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International Equity

as of 9/30/17

Fund Commentary

Developed ex-U.S. markets continued the strong performance during the third quarter, led by Europe and Japan. Strong economic growth has been supported by low global interest rates, modest inflation and stable labor markets. Manufacturing and industrial production in Japan and the eurozone continue to indicate economic improvements and future growth. The geopolitical events, including the aggressive and unpredictability of North Korea has not deterred investors nor significantly changed the risk profile of the equity markets. Oil rose above $50 to end the quarter; however, investors remained focused on the global growth story.

The International Equity Fund posted a total return of 5.30% for the quarter, compared with 5.40% for the Fund’s benchmark, the MSCI EAFE® Index. Across the developed markets value-oriented securities took leadership away from growth late in the third quarter. The Fund’s overweight to inexpensive securities added to performance as did our overweight to positive momentum securities. On the other hand, investors risk-off posture led to high-quality securities underperforming and detracting slightly from the Fund’s performance. Financials and healthcare sectors were the strongest performing sectors while consumer staples and utilities underperformed the benchmark. Regionally, Europe was the strongest region, with Pacific trailing the benchmark.

By focusing on inexpensive, high-quality securities and prudent risk management, we believe the Fund can deliver attractive long-term performance. We also believe the Fund is positioned to benefit from investors looking beyond the broad economic data and refocusing on company fundamentals.

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.

©2017 Northern Funds | Northern Funds are distributed by Northern Funds Distributors, LLC, not affiliated with Northern Trust.