https://www.sec.gov/Archives/edgar/data/916620/000119312523217676/d530146d497.htm497 1 d530146d497.htm NORTHERN FUNDS
SUMMARY PROSPECTUS, PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (“SAI”) SUPPLEMENT
NORTHERN FUNDS
SUPPLEMENT DATED AUGUST 22, 2023 TO
SUMMARY PROSPECTUS, PROSPECTUS AND SAI FOR THE NORTHERN ENGAGE360TM FUND DATED JULY 31, 2023
PENDING LIQUIDATION OF THE NORTHERN ENGAGE360TM FUND
The Board of Trustees (the “Board”) of Northern Funds (the “Trust”), upon the recommendation of Northern Trust Investments, Inc., investment adviser to the Trust, has determined that it is in the best interests of the Northern Engage360TM Fund (the “Fund”) and its shareholders that the Fund be liquidated and terminated on or about October 27, 2023 (the “Liquidation Date”) pursuant to a plan of liquidation and dissolution approved by the Board. The Liquidation Date may be changed at the discretion of the Trust’s officers.
The Fund will discontinue accepting orders by new investors for the purchase of Fund shares or exchanges into the Fund from other funds of the Trust after the close of business on August 23, 2023; provided, however, that existing shareholders of the Fund may continue to purchase, redeem and exchange Fund shares subject to the account policies described in the Fund’s prospectus until September 22, 2023. The Fund reserves the right, in its discretion, to modify the extent to which sales of shares are limited prior to the Liquidation Date. The plan of liquidation and dissolution for the Fund provides that the Fund will begin winding up its business and affairs and liquidating its assets in preparation for the liquidation.
Prior to the Liquidation Date, shareholders of the Fund may either: (1) redeem (sell) their shares at the Fund’s net asset value; or (2) exchange their shares at net asset value for shares of another fund of the Trust. Redemption and exchange orders should be submitted in the manner described in the Fund’s prospectus under “Account Policies and Other Information.” In connection with the liquidation, effective August 23, 2023, the redemption fee on the redemption of shares (including by exchange) held for 30 days or less is eliminated.
If no action is taken by a Fund shareholder prior to the Liquidation Date, the Fund will distribute to such shareholder, on or promptly after the Liquidation Date, a cash distribution equal to the shareholder’s proportionate interest in the net assets of the Fund (a “liquidating distribution”) as of the Liquidation Date. Prior to that time, the proceeds from the liquidation of portfolio securities will be invested in cash equivalent securities or held in cash. During this time, the Fund may hold more cash, cash equivalents or other short-term investments than normal, which may prevent the Fund from meeting its stated investment objective.
The Fund may make distributions to the shareholders of certain ordinary income and/or capital gains on or before the Liquidation Date. In that event, the distributions will generally be taxable to shareholders who receive the distribution (aside from tax-exempt accounts). Also, an exchange by a shareholder of shares of the Fund for shares of another fund of the Trust, a redemption of shares of the Fund for cash, or a liquidating distribution made to a shareholder as of the Liquidation Date will, in each case, generally result in a capital gain or loss for the shareholder for federal income tax purposes (and for most state and local income tax purposes), based on the difference between the value received by the shareholder for the Fund shares and the shareholder’s tax basis in the Fund shares. Shareholders also may be subject to foreign taxes on the liquidating distributions received.
SHAREHOLDERS SHOULD CONSULT THEIR PERSONAL TAX PROFESSIONALS CONCERNING ALL TAX CONSEQUENCES APPLICABLE TO THEIR INVESTMENT IN THE FUND AND THE TAX IMPACT OF THE LIQUIDATION OF THE FUND.
The pending liquidation of the Fund may be terminated and/or abandoned at any time before the Liquidation Date by action of the Board of the Trust.
Please retain this Supplement with your Summary Prospectus, Prospectus and SAI for future reference.
50 South LaSalle Street
P.O. Box 75986
Chicago, Illinois 60675-5986
800-595-9111
northerntrust.com/funds
LOGO NF SPT E360 (8/23)
Comments
Nice fund. $174 million AUM. Mildly trails the market. Really distinctive experiment, now over.
NENGX had 5 external subadvisors according to a recent report. ARK was removed as a subadvisor in 2021. The NT managers for the fund were changed in June 2022 and May 2023. In M* analyst report (computer-generated?), it is mentioned that fund strategy was also changed in May 2023 without being specific; I couldn't figure that out from the fund literature.
Fund inception was November 2017. There were good inflows in 2017-19, but outflows from 2021-now. Performance was so-so in global-blend category. Current AUM of $176.2 million was probably not much when split among so many external advisors.
https://www.northerntrust.com/united-states/what-we-do/investment-management/northern-funds/funds-and-performance/equity/NENGX
According to the fund fact sheet, Northern Trust replaced Strategic Global Advisors with Boston Common Asset Management on Dec 3, 2021. That appears to have been a straight swap; no reallocation is indicated.
https://cdn.northerntrust.com/pws/nt/documents/fact-sheets/mutual-funds/individual/nf_nengx_factsheet.pdf
According to an older (March 2021) version of the fact sheet, Segall Bryant & Hamill was terminated as a subadvisor on May 15, 2020 with assets reallocated among the remaining six subadvisors shortly thereafter.
https://web.archive.org/web/20210516141418/https://cdn.northerntrust.com/pws/nt/documents/fact-sheets/mutual-funds/individual/nf_nengx_factsheet.pdf?bc=25545033
The Northern Trust fund managers were changed in June 2022 (Diez replacing Hart) and in May 2023 (Finegan replacing Vella). Their responsibility is to oversee the fund. Perhaps Diez was responsible for dumping ARK, or perhaps Hart was replaced for supporting ARK too long. Who knows? I'm just looking at the timing.
However, the day to day management of the fund (what we typically think of as the "real" fund management) is handled by the subadvisors. One can't tell who the people are doing the day-to-day management by looking at the fund managers.
In contrast, when third party firms serve a fund advisors (not subadvisors), then it is the day-to-day managers who are listed as the fund managers. For example, VWIGX is advised (not subadvised) by Schroder and Baillie Gifford, and it is their people who are listed as the fund managers.
As one can see from the two NT manager changes, the "new team" did not "take the reins" in May 2023 as M* wrote. Rather, the change was piecemeal, with one change occurring in June 2022. M* suggests that because of this complete turnover of the two NT managers, the past record is now inapplicable - the strategy may have changed. Never mind that (aside from dropping ARK from 5% of the portfolio) the same subadvisor firms have been in place since the end of 2021.
The "people" section of the M* review was computer-generated (it is flagged with a 'Q'). Which just goes to show that humans still rule. Humans can go beyond what's input to the program to who is actually managing the funds. We can look beyond its "listed management team" changes (NT managers) to see that the subadvisor firms have been fairly stable, allocations have been fairly stable, suggesting that strategy has been stable. No subadvisor changes or reallocations have been made since this "new team" took "the reins."