NORTHERN INSTITUTIONAL FUNDS



                         INVESTMENT ADVISORY AGREEMENT





          AGREEMENT made this 31st day of July, 2001 between NORTHERN

INSTITUTIONAL FUNDS, a Delaware business trust (the "Trust"), and NORTHERN TRUST

INVESTMENTS, INC., an Illinois state bank (the "Adviser").



                                  WITNESSETH:

                                  ----------



          WHEREAS, the Trust is an open-end management investment company

registered under the Investment Company Act of 1940, as amended (the "1940

Act"); and



          WHEREAS, the Trust is authorized to issue shares of beneficial

interest ("Shares") in separate series with each such series representing the

interests in a separate portfolio of securities and other assets; and



          WHEREAS, the Trust presently intends to offer Shares in a new

portfolio, known as the Liquid Assets Portfolio (such Portfolio, the "Current

Portfolio," together with all other portfolios previously or subsequently

established by the Trust and made subject to this Agreement being herein

collectively referred to as the "Portfolios"); and



          WHEREAS, the Trust desires to retain the Adviser to render investment

advisory services to the Trust and its Current Portfolio as indicated below and

the Adviser is willing to so render such services;



          NOW, THEREFORE, in consideration of the premises and mutual covenants

hereinafter set forth, the parties hereto agree as follows:



     1.   Appointment of Adviser.

          ----------------------



          (a)  The Trust hereby appoints the Adviser to act as investment

               adviser to the Trust and its Current Portfolio for the periods

               and on the terms herein set forth. The Adviser accepts such

               appointment and agrees to render the services herein set forth,

               for the compensation herein provided.



          (b)  In the event that the Trust establishes one or more portfolios

               other than the Current Portfolio with respect to which it desires

               to retain the Adviser to act as investment adviser hereunder, it

               shall notify the Adviser in writing. If the Adviser is willing to

               render such services under this Agreement it shall notify the

               Trust in writing whereupon such portfolio shall become a

               Portfolio hereunder and shall be subject to the provisions of

               this Agreement to the same extent as the Current Portfolio except

               to the extent that said provisions (including those relating to

               the compensation payable by the Trust to the Adviser) are

               modified with respect to such Portfolio in writing by the Trust

               and the Adviser at the time.



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          (c)  At its discretion, the Adviser may provide advisory services

               under this Agreement through its own employees or the employees

               of one or more affiliated companies that are qualified to act as

               investment adviser to the Trust under applicable law and either

               control, are controlled by or are under control with the Adviser,

               provided that: (i) all persons, when providing services

               hereunder, are functioning as part of an organized group of

               persons; and (ii) such organized group of persons is managed at

               all times by the Adviser's authorized officers. In addition, the

               Adviser may engage one or more investment advisers that are

               either registered as such or specifically exempt from

               registration under the Investment Advisers Act of 1940, as

               amended, to act as sub-advisers or co-advisers to provide with

               respect to any Portfolio any or all of the services set forth in

               this Agreement, all as shall be set forth in a written contract

               approved to the extent and in the manner required by the 1940 Act

               and interpretations thereof by the Securities and Exchange

               Commission (the "Commission") and its staff.



     2.   Delivery of Documents. The Trust has delivered (or will deliver as

          ---------------------

soon as is possible) to the Adviser copies of each of the following documents:



          (a)  Agreement and Declaration of Trust dated as of July 1, 1997,

               together with all Amendments thereto (such Agreement and

               Declaration of Trust, as presently in effect and as amended from

               time to time, is herein called the "Trust Agreement"), copies of

               which are on file with the Trust;



          (b)  By-Laws of the Trust (such By-Laws, as presently in effect and as

               amended from time to time, are herein called the "By-Laws");



          (c)  Co-Administration Agreement between the Trust and its Co-

               Administrators;



          (d)  Placement Agency Agreement and Foreign Custody Agreement between

               the Trust and its Placement Agent;



          (e)  Custodian Agreement and Foreign Custody Agreement between the

               Trust and its Custodian;

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