Three Reasons for QLV

Three reasons to consider a strategic allocation to quality low volatility in an effort to minimize volatility

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Why Now?

Persistent Volatility: Continued market uncertainty sets up well for low volatility; controlling sector risks and adding quality to anchor the portfolio to strong fundamentals is especially important.

More Effective De-Risking: Both stocks and bonds have elevated volatility leaving asset class shifts less effective in reducing portfolio volatility. A low volatility approach to equity fulfillment may be an effective choice to achieve lower portfolio volatility.

Importance of Risk Controls: Low volatility strategies may vary significantly with regards to risk controls. Left unchecked, low volatility portfolios can have concentrations to sector, region, and macro-economic risk. The index is constructed to limit exposure to such uncompensated risks.

SEEKING TO OVERCOME LOW VOL'S LIMITED UPSIDE CAPTURE

Down Market Capture Ration: 74%  |  Up Market Capture Ratio: 87%

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Average Performance in Down Months Average Performance in Up Months 
NT Quality Low Volatility Index-3.22%NT Quality Low Volatility Index2.79%
Russell 1000-4.36%Russell 10003.22%

Source: Refinitiv, Bloomberg. Graph shows monthly performance of NT Quality Low Volatility Index and Russell 1000 Index from 01/31/2014 - 09/30/2022. Down (up) markets are defined as any monthly period when the Russell 1000 Index experienced negative (positive) performance. Arithmetic average is used. Index performance returns do not reflect any management fees, transaction costs or expenses. Past performance is not indicative or a guarantee of future results. Index performance returns do not reflect any management fees, transaction costs or expenses. It is not possible to invest directly in any index.

DEFINITIONS

Downside capture measures how much performance loss a fund captures relative to a benchmark index in down markets.

Upside capture measures how much performance gain a fund captures relative to a benchmark index in up markets.

Alpha is the excess return of an investment relative to the return of a benchmark index.

Northern Trust Quality Low Volatility Index tracks a portfolio of is designed to reflect the performance of a selection of companies that, in aggregate, possess lower overall absolute volatility characteristics relative to the Northern Trust 1250 Index.

Russell 1000 Index is an index of approximately 1,000 of the largest companies in the U.S. equity market.

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Before investing, carefully consider the FlexShares investment objectives, risks, charges and expenses. This and other information is in the prospectus and a summary prospectus, copies of which may be obtained on this website. Read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.

An investment in FlexShares is subject to numerous risks, including possible loss of principal. Fund returns may not match the return of the respective indexes. The Funds are subject to the following principal risks: asset class; authorized participant, calculation methodology; commodity; concentration; counterparty; currency; derivatives; dividend; emerging markets; Environmental, Social, Governance (ESG); equity securities; financial sector, fluctuation of yield; foreign securities; geographic; high portfolio turnover; income; industry concentration; inflation; infrastructure-related companies; interest rate; issuer; liquidity; large cap; management; market; market trading; mid cap stock; MLP; momentum; natural resources; new funds; non-diversification; passive investment; privatization; securities lending; small cap stock; tracking error; value investing; and volatility risk. A full description of risks is in the prospectus.

Individual investors should contact their financial advisor or broker dealer representative for more information on FlexShares ETFs. FlexShares ETFs are managed by Northern Trust.

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All registered investment companies, including FlexShares, are obliged to distribute portfolio gains to shareholders at year-end regardless of performance. Trading FlexShares Funds will also generate tax consequences and transaction expenses. The information provided is not intended to be tax advice. Tax consequences of dividend distributions may vary by individual taxpayer.

The FlexShares Funds, registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 ("Funds") are distributed by Foreside Fund Services, LLC, not affiliated with Northern Trust.

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