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Small Cap Index

as of 9/30/17

Fund Commentary

During the third quarter, the Russell 2000® Index returned 5.67%. Small-cap stocks outperformed large caps as represented by the Russell 1000® Index, which returned 4.50%. The Fund returned 5.64% for the period.

The top-performing sectors during the quarter were industrials and health care, returning 8.59% and 7.83%, respectively. Telecommunications services and real estate were the bottom-performing sectors with returns of 0.45% and 1.74%, respectively.

For the third quarter, U.S. stocks continued to rally, with the S&P 500® Index posting all-time highs, and volatility at all-time lows. Market participants shrugged off geopolitical turmoil and a series of devastating hurricanes in the United States, focusing instead on continued global growth. The third quarter also saw the Federal Reserve announce that it would soon begin to unwind its balance sheet, while continuing to gradually increase short-term rates. These announcements, coupled with talk of U.S. tax changes, led to an increase in inflation expectations and interest rates, which on balance benefited stocks.

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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