,230 Virginia State G.O. Bond,
5.375%, 6/1/05 3,446
----------
5,458
----------
WASHINGTON - 2.7%
560 King County G.O. Bond, Series A,
Prerefunded, 6.90%, 12/1/00 600
550 Kitsap County School District
No. 401 G.O. Bond, Series A,
6.05%, 12/1/00 579
310 Pierce County School District
No. 003 Puyallup G.O. Bond, Series A,
7.75%, 12/1/01 347
310 Pierce Fife County School District
No. 417 G.O. Bond, Series A,
7.85%, 12/1/01 348
450 Seattle City Limited Tax G.O. Bond,
7.00%, 3/1/01 486
500 Snohomish County School District
No. 015 Edmonds G.O. Bond,
7.00%, 12/1/01 547
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
WASHINGTON - 2.7% (CONT'D.)
$ 5,000 Washington State Public Power Supply
System Nuclear Project No. 2 Revenue
Bond, Series A, 5.00%, 7/1/03 $ 5,139
----------
8,046
----------
Total Municipal Investments
(cost $278,783) 286,060
----------
NUMBER
OF SHARES
(000S)
- ----------
SHORT-TERM INVESTMENTS - 3.6%
116 AIM Tax Free Cash Reserve Fund 116
10,760 Provident Municipal Fund 10,760
----------
Total Short-Term Investments
(cost $10,876) 10,876
----------
Total Investments - 99.5%
(cost $289,659) 296,936
Other Assets less Liabilities - 0.5% 1,593
----------
NET ASSETS - 100.0% $298,529
=========
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
FLORIDA INTERMEDIATE TAX-EXEMPT FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MUNICIPAL INVESTMENTS - 95.0%
FLORIDA - 95.0%
$ 185 Bay County Public Improvement
Revenue Bond, Series 1996 A
(FSA Insured), 5.00%, 10/1/04 $ 193
200 Broward County School District G.O.
Bond, Series 1988, 7.00%, 2/15/99 204
100 Charlotte County Utility Systems
Revenue Bond, Series 1994
(FGIC Insured), 5.50%, 10/1/00 104
1,000 Dade County Educational Facilities
Revenue Bond, Series A (MBIA Insured),
5.13%, 4/1/07 1,039
1,695 Dade County G.O. Bond (FGIC Insured),
5.13%, 11/1/17 1,692
225 Dade County Public Service Tax Revenue
Refunding Bond (FSA Insured),
5.00%, 10/1/01 232
500 Dade County Sales TRB (AMBAC Insured),
6.00%, 10/1/01 532
2,000 Dade County School District G.O.
Bond, Series 1996 (MBIA Insured),
5.20%, 2/15/11 2,028
400 Dade County Seaport Revenue
Refunding Bond (MBIA Insured),
6.50%, 10/1/10 469
700 Dade County Water and Sewer System
Revenue Bond (FGIC Insured),
5.00%, 10/1/00 718
150 Duval County School District G.O.
Bond, Series 1992 (AMBAC Insured),
6.13%, 8/1/04 163
920 Florida State Board of Education
Capital Outlay Revenue Bond,
Series 1989 A,
Prerefunded, 7.25%, 6/1/00 1,000
Florida State Board of Education Capital
Outlay Revenue Bond
100 Series 1992 B, 5.30%, 6/1/03 105
1,475 Series 1996 A, 4.80%, 1/1/10 1,482
1,000 Florida State Board of Education
Capital Outlay Revenue Bond,
Escrowed to Maturity,
Series 1987 C, 6.00%, 5/1/03 1,064
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
FLORIDA - 95.0% (CONT'D.)
$ 500 Florida State Department of
Transportation Right of Way Revenue
Refunding Bond, 6.00%, 7/1/04 $ 548
Florida State Finance Department
General Services Revenue Bond
1,250 Series A (FSA Insured), 5.50%, 7/1/09 1,353
750 Series A (MBIA Insured), 5.25%, 7/1/10 781
200 Florida State Municipal Power Agency
Revenue Bond, Power Supply Project
(AMBAC Insured), Prerefunded,
6.25%, 10/1/01 218
350 Florida State Municipal Power Agency
Revenue Bond, St. Lucie Project
(FGIC Insured), 5.40%, 10/1/05 371
250 Florida State Sunshine Skyway
Revenue Refunding Bond, Series 1991,
6.40%, 7/1/04 268
300 Gainesville City Utility Systems
Revenue Refunding Bond,
Series 1996 A, 5.75%, 10/1/05 327
500 Hillsborough County Aviation Authority
Revenue Bond (FGIC Insured),
6.60%, 10/1/03 529
500 Inland Protection Financing Corp. S.O.
Revenue Bond (FSA Insured),
5.00%, 7/1/00 512
500 Jacksonville City Health Facilities Authority
Revenue Bond, Series A (MBIA Insured),
Charity Obligation Group Project,
5.00%, 8/15/11 507
450 Kissimmee City Suburban Water
and Sewer System Revenue Refunding
Bond (AMBAC Insured), 5.75%, 10/1/01 475
100 Kissimmee City Utility Authority
Electric System Revenue Refunding
Bond, Series 1991 (FGIC Insured),
Prerefunded, 6.50%, 10/1/01 110
370 Lee County Refunding Bond, Series A
(MBIA Insured), 5.75%, 10/1/11 409
500 Manatee County Public Utilities Revenue
Bond (MBIA Insured), Series 1991 A,
Prerefunded, 6.75%, 10/1/01 552
1,000 Manatee County School Board COP,
Series A, 4.85%, 7/1/12 991
SCHEDULES OF INVESTMENTS MARCH 31, 1998
FLORIDA INTERMEDIATE TAX-EXEMPT FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
FLORIDA - 95.0% (CONT'D.)
$ 100 Miami City G.O. Bond, Series 1992
(FGIC Insured), 5.90%, 12/1/07 $ 111
1,000 Miami - Dade County S.O. Revenue
Bond, Series A (MBIA Insured),
0.00%, 10/1/14 426
200 Orange County Tourist Development
Tax Revenue Bond, Series 1992 B
(AMBAC Insured), 5.90%, 10/1/00 210
100 Orlando City Utilities Commission
Water and Electric Revenue Refunding
Bond, Series 1992, 5.75%, 10/1/05 109
1,000 Osceola County Capital Improvements
Revenue Refunding Bond
(MBIA Insured), 4.00%, 9/1/01 1,000
490 Polk County Constitutional Fuel Tax
Revenue Bond (FGIC Insured),
4.90%, 12/1/08 506
900 Polk County Utility System Revenue
Refunding Bond (FGIC Insured),
5.00%, 10/1/10 920
250 Reedy Creek Improvement District
Refunding Bond, Series 1991 A,
6.00%, 6/1/02 266
400 Santa Rosa Bay Bridge Authority
Capital Appreciation Bond,
Series 1996 A, 0.00%, 7/1/06 266
200 Sunrise City Utility Systems Revenue
Bond, Series 1996 A (AMBAC Insured),
0.00%, 10/1/01 173
750 Tampa City Sports Authority Revenue
Bond, Stadium Project (MBIA Insured),
6.00%, 1/1/06 829
250 Venice City Health Facilities Revenue
Bond, Venice Hospital, Inc. Project,
Prerefunded, 6.00%, 12/1/04 278
----------
Total Municipal Investments
(cost $23,616) 24,070
----------
NUMBER
OF SHARES VALUE
(000s) (000s)
- -----------------------------------------------------------------------
SHORT-TERM INVESTMENT - 3.7%
930 Federated Tax Free Trust Money
Market Fund #15
(cost $930) $ 930
----------
Total Investments - 98.7%
(cost $24,546) 25,000
Other Assets less Liabilities - 1.3% 329
----------
NET ASSETS - 100.0% $25,329
==========
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
FIXED INCOME FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
ASSET BACKED SECURITIES - 16.2%
$ 853 ALPS Ltd., Series 1994-1 A-2,
7.15%, 9/15/04 $ 855
5,000 Banc One Credit Card Master Trust,
7.80%, 12/15/00 5,050
1,125 Chevy Chase Auto Receivables Trust,
Series 1997-2, Class A,
6.35%, 1/15/04 1,131
2,820 Contimortgage Net Interest Margin Notes,
Series 1998-A, Class A,
7.92%, 3/16/28<F2> 2,812
- Delta Funding Mortgage Corp., I.O.,
Series 1991-1, Class A-4,
3.24%, 3/15/06<F2> 7
164 DLJ Mortgage Acceptance Corp.,
7.25%, 5/25/24 166
2,601 IMC Excess Cashflow Securities Trust,
Series 1997-A, Class A,
7.41%, 11/26/28<F2> 2,589
1,044 Olympic Automobile Receivables,
7.875%, 7/15/01 1,057
1,974 PNC Mortgage Securities Corp.,
8.09%, 4/28/27<F2> 2,039
3,217 Residential Asset Securitization Trust,
Series 1997-A8 C, Class A3,
7.00%, 10/25/27 3,234
2,878 Residential Funding Mortgage Securities I,
P.O., Series 1997-S17, Class A2,
23.99%, 9/25/27 2,306
1,135 The Money Store Trust,
Series 1997-1,
7.36%, 5/16/01<F2> 1,136
4,575 TMS Auto Grantor Trust,
Series 1997-3, Class A2,
6.12%, 12/20/03 4,583
Western Financial Grantor Trust
422 Series 1994-4, Class A-1, 7.10%, 1/1/00 426
2,034 Series 1995-4, Class A-1, 6.20%, 2/1/02 2,038
----------
Total Asset Backed Securities
(cost $20,319) 29,429
----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CORPORATE/GOVERNMENT BONDS
AND NOTES - 23.9%
BROKERAGE SERVICES - 2.3%
Lehman Brothers Holdings, MTN
$2,650 7.375%, 5/15/00 $ 2,777
1,350 6.90%, 1/29/01 1,372
----------
4,149
----------
COMMUNICATIONS - 0.6%
880 New Jersey Bell Telephone Co.,
7.85%, 11/15/29 1,032
----------
FINANCIAL SERVICES - 1.0%
1,800 Greyhound Financial Corp.,
8.50%, 5/1/98 1,803
----------
FOREIGN GOVERNMENT BONDS - 4.2%
2,905 Nova Scotia, Province of Canada,
8.25%, 11/15/19 3,424
3,675 Quebec, Province of Canada,
7.22%, 7/22/36 4,130
----------
7,554
----------
INDUSTRIAL INSTRUMENTS - 7.8%
3,900 Grand Metropolitan Investment Corp.,
7.45%, 4/15/35 4,376
4,540 Penney (J.C.) & Co., Inc.,
6.90%, 8/15/26 4,723
5,000 WMX Technologies, Inc.,
7.10%, 8/1/26 5,171
----------
14,270
----------
INSURANCE SERVICES - 6.0%
2,900 Anthem Insurance, Inc.,
9.00%, 4/1/27<F2> 3,192
Lumberman's Mutual Casualty Co.
2,370 9.15%, 7/1/26<F2> 2,740
805 8.30%, 12/1/37<F2> 855
3,750 Prudential Insurance,
8.30%, 7/1/25<F2> 4,185
----------
10,972
----------
SCHEDULES OF INVESTMENTS MARCH 31, 1998
FIXED INCOME FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
PETROLEUM PRODUCTS - 2.0%
$ 37 Chevron Capital U.S.A.,
9.75%, 7/15/17 $ 39
3,450 Petrozuata Finance, Inc.,
8.22%, 4/1/17<F2> 3,556
----------
3,595
----------
PRINTING AND PUBLISHING - 0.0%
19 Berkshire Hathaway, Inc.,
9.75%, 1/15/18 20
----------
Total Corporate/Government Bonds
and Notes
(cost $50,107) 43,395
----------
U.S. GOVERNMENT AGENCIES - 1.4%
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.4%
FHLMC - 0.8%
266 Series 1248, Class B,
7.00%, 3/15/22 269
440 Series 1591, Class FH,
7.00%, 9/15/22 445
810 Series 1591, Class SH,
5.03%, 9/15/22 700
----------
1,414
----------
FNMA REMIC Trusts - 0.6%
30 Series 1991-127, Class SA,
12.30%, 9/25/98 30
51 Series 1989-15, Class D,
10.00%, 9/25/18 51
- Series 1997-20, I.O.,
5.64%, 3/25/27 949
----------
1,030
----------
MORTGAGE BACKED SECURITIES - 0.0%
1 FHLMC, 6.50%, 6/1/04 1
1 GNMA, 11.50%, 3/15/99 1
----------
2
----------
Total U.S. Government Agencies
(cost $2,570) 2,446
----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 47.7%
U.S. TREASURY BONDS
$16,970 6.625%, 7/31/01 $ 17,461
41,910 7.50%, 2/15/05 46,081
20,420 7.125%, 2/15/23 23,304
----------
Total U.S. Government Obligations
(cost $84,397) 86,846
----------
FLOATING RATE BANK NOTES - 4.7%
Hong Kong and Shanghai Bank
1,450 Series 2H, 5.94%, 6/17/98 1,188
1,600 Series 1H, 6.00%, 8/26/98 1,318
2,800 Lloyds Bank PLC, 6.19%, 6/15/98 2,490
4,150 National Westminster Bank,
5.81%, 5/28/98 3,628
----------
Total Floating Rate Bank Notes
(cost $8,404) 8,624
----------
SHORT-TERM INVESTMENTS - 4.9%
7,244 Banque Paribas, Grand Cayman,
6.125%, 4/1/98 7,244
1,745 FHLB Discount Note,
5.90%, 4/1/98 1,745
----------
Total Short-Term Investments
(cost $8,989) 8,989
----------
Total Investments - 98.8%
(cost $174,786) 179,729
Other Assets less Liabilities - 1.2% 2,188
----------
NET ASSETS - 100.0% $181,917
==========
<F2> These private placement securities may require registration under the
Securities Act of 1933 or an exemption therefrom in order to effect sale in
the ordinary course of business. At March 31, 1998, the value of these
securities amounted to approximately $23,111,000 or 12.7% of net assets.
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
TAX-EXEMPT FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MUNICIPAL INVESTMENTS - 101.1%
ALABAMA - 1.2%
$2,000 Jefferson County Sewer Revenue
Refunding Bond, Series A (FGIC Insured),
5.625%, 2/1/22 $2,086
----------
ARIZONA - 4.1%
320 Cochise County School District No. 68,
Sierra Vista G.O. Bond (FGIC Insured),
9.00%, 7/1/03 391
1,500 Maricopa County School District No. 11,
Peoria Unified Project 1991 G.O. Bond,
5.50%, 7/1/10 1,578
3,000 Maricopa County School District No. 41,
Gilbert G.O. Bond, 6.25%, 7/1/15 3,250
1,260 Maricopa County School District No. 69,
Paradise Valley G.O. Bond, Series 1991 B,
8.50%, 7/1/06 1,609
----------
6,828
----------
CALIFORNIA - 10.8%
2,000 California State Refunding Bond,
5.00%, 2/1/14 1,993
2,250 California State Health Facility Financing
Authority Revenue Bond, Series 1997 A
(MBIA Insured), 5.00%, 8/15/37 2,160
California State Public Works
Revenue Bond
1,150 Series 1991 A-Calpatria,
6.10%, 9/1/02 1,241
4,000 Series 1993 E-Madera,
5.50%, 6/1/15 4,238
90 Fresno City Sewer System Revenue
Bond, Series 1993 A-1 (AMBAC Insured),
4.75%, 9/1/21 87
2,760 Los Angeles City Convention and
Exhibition Center Project Bond,
Prerefunded, 9.00%, 12/1/05 3,606
1,000 Los Angeles County Metropolitan
Transportation Authority Sales TRB,
Series B (AMBAC Insured),
4.75%, 7/1/18 947
1,500 Los Angeles County Public Works
Financing Authority Regional Park
and Space Revenue Bond,
4.50%, 10/1/05 1,513
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CALIFORNIA - 10.8% (CONT'D.)
$2,000 Metropolitan Water District of Southern
California Revenue Refunding Bond,
Series A, 5.00%, 7/1/37 $ 1,927
230 Walnut Valley Unified School District
G.O. Bond, Series 1991 A (MBIA Insured),
Escrowed to Maturity, 6.00%, 8/1/13 261
----------
17,973
----------
CONNECTICUT - 0.3%
460 Connecticut State Transportation
Infrastructure Special TRB, Series 1990 A,
7.125%, 6/1/10 564
----------
FLORIDA - 5.0%
3,670 Broward County G.O. Bond,
10.00%, 7/1/14 5,613
480 Florida State Board of Education Capital
Outlay G.O. Bond, Series 1985,
9.125%, 6/1/14 686
1,750 Orlando City Utilities Commission
Water and Electric Revenue Bond,
Series 1989 D, 6.75%, 10/1/17 2,129
----------
8,428
----------
GEORGIA - 2.2%
2,300 Georgia State Municipal Electric
Authority Power Revenue Bond,
Series 1992 B (FGIC Insured),
6.375%, 1/1/16 2,665
1,120 Gwinnett County School District
G.O. Bond, Series 1993,
4.00%, 2/1/12 1,018
----------
3,683
----------
ILLINOIS - 11.7%
Chicago City G.O. Bond, Series 1993 B
(AMBAC Insured)
1,835 5.125%, 1/1/15 1,871
4,610 5.125%, 1/1/22 4,628
Chicago City O'Hare Airport Revenue
Bond FRN (Royal Bank of Canada LOC)
3,000 Series 1983 C, 3.80%, 4/1/98 3,000
1,100 Series 1983 D, 3.80%, 4/1/98 1,100
1,480 Chicago City Water Revenue Refunding
Bond, Series 1993 (FGIC Insured),
4.125%, 11/1/13 1,363
SCHEDULES OF INVESTMENTS MARCH 31, 1998
TAX-EXEMPT FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
ILLINOIS - 11.7% (CONT'D.)
$1,000 Illinois State Development Financing
Authority PCR Refunding Bond
(MBIA Insured), 5.40%, 3/1/28 $ 1,003
2,000 Illinois State Educational Facilities
Authority Revenue Bond,
Series 1991, Loyola University,
Prerefunded, 7.125%, 7/1/01 2,211
1,150 Illinois State G.O. Refunding Bond,
Series 1994, 4.60%, 12/1/05 1,164
3,400 Illinois State Health Facilities
Authority Revenue Bond, Series A
(MBIA Insured), Loyola University,
5.00%, 7/1/24 3,251
----------
19,591
----------
INDIANA - 6.6%
970 Hamilton County Public Building
Corporation First Mortgage Bond,
7.25%, 8/1/13 1,226
420 Indiana State Municipal Power
Agency Revenue Bond, Series 1993 B
(MBIA Insured), 6.00%, 1/1/12 470
1,290 Indiana State Office Building
Capital Complex Revenue Bond,
Series 1990 B (MBIA Insured),
7.40%, 7/1/15 1,654
3,305 Indiana State Transportation Authority
Airport Finance Lease Revenue Bond,
Series 1995 A, 5.50%, 11/1/12 3,381
Indianapolis City Gas Revenue
Bond, Series 1986 B (FGIC Insured)
400 5.00%, 6/1/06 413
910 4.00%, 6/1/08 873
970 3.50%, 6/1/18 783
2,000 Marion County Convention and
Recreational Facility Authority Excise TRB,
Series A (AMBAC Insured),
7.00%, 6/1/21 2,187
----------
10,987
----------
MASSACHUSETTS - 1.8%
2,100 Massachusetts Bay Transportation
Authority General System Refunding
Bond, Series C, 5.00%, 3/1/24 2,020
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MASSACHUSETTS - 1.8% (CONT'D.)
$1,000 Massachusetts State Health and
Educational Facilities Authority
Revenue Refunding Bond, Series A
(MBIA Insured), 5.00%, 7/1/04 $1,035
----------
3,055
----------
MICHIGAN - 2.3%
4,000 Michigan State Hospital Finance
Authority Revenue Bond, Series A,
Oakwood, 5.00%, 8/15/31 3,789
----------
MONTANA - 2.4%
3,780 Montana State Health Facilities Authority
Revenue Bond, Sisters of Charity
(MBIA Insured), 5.00%, 12/1/13 3,759
190 University of Montana Higher Education
Revenue Bond, Series A (MBIA Insured),
4.50%, 11/15/15 176
----------
3,935
----------
NEVADA - 3.0%
1,000 Carson City School District G.O.
Refunding Bond, Series 1993
(AMBAC Insured), 4.50%, 4/1/11 962
1,150 Clark County Sanitation District
G.O. Bond, Series A (AMBAC Insured),
Prerefunded, 6.60%, 7/1/02 1,268
580 Nevada State G.O. Refunding
Bond, Project 20-23A, Escrowed to
Maturity (Colld. by U.S. Government
Securities), 7.20%, 7/1/06 607
2,000 Washoe County Airport Authority
Revenue Bond, Series A (MBIA Insured),
5.70%, 7/1/26 2,098
----------
4,935
----------
NEW YORK - 18.9%
5,000 New York City Municipal Water
Financing Authority Water and Sewer
System Refunding Revenue Bond,
Series A (MBIA Insured),
5.50%, 6/15/23 5,116
----------
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
TAX-EXEMPT FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
NEW YORK - 18.9% (CONT'D.)
$1,500 New York City Municipal Water
Financing Authority Water and Sewer
System Revenue Bond, Series C
(AMBAC Insured), Prerefunded,
6.20%, 6/15/02 $ 1,639
1,500 New York City Transitional Financing
Authority Revenue Future Tax Secured
Bond, Series B, 4.75%, 11/15/18 1,403
5,500 New York State Power Authority Revenue
Refunding Bond, 5.00%, 2/15/04 5,695
New York State G.O. Refunding Bond
1,000 Series D, 5.00%, 8/1/02 1,025
1,000 Series D, 5.75%, 8/1/07 1,074
3,000 Series G, 5.00%, 8/1/15 2,902
3,000 Series G, 5.00%, 8/1/18 2,881
8,000 New York State Urban Development Corp.
Refunding Bond (Colld. by HUD 236),
5.50%, 7/1/16 7,971
1,720 Triborough Bridge and Tunnel Authority
Revenue Bond, 6.00%, 1/1/12 1,928
----------
31,634
----------
NORTH CAROLINA - 5.4%
1,000 Charlotte-Mecklenberg Hospital Authority
Health Care System Revenue Bond,
Series 1997 A, 5.125%, 1/15/22 979
610 North Carolina State Eastern Municipal
Power Agency Revenue Refunding Bond,
Series 1991 A, Escrowed to Maturity,
6.50%, 1/1/18 728
3,850 North Carolina State Eastern Municipal
Power Agency Revenue Refunding Bond,
Series 1993B, 7.00%, 1/1/08 4,445
3,000 North Carolina State Medical Care
Community Hospital Revenue Bond,
5.00%, 6/1/23 2,900
----------
9,052
----------
OKLAHOMA - 0.9%
1,380 McGee Creek Water Authority Revenue
Bond, Series 1992 (MBIA Insured),
6.00%, 1/1/13 1,547
----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
OREGON - 0.2%
$ 230 Oregon State G.O. Bond, Series 66,
10.50%, 6/1/02 $ 285
----------
PENNSYLVANIA - 3.1%
5,000 Pennsylvania State G.O. Bond, Series 1,
5.00%, 3/1/05 5,186
----------
SOUTH CAROLINA - 4.9%
5,000 Piedmont Municipal Power Agency
Electric Revenue Bond, Series 1996 A,
6.55%, 1/1/16 5,006
3,225 South Carolina State Public Service
Authority Revenue Refunding Bond,
Series A (MBIA Insured), 5.00%, 1/1/19 3,147
----------
8,153
----------
TENNESSEE - 2.1%
2,250 Nashville and Davidson County Health and
Educational Facilities Board Revenue
Refunding Bond, Baptist Hospital, Inc.,
Series A (MBIA Insured),
4.875%, 11/1/28 2,116
1,500 Nashville and Davidson County
Metropolitan Revenue Refunding Bond
(FGIC Insured), 4.75%, 1/1/22 1,405
----------
3,521
----------
TEXAS - 7.6%
600 Austin City Utilities System
Revenue Bond, Series 1986 C,
Prerefunded, 7.30%, 11/15/01 664
1,030 Coastal Industrial Water Authority
Revenue Bond, Escrowed to Maturity
(Colld. by U.S. Government Securities),
6.375%, 12/15/07 1,093
1,030 Colorado River Municipal Water District
Revenue Bond, Prerefunded,
9.50%, 1/1/01 1,171
2,000 Fort Worth Higher Educational Financial
Corp. Revenue Bond, Texas Christian
University Project, 5.00%, 3/15/27 1,926
2,800 Harris County Health Facility Development
Corp. Revenue Refunding FRN,
Series 1994, Methodist Hospital,
3.80%, 4/1/98 2,800
SCHEDULES OF INVESTMENTS MARCH 31, 1998
TAX-EXEMPT FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
TEXAS - 7.6% (CONT'D.)
$5,000 Texas State Transportation Revenue
Bond, Series 1997 A,
4.75%, 8/31/98 $ 5,022
----------
12,676
----------
VIRGINIA - 1.0%
1,750 Fairfax County IDA Health Care
Revenue Refunding Bond, Series A,
5.00%, 8/15/18 1,702
----------
WASHINGTON - 5.6%
1,500 Washington State G.O. Bond, Series A,
Prerefunded, 6.375%, 2/1/02 1,628
690 Washington State G.O. Bond,
Series 1990 A, 6.75%, 2/1/10 818
4,000 Washington State Public Power
Supply System Revenue Refunding Bond,
Series A, Project II,
Prerefunded, 7.625%, 7/1/00 4,384
Washington State Public Power
Supply System Revenue Refunding Bond,
Series A
1,150 5.00%, 7/1/10 1,148
1,500 5.125%, 7/1/18 1,466
----------
9,444
----------
Total Municipal Investments
(cost $162,204) 169,054
----------
See Notes to the Financial Statements.
NUMBER
OF SHARES VALUE
(000s) (000s)
- -----------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 2.1%
868 AIM Tax Free Cash Reserve Fund $ 868
2,655 Provident Municipal Fund 2,655
----------
Total Short-Term Investments
(cost $3,523) 3,523
----------
Total Investments - 103.2%
(cost $165,727) 172,577
Liabilities less Other Assets - (3.2)% (5,357)
----------
NET ASSETS - 100.0% $167,220
=========
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
CALIFORNIA TAX-EXEMPT FUND
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
MUNICIPAL INVESTMENTS - 97.9%
CALIFORNIA - 93.0%
$ 250 Anaheim PFA Tax Allocation Revenue
Bond, Series A, Redevelopment Project
(MBIA Insured), 5.25%, 2/1/18 $ 253
1,000 California State Department of
Transportation Refunding COP, Series A
(MBIA Insured), 5.25%, 3/1/16 1,012
750 California State Department of Water
Resources Revenue Bond, Series O,
CVP Water Systems, 4.75%, 12/1/16 718
California State G.O. Bond
1,360 6.70%, 5/1/00 1,439
150 6.60%, 2/1/10 177
1,000 California State Health Facility Financing
Authority Revenue Bond, Catholic
HealthCare West (MBIA Insured),
5.00%, 7/1/17 982
1,500 California State Health Facility Financing
Authority Revenue Bond, Series B (AMBAC
Insured), UCSF-Stanford Health Care,
5.00%, 11/15/10 1,534
California State Health Facility Financing
Authority Revenue Bond, Sutter Health
(FSA Insured)
500 Series C, 5.00%, 8/15/17 489
1,000 Series A, 5.00%, 8/15/37 960
1,000 California State Public Works Board Lease
Revenue Refunding Bond, Series B,
California Community College (AMBAC
Insured), 5.625%, 3/1/16 1,049
600 California State RAN,
4.50%, 6/30/98 602
100 California Statewide Communities
Development Authority Solid Waste
Facilities Revenue FRN, Chevron USA, Inc.
Project, 3.85%, 4/16/98 100
400 Dry Creek Joint Elementary School
District G.O. Bond, Series A (FSA Insured),
0.00%, 8/1/09 236
200 East Bay Municipal Utility District Water
System Revenue Refunding Bond
(FGIC Insured), 5.00%, 6/1/14 200
150 Escondido Unified High School District
G.O. Bond (MBIA Insured),
5.60%, 11/1/09 163
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CALIFORNIA - 93.0% (CONT'D.)
