Table of Contents

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FlexShares® Trust

 

Annual Report

October 31, 2023

 

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Table of Contents

 

 

 
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Table of Contents

 

Letter to Shareholders

     2  

Management’s Discussion of Fund Performance

     3  

FlexShares® US Quality Low Volatility Index Fund

     3  

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund

     5  

FlexShares® Emerging Markets Quality Low Volatility Index Fund

     7  

FlexShares® Morningstar US Market Factor Tilt Index Fund

     9  

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund

     11  

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund

     13  

FlexShares® US Quality Large Cap Index Fund

     15  

FlexShares® STOXX® US ESG Select Index Fund

     17  

FlexShares® STOXX® Global ESG Select Index Fund

     19  

FlexShares® ESG  & Climate US Large Cap Core Index Fund

     21  

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund

     23  

FlexShares® ESG  & Climate Emerging Markets Core Index Fund

     25  

FlexShares®  Morningstar Global Upstream Natural Resources Index Fund

     27  

FlexShares® STOXX® Global Broad Infrastructure Index Fund

     29  

FlexShares® Global Quality Real Estate Index Fund

     31  

FlexShares® Real Assets Allocation Index Fund

     33  

FlexShares® Quality Dividend Index Fund

     35  

FlexShares® Quality Dividend Defensive Index Fund

     37  

FlexShares® International Quality Dividend Index Fund

     39  

FlexShares® International Quality Dividend Defensive Index Fund

     41  

FlexShares® International Quality Dividend Dynamic Index Fund

     43  

FlexShares® iBoxx 3-Year Target Duration TIPS Index Fund

     45  

FlexShares® iBoxx 5-Year Target Duration TIPS Index Fund

     47  

FlexShares® Disciplined Duration MBS Index Fund

     49  

FlexShares® Credit-Scored US Corporate Bond Index Fund

     51  

FlexShares® Credit-Scored US Long Corporate Bond Index Fund

     53  

FlexShares® High Yield Value-Scored Bond Index Fund .

     55  

FlexShares® ESG  & Climate Investment Grade Corporate Core Index Fund.

     58  

FlexShares® Ultra-Short Income Fund (formerly FlexShares® Ready Access Variable Income Fund)

     60  

FlexShares® Core Select Bond Fund

     62  

Statements of Assets and Liabilities

     65  

Statements of Operations

     73  

Statements of Changes in Net Assets

     81  

Financial Highlights

     96  

Schedules of Investments

     127  

FlexShares® US Quality Low Volatility Index Fund

     127  

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund

     131  

FlexShares® Emerging Markets Quality Low Volatility Index Fund

     137  

FlexShares® Morningstar US Market Factor Tilt Index Fund

     142  

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund

     178  

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund

     221  

FlexShares® US Quality Large Cap Index Fund

     275  

FlexShares® STOXX® US ESG Select Index Fund .

     280  

FlexShares® STOXX® Global ESG Select Index Fund .

     287  

FlexShares® ESG  & Climate US Large Cap Core Index Fund

     302  

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund

     307  

FlexShares® ESG  & Climate Emerging Markets Core Index Fund

     315  

FlexShares®  Morningstar Global Upstream Natural Resources Index Fund

     322  

FlexShares® STOXX® Global Broad Infrastructure Index Fund

     329  

FlexShares® Global Quality Real Estate Index Fund

     336  

FlexShares® Real Assets Allocation Index Fund

     341  

FlexShares® Quality Dividend Index Fund

     342  

FlexShares® Quality Dividend Defensive Index Fund

     349  

FlexShares® International Quality Dividend Index Fund

     354  

FlexShares® International Quality Dividend Defensive Index Fund

     362  

FlexShares® International Quality Dividend Dynamic Index Fund

     369  

FlexShares® iBoxx 3-Year Target Duration TIPS Index Fund

     376  

FlexShares® iBoxx 5-Year Target Duration TIPS Index Fund

     377  

FlexShares® Disciplined Duration MBS Index Fund

     378  

FlexShares® Credit-Scored US Corporate Bond Index Fund

     383  

FlexShares® Credit-Scored US Long Corporate Bond Index Fund

     408  

FlexShares® High Yield Value-Scored Bond Index Fund .

     422  

FlexShares® ESG  & Climate Investment Grade Corporate Core Index Fund

     443  

FlexShares® Ultra-Short Income Fund (formerly FlexShares® Ready Access Variable Income Fund)

     456  

FlexShares® Core Select Bond Fund

     469  

Notes to the Financial Statements

     471  

Report of Independent Registered Public Accounting Firm

     522  

Tax Information

     524  

Fund Expenses

     526  

Trustees and Officers

     530  

Approval of Advisory Agreement

     534  

Supplemental Information

     545  

For More Information

     546  

 

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Table of Contents

 

 

Letter to Shareholders

 

 

Dear Shareholder,

 

The past year reminded investors of the cyclicality – and resilience – of the capital markets. Despite the ongoing challenges of inflation, rising interest rates, and geopolitical uncertainty, we see reason for optimism as we move forward.

 

Having emerged from the pandemic with greater momentum than its peers, we believe the U.S. economy can keep growing at a modest pace through the year ahead. We believe the Federal Reserve’s rate hiking cycle appears to be near, if not at, its peak.

 

Looking abroad, although growth in the Eurozone area has been tepid, unemployment is holding at record lows. Inflation is falling across categories and countries, which may allow workers to achieve real wage gains. Meanwhile, as China’s economy slows after four decades of remarkable growth, other emerging markets are benefiting from improving labor market conditions, fiscal support and excess private savings accumulated through the pandemic.

 

There are, of course, variables that could potentially mitigate these positive trends – not the least of which being geopolitical tensions and the ongoing movement toward global

decoupling. Given the increase in global macro instability, there is higher potential for market volatility. The short-and long-term ramifications should not be underestimated.

 

We are pleased to provide this update for the FlexShares exchange-traded funds, sponsored and managed by Northern Trust Asset Management (“NTAM”), for the year ended October 31, 2023. In addition to financial results for each fund, NTAM explains the factors that have influenced its investment decisions and fund performance. As always, we encourage you to make the Insights Section on our website a destination for up to date analysis and perspective.

 

On behalf of all of us at Northern Trust, I want to thank you for your ongoing confidence and support. We are proud to share our insight and acumen to help you navigate this multifaceted environment.

 

Best wishes to you and yours for a joyful, safe, and prosperous new year.

 

Sincerely,

 

Darek Wojnar, CFA

Senior Advisor, Registered Funds, Northern Trust

Asset Management

 

2    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Quality Low Volatility Index Fund Ticker:  QLV

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     Fund
Inception
7/15/2019
 
 

 

 

 

FlexShares US Quality Low Volatility Index Fund
(Based on Net Asset Value)

    4.56     9.46     7.48

FlexShares US Quality Low Volatility Index Fund
(Based on Market Price)

    4.46     9.40     7.47

Russell 1000® Index

    9.48     9.52     9.40

Northern Trust Quality Low Volatility IndexSM

    4.77     9.72     7.76

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.23% and the net expense ratio is 0.22%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Quality Low Volatility IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, possess lower overall absolute volatility characteristics relative to the Northern Trust 1250 Index (the “Parent Index”), a float-adjusted market capitalization weighted index of U.S. domiciled large- and mid-capitalization companies. In addition, the Underlying Index is designed to select companies from the Parent Index that exhibit financial strength, stability and enhanced risk-return characteristics, which Northern Trust Investments, Inc. (“NTI”) believes can provide equity-market participation while seeking to protect against downside risks during certain market environments. As of October 31, 2023, there were 117 issues in the Underlying Index. NTI uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on domestic equity securities generally traded higher. Through Q4 of 2022, U.S. equity markets moved modestly lower as inflation remained elevated and the U.S. Federal Reserve (the “Fed”) continued to tighten monetary conditions through rate hikes. U.S. equities rose over the first half of 2023 as investors looked past the collapse of Silicon Valley Bank and the potential of a banking crisis, as inflation declined while Gross Domestic Product (GDP)1 growth was more resilient than expected. The Fed continued to hike interest rates through the first three meetings of the year, but lowered the magnitude of those hikes to one-quarter percent each before pausing at the June 2023

 

1 

GDP is seen as a comprehensive measure of U.S. economic activity which measures the value of the final goods and services produced in the United States.

