NORTHERN MONEY MARKET FUNDS

Transcription

1 NORTHERN MONEY MARKET FUNDS ANNUAL REPORT MARCH 31, 2017 MANAGED BY

2 A MESSAGE FROM BOB BROWNE CHIEF INVESTMENT OFFICER The 12-month period ended March 31, 2017 (the Period ), brought a wide dispersion of returns within the bond market. Even as credit-sensitive asset categories produced gains highlighted by a double-digit return for high-yield bonds more rate-sensitive segments of the market came under significant pressure. The evolving outlook for economic growth was the primary reason for this divergence. When the Period began, investors were fixated on the recent sharp drop in commodity prices, and its negative signal with regard to the world economy. As the Period progressed, however, the markets grew increasingly optimistic about the prospects for global growth. Central banks overseas took aggressive steps to spur growth in early 2016, leading to a rebound in commodities and improving economic data around the globe. Growth expectations were further boosted by the results of the November 2016 U.S. election, when the Republican party sweep raised hopes for lower taxes, higher infrastructure spending and a relaxation of federal government regulations. The improvement in growth and the rebound in commodities also contributed to an uptick in inflation, which represented a major departure from previous deflationary concerns that had cropped up at various points since the 2008 financial crisis. These developments prompted the U.S. Federal Reserve to move off of its longstanding policy of holding shortterm rates near zero. The U.S. Federal Reserve increased rates by a quarter point in December 2016 and again in March 2017, bringing the benchmark fed funds rate to a range of.75% to 1.00%. As of March 31, 2017 the consensus expectation was that the U.S. Federal Reserve would continue to raise rates gradually until it had achieved a normalized policy stance (i.e., one consistent with the level of growth and inflation). These circumstances acted as a headwind to U.S. Treasuries due to their above-average interest-rate risk. Yields rose and prices fell across the full maturity spectrum, highlighted by a move in the 10-year Treasury note to 2.40% at March 31, 2017 versus 1.78% a year earlier. The downturn in government issues, in turn, translated to weakness in other rate-sensitive asset classes such as mortgage-backed securities and municipal bonds. In contrast, investment-grade corporate issues bucked the broader trend by producing a positive return and outpacing U.S. Treasuries by a wide margin. Corporate issues were helped by the improvement in the economy, which contributed to stronger fundamentals for issuing companies, as well as a backdrop of healthy investor sentiment that supported demand for higher-yielding assets. High-yield bonds gained an even larger benefit from these trends, and they received an additional boost from the recovery in commodities. These factors contributed to a 12-month return of 16.39% for the Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index. In comparison, the Bloomberg Barclays U.S. Aggregate Index (which represents investmentgrade issues, including corporate securities) produced a gain of just 0.44%. At the close of the Period, the combination of healthier economic data, rising inflation and better corporate results were all factors contributing to upward pressure on bond yields. While the impact of these trends has been offset by continued investor demand for lower-risk assets, we would expect periods of volatility as the markets react to headlines and shifting expectations for U.S. Federal Reserve policy. However, it is important to keep in mind that if yields rise, they are rising for a positive reason such as: stronger economic growth. In this environment, we urge investors to remain focused on the importance of bonds in providing portfolio diversification, liquidity and the means to fund near-term goals. Bob Browne Chief Investment Officer Northern Trust

3 TABLE OF CONTENTS 2 PORTFOLIO MANAGEMENT COMMENTARY 6 STATEMENTS OF ASSETS AND LIABILITIES 7 STATEMENTS OF OPERATIONS This report has been prepared for the general information of Northern Funds shareholders. It is not authorized for distribution to prospective investors unless accompanied or preceded by a current Northern Funds summary prospectus or prospectus, which contains more complete information about the Northern Funds investment objectives, risks, fees and expenses. Investors are reminded to read a summary prospectus or prospectus carefully before investing or sending money. Northern Funds performance is compared to various market indices. Unlike a mutual fund, the performance of an index assumes no transaction costs, taxes, management fees or other expenses. A direct investment in an index is not possible. This report contains certain forward-looking statements about factors that may affect the performance of Northern Funds in the future. These statements are based on Northern Funds management predictions and expectations concerning certain future events, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in Northern Funds management strategies from those currently expected to be employed. You could lose money by investing in the Money Market Funds. Although each of the Money Market Funds seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Funds sponsor has no legal obligation to provide financial support to the Funds, and you should not expect that the sponsor will provide financial support to the Funds at any time. 8 STATEMENTS OF CHANGES IN NET ASSETS 9 FINANCIAL HIGHLIGHTS 13 SCHEDULES OF INVESTMENTS 13 MONEY MARKET FUND Ticker Symbol: NORXX 16 MUNICIPAL MONEY MARKET FUND Ticker Symbol: NOMXX 21 U.S. GOVERNMENT MONEY MARKET FUND Ticker Symbol: NOGXX 25 U.S. GOVERNMENT SELECT MONEY MARKET FUND Ticker Symbol: NOSXX 28 NOTES TO THE FINANCIAL STATEMENTS 35 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 36 TAX AND DISTRIBUTION INFORMATION 37 FUND EXPENSES 38 TRUSTEES AND OFFICERS 43 INVESTMENT CONSIDERATIONS 44 FOR MORE INFORMATION The Money Market Fund and the Municipal Money Market Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund s liquidity falls below required minimums because of market conditions or other factors. An investment in a Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation ( FDIC ), any other government agency, or The Northern Trust Company, its affiliates, subsidiaries or any other bank. Northern Funds are distributed by Northern Funds Distributors, LLC, Three Canal Plaza, Suite 100, Portland, Maine 04101, not affiliated with Northern Trust. NOT FDIC INSURED May lose value / No bank guarantee NORTHERN FUNDS ANNUAL REPORT 1 MONEY MARKET FUNDS

