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NORTHERN MONEY MARKET FUNDS
o Money Market Fund
o U.S. Government Money Market Fund
o U.S. Government Select Money Market Fund
o Tax-Exempt Money Market Fund
o Municipal Money Market Fund
o California Municipal Money Market Fund
Prospectus dated September 20, 1999
An investment in a Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. An investment in a Fund involves investment risks, including possible
loss of principal.
Although each of the Funds seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Funds.
The California Municipal Money Market Fund is not available in certain states.
Please call 1-800-595-9111 to determine the availability in your state.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
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TABLE OF CONTENTS
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RISK/RETURN SUMMARY Introduction 4
Information about the objectives, principal FUNDS
strategies and risk characteristics of each Fund. o Money Market Fund 5
o U.S. Government Money Market Fund 6
o U.S. Government Select Money Market Fund 7
o Tax-Exempt Money Market Fund 8
o Municipal Money Market Fund 9
o California Municipal Money Market Fund 10
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PRINCIPAL INVESTMENT RISKS 11
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FUND PERFORMANCE
o Money Market Fund 14
o U.S. Government Money Market Fund 15
o U.S. Government Select Money Market Fund 16
o Municipal Money Market Fund 17
o California Municipal Money Market Fund 18
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FUND FEES AND EXPENSES 19
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MANAGEMENT OF THE FUNDS INVESTMENT ADVISER 22
Details that apply to the Funds as a group.
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ADVISORY FEES 22
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FUND MANAGEMENT AND OTHER SERVICES 22
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ABOUT YOUR ACCOUNT PURCHASING AND SELLING SHARES 23
How to open, maintain and close an account. o Purchasing Shares 23
o Opening an Account 23
o Selling Shares 25
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ACCOUNT POLICIES AND OTHER INFORMATION 27
o Calculating Share Price 27
o Timing of Purchase Requests 27
o Social Security/Tax Identification
Number 27
o In-Kind Purchases and Redemptions 27
o Miscellaneous Purchase Information 27
o Timing of Redemption and Exchange
Requests 28
o Payment of Redemption Proceeds 28
o Miscellaneous Redemption Information 28
o Exchange Privileges 29
o Telephone Transactions 29
o Making Changes to Your Account
Information 29
o Signature Guarantees 29
o Business Day 29
o Early Closings 29
o Authorized Intermediaries 30
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o Service Organizations 30
o Shareholder Reports 31
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DIVIDENDS AND DISTRIBUTIONS 31
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TAX CONSIDERATIONS 31
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TAX TABLE 32
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YEAR 2000 ISSUES 33
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RISKS, SECURITIES, TECHNIQUES AND FINANCIAL RISKS, SECURITIES AND TECHNIQUES AND FINANCIAL
INFORMATION INFORMATION
o Additional Information on Principal
Investment Strategies and Related Risks 34
o Additional Description of Securities and
Common Investment Techniques 35
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FINANCIAL INFORMATION
o Fund Financial Highlights 41
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FOR MORE INFORMATION ANNUAL/SEMIANNUAL REPORT 44
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STATEMENT OF ADDITIONAL INFORMATION 44
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RISK/RETURN SUMMARY
INTRODUCTION
NORTHERN FUNDS IS A FAMILY OF NO-LOAD MUTUAL FUNDS THAT OFFERS A SELECTION OF
FUNDS TO INVESTORS, EACH WITH A DISTINCT INVESTMENT OBJECTIVE AND RISK/REWARD
PROFILE.
The descriptions on the following pages may help you choose the Fund or Funds
that best fit your investment needs. Keep in mind, however, that no Fund can
guarantee it will meet its investment objective, and no Fund should be relied
upon as a complete investment program.
This Prospectus describes Northern Funds' six money market funds (the "Funds").
Northern Funds' twelve fixed income and eleven equity funds are described in a
separate Prospectus.
The Funds seek to maintain a stable net asset value of $1.00 per share.
Consistent with this policy, each of the Funds:
o Limits its dollar-weighted average portfolio maturity to 90 days or less;
o Buys securities with remaining maturities of 397 days or less (except for
certain variable and floating rate instruments and securities
collateralizing repurchase agreements); and
o Invests only in U.S. dollar-denominated securities that represent minimal
credit risks.
In addition, each Fund limits its investments to "Eligible Securities" as
defined by the Securities and Exchange Commission ("SEC"). Eligible Securities
include, generally, securities that either (a) have short-term debt ratings at
the time of purchase in the two highest rating categories or (b) are issued or
guaranteed by, or otherwise allow a Fund to demand payment from, an issuer with
those ratings. Securities that are unrated (including securities of issuers that
have long-term but not short-term ratings) may be deemed to be Eligible
Securities if determined to be of comparable quality by The Northern Trust
Company ("Northern Trust") under the direction of the Board of Trustees. After
its purchase, a portfolio security may be assigned a lower rating or cease to be
rated. If this occurs, a Fund may continue to hold the issue if the Investment
Adviser believes it is in the best interest of the Fund and its shareholders.
Securities in which the Funds invest may not earn as high a level of income as
long-term or lower quality securities, which generally have greater market risk
and more fluctuation in market value.
In accordance with current SEC regulations, each Fund will not invest more than
5% of the value of its total assets at the time of purchase in the securities of
any single issuer. However, the California Municipal Money Market Fund may
invest up to 25% of its total assets in fewer than 5 issuers, and the other
Funds may invest up to 25% of their total assets in the securities of a single
issuer for up to three Business Days. These limitations do not apply to cash,
certain repurchase agreements, U.S. government securities or securities of other
investment companies. In addition, securities subject to certain unconditional
guarantees and securities that are not "First Tier Securities" as defined by the
SEC are subject to different diversification requirements as described in the
Statement of Additional Information.
In addition to the instruments described on the pages below, each Fund may use
various investment techniques in seeking its investment objective. You can learn
more about these techniques and their related risks by reading "Risks,
Securities and Techniques" beginning on page 34 of this Prospectus and the
Statement of Additional Information.
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RISK/RETURN SUMMARY
MONEY MARKET FUND
INVESTMENT OBJECTIVE
The Fund seeks to maximize current income to the extent consistent with the
preservation of capital and maintenance of liquidity by investing exclusively in
high-quality money market instruments.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
INVESTMENT STRATEGIES. The Fund seeks its objective by investing in a broad
range of government, bank and commercial obligations that are available in the
money markets, including:
o U.S. dollar-denominated obligations of U.S. banks with total assets in
excess of $1 billion (including obligations of foreign branches of such
banks);
o U.S. dollar-denominated obligations of foreign commercial banks where such
banks have total assets in excess of $5 billion;
o High-quality commercial paper and other obligations issued or guaranteed by
U.S. and foreign corporations and other issuers;
o Corporate bonds, notes, paper and other instruments that are of
high-quality;
o Asset-backed securities;
o Securities issued or guaranteed as to principal and interest by the U.S.
government or by its agencies or instrumentalities and custodial receipts
with respect thereto;
o U.S. dollar-denominated securities issued or guaranteed by one or more
foreign governments or political subdivisions, agencies or
instrumentalities;
o Repurchase agreements relating to the above instruments; and
o Municipal securities issued or guaranteed by state or local governmental
bodies.
RISKS. These primary investment risks apply to the Fund: stable NAV, interest
rate, credit, prepayment, debt extension, counterparty failure and guarantor
risks. See page 11 for these risks and other primary investment risks common to
all Funds.
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RISK/RETURN SUMMARY
U.S. GOVERNMENT MONEY MARKET FUND
INVESTMENT OBJECTIVE
The Fund seeks to maximize current income to the extent consistent with the
preservation of capital and maintenance of liquidity by investing exclusively in
high-quality money market instruments.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
INVESTMENT STRATEGIES. The Fund seeks its objective by investing in:
o Securities issued or guaranteed as to principal and interest by the
U.S. government, its agencies or instrumentalities;
o Repurchase agreements relating to such securities; and
o Custodial receipts representing interests in U.S. government
securities.
RISKS. These primary investment risks apply to the Fund: stable NAV, interest
rate, prepayment, debt extension, U.S. government securities, counterparty
failure and guarantor risks. See page 11 for these risks and other primary
investment risks common to all Funds.
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RISK/RETURN SUMMARY
U.S. GOVERNMENT SELECT MONEY MARKET FUND
INVESTMENT OBJECTIVE
The Fund seeks to maximize current income to the extent consistent with the
preservation of capital and maintenance of liquidity by investing exclusively in
high-quality money market instruments.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
INVESTMENT STRATEGIES. The Fund seeks its objective by investing exclusively in
securities issued or guaranteed as to principal and interest by the U.S.
government, its agencies or instrumentalities. Under normal market conditions,
the Fund will seek to acquire only those U.S. government securities the interest
upon which is generally exempt from state income taxation. These securities
include obligations issued by the U.S. Treasury and certain U.S. government
agencies and instrumentalities, such as the Federal Home Loan Bank and the
Federal Farm Credit Bank Funding Corp.
When appropriate securities that are exempt from state taxes are unavailable,
the Fund may also invest in non-exempt U.S. government securities and cash
equivalents including money market funds and time deposits with a maturity of
three months or less, and may hold uninvested cash.
RISKS. These primary investment risks apply to the Fund: stable NAV, interest
rate, prepayment, debt extension, U.S. government securities, counterparty
failure and guarantor risks. See page 11 for these risks and other primary
investment risks common to all Funds.
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RISK/RETURN SUMMARY
TAX-EXEMPT MONEY MARKET FUND
INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of income exempt from regular Federal
income tax, to the extent consistent with the preservation of capital, by
investing primarily in municipal instruments.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
INVESTMENT STRATEGIES. The Fund seeks to achieve its objective by investing
primarily in high-quality short-term municipal instruments. The high level of
income sought by the Fund is relative to yields currently available in the
tax-exempt marketplace. Municipal instruments are debt instruments, the interest
on which is, in the opinion of bond counsel or counsel for the issuers, exempt
from regular Federal income tax ("municipal instruments").
These may include:
o Fixed, variable and floating rate notes and bonds;
o Asset-backed securities;
o Tax-exempt commercial paper;
o Municipal bonds, notes, paper or other instruments; and
o Municipal bonds and notes which are guaranteed as to principal and
interest or backed by the U.S. government or its agencies or
instrumentalities.
Under normal market conditions, at least 80% of the Fund's annual gross income
will be derived from municipal instruments. Interest earned by the Fund on AMT
obligations ("private activity bonds") the interest on which may be treated as
an item of tax preference to shareholders under the Federal alternative minimum
tax, will not be deemed to have been derived from municipal instruments for the
purposes of determining whether the Fund meets this policy. For shareholders
subject to AMT, some portion of the Fund's dividends may be subject to Federal
tax to the extent the Fund invests in AMT obligations.
Under normal market conditions, investments in AMT obligations and taxable
instruments will not exceed 20% of the value of the total assets of the Fund.
During temporary defensive periods, however, all or any portion of the Fund's
assets may be held uninvested or invested in AMT obligations and taxable
instruments.
RISKS. These primary investment risks apply to the Fund: stable NAV, interest
rate, credit, prepayment, debt extension, guarantor, concentration and tax
risks. See page 11 for these risks and primary investment risks common to all
Funds.