 

   FLEXSHARES ANNUAL REPORT     3  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Quality Low Volatility Index Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

meeting. Over the first six months of 2023, technology companies led all sectors as artificial intelligence related companies drew interest, with seven large cap growth companies contributing a large portion of equity market gains. Domestic equity securities declined in Q3 of 2023 as inflation increased in July and August of 2023, and the Fed reiterated their outlook of “higher rates for longer” than we believe markets had priced in at the beginning of Q3 of 2023. U.S. equity markets continued to decline in October of 2023 as inflation remained resilient, and there were increased concerns of slowing global growth due to weakness in China’s economy.

 

Because U.S. domestic investments trended higher, and higher volatile securities outperformed less volatile securities during the 12 months ended October 31, 2023, we believe the low volatility2 approach was a negative driver of Fund performance for the 12-month period. In addition, we believe that the changes experienced in the macroeconomic environment as well as the increase in interest rates were conducive to high quality factor3 companies, resulting in the high-quality factor exposure augmenting Fund performance over the 12-month period. Overall, the positive performance derived from the quality factor exposure was not enough to offset the negative performance of the low volatility approach, which was the primary source of the Underlying Index’s underperformance against the Russell 1000® Index4 by -4.71%. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -21 basis points (“bps”)5, which is reflective of the management fee (-22 bps) and securities lending (+1 bp).

 

2 

Volatility is the measurement of the price movements of a group of stocks over a defined time frame.

 

3 

The quality factor is a factor that seeks to identify companies that exhibit financial strength and stability relative to the Parent Index.

 

4 

The Russell 1000® Index refers to a stock market index that represents the 1000 top companies in the United States.

 

5 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

4    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® Developed   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Markets ex-US Quality Low Volatility Index Fund    Ticker:  QLVD

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     Fund
Inception
7/15/2019
 
 

 

 

 

FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (Based on Net Asset Value)

    10.16     3.15     1.31

FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (Based on Market Price)

    10.41     3.20     1.45

MSCI World ex-US Index

    12.56     5.97     2.93

Northern Trust Developed Markets ex-US Quality Low Volatility IndexSM

    10.30     3.33     1.52

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.33% and the net expense ratio is 0.32%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Developed Markets ex-US Quality Low Volatility IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, possess lower overall absolute volatility characteristics relative to a broad universe of securities domiciled in developed market countries, excluding the U.S. (the “Parent Index”). The Parent Index is a subset of the Northern Trust Global Index, where eligible securities are limited to those securities domiciled in non-U.S. developed market countries and designated as large- and midcapitalization companies by Northern Trust Investments, Inc. (“NTI”), acting in its capacity as the index provider. In addition, the Underlying Index is designed to select companies from the Parent Index that exhibit financial strength, stability and enhanced risk-return characteristics, which NTI believes can provide equity-market participation while seeking to protect against downside risks during certain market environments. As of October 31, 2023, there were 166 issues in the Underlying Index. NTI uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on developed international equity securities generally traded higher. Over the course of the 12-month period, the U.S. dollar (USD) declined and positively impacted U.S. investors as returns in international currencies generally were aided by the falling USD. Through Q4 of 2022, developed international markets rose as falling inflation in Europe, a stabilized fiscal environment in the United Kingdom and the anticipated boost to global growth resulting from the re-opening of China’s economy all supported

 

   FLEXSHARES ANNUAL REPORT     5  


Table of Contents

 

FlexShares® Developed   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Markets ex-US Quality Low Volatility Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

equity security prices. Developed international equities continued higher in Q1 of 2023 as investors looked past concerns in the banking sector to falling energy prices, lower inflation in Europe, and strength in the technology and consumer discretionary sectors. Developed international equity securities continued higher in Q2 of 2023, but, in the aggregate, lagged U.S. equity markets as regional performance varied greatly between different markets. Japanese equity markets moved higher on the back of corporate governance reform while Eurozone equities benefited from technology and semiconductor companies connected to artificial intelligence. Equity markets in the United Kingdom traded lower in local currency terms, but were positive in USD terms as falling energy prices and monetary tightening by the Bank of England impacted equities. Asia Pacific equity markets excluding Japan were lower as concerns over growth in China due to weak consumer spending as well as increased geopolitical tensions between the U.S. and China impacted the region. Developed international equities declined in Q3 of 2023 as higher energy prices and concerns on consumer spending in China and Europe weighed on investors’ global growth outlook. Developed equities continued lower in October of 2023 as slowing global growth and increased geopolitical tensions weighed on markets.

 

Because developed international investments trended higher, and higher volatile securities outperformed less volatile securities during the 12 months ended October 31, 2023, we believe the low volatility1 approach was a negative driver of Fund performance for the 12-month period. In addition, we believe that the changes experienced in the macroeconomic environment as well as the increase in interest rates were conducive to high quality factor2 companies, resulting

in the high-quality factor exposure augmenting Fund performance over the 12 months. Overall, the positive performance derived from the quality factor exposure was not enough to offset the negative performance of the low volatility approach, which was the primary source of the Underlying Index’s underperformance against the MSCI World ex-US Index3 by -2.26%. The tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12month period was -14 basis points (“bps”)4, which is reflective of the Fund’s management fee (32 bps), stock selection/futures (+2 bps), securities lending (+2 bps), and dividend tax differential (+14 bps).

 

1 

Volatility is the measurement of the price movements of a group of stocks over a defined time frame.

 

2 

The quality factor is a factor that seeks to identify companies that exhibit financial strength and stability relative to the Parent Index.

3 

The MSCI All Country World Index Ex-U.S. is a market-capitalization-weighted index maintained by MSCI and is designed to provide a broad measure of stock performance throughout the world, with the exception of U.S.-based companies.

 

4 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

6    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® Emerging   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Markets Quality Low Volatility Index Fund Ticker:  QLVE

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     Fund
Inception
7/15/2019
 
 

 

 

 

FlexShares Emerging Markets Quality Low Volatility Index Fund (Based on Net Asset Value)

    8.52     -0.81     -0.85

FlexShares Emerging Markets Quality Low Volatility Index Fund (Based on Market Price)

    9.01     -1.20     -0.90

MSCI Emerging Markets Index

    10.80     -3.67     -0.94

Northern Trust Emerging Markets Quality Low Volatility IndexSM

    9.39     0.12     -0.06

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.41% and the net expense ratio is 0.40%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Emerging Markets Quality Low Volatility IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, possess lower overall absolute volatility characteristics relative to a broad universe of securities domiciled in emerging market countries (the “Parent Index”). The Parent Index is a subset of the Northern Trust Global Index, limited to those securities domiciled in emerging markets and designated as large- and mid- capitalization companies by Northern Trust Investments, Inc. (“NTI”), acting in its capacity as the index provider. In addition, the Underlying Index is designed to select companies from the Parent Index that exhibit financial strength, stability and enhanced risk-return characteristics, which NTI believes can provide equity-market participation while seeking to protect against downside risks during certain market environments. As of October 31, 2023, there were 163 issues in the Underlying Index. NTI uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on emerging market equities generally traded higher. Over the course of the 12-month period, the U.S. dollar (USD) declined and positively impacted U.S. investors as returns in international currencies generally were aided by the falling USD. Through Q4 of 2022, emerging equities traded higher as China relaxed some pandemic-related restrictions, boosting investors’ expectations that increased spending could aid global growth, and that a global recession may be less severe than previously expected. Emerging market equity securities continued to rise in Q1 of 2023 but lagged

 

   FLEXSHARES ANNUAL REPORT     7  


Table of Contents

 

FlexShares® Emerging   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Markets Quality Low Volatility Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

behind developed markets as continued monetary tightening across global central banks and increased U.S. and China geopolitical tensions weighed on the region. Emerging market equities continued higher in Q2 of 2023, but again trailed developed equity securities as optimism around China’s reopening was dampened by worse than expected consumer spending. Tensions between the U.S. and China increased as new restrictions around chip manufacturing in both the U.S. and Europe limited Chinese access to these technologies. Emerging equities declined in Q3 of 2023 as weakness in China’s property sector and overall economy negatively impacted global growth. We believe continued economic strength in the U.S. could result in global interest rates remaining at higher levels for longer than anticipated, also impinging on the growth outlook for emerging markets. Emerging markets continued lower in October of 2023 as slowing global growth, weak energy prices and increased geopolitical tensions weighed on markets.