4 MONEY MARKET FUND (UNAUDITED) PORTFOLIO MANAGEMENT COMMENTARY After the U.S. Federal Reserve enacted its first interest rate increase since 2006 in December 2015, it waited until December 2016 before its next hike. The minutes of the February 2017 meeting of the Federal Open Market Committee ( FOMC ) revealed that many members believed that a gradual tightening of monetary policy would continue to be appropriate. In March 2017, the U.S. Federal Reserve ( Fed ) increased the target range for the federal funds rate by another quarter point to a range of 0.75% to 1.00%. In addition, the United Kingdom s June 2016 vote to leave the European Union ( EU ) shocked the markets. Due to the uncertain future of the EU, U.S. Treasuries rallied amid heightened demand for safe haven investments. In addition, many investors flocked to U.S. Treasuries since their yields were higher than the negative yields offered by short- and intermediate-term issues in Europe and Japan. Within the markets, prime and municipal money market funds shrunk dramatically during the 12-month period ended, March 31, 2017, as a result of money market reform, particularly in the three months prior to the October 14, 2016 compliance deadline. Over $1 trillion in assets moved out of prime money market funds, with nearly all of the proceeds being transferred into government money market funds. As a result, both one- and three-month LIBOR rates were elevated as credit spreads initially widened due to reduced demand for short-end credit securities. While credit spreads eventually compressed, LIBOR remained elevated due in part to expectations for an interest rate increase later in The Money Market Fund posted a 0.42% return for its fiscal year ended March 31, 2017, compared with the 0.24% return of imoneynet MFR Average TM First Tier Retail category. As of March 31, 2017, the Fund s seven-day current yield was 0.80%. We maintained a short duration for the Fund relative to its benchmark during the second half of the 12-month reporting period. Liquidity and principal preservation remain our primary objectives. INVESTMENT PERFORMANCE PORTFOLIO MANAGERS AVERAGE ANNUAL RETURNS for periods ended March 31, 2017 TOTAL RETURN FUND INCEPTION (04/11/94) ONE YEAR FIVE YEAR TEN YEAR 7-DAY YIELD MONEY MARKET FUND 0.42% 0.10% 0.61% IMONEYNET MFR AVERAGE TM / FIRST TIER RETAIL % Fund performance quoted represents past performance and does not guarantee future results. Investment return will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown here. 7-Day Yield refers to income generated over the 7-day period ended March 31, Past performance may reflect voluntary and contractual expense reimbursements. In their absence, performance would be reduced. In the absence of voluntary expense reimbursements, the 7-Day Yield for the Fund would have been 0.58% as of March 31, Performance data current to the most recent month-end is available at northerntrust.com/funds. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. MATURITY ANALYSIS At March 31, 2017, the maturity analysis for the Money Market Fund as a percentage of investments was: MATURITY % We compare our Funds to the imoneynet Money Fund OVERNIGHT (ONE BUSINESS DAY) 37.3% Report Averages, which are composites of professionally managed money market investments with similar 2-15 DAYS 42.9 investment objectives DAYS DAYS 6.3 Fund portfolio composition is subject to change. Information about Investment Considerations can be found on page 43. JENNIFER GRECA With Northern Trust since 2000 PETER YI With Northern Trust since 2000 You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the Fund s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not a depositofabankandisnotinsuredor guaranteed by the Federal Deposit Insurance Corporation ( FDIC ), any other government agency, or The Northern Trust Company, its affiliates, subsidiaries or any other bank. The Fund s sponsor has no legal obligation to provide financial support to the Fund and you should not expect that the sponsor will provide financial support to the Fund at any time. MONEY MARKET FUNDS 2 NORTHERN FUNDS ANNUAL REPORT

5 MUNICIPAL MONEY MARKET FUND (UNAUDITED) PORTFOLIO MANAGEMENT COMMENTARY For the 12-month period ended March 31, 2017, the Municipal Money Market Fund provided investors with tax-exempt returns, stable value and liquidity. The 12-month reporting period ended March 31, 2017 was marked by several significant events, including money market reform, two Federal Open Market Committee ( FOMC ) rate hikes and a dramatic shift in the U.S. political landscape. These events created a significant amount of market volatility, and ultimately pushed up money market yields to levels not seen since before the recession. As we moved through the 12-month period, portfolio management was careful to reduce duration in advance of the October 2016 money market reform compliance deadline. To prepare, portfolio management reduced holdings in fixed-rate investments in favor of Municipal Variable Rate Demand Notes or VRDNs. Municipal VRDNs offered liquidity and a strong credit profile, and can be tendered at par. By converting the majority of Fund assets into daily and weekly municipal VRDNs, portfolio management was able to right size the Fund s portfolio, while maintaining liquidity and stable value. The Fund returned 0.53% during the 12-month reporting period, compared with the 0.20% return of the imoneynet MFR Average TM / Tax Free Retail category. As of March 31, 2017, the Fund s seven-day current yield was 0.75%. During the second half of the period, the markets began to factor in the probability of the FOMC increasing its policy rates. Improvements in the U.S. employment picture and an upward trend in inflation paved the way for the FOMC to increase rates by 25 basis points at both their December 2016 and March 2017 meetings. The Fund s significant holdings in VRDNs reset higher in conjunction with FOMC rate increases. Throughout the period, VRDN yields averaged approximately 90% of 30-day LIBOR, exceeding the ratio s long-term average. By calendar year end 2016, the weekly municipal SIFMA Index, the Index of high grade 7-day VRDNs, reached a post-recession high of 91 basis points. INVESTMENT PERFORMANCE PORTFOLIO MANAGER AVERAGE ANNUAL RETURNS for periods ended March 31, 2017 TOTAL RETURN FUND INCEPTION (04/11/94) ONE YEAR FIVE YEAR TEN YEAR 7-DAY YIELD MUNICIPAL MONEY MARKET FUND 0.53% 0.12% 0.49% IMONEYNET MFR AVERAGE TM / TAX-FREE RETAIL % Fund performance quoted represents past performance and does not guarantee future results. Investment return will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown here. 7-Day Yield refers to income generated over the 7-day period ended March 31, Performance reflects voluntary and contractual expense reimbursements in effect. In their absence, performance would be reduced. In the absence of voluntary expense reimbursements, the 7-Day Yield for the Fund would have been 0.51% as of March 31, Performance data current to the most recent month-end is available at northernfunds.com. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. MATURITY ANALYSIS At March 31, 2017, the maturity analysis for the Municipal Money Market Fund as a percentage of investments was: MATURITY % We compare our Funds to the imoneynet Money Fund OVERNIGHT (ONE BUSINESS DAY) 26.0% Report Averages, which are composites of professionally 2-15 DAYS 74.0 managed money market investments with similar investment objectives. Income from the Fund may be subject to federal alternative minimum tax (AMT) and state and local taxes. Fund portfolio composition is subject to change. Information about Investment Considerations can be found on page 43. KURT STOEBER With Northern Trust since 2000 You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the Fund s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation ( FDIC ), any other government agency, or The Northern Trust Company, its affiliates, subsidiaries or any other bank. The Fund s sponsor has no legal obligation to provide financial support to the Fund, andyoushouldnotexpectthatthe sponsor will provide financial support to the Fund at any time. NORTHERN FUNDS ANNUAL REPORT 3 MONEY MARKET FUNDS