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RISK/RETURN SUMMARY
MUNICIPAL MONEY MARKET FUND
INVESTMENT OBJECTIVE
The Fund seeks to provide, to the extent consistent with the preservation of
capital and prescribed portfolio standards, a high level of income exempt from
regular Federal income tax by investing primarily in municipal instruments.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
INVESTMENT STRATEGIES. The Fund seeks to achieve its objective by investing
primarily in high-quality short-term municipal instruments. These may include:
o Fixed, variable and floating rate notes and bonds;
o Asset-backed securities;
o Tax-exempt commercial paper;
o Municipal bonds, notes, paper or other instruments; and
o Municipal bonds and notes which are guaranteed as to principal and
interest or backed by the U.S. government or its agencies or
instrumentalities.
Under normal circumstances, at least 80% of the Fund's annual gross income will
be derived from municipal instruments. Under normal market conditions,
investments in taxable instruments will not exceed 20% of the value of the total
assets of the Fund. During temporary defensive periods, however, all or any
portion of the Fund's assets may be held uninvested or invested in taxable
instruments.
The Fund is not limited in the amount of its assets that may be invested in AMT
obligations ("private activity bonds") the interest on which may be treated as
an item of tax preference to shareholders under the Federal alternative minimum
tax. For shareholders subject to AMT, some portion of the Fund's dividends may
be subject to Federal tax to the extent the Fund invests in AMT obligations.
RISKS. These primary investment risks apply to the Fund: stable NAV, interest
rate, credit, prepayment, debt extension, counterparty failure, guarantor,
concentration and tax risks. See page 11 for these risks and other primary
investment risks common to all Funds.
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RISK/RETURN SUMMARY
CALIFORNIA MUNICIPAL MONEY MARKET FUND
INVESTMENT OBJECTIVE
The Fund seeks to provide, to the extent consistent with the preservation of
capital and prescribed portfolio standards, a high level of income exempt from
regular Federal income tax and California state personal income tax.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
INVESTMENT STRATEGIES. The Fund seeks to achieve its objective by investing
primarily in high-quality short-term instruments, the interest on which is
exempt from regular Federal income tax and California state personal income tax.
These may include:
o Fixed, variable and floating rate notes and bonds;
o Asset-backed securities;
o Tax-exempt commercial paper;
o Municipal bonds, notes, paper or other instruments; and
o Municipal bonds and notes which are guaranteed as to principal and
interest or backed by the U.S. government or its agencies or
instrumentalities.
Under normal circumstances, at least 80% of the Fund's annual gross income will
be derived from municipal instruments and at least 65% of the Fund's total
assets will be invested in instruments the interest on which is exempt from
California state personal income tax ("California municipal instruments"). Under
normal market conditions, investments in taxable instruments will not exceed 20%
of the value of the total assets of the Fund. During temporary defensive
periods, however, all or any portion of the Fund's assets may be held uninvested
or invested in taxable instruments.
The Fund is not limited in the amount of its assets that may be invested in AMT
obligations ("private activity bonds") the interest on which may be treated as
an item of tax preference to shareholders under the Federal alternative minimum
tax. For shareholders subject to AMT, some portion of the Fund's dividends may
be subject to Federal tax to the extent the Fund invests in AMT obligations.
The Fund is "non-diversified" under the Investment Company Act of 1940, as
amended (the "1940 Act").
RISKS. These primary investment risks apply to the Fund: stable NAV, interest
rate, credit, prepayment, debt extension, counterparty failure, guarantor,
concentration, tax and non-diversification risks. See page 11 for these risks
and other primary investment risks common to all Funds.
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RISK/RETURN SUMMARY
PRINCIPAL INVESTMENT RISKS
All investments carry some degree of risk which will affect the value of a
Fund's investments and its investment performance.
AN INVESTMENT IN EACH OF THE FUNDS IS NOT A DEPOSIT OF ANY BANK AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUNDS.
The following summarizes the principal risks that apply to the Funds.
RISKS THAT APPLY TO ALL FUNDS
o STABLE NAV RISK is the risk that a Fund will not be able to maintain a net
asset value per share of $1.00 at all times.
o INTEREST RATE RISK is the risk that during periods of rising interest
rates, a Fund's yield (and the market value of its securities) will tend to
be lower than prevailing market rates; in periods of falling interest
rates, a Fund's yield (and the market value of its securities) will tend to
be higher.
o CREDIT (OR DEFAULT) RISK is the risk that an issuer of fixed income
securities held by a Fund may default on its obligation to pay interest and
repay principal. High quality and investment grade securities are generally
believed to have a relatively low degree of credit risk.
o PREPAYMENT (OR CALL) RISK is the risk that asset-backed securities may be
more rapidly repaid than their stated maturity date would indicate as a
result of the pass-through of prepayments of principal on the underlying
obligations. During periods of declining interest rates, prepayment of
obligations underlying asset-backed securities can be expected to
accelerate. Accordingly, a Fund's ability to maintain positions in such
securities will be affected by reductions in the principal amount of such
securities resulting from prepayments, and its ability to reinvest the
returns of principal at comparable yields is subject to generally
prevailing interest rates at that time.
o DEBT EXTENSION RISK is the risk that an issuer will exercise its right to
pay principal on an obligation held by a Fund (such as an asset-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
o U.S. GOVERNMENT SECURITIES RISK is the risk that the U.S. government will
not provide financial support to U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so
by law.
o COUNTERPARTY FAILURE RISK is the risk that an issuer of a security, or a
bank or other financial institution that has entered into a repurchase
agreement, may default on its payment obligations.
o GUARANTOR (OR CREDIT ENHANCEMENT) RISK is the risk that changes in credit
quality of a U.S. or foreign bank, insurance company or other financial
institution could cause a Fund's investments in securities backed by
guarantees, letters of credit, insurance or other credit enhancements by
such bank or institution to decline in value.
o MANAGEMENT RISK is the risk that a strategy used by the investment
management team may fail to produce the intended results.
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RISK/RETURN SUMMARY
o LIQUIDITY RISK is the risk that a Fund will not be able to pay redemption
proceeds within the time periods described in this Prospectus because of
unusual market conditions, an unusually high volume of redemption requests
or other reasons.
o YEAR 2000 RISK is the risk that a Fund's operations or value will be
adversely affected by the "Year 2000 Problem." (For more information,
please see "Year 2000 Issues" on page 33.)
RISKS THAT APPLY PRIMARILY TO THE MUNICIPAL MONEY MARKET, TAX-EXEMPT MONEY
MARKET AND CALIFORNIA MUNICIPAL MONEY MARKET FUNDS
o CONCENTRATION RISK is the risk that a Fund may be more sensitive to an
adverse economic, business or political development if it invests more than
25% of its assets in the municipal instruments of issuers in the same
state, in municipal instruments the interest upon which is paid solely from
revenues of similar projects, or in industrial development bonds.
o TAX RISK is the risk that future legislative or administrative changes or
court decisions may materially affect the ability of a Fund to pay
tax-exempt dividends.
RISK THAT APPLIES PRIMARILY TO THE CALIFORNIA MUNICIPAL MONEY MARKET FUND
o NON-DIVERSIFICATION RISK is the risk that a non-diversified Fund may be
more susceptible to adverse developments affecting any single issuer, and
more susceptible to greater losses because of these developments.
More information about the risks of investing in the Funds is provided in
"Risks, Securities and Techniques" beginning on page 34 of this Prospectus. You
should carefully consider the risks discussed in this section and "Risks,
Securities and Techniques" before investing in a Fund.
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RISK/RETURN SUMMARY
FUND PERFORMANCE
The bar charts and tables below provide an indication of the risks of investing
in a Fund by showing changes in the performance of a Fund from year to year.
The bar charts and tables assume reinvestment of dividends and distributions. A
Fund's past performance is not necessarily an indication of how the Fund will
perform in the future. Performance reflects expense limitations that were in
effect during the periods presented. If expense limitations were not in place, a
Fund's performance would have been reduced. The bar chart and performance table
have been omitted for the Tax-Exempt Money Market Fund because the Fund has been
in operation for less than one year.
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RISK/RETURN SUMMARY
MONEY MARKET FUND
[Bar Chart]
CALENDAR YEAR TOTAL RETURN
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1995: 5.71%
1996: 5.08%
1997: 5.25%
1998: 5.19%
Year to date total return for the
six months ended June 30, 1999: 2.27%
BEST AND WORST QUARTERLY PERFORMANCE:
(for the periods ended December 31, 1998)
Best Quarter Return: Q2 `95 1.44%
Worst Quarter Return: Q2 `96 1.22%
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIODS ENDED DECEMBER 31, 1998)
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1-Year Since Inception
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MONEY MARKET FUND (Inception 4/11/94) 5.19% 5.15%
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THE 7-DAY YIELD FOR THE FUND AS OF DECEMBER 31, 1998: 4.81%. YOU MAY CALL
1-800-595-9111 TO OBTAIN THE CURRENT 7-DAY YIELD.
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RISK/RETURN SUMMARY
U.S. GOVERNMENT MONEY MARKET FUND
[Bar Chart]
CALENDAR YEAR TOTAL RETURN
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1995: 5.62%
1996: 4.96%
1997: 5.14%
1998: 5.11%
Year to date total return for the
six months ended June 30, 1999: 2.22%
BEST AND WORST QUARTERLY PERFORMANCE:
(for the periods ended December 31, 1998)
Best Quarter Return: Q2 `95 1.42%
Worst Quarter Return: Q4 `98 1.18%
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIODS ENDED DECEMBER 31, 1998)
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1-Year Since Inception
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U.S. GOVERNMENT MONEY
MARKET FUND (Inception 4/11/94) 5.11% 5.05%
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THE 7-DAY YIELD FOR THE FUND AS OF DECEMBER 31, 1998: 4.56%. YOU MAY CALL
1-800-595-9111 TO OBTAIN THE CURRENT 7-DAY YIELD.
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RISK/RETURN SUMMARY
U.S. GOVERNMENT SELECT MONEY MARKET FUND
[Bar Chart]
CALENDAR YEAR TOTAL RETURN
--------------------------
1995: 5.75%
1996: 5.09%
1997: 5.21%
1998: 5.03%
Year to date total return for the
six months ended June 30, 1999: 2.19%
BEST AND WORST QUARTERLY PERFORMANCE:
(for the periods ended December 31, 1998)
Best Quarter Return: Q2 `95 1.45%
Worst Quarter Return: Q4 `98 1.17%
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIODS ENDED DECEMBER 31, 1998)
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1-Year Since Inception
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U.S. GOVERNMENT SELECT MONEY MARKET FUND
(Inception 12/12/94) 5.03% 5.27%
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THE 7-DAY YIELD FOR THE FUND AS OF DECEMBER 31, 1998: 4.50%. YOU MAY CALL
1-800-595-9111 TO OBTAIN THE CURRENT 7-DAY YIELD.
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RISK/RETURN SUMMARY
MUNICIPAL MONEY MARKET FUND
[Bar Chart]
CALENDAR YEAR TOTAL RETURN
--------------------------
1995: 3.64%
1996: 3.18%
1997: 3.27%
1998: 3.09%
Year to date total return for the
six months ended June 30, 1999: 1.33%
BEST AND WORST QUARTERLY PERFORMANCE:
(for the periods ended December 31, 1998)
Best Quarter Return: Q2 `95 0.95%
Worst Quarter Return: Q1 `98 0.73%
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIODS ENDED DECEMBER 31, 1998)
---------------------------
1-Year Since Inception
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MUNICIPAL MONEY MARKET FUND (Inception 4/11/94) 3.09% 3.21%
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THE 7-DAY YIELD FOR THE FUND AS OF DECEMBER 31, 1998: 3.21%. YOU MAY CALL
1-800-595-9111 TO OBTAIN THE CURRENT 7-DAY YIELD.