 

Because emerging investments trended higher, and higher volatile securities outperformed less volatile securities during the 12 months ended October 31, 2023, we believe the low volatility1 approach was a negative driver of Fund performance for the 12-month period. In addition, we believe that the changes experienced in the macroeconomic environment as well as the increase in interest rates were conducive to high quality factor2 companies, resulting in the highquality factor exposure augmenting Fund performance over the 12 months. Overall, the positive performance derived from the quality factor exposure was not enough to offset the negative performance of the low volatility factor, which was the primary source of the Underlying Index’s underperformance against the

MSCI Emerging Markets Index3 by -1.41%. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -87 basis points (“bps”)4, which is reflective of the Fund’s management fee (-40 bps), stock selection/futures (-26 bps), India Capital Gains Taxes (-20 bps), and the compounding effect of tracking error over time (-1 bps).

1 

Volatility is the measurement of the price movements of a group of stocks over a defined time frame.

 

2 

The quality factor is a factor that seeks to identify companies that exhibit financial strength and stability relative to the Parent Index.

3 

The MSCI Emerging Markets Index is a selection of stocks that are designed to track the financial performance of key companies in fast-growing nations.

 

4 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

8    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® Morningstar®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Market Factor Tilt Index Fund Ticker:  TILT

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
9/16/2011
 
 

 

 

 

FlexShares Morningstar US Market Factor Tilt Index Fund (Based on Net Asset Value)

    5.67     9.09     9.27     11.56

FlexShares Morningstar US Market Factor Tilt Index Fund (Based on Market Price)

    5.61     9.08     9.25     11.56

Morningstar® U.S. Market Factor Tilt IndexSM

    5.83     9.24     9.42     11.72

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.26% and the net expense ratio is 0.25%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar® US Market Factor Tilt Index (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, possess greater exposure to size and value factors relative to the Morningstar US Market Index (the “Parent Index”), a float-adjusted market-capitalization weighted index of U.S.-incorporated large-, mid-, small- and micro- capitalization companies. The Underlying Index seeks to achieve increased exposures to size and value factors, or a “factor tilt,” by adjusting the Parent Index’s constituent weights to achieve a slightly greater weight on companies with smaller market capitalizations or lower valuations, as determined by Morningstar, Inc. pursuant to its index methodology. The Underlying Index is designed to measure the performance of U.S. equity markets with increased exposure toward small-capitalization and value stocks. As of October 31, 2023, there were 2,373 issues in the Underlying Index. NTI uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on domestic equity securities generally traded higher. Through Q4 of 2022, U.S. equity markets moved modestly lower as inflation remained elevated and the U.S. Federal Reserve (the “Fed”) continued to tighten monetary conditions through rate hikes. U.S. equities rose over the first half of 2023, as investors looked past the collapse of Silicon Valley Bank and the potential of a banking crisis, as inflation declined while

 

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Table of Contents

 

FlexShares® Morningstar®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Market Factor Tilt Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

Gross Domestic Product (GDP)1 growth was more resilient than expected. The Fed continued to hike interest rates through the first three meetings of the year, but lowered the magnitude of those hikes to one-quarter percent each before pausing at the June meeting. Over the first six months of 2023 technology companies led all sectors, as artificial intelligence related companies drew interest with seven large cap growth companies contributing a large portion of equity market gains. Domestic equity securities declined in Q3 of 2023 as inflation increased in July and August of 2023, and the Fed reiterated their outlook of “higher rates for longer” than we believe markets had priced in at the beginning of Q3 of 2023. U.S. equity markets continued to decline in October of 2023 as inflation remained resilient and there were increased concerns of slowing global growth due to weakness in China’s economy.

 

Because of the resiliency of the economic data, the falling inflation environment and the rising rate environment, U.S. domestic investments trended higher during the 12 months ended October 31, 2023; however, a large portion of the overall return for market weighted indices was concentrated in seven mega cap growth companies. We believe the value factor2 was a negative driver of Fund performance during the fiscal year ended October 31, 2023, as U.S. value stocks underperformed U.S. growth stocks3. The size factor4 was also impacted by the outsized performance of those mega cap growth companies that contributed outsized performance over the 12 months, resulting in size being a negative driver of Fund performance. Overall, the negative performance derived from both the value and size factors of the Underlying Index were the primary drivers behind the Underlying Index’s

underperformance against the Russell 3000 Index®5 by -2.55%. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -16 basis points (“bps”)6, which is reflective of the management fee (-25 bps), stock selection/futures (+4 bps) and securities lending (+5 bps).

 

The Morningstar U.S. Market Factor Tilt Index is the intellectual property (including registered trademarks) of Morningstar and/or its licensors (“Licensors”), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by Morningstar and its Licensors and neither of the Licensors shall have any liability with respect thereto.

1 

GDP is seen as a comprehensive measure of U.S. economic activity which measures the value of the final goods and services produced in the United States.

 

2 

The Morningstar value factor seeks to identify stocks that are inexpensive relative to some measure of fundamental value (e.g., low price/book, low price/earnings, high dividend yields, etc.), which could result in outperformance relative to those that are pricier.

 

3 

Growth stocks are defined as those issued by companies that are anticipated to grow at a rate significantly above the average for the market.

4 

The Morningstar size factor measures a stock’s total capitalization, which can be found by multiplying the current share price by all the outstanding shares of the stock, and seeks to overweight smaller capitalization stocks.

 

5 

The Russell 3000 Index is a market-capitalization-weighted equity index that seeks to track 3000 of the largest U.S.-traded stocks.

 

6 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

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FlexShares® Morningstar®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Developed Markets ex-US Factor Tilt Index Fund Ticker:  TLTD

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
9/25/2012
 
 

 

 

 

FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund (Based on Net Asset Value)

    13.21     3.24     2.74     4.48

FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund (Based on Market Price)

    14.31     3.45     2.76     4.55

Morningstar® Developed Markets ex-US Factor Tilt IndexSM

    13.31     3.24     2.80     4.56

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.40% and the net expense ratio is 0.39%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar® Developed Markets ex-US Factor Tilt IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, possess greater exposure to size and value factors relative to the Morningstar Developed Markets ex-US Index (the “Parent Index”), a float adjusted market-capitalization weighted index of companies incorporated in Developed-market countries, excluding the U.S. The Underlying Index seeks to achieve increased exposures to size and value factors, or a “factor tilt”, by adjusting the Parent Index’s constituent weights to achieve a slightly greater weight on companies with smaller market capitalizations or lower valuations, as determined by Morningstar, Inc. pursuant to its index methodology. The Underlying Index is designed to include companies with enhanced risk-return characteristics relative to the broader developed international equity market by featuring size and value risk premiums, which Northern Trust Investments, Inc. (“NTI”) believes have been historically demonstrated over a full market cycle. As of October 31, 2023, there were 3,189 issues in the Underlying Index. NTI uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on Developed international equity securities generally traded higher. Over the course of the 12-month period the U.S. dollar (USD) declined and positively impacted U.S. investors as returns in international currencies generally were aided by the falling USD. Through Q4 of 2022, Developed international markets rose as falling inflation in Europe, a stabilized fiscal environment in the United Kingdom, and the anticipated boost to global growth resulting from the re-opening of China’s economy all supported equity security prices. Developed international equities continued higher in Q1 of

 

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FlexShares® Morningstar®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

2023 as investors looked past concerns in the banking sector to falling energy prices, lower inflation in Europe, and strength in the technology and consumer discretionary sectors. Developed international equity securities continued higher in Q2 of 2023, but, in the aggregate, lagged U.S. equity markets as regional performance varied greatly between different markets. Japanese equity markets moved higher on the back of corporate governance reform, while Eurozone equities benefited from technology and semiconductor companies connected to artificial intelligence. Equity markets in the United Kingdom traded lower in local currency terms, but were positive in USD terms as falling energy prices and monetary tightening by the Bank of England impacted equities. Asia Pacific equity markets excluding Japan were lower, as concerns over growth in China due to weak consumer spending as well as increased geopolitical tensions between the U.S. and China impacted the region. Developed international equities declined in Q3 of 2023, as higher energy prices and concerns on consumer spending in China and Europe weighed on investors’ global growth outlook. Developed equities continued lower in October as slowing global growth and increased geopolitical tensions weighed on markets.