$ 515 Fillmore Unified School District
G.O. Bond, Series A (FGIC Insured),
0.00%, 7/1/10 $ 287
200 Folsom School Facilities
G.O. Bond, Series D (FGIC Insured),
5.70%, 8/1/13 216
295 Fontana Unified School District
G.O. Bond, Series D (FGIC Insured),
0.00%, 5/1/02 273
375 Foothill/Eastern Transportation Corridor
Agency Toll Road Senior Lien Revenue
Bond, Series A, 0.00%, 1/1/05 270
1,000 Galt Schools Joint Powers Authority
Revenue Refunding Bond, Series A,
High School and Elementary School
Projects (MBIA Insured), 5.75%, 11/1/16 1,076
200 Imperial Irrigation District Refunding
COP, Electricity System Project
(MBIA Insured), 5.20%, 11/1/09 212
200 Lemoore Unified High School District G.O.
Bond (AMBAC Insured), 6.00%, 1/1/12 225
200 Los Angeles City Department of Water and
Power Electricity Plant Revenue Refunding
Bond (FGIC Insured), 4.75%, 8/15/17 190
405 Los Angeles City Department of Water and
Power Waterworks Revenue Refunding
Bond (FGIC Insured), 4.50%, 5/15/14 380
40 Los Angeles City Harbor Department
Revenue Bond, 7.60%, 10/1/18 51
100 Los Angeles Convention and Exhibition
Center Authority Lease Revenue FRN,
Merrill P-Floats PA-88 (MBIA Insured),
3.62%, 4/8/98 100
500 Los Angeles County COP, Correctional
Facility Project (MBIA Insured),
Prerefunded, 6.50%, 9/1/00 539
300 Los Angeles County Metropolitan
Transportation Authority Sales TRB,
Series A (MBIA Insured),
5.125%, 7/1/10 311
1,000 Los Angeles County Metropolitan
Transportation Authority Sales TRB,
Series B (AMBAC Insured),
4.75%, 7/1/18 948
SCHEDULES OF INVESTMENTS MARCH 31, 1998
CALIFORNIA TAX-EXEMPT FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CALIFORNIA - 93.0% (CONT'D.)
$1,000 Los Angeles County Public Works
Financing Authority Revenue Bond,
Series A, Regional Park and Open Spaces
District Project, 5.50%, 10/1/10 $1,062
450 Los Angeles Unified School District
G.O. Bond, Series A (FGIC Insured),
6.00%, 7/1/15 507
200 Los Angeles Wastewater System Revenue
Bond, Series B, Prerefunded,
7.00%, 6/1/00 217
Metropolitan Water District Southern
California Waterworks Revenue Bond
300 Series C, 5.125%, 7/1/12 307
1,000 Series A, 5.00%, 7/1/26 969
200 Metropolitan Water District Southern
California Waterworks Revenue Refunding
Bond, Series B (MBIA Insured),
5.00%, 7/1/14 200
1,500 Modesto Revenue COP, Water System
Improvement Project (AMBAC Insured),
Prerefunded, 6.25%, 10/1/01 1,635
1,420 Modesto Revenue Refunding COP, Water
Utility System Refining Project
(FGIC Insured), 5.125%, 10/1/17 1,414
720 Monrovia Unified School District G.O.
Bond, Series A (MBIA Insured),
0.00%, 8/1/10 400
250 M-S-R Public Power Agency Revenue
Refunding Bond, Series G, San Juan Project
(MBIA Insured), 5.25%, 7/1/11 261
200 Oakland City G.O. Bond, Measure I
(FGIC Insured), 5.60%, 12/15/14 212
2,000 Oakland State Building Authority Lease
Revenue Bond, Series A (AMBAC Insured),
Elihu M. Harris Office Building,
5.00%, 4/1/15 1,984
195 Pomona Unified School District Refunding
Bond, Series A (MBIA Insured),
5.45%, 2/1/06 209
1,500 Poway Unified School District Special Tax
Community Facilities District No. 1 Bond
(MBIA Insured), 4.875%, 10/1/17 1,448
500 Redding Joint Powers Financing Authority
Electrical Systems Revenue Bond, Series A
(MBIA Insured), 5.25%, 6/1/15 509
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CALIFORNIA - 93.0% (CONT'D.)
$ 250 Riverside City Sewer Revenue Refunding
Bond (FGIC Insured), 5.00%, 8/1/11 $ 258
185 Riverside County Community Multifamily
Mortgage Revenue FRN, Series A,
Ambergate Apartments (Union Bank of
California LOC), 3.55%, 4/8/98 185
500 Riverside County Transportation
Community Sales TRB, Series A
(FGIC Insured), 6.00%, 6/1/05 554
200 Roseville Water Utility Revenue COP
(FGIC Insured), 5.20%, 12/1/15 202
1,000 Sacramento Municipal Utility District
Electric Revenue Bond, Series L
(AMBAC Insured), 5.20%, 7/1/16 1,010
1,000 San Bernardino County Transportation
Authority Sales TRB, Series A
(FSA Insured), 4.75%, 3/1/10 1,017
1,000 San Diego County Regional Transportation
Sales TRB, Series A (AMBAC Insured),
6.00%, 4/1/06 1,114
1,000 San Diego County Water Authority
Revenue Refunding COP, Series A,
4.75%, 5/1/14 968
San Diego Public Facilities Financing
Authority Sewer Revenue Bond
(FGIC Insured)
250 Series A, 5.20%, 5/15/11 259
450 Series B, 5.375%, 5/15/17 460
200 San Diego Unified School District COP,
Series A, Capital Projects Phase 8,
5.00%, 7/1/00 204
1,000 San Diego Unified School District TRAN,
Series B, 4.75%, 1/29/99 1,009
Santa Rosa Wastewater Revenue Refunding
Bond, Series A (FGIC Insured)
200 4.75%, 9/1/16 191
35 5.25%, 9/1/16 36
1,000 San Francisco Bay Area Rapid Transit
District Sales Refunding TRB,
5.25%, 7/1/17 1,010
1,000 University of California Revenue Refunding
Bond, Series E (MBIA Insured), Multiple
Purpose Project, 5.125%, 9/1/17 996
230 West Basin Municipal Water District
Revenue Refunding COP, Series 1992A
(AMBAC Insured), 5.25%, 8/1/11 239
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
CALIFORNIA TAX-EXEMPT FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
CALIFORNIA - 93.0% (CONT'D.)
$1,000 West & Central Basin Financing Authority
Revenue Bond (AMBAC Insured),
Prerefunded, 6.125%, 8/1/02 $ 1,097
----------
37,135
----------
PUERTO RICO - 4.9%
1,000 Puerto Rico Commonwealth Infrastructure
Financing Authority Special TRB,
Series A (AMBAC Insured),
5.00%, 7/1/21 976
1,000 Puerto Rico Commonwealth Highway and
Transportation Authority Revenue Bond,
Series A (AMBAC Insured),
5.00%, 7/1/28 970
----------
1,946
----------
Total Municipal Investments
(cost $38,262) 39,081
----------
NUMBER
OF SHARES VALUE
(000s) (000s)
- -----------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 5.2%
102 Federated California Municipal Cash
Trust Money Market Fund $ 102
1,993 Smith Barney Municipal Bond Fund
California Portfolio 1,993
----------
Total Short-Term Investments
(cost $2,095) 2,095
----------
Total Investments - 103.1%
(cost $40,357) 41,176
Liabilities less Other Assets - (3.1)% (1,233)
----------
NET ASSETS - 100.0% $39,943
=========
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERNATIONAL FIXED INCOME FUND
PRINCIPAL AMOUNT/
LOCAL CURRENCY VALUE
(000s) (000s)
- -----------------------------------------------------------------------
DEBT OBLIGATIONS - 97.0%
AUSTRALIAN DOLLAR - 2.8%
490 Commonwealth of Australia,
10.00%, 10/15/02 $ 385
----------
BELGIAN FRANC - 1.8%
8,175 Kingdom of Belgium,
7.50%, 7/29/08 255
----------
BRITISH POUND STERLING - 20.0%
125 Abbey National PLC,
6.00%, 8/10/99 206
350 BAA PLC,
7.875%, 2/10/07 628
375 Lloyds Bank PLC,
7.375%, 3/11/04 650
675 Treasury of Great Britain,
7.50%, 12/7/06 1,247
----------
2,731
----------
CANADIAN DOLLAR - 5.0%
500 Government of Canada,
7.50%, 12/1/03 390
375 Province of Ontario,
7.25%, 9/27/05 289
----------
679
----------
DANISH KRONE - 4.7%
3,850 Kingdom of Denmark,
8.00%, 3/15/06 650
----------
FRENCH FRANC - 6.0%
2,300 Electric de France,
8.60%, 4/9/04 442
2,250 Government of France,
5.50%, 4/25/07 378
----------
820
----------
GERMAN MARK - 15.2%
Federal Republic of Germany
1,100 7.50%, 11/11/04 685
1,175 6.25%, 1/4/24 704
500 LKB Global Bond,
6.00%, 5/10/99 276
See Notes to the Financial Statements.
PRINCIPAL AMOUNT/
LOCAL CURRENCY VALUE
(000s) (000s)
- -----------------------------------------------------------------------
GERMAN MARK - 15.2% (CONT'D.)
330 Republic of Austria,
8.00%, 1/30/02 $ 200
380 Republic of Finland,
5.50%, 2/9/01 212
----------
2,077
----------
ITALIAN LIRA - 11.9%
2,500,000 Republic of Italy,
8.50%, 4/1/04 1,622
----------
JAPANESE YEN - 13.7%
55,000 Asian Development Bank,
5.00%, 2/5/03 483
15,000 European Investment Bank,
5.875%, 11/26/99 122
80,000 International Bank for
Reconstruction and Development,
4.50%, 3/20/03 693
64,000 International Finance Corp.,
4.375%, 6/11/98 484
10,000 Japanese Development Bank,
6.50%, 9/20/01 89
----------
1,871
----------
NETHERLANDS GUILDER - 5.7%
Treasury of the Netherlands
500 8.50%, 3/15/01 267
1,000 5.75%, 2/15/07 509
----------
776
----------
SPANISH PESETA - 6.8%
Government of Spain
51,000 11.30%, 1/15/02 400
65,000 10.00%, 2/28/05 536
----------
936
----------
SWEDISH KRONA - 1.7%
1,500 Kingdom of Sweden, 10.25%, 5/5/03 230
----------
UNITED STATES DOLLAR - 1.7%
200 U.S. Treasury Bond, 7.125%, 2/23/15 228
----------
Total Debt Obligations
(cost $13,646) 13,260
----------
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERNATIONAL FIXED INCOME FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- -----------------------------------------------------------------------
SHORT-TERM INVESTMENT - 0.0%
UNITED STATES DOLLAR
$1 Banque Paribas, Grand Cayman,
6.125%, 4/1/98
(cost $1) $ 1
----------
Total Investments - 97.0%
(cost $13,647) 13,261
Other Assets less Liabilities - 3.0% 414
----------
NET ASSETS - 100.0% $13,675
==========
See Notes to the Financial Statements.
STATEMENTS OF ASSETS AND LIABILITIES MARCH 31, 1998
<TABLE>
<CAPTION>
EQUITY FUNDS
INT'L. INT'L.
INCOME STOCK GROWTH SELECT SMALL GROWTH SELECT TECH-
AMOUNTS IN THOUSANDS, EQUITY INDEX EQUITY EQUITY CAP EQUITY EQUITY NOLOGY
EXCEPT PER SHARE DATA FUND FUND FUND FUND FUND FUND FUND FUND
- ----------------------------------------------- ------- ------- ------- -------- ------- ------- -------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost $99,079, $76,828,
$329,877, $102,133, $275,713, $141,493,
$88,640 and $85,558, respectively) $116,754 $93,698 $478,477 $125,855 $371,940 $167,609 $115,713 $104,882
Cash and foreign currencies - 1 2 6 - 14,377 - 1
Income receivable 626 93 445 134 176 413 225 17
Receivable for foreign tax withheld - - - - - 311 41 -
Receivable for securities sold - 22 2,522 - - 4,371 4,125 -
Receivable for fund shares sold 233 272 297 557 137 86 62 68
Receivable from Adviser 2 4 6 3 14 1 1 -
Deferred organization costs, net of
accumulated amortization 9 - 12 7 10 11 10 -
Prepaid and other assets 11 27 35 11 69 14 1,928 7
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 117,635 94,117 481,796 126,573 372,346 187,193 122,105 104,975
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Due to Custodian - - - - - - 3,750 -
Payable for securities purchased - 171 1,714 - - 5,706 686 529
Payable for fund shares redeemed 40 15 188 - 3,663 74 19 22
Accrued investment advisory fees 16 6 67 17 52 30 19 17
Accrued transfer agent fees 2 2 8 2 6 3 2 2
Accrued administration fees 1 - 4 1 3 2 1 1
Accrued custody and accounting fees 1 3 2 1 4 4 2 -
Accrued registration fees and other liabilities 13 13 31 16 39 3,164 8 15
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 73 210 2,014 37 3,767 8,983 4,487 586
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $117,562 $93,907 $479,782 $126,536 $368,579 $178,210 $117,618 $104,389
===================================================================================================================================
ANALYSIS OF NET ASSETS:
Capital stock $94,879 $75,672 $316,390 $94,027 $263,853 $151,559 $96,252 $82,017
Accumulated undistributed (distributions in
excess of) net investment income 152 22 92 93 245 (1,648) (840) -
Accumulated undistributed net realized gains
(losses) on investments, options, futures
and foreign currency transactions 4,856 1,271 14,682 8,694 8,159 1,590 (4,900) 3,048
Net unrealized appreciation on investments,
options and futures contracts 17,675 16,942 148,618 23,722 96,322 26,116 27,073 19,324
Net unrealized gains on translation of assets
and liabilities denominated in foreign
currencies - - - - - 593 33 -
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $117,562 $93,907 $479,782 $126,536 $368,579 $178,210 $117,618 $104,389
===================================================================================================================================
SHARES OUTSTANDING ($.0001 PAR VALUE,
UNLIMITED AUTHORIZATION) 8,516 6,248 25,766 6,605 21,996 15,286 9,394 6,101
NET ASSET VALUE, REDEMPTION AND
OFFERING PRICE PER SHARE $13.81 $15.03 $18.62 $19.16 $16.76 $11.66 $12.52 $17.11
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
STATEMENTS OF OPERATIONS YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
EQUITY FUNDS
INT'L. INT'L.
INCOME STOCK GROWTH SELECT SMALL GROWTH SELECT TECH-
EQUITY INDEX EQUITY EQUITY CAP EQUITY EQUITY NOLOGY
AMOUNTS IN THOUSANDS FUND FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------- ------- ------- ------- ------- ------- ------- -------- -------
<C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,016 $ 95 $ 697 $ 101 $ 703 $ 540 $ 378 $ 104
Dividend income 2,344 927 3,950 985 2,995 3,040 1,375 118
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 4,360 1,022<F2> 4,647<F3> 1,086 3,698 3,580<F4> 1,753<F5> 222
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 963 344 3,929 1,133 3,473 2,107 1,366 906
Administration fees 144 86 589 142 434 263 171 113
Transfer agent fees 96 57 393 94 290 176 114 75
Custody and accounting fees 56 133 116 60 137 229 167 55
Registration fees 18 26 32 22 46 18 11 21
Professional fees 17 18 20 17 19 19 18 17
Amortization of organization costs 9 - 12 7 9 12 10 -
Trustees' fees and expenses 3 3 7 3 5 4 4 3
Other 9 13 27 9 20 13 10 14
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 1,315 680 5,125 1,487 4,433 2,841 1,871 1,204
Less voluntary waivers of:
Investment advisory fees (145) (115) (589) (331) (1,013) (351) (227) (151)
Administration fees (87) (56) (353) (88) (276) (148) (97) (72)
Less: Reimbursement of expenses
by Adviser (120) (194) (254) (124) (249) (147) (124) (37)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Expenses 963 315 3,929 944 2,895 2,195 1,423 944
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 3,397 707 718 142 803 1,385 330 (722)
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on:
Investments 9,548 2,485 45,623 18,422 14,126 8,002 4,417 7,339
Options - - 1,992 - - - - -
Futures contracts - 346 25 - 2,116 - - -
Foreign currency transactions - - - - - (11) (30) -
Net change in unrealized appreciation
on investments and futures contracts 13,166 18,305 102,175 17,761 77,478 22,932 18,625 20,811
Net change in unrealized gains on
translation of assets and liabilities
denominated in foreign currencies - - - - - 614 44 -
- -----------------------------------------------------------------------------------------------------------------------------------
Net Gains on Investments 22,714 21,136 149,815 36,183 93,720 31,537 23,056 28,150
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $26,111 $21,843 $150,533 $36,325 $94,523 $32,922 $23,386 $27,428
===================================================================================================================================
<F2> Net of $1 in non-reclaimable foreign withholding taxes.
<F3> Net of $32 in non-reclaimable foreign withholding taxes.
<F4> Net of $317 in non-reclaimable foreign withholding taxes.
<F5> Net of $142 in non-reclaimable foreign withholding taxes.
See Notes to the Financial Statements.
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY FUNDS
INCOME EQUITY STOCK INDEX GROWTH EQUITY SELECT EQUITY
FUND FUND FUND FUND
--------------------- ------------------- -------------------- ------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
AMOUNTS IN THOUSANDS 1998 1997 1998 1997<F2> 1998 1997 1998 1997
- --------------------------------------------- --------------------- ------------------- -------------------- ------------------
<C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 3,397 $ 2,436 $ 707 $ 167 $ 718 $ 1,504 $ 142 $ 104
Net realized gains (losses) on
investments, options, futures contracts
and foreign currency transactions 9,548 6,869 2,831 1,051 47,640 8,004 18,422 2,763
Net change in unrealized appreciation
(depreciation) on investments,
futures contracts and foreign
currency transactions 13,166 (774) 18,305 (1,363) 102,175 18,160 17,761 2,605
Net change in unrealized gains (losses)
on translation of assets and liabilities
denominated in foreign currencies _ _ _ _ _ _ _ _
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 26,111 8,531 21,843 (145) 150,533 27,668 36,325 5,472
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 30,293 25,427 71,265 41,842 85,630 90,928 48,932 36,755
Shares from reinvestment of dividends 7,604 5,302 2,579 85 35,735 13,333 9,808 1,871
Shares redeemed (12,408) (10,238) (34,323) (5,776) (55,984) (38,483) (20,167) (12,016)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Capital Share
Transactions 25,489 20,491 39,521 36,151 65,381 65,778 38,573 26,610
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS PAID:
From net investment income (3,307) (2,419) (697) (155) (670) (1,525) (123) (62)
From net realized gains (7,833) (5,420) (2,600) (11) (38,067) (13,887) (11,916) (2,185)
In excess of net investment income _ _ _ _ _ _ _ _
In excess of net realized gains _ _ _ _ _ _ _ _
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (11,140) (7,839) (3,297) (166) (38,737) (15,412) (12,039) (2,247)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 40,460 21,183 58,067 35,840 177,177 78,034 62,859 29,835
NET ASSETS:
Beginning of year 77,102 55,919 35,840 _ 302,605 224,571 63,677 33,842
- -----------------------------------------------------------------------------------------------------------------------------------
End of year $117,562 $77,102 $93,907 $35,840 $479,782 $302,605 $126,536 $63,677
===================================================================================================================================
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS
IN EXCESS OF) NET INVESTMENT
INCOME $152 $57 $22 $12 $92 $37 $93 $70
===================================================================================================================================
<F2> For the period October 7, 1996 (commencement of operations) through March 31, 1997.
See Notes to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY FUNDS
INTERNATIONAL INTERNATIONAL
SMALL CAP GROWTH EQUITY SELECT EQUITY TECHNOLOGY
FUND FUND FUND FUND
--------------------- ------------------- -------------------- ------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
AMOUNTS IN THOUSANDS 1998 1997 1998 1997 1998 1997 1998 1997
- --------------------------------------------- --------------------- ------------------- -------------------- ------------------
<C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 803 $ 953 $ 1,385 $ 1,425 $ 330 $ 528 $ (722) $ (178)
Net realized gains (losses) on
investments, options, futures contracts
and foreign currency transactions 16,242 12,542 7,991 5,757 4,387 (5,977) 7,339 1,762
Net change in unrealized appreciation
(depreciation) on investments,
futures contracts and foreign
currency transactions 77,478 6,088 22,932 (2,628) 18,625 3,053 20,811 (1,487)
Net change in unrealized gains (losses)
on translation of assets and liabilities
denominated in foreign currencies _ _ 614 (19) 44 (1) _ _
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 94,523 19,583 32,922 4,535 23,386 (2,397) 27,428 97
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 130,734 54,431 24,509 32,031 16,418 33,624 48,180 46,004
Shares from reinvestment of dividends 13,475 8,775 4,704 6,380 402 833 4,409 338
Shares redeemed (52,037) (30,899) (42,631) (50,531) (29,037) (24,242) (14,589) (2,325)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Capital Share
Transactions 92,172 32,307 (13,418) (12,120) (12,217) 10,215 38,000 44,017
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS PAID:
From net investment income (825) (833) (956) (1,123) (1,655) (302) _ _
From net realized gains (14,404) (9,182) (4,582) (3,947) _ _ (4,793) (360)
In excess of net investment income _ _ (1,648) (494) (840) (467) _ _
In excess of net realized gains _ _ _ (2,196) _ (824) _ _
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (15,229) (10,015) (7,186) (7,760) (2,495) (1,593) (4,793) (360)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 171,466 41,875 12,318 (15,345) 8,674 6,225 60,635 43,754
NET ASSETS:
Beginning of year 197,113 155,238 165,892 181,237 108,944 102,719 43,754 _
- -----------------------------------------------------------------------------------------------------------------------------------
End of year $368,579 $197,113 $178,210 $165,892 $117,618 $108,944 $104,389 $43,754
===================================================================================================================================
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS
IN EXCESS OF) NET INVESTMENT
INCOME $245 $263 $(1,648) $(432) $(840) $(571) $- $-
===================================================================================================================================
<F2> For the period October 7, 1996 (commencement of operations) through March 31, 1997.
See Notes to the Financial Statements.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY FUNDS
INCOME EQUITY STOCK INDEX
FUND FUND
----------------------------------------------- ---------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998 1997 1996 1995 1998 1997<F2>
- -------------------------------------------------- ----------------------------------------------- ---------------------
<C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF YEAR $11.81 $11.59 $ 9.95 $10.00 $10.74 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.45 0.44 0.34 0.29 0.15 0.08
Net realized and unrealized gains (losses)
on investments, options and futures contracts 3.02 1.19 1.66 (0.08) 4.80 0.74
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income from
Investment Operations 3.47 1.63 2.00 0.21 4.95 0.82
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.44) (0.44) (0.36) (0.26) (0.15) (0.07)
From net realized gains (1.03) (0.97) _ _ (0.51) (0.01)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (1.47) (1.41) (0.36) (0.26) (0.66) (0.08)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $13.81 $11.81 $11.59 $9.95 $15.03 $10.74
===================================================================================================================================
TOTAL RETURN<F4> 31.00% 14.42% 20.41% 2.21% 47.11% 8.21%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of year $117,562 $77,102 $55,919 $38,954 $93,907 $35,840
Ratio to average net assets of<F5>:
Expenses, net of waivers and
reimbursements 1.00% 1.00% 1.00% 1.00% 0.55% 0.55%
Expenses, before waivers and
reimbursements 1.37% 1.42% 1.48% 1.55% 1.18% 2.23%
Net investment income, net of
waivers and reimbursements 3.53% 3.71% 3.17% 3.08% 1.23% 1.92%
Net investment income (loss), before
waivers and reimbursements 3.16% 3.29% 2.69% 2.53% 0.60% 0.24%
Portfolio Turnover Rate 81.24% 72.04% 67.32% 45.68% 32.06% 64.94%
- -----------------------------------------------------------------------------------------------------------------------------------
<F2> For the period October 7, 1996 (commencement of operations) through March 31, 1997.
<F3> For the period April 6, 1994 (commencement of operations) through March 31, 1995.
<F4> Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, and a
complete redemption of the investment at net asset value at the end of the period. Total return is not annualized for periods
less than one year.
<F5> Annualized for periods less than a full year.
NA - Disclosure not applicable to these periods.
See Notes to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY FUNDS
GROWTH EQUITY SELECT EQUITY
FUND FUND
--------------------------------------- ---------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998 1997 1996 1995 1998 1997 1996 1995<F3>
- -------------------------------------------------- --------------------------------------- ---------------------------------------
<C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $13.93 $13.15 $10.61 $10.00 $14.55 $13.12 $10.77 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.03 0.08 0.08 0.08 0.02 0.02 0.02 0.06
Net realized and unrealized gains (losses)
on investments, options and futures contracts 6.36 1.49 2.59 0.60 6.81 2.05 2.73 0.75
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income from
Investment Operations 6.39 1.57 2.67 0.68 6.83 2.07 2.75 0.81
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.03) (0.08) (0.08) (0.07) (0.02) (0.02) (0.03) (0.04)
From net realized gains (1.67) (0.71) (0.05) _ (2.20) (0.62) (0.37) _
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (1.70) (0.79) (0.13) (0.07) (2.22) (0.64) (0.40) (0.04)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $18.62 $13.93 $13.15 $10.61 $19.16 $14.55 $13.12 $10.77
===================================================================================================================================
TOTAL RETURN<F4> 48.06% 11.72% 25.13% 6.90% 49.71% 15.64% 25.70% 8.18%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of year $479,782 $302,605 $224,571 $113,185 $126,536 $63,677 $33,842 $15,123
Ratio to average net assets of<F5>:
Expenses, net of waivers and
reimbursements 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses, before waivers and
reimbursements 1.30% 1.33% 1.36% 1.40% 1.58% 1.67% 1.91% 2.61%
Net investment income, net of
waivers and reimbursements 0.18% 0.56% 0.70% 0.86% 0.15% 0.21% 0.22% 0.82%
Net investment income (loss), before
waivers and reimbursements (0.12)% 0.23% 0.34% 0.46% (0.43)% (0.46)% (0.69)% (0.79)%
Portfolio Turnover Rate 73.85% 67.34% 73.20% 82.90% 148.55% 72.68% 137.99% 48.88%
- ------------------------------------------------------------------------------------------------------------------------------------
<F2> For the period October 7, 1996 (commencement of operations) through March 31, 1997.
<F3> For the period April 6, 1994 (commencement of operations) through March 31, 1995.
<F4> Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, and a
complete redemption of the investment at net asset value at the end of the period. Total return is not annualized for periods
less than one year.
<F5> Annualized for periods less than a full year.
NA - Disclosure not applicable to these periods.
See Notes to the Financial Statements.
</TABLE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
EQUITY FUNDS
INTERNATIONAL
SMALL CAP GROWTH EQUITY
FUND FUND
--------------------------------------- --------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998 1997 1996 1995 1998 1997 1996 1995
- --------------------------------------------- --------------------------------------- --------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF YEAR $12.31 $11.58 $ 9.98 $10.00 $10.05 $10.23 $ 9.61 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.03 0.07 0.05 0.11 0.09 0.09 0.17 0.04
Net realized and unrealized gains (losses)
on investments, futures contracts
and foreign currency transactions 5.14 1.37 2.29 (0.05) 1.98 0.18 0.65 (0.31)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) from
Investment Operations 5.17 1.44 2.34 0.06 2.07 0.27 0.82 (0.27)
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.04) (0.06) (0.07) (0.08) (0.07) (0.09) (0.11) (0.03)
From net realized gains (0.68) (0.65) (0.67) _ (0.29) (0.23) _ _
In excess of net investment income _ _ _ _ (0.10) _ (0.09) _
In excess of net realized gains _ _ _ _ _ (0.13) _ (0.09)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (0.72) (0.71) (0.74) (0.08) (0.46) (0.45) (0.20) (0.12)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $16.76 $12.31 $11.58 $9.98 $11.66 $10.05 $10.23 $9.61
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN<F3> 42.71% 12.48% 24.09% 0.57% 21.34% 2.61% 8.61% (2.65)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of year $368,579 $197,113 $155,238 $76,627 $178,210 $165,892 $181,237 $114,673
Ratio to average net assets of<F4>:
Expenses, net of waivers and
reimbursements 1.00% 1.00% 1.00% 1.00% 1.25% 1.25% 1.25% 1.25%
Expenses, before waivers and
reimbursements 1.53% 1.54% 1.61% 1.76% 1.62% 1.63% 1.65% 1.71%
Net investment income (loss), net of
waivers and reimbursements 0.28% 0.54% 0.65% 1.36% 0.79% 0.78% 0.92% 0.47%
Net investment income (loss), before
waivers and reimbursements (0.25)% 0.00% 0.04% 0.60% 0.42% 0.40% 0.52% 0.01%
Portfolio Turnover Rate 18.59% 18.92% 46.59% 82.46% 145.02% 190.94% 216.86% 158.31%
- -----------------------------------------------------------------------------------------------------------------------------------
<F2> For the period April 5, 1994 (commencement of operations) through March 31,
1995.