6 U.S. GOVERNMENT MONEY MARKET FUND (UNAUDITED) PORTFOLIO MANAGEMENT COMMENTARY Financial markets were active over the during the 12-month period ended March 31, 2017, as the surprise result of the November 2016 U.S. election putting the Republicans in control of the White House and Congress. The market s reaction was swift and significant as investors contemplated the increased likelihood for fiscal stimulus and inflation. The U.S. Federal Reserve (the Fed ) followed through on its signals to market participants and raised rates by 0.25% at the December 2016 Open Market Committee meeting. In a similar fashion to the Fed s late-2015 rate hike, the market was well prepared and reacted in an orderly manner to the decision. Entering 2017, economic data surprised to the upside in a number of areas, reinforcing the positive sentiment in risk markets. Hawkish rhetoric from Fed members in late February 2017 culminated in another incremental increase of the federal funds target at the March 2017 meeting, from the 0.50%-0.75% range to 0.75%-1.00%. In the money markets, technical factors related to regulatory reforms which took effect October 14, 2016 were a bigger driver of price action than fundamentals. Government money market funds experienced large inflows as prime money fund managers repositioned to avoid having to float their net asset values. Supply pressures, along with typical quarter-end dynamics, prompted a significant uptick in participation in the Fed s Reverse Repo Program, peaking at over $450 billion. Demand for short duration government assets continued to outstrip supply, holding yields in check even as the Fed continues to normalize monetary policy. For its fiscal year ended March 31, 2017, the U.S. Government Money Market Fund posted a 0.12% total return, compared with the 0.03% return of imoneynet s MFR Average TM /Government & Agencies Retail category. As of March 31, 2017 the Portfolio s 7-day current yield was 0.40%. While portfolio management positioned the portfolio to be long to its peer group at the beginning of the reporting period to take advantage of any steepness in the money market yield curve, following the U.S. election we shifted to a more neutral stance in acknowledgement of the prospects for a more hawkish Fed in INVESTMENT PERFORMANCE PORTFOLIO MANAGERS AVERAGE ANNUAL RETURNS for periods ended March 31, 2017 TOTAL RETURN FUND INCEPTION (04/11/94) ONE YEAR FIVE YEAR TEN YEAR 7-DAY YIELD U.S. GOVERNMENT MONEY MARKET FUND 0.12% 0.03% 0.55% IMONEYNET MFR AVERAGE TM / GOVT & AGENCIES RETAIL % Fund performance quoted represents past performance and does not guarantee future results. Investment return will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown here. 7-Day Yield refers to income generated over the 7-day period ended March 31, Past performance may reflect voluntary and contractual expense reimbursements. In their absence, performance would be reduced. Performance data current to the most recent month-end is available at northernfunds.com. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. DANIEL LAROCCO With Northern Trust since 2008 PETER YI With Northern Trust since 2000 MATURITY ANALYSIS At March 31, 2017, the maturity analysis for the U.S. Government Money Market Fund as a percentage of investments was: MATURITY % We compare the Fund to the imoneynet Money Fund OVERNIGHT (ONE BUSINESS DAY) 54.5% Report Averages, which are composites of professionally 2-15 DAYS 7.4 managed money market investments with similar DAYS 4.3 investment objectives DAYS 6.9 Fund portfolio composition is subject to change DAYS 13.9 Information about Investment Considerations can be DAYS 7.4 found on page DAYS DAYS 3.2 You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not a deposit of a bank andisnotinsuredorguaranteedby the Federal Deposit Insurance Corporation ( FDIC ), any other government agency, or The Northern Trust Company, its affiliates, subsidiaries or any other bank. The Fund s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time. MONEY MARKET FUNDS 4 NORTHERN FUNDS ANNUAL REPORT

7 U.S. GOVERNMENT SELECT MONEY MARKET FUND (UNAUDITED) PORTFOLIO MANAGEMENT COMMENTARY Financial markets were active over the during the 12-month period ended March 31, 2017, as the surprise result of the November 2016 U.S. election putting the Republicans in control of the White House and Congress. The market s reaction was swift and significant as investors contemplated the increased likelihood for fiscal stimulus and inflation. The U.S. Federal Reserve ( Fed ) followed through on its signals to market participants and raised rates by 0.25% at the December 2016 Open Market Committee meeting. In a similar fashion to the Fed s late-2015 rate hike, the market was well prepared and reacted in an orderly manner to the decision. Entering 2017, economic data surprised to the upside in a number of areas, reinforcing the positive sentiment in risk markets. Hawkish rhetoric from Fed members in late February 2017 culminated in another incremental increase of the federal funds target at the March 2017 meeting, from the 0.50%-0.75% range to 0.75%-1.00%. In the money markets, technical factors related to regulatory reforms which took effect October 14, 2016 were a bigger driver of price action than fundamentals. Government money market funds experienced large inflows as prime money fund managers repositioned to avoid having to float their net asset values. Supply pressures, along with typical quarter-end dynamics, prompted a significant uptick in participation in the Fed s Reverse Repo Program, peaking at over $450 billion. Demand for short duration government assets continued to outstrip supply, holding yields in check even as the Fed continues to normalize monetary policy. For its fiscal year ended March 31, 2017, the U.S. Government Select Money Market Fund posted a 0.15% total return, compared with the 0.03% return of imoneynet s MFR Average TM /Government & Agencies Retail category. As of March 31, 2017, the Fund s 7-day current yield was 0.40%. While portfolio management positioned the Fund s portfolio to be long to its peer group at the beginning of the reporting period to take advantage of any steepness in the money market yield curve, following the U.S. election we shifted to a more neutral stance in acknowledgement of the prospects for a more hawkish Fed in INVESTMENT PERFORMANCE PORTFOLIO MANAGERS AVERAGE ANNUAL RETURNS for periods ended March 31, 2017 TOTAL RETURN FUND INCEPTION (12/12/94) ONE YEAR FIVE YEAR TEN YEAR 7-DAY YIELD U.S. GOVERNMENT SELECT MONEY MARKET FUND 0.15% 0.04% 0.53% IMONEYNET MFR AVERAGE TM / GOVT & AGENCIES RETAIL % Fund performance quoted represents past performance and does not guarantee future results. Investment return will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown here. 7-Day Yield refers to income generated over the 7-day period ended March 31, Past performance may reflect voluntary and contractual expense reimbursements. In their absence, performance would be reduced. Performance data current to the most recent month-end is available at northernfunds.com. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. MATURITY ANALYSIS At March 31, 2017, the maturity analysis for the U.S. Government Select Money Market Fund as a percentage of investments was: MATURITY % We compare the Fund to the imoneynet Money Fund OVERNIGHT (ONE BUSINESS DAY) 39.9% Report Averages, which are composites of professionally 2-15 DAYS 11.8 managed money market investments with similar DAYS 7.2 investment objectives DAYS 18.1 Fund portfolio composition is subject to change DAYS 11.1 Information about Investment Considerations can be DAYS 6.6 found on page DAYS DAYS 3.1 DANIEL LAROCCO With Northern Trust since 2008 PETER YI With Northern Trust since 2000 You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not a deposit of a bank andisnotinsuredorguaranteedby the Federal Deposit Insurance Corporation ( FDIC ), any other government agency, or The Northern Trust Company, its affiliates, subsidiaries or any other bank. The Fund s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time. NORTHERN FUNDS ANNUAL REPORT 5 MONEY MARKET FUNDS