 

Because of the improved inflation outlook over the 12-month period, developed international investments trended higher during the 12 months ended October 31, 2023. We believe that the rising rate environment was beneficial to international value stocks relative to international growth stocks over the 12-month period and the value factor1 was a positive driver of Fund performance during the fiscal year ended October 31, 2023, as international value stocks outperformed international growth stocks2. The size

factor3, however, was a negative driver of Fund performance over the 12 months, as developed market small cap stocks underperformed developed market large cap stocks. Overall, the positive performance derived from the value factor exposures of the Underlying Index offset the negative performance of its size factor, leading to the Underlying Index’s outperformance against the MSCI World ex-USA IMI Index4 by 1.74%. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -10 basis points (“bps”)5, which is reflective of the Fund’s management fee (-39 bps), securities lending (+9 bps) and dividend tax differential (+20 bps).

 

The Morningstar Developed Markets ex-US Factor Tilt Index is the intellectual property (including registered trademarks) of Morningstar and/or its licensors (“Licensors”), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by Morningstar and its Licensors and neither of the Licensors shall have any liability with respect thereto.

1 

The Morningstar value factor seeks to identify stocks that are inexpensive relative to some measure of fundamental value (e.g., low price/book, low price/earnings, high dividend yields, etc.), which could result in outperformance relative to those that are pricier.

 

2 

Growth stocks are defined as those issued by companies that are anticipated to grow at a rate significantly above the average for the market.

3 

The Morningstar size factor measures a stock’s total capitalization, which can be found by multiplying the current share price by all the outstanding shares of the stock, and seeks to overweight smaller capitalization stocks.

 

4 

The MSCI World ex-USA Investable Market Index captures large, mid and small cap representation across 22 of 23 Developed Markets (DM) countries - excluding the U.S.

 

5 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

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FlexShares® Morningstar®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Emerging Markets Factor Tilt Index Fund Ticker:  TLTE

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

   

1 Year

   

5 Year

   

10 Year

   

Fund
Inception

9/25/2012

 
 

 

 

 

FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (Based on Net Asset Value)

    13.63     2.51     1.42     1.80

FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (Based on Market Price)

    13.27     2.56     1.35     1.75

Morningstar® Emerging Markets Factor Tilt IndexSM

    14.59     3.36     2.15     2.57

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.60% and the net expense ratio is 0.59%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar® Emerging Markets Factor Tilt IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, possess greater exposure to size and value factors relative to the Morningstar Emerging Markets Index (the “Parent Index”), a float-adjusted market-capitalization weighted index of companies incorporated in emerging-market countries. The Underlying Index seeks to achieve increased exposures to size and value factors, or a “factor tilt,” by adjusting the Parent Index’s constituent weights to achieve a slightly greater weight on companies with smaller market capitalizations or lower valuations, as determined by Morningstar, Inc., pursuant to its index methodology. The Underlying Index is designed to include companies with enhanced risk-return characteristics relative to the broader emerging equity market by featuring size and value risk premiums, which Northern Trust Investments, Inc. (“NTI”) believes have been historically demonstrated over a full market cycle. As of October 31, 2023, there were 3,701 issues in the Underlying Index. NTI uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests in a representative sample of securities that collectively has an investment profile similar to 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.

 

During the 12 months ending October 31, 2023, prices on emerging market equities generally traded higher. Over the course of the 12-month period the U.S. dollar (USD) declined and positively impacted U.S. investors as returns in international currencies generally were aided by the falling USD.

 

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Table of Contents

 

FlexShares® Morningstar®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Emerging Markets Factor Tilt Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

Through Q4 of 2022, emerging equities traded higher as China relaxed some pandemic-related restrictions, boosting investors’ expectations that increased spending could aid global growth, and that a global recession may be less severe than previously expected. Emerging market equity securities continued to rise in Q1 of 2023, but lagged behind Developed markets as continued monetary tightening across global central banks and increased U.S.China geopolitical tensions weighed on the region. Emerging market equities continued higher in Q2 of 2023, but again trailed Developed equity securities as optimism around China’s reopening was dampened by worse than expected consumer spending. Tensions between the U.S. and China increased as new restrictions around chip manufacturing in both the U.S. and Europe limited Chinese access to these technologies. Emerging equities declined in Q3 of 2023 as weakness in China’s property sector and overall economy negatively impacted global growth. We believe that continued economic strength in the U.S. could result in global interest rates remaining at higher levels for longer than anticipated, also impinging on the growth outlook for emerging markets. Emerging markets continued lower in October of 2023 as slowing global growth, weak energy prices, and increased geopolitical tensions weighed on markets.

 

Investors showed a preference for value companies in emerging markets for the 12 months ending October 31, 2023, resulting in the high value factor1 exposure being a positive driver of Fund performance as emerging market value stocks outperformed emerging market growth stocks.2 In addition, the size factor3 was a positive driver of Fund performance over the 12 months, as emerging market small cap stocks outperformed emerging market large cap stocks. Overall, the positive performance derived from the value and size factor exposures of the Underlying Index was the primary source of the Underlying Index’s outperformance against the MSCI Emerging Markets Investable Market Index (IMI)4 by 2.91%. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was

-96 basis points (“bps”)5, which is reflective of the Fund’s management fee (-59 bps), stock selection/futures (-19 bps), securities lending (+6 bps) and dividend tax differential (+1 bps), and India Capital Gains Taxes (-25 bps).

 

The Morningstar Emerging Markets Factor Tilt Index is the intellectual property (including registered trademarks) of Morningstar and/or its licensors (“Licensors”), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by Morningstar and its Licensors and neither of the Licensors shall have any liability with respect thereto.

 

1 

The Morningstar value factor seeks to identify stocks that are inexpensive relative to some measure of fundamental value (e.g., low price/book, low price/earnings, high dividend yields, etc.), which could result in outperformance relative to those that are pricier.

 

2 

Growth stocks are defined as those issued by companies that are anticipated to grow at a rate significantly above the average for the market.

 

3 

The Morningstar size factor measures a stock’s total capitalization, which can be found by multiplying the current share price by all the outstanding shares of the stock, and seeks to overweight smaller capitalization stocks.

 

4 

The MSCI Emerging Markets Investable Market Index (IMI) captures large, mid and small cap representation across 24 Emerging Markets (EM) countries.

