FlexShares STOXX US ESG Select Index Fund (ESG) Exchange: BATS

The Underlying Index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to environmental, social and governance (“ESG”) characteristics relative to the STOXX® USA 900 Index, a float-adjusted market-capitalization weighted index of U.S.- incorporated companies. The Underlying Index seeks to display enhanced ESG and risk-return characteristics relative to the broad large-cap equity market by featuring ESG-related key-performance indicators (“KPIs”) as determined by STOXX Ltd. (the “Index Provider”). To derive the Underlying Index, the Index Provider eliminates all non-U.S. incorporated companies from the STOXX® Global 1800 Index (the “Parent Index”), a float-adjusted market-capitalization weighted index of companies domiciled in the U.S. and in international developed markets (the “Parent Index”). From the Parent Index, the Index Provider also eliminates companies that (i) do not adhere to the United Nations Global Compact principles, (ii) are involved in controversial weapons or (iii) engage in coal mining. The Index Provider then scores all remaining companies based on a select group of KPIs and ranks each company according to their respective aggregate ESG score. The lowest-scoring half of these companies within each industry is then dropped from the Underlying Index. The weights of the remaining constituents are then adjusted so that higher scoring ESG companies are assigned greater weights compared to the Parent Index. The maximum weight that can be assigned to a single company is limited to 5% at the time of each index rebalancing or reconstitution. As of December 31, 2019, the Underlying Index consisted of 270 U.S. companies with market capitalizations ranging from $6.7 billion to $1.3 trillion. The Underlying Index is governed by published, objective rules for security selection, exclusion, rebalancing and adjustments for corporate actions and is reconstituted on a quarterly basis. The composition of the Underlying Index will change over time. NTI uses a “passive” or indexing approach 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. NTI uses a representative sampling strategy to manage the Fund. “Representative sampling” is investing in a representative sample of securities that collectively has an investment profile similar to the Underlying Index. The Fund may or may not hold all of the securities that are included in the Underlying Index. The Fund reserves the right to invest in substantially all of the securities in its Underlying Index in approximately the same proportions (i.e., replication) if NTI determines that it is in the best interest of the Fund. Under normal circumstances, the Fund will invest at least 80% of its total assets (exclusive of collateral held from securities lending) in the securities of the Underlying Index. The Fund may also invest up to 20% of its assets in cash and cash equivalents, including shares of money market funds advised by NTI or its affiliates, futures contracts and options on futures contracts, as well as securities not included in the Underlying Index, but which NTI believes will help the Fund track its Underlying Index. The Underlying Index is sponsored by the Index Provider, an organization that is independent of the Fund and NTI. The Index Provider determines the composition and relative weightings of the securities in the Underlying Index and publishes information regarding the market value of the Underlying Index. The Fund may lend securities representing up to one-third of the value of the Fund’s total assets (including the value of the collateral received). Industry Concentration Policy. The Fund will concentrate its investments (i.e., hold 25% or more of its total assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.