8 STATEMENTS OF ASSETS AND LIABILITIES MARCH 31, 2017 MUNICIPAL MONEY MARKET FUND U.S. GOVERNMENT MONEY MARKET FUND U.S. GOVERNMENT SELECT MONEY MARKET FUND MONEY Amounts in thousands, except per share data MARKET FUND ASSETS: Investments, at amortized cost, which approximates fair value $172,381 $202,155 $8,576,045 $2,233,568 Repurchase agreements, at cost, which approximates fair value 66 7,871,537 1,055,288 Cash ,004 Interest income receivable ,427 1,628 Receivable for securities sold 155 Receivable for fund shares sold 263 1,395 62,547 5,148 Receivable from affiliates for expense reimbursements Prepaid and other assets Total Assets 172, ,042 16,670,604 3,295,636 LIABILITIES: Cash overdraft 175 Payable for securities purchased 7, ,912 7,999 Payable for fund shares redeemed 46,873 5,149 Distributions payable to shareholders , Payable to affiliates: Management fees , Custody fees Transfer agent fees Trustee fees Accrued other liabilities Total Liabilities 8, ,663 14,569 Net Assets $164,606 $203,856 $16,481,941 $3,281,067 ANALYSIS OF NET ASSETS: Capital stock $164,542 $203,922 $16,481,912 $3,281,040 Accumulated undistributed net investment loss (46) (9) (14) Accumulated undistributed net realized gain (loss) 110 (66) Net Assets $164,606 $203,856 $16,481,941 $3,281,067 Shares Outstanding ($.0001 par value, unlimited authorization) 164, ,856 16,481,945 3,281,078 Net Asset Value, Redemption and Offering Price Per Share $1.00 $1.00 $1.00 $1.00 See Notes to the Financial Statements. MONEY MARKET FUNDS 6 NORTHERN FUNDS ANNUAL REPORT

9 STATEMENTS OF OPERATIONS FOR THE FISCAL YEAR ENDED MARCH 31, 2017 MUNICIPAL MONEY MARKET FUND U.S. GOVERNMENT MONEY MARKET FUND U.S. GOVERNMENT SELECT MONEY MARKET FUND MONEY Amounts in thousands MARKET FUND INVESTMENT INCOME: Interest income $18,728 $11,816 $51,030 $17,909 Income from affiliates (Note 6) 6 36 Total Investment Income 18,734 11,816 51,066 17,909 EXPENSES: Management fees 11,209 8,680 33,496 11,859 Custody fees , Transfer agent fees , Registration fees Printing fees Professional fees Trustee fees Other Total Expenses 12,429 9,656 36,578 13,078 Less expenses voluntarily reimbursed by investment adviser (230) (164) Less expenses contractually reimbursed by investment adviser (489) (335) (904) (424) Less custodian credits (8) (100) (6) (3) Net Expenses 11,702 9,057 35,668 12,651 Net Investment Income 7,032 2,759 15,398 5,258 NET REALIZED GAINS (LOSSES): Net realized gains (losses) on: Investments 978 (65) Net increase from payment by affiliate (Note 6) Net Gains 1, Net Increase in Net Assets Resulting from Operations $8,146 $2,785 $15,436 $5,298 See Notes to the Financial Statements. NORTHERN FUNDS ANNUAL REPORT 7 MONEY MARKET FUNDS

10 STATEMENTS OF CHANGES IN NET ASSETS FOR THE FISCAL YEARS ENDED MARCH 31, MONEY MARKET FUND MUNICIPAL MONEY MARKET FUND U.S. GOVERNMENT MONEY MARKET FUND U.S. GOVERNMENT SELECT MONEY MARKET FUND Amounts in thousands OPERATIONS: Net investment income $7,032 $3,776 $2,759 $570 $15,398 $341 $5,258 $562 Net realized gains (losses) (65) 1, Net increase from payment by affiliate (Note 6) 136 8, Net Increase in Net Assets Resulting from Operations 8,146 12,372 2,785 1,861 15, , CAPITAL SHARE TRANSACTIONS: (1) Net increase (decrease) in net assets resulting from capital share transactions (7,397,266) (1,291,406) (5,456,159) (613,299) 13,122,151 1,596,084 (606,916) 528,263 Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions (7,397,266) (1,291,406) (5,456,159) (613,299) 13,122,151 1,596,084 (606,916) 528,263 DISTRIBUTIONS PAID: From net investment income (7,945) (3,813) (3,024) (589) (15,407) (354) (5,265) (583) From net realized gains (71) (4) (622) (469) Total Distributions Paid (8,016) (3,817) (3,646) (1,058) (15,407) (354) (5,265) (583) Total Increase (Decrease) in Net Assets (7,397,136) (1,282,851) (5,457,020) (612,496) 13,122,180 1,596,093 (606,883) 528,269 NET ASSETS: Beginning of year 7,561,742 8,844,593 5,660,876 6,273,372 3,359,761 1,763,668 3,887,950 3,359,681 End of year $164,606 $7,561,742 $203,856 $5,660,876 $16,481,941 $3,359,761 $3,281,067 $3,887,950 Accumulated Undistributed Net Investment Income (Loss) $(46) $(42) $ $78 $(9) $(9) $(14) $(14) (1) The number of shares approximates the dollar amount of transactions. See Notes to the Financial Statements. MONEY MARKET FUNDS 8 NORTHERN FUNDS ANNUAL REPORT