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RISK/RETURN SUMMARY
CALIFORNIA MUNICIPAL MONEY MARKET FUND
[Bar Chart]
CALENDAR YEAR TOTAL RETURN
--------------------------
1995: 3.77%
1996: 3.20%
1997: 3.28%
1998: 2.85%
Year to date total return for the
six months ended June 30, 1999: 1.23%
BEST AND WORST QUARTERLY PERFORMANCE:
(for the periods ended December 31, 1998)
Best Quarter Return: Q2 `95 0.98%
Worst Quarter Return: Q3 `98 0.68%
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIODS ENDED DECEMBER 31, 1998)
---------------------------
1-Year Since Inception
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CALIFORNIA MUNICIPAL MONEY MARKET FUND
(Inception 11/29/94) 2.85% 3.29%
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THE 7-DAY YIELD FOR THE FUND AS OF DECEMBER 31, 1998: 2.98%. YOU MAY CALL
1-800-595-9111 TO OBTAIN THE CURRENT 7-DAY YIELD.
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RISK/RETURN SUMMARY
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds. Please note that the following information does not reflect
any charges which may be imposed by The Northern Trust Company, its affiliates,
correspondent banks and other institutions on their customers. For more
information, please see "Account Policies and Other Information" on page 27.
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SHAREHOLDER FEES
(fees paid directly from your investment)
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SALES CHARGE
SALES CHARGE (LOAD)
(LOAD) DEFERRED IMPOSED ON
IMPOSED ON SALES CHARGE REINVESTED REDEMPTION EXCHANGE
FUND PURCHASES (LOAD) DISTRIBUTIONS FEES (1) FEES
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Money Market None None None None None
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U.S. Government Money Market None None None None None
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U.S. Government Select Money Market None None None None None
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Tax-Exempt Money Market None None None None None
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Municipal Money Market None None None None None
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California Municipal Money Market None None None None None
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Footnotes
(1) A fee of $15.00 may be applicable for each wire redemption.
(2) During the last fiscal year the Funds did not pay any 12b-1 fees. The Funds
do not expect to pay any 12b-1 fees during the current fiscal year. The
maximum distribution fee is 0.25% of each Fund's average net assets under
Northern Funds' Distribution and Service Plan.
(3) These expenses include custodian, transfer agency and administration
expenses as well as other customary Fund Expenses. The administrator is
entitled to an administration fee of 0.15%, of which 0.09% is currently
being waived voluntarily. Such waivers may be terminated at any time. Since
the Tax-Exempt Money Market Fund had not commenced operations as of the
date of this Prospectus, "Other Expenses" is based on estimated amounts the
Fund expects to pay during the current fiscal year.
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RISK/RETURN SUMMARY
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
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TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
FEES (12b-1) FEES(2) EXPENSES(3) EXPENSES(4)
- ----------------------------------------------------------------------
<S> <C> <C> <C>
0.60% 0.00% 0.29% 0.89%
- ------------------------------------------------------------------------
0.60% 0.00% 0.31% 0.91%
- ------------------------------------------------------------------------
0.60% 0.00% 0.31% 0.91%
- ------------------------------------------------------------------------
0.60% 0.00% 0.32% 0.92%
- ------------------------------------------------------------------------
0.60% 0.00% 0.29% 0.89%
- ------------------------------------------------------------------------
0.60% 0.00% 0.31% 0.91%
- ------------------------------------------------------------------------
</TABLE>
(4) As a result of voluntary fee reductions, waivers and reimbursements,
"Management Fees," "Other Expenses" and "Total Fund Operating Expenses"
which are actually incurred by the Funds are set forth below. The voluntary
fee reductions, waivers and reimbursements may be terminated at any time at
the option of the Investment Adviser. If this occurs, "Management Fees,"
"Other Expenses" and "Total Fund Operating Expenses" may increase without
shareholder approval.
<TABLE>
<CAPTION>
MANAGEMENT DISTRIBUTION OTHER TOTAL ANNUAL FUND
FUND FEES (12b-1) FEES EXPENSES OPERATING EXPENSES
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market 0.40% 0.00% 0.15% 0.55%
- -------------------------------------------------------------------------------------------------------------
U.S. Government Money Market 0.40% 0.00% 0.15% 0.55%
- -------------------------------------------------------------------------------------------------------------
U.S. Government Select Money Market 0.40% 0.00% 0.15% 0.55%
- -------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market 0.40% 0.00% 0.15% 0.55%
- -------------------------------------------------------------------------------------------------------------
Municipal Money Market 0.40% 0.00% 0.15% 0.55%
- -------------------------------------------------------------------------------------------------------------
California Municipal Money Market 0.40% 0.00% 0.15% 0.55%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 20
<PAGE> 21
RISK/RETURN SUMMARY
EXAMPLE
The following Example is intended to help you compare the cost of investing in a
Fund (without fee waivers and expense reimbursements) with the cost of investing
in other mutual funds.
The Example assumes that you invest $10,000 in a Fund for the time periods
indicated (with reinvestment of all dividends and distributions) and then redeem
all of your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that a Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
FUND ONE YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market $ 91 $285 $495 $1,100
- -------------------------------------------------------------------------------------------
U.S. Government Money Market $ 93 $291 $506 $1,123
- -------------------------------------------------------------------------------------------
U.S. Government Select Money Market $ 93 $291 $506 $1,123
- -------------------------------------------------------------------------------------------
Tax-Exempt Money Market $ 94 $295 N/A N/A
- -------------------------------------------------------------------------------------------
Municipal Money Market $ 91 $285 $495 $1,100
- -------------------------------------------------------------------------------------------
California Municipal Money Market $ 93 $291 $506 $1,123
- -------------------------------------------------------------------------------------------
</TABLE>
Page 21
<PAGE> 22
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISER
The Northern Trust Company ("Northern Trust" or the "Investment Adviser"), an
Illinois state-chartered bank and member of the Federal Reserve System, serves
as investment adviser for the Funds.
The Investment Adviser is located at 50 S. LaSalle Street, Chicago, IL 60675 and
is a wholly-owned subsidiary of Northern Trust Corporation, a bank holding
company. As of June 30, 1999, Northern Trust Corporation and its subsidiaries
had approximately $30.2 billion in assets, $18.3 billion in deposits and
employed over 8,253 persons.
Northern Trust and its affiliates administered in various capacities (including
as master trustee, investment manager or custodian) approximately $1.34 trillion
of assets as of June 30, 1999, including approximately $258.6 billion of assets
for which Northern Trust and its affiliates had investment management
responsibility.
Under its Advisory Agreement with Northern Funds, the Investment Adviser,
subject to the general supervision of Northern Funds' Board of Trustees, is
responsible for making investment decisions for the Funds and for placing
purchase and sale orders for portfolio securities.
ADVISORY FEES
As compensation for its advisory services and its assumption of related
expenses, the Investment Adviser is entitled to an advisory fee, computed daily
and payable monthly, at annual rates set forth in the table below (expressed as
a percentage of each Fund's respective average daily net assets). The table also
reflects the advisory fees (after voluntary fee waivers) paid by the Funds,
other than the Tax-Exempt Money Market Fund, for the fiscal year ended March 31,
1999.
<TABLE>
<CAPTION>
ADVISORY FEE PAID
CONTRACTUAL FOR FISCAL YEAR
FUND RATE ENDED 3/31/99
- ---- ---- -------------
<S> <C> <C>
Money Market 0.60% 0.40%
U.S. Government Money Market 0.60% 0.40%
U.S. Government Select Money Market 0.60% 0.40%
Tax-Exempt Money Market 0.60% N/A
Municipal Money Market 0.60% 0.40%
California Municipal Money Market 0.60% 0.40%
</TABLE>
The difference between the contractual advisory fees and the actual advisory
fees paid by the Funds reflects that the Investment Adviser did not charge the
full amount of the advisory fees to which it was entitled. The Investment
Adviser may discontinue or modify its voluntary limitations in the future at its
discretion.
FUND MANAGEMENT AND OTHER SERVICES
The Investment Adviser employs a team approach to the investment management of
the Funds, relying upon investment professionals under the leadership of James
M. Snyder, Chief Investment Officer and Executive Vice President of Northern
Trust. Mr. Snyder oversees the management of all fixed income, equity and money
market assets managed by the Investment Adviser. Mr. Snyder joined Northern
Trust in 1980.
Northern Trust also serves as transfer agent ("Transfer Agent") and custodian
for each Fund. As Transfer Agent, Northern Trust performs various administrative
servicing functions, and any shareholder inquiries should be directed to it. The
fees that Northern Trust receives for its services in those capacities are
described in the Statement of Additional Information. Sunstone Financial Group,
Inc. acts as administrator for Northern Funds. Northern Funds Distributors, LLC
(an affiliate of Sunstone Financial Group, Inc.) serves as the Funds'
distributor. The fee that Sunstone Financial Group, Inc. receives for its
administrative services is described on page 19 under "Fund Fees and
Page 22
<PAGE> 23
MANAGEMENT OF THE FUNDS
Expenses." Northern Funds Distributors, LLC does not receive any compensation
from Northern Funds for its distribution services.
It is expected that on or after October 1, 1999, Northern Trust and First Data
Investor Services Group, Inc. ("Investor Services Group"), will replace Sunstone
Financial Group, Inc. to serve as the Funds' co-administrators, at substantially
the same cost to the Funds. It is also expected that on or after such date, the
Funds' current distributor, Northern Funds Distributors, LLC will be acquired by
Provident Distributors, Inc., an independently owned and operated broker-dealer
based in West Conshohocken, Pennsylvania.
PURCHASING AND SELLING SHARES
PURCHASING SHARES
You may purchase shares directly from Northern Funds or, if you maintain certain
accounts, through Northern Trust and certain other institutions. If you have any
questions or need assistance in opening an investment account or purchasing
shares, call 1-800-595-9111.
As of the date of this Prospectus, shares of the Tax-Exempt Money Market Fund
are not being offered. Please call 1-800-595-9111 before investing to determine
availability.
OPENING AN ACCOUNT
DIRECTLY FROM THE FUNDS. You may open a shareholder account and purchase shares
directly from the Funds with a minimum initial investment per Fund of $2,500
($500 for an IRA; $250 under the Automatic Investment Plan; and $500 for
employees of Northern Trust and its affiliates). The minimum subsequent
investment is $50 (except for reinvestments of distributions for which there is
no minimum). The Funds reserve the right to waive these minimums.
For your convenience, there are a number of ways to invest directly in the
Funds:
BY MAIL.
o Read this Prospectus carefully
o Complete and sign the Purchase Application
o Enclose a check or money order payable to Northern Funds
o If you are investing on behalf of a corporation or other entity,
your Purchase Application must be accompanied by a certified
corporate resolution (or other acceptable evidence of authority).
o Mail your check, corporate resolution (if needed) and completed
Purchase Application to:
Northern Funds
P.O. Box 75986
Chicago, Illinois 60690-6319
o For overnight delivery use the following address:
801 South Canal Street
Chicago, Illinois 60607
Attn: Northern Funds
o For subsequent investments:
- Enclose your check with the return remittance portion
of the confirmation of your previous investment; or
- Indicate on your check or a separate piece of paper
your name, address and account number
All checks must be payable in U.S. dollars and drawn on a bank located in
the United States. Cash and third party checks are not acceptable.
Page 23
<PAGE> 24
MANAGEMENT OF THE FUNDS
BY WIRE
To open a new account:
o Call 1-800-595-9111 for instructions
o Complete a Purchase Application and send it to:
Northern Funds
P.O. Box 75986
Chicago, IL 60690-6319
To add to an existing account:
o Have your bank wire Federal funds to:
The Northern Trust Company
Chicago, Illinois
ABA Routing No. 0710-00152
(Reference 10 Digit Fund Account No.)