 

5 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

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FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Quality Large Cap Index Fund Ticker:  QLC

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     5 Year     Fund
Inception
9/23/2015
 
 

 

 

 

FlexShares US Quality Large Cap Index Fund Index Fund (Based on Net Asset Value)

    9.54     10.93     8.56     9.71

FlexShares US Quality Large Cap Index Fund Index Fund (Based on Market Price)

    9.47     10.92     8.54     9.71

S&P 500 Index

    10.14     10.36     11.01     12.04

Northern Trust Quality Large Cap IndexSM

    9.89     11.31     8.84     10.04

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.26% and the net expense ratio is 0.25%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Quality Large Cap IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, possess greater exposure to quality, value and momentum factors relative to a universe of publicly traded U.S. large-capitalization equity securities. The universe is comprised of the 600 largest companies in the Northern Trust 1250 Index, a floatadjusted market-capitalization weighted index of U.S. domiciled companies. The Underlying Index is designed to include companies with enhanced risk-return characteristics relative to the broader U.S. large-cap equity market by featuring quality, value and momentum risk premiums, which Northern Trust Investments, Inc. (“NTI”) believes have been historically demonstrated over a full market cycle. As of October 31, 2023, there were 183 issues in the Underlying Index. NTI uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on domestic equity securities generally traded higher. Through Q4 of 2022, U.S. equity markets moved modestly lower as inflation remained elevated and the U.S. Federal Reserve (the “Fed”) continued to tighten monetary conditions through rate hikes. U.S. equities rose over the first half of 2023, as investors looked past the collapse of Silicon Valley Bank and the potential of a banking crisis, as inflation declined while Gross Domestic Product (GDP)1 growth was more resilient than expected. The Fed continued to hike interest rates through May 2023, but lowered the magnitude of those hikes to one-quarter percent each before pausing at the June 2023 meeting. Over the first six months of 2023, technology

 

   FLEXSHARES ANNUAL REPORT     15  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Quality Large Cap Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

companies led all sectors as artificial intelligence related companies drew interest, with seven large cap growth companies contributing a large portion of equity market gains. Domestic equity securities declined in Q3 of 2023 as inflation increased in July and August of 2023, and the Fed reiterated their outlook of “higher rates for longer” than we believe markets had priced in at the beginning of Q3 of 2023. U.S. equity markets continued to decline in October of 2023 as inflation remained resilient and there were increased concerns of slowing global growth due to weakness in China’s economy.

 

Because of the resiliency of the economic data, the falling inflation environment and the rising rate environment, U.S. domestic investments trended higher during the 12 months ended October 31, 2023; however, a large portion of the overall return for market weighted indices was concentrated in seven mega cap2 growth companies. Because of the outsized performance of these large cap growth names, we believe the value factor3 was a negative driver of Fund performance during the fiscal year ended October 31, 2023, as U.S. value stocks underperformed U.S. growth stocks4. We believe that investors showed a preference for high quality factor5 companies within the large cap universe utilized by the Underlying Index, resulting in the high-quality factor exposure enhancing Fund performance over the 12 months. The momentum factor exposure6 of the Underlying Index was also a positive driver of Fund performance as positive momentum companies outperformed negative momentum companies over the 12 months. Overall, the positive performance from the quality and momentum exposures of the Underlying Index was not enough to offset the negative performance of the value factor of the Underlying Index,

and this was the primary source of the Underlying Index’s underperformance relative to the S&P 500 Index7 by -25 basis points (“bps”)8. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -35 bps which is reflective of the management fee (-25 bps), stock selection/futures (-10 bps), securities lending (+1 bps) and performance calculation differences between the Underlying Index and the Fund (-1 bps).

1 

GDP is seen as a comprehensive measure of U.S. economic activity which measures the value of the final goods and services produced in the United States.

 

2 

Size is measured by a stock’s total capitalization which can be found by multiplying the current share price by all the outstanding shares of stock.

 

3 

The value factor is a factor reflecting the current worth of a company relative to its own historical value, book value, or valuation versus peers.

 

4 

Growth stocks are defined as those issued by companies that are anticipated to grow at a rate significantly above the average for the market.

 

 

5 

The quality factor is a factor that seeks to identify companies that exhibit financial strength and stability relative to the market.

 

6 

The momentum factor is a factor that reflects market sentiment and changes in security price over a given time period.

 

7 

The Standard & Poor’s 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S.

 

8 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

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FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

STOXX US ESG Select Index Fund Ticker:  ESG

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     5 Year     Fund
Inception
7/13/2016
 
 

 

 

 

FlexShares STOXX® US ESG Select Index Fund
(Based on Net Asset Value)

    11.91     10.43     11.37     12.01

FlexShares STOXX® US ESG Select Index Fund
(Based on Market Price)

    11.87     10.41     11.38     12.01

Russell 1000® Index

    9.48     9.52     10.71     11.31

STOXX® USA ESG Select KPIs IndexSM

    11.83     10.33     11.15     11.57

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.33% and the net expense ratio is 0.32%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® USA ESG Select KPIs IndexSM (“Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, score better with respect to a set of environmental, social and governance (“ESG”) key performance indicators relative to the U.S. companies in the STOXX® Global 1800 Index, a float adjusted market-capitalization weighted index of companies incorporated in the U.S. and in developed international markets. As of October 31, 2023, there were 263 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on domestic equity securities generally traded higher. Through Q4 of 2022, U.S. equity markets moved modestly lower as inflation remained elevated, and the U.S. Federal Reserve (the “Fed”) continued to tighten monetary conditions through rate hikes. U.S. equities rose over the first half of 2023, as investors looked past the collapse of Silicon Valley Bank and the potential of a banking crisis, as inflation declined while Gross Domestic Product (GDP)1 growth was more resilient than expected. The Fed continued to hike interest rates through the first three meetings of the year, but lowered the magnitude of those hikes to one-quarter percent each before pausing at the June meeting. Over the first six months of 2023, technology companies led all sectors as artificial intelligence related companies drew interest, with seven large cap growth companies contributing a large portion of equity market gains. Domestic equity securities declined in

 

1 

GDP is seen as a comprehensive measure of U.S. economic activity which measures the value of the final goods and services produced in the United States.

 

   FLEXSHARES ANNUAL REPORT     17  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

STOXX US ESG Select Index Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

Q3 of 2023 as inflation increased in July and August of 2023, and the Fed reiterated their outlook of “higher rates for longer” than we believe markets had priced in at the beginning of Q3 of 2023. U.S. equity markets continued to decline in October of 2023 as inflation remained resilient and there were increased concerns of slowing global growth due to weakness in China’s economy.

 

The Underlying Index had a positive total return during the 12 months ended October 31, 2023, and outperformed domestic equity markets, as defined by the Russell 1000® Index2 by 2.35%. The Underlying Index’s ESG-tilted approach led to underweight Fund exposure to the utilities, real estate and industrials sectors, which benefited Fund performance. Likewise, the ESG tilt led to differences in security weights within the communication services, financials and health care sectors that were also positive drivers of Fund performance. Overall, the only sector within the Underlying Index that contributed negatively to relative performance was the energy sector.

 

Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was +8 basis points (“bps”)3, which is reflective of the management fee (-32 bps), stock selection/futures (-7 bps) and dividend tax differential (+47 bps). The STOXX USA ESG Select KPIs Index is the intellectual property (including registered trademarks) of STOXX Limited, Zurich, Switzerland and/or its licensors (“Licensors”), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by STOXX and its Licensors and neither of the Licensors shall have any liability with respect thereto.

 

 

2 

The Russell 1000® Index refers to a stock market index that represents the 1000 top companies in the United States.

 

3 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

18    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

STOXX® Global ESG Select Index Fund Ticker:  ESGG

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     5 Year     Fund
Inception
7/13/2016
 
 

 

 

 

FlexShares STOXX® Global ESG Select Index Fund
(Based on Net Asset Value)

    14.17     9.38     9.50     10.00

FlexShares STOXX® Global ESG Select Index Fund
(Based on Market Price)

    14.52     9.33     9.46     10.04

MSCI World Index

    10.48     8.14     8.27     8.82

STOXX® Global ESG Select KPIs IndexSM

    14.30     9.47     9.56     10.03

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.43% and the net expense ratio is 0.42%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® Global ESG Select KPIs IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, score better with respect to a set of environmental, social and governance (“ESG”) key performance indicators relative to the STOXX® Global 1800 Index, a float-adjusted market-capitalization weighted index of companies incorporated in the U.S. and in developed international markets. As of October 31, 2023, there were 865 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on global equity securities generally traded higher. Through Q4 of 2022 global markets rose as falling inflation and the anticipated boost to global growth resulting from the re-opening of China’s economy all supported equity securities prices. Global equities continued higher over the first half of 2023, as investors looked past concerns in the banking sector to falling energy prices, lower inflation, and global growth was more resilient than expected. Over the first six months of 2023, technology companies led all sectors as artificial intelligence related companies drew interest, with seven U.S. large cap growth companies contributing a large portion of equity market gains. Global equities declined in Q3 of 2023 as higher energy prices, consumer spending concerns in China, and the U.S. Federal Reserve’s outlook of “higher rates for longer” weighed on investors’ global growth outlook. Global equities continued lower in October of 2023 as slowing global growth concerns and increased geopolitical tensions weighed on markets.