<F3> Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete
redemption of the investment at net asset value at the end of the period.
Total return is not annualized for periods less than one year.
<F4> Annualized for periods less than a full year.
NA - Disclosure not applicable to these periods.
See Note to the Financial Statements.
</TABLE>
NORTHERN FUNDS Annual Report
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
EQUITY FUNDS
INTERNATIONAL
SELECT EQUITY TECHNOLOGY
FUND FUND
--------------------------------------------------- -----------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1998 1997 1996 1995<F2> 1998 1997
- ------------------------------------------- --------------------------------------------------- -----------------------
<C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF YEAR $10.37 $10.73 $ 9.78 $10.00 $11.95 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.22 0.04 0.01 0.04 _ _
Net realized and unrealized gains (losses)
on investments, futures contracts
and foreign currency transactions 2.19 (0.25) 0.99 (0.23) 6.06 2.10
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) from
Investment Operations 2.41 (0.21) 1.00 (0.19) 6.06 2.10
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.16) (0.03) (0.02) (0.03) _ _
From net realized gains _ _ _ _ (0.90) (0.15)
In excess of net investment income (0.10) (0.04) (0.03) _ _ _
In excess of net realized gains _ (0.08) _ _ _ _
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid (0.26) (0.15) (0.05) (0.03) (0.90) (0.15)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $12.52 $10.37 $10.73 $9.78 $17.11 $11.95
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN<F3> 23.74% (1.95)% 10.20% (1.95)% 52.62% 20.82%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, in thousands, end of year $117,618 $108,944 $102,719 $71,958 $104,389 $43,754
Ratio to average net assets of<F4>:
Expenses, net of waivers and
reimbursements 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Expenses, before waivers and
reimbursements 1.64% 1.66% 1.71% 1.75% 1.59% 2.02%
Net investment income (loss), net of
waivers and reimbursements 0.29% 0.47% 0.12% 0.47% (0.96)% (0.75)%
Net investment income (loss), before
waivers and reimbursements (0.10)% 0.06% (0.34)% (0.03)% (1.30)% (1.52)%
Portfolio Turnover Rate 98.22% 97.60% 176.71% 97.69% 74.75% 67.89%
<F2> For the period April 5, 1994 (commencement of operations) through March 31, 1995.
<F3> Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, and a
complete redemption of the investment at net asset value at the end of the period. Total return is not annualized for periods
less than one year.
<F4> Annualized for periods less than a full year.
NA - Disclosure not applicable to these periods.
See Notes to the Financial Statements.
</TABLE>
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INCOME EQUITY FUND
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
CONVERTIBLE PREFERRED
STOCKS - 46.6%
BANKING - 1.5%
60,000 National Australia Bank $1,736
----------
COMMUNICATIONS - 2.0%
36,000 Cincinnati Bell, Inc. DECS 2,402
----------
FINANCIAL SERVICES - 5.4%
32,000 Conseco Finance Trust IV, Series F 1,930
7,000 Finova Finance Trust 549
35,000 Salomon Smith Barney Holdings, Inc. 1,571
66,000 WBK Trust STRYPES 2,248
----------
6,298
----------
FOOD AND BEVERAGES - 1.8%
33,000 IBC/Ralston Purina SAILS 2,083
----------
HEALTH SERVICES - 0.9%
84,000 MedPartners, Inc. 1,097
----------
INSURANCE SERVICES - 1.9%
8,000 Protective Life Corp. Capital Trust II 494
23,100 St. Paul Capital LLC 1,773
----------
2,267
----------
MACHINERY - 0.9%
40,000 Ingersoll-Rand PRIDES 1,007
----------
MANUFACTURING - 3.4%
30,000 Fleetwood Capital Trust<F2> 1,736
40,000 Newell Financial<F2> 2,275
----------
4,011
----------
MEDIA - 7.0%
68,000 Reader's Digest Association TRACES 1,806
19,850 Sinclair Broadcast Group, Inc. 1,367
34,000 TCI Communications, Inc. 2,448
40,000 Time Warner/Houston Industries ACES 2,592
----------
8,213
----------
PAPER PRODUCTS - 0.4%
8,700 International Paper Co. 440
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
PETROLEUM PRODUCTS - 1.2%
26,000 Unocal Capital Trust $ 1,440
----------
PROFESSIONAL SERVICES - 3.9%
40,000 Cendant Corp. PRIDES 2,085
60,000 Snyder Communications, Inc. STRYPES 2,543
----------
4,628
----------
REAL ESTATE - 5.0%
70,000 Equity Residential Properties Trust, Series G 1,794
34,600 Rouse Co. 1,669
36,500 Security Capital Industrial Trust, Series B 1,186
44,000 U.S. Restaurant Properties, Inc., Series A 1,216
----------
5,865
----------
RESTAURANTS - 1.8%
40,000 Wendy's Financing I 2,103
----------
RETAIL - 3.7%
23,600 IKON Office Solutions, Inc. 1,832
40,000 Kmart Financing I 2,510
----------
4,342
----------
TRANSPORTATION SERVICES - 1.3%
60,000 Republic Industries, Inc. TRACES 1,477
----------
UTILITIES - 4.5%
25,000 AES Trust II<F2> 1,444
9,800 MCN, Inc. FELINE STRYPES PRIDES 563
38,200 MCN, Inc. STRYPES 1,246
28,000 US WEST, Inc. 2,002
----------
5,255
----------
Total Convertible Preferred Stocks
(cost $47,078) 54,664
----------
PRINCIPAL
AMOUNT
(000S)
- ---------
CONVERTIBLE BONDS - 33.3%
COMMUNICATIONS - 2.7%
$1,000 Bell Atlantic Financial Services, Inc.,
5.75%, 4/1/03<F2> 1,000
2,400 TCI Communications, Inc.,
4.50%, 2/15/06 2,188
----------
3,188
----------
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INCOME EQUITY FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- ----------------------------------------------------------------------
COMPUTERS AND OFFICE MACHINES - 1.8%
$1,250 Learning Co. (The), Inc.,
5.50%, 11/1/00<F2> $1,163
450 May & Speh, Inc.,
5.25%, 4/1/03 492
600 Read-Rite Corp.,
6.50%, 9/1/04 486
----------
2,141
----------
ELECTRONICS AND OTHER ELECTRICAL
EQUIPMENT - 7.3%
1,300 Checkpoint Systems, Inc.,
5.25%, 11/1/05 <F2> 1,615
2,000 Micron Technology, Inc.,
7.00%, 7/1/04 1,920
1,900 Park Electrochemical Corp.,
5.50%, 3/1/06 1,729
800 SCI Systems, Inc.,
5.00%, 5/1/06 <F2> 1,286
800 Thermo Electron Corp.,
4.25%, 1/1/03 924
1,170 VLSI Technology, Inc.,
8.25%, 10/1/05 1,147
----------
8,621
----------
HEALTH SERVICES - 8.4%
2,000 Alpharma, Inc.,
5.75%, 4/1/05 <F2> 2,016
2,000 ALZA Corp.,
5.00%, 5/1/06 2,560
1,600 Chiron Corp.,
1.90%, 11/17/00 <F2> 1,516
1,500 Novacare, Inc.,
5.50%, 1/15/00 1,448
2,000 Omnicare, Inc.,
5.00%, 12/1/07 <F2> 2,370
----------
9,910
----------
INDUSTRIAL PARTS AND EQUIPMENT - 0.9%
1,200 ThermoTrex Corp.,
3.25%, 11/1/07 1,104
----------
MANUFACTURING - 1.5%
1,600 Thermo Instrument Systems, Inc.,
4.00%, 1/15/05 1,744
----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT
(000s)
- ---------
OIL AND GAS - 1.1%
$1,300 Loews Corp./Diamond Offshore
Drilling, Inc.,
3.125%, 9/15/07 $ 1,272
----------
PRINTING AND PUBLISHING - 2.0%
2,000 Mail-Well, Inc.,
5.00%, 11/1/02 2,400
----------
RETAIL - 4.1%
1,475 Home Depot (The), Inc.,
3.25%, 10/1/01 2,185
750 Pier 1 Imports, Inc.,
5.75%, 10/1/03 1,716
1,050 Sports Authority (The), Inc.,
5.25%, 9/15/01 936
----------
4,837
----------
STEEL PRODUCTS - 0.7%
800 Inco Ltd.,
7.75%, 3/15/16 806
----------
TRANSPORTATION PARTS AND
EQUIPMENT - 0.9%
750 Magna International, Inc.,
5.00%, 10/15/02 1,073
----------
TRAVEL AND LEISURE - 1.9%
2,000 Hilton Hotels Corp.,
5.00%, 5/15/06 2,200
----------
Total Convertible Bonds
(cost $35,425) 39,296
----------
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMMON STOCKS - 15.9%
BANKING - 1.6%
30,343 Banc One Corp. 1,919
----------
BUILDING MATERIALS - 0.9%
17,900 Masco Corp. 1,065
----------
COMMUNICATIONS - 1.3%
24,000 AT&T Corp. 1,575
----------
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INCOME EQUITY FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMPUTERS AND OFFICE MACHINES - 2.6%
9,000 Digital Equipment Corp.<F1> $ 471
21,000 Hewlett-Packard Co. 1,331
54,000 Learning Co. (The), Inc. 1,249
----------
3,051
----------
ELECTRONICS AND OTHER ELECTRICAL
EQUIPMENT - 1.0%
30,000 Checkpoint Systems, Inc. 638
20,000 Park Electrochemical Corp. 516
----------
1,154
----------
HEALTH SERVICES - 0.6%
34,000 Chiron Corp. 712
----------
PHARMACEUTICALS - 1.6%
6,500 Bristol-Myers Squibb Co. 678
19,000 Elan Corp. PLC ADR <F1> 1,228
----------
1,906
----------
PROFESSIONAL SERVICES - 1.5%
8,500 Automatic Data Processing, Inc. 579
14,000 Cendant Corp. 555
14,000 Omnicom Group, Inc. 659
----------
1,793
----------
RECREATION AND LEISURE SERVICES - 1.4%
15,000 Disney (The Walt) Co. 1,601
----------
RETAIL - 2.6%
14,500 Costco Cos., Inc. <F1> 774
16,000 Rite Aid Corp. 548
37,000 TJX Cos., Inc. 1,674
----------
2,996
----------
TRANSPORTATION PARTS AND
EQUIPMENT - 0.8%
14,500 Ford Motor Co. 940
----------
Total Common Stocks
(cost $12,494) 18,712
----------
See Notes to the Financial Statements.
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- ----------------------------------------------------------------------
SHORT-TERM INVESTMENT - 3.5%
$4,082 Banque Paribas, Grand Cayman,
6.125%, 4/1/98
(cost $4,082) $ 4,082
----------
Total Investments - 99.3%
(cost $99,079) 116,754
Other Assets less Liabilities - 0.7% 808
----------
NET ASSETS - 100.0% $117,562
==========
<F2> Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At March 31,
1998, the value of these securities amounted to approximately $16,421,000
or 14.0% of net assets.
See Notes to the Financial Statements.
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
STOCK INDEX FUND
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMMON STOCKS - 94.9%
AGRICULTURE - 0.1%
700 Pioneer Hi-Bred International, Inc. $ 68
----------
APPAREL - 0.1%
700 Liz Claiborne, Inc. 35
1,300 VF Corp. 68
----------
103
----------
BANKING - 8.1%
1,100 Ahmanson (H.F.) & Co. 85
6,630 Banc One Corp. 419
3,900 Bank of New York Co., Inc. 245
7,200 BankAmerica Corp. 595
1,500 BankBoston Corp. 165
1,000 Bankers Trust New York Corp. 120
1,500 BB&T Corp. 102
4,400 Chase Manhattan Corp. 593
4,700 Citicorp 667
1,100 Comerica, Inc. 116
2,000 CoreStates Financial Corp. 180
1,650 Fifth Third Bancorp 141
3,000 First Chicago NBD Corp. 264
6,700 First Union Corp. 380
600 Golden West Financial Corp. 57
2,000 Huntington Bancshares, Inc. 73
4,500 KeyCorp 170
2,600 Mellon Bank Corp. 165
1,400 Mercantile Bancorp., Inc. 77
1,800 Morgan (J. P.) & Co., Inc. 242
3,300 National City Corp. 242
9,740 NationsBank Corp. 710
7,800 Norwest Corp. 324
3,100 PNC Bank Corp. 186
600 Republic New York Corp. 80
1,700 State Street Corp. 116
1,800 Summit Bancorp 90
2,200 SunTrust Banks, Inc. 166
1,800 Synovus Financial Corp. 67
2,555 U.S. Bancorp 319
2,100 Wachovia Corp. 178
900 Wells Fargo & Co. 298
----------
7,632
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
BITUMINOUS COAL AND LIGNITE SURFACE
MINING - 0.1%
2,874 Houston Industries, Inc. $ 83
100 NACCO Industries, Inc. 13
----------
96
----------
BROKERAGE AND FINANCIAL SERVICES - 1.9%
4,800 American Express Co. 441
2,800 Fleet Financial Group, Inc. 238
1,400 Green Tree Financial Corp. 40
1,100 Lehman Bros. Holdings, Inc. 82
3,400 Merrill Lynch & Co., Inc. 282
6,150 Morgan Stanley, Dean Witter & Co. 448
2,700 Schwab (Charles) Corp. 103
2,610 Washington Mutual, Inc. 187
----------
1,821
----------
CHEMICALS AND ALLIED PRODUCTS - 10.6%
7,900 Abbott Laboratories 595
1,200 Air Products and Chemicals, Inc. 99
700 Allergan, Inc. 27
6,700 American Home Products Corp. 639
2,700 Amgen, Inc. <F1> 164
2,900 Baxter International, Inc. 160
10,300 Bristol-Myers Squibb Co. 1,074
1,100 Clorox (The) Co. 94
3,100 Colgate-Palmolive Co. 269
2,300 Dow Chemical Co. 224
11,700 du Pont (E.I.) de Nemours & Co. 796
800 Eastman Chemical Co. 54
1,300 Ecolab, Inc. 38
400 FMC Corp. <F1> 31
700 Goodrich (B.F.) Co. 36
800 Grace (W.R.) & Co. 67
600 Great Lakes Chemical Corp. 32
1,000 Hercules, Inc. 49
1,100 International Flavors & Fragrances, Inc. 52
11,500 Lilly (Eli) & Co. 686
12,400 Merck & Co., Inc. 1,592
1,300 Morton International, Inc. 43
700 Nalco Chemical Co. 28
13,400 Pfizer, Inc. 1,336
5,200 Pharmacia & Upjohn, Inc. 228
1,800 PPG Industries, Inc. 122
1,600 Praxair, Inc. 82
SCHEDULES OF INVESTMENTS MARCH 31, 1998
STOCK INDEX FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
CHEMICALS AND ALLIED PRODUCTS - 10.6% (CONT'D.)
600 Rohm & Haas Co. $ 62
7,600 Schering-Plough Corp. 621
1,800 Sherwin-Williams Co. 64
1,000 Sigma-Aldrich Corp. 37
1,300 Union Carbide Corp. 65
2,800 Warner-Lambert Co. 477
----------
9,943
----------
COMMUNICATIONS - 8.7%
5,200 AirTouch Communications, Inc.<F1> 254
1,900 ALLTEL Corp. 83
11,300 Ameritech Corp. 559
16,800 AT&T Corp. 1,103
8,004 Bell Atlantic Corp. 820
10,200 BellSouth Corp. 689
1,100 Clear Channel Communications, Inc.<F1> 108
3,600 Comcast Corp., Class A 127
1,700 Frontier Corp. 55
1,500 General Instrument Corp.<F1> 31
9,900 GTE Corp. 593
6,700 Lucent Technologies, Inc. 857
800 Mallinckrodt, Inc. 32
7,200 MCI Communications Corp. 356
2,700 Nextel Communications, Inc.<F1> 91
1,000 Providian Corp. 57
18,956 SBC Communications, Inc. 827
4,400 Sprint Corp. 298
1,900 Tellabs, Inc.<F1> 128
5,000 U.S. WEST Communications Group 274
6,300 U.S. WEST Media Group<F1> 219
3,600 ViaCom, Inc., Class B<F1> 193
10,500 WorldCom, Inc. <F1> 452
----------
8,206
----------
COMPUTERS AND OFFICE MACHINES - 6.3%
700 Adobe Systems, Inc. 32
1,300 Apple Computer, Inc. <F1> 36
2,300 Bay Networks, Inc. <F1> 62
1,600 Cabletron Systems, Inc. <F1> 23
800 Ceridian Corp. <F1> 43
10,550 Cisco Systems, Inc. <F1> 721
15,640 Compaq Computer Corp. <F1> 405
500 Data General Corp. <F1> 9
6,700 Dell Computer Corp. <F1> 454
1,500 Digital Equipment Corp. <F1> 78
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMPUTERS AND OFFICE MACHINES - 6.3% (CONT'D.)
5,100 EMC Corp. <F1> $ 193
10,000 International Business Machines Corp. 1,039
25,100 Microsoft Corp. <F1> 2,246
2,600 Parametric Technology Co. <F1> 87
3,000 Pitney Bowes, Inc. 151
2,500 Seagate Technology, Inc. <F1> 63
1,800 Silicon Graphics, Inc. <F1> 25
1,100 Tandy Corp. 52
3,700 3Com Corp. 133
2,500 Unisys Corp. <F1> 47
----------
5,899
----------
CONSTRUCTION - 0.2%
2,300 Dover Corp. 87
1,800 Dresser Industries, Inc. 87
----------
174
----------
CONSUMER PRODUCTS - 4.7%
1,400 Avon Products, Inc. 109
1,800 Fortune Brands, Inc. 72
5,800 Gillette Co. 688
13,900 Johnson & Johnson 1,019
5,700 Kimberly-Clark Corp. 286
25,000 Philip Morris Cos., Inc. 1,042
13,900 Procter & Gamble Co. 1,173
----------
4,389
----------
CREDIT INSTITUTIONS - 0.6%
500 Beneficial Corp. 62
1,100 Countrywide Credit Industries, Inc. 59
1,100 Household International, Inc. 152
5,175 MBNA Corp. 185
1,200 MGIC Investment Corp. 79
----------
537
----------
ELECTRONICS AND ELECTRICAL EQUIPMENT - 6.9%
1,400 Advanced Micro Devices, Inc. <F1> 41
2,300 AMP, Inc. 101
850 Andrew Corp. <F1> 17
3,800 Applied Materials, Inc. <F1> 134
1,200 Cooper Industries, Inc. 71
1,200 DSC Communications Corp. <F1> 22
4,600 Emerson Electric Co. 300
33,800 General Electric Co. 2,913
800 Harris Corp. 42
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
STOCK INDEX FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
ELECTRONICS AND ELECTRICAL
EQUIPMENT - 6.9% (CONT'D.)
16,900 Intel Corp. $1,319
900 KLA-Tencor Corp. <F1> 34
1,400 LSI Logic Corp. <F1> 35
1,000 Maytag Corp. 48
2,200 Micron Technology, Inc. 64
6,200 Motorola, Inc. 376
1,700 National Semiconductor Corp. <F1> 36
400 National Service Industries, Inc. 24
5,400 Northern Telecom Ltd. 349
900 Raychem Corp. 37
800 Scientific-Atlanta, Inc. 16
5,200 Tele-Communications, Inc. <F1> 162
4,000 Texas Instruments, Inc. 216
600 Thomas & Betts Corp. 38
800 Whirlpool Corp. 55
----------
6,450
----------
FOOD AND BEVERAGES - 6.5%
5,100 Anheuser-Busch Cos., Inc. 236
5,885 Archer-Daniels-Midland Co. 129
1,500 Bestfoods 175
700 Brown-Forman Corp., Class B 39
4,700 Campbell Soup Co. 267
25,500 Coca-Cola (The) Co. 1,975
4,900 ConAgra, Inc. 157
400 Coors (Adolph) Co., Class B 14
1,500 Darden Restaurants, Inc. 23
1,600 General Mills, Inc. 122
600 Giant Food, Inc., Class A 23
3,800 Heinz (H.J.) Co. 222
1,500 Hershey Foods Corp. 107
4,200 Kellogg Co. 181
7,100 McDonalds Corp. 426
15,700 PepsiCo, Inc. 670
1,400 Quaker Oats (The) Co. 80
1,100 Ralston-Ralston Purina Group 117
4,900 Sara Lee Corp. 302
3,700 Seagram (The) Co. Ltd. 141
1,530 Tricon Global Restaurants, Inc. <F1> 46
6,600 Unilever N.V. 453
1,900 UST, Inc. 61
470 Vlasic Foods Int'l., Inc. <F1> 12
1,300 Wendy's International, Inc. 29
1,200 Wrigley (Wm.) Jr. Co. 98
----------
6,105
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
FURNITURE - 0.1%
1,700 Masco Corp. $ 101
----------
GENERAL BUILDING CONTRACTORS - 0.2%
600 Centex Corp. 23
1,300 Honeywell, Inc. 107
400 Kaufman & Broad Home Corp. 13
----------
143
----------
GLASS, CLAY AND STONE PRODUCTS - 0.2%
2,400 Corning, Inc. 106
1,600 Newell Co. 78
----------
184
----------
HEALTH SERVICES - 1.3%
900 ALZA Corp. <F1> 40
1,100 Cardinal Health, Inc. 97
6,700 Columbia/HCA Healthcare Corp. 216
1,600 Guidant Corp. 117
2,200 HBO & Co. 133
4,000 HEALTHSOUTH Corp. <F1> 112
1,700 Humana, Inc. <F1> 42
700 Manor Care, Inc. 26
4,800 Medtronic, Inc. 249
900 St. Jude Medical, Inc. <F1> 30
3,200 Tenet Healthcare Corp. <F1> 116
----------
1,178
----------
HEAVY CONSTRUCTION - 0.2%
900 Fluor Corp. 45
400 Foster Wheeler Corp. 12
2,700 Halliburton Co. 136
----------
193
----------
INDUSTRIAL INSTRUMENTS - 2.1%
600 Bard (C.R.), Inc. 22
600 Bausch & Lomb, Inc. 27
1,300 Becton, Dickinson & Co. 88
1,100 Biomet, Inc. 33
2,000 Boston Scientific Corp. <F1> 135
3,400 Eastman Kodak Co. 221
10,700 Hewlett-Packard Co. 678
900 Johnson Controls, Inc. 55
400 Millipore Corp. 14
500 Perkin-Elmer Corp. 36
500 Polaroid Corp. 22
3,500 Raytheon Co. 204
SCHEDULES OF INVESTMENTS MARCH 31, 1998
STOCK INDEX FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
INDUSTRIAL INSTRUMENTS - 2.1% (CONT'D.)
550 Tektronix, Inc. $ 25
800 United States Surgical Corp. 26
3,400 Xerox Corp. 362
----------
1,948
----------
INSURANCE SERVICES - 4.8%
1,500 Aetna, Inc. 125
4,400 Allstate Corp. 405
2,621 American General Corp. 170
7,250 American International Group, Inc. 913
1,750 Aon Corp. 113
1,800 Chubb (The) Corp. 141
800 CIGNA Corp. 164
600 Cincinnati Financial Corp. 75
1,900 Conseco, Inc. 108
800 General Re Corp. 177
1,200 Hartford Financial Services Group (The), Inc. 130
700 Jefferson-Pilot Corp. 62
1,100 Lincoln National Corp. 93
1,200 Loews Corp. 125
1,800 Marsh & McLennan Cos., Inc. 157
1,000 MBIA, Inc. 78
700 Progressive Corp. 94
1,500 SAFECO Corp. 82
900 St. Paul Cos., Inc. 80
2,050 SunAmerica, Inc. 98
1,400 Torchmark Corp. 64
600 Transamerica Corp. 70
11,855 Travelers Group, Inc. 711
1,900 United Healthcare Corp. 123
1,400 UNUM Corp. 77
1,100 USF&G Corp. 27
----------
4,462
----------
JEWELRY AND PRECIOUS METALS - 0.0%
400 Jostens, Inc. 10
----------
LUMBER AND WOOD PRODUCTS - 0.0%
1,100 Louisiana-Pacific Corp. 26
----------
MACHINERY - 1.3%
1,700 Baker Hughes, Inc. 68
1,000 Black & Decker Corp. 53
300 Briggs & Stratton Corp. 14
1,000 Brunswick Corp. 35
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
MACHINERY - 1.3% (CONT'D.)
800 Case Corp. $ 55
3,800 Caterpillar, Inc. 209
400 Cincinnati Milacron, Inc. 13
400 Cummins Engine Co., Inc. 22
2,600 Deere & Co. 161
500 General Signal Corp. 23
500 Harnischfeger Industries, Inc. 17
1,700 Ingersoll-Rand Co. 81
1,800 Tenneco, Inc. 77
1,600 Thermo Electron Corp. <F1> 65
600 Timken (The) Co. 20
5,900 Tyco International Ltd. 322
----------
1,235
----------
MANUFACTURING - 0.1%
300 Aeroquip-Vickers, Inc. 17
600 Alberto-Culver Co., Class B 18
1,200 ITT Industries, Inc. 46
200 Pulte Corp. 9
----------
90
----------
MERCHANDISE - GENERAL - 0.1%
600 Snap-On, Inc. 27
900 Stanley Works (The) 50
----------
77
----------
METAL MINING - 0.3%
3,800 Barrick Gold Corp. 82
2,200 Battle Mountain Gold Co. 14
900 Cyprus Amax Minerals Co. 15
1,900 Freeport-McMoRan Copper & Gold, Inc.,
Class B 38
1,400 Homestake Mining Co. 15
1,700 Inco Ltd. 32
1,644 Newmont Mining Corp. 50
2,500 Placer Dome, Inc. 33
----------
279
----------
METAL PRODUCTS - 0.2%
2,000 Allegheny Teledyne, Inc. 56
300 Ball Corp. 10
450 Crane Co. 24
600 McDermott International, Inc. 25
1,150 Parker-Hannifin Corp. 59
----------
174
----------
See Notes to the Financial Statements.