(Reference Shareholder's Name)
BY DIRECT DEPOSIT
To purchase additional shares:
o Determine if your employer has direct deposit capabilities
through the Automated Clearing House ("ACH")
o Have your employer send payments to:
ABA Routing No. 0710-00152
(Reference 10 Digit Fund Account No.)
(Reference Shareholder's Name)
o The minimum periodic investment for direct deposit is $50
BY AUTOMATIC INVESTMENT
To open a new account:
o Complete a Purchase Application, including the Automatic
Investment section
o Send it to:
Northern Funds
P.O. Box 75986
Chicago, IL 60690-6319
o The minimum initial investment is $250; $50 for monthly minimum
additions
To add to an account:
o Call 1-800-595-9111 to obtain an Automatic Investment Plan
Application
o The minimum for automatic investment additions is $50
If you discontinue participation in the plan, the Funds reserve the right to
redeem the investor's account involuntarily, upon 30 days written notice, if the
account's net asset value is $1,000 or less. Involuntary redemptions will not be
made if the value of shares in an account falls below the minimum amount solely
because of a decline in the Fund's net asset value.
BY DIRECTED REINVESTMENT
You may elect to have your income dividends and capital gains
distributions automatically invested in another Northern Fund.
o Complete the Distribution Options section on the Purchase
Application
o Reinvestments can only be directed to an existing Northern
Funds account (which must meet the minimum investment
requirement)
Page 24
<PAGE> 25
MANAGEMENT OF THE FUNDS
BY EXCHANGE
You may open a new account or add to an existing account by exchanging
shares of one Fund for shares of any other Fund offered by Northern
Funds. See "Selling Shares - By Exchange" on page 26.
THROUGH NORTHERN TRUST AND OTHER INSTITUTIONS
If you have an account with Northern Trust, you may purchase Northern Funds
shares through Northern Trust. You may also purchase shares through other
institutions (together with Northern Trust, "Service Organizations") that have
entered into agreements with Northern Funds. To determine whether you may
purchase shares through your institution, contact your institution directly or
call 1-800-595-9111. Northern Trust or another Service Organization may impose
charges against your account which will reduce the net return on an investment
in a Fund. These charges may include asset allocation fees, account maintenance
fees, sweep fees, compensating balance requirements or other charges based upon
account transactions, assets or income.
BY INTERNET
You may initiate transactions between Northern Trust banking and
Northern Funds accounts by using Northern Trust Private Passport. For
details and to sign up for this service, go to
www.northerntrust.com/privatepassport or contact your relationship
manager.
SELLING SHARES
REDEEMING AND EXCHANGING DIRECTLY FROM THE FUNDS
If you purchased Northern Funds directly or, if you purchased your shares
through an account at Northern Trust or another Service Organization and you
appear on Northern Funds records as the registered holder, you may redeem all or
part of your shares using one of the methods described below.
BY MAIL
Send a written request to:
Northern Funds
P.O. Box 75986
Chicago, Illinois 60690-6319
The redemption request must include:
o The number of shares or the dollar amount to be redeemed
o The Fund account number
o A signature guarantee is also required if:
- The proceeds are to be sent elsewhere than the address
of record, or
- The redemption amount is greater than $50,000
BY WIRE
If you authorize wire redemptions on your Purchase Application, you can
redeem shares and have the proceeds sent by Federal wire transfer to a
previously designated account.
o You will be charged $15 for each wire redemption unless the
designated account is maintained at Northern Trust or an
affiliated bank
o Call the Transfer Agent at 1-800-595-9111 for instructions
o The minimum amount that may be redeemed by this method is $250
Page 25
<PAGE> 26
MANAGEMENT OF THE FUNDS
BY CHECK
If you authorize the checkwriting privilege on your Purchase Application,
you may redeem shares of the Funds by check in amounts of $250 or more. If
your account is already open:
o Call 1-800-595-9111 for the appropriate form
o The application must be signed by each person whose name appears
on the account and must be accompanied by a signature guarantee
o Dividends are earned until the check clears the Transfer Agent
o Checks you write will not be returned to you, although copies are
available upon request o A fee of $20 will be charged to the
account if there are insufficient funds to cover the amount of
your redemption by check
o To place a stop payment request, call 1-800-595-9111. A $20 fee
will be charged to the account
o You may not use checks to close an account or redeem shares
purchased within the past fifteen days
BY SYSTEMATIC WITHDRAWAL
If you own shares of a Fund with a minimum value of $10,000, you may elect
to have a fixed sum redeemed at regular intervals and distributed in cash
or reinvested in one or more other Northern Funds.
o Call 1-800-595-9111 for an application form and additional
information
o The minimum amount is $250 per withdrawal
BY EXCHANGE
Northern Funds offers you the ability to exchange shares of one Northern
Fund for another Fund in the Northern Funds family.
o When opening an account, complete the Exchange Privilege
section of the Purchase Application or, if your account is
already opened, send a written request to:
Northern Funds
P.O. Box 75986
Chicago, IL 60690-6319
o Shares being exchanged must have a value of at least $1,000
($2,500 if a new account is being established by the
exchange)
o Call 1-800-595-9111 for more information
BY TELEPHONE
If you authorize the telephone privilege on your Purchase Application, you
may redeem Northern Funds shares by phone.
o If your account is already opened, send a written request to:
Northern Funds
P.O. Box 75986
Chicago, IL 60690-6319
o The request must be signed by each owner of the account and must
be accompanied by signature guarantees
o Call 1-800-595-9111 to use the telephone privilege
o During periods of unusual economic or market activity, telephone
redemptions may be difficult to implement. In such event,
shareholders should follow the procedures outlined on page 25
under "Selling Shares -- By Mail"
BY INTERNET
You may initiate transactions between Northern Trust banking and Northern
Funds accounts by using Northern Trust Private Passport. For details and to
sign up for this service, go to www.northerntrust.com/privatepassport or
contact your relationship manager.
REDEEMING AND EXCHANGING THROUGH NORTHERN TRUST AND OTHER INSTITUTIONS
If you purchased your Northern Funds shares through an account at Northern Trust
or another Service Organization, you may redeem or exchange your shares
according to the instructions pertaining to that account.
Page 26
<PAGE> 27
MANAGEMENT OF THE FUNDS
o Although Northern Funds imposes no charges when you redeem, when
shares are purchased through Northern Trust or another Service
Organization, a fee may be charged by those institutions for providing
services in connection with your account
o Contact your account representative at Northern Trust or other Service
Organization for more information about redemptions or exchanges
ACCOUNT POLICIES AND OTHER INFORMATION
CALCULATING SHARE PRICE. Northern Funds issues shares and redeems shares at net
asset value ("NAV"). The NAV for each Fund is calculated by dividing the value
of the Fund's net assets by the number of the Fund's outstanding shares. The NAV
is calculated on each Business Day as of 1:00 p.m., Chicago time, for each Fund.
The NAV used in determining the price of your shares is the one calculated after
your purchase, exchange or redemption order is received and accepted as
described below.
The Funds seek to maintain an NAV of $1.00 per share by valuing the obligations
held by the Funds at amortized cost in accordance with SEC regulations.
Amortized cost will normally approximate market value.
TIMING OF PURCHASE REQUESTS. Requests accepted by the Transfer Agent or other
authorized intermediary by 1:00 p.m., Chicago time, on any Business Day will be
executed the same day, at that day's closing share price provided that either:
o The order is in proper form and payment in immediately available funds
has been received by the Transfer Agent;
o The order is placed by Northern Trust or a Service Organization and
payment in Federal or other immediately available funds is to be made
by the close of the same Business Day; or
o The order is accepted by an authorized intermediary and payment in
Federal or other immediately available funds is to be made by the
close of the same Business Day in accordance with procedures
acceptable to Northern Funds.
Orders received by the Transfer Agent that are accompanied by payment in any
form other than immediately available funds will not be executed until payment
is converted to Federal funds, which normally occurs within two Business Days
after receipt.
SOCIAL SECURITY/TAX IDENTIFICATION NUMBER. Federal regulations require you to
provide a Social Security or other certified taxpayer identification number when
you open or reopen an account. Purchase Applications without such a number or an
indication that a number has been applied for will not be accepted. If you have
applied for a number, the number must be provided and certified within 60 days
of the date of the Purchase Application.
IN-KIND PURCHASES AND REDEMPTIONS. Northern Funds reserves the right to accept
payment for shares in the form of securities that are permissible investments
for a Fund. Northern Funds also reserves the right to pay redemptions by a
distribution "in-kind" of securities (instead of cash) from a Fund. See the
Statement of Additional Information for further information about the terms of
these purchases and redemptions.
MISCELLANEOUS PURCHASE INFORMATION.
o You will be responsible for all losses and expenses of a Fund in the event
of any failure to make payment according to the procedures outlined in this
Prospectus. Northern Trust may redeem shares from any account it maintains
to protect the Funds and Northern Trust against loss. In addition, a $20
charge will be imposed if a check does not clear.
o You may initiate transactions between Northern Trust banking and Northern
Funds accounts by using Northern Trust Private Passport. For additional
details, please visit our website at www.northerntrust.com/privatepassport
or contact your relationship manager.
Page 27
<PAGE> 28
MANAGEMENT OF THE FUNDS
o Northern Funds reserves the right to reject any purchase order. The Funds
also reserve the right to change or discontinue any of their purchase
procedures.
o In certain circumstances, Northern Funds may advance the time by which
purchase orders must be received. See "Early Closings" on page 29.
o Northern Funds may reproduce this Prospectus in an electronic format which
may be available on the Internet. If you have received this Prospectus in
its electronic format you, or your representative, may contact the Transfer
Agent for a free paper copy of this Prospectus by writing to the Northern
Funds Center at P.O. Box 75986, Chicago, IL 60690-6319, calling
1-800-595-9111 or sending an e-mail to: [email protected].
TIMING OF REDEMPTION AND EXCHANGE REQUESTS. Redemption and exchange requests
received in good order by the Transfer Agent or other authorized intermediary on
a Business Day by 1:00 p.m., Chicago time, will be executed on the same day. The
redemption or exchange will be effected at that day's closing share price.
Good order means that the request must include the following information:
o The account number and Fund name
o The amount of the transaction, in dollar amount or number of shares
o The signature of all account owners exactly as they are registered on
the account (except for online, telephone and wire redemptions)
o Required signature guarantees, if applicable
o Other supporting legal documents that might be required in the case of
estates, corporations, trusts and certain other accounts. Call
1-800-595-9111 for more information about documentation that may be
required of these entities
In certain circumstances, Northern Funds may advance the time by which
redemption and exchange orders must be received. See "Early Closings" on page
29.
PAYMENT OF REDEMPTION PROCEEDS. If a redemption request is received by the
Transfer Agent in good order by 1:00 p.m., Chicago time, on a Business Day, the
proceeds will normally be sent on the next Business Day, unless payment in
immediately available funds on the same Business Day is requested. Proceeds for
redemption orders received on a non-Business Day will normally be sent on the
second Business Day after receipt in good order. However, if any portion of the
shares to be redeemed represents an investment made by check, the Funds may
delay the payment of the redemption proceeds until the check has cleared and
collected. This may take up to fifteen days from the purchase date.
