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Large Cap Core

as of 12/31/17

Fund Commentary

For the ninth consecutive quarter, the U.S. large cap market as measured by the S&P 500® Index recorded positive performance, ending last quarter at record levels. The strong market performance has been the result of a strong economy, low inflation and unemployment levels at a 17-year low. Congress and the Trump administration passed and signed into law the largest corporate and personal tax bill in three decades. Investors have looked beyond the geopolitical risks and focused their attention on record level corporate earnings and the pro-growth policies of the U.S. administration.

The Large Cap Core Fund posted a total return of 7.44% for the quarter, compared with 6.64% for the Fund's benchmark, the S&P 500® Index. During the fourth quarter there was a transition in leadership from growth stocks to value stocks creating a favorable environment for the Fund's performance. The Funds emphasis on inexpensive, high-quality securities led to the strong performance during the quarter. Specifically, inexpensive securities within the Industrials sector outperformed, and high quality securities in the industrials and consumer discretionary sectors outperformed leading to strong Fund performance. Weakest performance was in the financials sector where low quality companies outperformed. The momentum factor was mixed during the quarter and did not have a significant impact on performance.

We expect the outlook for high-quality, inexpensive securities to remain positive in the U.S., given current valuation levels. 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.

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