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
STOCK INDEX FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
MORTGAGE AGENCIES - 1.1%
11,000 Fannie Mae $ 696
7,200 Freddie Mac 342
----------
1,038
----------
NATURAL GAS - 0.6%
1,000 Apache Corp. 37
1,100 Coastal Corp. 72
500 Columbia Gas System, Inc. 39
1,000 Consolidated Natural Gas Co. 58
200 Eastern Enterprises 9
3,200 Enron Corp. 148
500 NICOR, Inc. 21
300 ONEOK, Inc. 12
900 Pacific Enterprises 37
400 Peoples Energy Corp. 15
1,100 Sonat, Inc. 48
3,300 Williams (The) Cos., Inc. 106
----------
602
----------
OFFICE EQUIPMENT - 0.1%
1,400 IKON Office Solutions, Inc. 48
----------
OIL AND GAS - 4.5%
600 Anadarko Petroleum Corp. 41
1,857 Burlington Resources, Inc. 89
6,800 Chevron Corp. 546
25,500 Exxon Corp. 1,724
500 Helmerich & Payne, Inc. 16
3,500 Occidental Petroleum Corp. 103
1,100 Oryx Energy Co. <F1> 29
900 Rowan Cos., Inc. <F1> 26
22,100 Royal Dutch Petroleum Co. ADR 1,256
5,100 Schlumberger Ltd. 386
2,569 Union Pacific Resources Group, Inc. 61
600 Western Atlas, Inc. <F1> 46
----------
4,323
----------
PACKAGING AND CONTAINER PRODUCTS - 0.1%
1,300 Crown Cork & Seal Co., Inc. 70
1,500 Owens-Illinois, Inc. <F1> 65
----------
135
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
PAPER PRODUCTS - 1.2%
1,100 Avery Dennison Corp. $ 59
500 Bemis Co., Inc. 23
600 Boise Cascade Co. 22
1,000 Champion International Corp. 54
2,200 Fort James Corp. 101
1,000 Georgia-Pacific Corp. 65
3,100 International Paper Co. 145
1,100 Mead Corp. 39
4,200 Minnesota Mining & Manufacturing Co. 383
1,000 Stone Container Corp. 13
600 Temple-Inland, Inc. 37
700 Union Camp Corp. 42
1,000 Westvaco Corp. 31
2,100 Weyerhaeuser Co. 119
----------
1,133
----------
PERSONAL SERVICES - 0.4%
1,100 Block (H&R), Inc. 52
2,600 Hilton Hotels Corp. 83
1,300 Marriott International, Inc. 48
1,300 Marriott International, Inc., Class A 47
2,600 Service Corp. International 110
1,100 Willamette Industries, Inc. 41
----------
381
----------
PETROLEUM - 2.3%
900 Amerada Hess Corp. 52
5,000 Amoco Corp. 432
800 Ashland, Inc. 45
3,300 Atlantic Richfield Co. 259
500 Kerr-McGee Corp. 35
8,100 Mobil Corp. 621
500 Pennzoil Co. 32
2,700 Phillips Petroleum Co. 135
700 Sun Co., Inc. 29
5,700 Texaco, Inc. 343
2,500 Unocal Corp. 97
3,000 USX - Marathon Group 113
----------
2,193
----------
PRINTING AND PUBLISHING - 1.3%
800 American Greetings Corp., Class A 37
800 Deluxe Corp. 26
1,500 Donnelley (R.R.) & Sons Co. 62
SCHEDULES OF INVESTMENTS MARCH 31, 1998
STOCK INDEX FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
PRINTING AND PUBLISHING - 1.3% (CONT'D.)
1,000 Dow Jones & Co., Inc. $ 53
2,900 Gannett Co., Inc. 208
900 Knight-Ridder, Inc. 50
1,000 McGraw Hill Cos., Inc. 76
500 Meredith Corp. 21
900 Moore Corp. Ltd. 15
1,000 New York Times Co., Class A 70
6,000 Time Warner, Inc. 432
900 Times Mirror Co., Class A 57
1,300 Tribune Co. 92
----------
1,199
----------
PROFESSIONAL SERVICES - 2.1%
500 Autodesk, Inc. 22
3,100 Automatic Data Processing, Inc. 211
8,364 Cendant Corp. <F1> 331
5,650 Computer Associates International, Inc. 326
1,600 Computer Sciences Corp. <F1> 88
1,500 Equifax, Inc. 55
4,400 First Data Corp. 143
1,350 Interpublic Group of Cos., Inc. 84
3,500 Novell, Inc. <F1> 37
1,700 Omnicom Group, Inc. 80
10,150 Oracle Corp. <F1> 320
800 Ryder System, Inc. 30
300 Shared Medical Systems Corp. 24
325 Sodexho Marriott Services, Inc. 9
3,900 Sun Microsystems, Inc. <F1> 163
----------
1,923
----------
RECREATION AND LEISURE SERVICES - 1.1%
7,000 Disney (The Walt) Co. 747
700 Harcourt General, Inc. 39
1,000 Harrah's Entertainment, Inc. <F1> 25
700 King World Productions, Inc. 20
3,000 Mattel, Inc. 119
1,800 Mirage Resorts, Inc. <F1> 44
----------
994
----------
RESEARCH AND CONSULTING SERVICES - 0.2%
1,700 Cognizant Corp. 97
1,700 Dun & Bradstreet (The) Corp. 58
400 EG&G, Inc. 12
----------
167
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
RETAIL - 5.0%
2,500 Albertson's, Inc. $ 132
2,800 American Stores Co. 73
1,600 AutoZone, Inc. <F1> 54
1,000 Charming Shoppes, Inc. <F1> 5
1,000 Circuit City Stores, Inc. 43
1,100 Consolidated Stores Corp. <F1> 47
2,200 Costco Cos., Inc. <F1> 117
1,800 CVS Corp. 136
2,300 Dayton-Hudson Corp. 202
1,100 Dillard's, Inc., Class A 41
2,200 Federated Department Stores, Inc. 114
4,100 Gap (The), Inc. 185
400 Great Atlantic & Pacific Tea Co., Inc. 12
1,250 Hasbro, Inc. 44
7,550 Home Depot (The), Inc. 509
5,000 Kmart Corp. <F1> 83
2,600 Kroger Co. <F1> 120
2,800 Limited (The), Inc. 80
400 Longs Drug Stores, Inc. 12
1,800 Lowe's Cos., Inc. 126
2,400 May Department Stores Co. 152
400 Mercantile Stores Co., Inc. 27
3,000 Nike, Inc., Class B 133
800 Nordstrom, Inc. 51
2,600 Penney (J.C.) Co., Inc. 197
600 Pep Boys - Manny, Moe & Jack 14
600 Reebok International Ltd. <F1> 18
2,700 Rite Aid Corp. 92
4,000 Sears, Roebuck & Co. 230
600 SUPERVALU , Inc. 28
1,700 TJX Cos., Inc. 77
2,900 Toys "R" Us, Inc. <F1> 87
23,200 Wal-Mart Stores, Inc. 1,179
5,100 Walgreen Co. 179
1,500 Winn-Dixie Stores, Inc. 70
1,400 Woolworth Corp. <F1> 35
----------
4,704
----------
RUBBER AND PLASTICS - 0.6%
400 Armstrong World Industries, Inc. 35
800 Cooper Tire & Rubber Co. 19
1,600 Goodyear (The) Tire & Rubber Co. 121
6,100 Monsanto Co. 317
1,500 Rubbermaid, Inc. 43
600 Tupperware Corp. 16
----------
551
----------
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
STOCK INDEX FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
SANITARY SERVICES - 0.3%
2,000 Browning-Ferris Industries, Inc. $ 65
3,300 Laidlaw, Inc. 52
4,723 Waste Management, Inc. 146
----------
263
----------
SERVICE INDUSTRY MACHINERY - 0.3%
7,300 CBS Corp. <F1> 248
1,300 Pall Corp. 28
----------
276
----------
STEEL PRODUCTS - 0.5%
2,300 Alcan Aluminium Ltd. 72
1,800 Aluminum Co. of America 124
1,000 Armco, Inc. <F1> 6
400 ASARCO, Inc. 11
1,100 Bethlehem Steel Corp. <F1> 15
1,400 Engelhard Corp. 27
500 Inland Steel Industries, Inc. 14
900 Nucor Corp. 49
500 Owens Corning 18
600 Phelps Dodge Corp. 39
800 Reynolds Metals Co. 49
900 USX - U.S. Steel Group 34
900 Worthington Industries, Inc. 16
----------
474
----------
TEXTILES - 0.1%
700 Fruit of the Loom, Inc., Class A<F1> 21
400 Russell Corp. 11
200 Springs Industries, Inc., Class A 11
----------
43
----------
TRANSPORTATION PARTS AND EQUIPMENT - 3.9%
5,800 AlliedSignal, Inc. 244
10,352 Boeing (The) Co. 540
6,700 Chrysler Corp. 278
1,100 Dana Corp. 64
800 Eaton Corp. 76
700 Echlin, Inc. 37
400 Fleetwood Enterprises, Inc. 19
12,400 Ford Motor Co. 804
600 General Dynamics Corp. 52
7,300 General Motors Corp. 492
2,600 Illinois Tool Works, Inc. 168
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
TRANSPORTATION PARTS AND
EQUIPMENT - 3.9% (CONT'D.)
2,000 Lockheed Martin Corp. <F1> $ 225
700 Navistar International Corp. 24
700 Northrop Grumman Corp. 75
800 PACCAR, Inc. 48
2,100 Rockwell International Corp. 120
1,700 Textron, Inc. 131
1,300 TRW, Inc. 72
2,400 United Technologies Corp. 222
----------
3,691
----------
TRANSPORTATION SERVICES - 1.1%
900 AMR Corp. <F1> 129
1,600 Burlington Northern Santa Fe Corp. 166
2,300 CSX Corp. 137
800 Delta Air Lines, Inc. 95
1,540 FDX Corp. <F1> 110
3,900 Norfolk Southern Corp. 146
2,300 Southwest Airlines Co. 68
2,600 Union Pacific Corp. 146
900 US Airways Group, Inc. <F1> 67
----------
1,064
----------
UTILITIES - 2.2%
1,400 Ameren Corp. 59
2,000 American Electric Power Co. 100
1,500 Baltimore Gas & Electric Co. 49
1,600 Carolina Power & Light Co. 72
2,200 Central & South West Corp. 59
1,600 Cinergy Corp. 59
100 Columbia Energy Group 8
2,400 Consolidated Edison Co. of New York, Inc. 112
2,000 Dominion Resources, Inc. 84
1,500 DTE Energy Co. 59
3,744 Duke Power Co. 222
3,900 Edison International 115
2,500 Entergy Corp. 74
2,400 Firstenergy Corp. 74
1,900 FPL Group, Inc. 122
1,300 GPU, Inc. 58
1,400 Niagara Mohawk Power Corp. <F1> 18
800 Northern States Power Co. 47
3,000 PacifiCorp 74
2,300 PECO Energy Co. 51
SCHEDULES OF INVESTMENTS MARCH 31, 1998
STOCK INDEX FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
UTILITIES - 2.2% (CONT'D.)
4,500 PG&E Corp. $ 148
1,700 PP&L Resources, Inc. 40
2,400 Public Service Enterprise Group, Inc. 91
7,100 Southern Co. 196
2,512 Texas Utilities Co. 99
2,200 Unicom Corp. 77
----------
2,167
----------
WHOLESALE - 0.2%
1,850 Genuine Parts Co. 71
500 Grainger (W.W.), Inc. 51
300 Potlatch Corp. 13
3,500 Sysco Corp. 90
----------
225
----------
Total Common Stocks
(cost $72,247) 89,117
----------
PRINCIPAL
AMOUNT
(000S)
- ----------
SHORT-TERM INVESTMENTS - 4.9%
$4,376 Banque Paribas, Grand Cayman,
6.125%, 04/1/98 4,376
205 U.S. Treasury Bill,
5.45%, 4/16/98 <F1> 205
----------
Total Short-Term Investments
(cost $4,581) 4,581
----------
Total Investments - 99.8%
(cost $76,828) 93,698
Other Assets less Liabilities - 0.2% 209
----------
NET ASSETS - 100.0% $93,907
==========
OPEN FUTURES CONTRACTS:
Contract Unrealized
Number of Amount Contract Contract Gain
Type Contracts (000s) Position Exp. (000s)
- -------------------------------------------------------------------------
S&P 500 MINI 83 $4,609 Long 6/98 $72
====
<F2> Security pledged to cover margin requirements for open futures
contracts.
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
GROWTH EQUITY FUND
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMMON STOCKS - 98.7%
BANKING - 7.0%
37,600 Banc One Corp. $ 2,378
20,800 Chase Manhattan Corp. 2,805
117,750 Fifth Third Bancorp 10,068
272,200 State Street Corp. 18,527
----------
33,778
----------
BROKERAGE AND FINANCIAL SERVICES - 5.2%
168,200 Merrill Lynch & Co., Inc. 13,961
154,100 Price (T. Rowe) Associates, Inc. 10,845
----------
24,806
----------
CHEMICALS AND ALLIED PRODUCTS - 9.6%
76,500 Bristol-Myers Squibb Co. 7,980
54,800 du Pont (E.I.) de Nemours & Co. 3,726
114,300 Lilly (Eli) & Co. 6,815
147,000 Pfizer, Inc. 14,654
52,400 Schering-Plough Corp. 4,280
49,600 Warner-Lambert Co. 8,448
----------
45,903
----------
COMMUNICATIONS - 4.9%
83,100 Ameritech Corp. 4,108
67,900 AT&T Corp. 4,456
63,200 Bell Atlantic Corp. 6,478
36,300 Lucent Technologies, Inc. 4,642
59,150 Tellabs, Inc. <F1> 3,971
----------
23,655
----------
COMPUTERS AND OFFICE MACHINES - 12.2%
159,150 Cisco Systems, Inc. <F1> 10,882
76,600 Computer Sciences Corp. <F1> 4,213
115,700 EMC Corp. <F1> 4,375
89,300 Intel Corp. 6,971
116,800 Microsoft Corp. <F1> 10,454
58,400 Network Associates, Inc. <F1> 3,869
237,500 PeopleSoft, Inc. <F1> 12,513
186,200 Siebel Systems, Inc. <F1> 5,353
----------
58,630
----------
CONSUMER PRODUCTS - 5.5%
48,000 Gillette Co. 5,697
111,700 Johnson & Johnson 8,189
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
CONSUMER PRODUCTS - 5.5% (CONT'D.)
147,700 Philip Morris Cos., Inc. $ 6,157
73,900 Procter & Gamble Co. 6,235
----------
26,278
----------
ELECTRONICS AND OTHER ELECTRICAL
EQUIPMENT - 5.5%
233,100 General Electric Co. 20,090
39,200 KLA-Tencor Corp. <F1> 1,499
67,200 Solectron Corp. <F1> 2,839
39,500 Texas Instruments, Inc. 2,138
----------
26,566
----------
FOOD AND BEVERAGES - 5.5%
183,500 Coca-Cola (The) Co. 14,210
115,000 PepsiCo, Inc. 4,909
79,300 Sara Lee Corp. 4,887
34,600 Suiza Foods Corp. <F1> 2,128
----------
26,134
----------
GENERAL BUILDING CONTRACTORS - 0.7%
65,100 Centex Corp. 2,482
51,300 D.R. Horton, Inc. 1,090
----------
3,572
----------
HEALTH SERVICES - 3.6%
22,500 Cardinal Health, Inc. 1,984
64,500 Guidant Corp. 4,733
152,700 Health Management Associates, Inc. <F1> 4,371
121,400 Medtronic, Inc. 6,298
----------
17,386
----------
HEAVY CONSTRUCTION - 0.2%
21,600 Halliburton Co. 1,084
----------
INDUSTRIAL PRODUCTS - 0.4%
26,600 Becton, Dickinson and Co. 1,811
----------
INSURANCE SERVICES - 4.6%
24,300 Allstate Corp. 2,234
81,300 American International Group, Inc. 10,239
81,700 MBIA, Inc. 6,332
56,100 Mutual Risk Management Ltd. 1,900
21,500 UNUM Corp. 1,187
----------
21,892
----------
See Notes to the Financial Statements.
SCHEDULES OF INVESTMENTS MARCH 31, 1998
GROWTH EQUITY FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
MACHINERY - 0.6%
48,700 Tyco International Ltd. $ 2,660
----------
MEDICAL PRODUCTS AND EQUIPMENT - 0.8%
57,800 Elan Corp. PLC ADR<F2> 3,735
----------
OIL AND GAS - 9.4%
43,800 Amoco Corp. 3,783
39,600 BJ Services Co. <F1> 1,443
59,400 Diamond Offshore Drilling, Inc. 2,695
182,000 Exxon Corp. 12,308
55,100 Mobil Corp. 4,222
150,900 Royal Dutch Petroleum Co. ADR 8,573
95,900 Schlumberger Ltd. 7,264
96,900 Transocean Offshore, Inc. 4,984
----------
45,272
----------
PROFESSIONAL SERVICES - 2.6%
90,800 Automatic Data Processing, Inc. 6,180
43,500 Interpublic Group of Cos. (The), Inc. 2,702
62,800 Paychex, Inc. 3,623
----------
12,505
----------
RECREATION AND LEISURE SERVICES - 1.0%
45,100 Disney (The Walt) Co. 4,814
----------
RESTAURANTS - 1.9%
199,500 Starbucks Corp. <F1> 9,040
----------
RETAIL - 12.2%
34,700 99 Cents Only Stores<F1> 1,212
62,300 Cracker Barrel Old Country Store, Inc. 2,492
81,000 Dayton Hudson Corp. 7,128
117,800 Gap (The), Inc. 5,301
35,200 General Nutrition Cos., Inc. <F1> 1,399
168,100 Home Depot (The), Inc. 11,336
78,200 Kohl's Corp. <F1> 6,393
24,000 Linens 'n Things, Inc. <F1> 1,319
85,800 Ross Stores, Inc. 3,786
236,200 Wal-Mart Stores, Inc. 12,002
179,000 Walgreen Co. 6,299
----------
58,667
----------
TRANSPORTATION SERVICES - 0.5%
93,300 Comair Holdings, Inc. 2,472
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 2.3%
82,600 Fannie Mae $ 5,224
124,500 Freddie Mac 5,906
----------
11,130
----------
UTILITIES - 2.5%
86,600 Cinergy Corp. 3,204
44,200 New Century Energies, Inc. 2,227
85,100 NIPSCO Industries, Inc. 2,383
99,700 Texas Utilities Co. 3,920
----------
11,734
----------
Total Common Stocks
(cost $324,924) 473,524
----------
PRINCIPAL
AMOUNT
(000S)
SHORT-TERM INVESTMENTS - 1.0%
$4,729 Banque Paribas, Grand Cayman,
6.125%, 4/1/98 4,729
225 U.S. Treasury Bill,
5.46%, 4/16/98 <F1> 224
----------
Total Short-Term Investments
(cost $4,953) 4,953
----------
Total Investments - 99.7%
(cost $329,877) 478,477
Other Assets less Liabilities - 0.3% 1,305
----------
NET ASSETS - 100.0% $479,782
==========
OPEN FUTURES CONTRACTS:
Contract Unrealized
Number of Amount Contract Contract Gain
Type Contracts (000s) Position Exp. (000s)
- ----------------------------------------------------------------------------
S&P 500 14 $3,887 Long 6/98 $18
==
<F2> Security pledged as collateral to cover margin requirements for open
futures contracts.
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SELECT EQUITY FUND
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMMON STOCKS - 99.0%
BANKING - 6.3%
10,000 AmSouth Bancorporation $ 591
53,000 Banc One Corp. 3,352
4,500 Citicorp 639
10,000 NationsBank Corp. 729
33,500 Norwest Corp. 1,392
18,000 State Street Corp. 1,225
----------
7,928
----------
BROKERAGE AND FINANCIAL SERVICES - 2.5%
18,500 Associates First Capital Corp., Class A 1,462
6,000 CCB Financial Corp. 663
8,700 Franklin Resources, Inc. 461
8,500 Price (T. Rowe) Associates, Inc. 598
----------
3,184
----------
CHEMICALS AND ALLIED PRODUCTS - 0.5%
10,000 du Pont (E.I.) de Nemours & Co. 680
----------
COMMUNICATIONS - 8.6%
95,000 Ameritech Corp. 4,697
9,000 AT&T Corp. 591
7,000 Bell Atlantic Corp. 718
8,000 Lucent Technologies, Inc. 1,023
8,500 SBC Communications, Inc. 371
29,000 Tellabs, Inc. <F1> 1,947
7,000 Time Warner, Inc. 504
25,000 WorldCom, Inc. <F1> 1,077
----------
10,928
----------
COMPUTERS AND OFFICE MACHINES - 9.7%
31,500 Cisco Systems, Inc. <F1> 2,154
11,000 Complete Business Solutions, Inc. <F1> 395
10,000 Computer Horizons Corp. <F1> 502
24,000 Computer Sciences Corp. <F1> 1,320
10,000 Hewlett-Packard Co. 634
8,000 Intel Corp. 624
38,000 Microsoft Corp. <F1> 3,401
17,000 Network Associates, Inc. <F1> 1,126
21,500 PeopleSoft, Inc. <F1> 1,133
10,000 Yahoo! Inc. <F1> 924
----------
12,213
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
CONSUMER PRODUCTS - 5.9%
12,500 Gillette Co. $1,484
10,500 Johnson & Johnson 770
20,000 Newell Co. 969
60,000 Philip Morris Cos., Inc. 2,501
21,000 Procter & Gamble Co. 1,772
----------
7,496
----------
CREDIT INSTITUTION - 0.4%
13,500 MBNA Corp. 483
----------
ELECTRONICS AND OTHER ELECTRICAL
EQUIPMENT - 6.0%
66,500 General Electric Co. 5,731
26,000 Linear Technology Corp. 1,794
----------
7,525
----------
FOOD AND BEVERAGES - 3.8%
35,600 Coca-Cola (The) Co. 2,757
25,000 PepsiCo, Inc. 1,067
14,500 Unilever N.V. ADR 995
----------
4,819
----------
HEALTH SERVICES - 4.9%
10,400 Cardinal Health, Inc. 917
13,000 Guidant Corp. 954
48,400 HBO & Co. 2,922
17,000 Medtronic, Inc. 882
12,000 Omnicare, Inc. 476
----------
6,151
----------
HEAVY CONSTRUCTION - 1.1%
29,000 Halliburton Co. 1,455
----------
INSURANCE SERVICES - 3.7%
12,500 Allstate Corp. 1,149
17,500 American International Group, Inc. 2,204
22,000 Travelers Group, Inc. 1,320
----------
4,673
----------
OIL AND GAS - 5.9%
6,500 Chevron Corp. 522
10,000 Exxon Corp. 676
See Notes to the Financial Statements.
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SELECT EQUITY FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
OIL AND GAS - 5.9% (CONT'D.)
47,800 Mobil Corp. $ 3,663
62,000 Newpark Resources, Inc. <F1> 1,132
20,000 Schlumberger Ltd. 1,515
----------
7,508
----------
PHARMACEUTICALS - 12.8%
35,000 Bristol-Myers Squibb Co. 3,651
46,000 Elan Corp. PLC ADR<F1> 2,973
11,000 Incyte Pharmaceuticals, Inc. <F1> 514
7,000 Lilly (Eli) & Co. 417
8,000 Merck & Co., Inc. 1,027
40,800 Pfizer, Inc. 4,067
33,000 Schering-Plough Corp. 2,696
5,000 Warner-Lambert Co. 852
----------
16,197
----------
PROFESSIONAL SERVICES - 5.8%
30,000 Accustaff, Inc. <F1> 1,035
34,000 Cendant Corp. <F1> 1,347
13,000 Cintas Corp. 673
11,000 Interpublic Group of Cos. (The), Inc. 683
38,000 Paychex, Inc. 2,192
18,500 Snyder Communications, Inc. <F1> 867
14,000 Staffmark, Inc. <F1> 574
----------
7,371
----------
RECREATION AND LEISURE SERVICES - 4.7%
50,500 Carnival Corp., Class A 3,522
22,500 Disney (The Walt) Co. 2,402
----------
5,924
----------
RESTAURANTS - 1.3%
35,000 Starbucks Corp. <F1> 1,586
----------
RETAIL - 11.2%
9,000 Dayton Hudson Corp. 792
40,500 Gap (The), Inc. 1,823
19,000 Home Depot (The), Inc. 1,281
15,000 Kohl's Corp. <F1> 1,226
12,000 Linens 'n Things, Inc. <F1> 659
66,500 Staples, Inc. <F1> 1,542
84,500 Walgreen Co. 2,973
76,600 Wal-Mart Stores, Inc. 3,892
----------
14,188
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 3.9%
31,000 Fannie Mae $ 1,961
62,000 Freddie Mac 2,941
----------
4,902
----------
Total Common Stocks
(cost $101,489) 125,211
----------
PRINCIPAL
AMOUNT
(000S)
- ----------
SHORT-TERM INVESTMENT - 0.5%
$644 Banque Paribas, Grand Cayman,
6.125%, 4/1/98
(cost $644) 644
----------
Total Investments - 99.5%
(cost $102,133) 125,855
Other Assets less Liabilities - 0.5% 681
----------
NET ASSETS - 100.0% $126,536
==========
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMMON STOCKS - 99.1%
AEROSPACE - 0.2%
25,700 Aviall, Inc. <F1> $ 385
1,300 Primex Technologies, Inc. 60
1,900 SPACEHAB, Inc. <F1> 22
2,700 Titan Corp. (The) <F1> 18
6,800 TransTechnology Corp. <F1> 205
----------
690
----------
APPAREL - 0.7%
18,700 Bell Sports Corp. <F1> 160
13,000 Chic By H.I.S., Inc. <F1> 118
12,200 Deckers Outdoor Corp. <F1> 88
33,300 Delta Woodside Industries, Inc. 187
5,500 Donna Karan International, Inc. <F1> 73
13,500 Farah, Inc. <F1> 85
6,900 Garan, Inc. 191
600 Hampshire Group, LTD. <F1> 12
8,600 Hartmarx Corp. <F1> 71
28,900 Kellwood Co. 891
11,437 Movado Group, Inc. 330
9,200 Oxford Industries, Inc. 289
600 Pluma, Inc. <F1> 4
800 S & K Famous Brands, Inc. <F1> 13
400 Sport-Haley, Inc. <F1> 4
4,600 Starter Corp. <F1> 15
1,100 Supreme International Corp. <F1> 14
40,600 Tultex Corp. <F1> 155
3,900 Weyco Group, Inc. 86
----------
2,786
----------
BANKING - 8.0%
300 1st Bergen Bancorp<F1> 6
7,100 Aames Financial Corp. 99
1,400 ABC Bancorp 25
3,750 Advantage Bancorp, Inc. 260
17,380 Albank Financial Corp. 871
10,862 Alliance Bancorp 301
700 Ambanc Holding Co., Inc. 13
600 Ameriana Bancorp 12
2,500 American Bank of Connecticut 146
3,500 American Banknote Corp. <F1> 14
6,500 Anchor Bancorp Wisconsin, Inc. 286
6,940 Andover Bancorp, Inc. 277
4,100 Area Bancshares Corp. 117
300 Avondale Financial Corp. <F1> 5
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
BANKING - 8.0% (CONT'D.)
1,600 BancFirst Corp. $ 64
17,600 Bay View Capital Corp. 612
1,260 Beverly Bancorporation, Inc. 34
12,342 Brenton Banks, Inc. 262
9,900 BSB Bancorp, Inc. 307
4,100 Calumet Bancorp, Inc. <F1> 144
600 Camco Financial Corp. 17
300 Cameron Financial Corp. 6
900 Cass Commercial Corp. 31
5,000 Cathay Bancorp, Inc. 179
4,000 CB Bancshares, Inc. 146
1,900 CBT Corp. 66
200 Central Co-Operative Bank 6
700 Central Financial Acceptance Corp. <F1> 8
500 Charter Financial, Inc. 17
11,700 CitFed Bancorp 658
6,700 Coastal Bancorp, Inc. 223
800 Commercial Bank of New York 20
4,100 Commonwealth Bancorp 87
6,600 Community Bank System, Inc. 224
800 Community Federal Bancorp, Inc. 15
2,600 Community Trust Bancorp, Inc. 83
6,975 Covest Bancshares, Inc. 120
14,400 CPB, Inc. 277
8,650 Dain Rauscher Corp. 498
40,738 Downey Financial Corp. 1,318
1,300 Eagle Bancshares, Inc. <F1> 33
8,500 Eagle Financial Corp. 491
400 Enterprise Federal Bancorp, Inc. 12
8,200 Evergreen Bancorp, Inc. 193
700 FCB Financial Corp. 22
400 Fed One Bancorp, Inc. 15
4,766 FFLC Bancorp, Inc. 93
400 Fidelity Bancorp, Inc. 10
8,000 Fidelity Bankshares, Inc. 247
1,300 Fidelity National Corp. <F1> 17
900 First Albany Cos., Inc. 13
1,100 First Bell Bancorp, Inc. 23
200 First Colonial Group, Inc. 7
2,000 First Defiance Financial Corp. 31
10,200 First Essex Bancorp, Inc. 246
800 First Federal Bancshares of Arkansas, Inc. 24
14,400 First Federal Financial Corp. 603
3,500 First Federal Savings & Loan Association
of East Hartford 142
17,160 First Indiana Corp. 461
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
BANKING - 8.0% (CONT'D.)