11 FINANCIAL HIGHLIGHTS FOR THE FISCAL YEARS ENDED MARCH 31, MONEY MARKET FUND Selected per share data Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00 INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (1) Net realized and unrealized gains (losses) (2) Net increase from payment by affiliate (Note 6) (3) (4) Total from Investment Operations LESS DISTRIBUTIONS PAID: From net investment income (5) From net realized gains (6) (6) Total Distributions Paid Net Asset Value, End of Year $1.00 $1.00 $1.00 $1.00 $1.00 Total Return (7) 0.42% 0.05% 0.01% 0.01% 0.01% SUPPLEMENTAL DATA AND RATIOS: Net assets, in thousands, end of year $164,606 $7,561,742 $8,844,593 $7,979,006 $8,576,752 Ratio to average net assets of: Expenses, net of reimbursements and credits (8) 0.34% 0.26% 0.17% 0.18% 0.24% Expenses, before reimbursements and credits (8) 0.37% 0.36% 0.39% 0.48% 0.48% Net investment income, net of reimbursements and credits (8) 0.22% 0.05% 0.01% 0.01% 0.01% Net investment income (loss), before reimbursements and credits (8) 0.19% (0.05)% (0.21)% (0.29)% (0.23)% (1) (2) (3) (4) (5) (6) (7) (8) Per share amounts from net investment income were less than $0.01 per share. Per share amounts from net realized and unrealized gains (losses) were less than $0.01 per share. The Fund received a cash contribution from Northern Trust Corporation, the parent company of NTI, of approximately $136,000. The voluntary cash contribution represents less than $0.01 per share and had no effect on the Fund s total return. The Fund received a cash contribution from Northern Trust Corporation, the parent company of NTI, of approximately $8,190,000. The voluntary cash contribution represents less than $0.01 per share and had no effect on the Fund s total return. Per share amounts from distributions paid from net investment income were less than $0.01 per share. Per share amount from distributions paid from net realized gains was less than $0.01 per share. 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. The impact on Net Assets due to any custody credits is less than 0.005%. See Notes to the Financial Statements. NORTHERN FUNDS ANNUAL REPORT 9 MONEY MARKET FUNDS

12 FINANCIAL HIGHLIGHTS continued MUNICIPAL MONEY MARKET FUND Selected per share data Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00 INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (1) Net realized and unrealized gains (losses) 0.01 (2) (2) (2) (2) Net increase from payment by affiliate (Note 6) (3) Total from Investment Operations 0.01 LESS DISTRIBUTIONS PAID: From net investment income (0.01) (4) (4) (4) (4) From net realized gains (5) (5) (5) Total Distributions Paid (0.01) Net Asset Value, End of Year $1.00 $1.00 $1.00 $1.00 $1.00 Total Return (6) 0.53% 0.02% 0.02% 0.02% 0.01% SUPPLEMENTAL DATA AND RATIOS: Net assets, in thousands, end of year $203,856 $5,660,876 $6,273,372 $6,427,560 $6,657,305 Ratio to average net assets of: Expenses, net of reimbursements and credits (7) 0.34% 0.09% 0.07% 0.10% 0.17% Expenses, before reimbursements and credits (7) 0.37% 0.36% 0.39% 0.48% 0.48% Net investment income, net of reimbursements and credits (7) 0.11% 0.01% 0.01% 0.01% 0.01% Net investment income (loss), before reimbursements and credits (7) 0.08% (0.26)% (0.31)% (0.37)% (0.30)% (1) (2) (3) (4) (5) (6) (7) Per share amounts from net investment income were less than $0.01 per share. Per share amounts from net realized and unrealized gains (losses) were less than $0.01 per share. The Fund received a cash contribution from Northern Trust Corporation, the parent company of NTI, of approximately $91,000. The voluntary cash contribution represents less than $0.01 per share and had no effect on the Fund s total return. Per share amounts from distributions paid from net investment income were less than $0.01 per share. Per share amount from distributions paid from net realized gains was less than $0.01 per share. 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. The impact on Net Assets due to any custody credits is less than 0.005%. See Notes to the Financial Statements. MONEY MARKET FUNDS 10 NORTHERN FUNDS ANNUAL REPORT

13 FOR THE FISCAL YEARS ENDED MARCH 31, U.S. GOVERNMENT MONEY MARKET FUND Selected per share data Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00 INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (1) Net realized and unrealized gains (losses) (2) Total from Investment Operations LESS DISTRIBUTIONS PAID: From net investment income (3) Total Distributions Paid Net Asset Value, End of Year $1.00 $1.00 $1.00 $1.00 $1.00 Total Return (4) 0.12% 0.01% 0.01% 0.01% 0.01% SUPPLEMENTAL DATA AND RATIOS: Net assets, in thousands, end of year $16,481,941 $3,359,761 $1,763,668 $1,383,478 $1,329,392 Ratio to average net assets of: Expenses, net of reimbursements and credits (5) 0.35% 0.22% 0.09% 0.10% 0.17% Expenses, before reimbursements and credits (5) 0.36% 0.36% 0.40% 0.48% 0.48% Net investment income, net of reimbursements and credits (5) 0.15% 0.01% 0.01% 0.01% 0.01% Net investment income (loss), before reimbursements and credits (5) 0.14% (0.13)% (0.30)% (0.37)% (0.30)% (1) (2) (3) (4) (5) Per share amounts from net investment income were less than $0.01 per share. Per share amounts from net realized and unrealized gains (losses) were less than $0.01 per share. Per share amounts from distributions paid from net investment income were less than $0.01 per share. 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. The impact on Net Assets due to any custody credits is less than 0.005%. See Notes to the Financial Statements. NORTHERN FUNDS ANNUAL REPORT 11 MONEY MARKET FUNDS