 

The Underlying Index had a positive total return during the 12 months ended

 

   FLEXSHARES ANNUAL REPORT     19  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

STOXX® Global ESG Select Index Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

October 31, 2023, and outperformed global equity markets, as defined by the MSCI World Index1, by 3.82%. The Underlying Index’s ESG-tilted approach led to underweights to the utilities and real estate sectors as well as overweights to the technology and energy sectors that benefited Fund performance. The ESG tilt also led to overweights to the healthcare and energy sectors as well as an underweight to the communication services sector that detracted from performance. Likewise, the ESG tilt led to differences in security weights within the communication services, financials and industrials sectors that were positive drivers of Fund performance as well as security selections within the technology and energy sectors that detracted from performance. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -13 basis points (“bps”)2, which is reflective of the management fee (-42 bps), stock selection/futures (-10 bps), securities lending (+1 bps), and dividend tax differential (+38 bps).

 

The STOXX Global ESG Select KPIs Index is the intellectual property (including registered trademarks) of STOXX Limited, Zurich, Switzerland and/or its licensors (“Licensors”), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by STOXX and its Licensors and neither of the Licensors shall have any liability with respect thereto.

 

1 

The MSCI World Index captures large and mid-cap representation across 23 Developed Markets countries.

 

2 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

20    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® ESG & Climate   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Large Cap Core Index Fund Ticker:  FEUS

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     Fund
Inception
9/20/2021
 
 

 

 

 

FlexShares ESG & Climate US Large Cap Core Index Fund (Based on Net Asset Value)

    9.33     -0.97

FlexShares ESG & Climate US Large Cap Core Index Fund (Based on Market Price)

    9.29     -0.99

S&P 500 Index

    10.14     -0.23

Northern Trust ESG & Climate US Large Cap Core IndexSM

    9.47     -0.88

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.10% and the net expense ratio is 0.09%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust ESG & Climate US Large Cap Core IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that exhibit certain environmental, social and governance (“ESG”) characteristics, while also seeking to provide broad-market, core exposure to publicly traded U.S. large capitalization equity securities, i.e., the 600 largest companies in the Northern Trust 1250 IndexSM (the “Starting Universe”), as measured by largest float adjusted market capitalization. The Underlying Index is designed to minimize tracking differences relative to the Starting Universe, while also seeking (a) an aggregate higher scoring of certain ESG characteristics, as measured by the Northern Trust ESG Vector Score, and (b) reduction of aggregate climate-related risk, as measured by certain carbon-related risk metrics, each relative to the Starting Universe. As of October 31, 2023, there were 166 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on domestic equity securities generally traded higher. Through Q4 of 2022 U.S. equity markets moved modestly lower as inflation remained elevated, and the U.S. Federal Reserve (the “Fed”) continued to tighten monetary conditions through rate hikes. U.S. equities rose over the first half of 2023, as investors looked past the collapse of Silicon Valley Bank and the potential of a banking crisis, as inflation declined while Gross Domestic Product (GDP)1 growth was more resilient than expected. The Fed con-

 

1 

GDP is seen as a comprehensive measure of U.S. economic activity which measures the value of the final goods and services produced in the United States.

 

   FLEXSHARES ANNUAL REPORT     21  


Table of Contents

 

FlexShares® ESG & Climate   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Large Cap Core Index Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

tinued to hike interest rates through the first three meetings of the year, but lowered the magnitude of those hikes to one-quarter percent each before pausing at the June meeting. Over the first six months of 2023, technology companies led all sectors as artificial intelligence related companies drew interest, with seven large cap growth companies contributing a large portion of equity market gains. Domestic equity securities declined in Q3 of 2023, as inflation increased in July and August of 2023, and the Fed reiterated their outlook of “higher rates for longer” than we believe markets had priced in at the beginning of Q3 of 2023. U.S. equity markets continued to decline in October of 2023, as inflation remained resilient and there were increased concerns of slowing global growth due to weakness in China’s economy.

 

The Underlying Index had a positive total return during the 12 months ended October 31, 2023, and underperformed the U.S. large cap equity market, as defined by the S&P 500 Index2 by -0.67%. The Underlying Index’s Climate and ESG focused approach led to differences in security weights within the healthcare, industrials, communication services and consumer staples sectors that negatively impacted performance. Overall, it was the differences in these sectors that were the primary source of the Underlying Index’s underperformance. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was - 14 basis point (“bps”)3, which is reflective of the management fee (-9 bps), stock selection/futures (-4 bps), and compounding of tracking error over time (-1 bps).

 

2 

The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S.

 

3 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

22    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® ESG & Climate   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Developed Markets ex-US Core Index Fund Ticker:  FEDM

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year    

Fund

Inception

9/20/2021

 
 

 

 

 

FlexShares ESG & Climate Developed Markets Ex-US Core Index Fund (Based on Net Asset Value)

    12.08     -5.90

FlexShares ESG & Climate Developed Markets Ex-US Core Index Fund (Based on Market Price)

    12.80     -5.49

MSCI World ex-US Index

    12.56     -5.22

Northern Trust ESG & Climate Developed Markets ex-US Core IndexSM

    12.21     -5.93

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.13% and the net expense ratio is 0.12%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust ESG & Climate Developed Markets ex-US Core IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that exhibit certain environmental, social and governance (“ESG”) characteristics, while also seeking to provide broad-market, core exposure to publicly traded equity securities issued by companies domiciled in developed market countries, excluding the U.S. The Underlying Index is designed to minimize tracking differences relative to the Northern Trust Developed Markets ex-US Large Cap IndexSM (the “Parent Index”), while also seeking (a) an aggregate higher scoring of certain ESG characteristics, as measured by the Northern Trust ESG Vector Score, and (b) reduction of aggregate climate-related risk, as measured by certain carbon-related risk metrics, each relative to the Parent Index. As of October 31, 2023, there were 281 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on developed international equity securities generally traded higher. Over the course of the 12-month period the U.S. dollar (USD) declined and positively impacted U.S. investors as returns in international currencies generally were aided by the falling USD. Through Q4 of 2022, developed international markets rose as falling inflation in Europe, a stabilized fiscal environment in the United Kingdom, and the anticipated boost to global growth resulting from the re-opening of China’s economy all supported equity security prices. Developed international equities continued higher in Q1 of 2023, as investors looked past concerns in the banking sector to falling energy prices, lower inflation in Europe,

 

   FLEXSHARES ANNUAL REPORT     23  


Table of Contents

 

FlexShares® ESG & Climate   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Developed Markets ex-US Core Index Fund (cont.)

 

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

and strength in the technology and consumer discretionary sectors. Developed international equity securities continued higher in Q2 of 2023, but, in the aggregate, lagged U.S. equity markets as regional performance varied greatly between different markets. Japanese equity markets moved higher on the back of corporate governance reform, while Eurozone equities benefited from technology and semiconductor companies connected to artificial intelligence. Equity markets in the United Kingdom traded lower in local currency terms, but were positive in USD terms as falling energy prices and monetary tightening by the Bank of England impacted equities. Asia Pacific equity markets excluding Japan were lower as concerns over growth in China due to weak consumer spending, as well as increased geopolitical tensions between the U.S. and China impact the region. Developed international equities declined in Q3 of 2023, as higher energy prices and concerns on consumer spending in China and Europe weighed on investors’ global growth outlook. Developed equities continued lower in October of 2023 as slowing global growth and increased geopolitical tensions weighed on markets.

