NORTHERN FUNDS

                 ADDENDUM NO. 3 TO THE FOREIGN CUSTODY AGREEMENT



     This Addendum No. 3, 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 ("Northern"), an Illinois state bank.

     WHEREAS, the Trust and Northern have entered into a Foreign Custody
Agreement dated April 1, 1994, as amended by Addendum No. 1 dated as of April 1,
1998 and Addendum No. 2 dated as of February 8, 2000 (the "Foreign Custody
Agreement"), pursuant to which the Trust has appointed Northern to act as
custodian to the Trust for its International Growth Equity Fund, Global Fixed
Income Fund (formerly known as the International Fixed Income Fund),
International Select Equity Fund and Global Communications Fund (collectively,
the "Funds"); and

     WHEREAS, the Trust has this day reorganized itself from a Massachusetts
business trust to a Delaware business trust; and

     WHEREAS, the Trust and Northern desire that Northern continue to act as
custodian to the Trust for the Funds pursuant to the terms of the Foreign
Custody Agreement as amended to date;

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

     1.   RESTATEMENT. Section 18 of the Foreign Custody Agreement is hereby
          amended and restated as follows:

          MISCELLANEOUS. The Trust's Agreement and Declaration of Trust is on
          file with the Trust. The captions of this Agreement are included for
          convenience of reference only and in no way define or delimit any of
          the provisions hereof or otherwise affect their construction or
          effect. If any provision of this Agreement shall be held or made
          invalid by a court decision, statute, rule or otherwise, the remainder
          of this Agreement shall not be affected thereby. Any provision in this
          Agreement requiring compliance with any statute or regulation shall
          mean such statute or regulation as amended and in effect from time to
          time. This Agreement shall be construed in accordance with the laws of
          the State of Illinois (except as to Section 19 hereof which shall be
          construed in accordance with the laws of the State of Delaware) and
          shall be binding upon and shall inure to the benefit of the parties
          hereto and their respective successors.


     2.   REAFFIRMATION. The Foreign Custody Agreement as amended to date is
          hereby reaffirmed and readopted by each of the parties hereto, and
          Northern shall continue to provide services to the Trust for the
          Funds, and to receive compensation for such services, as provided in
          the Foreign Custody Agreement, subject to the terms set forth therein.

     3.   MISCELLANEOUS. Except to the extent supplemented hereby, the Foreign
          Custody 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
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                                                By: /s/ Archibald King
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                                                Name: Archibald King
                                                     ---------------

                                                Title: Vice-President
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                                                THE NORTHERN TRUST COMPANY


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

                                                Name: Archibald King
                                                     ---------------

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