MISCELLANEOUS REDEMPTION INFORMATION. All redemption proceeds will be sent by
check unless the Transfer Agent is directed otherwise. Redemption proceeds may
also be wired. A redemption request may not be processed if a shareholder has
failed to submit a completed and properly executed Purchase Application.
o Northern Funds reserves the right to redeem shares held by any shareholder
who provides incorrect or incomplete account information or when such
involuntary redemptions are necessary to avoid adverse consequences to the
Fund and its shareholders.
o Northern Funds may require any information reasonably necessary to ensure
that a redemption has been duly authorized.
o Northern Funds reserves the right, on 60 days' written notice, to redeem
the shares held in any account if, at the time of redemption, the net asset
value of the remaining shares in the account falls below $1,000.
Involuntary redemptions will not be made if the value of shares in an
account falls below the minimum solely because of a decline in a Fund's net
asset value.
o Northern Funds reserves the right to change or discontinue any of its
redemption procedures.
Page 28
<PAGE> 29
MANAGEMENT OF THE FUNDS
o You may initiate transactions between Northern Trust banking and Northern
Funds accounts by using Northern Trust Private Passport. For additional
details, please visit our web site at www.northerntrust.com/privatepassport
or contact your relationship manager.
o Northern Funds reserves the right to defer crediting, sending or wiring
redemption proceeds for up to seven days (or such longer period permitted
by the SEC) after receiving the redemption order if, in its judgment, an
earlier payment could adversely affect a Fund.
EXCHANGE PRIVILEGES. You may exchange shares of one Northern Fund for another
only if the registration of both accounts is identical. An exchange is a
redemption of shares of one Fund and the purchase of shares of another Fund. It
is considered a taxable event and may result in a gain or loss. Northern Funds
reserves the right, at any time without prior notice to suspend, limit or
terminate the exchange privilege of any shareholder who makes more than eight
exchanges of shares in a year and/or two exchanges of shares in a calendar
quarter. Northern Funds may also modify or terminate the exchange privilege with
respect to any or all shareholders, and may reject any exchange request.
Exchanges are only available in states where an exchange can legally be made.
Before making an exchange you should read the Prospectus for the shares you are
acquiring.
TELEPHONE TRANSACTIONS. For your protection, telephone requests are recorded in
order to verify their accuracy. In addition, the Transfer Agent has adopted
procedures in an effort to establish reasonable safeguards against fraudulent
telephone transactions. If reasonable measures are taken to verify that
telephone instructions are genuine, Northern Funds and its service providers
will not be responsible for any loss resulting from fraudulent or unauthorized
instructions received over the telephone. In these circumstances, shareholders
will bear the risk of loss. During periods of unusual market activity, you may
have trouble placing a request by telephone. In this event, consider sending
your request in writing.
The proceeds of redemption orders received by telephone will be sent by check,
wire or transfer according to proper instructions. All checks will be made
payable to the shareholder of record and mailed only to the shareholder's
address of record.
Northern Funds reserves the right to refuse a telephone redemption.
MAKING CHANGES TO YOUR ACCOUNT INFORMATION. You may make changes to wiring
instructions, address of record or other account information only in writing.
These instructions must be accompanied by a signature guarantee from an
institution participating in the Stock Transfer Agency Medallion Program
("STAMP"), or other acceptable evidence of authority. Additional requirements
may be imposed. In accordance with SEC regulations, the Funds and Transfer Agent
may charge a shareholder reasonable costs in locating a shareholder's current
address.
SIGNATURE GUARANTEES. If a signature guarantee is required, it must be from an
institution participating in STAMP, or other acceptable evidence of authority
must be provided. Additional requirements may be imposed by Northern Funds. In
addition to the situations described in this Prospectus, Northern Funds may
require signature guarantees in other circumstances based on the amount of a
redemption request or other factors.
BUSINESS DAY. A "Business Day" is each Monday through Friday when Northern Trust
or the New York Stock Exchange is open for business. In 1999 the Funds will be
closed on the following holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas Day.
EARLY CLOSINGS. Northern Funds reserve the right to cease, or to advance the
time for, accepting purchase, redemption or exchange orders for same Business
Day credit when Northern Trust or the Exchange closes early as a result of
unusual weather or other conditions. They also reserve this right when The Bond
Market Association recommends that securities markets close or close early.
Page 29
<PAGE> 30
MANAGEMENT OF THE FUNDS
AUTHORIZED INTERMEDIARIES. Northern Funds may authorize certain financial
intermediaries (including banks, trust companies, brokers and investment
advisers), which provide recordkeeping, reporting and processing services, to
accept purchase, redemption and exchange orders from their customers on behalf
of the Funds. These financial intermediaries may also designate other
intermediaries to accept such orders, if approved by the Funds. Authorized
intermediaries are responsible for transmitting orders and delivering funds on a
timely basis. A Fund will be deemed to have received an order when the order is
accepted by the authorized intermediary on a Business Day, and the order will be
priced at the Fund's per share NAV next determined.
SERVICE ORGANIZATIONS. Northern Funds may enter into agreements with Service
Organizations such as banks, corporations, broker/dealers and other financial
institutions, including Northern Trust, concerning the provision of support
and/or distribution services to their customers who own Fund shares. These
services may include:
o support services such as assisting investors in processing purchase,
exchange and redemption requests;
o processing dividend and distribution payments from the Funds;
o providing information to customers showing their positions in the Funds;
and
o providing subaccounting with respect to Fund shares beneficially owned by
customers or the information necessary for subaccounting.
In addition, Service Organizations may provide assistance, such as the
forwarding of sales literature and advertising to their customers, in connection
with the distribution of Fund shares.
For their services, Service Organizations may receive fees from a Fund at annual
rates of up to 0.25% of the average daily net asset value of the shares covered
by their agreements. Because these fees are paid out of the Funds' assets on an
on-going basis, they will increase the cost of your investment in the Funds. In
addition, Northern Trust may provide compensation to certain dealers and other
financial intermediaries who provide services to their customers who invest in
Northern Funds or whose customers purchase significant amounts of a Fund's
shares. The amount of such compensation may be made on a one-time and/or
periodic basis, and may represent all or a portion of the annual fees earned by
Northern Trust as Investment Adviser (after adjustments). This additional
compensation will be paid by Northern Trust or its affiliates and will not
represent an additional expense to Northern Funds or its shareholders.
Service Organizations may also charge their customers fees for providing
administrative services in connection with investments in a Fund. Investors
should contact their Service Organizations with respect to these fees and the
particular Service Organization's procedures for purchasing and redeeming
shares. It is the responsibility of Service Organizations to transmit purchase
and redemption orders and record those orders on a timely basis in accordance
with their agreements with their customers.
Conflict-of-interest restrictions may apply to the receipt of compensation paid
by Northern Funds in connection with the investment of fiduciary funds in Fund
shares. Institutions, including banks regulated by the Comptroller of the
Currency, Federal Reserve Board and state banking commissions, and investment
advisers and other money managers subject to the jurisdiction of the SEC, the
Department of Labor or state securities commissions, are urged to consult their
legal counsel before entering into agreements with Northern Funds.
State securities laws regarding the registration of dealers may differ from
Federal law. As a result, Service Organizations investing in the Funds on behalf
of their customers may be required to register as dealers.
Agreements that contemplate the provision of distribution services by Service
Organizations are governed by a Distribution and Service Plan (the "Plan") that
has been adopted by Northern Funds pursuant to Rule 12b-1 under the 1940 Act.
Payments to Service Organizations, including Northern Trust, under the Plan are
not tied directly to
Page 30
<PAGE> 31
MANAGEMENT OF THE FUNDS
their own out-of-pocket expenses and therefore may be used as they elect (for
example, to defray their overhead expenses), and may exceed their direct and
indirect costs.
SHAREHOLDER REPORTS. Shareholders of record will be provided each year with a
semiannual report showing portfolio investments and other information as of
September 30 and, after the close of the Funds' fiscal year on March 31, with an
annual report containing audited financial statements. To eliminate unnecessary
duplication, only one copy of shareholder reports will be sent to shareholders
with the same mailing address. Shareholders who desire a duplicate copy of
shareholder reports to be mailed to their residence should call 1-800-595-9111
or send an email to: [email protected].
DIVIDENDS AND DISTRIBUTIONS
Dividends and capital gain distributions of each Fund are automatically
reinvested in additional shares of the same Fund without any sales charge or
additional purchase price amount.
You may, however, elect to have dividends or capital gain distributions (or
both) paid in cash or reinvested in shares of another Northern Fund at their net
asset value per share. If you would like to receive dividends or distributions
in cash or have them reinvested in another Northern Fund, you must notify the
Transfer Agent in writing. This election will become effective for distributions
paid two days after its receipt by the Transfer Agent. Dividends and
distributions may only be reinvested in a Northern Fund in which you maintain an
account.
Each Fund's net investment income is declared as a dividend on each Business Day
and paid monthly. Dividends will also be paid promptly upon a total redemption
of shares in an account not subject to a standing order for the purchase of
additional shares. Net investment income includes interest accrued on the Fund's
assets less the Fund's estimated expenses. Net realized short-term capital gains
may be distributed from time to time during Northern Funds' fiscal year (but not
less frequently than annually). The Funds do not expect to realize net long-term
capital gains. Shares begin earning dividends on the day an order is executed if
payment in immediately available funds is received by Northern Funds by the time
designated on page 23 under "Purchasing and Selling Shares." Otherwise, shares
begin earning dividends on the day payment in Federal or other immediately
available funds is received.
TAX CONSIDERATIONS
Each Fund contemplates declaring as dividends each year all or substantially all
of its taxable income, including its net capital gain (excess of long-term
capital gain over short-term capital loss). Fund distributions will generally be
taxable as ordinary income, except as discussed below. You will be subject to
income tax on Fund distributions regardless of whether they are paid in cash or
reinvested in additional shares. You will be notified annually of the tax status
of distributions to you. The one major exception to these tax principles is that
distributions on shares held in an IRA (or other tax-qualified plan) will not be
currently taxable.
If you (a) have provided either an incorrect Social Security Number or Taxpayer
Identification Number or no number at all, (b) are subject to withholding by the
Internal Revenue Service for prior failure to properly include on your return
payments of interest or dividends, or (c) have failed to certify to Northern
Funds, when required to do so, that you are not subject to backup withholding or
are an "exempt recipient," then Northern Funds will be required in certain cases
to withhold and remit to the U.S. Treasury 31% of the dividends and
distributions payable to you.
There are certain tax requirements that the Funds must follow in order to avoid
Federal taxation. In their efforts to adhere to these requirements, the Funds
may have to limit their investment activity in some types of instruments.
Municipal Money Market, Tax-Exempt Money Market and California Municipal Money
Market Funds. The Municipal Money Market and California Municipal Money Market
Funds (the "Municipal Funds") and the Tax-Exempt Money Market Fund expect to pay
"exempt-interest dividends" that are generally exempt from regular Federal
income tax. However, a portion of the exempt-interest dividends paid by the
Tax-Exempt Money Market
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MANAGEMENT OF THE FUNDS
Fund may be, and a portion of the dividends paid by the Municipal Funds
generally will be, an item of tax preference for purposes of determining Federal
alternative minimum tax liability. Exempt-interest dividends will also be
considered along with other adjusted gross income in determining whether any
Social Security or railroad retirement payments received by you are subject to
Federal income taxes.
Except as stated below, you may be subject to state and local taxes on Fund
distributions and redemptions. State income taxes may not apply, however, to the
portions of each Fund's distributions, if any, that are attributable to interest
on certain types of Federal securities or interest on securities issued by the
particular state or municipalities within the state.
The California Municipal Money Market Fund expects to pay dividends that are
generally exempt from California personal income tax. This exemption will apply,
however, only to dividends that are derived from interest paid on California
municipal instruments, or on certain Federal obligations. In addition, dividends
paid by this Fund will be subject to state franchise and corporate income taxes,
if applicable.