4,800 First Liberty Financial Corp. $ 161
300 First Midwest Bancorp 7
1,600 First Merchants Corp. 66
12,000 First Northern Capital Corp. 164
6,800 First Palm Beach Bancorp, Inc. 274
4,900 First Savings Bancorp, Inc. 125
400 First Shenango Bancorp, Inc. 17
200 First State Bancorporation 5
2,700 First State Corp. 63
1,400 Flushing Financial Corp. 35
19,094 F.N.B. Corp. 740
615 Franklin Bank N.A. 10
300 FSF Financial Corp. <F1> 6
4,400 GBC Bancorp 294
700 German American Bancorp 22
11,800 Haven Bancorp, Inc. 286
300 Hawthorne Financial Corp. <F1> 6
1,000 HF Bancorp, Inc. <F1> 17
300 HF Financial Corp. 9
5,700 HMN Financial, Inc. <F1> 171
200 Home Bancorp 7
5,625 Home Federal Bancorp 165
10,090 Horizon Financial Corp. 189
100 Indiana United Bancorp 6
800 Industrial Bancorp, Inc. <F1> 18
3,000 Interchange Financial Services Corp. 92
400 Iroquois Bancorp, Inc. 10
1,600 ISB Financial Corp. 44
1,900 ITLA Capital Corp. <F1> 40
300 Jacksonville Bancorp, Inc. 6
400 James River Bankshares, Inc. <F1> 8
6,784 JeffBanks, Inc. 366
13,600 Jefferson Savings Bancorp, Inc. <F1> 411
100 Kankakee Bancorp, Inc. 4
2,300 Klamath First Bancorp, Inc. 53
18,400 Long Island Bancorp, Inc. 1,164
300 Mahaska Investment Co. <F1> 6
1,000 Mason-Dixon Bancshares, Inc. 35
440 Matewan BancShares, Inc. 11
6,100 Medford Bancorp, Inc. 268
8,700 Maryland Federal Bancorp, Inc. 340
4,866 MASSBANK Corp. 244
2,700 Merchants Bancshares, Inc. <F1> 92
1,400 Michigan Financial Corp. 45
11,602 Mid-America Bancorp 373
300 Monterey Bay Bancorp, Inc. 8
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
BANKING - 8.0% (CONT'D.)
500 MSB Bancorp, Inc. $ 18
400 Mutual Savings Bank, f.s.b. <F1> 5
11,013 National City Bancorporation<F1> 373
8,644 NBT Bancorp, Inc. 242
500 North Central Bancshares, Inc. 11
400 NSS Bancorp, Inc. 19
2,000 Ocean Financial Corp. 74
500 Old Second Bancorp, Inc. 32
14,300 ONBANCorp, Inc. 990
300 Pacific Crest Capital, Inc. <F1> 6
300 Pamrapo Bancorp, Inc. 9
1,000 Parkvale Financial Corp. 31
2,600 PennFed Financial Services, Inc. 47
6,600 Pennfirst Bancorp, Inc. 128
300 Peoples Bancorp 7
27,213 Peoples Heritage Financial Group Inc. 1,313
7,893 Peoples Holdings Co. 290
200 Permanent Bancorp, Inc. 7
200 Perpetual Midwest Finanacial, Inc. 6
8,300 PonceBank 210
15,000 Poughkeepsie Savings Bank, FSB 169
300 Princeton National Bancorp, Inc. 9
5,200 Progressive Bank, Inc. 220
300 Pulse Bancorp, Inc. 8
6,375 Quaker City Bancorp, Inc. <F1> 142
200 Raritan Bancorp, Inc. 5
1,500 RedFed Bancorp, Inc. <F1> 30
1,700 Republic Bancshares, Inc. <F1> 49
4,100 Republic Security Financial Corp. <F1> 47
46,300 Riggs National Corp. 1,308
400 Sandwich Bancorp, Inc. <F1> 25
31,200 Silicon Valley Bancshares 608
400 Southside Bancshares Corp. 16
400 Southwest Bancorp, Inc. 11
3,550 Southwest Bancshares, Inc. 116
500 Southwest National Corp. 25
22,745 Sovereign Bancorp, Inc. 414
37,312 St. Paul Bancorp, Inc. 947
7,000 Sterling Bancshares, Inc. 190
7,500 Sterling Financial Corp. <F1> 195
21,800 Sumitomo Bank of California 818
600 Teche Holding Co. 13
5,500 TF Financial Corp. 154
13,000 TR Financial Corp. 452
5,700 Triangle Bancorp, Inc. 177
2,875 TriCo Bancshares 93
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
BANKING - 8.0% (CONT'D.)
8,500 US Bancorp, Inc. $ 656
3,400 Vermont Financial Services Corp. 94
800 Virginia Beach Federal Financial Corp. 16
400 Vista Bancorp, Inc. 9
14,218 Webster Financial Corp. 988
4,100 Wesbanco Inc. 114
200 Westco Bancorp, Inc. 6
35,600 Westcorp 596
2,800 Western Ohio Financial Corp. 74
200 WVS Financial Corp. 8
300 Yonkers Financial Corp. 6
----------
29,646
----------
BITUMINOUS COAL AND LIGNITE SURFACE
MINING - 0.3%
16,100 Arch Coal, Inc. 435
215,500 Echo Bay Mines Ltd. <F1> 497
11,200 Penn Virginia Corp. 326
100 Rochester & Pittsburgh Coal Co. 4
----------
1,262
----------
BROKERAGE AND FINANCIAL SERVICES - 2.8%
6,700 Advest Group, Inc. 165
9,600 Arcadia Financial Ltd. <F1> 61
4,900 Bank Plus Corp. <F1> 73
14,737 CFX Corp. 470
28,125 Commercial Federal Corp. 1,023
11,600 Credit Acceptance Corp. <F1> 108
3,900 Delta Financial Corp. <F1> 68
3,200 Dime Community Bancorp, Inc. 78
9,400 Doral Financial Corp. 283
5,700 FFVA Financial Corp. 223
4,300 First Colorado Bancorp, Inc. 125
5,550 First Federal Capital Corp. 183
5,700 First Federal Financial Corp. of Kentucky 124
12,900 First Republic Bank <F1> 464
2,600 First Savings Bank of Washington
Bancorp, Inc. 68
7,612 First Savings Bank, SLA 324
8,645 Fund American Enterprise Holdings Co. 1,168
5,000 Grand Premier Financial, Inc. 95
4,400 HFNC Financial Corp. 58
900 Hoenig Group, Inc. <F1> 6
7,400 Interstate/Johnson Lane, Inc. 226
6,900 InterWest Bancorp Inc. 311
34,400 John Alden Financial Corp. 742
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
BROKERAGE AND FINANCIAL
SERVICES - 2.8% (CONT'D.)
12,400 McDonald and Co. Investments, Inc. $ 370
28,700 Mercury Finance Co. <F1> 22
1,000 National Discount Brokers Group, Inc. <F1> 12
1,200 Northern States Financial Corp. 192
6,830 Ottawa Financial Corp. 198
4,600 PFF Bancorp, Inc. <F1> 95
11,100 Phoenix Duff & Phelps Corp. 104
15,400 Piper Jaffray Cos., Inc. 570
17,325 Queens County Bancorp, Inc. 762
11,800 Reliance Bancorp, Inc. 457
5,400 Resource Bancshares Mortgage Group, Inc. 86
6,050 Southwest Securities Group, Inc. 167
7,200 St. Francis Capital Corp. 328
920 Stifel Financial Corp. 16
6,500 WFS Financial, Inc. <F1> 67
11,971 York Financial Corp. 308
200 Ziegler Cos. (The), Inc. 5
----------
10,205
----------
CHEMICALS, PHARMACEUTICALS AND ALLIED
PRODUCTS - 3.7%
6,340 Aceto Corp. 139
3,200 AXYS Pharmaceuticals, Inc. <F1> 28
8,000 Alliance Pharmaceutical Corp. <F1> 61
99 Alpha 1 Biomedicals, Inc. 0
11,000 Alpharma, Inc. 239
800 American Pacific Corp. <F1> 9
2,300 BioCryst Pharmaceuticals, Inc. <F1> 17
60,200 Biomira, Inc. <F1> 151
2,100 Cadus Pharmaceutical Corp. <F1> 17
53,900 Calgon Carbon Corp. 630
62,900 Carter-Wallace, Inc. 1,144
19,500 Cellpro, Inc. <F1> 71
6,900 Cephalon, Inc. <F1> 97
13,600 Chemed Corp. 558
5,500 ChemFirst Inc. 146
3,200 CNS, Inc. <F1> 18
25,900 Copley Pharmaceutical, Inc. <F1> 181
1,000 Cubist Pharmaceuticals, Inc. <F1> 5
5,075 Cytrx Corp. <F1> 17
1,700 CytoTherapeutics, Inc. <F1> 6
31,400 Dexter Corp. 1,299
3,400 Diagnostic Products Corp. 95
21,200 Ethyl Corp. 170
19,100 Fuller (H.B.) Co. 1,143
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
CHEMICALS, PHARMACEUTICALS AND ALLIED
PRODUCTS - 3.7% (CONT'D.)
18,700 Genemedicine, Inc. <F1> $ 54
6,866 Herbalife International, Inc., Class A 173
2,100 ILEX Oncology, Inc. <F1> 21
10,900 Immucor, Inc. <F1> 105
19,900 Immune Response Corp. <F1> 195
30,700 IVAX Corp. <F1> 269
15,600 Learonal, Inc. 454
14,550 Life Technologies, Inc. 560
17,500 LSB Industries, Inc. 77
11,700 MacDermid, Inc. 336
3,600 Matrix Pharmaceutical, Inc. <F1> 17
3,400 Medarex, Inc. <F1> 16
1,800 Microcide Pharmaceuticals, Inc. <F1> 16
1,300 MIM Corp. <F1> 5
9,000 Mississippi Chemical Corp. 181
11,600 NBTY, Inc. <F1> 705
9,700 NCH Corp. 686
3,800 Neoprobe Corp. 17
14,900 NeXstar Pharmaceuticals, Inc. <F1> 171
2,000 NPS Pharmaceuticals, Inc. <F1> 15
1,700 ONYX Pharmaceuticals, Inc. <F1> 13
25,300 OSI Pharmaceuticals, Inc. <F1> 155
23,900 Pharmaceutical Resources, Inc. <F1> 109
8,900 PharMerica, Inc. <F1> 132
19,700 Quaker Chemical Corp. 374
7,900 Regeneron Pharmaceuticals, Inc. <F1> 58
17,900 Ribi ImmunoChem Research, Inc. <F1> 103
37,900 Roberts Pharmaceutical Corp. <F1> 540
9,200 Schulman (A.), Inc. 232
900 Sibia Neurosciences, Inc. <F1> 5
700 Southwall Technologies, Inc. <F1> 5
7,700 Syborn Chemicals, Inc. <F1> 263
1,700 Synaptic Pharmaceutical Corp. <F1> 22
8,200 Tetra Technologies, Inc. <F1> 203
4,200 U.S. Home & Garden, Inc. <F1> 29
9,200 VIMRx Pharmaceuticals, Inc. <F1> 19
4,800 Viragen, Inc. <F1> 12
42,200 Wellman, Inc. 913
----------
13,501
----------
COMMUNICATIONS - 2.4%
400 Active Voice Corp. <F1> 5
8,000 Aerial Communications, Inc. <F1> 62
34,100 American Mobile Satellite Corp., Inc. <F1> 486
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMMUNICATIONS - 2.4% (CONT'D.)
52,600 ANTEC Corp. <F1> $ 789
2,100 Applied Digital Access, Inc. <F1> 17
3,500 Arch Communications Group, Inc. <F1> 20
6,680 Atlantic Tele-Network, Inc. <F1> 73
27,800 Bowne & Co., Inc. 1,149
2,300 Broadband Technologies, Inc. <F1> 18
1,900 Cadmus Communications Corp. 45
9,600 Centigram Communications Corp. <F1> 127
3,500 Cidco, Inc. <F1> 33
700 CMC Industries, Inc. <F1> 7
4,100 Commonwealth Telephone
Enterprises, Inc. <F1> 115
66,600 CommScope, Inc. <F1> 962
17,700 Corecomm, Inc. <F1> 295
3,400 Corsair Communications, Inc. <F1> 64
900 East/West Communications, Inc. <F1> 1
1,900 EIS International, Inc. <F1> 16
11,700 Geotek Communications, Inc. <F1> 12
6,700 Intermedia Communications, Inc. <F1> 533
6,700 Intek Global Corp. <F1> 19
39,525 Metrocall, Inc. <F1> 277
2,725 Metrocall, Inc. Variable Rights<F1> 0
17,000 Metromedia International Group, Inc. <F1> 258
18,300 Mosaix, Inc. <F1> 215
2,700 Ods Networks, Inc. <F1> 16
6,700 On Command Corp. <F1> 90
2,800 Ortel Corp. <F1> 37
2,900 Periphonics Corp. <F1> 37
36,500 Powertel, Inc. <F1> 788
12,877 Roseville Communications Co. 351
3,200 SpectraLink Corp. <F1> 11
1,200 SpecTran Corp. <F1> 9
1,000 Summa Four, Inc. <F1> 11
1,300 Tadiran Ltd. ADR 54
5,300 TCSI Corp. <F1> 38
4,200 TeleSpectrum Worldwide, Inc. <F1> 30
1,100 Teltrend, Inc. <F1> 15
5,400 Telular Corp. <F1> 14
1,000 TresCom International, Inc. <F1> 10
35,100 True North Communications, Inc. 1,158
30,882 VTEL Corp. <F1> 189
12,800 Woodward Governor Co. 357
----------
8,813
----------
COMPUTERS AND OFFICE MACHINES - 4.3%
10,000 Alliance Semiconductor Corp. <F1> 75
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMPUTERS AND OFFICE
MACHINES - 4.3% (CONT'D.)
15,000 Amplicon, Inc. $ 360
600 Analysis & Technology, Inc. 13
3,300 Applied Voice Technology, Inc. <F1> 129
1,000 Applix, Inc. <F1> 6
1,400 Ardent Software, Inc. <F1> 20
6,300 Auspex Systems, Inc. <F1> 55
700 Award Software International, Inc. <F1> 9
700 Axsys Technologies, Inc. <F1> 19
2,600 Banctec, Inc. <F1> 64
44,000 Borland International, Inc. <F1> 395
1,500 Broadway & Seymour, Inc. <F1> 12
54,200 BT Office Products International, Inc. <F1> 647
1,400 BTG, Inc. <F1> 13
18,000 Caere Corp. <F1> 196
12,000 Calcomp Technology, Inc. <F1> 45
16,000 Cambrex Corp. 805
3,000 Casino Data Systems<F1> 9
500 Ciprico, Inc. <F1> 7
17,100 Cirrus Logic, Inc. 173
3,700 Computer Network Technology Corp. <F1> 17
1,700 Comshare, Inc. <F1> 13
1,700 Creative Computers, Inc. <F1> 13
37,400 Data General Corp. <F1> 662
47,000 Diamond Multimedia Systems, Inc. <F1> 699
3,400 Digi International, Inc. <F1> 94
1,500 Digital Link Corp. <F1> 17
1,000 Dynamics Research Corp. <F1> 12
11,400 Dynatech Corp. 549
6,500 Elcom International, Inc. <F1> 33
12,300 Evans & Sutherland Computer Corp. <F1> 360
30,400 Exabyte Corp. <F1> 262
12,600 Exar Corp. <F1> 272
5,700 FTP Software, Inc. <F1> 19
10,200 General Binding Corp. 332
14,800 Genicom Corp. <F1> 179
7,500 Indus International, Inc. <F1> 77
65,100 Intergraph Corp. <F1> 551
13,000 International Rectifier Corp. <F1> 153
37,350 Interpool, Inc. 579
3,600 Itron, Inc. <F1> 70
13,400 Komag, Inc. <F1> 194
9,700 Macromedia, Inc. 144
600 MapInfo Corp. <F1> 7
30,500 Metromail Corp. <F1> 1,056
1,900 Micro Linear Corp. <F1> 13
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMPUTERS AND OFFICE
MACHINES - 4.3% (CONT'D.)
7,900 Microtouch Systems, Inc. <F1> $ 152
2,500 Microware Systems Corp. <F1> 12
12,300 MTI Technology Corp. <F1> 212
4,800 Mylex Corp. <F1> 38
4,100 National Techteam, Inc. 42
9,300 NetManage, Inc. <F1> 36
1,100 Netopia, Inc. <F1> 7
23,100 Network Computing Devices, Inc. <F1> 243
16,500 Network Peripherals, Inc. <F1> 113
2,100 OPTi, Inc. <F1> 15
700 OrCAD, Inc. <F1> 7
1,000 Overland Data, Inc. <F1> 6
12,000 Par Technology Corp. <F1> 85
4,300 Phoenix Technologies Ltd. <F1> 52
1,800 Planar Systems, Inc. <F1> 23
14,000 Powerhouse Technologies, Inc. <F1> 200
1,700 Printronix, Inc. <F1> 28
2,500 Prism Solutions, Inc. <F1> 14
2,500 Proxim, Inc. <F1> 38
7,500 QAD, Inc. <F1> 110
10,800 Quixote Corp. 108
10,400 Rainbow Technologies, Inc. <F1> 268
12,100 Read Rite Corp. <F1> 167
2,100 Red Brick Systems, Inc. <F1> 13
76,100 S3, Inc. <F1> 537
49,500 Santa Cruz Operation, Inc. <F1> 254
800 Security First Network Bank<F1> 7
1,200 Segue Software, Inc. <F1> 16
41,400 Sequent Computer Systems, Inc. <F1> 756
7,500 Shiva Corp. <F1> 75
3,800 Silicon Storage Technology, Inc. <F1> 11
2,200 Spyglass, Inc. <F1> 18
2,700 SS&C Technologies, Inc. <F1> 46
6,600 Stac, Inc. <F1> 32
21,000 Standard Microsystems Corp. <F1> 205
24,100 Stratus Computer, Inc. <F1> 1,062
1,700 Sync Research, Inc. <F1> 4
800 TAB Products Co. 11
1,300 Texas Micro, Inc. <F1> 5
2,100 Trident Microsystems, Inc. <F1> 16
1,200 TRM Copy Centers Corp. <F1> 17
2,900 Verilink Corp. <F1> 32
15,000 Verity, Inc. <F1> 126
9,900 Walker Interactive Systems, Inc. <F1> 194
12,600 Wall Data, Inc. <F1> 189
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMPUTERS AND OFFICE
MACHINES - 4.3% (CONT'D.)
7,100 Wandel & Goltermann Technologies, Inc. $ 109
26,400 Wang Laboratories, Inc. <F1> 817
----------
15,957
----------
CREDIT INSTITUTIONS - 0.9%
29,455 Astoria Financial Corp. 1,820
2,800 IBS Financial Corp. 54
13,400 JSB Financial, Inc. 750
38,670 National Auto Credit, Inc. <F1> 53
3,000 New Century Financial Corp. <F1> 30
9,000 Paymentech, Inc. <F1> 175
200 PVF Capital Corp. <F1> 5
20,400 Ryland Group, Inc. 564
----------
3,451
----------
ELECTRICAL SERVICES - 0.6%
7,500 Bangor Hydro-Electric Co. <F1> 59
11,200 BayCorp Holdings, Ltd. <F1> 71
15,500 Central Vermont Public Service Corp. 231
4,900 Electroglas, Inc. <F1> 78
7,100 Envoy Corp. <F1> 305
67,400 Executone Information Systems, Inc. <F1> 149
6,900 Green Mountain Power Corp. 130
2,000 St. Joseph Light & Power Co. 36
6,000 Unitil Corp. 152
3,000 Upper Penninsula Energy Corp. 81
16,800 Zurn Industries, Inc. 795
----------
2,087
----------
ELECTRONICS AND OTHER ELECTRICAL
EQUIPMENT - 4.7%
2,800 ADE Corp. <F1> 47
12,900 Aeroflex, Inc. <F1> 171
4,800 Affinity Technology Group, Inc. <F1> 11
800 Align-Rite International, Inc. <F1> 13
7,000 Allen Telecom, Inc. <F1> 110
4,000 Altron, Inc. <F1> 61
19,800 Amtech Corp. <F1> 78
10,500 ANADIGICS, Inc. <F1> 137
12,100 Anixter International, Inc. <F1> 223
18,900 Applied Magnetics Corp. <F1> 219
6,900 Aydin Corp. <F1> 86
6,700 Bel Fuse, Inc. <F1> 153
8,200 Benchmark Electronics, Inc. <F1> 195
1,000 California Micro Devices Corp. <F1> 6
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
ELECTRONICS AND OTHER ELECTRICAL
EQUIPMENT - 4.7% (CONT'D.)
22,200 California Microwave, Inc. <F1> $ 475
28,400 Canadian Marconi Co. 412
600 Central Sprinkler Corp. <F1> 8
8,600 Checkpoint Systems, Inc. <F1> 183
15,600 Coherent Communications Systems Corp. <F1> 377
1,700 C.P. Clare Corp. <F1> 24
28,896 CTS Corp. 981
23,000 Cypress Semiconductor Corp. <F1> 233
28,100 Dallas Semiconductor Corp. 945
5,600 Davel Communications Group, Inc. <F1> 144
24,400 DII Group, Inc. <F1> 524
500 Diodes, Inc. <F1> 5
900 Elantec Semiconductor, Inc. <F1> 8
11,625 Electromagnetic Sciences, Inc. <F1> 262
10,200 Encore Wire Corp. <F1> 330
10,300 ESS Technology, Inc. <F1> 66
9,300 Galileo Electro-Optics Corp. <F1> 136
3,400 Gasonics International Corp. <F1> 35
25,800 General DataComm Industries, Inc. <F1> 153
12,800 Genlyte Group, Inc. <F1> 246
1,600 Genus, Inc. <F1> 4
81,900 Glenayre Technologies, Inc. <F1> 1,024
41,200 Griffon Corp. <F1> 654
4,700 Harman International Industries, Inc. 207
16,500 Hutchinson Technology, Inc. <F1> 437
10,200 IEC Electronics Corp. <F1> 93
2,400 Imnet Systems, Inc. <F1> 54
4,500 Industrial Scientific Corp. 106
11,300 Insteel Industries, Inc. 90
20,400 Integrated Device Technology, Inc. <F1> 287
4,000 Integrated Silicon Solutions, Inc. <F1> 36
12,200 Interdigital Communications Corp. <F1> 70
3,500 InterVoice, Inc. <F1> 33
2,000 ITI Technologies, Inc. <F1> 52
10,200 Kopin Corp. <F1> 180
8,600 Kuhlman Corp. 419
9,300 LTX Corp. <F1> 45
21,700 Magnetek, Inc. 408
2,300 Mattson Technology, Inc. <F1> 14
10,500 MEMC Electronic Materials, Inc. <F1> 167
1,000 Merix Corp. <F1> 18
400 Micrion Corp. <F1> 5
24,300 Micron Electronics, Inc. <F1> 308
10,000 National Presto Industries, Inc. 431
21,500 Park Electrochemical Corp. 555
NORTHERN FUND Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
ELECTRONICS AND OTHER ELECTRICAL
EQUIPMENT - 4.7% (CONT'D.)
35,400 Pioneer Standard Electronics, Inc. $ 434
7,350 Pittway Corp. 529
6,800 Powell Industries, Inc. <F1> 73
23,700 Quickturn Design Systems, Inc. <F1> 241
2,700 Recoton Corp. <F1> 71
8,300 Reptron Electronics, Inc. <F1> 95
2,800 Rofin-Sinar Technologies, Inc. <F1> 54
3,400 SDL, Inc. <F1> 81
1,500 Sheldahl, Inc. <F1> 17
3,800 Siliconix, Inc. <F1> 143
600 Smartflex Systems, Inc. <F1> 6
1,300 Sparton Corp. <F1> 12
1,000 Spectrum Control, Inc. <F1> 6
17,800 Standard Motor Products, Inc. <F1> 342
8,000 Stanford Telecommunications, Inc. <F1> 135
3,100 Symmetricon, Inc. <F1> 22
12,800 Telco Systems, Inc. <F1> 150
2,300 ThermoSpectra Corp. <F1> 22
15,600 Thomas Industries, Inc. 347
2,000 TriQuint Semiconductor, Inc. <F1> 45
28,000 Ultratech Stepper, Inc. <F1> 571
19,400 United Industrial Corp. 251
8,500 Universal Electronics, Inc. <F1> 98
16,100 Valence Technology, Inc. <F1> 79
2,200 Veeco Instruments, Inc. <F1> 82
6,900 Vertex Communications Corp. <F1> 176
17,800 Windmere Corp. 463
1,800 Xicor, Inc. <F1> 5
----------
17,304
----------
FOOD AND BEVERAGES - 2.9%
12,000 Bertuccis, Inc. <F1> 92
56,400 Bob Evans Farms, Inc. 1,195
51,900 Boston Chicken, Inc. <F1> 261
8,400 California Water Service Co. 227
518 Chiquita Brands International, Inc. 7
14,365 Chock Full O'Nuts Corp. <F1> 111
2,600 Darling International, Inc. <F1> 22
60,200 Earthgrains Co. 2,659
2,000 Farmer Bros. Inc. 370
63,700 Fleming Companies, Inc. 1,262
2,900 Genesee Corp., Class B 116
29,844 Imperial Holly Corp. 287
21,400 International Multifoods Corp. 641
12,000 J&J Snack Food Corp. <F1> 235
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
FOOD AND BEVERAGES - 2.9% (CONT'D.)
10,400 Lone Star Steakhouse & Saloon, Inc. <F1> $ 236
20,600 Michael Foods, Inc. 551
13,200 Midwest Grain Products, Inc. <F1> 178
1,100 Opta Food Ingredients, Inc. <F1> 6
13,700 Orange-co, Inc. <F1> 92
2,600 Rare Hospitality International, Inc. <F1> 31
11,000 Riviana Foods, Inc. 250
64,200 Ryan's Family Steak Houses, Inc. <F1> 582
19,450 Sanderson Farms, Inc. 246
9,300 Sanfilippo (John B.) & Son, Inc. <F1> 71
1,250 SEABOARD Corp. 456
8,300 Thorn Apple Valley, Inc. <F1> 141
500 Todhunter International, Inc. <F1> 4
22,114 WLR Foods, Inc. <F1> 124
13,640 Zapata Corp. <F1> 193
----------
10,646
----------
FURNITURE AND FIXTURES - 1.5%
17,700 Bassett Furniture Industries, Inc. 543
25,200 Ethan Allen Interiors, Inc. 1,505
1,600 Falcon Products, Inc. 21
9,300 Flexsteel Industries, Inc. 129
77,400 Heilig-Meyers Co. 1,088
4,850 Knape & Vogt Manufacturing Co. 105
3,300 LADD Furniture, Inc. <F1> 79
24,400 La-Z-Boy Inc. 1,218
22,600 O'Sullivan Industrial Holdings, Inc. <F1> 288
3,800 Pulaski Furniture Corp. 87
15,600 Royal Appliance Manufacturing Co. <F1> 94
9,000 Virco Manufacturing Corp. 217
8,700 Winsloew Furniture, Inc. <F1> 191
----------
5,565
----------
GENERAL BUILDING CONTRACTORS - 2.0%
2,600 ABT Building Products Corp. <F1> 43
1,700 American Residential Services, Inc. <F1> 17
10,000 Amrep Corp. <F1> 97
8,200 Beazer Homes USA, Inc. <F1> 211
12,600 Cameron Ashley, Inc. <F1> 231
9,300 Continental Homes Holding Corp. 432
1,400 Diamond Home Services, Inc. <F1> 9
14,600 Engle Homes, Inc. 245
39,700 Kaufman & Broad Home Corp. 1,293
23,900 M.D.C. Holdings, Inc. 424
10,300 M/I Schottenstein Homes, Inc. <F1> 225
15,100 NVR, Inc. <F1> 477
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
GENERAL BUILDING
CONTRACTORS - 2.0% (CONT'D.)
