NORTHERN FUNDS

               ADDENDUM NO. 2 TO THE INVESTMENT ADVISORY AGREEMENT

          This Addendum, dated as of the 31st day of July, 2000, is entered
into between NORTHERN FUNDS (the "Trust"), a Delaware business trust, and THE
NORTHERN TRUST COMPANY (the "Investment Adviser"), an Illinois state bank.

                  WHEREAS, the Trust and the Investment Adviser have entered
into an Investment Advisory Agreement dated as of July 31, 2000 as amended by
Addendum No. 1 dated July 31, 2000 (the "Advisory Agreement") pursuant to
which the Trust appointed the Investment Adviser to act as investment adviser
to the Trust for the Money Market Fund, U.S. Government Money Market Fund,
Municipal Money Market Fund, U.S. Government Select Money Market Fund,
California Municipal Money Market Fund, U.S. Government Fund, Fixed Income
Fund, Intermediate Tax-Exempt Fund, Tax-Exempt Fund, Global Fixed Income Fund
(formerly known as the International Fixed Income Fund), Income Equity Fund,
Growth Equity Fund, Select Equity Fund, Small Cap Value Fund (formerly known
as the Small Cap Fund), International Growth Equity Fund and International
Select Equity Fund; and

          WHEREAS, Section 1(b) of the Advisory Agreement provides that in
the event the Trust establishes one or more additional investment portfolios
with respect to which it desires to retain the Investment Adviser to act as
investment adviser under the Advisory Agreement, the Trust shall so notify
the Investment Adviser in writing and if the Investment Adviser is willing to
render such services it shall notify the Trust in writing, and the
compensation to be paid to the Investment Adviser shall be that which is
agreed to in writing by the Trust and the Investment Adviser; and

          WHEREAS, pursuant to Section 1(b) of the Advisory Agreement, the
Trust has notified the Investment Adviser that it is establishing the
Technology Fund (the "Fund"), and that it desires to retain the Investment
Adviser to act as the investment adviser therefor, and the Investment Adviser
has notified the Trust that it is willing to serve as investment adviser for
the Fund;

          NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

          1.   APPOINTMENT. The Trust hereby appoints the Investment Adviser to
               act as investment adviser to the Trust for the Fund in
               accordance with the terms set forth in the Advisory Agreement.
               The Investment Adviser hereby accepts such appointment and agrees
               to render the services set forth in the Advisory Agreement for
               the compensation herein provided.

          2.   COMPENSATION. For the services provided and the expenses assumed
               pursuant to the Advisory Agreement regarding the Fund, the Trust
               will pay the Investment Adviser, and the Investment Adviser will
               accept as full



               compensation therefor from the Trust, a fee at an annual rate
               of 1.20% of the Fund's average daily net assets.

          3.   CAPITALIZED TERMS. From and after the date hereof, the term
               "Current Funds" as used in the Advisory Agreement shall be
               deemed to include the Technology Fund. Capitalized terms used
               herein and not otherwise defined shall have the meanings
               ascribed to them in the Advisory Agreement.

          4.   MISCELLANEOUS. The initial term of the Advisory Agreement with
               respect to the Fund shall continue, unless sooner terminated in
               accordance with the Advisory Agreement, until March 31, 2001.
               Except to the extent supplemented hereby, the Advisory Agreement
               shall remain unchanged and in full force and effect, and is
               hereby ratified and confirmed in all respects as supplemented
               hereby.



          IN WITNESS WHEREOF, the undersigned have executed this Addendum as
of the date and year first above written.

                                                NORTHERN FUNDS


Attest:  /s/ Diane Anderson
       --------------------                     By: /s/ Archibald King
                                                    ------------------

                                                Title: Vice-President
                                                      ---------------


                                                THE NORTHERN TRUST COMPANY


Attest:  /s/ Diane Anderson
        -------------------                     By: /s/ Archibald King
                                                    ------------------

                                                Title: Senior Vice-President
                                                       ---------------------