14 FINANCIAL HIGHLIGHTS continued FOR THE FISCAL YEARS ENDED MARCH 31, U.S. GOVERNMENT SELECT MONEY MARKET FUND Selected per share data Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00 INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (1) Net realized and unrealized gains (losses) (2) Total from Investment Operations LESS DISTRIBUTIONS PAID: From net investment income (3) Total Distributions Paid Net Asset Value, End of Year $1.00 $1.00 $1.00 $1.00 $1.00 Total Return (4) 0.15% 0.02% 0.01% 0.01% 0.01% SUPPLEMENTAL DATA AND RATIOS: Net assets, in thousands, end of year $3,281,067 $3,887,950 $3,359,681 $3,727,033 $3,537,631 Ratio to average net assets of: Expenses, net of reimbursements and credits (5) 0.35% 0.20% 0.09% 0.10% 0.15% Expenses, before reimbursements and credits (5) 0.36% 0.36% 0.39% 0.48% 0.48% Net investment income, net of reimbursements and credits (5) 0.14% 0.01% 0.01% 0.01% 0.01% Net investment income (loss), before reimbursements and credits (5) 0.13% (0.15)% (0.29)% (0.37)% (0.32)% (1) (2) (3) (4) (5) Per share amounts from net investment income were less than $0.01 per share. Per share amounts from net realized and unrealized gains (losses) were less than $0.01 per share. Per share amounts from distributions paid from net investment income were less than $0.01 per share. 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. The impact on Net Assets due to any custody credits is less than 0.005%. See Notes to the Financial Statements. MONEY MARKET FUNDS 12 NORTHERN FUNDS ANNUAL REPORT

15 SCHEDULE OF INVESTMENTS MONEY MARKET FUND MARCH 31, 2017 PRINCIPAL AMOUNT ABS COMMERCIAL PAPER 16.4% ABS Other 16.4% Alpine Securitization Ltd., 1.07%, 4/3/17 (1) $2,550 $2,550 Atlantic Asset Securitization LLC, 0.86%, 4/11/17 3,000 2,999 Bennington Stark Capital Co. LLC, 1.04%, 4/3/17 3,000 3,000 Charta Corp. LLC, 0.99%, 5/4/17 (1) 2,500 2,498 Concord Minutemen Capital Co. LLC, Class A, 0.91%, 4/13/17 (1) 3,000 2,999 MetLife Short Term Funding LLC, 0.82%, 4/10/17 (1) 1,000 1,000 Regency Markets No. 1 LLC, 0.96%, 4/6/17 (1) 3,000 2,999 Ridgefield Funding Co. LLC, 1.02%, 4/3/17 (1) 3,000 3,000 Thunder Bay Funding LLC, 0.99%, 5/10/17 (1) 3,000 2,997 Victory Receivables Corp., 1.01%, 4/20/17 3,000 2,998 27,040 Total ABS Commercial Paper (Cost $27,040) 27,040 CERTIFICATES OF DEPOSIT 9.7% Banking 9.7% Cooperatieve Rabobank U.A., 1.36%, 4/7/17 (2) 5,000 5,001 Credit Industriel et Commercial, New York Brach, 1.49%, 4/6/17 (3) 3,000 3,001 Oversea-Chinese Banking Corp. Ltd., 0.95%, 4/3/17 5,000 5,000 Sumitomo Mitsui Banking Corp., New York Branch, 1.53%, 4/7/17 (2) 3,000 3,000 16,002 Total Certificates Of Deposit (Cost $16,002) 16,002 COMMERCIAL PAPER 16.8% PRINCIPAL AMOUNT Banking 3.7% Commonwealth Bank of Australia, New York Branch, 1.42%, 4/19/17 (1) (2) $3,000 $3,001 HSBC Bank PLC, 1.44%, 4/18/17 (1) (3) 3,000 3,000 6,001 Foreign Agencies 10.6% Bank Nederlandse Gemeenten, 1.02%, 4/26/17 (1) 4,500 4,497 Caisse D Amortissement De La Dette, 0.81%, 4/6/17 (1) 5,000 4, %, 4/19/17 3,000 2,999 Nederlandse Waterschapsbank N.V., 0.81%, 4/24/17 5,000 4,997 17,492 Foreign Local Government 0.7% NRW.BANK, 0.87%, 4/18/17 (1) 1,125 1,125 Technology 1.8% Apple, Inc., 0.79%, 4/5/17 (1) 3,000 3,000 Total Commercial Paper (Cost $27,618) 27,618 CORPORATE NOTES/BONDS 3.0% Banking 3.0% Bank of Nova Scotia, 1.33%, 4/11/17 (2) 5,000 5,001 Total Corporate Notes/Bonds (Cost $5,001) 5,001 EURODOLLAR TIME DEPOSITS 17.6% Banking 17.6% Australia and New Zealand Banking Group, 0.83%, 4/3/17 5,000 5,000 Canadian Imperial Bank of Commerce, 0.82%, 4/3/17 11,000 11,000 Commonwealth Bank of Australia, London Branch, 0.83%, 4/3/17 5,000 5,000 See Notes to the Financial Statements. NORTHERN FUNDS ANNUAL REPORT 13 MONEY MARKET FUNDS