 

The Underlying Index had a positive total return during the 12 months ended October 31, 2023, and underperformed the developed international equity market, as defined by the MSCI World ex-US Index1 by -0.35%. The Underlying Index’s Climate and ESG focused approach led to differences in security weights within the utilities, financials and consumer discretionary sectors that negatively impacted performance. Overall, it was the differences in these sectors that were the primary source of the Underlying Index’s underperformance. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -13 basis points (“bps”)2, which is reflective of the management fee (-12 bps), stock selection/futures (-5 bps), and dividend tax differential (+4 bps).

 

1

The MSCI World ex USA Index captures large and mid cap representation across 22 of 23 Developed Markets (DM) countries – excluding the United States.

 

2

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

24    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® ESG & Climate   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Emerging Markets Core Index Fund              Ticker:  FEEM

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

   

1 Year

   

Fund

Inception
4/20/2022

 
 

 

 

   

 

 

 

FlexShares ESG & Climate Emerging Markets Core Index Fund
(Based on Net Asset Value)

    11.14     -8.50

FlexShares ESG & Climate Emerging Markets Core Index Fund
(Based on Market Price)

    10.98     -8.23

MSCI Emerging Markets Index

    10.80     -8.38

Northern Trust ESG & Climate Emerging Markets Core IndexSM

    11.79     -8.30

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.19% and the net expense ratio is 0.18%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust ESG & Climate Emerging Markets Core IndexSM (the “Underlying Index”) The Underlying Index is designed to reflect the performance of a selection of companies that exhibit certain environmental, social and governance (“ESG”) characteristics, while also seeking to provide broad-market, core exposure to publicly traded equity securities issued by companies domiciled in emerging market countries. The Underlying Index is designed to minimize tracking differences relative to the Northern Trust Emerging Markets Large Cap IndexSM (the “Parent Index”), while also seeking (a) an aggregate higher scoring of certain ESG characteristics, as measured by the Northern Trust ESG Vector Score, and (b) reduction of aggregate climate-related risk, as measured by certain carbon-related risk metrics, each relative to the Parent Index. As of October 31, 2023, there were 265 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on emerging market equities generally traded higher. Over the course of the 12-month period the U.S. dollar (USD) declined and positively impacted U.S. investors as returns in international currencies generally were aided by the falling USD. Through Q4 of 2022, emerging equities traded higher as China relaxed some pandemic-related restrictions, boosting investors’ expectations that increased spending could aid global growth, and that a global recession may be less severe than previously expected. Emerging market equity securities continued to rise in Q1 of 2023, but lagged behind developed markets as continued monetary tightening across global central banks and increased U.S.China geopolitical

 

   FLEXSHARES ANNUAL REPORT     25  


Table of Contents

 

FlexShares® ESG & Climate   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Emerging Markets Core Index Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

tensions weighed on the region. Emerging market equities continued higher in Q2 of 2023, but again trailed developed equity securities as optimism around China’s reopening was dampened by worse than expected consumer spending. Tensions between the U.S. and China increased as new restrictions around chip manufacturing in both the U.S. and Europe limited Chinese access to these technologies. Emerging equities declined in Q3 of 2023, as weakness in China’s property sector and overall economy negatively impacted global growth. We believe continued economic strength in the U.S. could result in global interest rates remaining at higher levels for longer than anticipated, also impinging on the growth outlook for emerging markets. Emerging markets continued lower in October of 2023 as slowing global growth, weak energy prices and increased geopolitical tensions weighed on markets.

 

The Underlying Index had a positive total return during the 12 months ended October 31, 2023, and outperformed the emerging equity market, as defined by the MSCI Emerging Markets Index1 by 0.99% The Underlying Index’s Climate and ESG focused approach led to differences in security weights within the financials, consumer discretionary and materials sectors that positively impacted performance. Overall, it was the differences in these sectors that were the primary source of the Underlying Index’s outperformance. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -65 basis points (“bps”)2, which is reflective of the management fee (-18 bps), stock selection/futures (-45 bps), dividend tax differential (-1 bps), and India Capital Gains Taxes (-1 bps).

 

1

The MSCI Emerging Markets Index is a selection of stocks that are designed to track the financial performance of key companies in fast-growing nations.

 

2

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

26    FLEXSHARES ANNUAL REPORT  


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FlexShares®  Morningstar®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Global Upstream Natural Resources Index Fund  Ticker:   GUNR

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
9/16/2011
 
 

 

 

 

FlexShares Morningstar Global Upstream Natural Resources Index Fund (Based on Net Asset Value)

    -3.92     7.97     4.50     3.73

FlexShares Morningstar Global Upstream Natural Resources Index Fund (Based on Market Price)

    -3.96     7.99     4.49     3.74

Morningstar® Global Upstream Natural Resources IndexSM

    -3.32     8.57     5.02     4.18

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.47% and the net expense ratio is 0.46%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Global Upstream Natural Resources IndexSM (the “Underlying Index”). The Underlying Index reflects the performance of a selection of equity securities that are traded in or are issued by companies classified as developed or emerging markets (including the U.S.), as determined by Morningstar, Inc., the index provider, pursuant to its index methodology. To be eligible for inclusion in the Underlying Index, a security must be issued by a company that has significant economic interests in one of the following natural resource categories: energy, agriculture, precious or industrial metals, timber or water, as determined by the Index Provider pursuant to its index methodology (collectively, the “Natural Resources sector”). As of October 31, 2023, there were 120 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective and a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on global equity securities generally traded higher. Through Q4 of 2022 global markets rose as falling inflation and the anticipated boost to global growth resulting from the re-opening of China’s economy all supported equity security prices. Global equities continued higher over the first half of 2023, as investors looked past concerns in the banking sector to falling energy prices, lower inflation and global growth was more resilient than expected. Over the first six months of 2023, technology companies led all sectors as artificial intelligence related companies drew interest, with seven U.S. large cap growth companies contributing a large portion of equity market gains. Global equities declined in Q3 of 2023 as higher energy prices, consumer spending concerns in China, and the U.S. Federal Reserve’s outlook of “higher rates for longer” weighed on

 

   FLEXSHARES ANNUAL REPORT     27  


Table of Contents

 

FlexShares® Morningstar®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Global Upstream Natural Resources Index Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

investors’ global growth outlook. Global equities continued lower in October of 2023, as slowing global growth concerns and increased geopolitical tensions weighed on markets.

 

For the 12-month period ended October 31, 2023, the Underlying Index underperformed the global natural resource equity markets, as defined by the S&P Global Natural Resources Index1, by -4.28%. Due to the Underlying Index’s focus on the upstream section of the natural resource supply chain, security selection in Energy and Metals detracted from performance. Sector allocation within Agriculture and Metals also detracted from performance versus the benchmark. The Water Resources sector was a drag on performance, as higher interest rates negatively impacted returns due to the capital intensive nature of the sector. Relative performance in Timber did not aid or detract from the Underlying Index’s relative performance, as negative performance attributed to allocation was offset by positive security selection within the sector. Tracking difference for the period between the Fund’s NAV and the Underlying Index was -60 basis points (bps)2, which is reflective of the Fund’s management fee (-46 bps), stock selection/futures (-20 bps), securities lending (+3 bps), and dividend tax differential (+3 bps).

 

The Morningstar Global Upstream Natural Resources Index is the intellectual property (including registered trademarks) of Morningstar and/or its licensors (“Licensors”), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by Morningstar and its Licensors and neither of the Licensors shall have any liability with respect thereto.

 

 

1

The S&P Global Natural Resources Index includes 90 of the largest publicly-traded companies in natural resources and commodities businesses that meet specific investability requirements, offering investors diversified and investable equity exposure across 3 primary commodityrelated sectors: agribusiness, energy, and metals & mining.