28,700 Pulte Corp. $1,334
27,300 Schuler Homes, Inc. <F1> 198
800 Schult Homes Corp. <F1> 18
3,200 Southern Energy Homes, Inc. <F1> 39
40,000 Standard-Pacific Corp. 608
7,200 Turner Corp. <F1> 200
15,700 U.S. Home Corp. <F1> 719
23,900 Webb (Del E.) Corp. 729
----------
7,549
----------
GLASS, CLAY AND STONE PRODUCTS - 0.7%
5,400 Ameron International Corp. 316
10,700 Green (A.P.) Industries, Inc. 234
41,100 Jannock Ltd. 617
4,600 Mikasa, Inc. 62
6,600 Puerto Rican Cement Co., Inc. 337
15,300 Southdown, Inc. 1,065
----------
2,631
----------
HEALTH SERVICES - 4.6%
2,300 Aksys, Ltd. <F1> 15
10,900 American Healthcorp, Inc. <F1> 106
20,150 American HomePatient, Inc. <F1> 392
13,100 Apria Healthcare Group, Inc. <F1> 116
14,500 ATL Ultrasound, Inc. <F1> 738
2,900 ATS Medical <F1> 23
10,315 Block Drug Co., Inc., Class A 433
9,400 BRC Holdings, Inc. <F1> 369
2,300 Cardiothoracic Systems, Inc. <F1> 15
3,000 ChiRex, Inc. <F1> 57
2,500 Compdent Corp. <F1> 38
5,000 Complete Management, Inc. <F1> 43
20,400 COR Therapeutics, Inc. <F1> 252
1,900 Corixa Corp. <F1> 14
1,300 Corvas International, Inc. <F1> 7
13,000 Creative Biomolecules, Inc. <F1> 107
800 Daxor Corp. 12
600 DIANON Systems, Inc. <F1> 6
2,900 Duramed Pharmaceuticals, Inc. <F1> 20
14,300 DVI Health Services, Inc. <F1> 328
8,800 Genesis Health Ventures, Inc. <F1> 248
37,800 Gensia Sicor, Inc. <F1> 189
25,630 Graham-Field Health PDS, Inc. <F1> 205
36,000 Haemonetics Corp. <F1> 646
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
HEALTH SERVICES - 4.6% (CONT'D.)
3,700 Health Management, Inc. <F1> $ 46
10,011 Healthcare Service Group<F1> 145
20,951 HealthPlan Services Corp. 552
1,500 Home Health Corp. of America, Inc. <F1> 4
51,600 IDEXX Laboratories, Inc. <F1> 929
25,341 Integrated Health Services, Inc. 996
40,100 Invacare Corp. 1,042
53,300 Isolyser Co., Inc. <F1> 140
700 Karrington Health, Inc. <F1> 8
7,700 Lab Holdings, Inc. 181
9,000 LabOne, Inc. 150
31,300 Laboratory Corporation of America
Holdings<F1> 61
1,200 Laserscope<F1> 3
223 Lynx Therapeutics, Inc. <F1> 2
39,800 Mariner Health Group, Inc. <F1> 682
3,200 Martek Biosciences Corp. <F1> 49
49,600 Matria Healthcare, Inc. <F1> 282
11,600 Maxxim Medical, Inc. <F1> 333
2,600 MedCath, Inc. <F1> 47
5,700 Medical Resources, Inc. 30
12,300 MEDIQ, Inc. <F1> 168
17,416 Molecular Biosystems, Inc. <F1> 161
5,800 Nabi<F1> 18
3,600 Neurogen Corp. <F1> 55
5,200 Neuromedical Systems, Inc. <F1> 13
72,300 NovaCare, Inc. <F1> 1,075
17,300 OEC Medical Systems, Inc. <F1> 409
1,100 Pediatric Services of America, Inc. <F1> 24
9,400 Prime Medical Services, Inc. <F1> 110
40,000 Quest Diagnostics, Inc. <F1> 673
7,200 Rehabcare Group, Inc. <F1> 192
16,100 Rural/Metro Corp. <F1> 529
500 Safeguard Health Enterprises, Inc. <F1> 4
24,500 Sierra Health Services, Inc. <F1> 977
15,200 Staff Builders, Inc., Class A<F1> 34
17,000 Summit Care Corp. <F1> 353
55,200 Sun Healthcare Group, Inc. <F1> 1,028
17,088 Total Renal Care Holdings<F1> 569
11,400 Transcend Services, Inc. <F1> 36
2,500 Transworld HealthCare, Inc. <F1> 15
10,000 Trex Medical Corp. <F1> 188
1,700 UroCor, Inc. <F1> 12
5,100 Veterinary Centers of America, Inc. <F1> 82
6,500 Vitalink Pharmacy Services, Inc. <F1> 140
15,600 Xoma Corp. <F1> 73
----------
16,999
----------
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
HEAVY CONSTRUCTION - 1.2%
8,300 BFC Construction Corp. <F1> $ 81
13,950 Elcor Corp. 375
21,800 Florida Rock Industries, Inc. 623
6,900 Giant Cement Holding, Inc. <F1> 185
24,800 Granite Construction, Inc. 694
31,700 Lennar Corp. 1,091
12,100 Mestek, Inc. <F1> 261
73,300 Morrison Knudsen Corp. <F1> 820
10,600 Nortek, Inc. <F1> 339
----------
4,469
----------
INDUSTRIAL INSTRUMENTS - 2.2%
28,100 Acuson Corp. <F1> 509
5,300 Analogic Corp. 213
2,700 Biosite Diagnostics, Inc. <F1> 44
800 BioSource International, Inc. <F1> 5
2,000 CardiGenesis Corp. <F1> 14
900 CardioVascular Dynamics, Inc. <F1> 5
16,500 Circon Corp. <F1> 275
3,800 Conmed Corp. <F1> 91
9,700 CPAC, Inc. <F1> 108
12,150 Cubic Corp. 286
23,200 Daniel Industries, Inc. 465
22,000 Datascope Corp. 572
2,800 Datum, Inc. <F1> 40
1,300 Eclipse Surgical Technologies, Inc. <F1> 16
6,500 FLIR Systems, Inc. <F1> 132
24,800 Fluke Corp. 591
8,200 Fonar Corp. <F1> 21
2,300 General Surgical Innovations, Inc. <F1> 10
7,400 Hach Co., Class A 61
7,400 Hach Co., Class B 68
2,500 Heartstream, Inc. <F1> 28
3,400 Hologic, Inc. <F1> 94
3,900 IBAH, Inc. <F1> 21
9,600 IFR System, Inc. 214
3,100 InControl, Inc. <F1> 23
1,500 Innovasive Devices, Inc. <F1> 15
9,200 Instron Corp. 175
600 IRIDEX Corp. <F1> 5
2,100 KeraVision, Inc. <F1> 17
2,100 Lunar Corp. <F1> 42
2,100 Mackie Designs, Inc. <F1> 15
4,500 Marquette Medical Systems, Inc. <F1> 125
4,200 Medicus Systems Corp. <F1> 34
88,100 Mentor Corp. <F1> 864
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
INDUSTRIAL INSTRUMENTS - 2.2% (CONT'D.)
7,000 Mine Safety Appliances Co. $ 483
1,100 Minntech Corp. 14
18,600 MTS Systems Corp. 298
12,200 Newport Corp. 241
1,600 Nitinol Medical Technologies, Inc. <F1> 17
700 Norland Medical Systems, Inc. <F1> 3
1,500 Novametrix Medical Systems, Inc. <F1> 11
14,300 Optical Coating Laboratory, Inc. 184
6,000 OrthoLogic Corp. <F1> 42
11,500 Polymedica Industries, Inc. <F1> 141
8,800 Primesource Corp. 98
8,900 Protocol Systems, Inc. <F1> 86
1,400 Quest Medical, Inc. <F1> 12
4,000 QUIDEL Corp. <F1> 12
1,400 Raytel Medical Corp. <F1> 11
3,300 ReSound Corp. <F1> 18
900 SL Industries, Inc. 13
534 Starrett (L.S.) Co., Class B 0
26,200 Sunrise Medical, Inc. <F1> 418
8,200 Tech-Sym Corp. <F1> 231
10,100 TSI, Inc. 88
1,400 Utah Medical Products, Inc. <F1> 11
3,300 Vista Medical Technologies, Inc. <F1> 37
3,200 Vital Signs, Inc. 72
11,100 Watkins-Johnson Co. 300
1,100 Xomed Surgical Products, Inc. <F1> 30
----------
8,069
----------
INSURANCE SERVICES - 6.8%
20,800 Acceptance Insurance Cos., Inc. <F1> 495
9,600 Allcity Insurance Co. <F1> 72
25,425 Allied Group, Inc. 820
400 Allied Life Financial Corp. 9
6,000 American Heritage Life Investment Corp. <F1> 124
27,000 AmerUs Life Holdings, Class A 874
82,600 Argonaut Group, Inc. 2,983
3,100 Atlantic American Corp. <F1> 16
3,800 Baldwin & Lyons, Inc., Class B 82
16,200 Berkley (W.R.) Corp. 767
16,200 Capital RE Corp. 1,041
2,800 Capitol Transamerica Corp. 59
2,600 Centris Group (The), Inc. <F1> 32
2,400 Chartwell Re Corp. 81
37,300 Citizens Corp. 1,161
23,700 CNA Surety Corp. <F1> 378
3,300 Consumer Portfolio Services, Inc. <F1> 40
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
INSURANCE SERVICES - 6.8% (CONT'D.)
2,600 Danielson Holding Corp. <F1> $ 20
8,166 Donegal Group, Inc. 191
15,200 EMC Insurance Group, Inc. 203
21,600 Enhance Financial Services Group, Inc. 1,500
1,300 Farm Family Holding, Inc. <F1> 50
25,500 FBL Financial Group, Inc., Class A 1,291
900 Financial Industries Corp. <F1> 19
20,700 First American Financial Corp. 1,325
4,900 Gainsco, Inc. 40
9,100 Gryphon Holdings, Inc. <F1> 163
2,300 Guarantee Life Cos., Inc. 68
38,800 Harleysville Group, Inc. 1,009
2,500 Highlands Insurance Group, Inc. <F1> 67
14,800 Insurance Auto Auctions, Inc. <F1> 163
10,400 Intercargo Corp. 130
400 InterContinental Life Corp. <F1> 9
8,400 Kansas City Life Insurance Co. 727
12,100 LandAmerica Financial Group, Inc. 548
2,100 Meadowbrook Insurance Group, Inc. 64
3,800 Merchants Group, Inc. 83
8,800 Meridian Insurance Group, Inc. 165
4,200 Midland Co. 329
4,700 NAC Re Corp. 246
2,000 Navigators Group (The), Inc. <F1> 38
5,900 Nobel Insurance Ltd. 77
13,100 Nymagic, Inc. 388
700 Old Guard Group, Inc. 13
6,700 Penn Treaty American Corp. 196
8,200 PICO Holdings, Inc. <F1> 47
46,700 Presidential Life Corp. 884
4,720 Professionals Insurance Co. <F1> 197
20,900 PXRE Corp. 648
3,200 Risk Capital Holdings, Inc. <F1> 77
12,800 RLI Corp. 691
3,300 SCPIE Holdings, Inc. 102
51,600 Selective Insurance Group, Inc. 1,387
8,550 Stewart Information Services Corp. 263
1,000 Superior National Insurance Group, Inc. <F1> 19
3,000 Trenwick Group, Inc. 113
600 Unico American Corp. 10
7,300 United Cos. Financial Corp. 130
9,850 United Fire & Casualty Co. 430
31,600 United Wisconsin Services, Inc. 1,049
500 Walshire Assurance Co. 5
24,000 Zenith National Insurance Corp. 695
----------
24,903
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
JEWELRY AND PRECIOUS METALS - 0.2%
34,600 Jan Bell Marketing, Inc. <F1> $ 171
169,300 Kinross Gold Corp. <F1> 687
1,400 Lazare Kaplan International, Inc. <F1> 15
----------
873
----------
LEATHER PRODUCTS - 0.2%
24,500 Brown Group, Inc. 352
35,700 Justin Industries, Inc. 501
----------
853
----------
LUMBER AND WOOD PRODUCTS - 0.2%
24,000 T.J. International, Inc. 767
----------
MACHINERY - 1.5%
13,000 Ampco-Pittsburgh Corp. 241
12,600 Astec Industries, Inc. <F1> 321
4,200 Binks Sames Corp. 204
1,000 Bridgeport Machines, Inc. <F1> 12
3,000 Cascade Corp. 49
3,200 CTB International Corp. <F1> 55
6,000 DT Industries, Inc. 230
14,600 Excel Industries, Inc. 301
1,300 Franklin Electric Co., Inc. 15
30,600 FSI International, Inc. <F1> 337
9,300 Gardner Denver Machinery, Inc. <F1> 276
7,400 Gehl Co. <F1> 158
30,700 Global Industrial Technologies, Inc. <F1> 507
8,800 Hardinge, Inc. 300
10,300 Imation Corp. <F1> 191
4,400 Integrated Process Equipment Corp. <F1> 89
11,200 Katy Industries, Inc. 213
19,400 Kulicke & Soffa Industries, Inc. <F1> 422
8,900 Lufkin Industries, Inc. 289
3,400 Osmonics, Inc. <F1> 56
25,300 Pilgrim's Pride Corp. 368
800 Portec, Inc. 12
500 Selas Corp. of America 5
8,300 SPX Corp. 632
11,800 Thermo Power Corp. <F1> 134
5,500 Titan International, Inc. 106
2,000 Tractor Supply Co. <F1> 41
3,800 Twin Disc, Inc. 123
400 Valley Forge Corp. 6
----------
5,693
----------
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
MANUFACTURING - GENERAL - 1.2%
2,100 ABC Rail Products Corp. <F1> $ 38
1,100 Acorn Products, Inc. <F1> 11
600 Advanced Magnetics, Inc. <F1> 8
800 Allied Healthcare Products, Inc. <F1> 5
800 American Biltrite, Inc. 24
400 American Technical Ceramics Corp. <F1> 4
5,700 Applied Science & Technology, Inc. <F1> 90
20,200 Aura Systems, Inc. <F1> 69
12,200 Bairnco Corp. 134
300 Baldwin Piano & Organ Co. <F1> 5
1,600 Cardiac Pathways Corp. <F1> 15
2,100 Collagen Corp. 46
1,500 Cybex International, Inc. <F1> 20
1,200 Del Global Technologies Corp. <F1> 14
1,500 Endocardial Solutions, Inc. <F1> 21
4,100 EndoSonics Corp. <F1> 43
4,100 Ennis Business Forms, Inc. 48
2,200 Epitope Inc. <F1> 15
3,600 First Alert, Inc. <F1> 19
32,500 Furniture Brands International, Inc. <F1> 1,045
1,700 GT Bicycles, Inc. <F1> 11
1,700 ICU Medical, Inc. <F1> 26
2,700 Intermagnetics General Corp. <F1> 30
3,000 Jason, Inc. <F1> 29
25,100 Juno Lighting, Inc. 530
8,500 LaCrosse Footwear, Inc. 100
4,900 M & F Worldwide Corp. <F1> 44
400 Moore Products Co. <F1> 13
7,400 Oil-Dri Corporation of America 118
1,000 Patrick Industries, Inc. 16
8,000 Polymer Group, Inc. <F1> 105
1,500 Rival (The) Co. 26
800 Safety Components International, Inc. <F1> 13
10,900 Samsonite Corp. <F1> 320
69,200 Singer Co. N.V. <F1> 731
600 Stratasys, Inc. <F1> 6
1,100 Sun Hydraulics Corp. 16
10,800 Superior Surgical Manufacturing Co., Inc. 189
4,500 Tracor, Inc. <F1> 144
13,700 UNOVA, Inc. <F1> 274
----------
4,415
----------
MERCHANDISE - GENERAL - 0.1%
1,400 AEP Industries, Inc. <F1> 48
11,200 Hunt Corp. 274
----------
322
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
METAL MINING - 1.0%
12,800 Basin Exploration, Inc. <F1> $ 264
83,600 Cambior, Inc. 574
178,600 Campbell Resources, Inc. <F1> 84
15,400 Cleveland Cliffs, Inc. 828
29,700 Coeur D'Alene Mines Corp. 382
2,200 Gold Reserve Corp. <F1> 7
74,800 Hecla Mining Co. <F1> 496
99,900 Meridian Gold, Inc. <F1> 343
25,901 Nord Resources Corp. <F1> 65
191,100 Royal Oak Mines, Inc. <F1> 227
5,200 Stillwater Mining Co. <F1> 132
105,700 Vista Gold Corp. <F1> 33
11,420 Zemex Corp. <F1> 108
----------
3,543
----------
METAL PRODUCTS - 3.2%
28,642 Allegheny Teledyne, Inc. 797
155,800 Amax Gold, Inc. <F1> 477
7,200 Applied Industrial Technologies, Inc. 194
10,300 ASARCO, Inc. 275
1,900 Butler Manufacturing Co. 68
5,000 Century Aluminum Co. 75
4,500 Citation Corp. <F1> 101
19,900 Commercial Metals Co. 697
4,100 Commonwealth Industries, Inc. 71
12,000 Curtiss-Wright Corp. 465
2,200 Easco, Inc. 34
300 Eastern Co. (The) 8
14,200 Handy & Harman Co. 500
4,950 Independence Holding Co. 78
5,800 International Aluminum Corp. 203
15,400 Lone Star Technologies, Inc. <F1> 366
20,300 Lukens, Inc. 664
3,900 Material Sciences Corp. <F1> 43
14,200 Maverick Tube Corp. <F1> 251
23,800 Mueller Industries, Inc. <F1> 1,507
4,500 Pitt-Des Moines, Inc. 216
19,000 Quanex Corp. 571
33,700 ROHN Industries, Inc. 190
5,600 Shaw Group, Inc. <F1> 140
15,700 Shiloh Industries, Inc. <F1> 353
3,400 Southern Peru Copper Corp. 51
7,400 SPS Technologies, Inc. <F1> 399
28,400 Texas Industries, Inc. 1,641
18,075 Varlen Corp. 696
See Notes to the Financial Statements.
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
METAL PRODUCTS - 3.2% (CONT'D.)
29,803 WHX Corp. <F1> $ 486
3,500 Wolverine Tube, Inc. <F1> 140
----------
11,757
----------
MISCELLANEOUS INVESTING INSTITUTIONS - 0.5%
7,809 Cenfed Financial Corp. 359
3,300 Dime Financial Corp. 119
5,600 FFY Financial Corp. 187
1,500 FirstCity Financial Corp. <F1> 45
900 Lynch Corp. <F1> 98
6,616 MAF Bancorp, Inc. 252
25,100 PEC Israel Economic Corp. <F1> 575
7,600 Westerfed Financial Corp. 201
----------
1,836
----------
NATURAL GAS TRANSMISSION - 1.2%
200 Berkshire Gas Co. (The) 5
800 Chesapeake Utilities Corp. 15
9,200 Connecticut Energy Corp. 283
2,100 CTG Resources, Inc. 54
2,300 EnergyNorth, Inc. 67
15,400 NUI Corp. 422
2,800 Patina Oil and Gas Corp. 20
9,500 Piedmont Natural Gas Co. 330
39,200 Primark Corp. <F1> 1,675
7,900 Providence Energy Corp. 165
56,700 Public Service Co. of North Carolina, Inc. 1,386
----------
4,422
----------
OIL AND GAS - 3.3%
2,200 American Oilfield Divers, Inc. <F1> 32
8,600 Atwood Oceanics, Inc. <F1> 465
7,400 Benton Oil & Gas Co. <F1> 82
7,600 Callon Petroleum Co. <F1> 129
31,600 CalMat Co. 873
21,890 Chesapeake Energy Corp. 129
18,500 Chieftain International, Inc. <F1> 439
1,500 Clayton Williams Energy, Inc. <F1> 19
12,400 Cliff's Drilling Co. <F1> 512
11,500 Coho Energy, Inc. <F1> 90
600 Coho Resources Ltd., Class B<F1> 7
3,000 Crystal Oil Co. <F1> 126
900 Dawson Geophysical Co. <F1> 14
2,100 Dawson Production Services, Inc. <F1> 27
2,100 DLB Oil & Gas, Inc. <F1> 19
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
OIL AND GAS - 3.3% (CONT'D.)
31,700 Houston Exploration (The) Co. <F1> $ 683
6,900 Howell Corp. 98
23,000 HS Resources, Inc. <F1> 359
900 Matrix Service Co. <F1> 7
500 Maynard Oil Co. <F1> 6
8,500 Meridian Resource Corp. <F1> 68
6,700 National Energy Group, Inc. <F1> 19
130,600 Numac Energy, Inc. <F1> 473
7,400 Pennsylvania Enterprises, Inc. 187
11,500 PetroCorp, Inc. <F1> 95
22,800 Pool Energy Services Co. <F1> 533
47,700 Quaker State Corp. 897
102,000 Ranger Oil Ltd. <F1> 663
76,300 Rigel Energy Corp. <F1> 632
35,000 RPC, Inc. <F1> 429
31,500 Snyder Oil Corp. 642
11,897 Southern Union Co. <F1> 286
36,800 Southwest Gas Corp. 768
6,300 Southwestern Energy Co. 67
33,000 Stolt Comex Seaway S.A. <F1> 831
5,104 Swift Energy Co. <F1> 87
10,000 Titan Exploration, Inc. <F1> 81
12,000 Tuboscope, Inc. <F1> 228
13,600 Unit Corp. <F1> 111
43,600 Western Gas Resources, Inc. 828
12,100 Wiser Oil Co. 154
----------
12,195
----------
OTHER SERVICES - 1.1%
2,600 Brite Voice Systems, Inc. <F1> 25
500 Childtime Learning Centers, Inc. <F1> 8
4,600 Christiana Co., Inc. <F1> 168
1,300 Correctional Services Corp. <F1> 20
8,700 Data Broadcasting Corp. <F1> 50
1,200 Educational Medical, Inc. <F1> 14
1,400 Electric Fuel Corp. <F1> 4
49,200 Franklin Covey Co. <F1> 1,195
200 Hudson General Corp. 9
400 IIC Industries, Inc. <F1> 4
5,200 InteliData Technologies Corp. <F1> 16
1,400 IntelliQuest Information Group, Inc. <F1> 16
6,675 International Technology Corp. <F1> 68
98,700 Medaphis Corp. <F1> 1,030
4,200 MoneyGram Payment Systems, Inc. <F1> 64
24,500 National Processing, Inc. <F1> 303
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
OTHER SERVICES - 1.1% (CONT'D.)
65,700 Physicians Reliance Network, Inc. <F1> $ 903
1,900 RTW, Inc. <F1> 15
26 Score Board (The), Inc. 0
3,000 Sovran Self Storage, Inc. 89
3,800 U.S. Diagnostic, Inc. <F1> 16
----------
4,017
----------
PAINTS AND RELATED PRODUCTS - 0.0%
600 FinishMaster, Inc. <F1> 6
----------
PAPER AND RELATED PRODUCTS - 0.5%
32,000 Chesapeake Corp. 1,103
3,500 Dravo Corp. <F1> 38
13,100 Longview Fibre Co. 204
8,900 Nashua Corp. <F1> 130
16,200 Paragon Trade Brands, Inc. <F1> 86
18,300 Pope & Talbot, Inc. 278
----------
1,839
----------
PERSONAL SERVICES - 0.2%
29,850 Marcus Corp. 525
13,300 Unifirst Corp. 372
----------
897
----------
PETROLEUM PRODUCTS - 0.3%
3,300 Crown Central Petroleum Corp., Class B<F1> 61
15,000 Giant Industries, Inc. 308
11,467 Louis Dreyfus Natural Gas Corp. <F1> 209
36,400 Tesoro Petroleum Corp. <F1> 650
----------
1,228
----------
PRINTING AND PUBLISHING - 1.2%
1,000 Advanced Marketing Services, Inc. <F1> 19
22,300 American Business Products, Inc. 493
10,812 Axiohm Transaction Solutions, Inc. <F1> 146
20,000 CMP Media, Inc. <F1> 503
400 Courier Corp. 11
14,700 CSS Industries, Inc. <F1> 482
22,300 Gibson Greetings, Inc. <F1> 616
4,300 Nelson (Thomas), Inc. 59
1,500 NewsEdge Corp. <F1> 21
800 Norwood Promotional Products, Inc. <F1> 16
25,200 Standard Register Co. 855
9,900 Topps Co., Inc. <F1> 25
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
PRINTING AND PUBLISHING - 1.2% (CONT'D.)
28,750 World Color Press, Inc. <F1> $ 999
----------
4,245
----------
PROFESSIONAL SERVICES - 3.6%
1,900 3-D Geophysical, Inc. <F1> 18
1,500 ACT Networks, Inc. <F1> 17
1,400 Adept Technology, Inc. <F1> 15
500 Alarmguard Holdings, Inc. <F1> 5
400 Allied Research Corp. <F1> 5
58,300 AMERCO* 1,793
7,400 American Oncology Resources, Inc. <F1> 113
1,300 Andersons (The), Inc. 12
1,600 Atalanta/Sosnoff Capital Corp. <F1> 17
40,400 Banta Corp. 1,250
20,700 Banyan Systems, Inc. <F1> 114
12,200 BE Aerospace, Inc. <F1> 343
1,200 Carey International, Inc. <F1> 29
3,900 Clintrials Research, Inc. <F1> 28
6,100 Cyberonics, Inc. <F1> 194
18,600 Cyrk, Inc. <F1> 288
3,100 DNAP Holding Corp. <F1> 12
1,400 Echelon International Corp., Inc. <F1> 31
39,600 Elsag Bailey Process Automation N.V. <F1> 757
3,300 Euronet Services, Inc. <F1> 25
11,326 Flour Daniel/GTI, Inc. <F1> 109
37,700 Gerber Scientific, Inc. 983
900 Grey Advertising, Inc. 334
2,500 HCIA, Inc. <F1> 37
15,700 Inacom Corp<F1> 434
3,400 INSO Corp. <F1> 60
46,600 Interim Services, Inc. <F1> 1,573
3,000 Landstar System, Inc. <F1> 97
9,900 Layne Christensen Co. <F1> 150
2,100 Microdyne Corp. <F1> 14
6,200 MTL, Inc. <F1> 239
28,700 Network Equipment Technologies, Inc. <F1> 466
17,900 Nichols Research Corp. <F1> 501
2,900 Novadigm, Inc. <F1> 10
10,600 Oak Technology, Inc. <F1> 67
4,600 Personnel Group of America, Inc. <F1> 105
17,900 Pharmaceutical Marketing Services, Inc. <F1> 264
7,600 Phymatrix Corp. <F1> 85
11,300 Physician Computer Network, Inc. <F1> 19
5,000 Physician Resource Group, Inc. <F1> 18
17,050 Pinkerton's, Inc. <F1> 393
See Notes to the Financial Statements.
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
PROFESSIONAL SERVICES - 3.6% (CONT'D.)
3,000 Progress Software Corp. <F1> $ 90
10,900 Protein Design Laboratories, Inc. <F1> 428
20,200 Retix Co. <F1> 98
5,200 Scopus Technology, Inc. <F1> 105
1,100 Seer Technologies, Inc. <F1> 3
300 Somerset Group (The), Inc. 7
1,600 StarTek, Inc. <F1> 19
500 SteriGenics International, Inc. <F1> 11
6,700 Strategic Distribution, Inc. <F1> 40
20,900 Telxon Corp. 554
2,800 Thermo TerraTech, Inc. <F1> 20
6,900 ThermoTrex Corp. <F1> 146
1,900 United Dental Care, Inc. <F1> 34
9,300 Volt Information Sciences, Inc. <F1> 518
11,800 Xircom, Inc. <F1> 163
----------
13,260
----------
REAL ESTATE - 0.8%
8,700 Ambassador Apartments, Inc. 178
12,300 Avatar Holdings, Inc. <F1> 338
4,300 Bluegreen Corp. <F1> 36
5,000 Castle & Cooke, Inc. <F1> 84
2,700 Cavalier Homes, Inc. 31
17,500 Getty Realty Corp. 401
5,533 LaSalle Partners, Inc. <F1> 180
6,100 Lexford, Inc. <F1> 250
32,200 LNR Property Corp. 861
4,500 Price Enterprises, Inc. 86
8,400 Trammell Crow Co. <F1> 239
22,000 Winston Hotels, Inc. 292
----------
2,976
----------
RECREATIONAL AND LEISURE SERVICES - 2.6%
20,800 Aldila, Inc. <F1> 124
3,500 AMC Entertainment, Inc. <F1> 84
13,800 American Classic Voyages Co. <F1> 317
3,400 Ameristar Casinos, Inc. <F1> 20
4,100 Argosy Gaming Co. <F1> 16
40,400 Ascent Entertainment Group, Inc. <F1> 417
61,300 Aztar Corp. <F1> 529
59,900 Boyd Gaming Corp. <F1> 431
5,500 Carmike Cinemas, Inc. <F1> 177
3,900 Casino America, Inc. <F1> 11
239,900 Cineplex Odeon Corp. <F1> 405
10,400 Coastcast Corp. <F1> 217
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
RECREATIONAL AND LEISURE
SERVICES - 2.6% (CONT'D.)
