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Emerging Markets Equity Index

as of 12/31/17

Fund Commentary

In the fourth quarter of 2017, the MSCI Emerging Markets Index returned 7.44%. Emerging markets equities underperformed U.S. equities, as measured by the S&P 500® Index, which returned 6.64% in the fourth quarter.

The top performing sectors over this time period were health care and consumer discretionary, returning 16.58% and 9.04%, respectively. Utilities and telecommunications services were the worst performing sectors for the quarter, with returns of 1.74% and 3.08%, respectively.

From a regional perspective, exposure to South Africa and Hong Kong aided the fund's performance with returns of 21.46% and 14.87%, respectively. Meanwhile, Mexico and Pakistan returned -8.02% and -5.23%, respectively, thus diminishing the Fund's returns.

For the fourth quarter the Emerging Markets Equity Index Fund posted a return of 7.02%, slightly behind the MSCI Emerging Markets Index's return of 7.44%. Emerging markets continued to rally off of a strong first three quarters of 2017 on the heels of an upswing in global growth and continued to be supporting developments in the U.S. The dollar continued to demonstrate weakness as it has all of 2017, and combined with increasing oil prices provided a nice tailwind for emerging markets in general. China, the largest of the emerging market economies, posted strong returns, outpacing U.S. equities for the third quarter in a row as concerns about North Korea continued to be largely ignored as investors focused more on growth. Brazil and Russia after posting the highest returns for the third quarter could not keep pace with China during the last three months of the year.

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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