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Multi-Manager Global Real Estate

as of 12/31/17

Fund Commentary

The global real estate market, as measured by the FTSE® EPRA®/NAREIT® Global Index, returned 3.6% in the fourth quarter. The U.K. was the top-performing market in the quarter, returning more than 9%. Continental Europe and the Asia Pacific region posted strong positive performance, while the U.S. and Japan lagged. Emerging markets performed in line with the broad global index. Most property types experienced positive returns in the fourth quarter with the exception of the healthcare sector, which declined nearly 5%. Retail rebounded in the quarter after challenging performance in the first three quarters of 2017 and was the top performing sector in the quarter.

The Multi-Manager Global Real Estate Fund returned 3.34% during the quarter, underperforming the FTSE® EPRA®/NAREIT® Global Index returns of 3.56%. Stock selection and an overweight to the U.S. detracted from relative performance in the quarter. Stock selection in Germany was negative, but an overweight position in that market and the U.K. helped offset that negative impact. Stock selection in the diversified property sector and underweight to the healthcare sector were positive contributors in the period. Sub-adviser Brookfield performed well during the quarter due to an overweight position in the U.K. and strong stock selection in the diversified sector. Stock selection in the U.S. somewhat offset the positive results. Sub-adviser Delaware underperformed for the quarter primarily due to an overweight to the U.S. and weak stock selection in Continental Europe. Delaware's stock selection in the Asia Pacific region contributed positively to relative performance in the period.

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.

©2018 Northern Funds | Northern Funds are distributed by Northern Funds Distributors, LLC, not affiliated with Northern Trust.