600 Craig Corp. <F1> $ 7
10,500 GC Cos., Inc. <F1> 549
64,000 Grand Casinos, Inc. <F1> 1,092
13,300 Harveys Casino Resorts 377
24,637 Hollywood Park, Inc. <F1> 289
7,100 Homestead Village, Inc. <F1> 107
12,300 Jackpot Enterprises, Inc. <F1> 160
15,200 Lodgenet Entertainment Corp. <F1> 177
13,400 Mikohn Gaming Corp. <F1> 93
6,800 Players International, Inc. <F1> 34
3,248 President Casinos, Inc. <F1> 10
54,900 Prime Hospitality Corp. <F1> 1,071
3,100 Quintel Entertainment, Inc. <F1> 17
700 Reading Entertainment, Inc. <F1> 9
3,600 Red Roof Inns, Inc. <F1> 66
25,300 Rio Hotel & Casino, Inc. <F1> 656
500 Riviera Holdings Corp. <F1> 5
9,700 Sholodge, Inc. <F1> 92
21,900 Showboat, Inc. 656
1,700 Shuffle Master, Inc. <F1> 16
13,100 Skyline Corp. 400
5,400 Sodak Gaming, Inc. <F1> 38
23,000 Spelling Entertainment Group, Inc. 207
8,900 Station Casinos, Inc. <F1> 131
4,000 Suburban Lodges of America, Inc. <F1> 64
4,800 Sunburst Hospitality Corp. <F1> 42
500 Supertel Hospitality, Inc. <F1> 6
5,700 Trump Hotels and Casino Resorts, Inc. <F1> 52
5,300 White River Corp. <F1> 477
----------
9,648
----------
RESEARCH AND CONSULTING SERVICES - 1.6%
4,300 Aurora Biosciences Corp. <F1> 49
700 Baker (Michael) Corp. <F1> 7
1,500 BioReliance Corp. <F1> 25
37,600 Cell Genesys, Inc. <F1> 249
4,400 Continental Can, Inc. <F1> 172
1,100 Corrpro Cos., Inc. <F1> 16
8,500 Cytogen Corp. <F1> 18
24,500 Dames & Moore, Inc. 326
9,900 Exponent, Inc. <F1> 99
3,900 Genome Therapeutics Corp. <F1> 34
2,200 ICF Kaiser International, Inc. <F1> 6
38,500 Information Resources, Inc. <F1> 626
900 Information Storage Devices, Inc. <F1> 5
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
RESEARCH AND CONSULTING
SERVICES - 1.6% (CONT'D.)
38,600 Informix Corp. <F1> $ 328
6,400 Integra Lifesciences Corp. <F1> 28
6,500 Jacobs Engineering Group, Inc. <F1> 210
9,500 Liposome Technology, Inc. <F1> 53
900 M/A/R/C, Inc. 13
24,500 Mycogen Corp. <F1> 446
3,400 Neopath, Inc. <F1> 47
33,000 Neurocrine Biosciences, Inc. <F1> 268
19,100 Northfield Laboratories, Inc. <F1> 191
37,000 OHM Corp. <F1> 497
1,100 Right Management Consultants, Inc. <F1> 13
43,400 Scios, Inc. 529
10,800 Somatogen, Inc. <F1> 91
13,000 SpaceLabs Medical, Inc. <F1> 288
1,300 SpectRx, Inc. <F1> 11
17,400 Stone & Webster, Inc. 813
7,500 Summit Technology, Inc. <F1> 41
600 Thomas Group, Inc. <F1> 5
14,383 URS Corp. <F1> 227
----------
5,731
----------
RETAIL - 5.7%
1,000 Alrenco, Inc. <F1> 20
34,800 AnnTaylor Stores, Inc. <F1> 572
1,700 Applied Extrusions Technologies, Inc. <F1> 13
38,000 Avis Rent A Car, Inc. <F1> 1,233
16,500 Baker (J.), Inc. 130
11,500 Bell Microproducts, Inc. <F1> 86
12,300 Blair Corp. <F1> 281
2,900 Books-A-Million, Inc. <F1> 17
9,600 Bombay Co. (The), Inc. <F1> 48
11,300 Bon-Ton Stores, Inc. <F1> 172
10,600 Brookstone, Inc. <F1> 140
11,500 Buffets, Inc. <F1> 158
64,320 Burlington Coat Factory Warehouse Co. 1,118
11,700 Buttrey Food & Drug Stores Co. <F1> 174
33,000 Cash America International, Inc. 536
161,700 Charming Shoppes, Inc. <F1> 768
15,900 Chart House Enterprises, Inc. <F1> 111
82,500 Checkers Drive-In Restaurants, Inc. <F1> 72
700 Consolidated Products, Inc. <F1> 6
8,500 Davco Restaurants, Inc. <F1> 168
2,100 DEB Shops, Inc. 15
22,400 Dress Barn, Inc. <F1> 644
17,800 Drug Emporium, Inc. <F1> 75
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
RETAIL - 5.7% (CONT'D.)
800 Duckwall-ALCO Stores, Inc. <F1> $ 12
44,400 Eagle Hardware & Garden, Inc. <F1> 783
23,400 Egghead, Inc. <F1> 252
8,500 Einstein/Noah Bagel Corp. <F1> 35
3,900 Fabri-Centers of America, Inc., Class A 121
9,300 Fedders Corp. 53
24,500 Filene's Basement Corp. <F1> 132
54,900 Fingerhut Cos., Inc. 1,424
1,400 Florsheim Group, Inc. <F1> 12
8,141 Frisch's Restaurants, Inc. 106
4,300 Galoob Toys, Inc. <F1> 43
2,300 Getty Petroleum Marketing, Inc. <F1> 14
500 Global Motorsport Group, Inc. <F1> 9
18,700 Good Guys, Inc. <F1> 198
14,200 Gottschalks, Inc. <F1> 113
11,600 Haggar Corp. 171
11,800 Haverty Furniture, Inc. 221
17,600 Helen of Troy Ltd. <F1> 327
9,300 Hollywood Entertainment Corp. <F1> 130
51,000 HomeBase, Inc. <F1> 427
16,300 InterTAN, Inc. <F1> 85
6,900 Jacobson Stores, Inc. <F1> 97
7,600 Just For Feet, Inc. <F1> 155
2,300 Koo Koo Roo, Inc. <F1> 7
21,500 Lechters, Inc. <F1> 122
2,700 Lifetime Hoan Corp. 31
13,000 Lillian Vernon Corp. 227
1,400 Little Switzerland, Inc. <F1> 11
28,100 Michael's Stores, Inc. <F1> 1,050
46,700 Micro Warehouse, Inc. <F1> 762
1,700 Monro Muffler Brake, Inc. <F1> 28
24,900 Musicland Stores Corp. <F1> 282
4,400 National Media Corp. <F1> 11
13,500 Piccadilly Cafeterias, Inc. 170
2,800 Quality Dining, Inc. <F1> 14
300 Republic Automotive Parts, Inc. <F1> 5
1,300 REX Stores Corp. <F1> 19
600 Rush Enterprises, Inc. <F1> 7
4,800 Schultz Sav-o Stores, Inc. 80
1,700 SED International Holdings, Inc. <F1> 19
25,500 Service Merchandise Co., Inc. <F1> 51
17,700 Shoe Carnival, Inc. <F1> 190
43,900 Shopko Stores, Inc. <F1> 1,391
7,950 Showbiz Pizza Time, Inc. <F1> 265
29,700 Sizzler International, Inc. <F1> 98
11,000 Sport Supply Group, Inc. <F1> 102
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
RETAIL - 5.7% (CONT'D.)
42,700 Sports Authority (The), Inc. <F1> $ 699
800 Stephan Co. (The) 10
11,100 Swiss Army Brands, Inc. <F1> 130
24,000 Syms Corp. <F1> 339
20,100 Taco Cabana, Inc., Class A<F1> 138
8,100 Talbots, Inc. 158
17,100 Tandycrafts, Inc. <F1> 90
25,500 TCBY Enterprises, Inc. 255
8,000 Trak Auto Corp. <F1> 76
4,400 Ugly Duckling Corp. <F1> 48
4,600 United Auto Group, Inc. <F1> 61
1,900 Uno Restaurant Corp. <F1> 14
43,100 Value City Department Stores, Inc. <F1> 730
12,400 Vicorp Restaurants, Inc. <F1> 228
9,400 Wolohan Lumber Co. 122
47,600 Zale Corp. <F1> 1,374
----------
20,891
----------
RUBBER AND PLASTICS - 1.1%
38,200 ACX Technologies, Inc. <F1> 914
13,700 Blessings Corp. <F1> 247
8,300 China Tire Holdings Ltd. 63
11,968 Essef Corp. <F1> 226
15,600 Furon Co. 368
21,500 Gundle/SLT Environmental, Inc. <F1> 113
2,300 Lamson & Sessions (The) Co. <F1> 15
3,800 O'Sullivan Corp. 36
2,500 Park-Ohio Industries<F1> 48
400 Ragan (Brad), Inc. <F1> 14
15,000 Sealright Co., Inc. <F1> 206
18,500 Sola International, Inc. <F1> 767
9,550 Tredegar Industries, Inc. 692
18,100 Uniroyal Technology Corp. <F1> 167
----------
3,876
----------
SANITARY SERVICES - 0.2%
14,300 Kaiser Ventures, Inc. <F1> 189
94,500 Laidlaw Environment Services, Inc. <F1> 354
5,245 NSC Corp. 10
300 Scope Industries 19
10,720 Sevenson Environmental Services, Inc. 102
2,100 Thermo Remediation, Inc. 13
688 Valley Systems, Inc. <F1> 1
----------
688
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
SERVICE INDUSTRY MACHINERY - 0.2%
7,100 Edelebrock Corp. <F1> $ 138
14,300 Scotsman Industries, Inc. 411
2,200 Thermo Sentron, Inc. <F1> 25
1,100 Trident International, Inc. <F1> 17
----------
591
----------
SOCIAL SERVICES - 0.1%
13,100 Berlitz International, Inc. <F1> 355
1,200 New Horizons Worldwide, Inc. <F1> 16
----------
371
----------
STEEL PRODUCTS - 1.6%
15,800 Acme Metals, Inc. <F1> 145
13,500 AK Steel Holding Corp. 285
11,800 Amcast Industrial Corp. 255
40,300 Birmingham Steel Corp. 660
22,200 Brush Wellman, Inc. 633
11,500 Fansteel, Inc. <F1> 87
16,700 Gibraltar Steel Corp. <F1> 357
12,300 Inland Steel Industries, Inc. 340
52,500 J & L Specialty Steel, Inc. 499
6,100 National Steel Corp. 104
14,500 Olympic Steel, Inc. <F1> 201
34,900 Oregon Steel Mills, Inc. 768
20,550 Reliance Steel & Aluminum Co. 791
15,225 Roanoke Electric Steel Corp. 314
8,100 Steel of West Virginia, Inc. <F1> 83
16,300 Steel Technologies, Inc. 195
12,800 Tyler Corp. <F1> 99
58,100 Weirton Steel Corp. <F1> 211
----------
6,027
----------
TEXTILES - 1.7%
12,400 Angelica Corp. 286
188,700 Burlington Industries, Inc. <F1> 3,314
5,100 Chemfab Corp. <F1> 125
6,300 Cone Mills Corp. <F1> 56
10,800 Crown Crafts, Inc. 226
11,400 Dixie Group (The), Inc. <F1> 132
15,600 Dyersburg Corp. 122
7,700 Fab Industries, Inc. 245
26,100 Guilford Mills, Inc. 770
13,200 Johnstown American Industries, Inc. <F1> 216
36,700 Phillips-Van Heusen Corp. 452
3,362 Pillowtex Corp. 163
19,600 Worldtex, Inc. <F1> 148
----------
6,255
----------
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
TRANSPORTATION PARTS AND EQUIPMENT - 3.3%
38,550 AAR Corp. $ 1,050
14,000 Amtran, Inc. <F1> 228
7,400 Arctic Cat, Inc. 69
26,500 Arkansas Best Corp. <F1> 290
29,200 Arvin Industries, Inc. 1,195
19,700 Avondale Industries, Inc. <F1> 566
31,800 Banner Aerospace, Inc. <F1> 372
17,800 Brilliance China Automotive Holdings Ltd. 189
9,100 Celadon Group, Inc. <F1> 134
3,400 Copart, Inc. <F1> 57
33,500 Detroit Diesel Corp. <F1> 735
8,500 Durakon Industries, Inc. <F1> 79
5,400 Exide Corp. 91
200 Federal Screw Works 11
4,700 FRP Properties, Inc. <F1> 153
19,200 Greenbrier, Inc. 331
17,300 Huffy Corp. 280
400 Lund International Holdings, Inc. <F1> 5
6,600 Molecular Dynamics, Inc. <F1> 95
16,700 MotivePower Industries, Inc. <F1> 461
11,300 Old Dominion Freight Line, Inc. <F1> 194
43,700 Orbital Sciences Corp. <F1> 1,961
300 Oshkosh Truck Corp. 6
10,700 R & B, Inc. <F1> 111
83,700 Rollins Truck Leasing Corp. 1,156
2,100 Spartan Motors, Inc. <F1> 17
22,800 Standard Products Co. 751
45,000 Stewart & Stevenson Services, Inc. 1,083
9,800 Thor Industries, Inc. 401
600 Transpro, Inc. 5
11,800 Walbro Corp. <F1> 145
----------
12,221
----------
TRANSPORTATION SERVICES - 5.2%
8,300 AirTran Holdings, Inc. <F1> 58
19,800 Alaska Air Group, Inc. <F1> 1,073
9,300 Allied Holdings, Inc. <F1> 186
8,000 American Freightways, Inc. <F1> 88
6,500 Arnold Industries, Inc. 110
19,600 Circle International Corp. <F1> 519
5,700 Consolidated Freightways Corp. <F1> 97
600 Dynamex, Inc. <F1> 7
8,000 Florida East Coast Industries, Inc. 889
48,100 Fritz Companies, Inc. <F1> 764
22,800 Frozen Food Express Industries, Inc. 215
80,500 Greyhound Lines, Inc. <F1> 382
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
TRANSPORTATION SERVICES - 5.2% (CONT'D.)
5,300 Gulfmark Offshore, Inc. <F1> $ 146
9,700 Hawaiian Airlines, Inc. <F1> 33
49,500 Hunt (J.B.) Transportation Services, Inc. 1,408
400 Kenan Transport Co. 13
33,000 Kirby Corp. <F1> 794
5,900 KLLM Transport Services, Inc. <F1> 74
17,200 Maritrans, Inc. 188
6,000 Marten Transport Ltd. <F1> 110
11,800 Matlack Systems, Inc. <F1> 112
16,300 M.S. Carriers, Inc. <F1> 552
38,400 Mesa Airlines, Inc. <F1> 353
28,800 Offshore Logistics, Inc. <F1> 572
6,200 Oglebay Norton Co. 256
58,300 OMI Corp. <F1> 525
49,550 Overseas Shipholding Group, Inc. 1,059
8,100 PS Group, Inc. <F1> 105
900 RailAmerica, Inc. <F1> 6
12,400 Railtex, Inc. <F1> 205
27,900 Roadway Express, Inc. 685
13,800 Skywest, Inc. 504
3,400 Stolt-Nielsen S.A. 68
38,400 Teekay Shipping Corp. 1,195
20,800 Tower Air, Inc. <F1> 104
8,400 TransFinancial Holdings, Inc. <F1> 79
1,100 Transport Corp. of America, Inc. <F1> 19
30,600 US Freightways Corp. 1,102
45,350 Werner Enterprises, Inc. 1,156
38,700 XTRA Corp. 2,496
38,600 Yellow Corp. <F1> 738
----------
19,045
----------
UTILITIES - ELECTRIC - 2.3%
5,000 Calpine Corp. <F1> 89
26,600 Central Hudson Gas & Electric Corp. 1,160
44,000 Central Maine Power Co. 776
17,700 CILCORP, Inc. 854
27,700 Eastern Utilities Associates 755
4,300 Empire District Electric Co. 93
11,500 Interstate Power Co. 412
18,500 Orange & Rockland Utilities, Inc. 830
21,600 Sierra Pacific Resources 811
17,800 TNP Enterprises, Inc. 589
3,000 Trigen Energy Corp. 45
19,100 United Illuminating Co. 924
2,400 WPS Resources Corp. 1,079
----------
8,417
----------
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
WATER SUPPLY - 0.6%
6,600 Aquarion Co. $ 214
12,000 Consumers Water Co. 248
10,700 E' Town Corp. 371
4,300 SJW Corp. 303
12,200 Southern California Water Co. 317
35,268 United Water Resources, Inc. 637
----------
2,090
----------
WHOLESALE - 2.1%
11,100 Atchison Casting Corp. <F1> 173
12,387 Bell Industries, Inc. <F1> 175
16,000 Bindley Western Industries, Inc. 607
16,100 Building Materials Holding Corp. <F1> 219
4,200 Discount Auto Parts, Inc. <F1> 102
25,800 Ekco Group, Inc. <F1> 182
45,300 Handleman Co. <F1> 362
23,900 Hughes Supply, Inc. 865
9,700 IGEN, Inc. <F1> 411
1,200 Industrial Distribution Group, Inc. <F1> 22
53,200 Intelligent Electronics, Inc. <F1> 384
25,500 Marshall Industries Co. <F1> 851
21,000 Microage, Inc. <F1> 265
13,600 Morgan Products Ltd. Co. <F1> 75
15,300 Nash-Finch Co. 304
2,000 Noel Group, Inc. <F1> 5
4,900 Noland Co. 115
1,200 NuCo2, Inc. <F1> 16
32,600 Owens & Minor, Inc. Holding Co. 589
7,200 Rentrak Corp. <F1> 68
9,400 Richardson Electronics Ltd. 126
1,500 Richey Electronics, Inc. <F1> 15
13,200 Russ Berrie & Co., Inc. 400
22,600 Sciclone Pharmaceuticals, Inc. <F1> 90
16,100 Shaman Pharmaceuticals, Inc. <F1> 81
5,900 Software Spectrum, Inc. <F1> 128
17,220 Standard Commercial Corp. <F1> 274
13,000 Syncor International Corp. <F1> 236
7,720 United Stationers, Inc. <F1> 477
9,900 Vallen Corp. <F1> 203
----------
7,820
----------
Total Common Stocks
(cost $269,134) 365,348
----------
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
WARRANTS - 0.0%
50 Coram Healthcare Corp., Exp. 7/11/99<F1> $ 0
51 Jan Bell Marketing, Inc., Exp. 12/16/98<F1> 0
255 Millicom American Satellite, Exp. 6/30/99<F1> 0
1,010 Olicom A/S, Exp. 6/11/00<F1> 10
23 Perkin-Elmer Corp., Exp. 9/11/03<F1> 0
27 Royce Laboratories, Inc., Exp. 1998<F1> 0
18 Sound Advice, Inc., Exp. 6/14/99<F1> 0
90 Stevens International, Inc., Exp. 10/30/98<F1> 0
32 Valley Systems, Inc., Exp. 1998<F1> 0
50 Xytronyx, Inc., Exp. 8/11/01<F1> 0
10 York Research Corp., Class B,
Exp. 5/1/98<F1> 0
6 York Research Corp., Class C,
Exp. 9/30/98<F1> 0
----------
Total Warrants
(cost $0) 10
----------
OTHER INVESTMENTS - 0.0%
10,000 Escrow American Medical Electronics, Inc. <F1> 0
220 Escrow Millicom, Inc. <F1> 0
300 Escrow Northeast Bancorp, Inc. <F1> 0
225 Escrow Statesman Group, Inc. <F1> 0
4,500 Escrow Strawbridge & Clothier<F1> 0
1,200 Escrow Takecare, Inc. <F1> 0
----------
Total Other Investments
(cost $0) 0
----------
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
SMALL CAP FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- ----------------------------------------------------------------------
PROMISSORY NOTE - 0.0%
$ 3 DVL, Inc. Redeemable Promissory Note,
10.00%, 12/31/05
(cost $0) $ 3
----------
SHORT-TERM INVESTMENTS - 1.8%
6,115 Banque Paribas, Grand Cayman,
6.13%, 4/1/98 6,115
470 U.S. Treasury Bill,
5.32%, 4/16/98 <F1> 464
----------
Total Short-Term Investments
(cost $6,579) 6,579
----------
Total Investments - 100.9%
(cost $275,713) 371,940
Liabilities less Other Assets - (0.9)% (3,361)
----------
NET ASSETS - 100.0% $368,579
==========
OPEN FUTURES CONTRACTS:
Contract Unrealized
Number of Amount Contract Contract Gain
Type Contracts (000s) Position Exp. (000s)
- ----------------------------------------------------------------------------
Russell 2000 21 $5,114 Long 6/98 $75
S&P/Barra Value 11 1,508 Long 6/98 20
----
$95
====
<F2> Security pledged as collateral to cover margin requirements for open
futures contracts.
See Notes to the Financial Statements.
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERNATIONAL GROWTH EQUITY FUND
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMMON STOCKS - 94.1%
FRANCE - 14.2%
9,500 Accor S.A. $ 2,438
38,000 Axa-UAP 3,913
14,000 Castorama Dubois Investisse 2,350
32,000 Cie Financiere Paribas 3,238
14,000 Cie Generale des Eaux 2,273
23,000 Elf Aquitaine S.A. 3,013
11,000 Groupe Danone S.A. 2,656
16,000 Societe Generale 3,202
16,000 Suez Lyonnaise des Eaux 2,311
----------
25,394
----------
GERMANY - 12.2%
11,000 Allianz A.G. 3,322
40,000 Deutsche Bank A.G. 3,010
5,000 Karstadt A.G. 1,952
9,000 MAN A.G. 2,998
4,300 Mannesmann A.G. 3,148
6,000 Muenchener Rueckversicherungs -
Gesellschaft A.G. 2,595
38,000 VEBA A.G. 2,696
2,500 Volkswagen A.G. 1,958
----------
21,679
----------
GREECE - 2.0%
15,000 Alpha Credit Bank 1,161
30,000 Hellenic Bottling Co. S.A. 863
60,000 Hellenic Telecommunication
Organization S.A. 1,501
----------
3,525
----------
IRELAND - 1.8%
50,000 Elan Corp. PLC ADR<F1> 3,231
----------
ITALY - 7.4%
125,000 Assicurazioni Generali 3,854
650,000 Fiat S.p.A. 2,712
850,000 Pirelli S.p.A. 3,259
425,000 Telecom Italia S.p.A. 3,349
----------
13,174
----------
JAPAN - 15.6%
100,000 Eisai Co. Ltd. 1,372
50,000 Fuji Photo Film Co. 1,860
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
JAPAN - 15.6% (CONT'D.)
250,000 Industrial Bank of Japan (The) Ltd. $ 1,706
25,000 Ito-Yokado Co. Ltd. 1,354
35,000 Jafco Co. 1,181
200,000 Kirin Brewery Co. Ltd. 1,785
30,000 Matsumotokiyoshi 1,057
155,000 Mitsubishi Estate Co. Ltd. 1,511
150,000 Nippon Comsys Corp. 1,754
275 Nippon Telegraph & Telephone Corp. 2,289
135,000 Nomura Securities Co. Ltd. 1,589
200,000 Obayashi Corp. 982
115,000 Ricoh Co. Ltd. 1,156
350,000 Sakura Bank (The) Ltd. 1,241
110,000 Sanwa Bank (The) Ltd. 982
230,000 Sumitomo Realty & Development Co. Ltd. 1,355
150,000 Terumo Corp. 2,103
105,000 Uny Co. Ltd. 1,716
60,000 Xebio Co. Ltd. 742
----------
27,735
----------
NETHERLANDS - 4.2%
33,000 ING Groep N.V. 1,873
45,000 Unilever N.V. ADR 3,088
40,000 Vendex International N.V. 2,533
----------
7,494
----------
PORTUGAL - 2.2%
60,000 Cimpor - Cimentos de Portugal,
SGPS, S.A. 2,114
36,000 Portugal Telecom S.A. ADR 1,888
----------
4,002
----------
SPAIN - 3.2%
23,000 Banco Bilbao Vizcaya S.A. 1,080
160,000 Iberdrola S.A. 2,430
16,000 Telefonica de Espana ADR 2,116
----------
5,626
----------
SWEDEN - 2.7%
115,000 Astra AB, A Shares 2,374
30,000 Electrolux AB, B Shares 2,477
----------
4,851
----------
SWITZERLAND - 8.0%
12,000 Credit Suisse Group 2,401
1,500 Nestle S.A. 2,866
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERNATIONAL GROWTH EQUITY FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
SWITZERLAND - 8.0% (CONT'D.)
2,000 Novartis A.G. $ 3,540
1,700 UBS Bearer 2,777
4,500 Zurich Versicherungs-Gesellschaft A.G. 2,612
----------
14,196
----------
UNITED KINGDOM - 20.6%
200,000 Bass PLC 3,839
200,000 CRH PLC 3,014
220,000 Diageo PLC 2,594
450,000 General Electric Co. PLC 3,564
48,000 Glaxo Wellcome PLC ADR 2,598
210,000 Great Universal Stores PLC 2,608
500,000 Ladbroke Group PLC 2,799
210,000 Lloyds TSB Group PLC 3,267
200,000 National Westminster Bank PLC 3,660
185,000 Pearson PLC 3,005
500,000 Shell Transport & Trading Co. 3,676
20,000 Vodafone Group PLC ADR 2,078
----------
36,702
----------
Total Common Stocks
(cost $141,493) 167,609
----------
Total Investments - 94.1%
(cost $141,493) 167,609
Other Assets less Liabilities - 5.9% 10,601
----------
NET ASSETS - 100.0% $178,210
==========
See Notes to the Financial Statements.
At March 31, 1998, the International Growth Equity Fund's investments were
diversified as follows:
Industry
Sector
- ----------------------------------------
Basic Industries/Energy 8.1%
Capital Goods 8.7
Consumer Goods 34.8
Financial Services 27.4
Real Estate 1.6
Technology 8.1
Other 11.3
------
Total 100.0%
======
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERNATIONAL SELECT EQUITY FUND
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMMON STOCKS - 88.9%
AUSTRIA - 2.0%
40,000 Erste Bank der Desterreichischen
Sparkasser A.G. $ 2,389
----------
BRAZIL - 1.7%
15,000 Telebras ADR 1,947
----------
FRANCE - 8.3%
15,000 Castorama Dubois Investisse 2,518
12,000 Societe Generale 2,402
20,000 Total S.A., B Shares 2,402
15,000 Union des Assurances Federales 2,464
----------
9,786
----------
GERMANY - 2.5%
15,000 ERGO Versicherungs Gruppe A.G. 2,952
----------
GREECE - 4.4%
25,000 Alpha Credit Bank 1,935
10,000 Hellenic Bottling Co. S.A. 288
120,000 Hellenic Telecommunication
Organization S.A. 3,002
----------
5,225
----------
IRELAND - 4.2%
175,000 CRH PLC 2,637
35,000 Elan Corp. PLC ADR<F1> 2,262
----------
4,899
----------
ITALY - 9.0%
156,600 Assicurazioni Generali 4,828
100,000 Banco Popolare di Bergamo Credito
Varesino S.p.A. 2,288
900,000 Pirelli S.p.A. 3,451
----------
10,567
----------
JAPAN - 14.9%
55,000 Fuji Photo Film Co. 2,046
275,000 Industrial Bank of Japan (The) 1,877
40,000 Ito-Yokado Co. Ltd. 2,166
57,000 Matsumotokiyoshi 2,009
300 Nippon Telegraph & Telephone Corp. 2,497
75,000 Sankyo Co. Ltd. 2,081
175,000 Terumo Corp. 2,454
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
JAPAN - 14.9% (CONT'D.)