In all cases, distributions, if any, derived from net long-term capital gains
will generally be taxable to you as long-term capital gains, and any dividends
derived from short-term capital gains and taxable interest income will be
taxable to you as ordinary income.
If you receive an exempt-interest dividend with respect to any share and the
share is held for six months or less, any loss on the sale or exchange of the
share will be disallowed to the extent of the dividend amount. Interest on
indebtedness incurred by a shareholder to purchase or carry shares of the
Municipal Funds or the Tax-Exempt Money Market Fund generally will not be
deductible for Federal income tax purposes.
Consult Your Tax Professional. Your investment in the Funds could have
additional tax consequences. You should consult your tax professional for
information regarding all tax consequences applicable to your investments in the
Funds. More tax information is provided in the Statement of Additional
Information. This short summary is not intended as a substitute for careful tax
planning.
TAX TABLE
You may find it particularly useful to compare the tax-free yields of
the Municipal Funds and the Tax-Exempt Money Market Fund to the equivalent
yields from taxable investments. For an investor in a low tax bracket, it may
not be helpful to invest in a tax-exempt investment if a higher after-tax yield
can be achieved from a taxable instrument.
The table below illustrates the difference between hypothetical
tax-free yields and tax-equivalent yields for different tax brackets. You should
be aware, however, that tax brackets can change over time and that your tax
adviser should be consulted for specific yield calculations.
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MANAGEMENT OF THE FUNDS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
FEDERAL
MARGINAL TAX-EXEMPT YIELDS
TAXABLE INCOME TAX RATE 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%
- ----------------------------------------------------------------------------------------------------------------------------
SINGLE RETURN JOINT RETURN EQUIVALENT TAXABLE YIELDS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $ 25,750 $ 0 - $ 43,050 15% 2.35% 3.53% 4.71% 5.88% 7.06% 8.24% 9.41%
- ----------------------------------------------------------------------------------------------------------------------------
$ 25,751 - $ 62,450 $ 43,051 - $104,050 28% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72% 11.11%
- ----------------------------------------------------------------------------------------------------------------------------
$ 62,451 - $130,250 $104,051 - $158,550 31% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14% 11.59%
- ----------------------------------------------------------------------------------------------------------------------------
$130,251 - $283,150 $158,551 - $283,150 36% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94% 12.50%
- ----------------------------------------------------------------------------------------------------------------------------
Over $283,151 Over $283,151 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59% 13.25%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The tax-exempt yields used here are hypothetical and no assurance can be made
that the Funds will attain any particular yield. A Fund's yield fluctuates as
market conditions change. The tax brackets and related yield calculations are
based on the 1999 Federal marginal tax rates indicated in the table. The table
does not reflect the phase out of personal exemptions and itemized deductions
which will apply to certain higher income taxpayers. In addition, the brackets
do not take into consideration the California state personal income tax or any
other state tax.
YEAR 2000 ISSUES
Like every other business dependent upon computerized information processing,
Northern Trust Corporation must deal with "Year 2000" issues.
Many computer systems use two digits rather than four to identify the year.
Unless adapted, these systems may not be able to correctly distinguish the Year
2000 from the Year 1900. As the Year 2000 approaches, many systems may be unable
to accurately process certain date-based information, which could cause a
variety of operational problems for businesses. This could have a negative
effect on the companies in which the Funds invest, thus hurting the Funds'
investment returns.
Northern Trust Corporation has implemented steps to prepare its critical
computer systems and processes for Year 2000 processing. It has established a
dedicated Year 2000 Project Team whose members have significant systems
development and maintenance experience. Northern Trust Corporation's Year 2000
project includes a comprehensive testing plan of its critical systems. Northern
Trust Corporation has advised Northern Funds that it has substantially completed
work on its critical systems and that testing with outside parties will be
conducted during 1999.
Northern Trust Corporation also will have a program to monitor and assess the
efforts of other parties, such as other service providers to the Fund. However,
it cannot control the success of those other parties' efforts. Contingency plans
are being established to provide Northern Trust Corporation with alternatives in
case these entities experience significant Year 2000 difficulties that impact
Northern Trust Corporation.
Furthermore, even if the actions taken by Northern Trust Corporation are
successful, the normal operations of the Funds may, in any event, be disrupted
significantly by the failure of communications and public utility companies,
governmental entities, financial processors or others to perform their services
as a result of Year 2000 problems.
Efforts in foreign countries to remediate potential Year 2000 problems are not
as extensive as those in the United States. As a result, the operations of
foreign markets, foreign issuers and foreign governments may be disrupted by the
Year 2000 problem and the investment portfolio of a Fund may be adversely
affected.
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Risks, Securities, Techniques
and Financial Information
RISKS, SECURITIES AND TECHNIQUES
ADDITIONAL INFORMATION ON FUND STRATEGIES, RISKS,
SECURITIES AND TECHNIQUES
This section takes a closer look at some of the Funds' principal investment
strategies and related risks. It also explores the various investment securities
and techniques that the investment management team may use. The Funds may invest
in other securities and are subject to further restrictions and risks which are
described in the Statement of Additional Information. You should note that a
Fund's investment objective may be changed by Northern Funds' Board of Trustees
without shareholder approval. Shareholders will, however, be notified of any
changes. Any such change may result in a Fund having an investment objective
different from the objective which the shareholder considered appropriate at the
time of investment in the Fund.
ADDITIONAL INFORMATION ON PRINCIPAL INVESTMENT
STRATEGIES AND RELATED RISKS
CALIFORNIA MUNICIPAL INSTRUMENTS. The investments of the California Municipal
Money Market Fund in California municipal instruments raise special
considerations. Payment of the interest on and the principal of these
instruments is dependent upon the continuing ability of issuers of California
municipal instruments to meet their obligations.
INVESTMENT STRATEGY. Under normal market conditions, at least 65% of the
value of the California Municipal Money Market Fund's total assets will be
invested in California municipal instruments. Consequently, the Fund is
more susceptible to factors adversely affecting issuers of California
municipal instruments, and may be riskier than comparable funds that do not
emphasize these issuers to this degree.
SPECIAL RISKS. The California Municipal Money Market Fund's investments
will be affected by political and economic developments within the State of
California (the "State"), and by the financial condition of the State, its
public authorities and political subdivisions. After suffering a severe
recession in the early 1990's which caused the State to experience
financial difficulties, California's economy entered a sustained recovery
since late 1993 and the State's budget has been returned to a positive
balance. California's long-term credit rating has been raised after being
reduced during the recession. To respond to its own revenue shortfalls
during the recession, the State reduced assistance to its public
authorities and political subdivisions. Cutbacks in state aid could further
adversely affect the financial condition of cities, counties and education
districts which are subject to their own fiscal constraints. California
voters in the past have passed amendments to the California Constitution
and other measures that limit the taxing and spending authority of
California governmental entities, and future voter initiatives could result
in adverse consequences affecting California municipal instruments. Also,
the ultimate fiscal effect of Federally-mandated reform of welfare programs
on the State and its local governments is still to be resolved. These
factors, among others (including the outcome of related pending
litigation), could reduce the credit standing of certain issuers of
California municipal instruments.
In addition to the risk of nonpayment of California municipal instruments,
if these obligations decline in quality and are downgraded by a Nationally
Recognized Statistical Rating Organization, they may become ineligible for
purchase by the Fund. Since there are large numbers of buyers of these
instruments, the supply of California municipal instruments that are
eligible for purchase by the California Municipal Money Market Fund could
become inadequate at certain times.
A more detailed description of special factors affecting investments in
California municipal instruments is provided in the Statement of Additional
Information.
FOREIGN INVESTMENTS. The Money Market Fund may invest in the U.S.
dollar-denominated obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions, agencies or
instrumentalities, foreign commercial banks and foreign branches of U.S. banks.
It may also invest in U.S. dollar-denominated commercial paper and other
obligations of foreign issuers.
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Risks, Securities, Techniques
and Financial Information
INVESTMENT STRATEGY. Investments by the Money Market Fund in foreign issuer
obligations will not exceed 50% of the Fund's total assets measured at the
time of purchase.
SPECIAL RISKS. Foreign securities involve special risks and costs. Foreign
securities, and in particular foreign debt securities, are sensitive to
changes in interest rates. In addition, investment in the securities of
foreign governments involves the risk that foreign governments may default
on their obligations or may otherwise not respect the integrity of their
debt.
Investment in foreign securities may involve higher costs than investment
in U.S. securities, including higher transaction and custody costs as well
as the imposition of additional taxes by foreign governments. Foreign
investments may also involve risks associated with less complete financial
information about the issuers, less market liquidity, more market
volatility and political instability. Future political and economic
developments, the possible imposition of withholding taxes on dividend
income, the possible seizure or nationalization of foreign holdings, or the
adoption of other governmental restrictions might adversely affect an
investment in foreign securities. Additionally, foreign banks and foreign
branches of domestic banks may be subject to less stringent reserve
requirements, and to different accounting, auditing and recordkeeping
requirements.
ADDITIONAL DESCRIPTIONS OF SECURITIES AND
COMMON INVESTMENT TECHNIQUES
ASSET-BACKED SECURITIES. Asset-backed securities are sponsored by entities such
as government agencies, banks, financial companies and commercial or industrial
companies. They represent interests in pools of mortgages or other cash-flow
producing assets such as automobile loans, credit card receivables and other
financial assets. In effect, these securities "pass through" the monthly
payments that individual borrowers make on their mortgages or other assets net
of any fees paid to the issuers. Examples of these include guaranteed mortgage
pass-through certificates, collateralized mortgage obligations ("CMOs") and real
estate mortgage investment conduits ("REMICs").
INVESTMENT STRATEGY. The U.S. Government Money Market Fund and U.S.
Government Select Money Market Fund may purchase securities that are
secured or backed by mortgages and that are issued or guaranteed by the
U.S. government, its agencies or instrumentalities. The other Funds may
purchase these and other types of asset-backed securities. Asset-backed
securities purchased by the Funds must meet the quality restrictions
imposed by the SEC.
SPECIAL RISKS. In addition to credit and market risk, asset-backed
securities involve prepayment risk because the underlying assets (loans)
may be prepaid at any time. The value of these securities may also change
because of actual or perceived changes in the creditworthiness of the
originator, the servicing agent, the financial institution providing the
credit support or the counterparty. Like other fixed income securities,
when interest rates rise, the value of an asset-backed security generally
will decline. However, when interest rates decline, the value of an
asset-backed security with prepayment features may not increase as much as
that of other fixed income securities. In addition, non-mortgage
asset-backed securities involve certain risks not presented by
mortgage-backed securities. Primarily, these securities do not have the
benefit of the same security interest in the underlying collateral. Credit
card receivables are generally unsecured, and the debtors are entitled to
the protection of a number of state and Federal consumer credit laws.
Automobile receivables are subject to the risk that the trustee for the
holders of the automobile receivables may not have an effective security
interest in all of the obligations backing the receivables.
BORROWINGS AND REVERSE REPURCHASE AGREEMENTS. The Funds can borrow money from
banks and enter into reverse repurchase agreements with banks and other
financial institutions. Reverse repurchase agreements involve the sale of
securities held by a Fund subject to the Fund's agreement to repurchase them at
a mutually agreed upon date and price (including interest).
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Risks, Securities, Techniques
and Financial Information
INVESTMENT STRATEGY. Each Fund may borrow in amounts not exceeding
one-third of its total assets (including the amount borrowed). These
transactions may be entered into as a temporary measure for emergency
purposes or to meet redemption requests. The Money Market and U.S.
