NORTHERN EQUITY INDEX FUNDS ANNUAL REPORT MARC H 31, 2020 Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of Northern Funds shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from Northern Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Funds’ website (northerntrust.com) and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you have already elected to receive your shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from Northern Funds electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if your account is held directly with Northern Funds, by calling the Northern Funds Center at 800-595-9111 or by sending an e-mail request to: [email protected]. You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, please contact your financial intermediary to continue receiving paper copies of your shareholder reports. If you invest directly with Northern Funds, you can inform Northern Funds that you wish to continue receiving paper copies of your shareholder reports by calling the Northern Funds Center at 800-595-9111 or by sending an e-mail request to: [email protected]. Your election to receive reports in paper will apply to all Northern Funds you hold in your account at the financial intermediary or through an account with Northern Funds. You must provide separate instructions to each of your financial intermediaries. AME S S AG EF R O M BOB BROWNE C HIEF INVES TMENT OFFICER After performing well throughout 2019 The policy response to the harm. The coronavirus indeed poses and into mid-February of 2020, global coronavirus outbreak was both rapid and significant near-term economic equity markets experienced a swift and extensive,helpingstockstorecoversome challenges. Small businesses will suffer sudden decline beginning in portion of their losses over the final days disproportionately, unemployment will mid-February as investors struggled to of March. Central bankers were the first rise meaningfully and corporate assess the economic impact of the officials to address the financial impact of earnings will be heavily impacted. Our coronavirus and the resulting the pandemic. Their initial actions were view in this challenging environment is containment efforts. The sudden to increase liquidity in the financial to take a long-term perspective that disappearance of predictability regarding system, with substantial interest rate cuts emphasizes the trajectory of earnings near-term economic conditions and and new quantitative easing programs post-crisis, rather than one that corporate earnings caused investor worldwide. In the U.S., the Federal attempts to evaluate day-to-day demand for equities and other higher-risk Reserve cut interest rates from 1.5% to headlines. Although near-term setbacks assets to shrink dramatically, weighing zero and pledged to purchase unlimited are probable, we expect the market’s heavily on markets across the globe. In amounts of Treasury and mortgage- focus to eventually shift to the potential addition, a surprising crude oil price war backed securities. The Federal Reserve impact of pent-up demand and between Saudi Arabia and Russia in also restarted many of the lending significant policy stimulus once the March 2020 sparked a sharp downturn in facilities it had created during the 2008 global health outlook begins to improve. oil prices and exacerbated disruptions to financial crisis, and implemented several We believe that investors who maintain the financial markets. new programs as well. In total, the an eye toward risk management, but Together, these factors led to a return Federal Reserve’s programs could reach position their portfolios to take of -6.98% for the S&P 500 Index for the over $4 trillion, dwarfing its response to advantage of opportunities as they arise, 12-month period ended March 31, 2020. the 2008 financial crisis. Additionally, should be rewarded over time. At its low point on March 23, 2020, the central banks across the globe initiated a Most important, please know that S&P500Indexhadgivenbackallof its raft of targeted measures to boost our thoughts are with each one of our gains for the three previous calendar liquidity, free up capital for bank lending, readers – our clients, colleagues, years. Small-cap stocks lagged, reflecting and provide inexpensive sources of business partners and everyone else smaller companies’ higher vulnerability to funding. The global fiscal response was withinourcommunity–aswestriveto a recession. International equities, which also substantial, highlighted by the overcome this health crisis. Thank you were already lagging due to the unsteady U.S. Congress’ approval of a $2.2 trillion for the continued opportunity to economic conditions that existed even stimulus package in late March. manage your assets. before the coronavirus outbreak, While these measures helped stocks underperformed during both the to recover some of the ground they had February-March 2020 downturn and the lost in the sell-off, global equities 12-month period as a whole. remained extremely volatile as investors Bob Browne struggled to assess headlines regarding Chief Investment Officer the health threat and associated economic Northern Trust EQUITY INDEX FUNDS TABLE OF C ONTENT S 2 PORTFOLIO MANAGEMENT COMMENTARY 10 STATEMENTS OF ASSETS AND LIABILITIES 12 STATEMENTS OF OPERATIONS 14 STATEMENTS OF CHANGES IN NET ASSETS 16 FINANCIAL HIGHLIGHTS 23 SCHEDULES OF INVESTMENTS 23 EMERGING MARKETS EQUITY INDEX FUND Ticker Symbol: NOEMX 45 GLOBAL REAL ESTATE INDEX FUND Ticker Symbol: NGREX 56 GLOBAL SUSTAINABILITY INDEX FUND Ticker Symbol: NSRIX 68 INTERNATIONAL EQUITY INDEX FUND Ticker Symbol: NOINX 82 MID CAP INDEX FUND This report has been prepared for the general Ticker Symbol: NOMIX information of Northern Funds shareholders. It is not authorized for distribution to prospective 89 SMALL CAP INDEX FUND investors unless accompanied or preceded by Ticker Symbol: NSIDX a current Northern Funds summary prospectus 115 STOCK INDEX FUND or prospectus, which contains more complete Ticker Symbol: NOSIX information about a fund’s investment objectives, risks, fees and expenses. Investors 123 NOTES TO THE FINANCIAL STATEMENTS are reminded to read a summary prospectus 137 REPORT OF INDEPENDENT REGISTERED PUBLIC or prospectus carefully before investing or ACCOUNTING FIRM sending money. 138 TAX INFORMATION This report contains certain forward-looking statements about factors that may affect the 139 LIQUIDITY RISK MANAGEMENT PROGRAM performance of the Funds in the future. These 140 FUND EXPENSES statements are based on Northern Funds’ management predictions and expectations 142 TRUSTEES AND OFFICERS concerning certain future events, such as performance of the economy as a whole and 146 INVESTMENT CONSIDERATIONS of specific industry sectors, changes in the 148 FOR MORE INFORMATION 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. 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 EQUITY INDEX FUNDS EQUITY INDEX FUNDS EMERGING MARKETS EQUITY INDEX FUND (UNAUDITED) PORTFOLIO MANAGEMENT COMMENTARY The Emerging Markets Equity Index Fund returned -18.36% during the 12-month reporting period ended March 31, 2020, compared with a return of -17.69% for its benchmark, the MSCI Emerging Markets Index. Emerging market equities lagged their developed market counterparts, as gauged by the -10.39% return of the MSCI World Index. Emerging markets underperformed during the first nine months of the 12-month period, reflecting investor concerns regarding global trade policies, geopolitical uncertainty and the strengthening U.S. dollar. These worries were quickly overshadowed in the first quarter of 2020 once China was affected by the outbreak of COVID-19, putting additional pressure on stock prices. The subsequent spread of the virusacrosstheglobecausedmanygovernmentstolockdowntheireconomies,weighingheavilyontheoutlookforeconomicgrowth and corporate earnings. In addition, a breakdown in the talks between Saudi Arabia and Russia led to an in increase in crude oil supply, causing oil prices to collapse. These events contributed to weak performance for all sectors, with the most pronounced downturns occurring in energy and financials. A strong rally in the U.S. dollar also weighed on the emerging markets during the final three months of the 12-month period. For the 12-month period ended March 31, 2020, information technology and consumer discretionary were the top-performing sectors in the benchmark index with returns of 3.93% and -7.93%, respectively. Energy and materials were the bottom performers in the benchmark