150,000 Uny Co. Ltd. $ 2,452
----------
17,582
----------
MEXICO - 2.0%
75,000 Cifra S.A. ADR 1,350
200,000 Kimberly-Clark de Mexico S.A., A Shares 1,033
----------
2,383
----------
NETHERLANDS - 6.6%
50,000 Cap Gemini N.V. 3,070
90,000 Vedior N.V. 2,267
70,000 Verenigd Bezit VNU 2,394
----------
7,731
----------
NORWAY - 2.3%
100,000 Tomra Systems ASA 2,649
----------
PORTUGAL - 5.1%
90,000 Cimpor-Cimentos de Portugal, SGPS, S.A. 3,171
55,000 Portugal Telecom S.A. ADR 2,884
----------
6,055
----------
SOUTH AFRICA - 2.5%
100,000 Nedcor Ltd. 2,937
----------
SWEDEN - 1.8%
100,000 Astra AB, A Shares 2,064
----------
SWITZERLAND - 7.3%
15,000 Credit Suisse Group 3,001
1,800 Novartis A.G. 3,185
225 Roche Holding A.G. 2,435
----------
8,621
----------
UNITED KINGDOM - 14.3%
100,000 Barclays PLC 2,997
490,000 Capita Group PLC 3,689
200,000 National Westminster Bank PLC 3,661
175,000 Pearson PLC 2,842
35,000 Vodafone Group PLC ADR 3,636
----------
16,825
----------
Total Common Stocks
(cost $80,776) 104,612
----------
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
INTERNATIONAL SELECT EQUITY FUND (continued)
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
PREFERRED STOCKS - 5.2%
GERMANY - 5.2%
12,000 Fresenius A.G. $ 2,660
8,000 SAP A.G. 3,402
----------
Total Preferred Stocks
(cost $2,825) 6,062
----------
PRINCIPAL
AMOUNT
(000S)
- ---------
SHORT-TERM INVESTMENTS - 4.3%
$4,684 Banque Paribas, Grand Cayman,
6.125%, 4/1/98 4,684
355 FHLB Discount Note,
5.889%, 4/1/98 355
----------
Total Short-Term Investments
(cost $5,039) 5,039
----------
Total Investments - 98.4%
(cost $88,640) 115,713
Other Assets less Liabilities - 1.6% 1,905
----------
NET ASSETS - 100.0% $117,618
==========
See Notes to the Financial Statements.
At March 31, 1998, the International Select Equity Fund's investments, excluding
short-term investments, were diversified as follows:
Industry
Sector
- ----------------------------------------
Basic Industries/Energy 7.0%
Capital Goods 5.2
Consumer Goods 29.9
Financial Services 28.7
Pharmaceuticals 16.4
Other 12.8
------
Total 100.0%
======
SCHEDULES OF INVESTMENTS MARCH 31, 1998
TECHNOLOGY FUND
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMMON STOCKS - 98.8%
COMMUNICATIONS EQUIPMENT - 20.9%
56,700 3Com Corp. <F1> $ 2,038
83,000 Ascend Communications, Inc. <F1> 3,144
90,000 Bay Networks, Inc. <F1> 2,441
16,500 CIENA Corp. <F1> 703
57,862 Cisco Systems, Inc. <F1> 3,956
7,530 Exodus Communications, Inc. <F1> 211
12,800 Loral Space & Communications Ltd. <F1> 358
30,700 Lucent Technologies, Inc. 3,926
17,100 P-COM, Inc. <F1> 342
12,008 Qwest Communications International, Inc. <F1> 467
5,333 RELTEC Corp. <F1> 189
54,500 Tellabs, Inc. <F1> 3,658
9,000 Uniphase Corp. <F1> 379
----------
21,812
----------
COMPUTER PERIPHERALS - 5.0%
83,000 EMC Corp. <F1> 3,138
82,400 Seagate Technology, Inc. <F1> 2,081
----------
5,219
----------
COMPUTER SOFTWARE AND SERVICES - 36.1%
47,750 America Online, Inc. <F1> 3,262
5,600 Arbor Software Corp. <F1> 258
5,000 At Home Corp., Series A<F1> 169
35,000 BEA Systems, Inc. <F1> 984
50,100 Computer Associates International, Inc. 2,893
50,400 Computer Sciences Corp. <F1> 2,772
8,500 Documentum, Inc. <F1> 460
55,000 Electronic Arts, Inc. <F1> 2,581
41,400 Electronic Data Systems Corp. 1,899
12,575 Genesys Telecommunications
Laboratories, Inc. <F1> 478
10,500 HBO & Co. 634
56,000 Intuit, Inc. <F1> 2,709
3,432 ISS Group, Inc. <F1> 133
11,875 J.D. Edwards & Co. <F1> 388
31,000 Microsoft Corp. <F1> 2,775
62,668 Netscape Communications Corp. <F1> 1,140
10,362 Networks Associates, Inc. <F1> 687
91,380 Oracle Corp. <F1> 2,884
90,000 Parametric Technology Corp. <F1> 2,998
68,300 PeopleSoft, Inc. <F1> 3,599
24,206 Siebel Systems, Inc. <F1> 696
See Notes to the Financial Statements.
NUMBER VALUE
OF SHARES (000s)
- ----------------------------------------------------------------------
COMPUTER SOFTWARE AND
SERVICES - 36.1% (CONT'D.)
13,000 Synopsys, Inc. <F1> $ 426
31,000 Yahoo! Inc. <F1> 2,866
----------
37,691
----------
COMPUTER SYSTEMS - 11.7%
70,700 Compaq Computer Corp. <F1> 1,829
54,000 Dell Computer Corp. <F1> 3,658
42,325 Hewlett-Packard Co. 2,682
18,400 International Business Machines Corp. 1,911
50,700 Sun Microsystems, Inc. <F1> 2,115
----------
12,195
----------
DATA PROCESSING - 4.6%
34,800 Automatic Data Processing, Inc. 2,368
74,000 First Data Corp. 2,405
----------
4,773
----------
ELECTRICAL AND ELECTRONIC
COMPONENTS - 20.0%
20,500 Analog Devices, Inc. <F1> 682
60,000 Applied Materials, Inc. <F1> 2,119
7,500 ATMI, Inc. <F1> 227
20,000 DII Group, Inc. <F1> 430
14,000 Integrated Process Equipment Corp. <F1> 282
27,000 Intel Corp. 2,108
12,925 KLA-Tencor Corp. <F1> 494
44,225 Linear Technology Corp. 3,052
9,600 Maxim Integrated Products, Inc. <F1> 350
32,000 Motorola, Inc. 1,940
14,000 PMC-Sierra, Inc. <F1> 532
8,000 SCI Systems, Inc. <F1> 285
19,700 SGS-Thomson Microelectronics N.V. <F1> 1,528
44,000 Solectron Corp. <F1> 1,859
38,400 Texas Instruments, Inc. 2,078
10,000 TriQuint Semiconductor, Inc. <F1> 226
71,600 Xilinx, Inc. <F1> 2,681
----------
20,873
----------
MEDICAL PRODUCTS AND
PHARMACEUTICALS - 0.5%
1,600 QIAGEN N.V. <F1> 107
16,000 Ventana Medical Systems, Inc. <F1> 426
----------
533
----------
Total Common Stocks
(cost $83,772) 103,096
----------
NORTHERN FUNDS Annual Report
SCHEDULES OF INVESTMENTS MARCH 31, 1998
TECHNOLOGY FUND (continued)
PRINCIPAL
AMOUNT VALUE
(000s) (000s)
- ----------------------------------------------------------------------
SHORT-TERM INVESTMENT - 1.7%
$1,786 Banque Paribas, Grand Cayman,
6.125%, 4/1/98
(cost $1,786) $ 1,786
----------
Total Investments - 100.5%
(cost $85,558) 104,882
Liabilities less Other Assets - (0.5)% (493)
----------
NET ASSETS - 100.0% $104,389
==========
See Notes to the Financial Statements.
NOTES TO THE
FINANCIAL STATEMENTS
MARCH 31, 1998
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. The Money Market, U.S. Government Money Market,
U.S. Government Select Money Market, Municipal Money Market, California
Municipal Money Market, U.S. Government, Intermediate Tax-Exempt, Florida
Intermediate Tax-Exempt, Fixed Income, Tax-Exempt, California Tax-Exempt,
International Fixed Income, Income Equity, Stock Index, Growth Equity, Select
Equity, Small Cap, International Growth Equity, International Select Equity and
Technology Funds (collectively the "Funds") are separate, diversified investment
portfolios of Northern Funds, except the California Municipal Money Market,
Florida Intermediate Tax-Exempt, California Tax-Exempt and International Fixed
Income Funds which are non-diversified portfolios of Northern Funds. Non-
diversified portfolios may invest a relatively high percentage of their net
assets in obligations of a limited number of issuers. Each of the Funds
maintains its own investment objective.
The Funds have entered into an Investment Advisory Agreement with The
Northern Trust Company ("Northern Trust" or the "Adviser"). Effective April 1,
1998, Northern Trust Quantitative Advisors, Inc., a wholly-owned subsidiary of
Northern Trust Corporation, will serve as investment adviser for the Stock Index
and Small Cap Funds. 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 preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent 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.
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. Securities which are traded
on a recognized U.S. or foreign securities exchange are generally valued at
the last quoted sales price on the securities exchange on which the
securities are primarily traded. 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 generally valued at the last sales price.
Guaranteed investment contracts are valued at cost plus accrued interest,
which approximates market value. 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.FUTURES CONTRACTS - Certain Funds may enter into long futures contracts to
maintain liquidity or short futures contracts for hedging purposes. These
Funds may also enter into futures contracts for speculative purposes.
Futures contracts are valued based upon their quoted daily settlement prices;
changes in initial settlement value are accounted for as unrealized
appreciation (depreciation) until the contracts are terminated at which time
realized gains and losses are recognized.
A Fund bears the market risk arising from changes in the value of these
financial instruments. At the time a Fund enters into a futures contract, it
is required to make a margin deposit in a segregated account of a specified
amount of cash or eligible securities. Subsequently, as the market price of
the futures contract fluctuates, gains and losses are recognized and payments
are made, on a daily basis, between the Fund and the broker. The Statements
of Operations reflect gains and losses as realized for closed futures
contracts and as unrealized for open contracts. At March 31, 1998, the Stock
Index, Growth Equity and Small Cap Funds had entered into exchange-traded
futures contracts. The aggregate market value of securities pledged to cover
margin requirements for open positions at March 31, 1998 was approximately
$205,000, $224,000 and $464,000, for the Stock Index, Growth Equity and Small
Cap Funds, respectively.
D.OPTIONS CONTRACTS - Certain Funds may purchase and write (sell) put and call
options on foreign and domestic stock indices, foreign currencies and U.S.
and foreign securities that are traded on U.S. and foreign securities
exchanges and over-the-counter markets. These transactions are for hedging
purposes or for the purpose of earning additional income. In addition, the
International Fixed Income, International Growth Equity and International
Select Equity Funds may enter into such transactions for cross-hedging
purposes.
The risk associated with purchasing an option is that the Fund pays a
premium whether or not the option is exercised. Additionally, the Fund bears
the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased
are accounted for in the same manner as portfolio securities. The cost of
securities acquired through the exercise of call options is increased by
premiums paid. The proceeds from securities sold through the exercise of put
options are decreased by the premiums paid.
When the Fund writes an option, the premium received by the Fund is
recorded as a liability and is subsequently adjusted to the current market
value of the option written. Premiums received from writing options which
expire unexercised are recorded by the Fund on the expiration date as
realized gains from option transactions. The difference between the premium
and the amount paid on effecting a closing purchase transaction, including
brokerage commissions, is also treated as a realized gain, or if the premium
is less than the amount paid for the closing purchase transaction, as a
realized loss. If a call option is exercised, the premium is added to the
proceeds from the sale of the underlying security or currency in determining
whether the Fund has realized a gain or loss. If a put option is exercised,
the premium reduces the cost basis of the security or currency purchased by
the Fund. In writing an option, the Fund bears the market risk of an
unfavorable change in the price of the security or currency underlying the
written option. Exercise of an option written by the Fund could result in
the Fund selling or buying a security or currency at a price different from
the current market value. Transactions in put options written for the year
ended March 31, 1998 for the Growth Equity Fund were as follows:
NUMBER OF PREMIUMS
CONTRACTS (000S)
- ---------------------------------------------
Options outstanding
at 3/31/97 99 $319
Options written 224 759
Options terminated in
closing purchase
transactions (323) (1,078)
Options expired _ _
Options outstanding at
------ -------
3/31/98 _ $ _
====== =======
The Fund did not write call options during the year ended March 31, 1998.
E.STRIPPED SECURITIES - Stripped securities represent the right to receive
future interest payments (interest only stripped securities) or principal
payments (principal only stripped securities). The value of variable rate
interest only stripped securities varies directly with changes in interest
rates, while the value of fixed rate interest only stripped securities and
the value of principal only stripped securities vary inversely with changes
in interest rates.
F.FOREIGN CURRENCY TRANSLATIONS - Values of investments denominated in foreign
currencies are converted into U.S. dollars using the spot market rate of
exchange at the time of valuation. Purchases and sales of investments and
dividend income are translated into U.S. dollars using the spot market rate
of exchange prevailing on the respective dates of such transactions. The
gains or losses on investments resulting from changes in foreign exchange
rates are included with net realized and unrealized gains (losses) on
investments.
G.FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - Certain Funds are authorized to
enter into forward foreign currency exchange contracts for the purchase of a
specific foreign currency at a fixed price on a future date as a hedge
against either specific transactions or portfolio positions, or as a cross-
hedge transaction or for speculative purposes. The objective of a Fund's
foreign currency hedging transactions is to reduce the risk that the U.S.
dollar value of a Fund's foreign currency denominated securities will decline
in value due to changes in foreign currency exchange rates. All forward
foreign currency contracts are "marked-to-market" daily at the applicable
translation rates and any resulting unrealized gains or losses are recorded
in a Fund's financial statements. A Fund records realized gains or losses at
the time the forward contract is offset by entering into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
The contractual amounts of forward foreign currency exchange contracts do not
necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
At March 31, 1998, there were no outstanding contracts.
H.ORGANIZATION COSTS - Organization expenses of approximately $1,030,000 have
been deferred and are being amortized on a straight-line basis through 1999.
I. 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. Dividend
income is recognized on the ex-dividend date and interest income is
recognized on an accrual basis and includes amortization of discounts and
premiums. Dividends from foreign securities are recorded on ex-date, or as
soon as the information is available.
During the year ended March 31, 1998, all of the dividends derived from
net investment income paid by each of the Municipal Money Market, California
Municipal Money Market, Intermediate Tax-Exempt, Florida Intermediate Tax-
Exempt, Tax-Exempt and California Tax-Exempt Funds were "exempt interest
dividends," excludable from gross income for Federal income tax purposes.
Further, all such dividends paid by the California Municipal Money Market
and California Tax-Exempt Funds were "California exempt interest dividends,"
exempt from California state personal income tax.
J.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.
K.DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income are
declared and paid as follows:
DECLARATION PAYMENT
FREQUENCY FREQUENCY
- --------------------------------------------------
Money Market Daily Monthly
U.S. Government Money
Market Daily Monthly
U.S. Government Select
Money Market Daily Monthly
Municipal Money Market Daily Monthly
California Municipal
Money Market Daily Monthly
U.S. Government Daily Monthly
Intermediate Tax-Exempt Daily Monthly
Florida Intermediate
Tax-Exempt Daily Monthly
Fixed Income Daily Monthly
Tax-Exempt Daily Monthly
California Tax-Exempt Daily Monthly
International
Fixed Income Quarterly Quarterly
Income Equity Monthly Monthly
Stock Index Quarterly Quarterly
Growth Equity Quarterly Quarterly
Select Equity Annually Annually
Small Cap Annually Annually
International Growth
Equity Annually Annually
International Select
Equity Annually Annually
Technology Annually Annually
- --------------------------------------------------
Prior to September 27, 1997, dividends from net investment income of the
International Fixed Income Fund were declared daily and paid quarterly.
Distributions of net realized capital gains, if any, are declared at least
annually. Distributions to shareholders are recorded on the ex-dividend
date.
The timing and character of distributions determined in accordance with
federal income tax regulations may differ from financial statement amounts
determined in accordance with generally accepted accounting principles due to
differences in the treatment and recognition of investment income and
realized gains (losses). These differences are primarily related to foreign
currency transactions, deferral of wash sales and capital loss carryforwards.
Certain differences in treatment of income and capital gains for
distributions, which are permanent, may result in periodic reclassifications
in the Funds' capital accounts.
Distributions from net realized capital gains, as presented in the
accompanying Statement of Changes in Net Assets and, on a per share basis, in
the Financial Highlights, include amounts declared as short-term capital
gains and as long-term capital gains. Short-term capital gains are taxable as
ordinary income. Long-term capital gains are taxable at a maximum rate of 28%
or 20%, as applicable, under the provisions of the Internal Revenue Code as
amended by the Taxpayer Relief Act of 1997. All capital gain distributions
during the year ended March 31, 1998 were paid December 26, 1997 to
shareholders of record on December 23, 1997. The amount of such distributions
from long-term capital gains, and the percentage of such amount taxable at
the 28% maximum rate are as follows:
LONG-TERM
CAPITAL GAIN 28% RATE
- -----------------------------------------------------
U.S. Government $0.003256 100%
Intermediate Tax-Exempt _ _
Florida Intermediate
Tax-Exempt _ _
Fixed Income 0.005488 100%
Tax-Exempt 0.058426 8%
California Tax-Exempt _ _
International Fixed
Income 0.051241 32%
Income Equity 0.753211 60%
Stock Index 0.012278 100%
Growth Equity 1.534681 43%
Select Equity 1.496708 60%
Small Cap 0.560600 50%
International Growth
Equity 0.000725 100%
International Select
Equity _ _
Technology 0.319966 56%
- ------------------------------------------------------
L.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
substantially all of their taxable income to their shareholders.
M.RECLASSIFICATIONS - At March 31, 1998, the Funds made reclassifications among
their capital accounts to reflect the characterization of certain income and
capital gains distributions for federal income tax purposes, as follows:
UNDISTRIBUTED UNDISTRIBUTED
NET NET PAID
AMOUNTS IN INVESTMENT CAPITAL IN
THOUSANDS INCOME GAINS CAPITAL
- --------------------------------------------------------------------
Money Market 24 (1) (23)
U.S. Government
Money Market 6 _ (6)
U.S. Government
Select Money
Market 4 _ (4)
Municipal Money
Market 27 _ (27)
California Municipal
Money Market 4 _ (4)
U.S. Government 174 (164) (10)
Intermediate Tax-
Exempt 18 (1) (17)
Florida Intermediate
Tax-Exempt _ _ _
Fixed Income (105) 112 (7)
Tax-Exempt 11 147 (158)
California Tax-
Exempt _ _ _
International Fixed
Income (144) 147 (3)
Income Equity 5 2 (7)
Stock Index _ _ _
Growth Equity 7 _ (7)
Select Equity 4 1 (5)
Small Cap 4 1 (5)
International Growth
Equity 3 (473) 470
International Select
Equity 1,896 (1,966) 70
Technology 722 (722) _
- --------------------------------------------------------------------
These reclassifications have no impact on the net asset value of the Funds
and are primarily due to differing treatments of foreign currency gains,
investments in passive foreign investment companies, real estate investment
trusts, asset-backed securities, and certain fees and expenses.
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 ended
March 31, 1998, the Adviser voluntarily agreed to waive a portion of its
advisory fees as applied to each Fund's daily net assets as shown on the
accompanying Statements of Operations. Northern Trust had also agreed to
reimburse the Funds as shown on the accompanying Statements of Operations to
adhere to the expense limitations presented in the following table:
ANNUAL ADVISORY
ADVISORY FEES AFTER EXPENSE
FEES WAIVERS LIMITATIONS
- ------------------------------------------------------------------------
Money Market 0.60% 0.40% 0.55%
U.S. Government
Money Market 0.60% 0.40% 0.55%
U.S. Government Select
Money Market 0.60% 0.40% 0.55%
Municipal Money
Market 0.60% 0.40% 0.55%
California Municipal
Money Market 0.60% 0.40% 0.55%
U.S. Government 0.75% 0.75% 0.90%
Intermediate Tax-
Exempt 0.75% 0.70% 0.85%
Florida Intermediate
Tax-Exempt 0.75% 0.70% 0.85%
Fixed Income 0.75% 0.75% 0.90%
Tax-Exempt 0.75% 0.70% 0.85%
California Tax-Exempt 0.75% 0.70% 0.85%
International Fixed
Income 0.90% 0.90% 1.15%
Income Equity 1.00% 0.85% 1.00%
Stock Index 0.60% 0.40% 0.55%
Growth Equity 1.00% 0.85% 1.00%
Select Equity 1.20% 0.85% 1.00%
Small Cap 1.20% 0.85% 1.00%
International Growth
Equity 1.20% 1.00% 1.25%
International Select
Equity 1.20% 1.00% 1.25%
Technology 1.20% 1.00% 1.25%
- ------------------------------------------------------------------------
For the periods April 1, 1997 to September 30, 1997 and November 3, 1997 to
December 31, 1997, the annual advisory fees, advisory fees after waivers and
expense limitations for the U.S. Government Select Money Market and California
Municipal Money Market Funds were as follows:
ANNUAL ADVISORY
ADVISORY FEES AFTER EXPENSE
FEES WAIVERS
LIMITATIONS
- ------------------------------------------------------------------
U.S. Government Select
Money Market 0.60% 0.25% 0.40%
California Municipal
Money Market 0.60% 0.30% 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 ended March 31, 1998, Sunstone
voluntarily agreed to waive a portion of its administration fees as shown on the
accompanying Statements of Operations. The waivers and reimbursements of
Northern Trust and Sunstone described above are voluntary and may be terminated
by them at any time at their discretion.
4. BANK LOANS
The Funds maintain a $5,000,000 revolving bank 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.
Interest expense for the year ended March 31, 1998 was approximately $1,000
and $6,000, for the International Fixed Income and Stock Index Funds,
respectively. These amounts are included in other expenses on the Statements of
Operations.
As of March 31, 1998, there were no outstanding borrowings.
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the year ended March 31, 1998 were as follows:
PURCHASES SALES
----------------------------------------------
U.S. U.S.
AMOUNTS IN THOUSANDS GOVERNMENT OTHER GOVERNMENT OTHER
- ---------------------------------------------------------------------------
U.S. Government $114,167 _ $84,123 _
Intermediate Tax-Exempt _ $183,779 _ $162,918
Florida Intermediate
Tax-Exempt _ 17,393 _ 8,772
Fixed Income 56,795 41,767 25,866 20,327
Tax-Exempt _ 123,232 _ 101,836
California Tax-Exempt _ 42,307 _ 4,101
International Fixed Income _ 4,435 _ 6,722
Income Equity _ 92,660 _ 73,581
Stock Index _ 51,112 _ 18,052
Growth Equity _ 314,525 _ 281,050
Select Equity _ 165,926 _ 138,156
Small Cap _ 135,085 _ 51,639
International Growth Equity _ 237,966 _ 256,852
International Select Equity _ 104,299 _ 119,675
Technology _ 87,908 _ 55,051
- ----------------------------------------------------------------------------
At March 31, 1998, for federal income tax purposes, gross unrealized
appreciation, gross unrealized depreciation, net unrealized appreciation
(depreciation) on investments (including the effects of foreign currency
translation) and cost basis of securities were approximately as follows:
NET COST
UNREALIZED UNREALIZED APPRECIATION BASIS OF
AMOUNTS IN THOUSANDS APPRECIATION DEPRECIATION (DEPRECIATION)SECURITIES
- ------------------------------------------------------------------------------
U.S. Government $3,144 $344 $2,800 $224,657
Intermediate Tax-Exempt 7,463 186 7,277 289,659
Florida Intermediate Tax-Exempt 509 55 454 24,546
Fixed Income 5,200 377 4,823 174,906
Tax-Exempt 7,097 247 6,850 165,727
California Tax-Exempt 860 41 819 40,357
International Fixed Income 438 841 (403) 13,664
Income Equity 19,047 1,473 17,574 99,180
Stock Index 17,791 1,117 16,674 77,024
Growth Equity 150,423 1,823 148,600 329,877
Select Equity 24,215 493 23,722 102,133
Small Cap 110,695 14,471 96,224 275,716
International Growth Equity 29,191 4,235 24,956 142,653
International Select Equity 27,790 1,537 26,253 89,460
Technology 23,064 4,627 18,437 86,445
- ------------------------------------------------------------------------------
At March 31, 1998, the California Municipal Money Market and International
Select Equity Funds had capital loss carry-forwards, for income tax purposes, of
approximately $1,000 and $4,964,000, respectively, due to expire March 31, 2006.
These capital loss carryforwards are available to offset future gains.
6. CAPITAL SHARE TRANSACTIONS
Transactions of shares of the Funds for the year ended March 31, 1998 were as
follows:
NET
REINVESTMENT INCREASE
AMOUNTS IN THOUSANDS SOLD OF DIVIDENDS REDEEMED (DECREASE)
- ------------------------------------------------------------------------------
U.S. Government 6,618 74 2,623 4,069
Intermediate Tax-Exempt 6,360 64 3,898 2,526
Florida Intermediate Tax-Exempt 1,465 14 536 943
Fixed Income 7,837 110 2,908 5,039
Tax-Exempt 3,720 126 1,584 2,262
California Tax-Exempt 4,132 12 433 3,711
International Fixed Income 200 23 465 (242)
Income Equity 2,329 613 955 1,987
Stock Index 5,376 201 2,666 2,911
Growth Equity 5,044 2,265 3,266 4,043
Select Equity 2,762 603 1,136 2,229
Small Cap 8,480 908 3,399 5,989
International Growth Equity 2,240 466 3,929 (1,223)
International Select Equity 1,429 38 2,583 (1,116)
Technology 3,074 322 956 2,440
- ------------------------------------------------------------------------------
Transactions of shares of the Funds for the year ended March 31, 1997 were as
follows:
NET
REINVESTMENT INCREASE
AMOUNTS IN THOUSANDS SOLD OF DIVIDENDS REDEEMED (DECREASE)
- -----------------------------------------------------------------------------
U.S. Government 5,159 144 1,695 3,608
Intermediate Tax-Exempt 7,072 245 4,928 2,389
Florida Intermediate Tax-Exempt 1,846 4 373 1,477
Fixed Income 4,239 222 2,080 2,381
Tax-Exempt 2,592 80 1,436 1,236
International Fixed Income 416 28 289 155
Income Equity 2,128 450 875 1,703
Stock Index 3,844 8 515 3,337
Growth Equity 6,478 922 2,752 4,648
Select Equity 2,494 125 823 1,796
Small Cap 4,424 716 2,534 2,606
International Growth Equity 3,091 641 4,935 (1,203)
International Select Equity 3,161 82 2,310 933
Technology 3,820 25 184 3,661
- -----------------------------------------------------------------------------
7. SUBSEQUENT EVENT
The Mid Cap Growth Fund, a separate, diversified investment portfolio of
Northern Funds, commenced operations after the close of business on March 31,
1998.
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES:
NORTHERN FUNDS
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, U.S. Government Select Money Market
Fund, Municipal Money Market Fund, California Municipal Money Market Fund, U.S.
Government Fund, Intermediate Tax-Exempt Fund, Florida Intermediate Tax-Exempt
Fund, Fixed Income Fund, Tax-Exempt Fund, California Tax-Exempt Fund,
International Fixed Income Fund, Income Equity Fund, Stock Index Fund, Growth
Equity Fund, Select Equity Fund, Small Cap Fund, International Growth Equity
Fund, International Select Equity Fund and Technology Fund), including the
schedules of investments, as of March 31, 1998, 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, 1998, 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 Northern Funds as of March 31, 1998,
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 13, 1998
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 complete information about Northern Funds investment policies,
management fees and expenses. Investors are reminded to read the prospectus
carefully before investing or sending money.
c 1998 Sunstone Distribution Services, LLC,
Distributor
(logo)
P.O. Box 2081
Milwaukee, WI 53201-9800
1-800-595-9111
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