Government Money Market Funds may utilize reverse repurchase agreements
when the investment management team expects that the interest income to be
earned from the investment of the transaction proceeds will be greater than
the related interest expense. A Fund's reverse repurchase agreements,
together with any other borrowings, will not exceed, in the aggregate, 33
1/3% of the value of its total assets. In addition, whenever borrowings
exceed 5% of the Fund's total assets, the Fund will not make any
investments.
SPECIAL RISKS. Borrowings and reverse repurchase agreements involve
leveraging. If the securities held by the Funds decline in value while
these transactions are outstanding, the net asset value of the Funds'
outstanding shares will decline in value by proportionately more than the
decline in value of the securities. In addition, reverse repurchase
agreements involve the risks that the interest income earned by a Fund
(from the investment of the proceeds) will be less than the interest
expense of the transaction, that the market value of the securities sold by
a Fund will decline below the price the Fund is obligated to pay to
repurchase the securities, and that the securities may not be returned to
the Fund.
CUSTODIAL RECEIPTS FOR TREASURY SECURITIES. Custodial receipts are
participations in trusts that hold U.S. Treasury securities and are sold under
names such as TIGRs and CATS. Like other stripped obligations, they entitle the
holder to future interest or principal payments on the U.S. Treasury securities.
INVESTMENT STRATEGY. To the extent consistent with their respective
investment objectives, the Funds, other than the U.S. Government Select
Money Market Fund, may invest a portion of their total assets in custodial
receipts. Investments by the U.S. Government Money Market Fund in custodial
receipts will not exceed 35% of the value of the Fund's total assets.
SPECIAL RISKS. Like other stripped obligations, custodial receipts may be
subject to greater price volatility than ordinary debt obligations because
of the way in which their principal and interest are returned to investors.
DERIVATIVES. The Funds may purchase certain "derivative" instruments. A
derivative is a financial instrument whose value is derived from---or based
upon---the performance of underlying assets, interest rates or indices.
Derivatives include structured debt obligations such as collateralized mortgage
obligations and other types of asset-backed securities, "stripped" securities
and various floating rate instruments.
INVESTMENT STRATEGY. A Fund will invest in derivatives only if the
potential risks and rewards are consistent with the Fund's objective,
strategies and overall risk profile.
SPECIAL RISKS. Engaging in derivative transactions involves special risks,
including (a) market risk that the Fund's derivatives position will lose
value; (b) credit risk that the counterparty to the transaction will
default; (c) leveraging risk that the value of the derivative instrument
will decline more than the value of the assets on which it is based; (d)
illiquidity risk that a Fund will be unable to sell its position because of
lack of market depth or disruption; (e) pricing risk that the value of a
derivative instrument will be difficult to determine; and (f) operations
risk that loss will occur as a result of inadequate systems or human error.
Many types of derivatives have been recently developed and have not been
tested over complete market cycles. For these reasons, a Fund may suffer a
loss whether or not the analysis of the investment management team is
accurate.
ILLIQUID OR RESTRICTED SECURITIES. Illiquid securities include repurchase
agreements and time deposits with notice/termination dates of more than seven
days, certain variable amount master demand notes that cannot be called within
seven days, certain insurance funding agreements (see below) and other
securities that are traded in the U.S. but are subject to trading restrictions
because they are not registered under the Securities Act of 1933, as amended
(the "1933 Act").
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Risks, Securities, Techniques
and Financial Information
INVESTMENT STRATEGY. Each Fund may invest up to 10% of its net assets in
securities that are illiquid. If otherwise consistent with their investment
objectives and policies, the Funds may purchase commercial paper issued
pursuant to Section 4(2) of the 1933 Act and domestically traded securities
that are not registered under the 1933 Act but can be sold to "qualified
institutional buyers" in accordance with Rule 144A under the 1933 Act
("Rule 144A Securities"). These securities will not be considered illiquid
so long as the Investment Adviser determines, under guidelines approved by
Northern Funds' Board of Trustees, that an adequate trading market exists.
SPECIAL RISKS. Because illiquid and restricted securities may be difficult
to sell at an acceptable price, they may be subject to greater volatility
and may result in a loss to a Fund. The practice of investing in Rule 144A
Securities could increase the level of a Fund's illiquidity during any
period that qualified institutional buyers become uninterested in
purchasing these securities.
INSURANCE FUNDING AGREEMENTS. An insurance funding agreement ("IFA") is an
agreement that requires a Fund to make cash contributions to a deposit fund of
an insurance company's general account. The insurance company then credits
interest to the Fund for a set time period.
INVESTMENT STRATEGY. The Money Market Fund may invest in IFAs issued by
insurance companies that meet quality and credit standards established by
the Investment Adviser.
SPECIAL RISKS. IFAs are not insured by a government agency--they are backed
only by the insurance company that issues them. As a result, they are
subject to default risk. In addition, the transfer of IFAs may be
restricted and an active secondary market in IFAs does not currently exist.
This means that it may be difficult or impossible to sell an IFA at an
appropriate price.
INVESTMENT COMPANIES. To the extent consistent with their respective investment
objectives and policies, the Funds may invest in securities issued by other
investment companies, including money market funds.
INVESTMENT STRATEGY. Investments by a Fund in other investment companies
will be subject to the limitations of the 1940 Act.
SPECIAL RISKS. As a shareholder of another investment company, a Fund would
be subject to the same risks as any other investor in that company. In
addition, it would bear a proportionate share of any fees and expenses paid
by that company. These would be in addition to the advisory and other fees
paid directly by the Fund.
MUNICIPAL AND RELATED INSTRUMENTS. Municipal instruments include debt
obligations issued by or on behalf of states, territories and possessions of the
United States and their political subdivisions, agencies, authorities and
instrumentalities.
Municipal instruments include both "general" and "revenue" bonds and may be
issued to obtain funds for various public purposes. General obligations are
secured by the issuer's pledge of its full faith, credit and taxing power.
Revenue obligations are payable only from the revenues derived from a particular
facility or class of facilities. In some cases, revenue bonds are also payable
from the proceeds of a special excise or other specific revenue source such as
lease payments from the user of a facility being financed. Some municipal
instruments, known as private activity bonds, are issued to finance projects for
private companies. Private activity bonds are usually revenue obligations since
they are typically payable by the private user of the facilities financed by the
bonds.
Municipal instruments also include "moral obligation" bonds, municipal leases,
certificates of participation and custodial receipts. Moral obligation bonds are
supported by a moral commitment but not a legal obligation of a state or
municipality. Municipal leases and participation certificates present the risk
that the state or municipality involved will not appropriate the monies to meet
scheduled payments on an annual basis. Custodial receipts represent interests in
municipal instruments held by a trustee.
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Risks, Securities, Techniques
and Financial Information
Each of the Municipal Funds and the Tax-Exempt Money Market Fund may acquire
"stand-by commitments" relating to the municipal instruments it holds. Under a
stand-by commitment, a dealer agrees to purchase, at the Fund's option,
specified municipal instruments at a specified price. A stand-by commitment may
increase the cost, and thereby reduce the yield, of the municipal instruments to
which the commitment relates. The Funds will acquire stand-by commitments to
facilitate portfolio liquidity and do not intend to exercise their rights for
trading purposes.
INVESTMENT STRATEGY. Although it is not their current policy to do so on a
regular basis, in connection with their investments in municipal
instruments, the Municipal Funds and the Tax-Exempt Money Market Fund may
invest more than 25% of their total assets in municipal instruments the
interest upon which is paid solely from revenues of similar projects.
However, these Funds do not intend to invest more than 25% of the value of
their total assets in industrial development bonds or similar obligations
where the non-governmental entities supplying the revenues to be paid are
in the same industry.
The California Municipal Money Market Fund expects to invest principally in
California municipal instruments. The Municipal Money Market Fund and
Tax-Exempt Money Market Fund may also invest more than 25% of the value of
their respective total assets in municipal instruments whose issuers are in
the same state.
Funds in addition to the Municipal Funds and the Tax-Exempt Money Market
Fund may invest from time to time in municipal instruments or other
securities issued by state and local governmental bodies. Generally, this
will occur when the yield of municipal instruments, on a pre-tax basis, is
comparable to that of other permitted short-term taxable investments.
Dividends paid by the Funds other than the Municipal Funds and Tax-Exempt
Money Market Fund on such investments will be taxable to shareholders.
SPECIAL RISKS. Municipal instruments purchased by the Municipal Funds and
the Tax-Exempt Money Market Fund may be backed by letters of credit,
insurance or other forms of credit enhancement issued by foreign (as well
as domestic) banks, insurance companies and other financial institutions.
If the credit quality of these institutions declines, a Fund could suffer a
loss to the extent that the Fund is relying upon this credit support. Risks
relating to foreign banks, insurance companies and financial institutions
are described on page 34 under "Foreign Investments."
In addition, when a substantial portion of a Fund's assets is invested in
instruments which are used to finance facilities involving a particular
industry, whose issuers are in the same state or which are otherwise
related, there is a possibility that an economic, business or political
development affecting one instrument would likewise affect the related
instrument.
REPURCHASE AGREEMENTS. Repurchase agreements involve the purchase of securities
by a Fund subject to the seller's agreement to repurchase them at a mutually
agreed upon date and price.
INVESTMENT STRATEGY. Each Fund may enter into repurchase agreements with
financial institutions such as banks and broker-dealers that are deemed to
be creditworthy by the Investment Adviser. Although the securities subject
to a repurchase agreement may have maturities exceeding one year,
settlement of the agreement will never occur more than one year after a
Fund acquires the securities.
SPECIAL RISKS. In the event of a default, a Fund will suffer a loss to the
extent that the proceeds from the sale of the underlying securities and
other collateral are less than the repurchase price and the Fund's costs
associated with delay and enforcement of the repurchase agreement. In
addition, in the event of bankruptcy, a Fund could suffer additional losses
if a court determines that the Fund's interest in the collateral is
unenforceable.
SECURITIES LENDING. In order to generate additional income, the Funds may lend
securities on a short-term basis to banks, brokers-dealers or other qualified
institutions. In exchange, the Funds will receive collateral equal to at least
100% of the value of the securities loaned.
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Risks, Securities, Techniques
and Financial Information
INVESTMENT STRATEGY. Securities lending may represent no more than
one-third the value of a Fund's total assets (including the loan
collateral). Any cash collateral received by a Fund in connection with
these loans may be invested in U.S. government securities and other liquid
high-quality debt obligations.
SPECIAL RISKS. The main risk when lending portfolio securities is that the
borrower might become insolvent or refuse to honor its obligation to return
the securities. In this event, a Fund could experience delays in recovering
its securities and may incur a capital loss. In addition, a Fund may incur
a loss in reinvesting the cash collateral it receives.
STRIPPED OBLIGATIONS. These securities are issued by the U.S. government (or
agency or instrumentality), foreign governments, banks and other issuers. They
entitle the holder to receive either interest payments or principal payments
that have been "stripped" from a debt obligation. These obligations include
stripped mortgage-backed securities, which are derivative multi-class mortgage
securities.
INVESTMENT STRATEGY. To the extent consistent with their respective
investment objectives, the Funds may purchase stripped securities.
SPECIAL RISKS. Stripped securities are very sensitive to changes in
interest rates and to the rate of principal prepayments. A rapid or
unexpected change in prepayments could depress the price of certain
stripped securities and adversely affect a Fund's total return.
