Fund Description: FlexShares Disciplined Duration MBS Index Fund is an exchange-traded index fund or Index ETF which is a separate investment portfolio of the FlexShares Trust, an open-end investment management company. INVESTMENT OBJECTIVE: The FlexShares Disciplined Duration MBS Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the BofA Merrill Lynch Constrained Duration US Mortgage Backed Securities Index. INDEX DESCRIPTION: The BofA Merrill Lynch Constrained Duration US Mortgage Backed Securities Index reflects the performance of a selection of investment-grade US agency residential mortgage-backed pass-through securities. MBS is a category of pass-through securities backed by pools of mortgages and issued by one of the following US government agencies: the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Government National Mortgage Association (Ginnie Mae). The Index constituents are capitalization-weighted, based on their outstanding face value times price plus accrued interest, adjusted to achieve an effective duration for the Index that is generally between 3.25 and 4.25 years. The Index is rebalanced on the last calendar day of each month. FUND STRATEGY: A passive or indexing approach is used to try to achieve the Fund’s investment objective. Unlike many investment companies, the Fund does not try to beat the index it tracks and does not seek temporary defensive positions when markets decline or appear overvalued. A Representative sampling is used by investing in a representative sample of securities that collectively has an investment profile similar to the Index. Securities selected are expected to have, in the aggregate, investment characteristics (based on factors such as market capitalization and industry weightings), fundamental characteristics (such as return variability and yield) and liquidity measures similar to those of the Index. The Fund may or may not hold all of the securities that are included in the Index. Replication is an indexing strategy in which a fund invests in substantially all of the securities in its index in approximately the same proportions as in the index. The Fund generally will invest under normal circumstances at least 80% of its total assets in the securities of the Index and in TBA Transactions. Most transactions in mortgage pass-through securities occur through standardized contracts for future delivery in which the exact mortgage pools to be delivered are not specified until a few days prior to settlement, referred to as a to-be announced transaction or TBA Transaction. In a TBA Transaction, the buyer and seller agree upon general trade parameters such as agency, coupon rate, settlement date, par amount and price. The actual pools delivered generally are determined two days prior to the settlement date. The Fund expects to enter into such contracts on a regular basis, and pending settlement of such contracts, the Fund will invest its assets in liquid, short-term instruments, which may include shares of money market funds. The Fund may also invest up to 20% of its assets in cash and cash equivalents, including shares of money market funds, futures contracts, options on futures contracts, options and interest rate and total rate of return swaps, as well as securities not included in the Index, but which the adviser believes will help the Fund track its Index. FUND MANAGEMENT: Northern Trust Investments, Inc., an indirect subsidiary of Northern Trust Corporation, serves as the Investment Adviser of the Fund.