16 SCHEDULE OF INVESTMENTS MONEY MARKET FUND continued PRINCIPAL AMOUNT EURODOLLAR TIME DEPOSITS % continued Banking 17.6% continued Credit Agricole S.A., London Branch, 0.85%, 4/3/17 $5,000 $5,000 National Bank of Canada, 0.81%, 4/3/17 3,000 3,000 29,000 Total Eurodollar Time Deposits (Cost $29,000) 29,000 MUNICIPAL INVESTMENTS 41.2% California 3.8% HW Hellman Building L.P. Bonds, (FHLB of San Francisco LOC), 0.93%, 4/10/17 (4) 3,000 3,000 Landing at College Square LLC Bonds, (FHLB of San Francisco LOC), 0.93%, 4/10/17 (4) 3,300 3,300 6,300 Florida 5.0% Palm Beach County Revenue Refunding Bonds, Pine Crest Preparatory, (TD Bank N.A. LOC), 0.91%, 4/10/17 (4) 8,200 8,200 Illinois 4.9% Illinois State Finance Authority Revenue Bonds, North Park University Project, (U.S. Bank N.A. LOC), 0.92%, 4/10/17 (4) 8,000 8,000 Maryland 1.8% Maryland State Department of Housing & Community Development Administration Taxable Revenue Bonds, Series E, 0.95%, 4/10/17 (4) 3,000 3,000 Massachusetts 4.9% Massachusetts State G.O. Limited Bonds, Series B, Central Artery, 0.84%, 4/3/17 (4) 8,000 8,000 Mississippi 4.0% Mississippi State Business Finance Corp. Commission Gulf Opportunity Zone Revenue Bonds, Series K, Chevron USA, Inc., (Chevron Corp. Gtd.), PRINCIPAL AMOUNT MUNICIPAL INVESTMENTS % continued Mississippi 4.0% continued 0.91%, 4/3/17 (4) $6,600 $6,600 Missouri 3.1% Springfield IDA Revenue Bonds, ABEC Inc. Project, (U.S. Bank N.A. LOC), 0.98%, 4/10/17 (4) 5,090 5,090 New York 6.0% New York City G.O. Unlimited Bonds, Series I, Subseries I-8, 0.90%, 4/3/17 (4) 8,000 8,000 New York State Housing Finance Agency Revene Bonds, Series B, (Wells Fargo Bank N.A. LOC), 0.90%, 4/10/17 (4) 1,900 1,900 9,900 Texas 3.3% Texas State Department of Housing & Community Affairs Revenue Bonds, Series A-1, Timber Point Apartments, (FHLMC LOC), 0.90%, 4/10/17 (4) 5,430 5,430 Vermont 3.1% Vermont EDA Municipal Interest Bearing CP, (JPMorgan Chase Bank N.A. LOC), 1.10%, 5/24/17 5,000 5,000 Wisconsin 1.3% Wisconsin State Health & Educational Facilities Authority Revenue Bonds, Series C, Aurora Healthcare, (Bank of Montreal LOC), 0.90%, 4/3/17 (4) 2,200 2,200 Total Municipal Investments (Cost $67,720) 67,720 Investments, at Amortized Cost ( $172,381) 172,381 See Notes to the Financial Statements. MONEY MARKET FUNDS 14 NORTHERN FUNDS ANNUAL REPORT

17 MARCH 31, 2017 (1) (2) (3) (4) (5) PRINCIPAL AMOUNT REPURCHASE AGREEMENTS 0.1% Repurchase Agreements 0.1% (5) Citigroup Global Markets, Inc., dated 3/31/17, repurchase price $ %, 4/3/17 $66 $66 Total Repurchase Agreements (Cost $66) 66 Total Investments 104.8% (Cost $172,447) (6) 172,447 Liabilities less Other Assets (4.8%) (7,841) NET ASSETS 100.0% $164,606 Securities exempt from registration under Rule 144A of the Securities Act of These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The value of these securities is determined in accordance with procedures established by the Board of Trustees of Northern Funds. Variable rate security. Rate as of March 31, 2017 is disclosed. Variable rate security. Rate as of March 31, 2017 is disclosed. Maturity date represents the next interest reset date. The security s legal final maturity date is longer than the reset date. Securities with longer maturity dates have a greater sensitivity to changes in liquidity, interest rate risk, and/or credit risk. Variable rate security. Rate as of March 31, 2017 is disclosed. Maturity date represents the date when principal payments may be due, taking into account any call options exercised and any permissible maturity shortening features. The nature and terms of the collateral received for the repurchase agreements are as follows: The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and other financial instruments, if any. The following table summarizes the valuations of the Fund s investments, which are carried at amortized cost, which approximates fair value, by the above fair value hierarchy as of March 31, 2017: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Investments held by Money Market Fund (1) $ $172,447 $ $172,447 (1) Classifications as defined in the Schedule of Investments. The Fund discloses all transfers between levels based on valuations at the end of each reporting period. At March 31, 2017, there were no transfers between Level 1, Level 2 or Level 3 classifications based on levels assigned to the securities on March 31, EXPLANATION OF ABBREVIATIONS AND ACRONYMS USED THROUGHOUT THE SCHEDULE OF INVESTMENTS: CP - Commercial Paper EDA - Economic Development Authority FHLB - Federal Home Loan Bank FHLMC - Federal Home Loan Mortgage Corporation G.O. - General Obligation Gtd. - Guaranteed IDA - Industrial Development Authority LOC - Line of Credit NAME FAIR COUPON RATES MATURITY DATES U.S. Treasury Notes $ % 3/31/19 (6) The cost for federal income tax purposes was approximately $172,447,000. Percentages shown are based on Net Assets. The classifications shown on the Schedule of Investments and in the tables herein are unaudited. Various inputs are used in determining the value of the Fund s investments. These inputs are summarized in three levels listed below: Level 1 - Unadjusted quoted market prices in active markets for identical securities on the measurement date. Level 2 - Other observable inputs (e.g., quoted prices in active markets for similar securities, securities valuations based on commonly quoted benchmark interest rates and yield curves, maturities, ratings and/or securities indices). Level 3 - Significant unobservable inputs (e.g., information about assumptions, including risk, market participants would use in pricing a security). See Notes to the Financial Statements. NORTHERN FUNDS ANNUAL REPORT 15 MONEY MARKET FUNDS

