Fund Description: FlexShares Morningstar Developed Markets ex-US Factor Tilt 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 Morningstar Developed Markets ex-US Factor Tilt Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Developed Markets ex-US Factor Tilt Index. INDEX DESCRIPTION: The Morningstar Developed Markets ex-US Factor Tilt Index reflects the performance of a selection of equity securities designed to provide broad exposure to the global developed equities markets, excluding the U.S., with increased exposure (or a tilt) to small-capitalization stocks and value stocks. Small-capitalization and value stocks in the Index are weighted slightly more than such stocks would be in an index that is solely market-capitalization weighted, all as determined by Morningstar, Inc. (the Index Provider) pursuant to its index methodology. In addition to tracking the performance of the Index, the Investment Adviser seeks to minimize portfolio turnover and tax inefficiencies. As of September 21, 2012, the Index comprised 3,064 stocks and the Index’s three largest constituents (by weighting) were Nestle SA, HSBC Holdings PLC and Novartis AG, and its three largest industries were Financials, Industrials and Consumer Discretionary. The top five countries (by weighting) represented in the Index were Japan, the United Kingdom, Canada, Australia and France and in the aggregate represented 65.31% of the Index. The Index is governed by published, objective rules for security selection, exclusion, rebalancing and adjustments for corporate actions and is reconstituted on a semi-annual basis and is rebalanced quarterly. The Index Provider’s index methodology and other factors will cause the composition of the Index to change over time. 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. Representative sampling is a strategy used to manage the Fund by investing in a representative sample of securities that collectively has an investment profile close 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. Funds that employ a representative sampling strategy may incur tracking error risk to a greater extent than a fund that seeks to replicate an index. The Fund generally will invest under normal circumstances at least 80% of its total assets in the securities of the and in American Depositary Receipts and Global Depositary Receipts based on the securities in the Index. 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, forward currency contracts, options and total return swaps, as well as securities not included in the Index. The Fund is non-diversified and may invest more of its assets in fewer issuers than diversified funds. FUND MANAGEMENT: Northern Trust Investments, Inc. (NTI), an indirect subsidiary of Northern Trust Corporation, serves as the Investment Adviser of the Fund.