UNITED STATES GOVERNMENT OBLIGATIONS. These include U.S. Treasury obligations,
such as bills, notes and bonds, which generally differ only in terms of their
interest rates, maturities and time of issuance. These also include obligations
issued or guaranteed by the U.S. government or its agencies and
instrumentalities. Securities guaranteed as to principal and interest by the
U.S. government, its agencies or instrumentalities are deemed to include (a)
securities for which the payment of principal and interest is backed by an
irrevocable letter of credit issued by the U.S. government or an agency or
instrumentality thereof, and (b) participations in loans made to foreign
governments or their agencies that are so guaranteed.
INVESTMENT STRATEGY. To the extent consistent with its investment
objective, each Fund may invest in a variety of U.S. Treasury obligations
and also may invest in obligations issued or guaranteed by the U.S.
government or its agencies and instrumentalities.
SPECIAL RISKS. Not all U.S. government obligations carry the same credit
support. Some, such as those of the Government National Mortgage
Association ("GNMA"), are supported by the full faith and credit of the
United States Treasury. Other obligations, such as those of the Federal
Home Loan Banks, are supported by the right of the issuer to borrow from
the United States Treasury; and others, such as those issued by the Federal
National Mortgage Association ("FNMA"), are supported by the discretionary
authority of the U.S. government to purchase the agency's obligations.
Still others are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. government would provide financial
support to its agencies or instrumentalities if it is not obligated to do
so by law. In addition, the secondary market for certain participations in
loans made to foreign governments or their agencies may be limited.
VARIABLE AND FLOATING RATE INSTRUMENTS. Variable and floating rate instruments
have interest rates that are periodically adjusted either at set intervals or
that float at a margin above a generally recognized index rate. These
instruments include variable amount master demand notes and long-term variable
and floating rate bonds (sometimes referred to as "Put Bonds") where a Fund
obtains at the time of purchase the right to put the bond back to the issuer or
a third party at par at a specified date.
INVESTMENT STRATEGY. Each Fund may invest in rated and unrated variable and
floating rate instruments to the extent consistent with its investment
objective. Unrated instruments may be purchased by a Fund if they are
determined by the Investment Adviser to be of comparable quality to rated
instruments eligible for purchase by the Fund.
Page 39
<PAGE> 40
Risks, Securities, Techniques
and Financial Information
SPECIAL RISKS. Because there is no active secondary market for certain
variable and floating rate instruments, they may be more difficult to sell
if the issuer defaults on its payment obligations or during periods when
the Funds are not entitled to exercise their demand rights.
WHEN-ISSUED SECURITIES, DELAYED DELIVERY TRANSACTIONS AND FORWARD COMMITMENTS. A
purchase of "when-issued" securities refers to a transaction made conditionally
because the securities, although authorized, have not yet been issued. A delayed
delivery or forward commitment transaction involves a contract to purchase or
sell securities for a fixed price at a future date beyond the customary
settlement period.
INVESTMENT STRATEGY. Each Fund may purchase or sell securities on a
when-issued, delayed delivery or forward commitment basis. Although the
Funds would generally purchase securities in these transactions with the
intention of acquiring the securities, the Funds may dispose of such
securities prior to settlement if the investment management team deems it
appropriate to do so.
SPECIAL RISKS. Purchasing securities on a when-issued, delayed delivery or
forward commitment basis involves the risk that the value of the securities
may decrease by the time they are actually issued or delivered. Conversely,
selling securities in these transactions involves the risk that the value
of the securities may increase by the time they are actually issued or
delivered. These transactions also involve the risk that the seller may
fail to deliver the security or cash on the settlement date.
Northern Trust is sometimes referred to as "The Northern Trust Bank" in
advertisements and other sales literature.
Page 40
<PAGE> 41
FINANCIAL INFORMATION
The financial highlights tables are intended to help you understand a Fund's
financial performance for the past five years (or, if shorter, the period of the
Fund's operations). Certain information reflects financial results for a single
Fund share. The total returns in the tables represent the rate that an investor
would have earned or lost on an investment in a Fund (assuming reinvestment of
all dividends and distributions). This information has been audited by Arthur
Andersen LLP, whose report is included in the Funds' annual report along with
the Funds' financial statements. The annual report is available upon request and
without charge.
Page 41
<PAGE> 42
FINANCIAL HIGHLIGHTS
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
MONEY MARKET
FUND
---------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
BEGINNING OF YEAR ......
INCOME FROM
INVESTMENT OPERATIONS:
Net investment
income ............... 0.05 0.05 0.05 0.05 0.04
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment
income ............... (0.05) (0.05) (0.05) (0.05) (0.04)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF YEAR ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) ........... 5.04% 5.31% 5.05% 5.57% 4.55%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, in thousands,
end of year ............ $4,886,098 $3,296,030 $1,607,187 $1,061,813 $ 894,279
Ratio to average net assets
of:(4)
Expenses, net of
waivers and
reimbursements ......... 0.55% 0.55% 0.55% 0.49% 0.45%
Expenses, before
waivers and
reimbursements ......... 0.89% 0.90% 0.90% 0.91% 0.96%
Net investment income,
net of waivers and
reimbursements ......... 4.91% 5.19% 4.94% 5.42% 4.94%
Net investment income,
before waivers and
reimbursements ......... 4.57% 4.84% 4.59% 5.00% 4.43%
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
U.S. GOVERNMENT
MONEY MARKET
FUND
---------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------
<S> <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
INCOME FROM
INVESTMENT OPERATIONS:
Net investment
income ............... 0.05 0.05 0.05 0.05 0.04
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment
income ............... (0.05) (0.05) (0.05) (0.05) (0.04)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF YEAR ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) ........... 4.94% 5.22% 4.93% 5.46% 4.47%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, in thousands,
end of year ............ $ 469,866 $ 417,042 $ 314,259 $ 207,105 $ 227,543
Ratio to average net assets
of:(4)
Expenses, net of
waivers and
reimbursements ......... 0.55% 0.55% 0.55% 0.49% 0.45%
Expenses, before
waivers and
reimbursements ......... 0.91% 0.93% 0.96% 0.94% 1.01%
Net investment income,
net of waivers and
reimbursements ......... 4.82% 5.10% 4.82% 5.33% 4.93%
Net investment income,
before waivers and
reimbursements ......... 4.46% 4.72% 4.41% 4.88% 4.37%
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
U.S. GOVERNMENT
SELECT MONEY MARKET
FUND
---------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997 1996 1995(2)
- ----------------------------------------------------------------------------------------------------------
<S> <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
INCOME FROM
INVESTMENT OPERATIONS:
Net investment
income ............... 0.05 0.05 0.05 0.05 0.02
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment
income ............... (0.05) (0.05) (0.05) (0.05) (0.02)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF YEAR ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) ........... 4.87% 5.24% 5.07% 5.55% 1.75%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, in thousands,
end of year ............ $ 416,527 $ 306,425 $ 168,128 $ 85,400 $ 82,162
Ratio to average net assets
of:(4)
Expenses, net of
waivers and
reimbursements ......... 0.55% 0.46% 0.40% 0.33% 0.30%
Expenses, before
waivers and
reimbursements ......... 0.91% 0.93% 0.97% 1.00% 1.32%
Net investment income,
net of waivers and
reimbursements ......... 4.73% 5.13% 4.95% 5.43% 5.84%
Net investment income,
before waivers and
reimbursements ......... 4.37% 4.66% 4.38% 4.76% 4.82%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period April 11, 1994 (commencement of operations) through March
31, 1995.
(2) For the period December 12, 1994 (commencement of operations) through March
31, 1995.
(3) Assumes investment at net asset value at the beginning of the year,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at net asset value at the end of the year. Total return
is not annualized for periods less than one year.
(4) Annualized for periods less than a full year.
Page 42
<PAGE> 43
FINANCIAL HIGHLIGHTS (CONTINUED)
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
MUNICIPAL
MONEY MARKET
FUND
---------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------
<S> <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
INCOME FROM
INVESTMENT OPERATIONS:
Net investment
Income ............... 0.03 0.03 0.03 0.03 0.03
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment
Income ............... (0.03) (0.03) (0.03) (0.03) (0.03)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF YEAR ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) ........... 2.98% 3.27% 3.14% 3.54% 2.90%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, in thousands,
end of year ............ $2,384,030 $1,814,343 $1,420,041 $1,102,789 $ 927,747
Ratio to average net assets
of:(4)
Expenses, net of waivers
and reimbursements ..... 0.55% 0.55% 0.55% 0.49% 0.45%
Expenses, before waivers
and reimbursements ..... 0.89% 0.89% 0.90% 0.91% 0.95%
Net investment income,
net of waivers and
reimbursements ......... 2.90% 3.20% 3.08% 3.46% 3.10%
Net investment income,
before waivers and
reimbursements ......... 2.56% 2.86% 2.73% 3.04% 2.60%
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
CALIFORNIA
MUNICIPAL
MONEY MARKET
FUND
---------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997 1996 1995(2)
- ----------------------------------------------------------------------------------------------------------
<S> <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
INCOME FROM
INVESTMENT OPERATIONS:
Net investment
Income ............... 0.03 0.03 0.03 0.04 0.01
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS PAID:
From net investment
Income ............... (0.03) (0.03) (0.03) (0.04) (0.01)
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF YEAR ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) ........... 2.75% 3.20% 3.19% 3.63% 1.27%
SUPPLEMENTAL DATA
AND RATIOS:
Net assets, in thousands,
end of year ............ $ 363,050 $ 224,843 $ 200,989 $ 165,087 $ 161,316
Ratio to average net assets
of:(4)
Expenses, net of waivers
and reimbursements ..... 0.55% 0.49% 0.45% 0.39% 0.35%
Expenses, before waivers
and reimbursements ..... 0.91% 0.94% 0.94% 0.94% 1.07%
Net investment income,
net of waivers and
reimbursements ......... 2.68% 3.14% 3.13% 3.55% 3.78%
Net investment income,
before waivers and
reimbursements ......... 2.32% 2.69% 2.64% 3.00% 3.06%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period April 11, 1994 (commencement of operations) through March
31, 1995.
(2) For the period November 29, 1994 (commencement of operations) through March
31, 1995.
(3) Assumes investment at net asset value at the beginning of the year,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at net asset value at the end of the year. Total return
is not annualized for periods less than one year.
(4) Annualized for periods less than a full year.
Page 43
<PAGE> 44
FOR MORE INFORMATION
ANNUAL/SEMIANNUAL REPORT
Additional information about the Funds' investments is available in the Funds'
annual and semiannual reports to shareholders.
STATEMENT OF ADDITIONAL INFORMATION
Additional information about the Funds and their policies is also available in
the Funds' Statement of Additional Information ("SAI"). The SAI is incorporated
by reference into this Prospectus (is legally considered part of this
Prospectus).
The Funds' annual and semiannual reports, and the SAI, are available free upon
request by calling The Northern Funds Center at 1-800-595-9111.
TO OBTAIN OTHER INFORMATION AND FOR SHAREHOLDER INQUIRIES:
BY TELEPHONE - Call 1-800-595-9111
BY MAIL - Northern Funds
P.O. Box 75986
Chicago, IL 60690-6319
ON THE INTERNET - Text-only versions of the Funds' documents are available:
o On the SEC's website at http://www.sec.gov.
o On Northern Funds' website at http://www.northernfunds.com.
You may review and obtain copies of Northern Funds' documents by visiting the
SEC's Public Reference Room in Washington, D.C. You may also obtain copies of
Northern Funds' documents by sending your request and a duplicating fee to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Information on the
operation of the public reference room may be obtained by calling the SEC at
1-800-SEC-0330.
[LOGO]
811-8236
Page 44
