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Active M Emerging Markets Equity

as of 9/30/17

Fund Commentary

Emerging markets equities as measured by the MSCI Emerging Markets Index returned 7.89% in the third quarter, with China, Brazil and Russia leading the way. Performance within China was led by companies in the information technology and real estate sectors, both of which were boosted by strong earnings. In addition, the market was propelled by optimism regarding potential leadership changes in China following the 19th National Congress of the Communist Party. Expectations were for a focus on economic stability that would move the country away from a credit-fueled economy and toward a more sustainable growth path. Brazil also performed well, as declining inflation and interest rate levels led to an increase in domestic consumption.

Information technology and financials drove returns for the emerging markets, with added contributions from energy, materials and real estate. Consumer-related sectors lagged the broader Index.

The Active M Emerging Markets Equity Fund kept pace with the Index, returning 7.87% during the quarter. Both stock selection and sector positioning added value. Exposure to Brazilian retail and automotive stocks helped performance, as consumer confidence improved. The Fund also benefited from a rebound in commodities, as mining companies held in the portfolio generated significant gains. Stock selection in information technology detracted from quarterly results, as did several holdings in South Korea and Taiwan. Stock selection in China, together with an underweight in the country, also weighed on performance. The Fund’s underweights in both the real estate and information technology sectors in China were the cause of the shortfall.

Not FDIC insured | May lose value | No bank guarantee

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Please carefully read the prospectus and summary prospectus and consider the investment objectives, risks, charges and expenses of Northern Funds before investing. Call 800-595-9111 to obtain a prospectus and summary prospectus, which contains this and other information about the funds.

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