18 SCHEDULE OF INVESTMENTS MUNICIPAL MONEY MARKET FUND PRINCIPAL AMOUNT MUNICIPAL INVESTMENTS 99.2% Alabama 4.5% Chatom Alabama IDB Gulf Opportunity Zone Revenue Bonds, Powersouth Energy Cooperative, (Natural Rural Utilities Cooperative Finance Corp. LOC), 1.04%, 4/10/17 (1) $3,700 $3,700 Tuscaloosa County IDA Gulf Opportunity Zone Revenue Bonds, Series A, Hunt Refining Project, (JPMorgan Chase Bank N.A. LOC), 0.91%, 4/10/17 (1) 5,500 5,500 9,200 Alaska 1.0% Alaska State Industrial Development & Export Authority Revenue Refunding Bonds, Series A, Greater Fairbanks, (MUFG Union Bank N.A. LOC), 0.91%, 4/10/17 (1) 2,000 2,000 California 7.9% California State University Municipal Interest Bearing CP, 0.84%, 5/2/17 3,000 3,000 California Statewide Communities Development Authority MFH Revenue Bonds, Series OO (AMT), Imperial Park Apartments, (FHLMC LOC), 0.89%, 4/10/17 (1) 3,000 3,000 California Statewide Communities Development Authority MFH Revenue Bonds, Series WW (AMT), David Avenue Apartments, (FHLMC LOC), 0.89%, 4/10/17 (1) 5,300 5,300 Los Angeles Department of Water & Power System Revenue Refunding Bonds, Subseries A-6, 0.83%, 4/3/17 (1) Oceanside City MFH Revenue Bonds, Shadow Way (Non AMT), (FHLMC LOC), 0.93%, 4/10/17 (1) 4,225 4,225 16,025 PRINCIPAL AMOUNT MUNICIPAL INVESTMENTS % continued Colorado 3.5% Colorado State Educational & Cultural Facilities Authority Revenue Bonds, Series B-1, National Jewish Federation Board Program, (Toronto-Dominion Bank LOC), 0.95%, 4/3/17 (1) $1,400 $1,400 Colorado State Educational & Cultural Facilities Authority Revenue Refunding Bonds, Capital Christian Schools, (FHLB of San Francisco LOC), 0.91%, 4/10/17 (1) 2,200 2,200 Colorado State Housing & Finance Authority SFM Revenue Bonds, Series 1-A3, 0.92%, 4/10/17 (1) 3,620 3,620 7,220 District of Columbia 0.8% District of Columbia Revenue Bonds, Center of Internship and Academic, (Branch Banking & Trust Co. LOC), 0.93%, 4/10/17 (1) 1,265 1,265 District of Columbia Revenue Bonds, Series A, Tranche 1, (TD Bank N.A. LOC), 0.96%, 4/3/17 (1) ,665 Florida 3.4% Highlands County Health Facilities Authority Revenue Bonds, Series A, Hospital Adventist Health System, 0.90%, 4/10/17 (1) 2,200 2,200 JEA Electric System Revenue Bonds, Subseries D, 0.90%, 4/3/17 (1) 2,600 2,600 Orange County Health Facilities Authority Revenue Bonds, Series C-2, Nemours Foundation, (TD Bank N.A. LOC), 0.90%, 4/10/17 (1) 1,800 1,800 Palm Beach County Revenue Refunding Bonds, Pine Crest Preparatory, (TD Bank N.A. LOC), 0.91%, 4/10/17 (1) ,900 See Notes to the Financial Statements. MONEY MARKET FUNDS 16 NORTHERN FUNDS ANNUAL REPORT

19 MARCH 31, 2017 PRINCIPAL AMOUNT MUNICIPAL INVESTMENTS % continued Illinois 22.6% Illinois Finance Authority Revenue Bonds, Gift of Hope Donor Project, (JPMorgan Chase Bank N.A. LOC), 0.98%, 4/10/17 (1) $5,000 $5,000 Illinois State Development Finance Authority Revenue Bonds, St. Ignatius College Project, (PNC Bank N.A. LOC), 0.93%, 4/10/17 (1) 6,100 6,100 Illinois State Development Finance Authority Revenue Bonds, Wheaton Academy Project, (BMO Harris Bank N.A. LOC), 0.93%, 4/10/17 (1) 2,500 2,500 Illinois State Finance Authority Revenue Bonds, Community Action Partnership, (Citibank N.A. LOC), 0.93%, 4/10/17 (1) 4,670 4,670 Illinois State Finance Authority Revenue Bonds, Series A, University of Chicago Medical Center, (Bank of America N.A. LOC), 0.87%, 4/3/17 (1) 5,800 5,800 Illinois State Finance Authority Revenue Bonds, Series D-1, University of Chicago Medical, (PNC Bank N.A. LOC), 0.90%, 4/3/17 (1) 8,000 8,000 Illinois State Finance Authority Revenue Bonds, Subseries B, Northwestern University, 0.85%, 4/10/17 (1) 2,000 2,000 Illinois State Toll Highway Authority Revenue Bonds, Series A-1B, (Bank of America N.A. LOC), 0.91%, 4/10/17 (1) 10,000 10,000 Quad Cities Regional EDA Revenue Bonds, Augustana College, (BMO Harris Bank N.A. LOC), 0.92%, 4/10/17 (1) 1,900 1,900 45,970 PRINCIPAL AMOUNT MUNICIPAL INVESTMENTS % continued Indiana 1.1% Indiana State Finance Authority Environmental Revenue Refunding Bonds, Series A-4, Duke Energy Indiana Project, (Sumitomo Mitsui Banking Corp. LOC), 0.88%, 4/3/17 (1) $2,300 $2,300 Iowa 2.5% Iowa State Finance Authority Community Revenue Bonds, Series B, Wesley Retirement Services, (Bank of America N.A. LOC), 0.92%, 4/10/17 (1) 5,000 5,000 Louisiana 3.7% East Baton Rouge Parish IDA Development Board, Inc. Revenue Bonds, Series A, Exxon Mobil Project, 0.88%, 4/3/17 (1) 1,000 1,000 East Baton Rouge Parish IDB, Inc. Revenue Bonds, Exxon Mobil Project, 0.88%, 4/3/17 (1) 2,000 2,000 Louisiana State Offshore Terminal Authority Deepwater Port Revenue Refunding Bonds, Series A, 1st Stage Loop LLC, (JPMorgan Chase Bank N.A. LOC), 0.95%, 4/3/17 (1) 2,000 2,000 Louisiana State Public Facilities Authority Multifamily Revenue Refunding Bonds, (FNMA LOC), 0.95%, 4/10/17 (1) 2,500 2,500 7,500 Massachusetts 3.7% Commonwealth of Massachusetts G.O. Limited Bonds, Series A, 0.89%, 4/3/17 (1) 1,550 1,550 Massachusetts Development Finance Agency Revenue Bonds, Series M1, Partner Healthcare System, (U.S. Bank N.A. LOC), 0.87%, 4/3/17 (1) 6,000 6,000 7,550 See Notes to the Financial Statements. NORTHERN FUNDS ANNUAL REPORT 17 MONEY MARKET FUNDS