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Bond Index

as of 9/30/17

Fund Commentary

The quarter began with risk assets rallying, but political turmoil and concerns about North Korea caused the markets to stumble in August. The markets resumed the “risk on” trade toward the end of August as worries regarding geopolitical risk seemed to fade, and markets continued to rally in September. The equity markets closed out the quarter near historic highs and corporate spreads ended at their tightest levels this year. At its September meeting, the Federal Reserve left its benchmark lending rate unchanged, but announced that it would begin to shrink its balance sheet by permitting a gradually increasing portion of its bond holdings to mature without being replaced.

For the quarter, yields rose slightly along the U.S. Treasury curve, with the two-year yield going from 1.38% to 1.47%, the 10-year from 2.31% to 2.33%, the 20-year from 2.61% to 2.63% and the 30-year from 2.84% to 2.86%. On a duration-adjusted basis, the Bloomberg Barclays U.S. Aggregate Bond Index return of 0.85% outperformed U.S. Treasury securities for the third quarter. Investment-grade corporate credit represented the best-performing sector for the period, followed by commercial mortgage-backed securities.

The Fund’s return of 0.85% matched the return of the benchmark for the third quarter. We will continue to invest in a sample of securities that are representative of the Index in an effort to provide returns that closely approximate those of the Index.

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.