 

2 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

28    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® STOXX   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Global Broad Infrastructure Index Fund Ticker:  NFRA

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
10/8/2013
 
 

 

 

 

FlexShares STOXX® Global Broad Infrastructure Index Fund (Based on Net Asset Value)

    1.24     3.71     4.05     4.44

FlexShares STOXX® Global Broad Infrastructure Index Fund (Based on Market Price)

    1.41     3.84     4.06     4.46

STOXX® Global Broad Infrastructure Index

    1.10     3.59     3.95     4.34

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.48% and the net expense ratio is 0.47%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® Global Broad Infrastructure Index (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, offer broad exposure to publicly traded developed- and emerging-market infrastructure companies, including U.S. companies, as defined by STOXX Ltd. (“STOXX”) pursuant to its index methodology. As of October 31, 2023, there were 172 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on global equity securities generally traded higher. Through Q4 of 2022 global markets rose as falling inflation and the anticipated boost to global growth resulting from the re-opening of China’s economy all supported equity security prices. Global equities continued higher over the first half of 2023, as investors looked past concerns in the banking sector to falling energy prices, lower inflation and global growth was more resilient than expected. Over the first six months of 2023, technology companies led all sectors as artificial intelligence related companies drew interest, with seven U.S. large cap growth companies contributing a large portion of equity market gains. Global equities declined in Q3 of 2023, as higher energy prices, consumer spending concerns in China, and the U.S. Federal Reserve’s outlook of “higher rates for longer” weighed on investors’ global growth outlook. Global equities continued lower in October of 2023, as slowing global growth concerns and increased geopolitical tensions weighed on markets.

 

   FLEXSHARES ANNUAL REPORT     29  


Table of Contents

 

FlexShares® STOXX   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Global Broad Infrastructure Index Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

The Underlying Index had a positive total return during the 12 months ended October 31, 2023, and outperformed the global infrastructure market, as defined by the S&P Global Infrastructure Index1, by 3.33%. The Underlying Index’s exposures to the communication, energy, utilities and social infrastructure sectors positively benefited Fund performance, while exposure to transportation infrastructure negatively contributed to Fund performance. The tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was +14 basis points (“bps”)2, which is reflective of the Fund’s management fee (-47 bps), stock selection/futures (+2 bps), securities lending (+4 bps), dividend tax differential (+54 bps), and India Capital Gain taxes (+1 bps).

 

The STOXX Global Infrastructure Index is the intellectual property (including registered trademarks) of STOXX Limited, Zurich, Switzerland and/or its licensors (“Licensors”), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by STOXX and its Licensors and neither of the Licensors shall have any liability with respect thereto.

 

1

The S&P Global Infrastructure Index is designed to track 75 companies from around the world chosen to represent the listed infrastructure industry while maintaining liquidity and tradability.

 

2 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

30    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Global Quality Real Estate Index Fund Ticker:  GQRE

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     5 Year     Fund
Inception
11/5/2013
 
 

 

 

 

FlexShares Global Quality Real Estate Index Fund (Based on Net Asset Value)

    -7.16     -0.05     -1.19     2.23

FlexShares Global Quality Real Estate Index Fund (Based on Market Price)

    -6.84     0.02     -1.13     2.25

FTSE EPRA/NAREIT Developed IndexSM

    -6.03     0.08     -1.46     1.34

Northern Trust Global Quality Real Estate IndexSM

    -7.38     -0.34     -1.37     2.11

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.46% and the net expense ratio is 0.45%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Global Quality Real Estate IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, possess greater exposure to quality, value and momentum factors relative to the Northern Trust Global Real Estate Index (the “Parent Index”), a float-adjusted market-capitalization weighted index of publicly traded equity securities of U.S. and non-U.S. real estate investment trusts (“REITs”) and real estate operating companies. In addition, the Underlying Index is designed to include companies with enhanced risk-return characteristics relative to the global publicly traded real-estate market by featuring quality, value and momentum risk premiums, which Northern Trust Investments, Inc. (“NTI”) believes have been historically demonstrated over a full market cycle. As of October 31, 2023, there were 137 issues in the Underlying Index. NTI uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on global equity securities generally traded higher. Through Q4 of 2022 global markets rose as falling inflation and the anticipated boost to global growth resulting from the re-opening of China’s economy all supported equity security prices. Global equities continued higher over the first half of 2023, as investors looked past concerns in the banking sector to falling energy prices, lower inflation, and global growth was more resilient than expected. Over the first six months of 2023, technology companies led all sectors as artificial intelligence related companies drew interest, with seven U.S. large cap growth companies contributing a large portion of equity market gains. Global equities declined in Q3 of 2023, as higher energy prices, consumer spending concerns in

 

   FLEXSHARES ANNUAL REPORT     31  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Global Quality Real Estate Index Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

China, and the U.S. Federal Reserve’s outlook of “higher rates for longer” weighed on investors’ global growth outlook. Global equities continued lower in October of 2023, as slowing global growth concerns and increased geopolitical tensions weighed on markets.

 

The Underlying Index had a negative total return during the 12 months ended October 31, 2023, and underperformed the global equity real estate markets, as defined by the FTSE EPRA/NAREIT Developed Net Index1, by -1.35%. The value2 and quality3 factor exposures of the Underlying Index were negative drivers of Fund performance, while the momentum4 factor exposure was a positive driver of Fund performance. Overall, the positive exposure to momentum was not enough to offset the headwinds from the negative performance derived from the value and quality exposures. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the period was +22 basis points (“bps”)5, which is reflective of the Fund’s management fee (-45 bps), stock selection/futures (+8 bps), securities lending (+2 bps), dividend tax differential (+58 bps), and compounding of tracking error over time (-1 bps).

 

1

The FTSE EPRA/NAREIT Developed Net Index is an index designed to track the performance of listed real estate companies in both developed and emerging countries worldwide.

 

2 

The value factor is a factor reflecting the current worth of a company relative to its own historical value, book value or valuation versus peers.

 

3

The quality factor is a factor that seeks to identify companies that exhibit financial strength and stability relative to the Parent Index.

 

4 

The momentum factor is a factor that reflects market sentiment and changes in a security price over a given time period.

 

5 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

32    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Real Assets Allocation Index Fund Ticker:  ASET

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     5 Year     Fund
Inception
11/23/2015
 
 

 

 

 

FlexShares Real Assets Allocation Index Fund (Based on Net Asset Value)

    -1.78     5.14     3.67     4.15

FlexShares Real Assets Allocation Index Fund (Based on Market Price)

    -1.99     5.09     3.63     4.13

MSCI ACWI Index

    10.50     6.68     7.48     7.69

Northern Trust Real Assets Allocation IndexSM

    -1.69     5.27     3.80     4.27

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. Prior to September 1, 2023, the gross expense ratio of the Fund was 1.04% and the net expense ratio was 0.57%. Effective September 1, 2023, the gross expense ratio of the Fund is 0.96% and the net expense ratio is 0.49%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Real Assets Allocation IndexSM (the “Underlying Index”). The Fund is a fund of funds and seeks to achieve its investment objective by investing primarily in the shares of other FlexShares ETFs (each an “Underlying Fund,” and together, the “Underlying Funds”) that are eligible for inclusion in the Underlying Index, rather than in securities of individual companies. The Underlying Funds themselves seek investment results corresponding to their own respective underlying indexes. The Underlying Funds invest primarily in separate sets of securities representing or providing exposures to global “real assets.” Real assets are defined by the index provider as physical or tangible assets. Examples of real assets include but are not limited to commodities, precious metals, oil, and real estate. Each Underlying Fund has its own risk profile and will contribute differently to the overall risk profile of the Fund. Each of the Underlying Funds invests in equity securities that are traded in or are issued by companies domiciled in global developed or emerging markets (including the U.S.). Certain of the Underlying Funds may invest in publicly traded units of master limited partnerships and real estate investment trusts. As of October 31, 2023, there were three Underlying Funds in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI generally intends to replicate the constituent securities of the Underlying Index to manage the Fund but may use representative sampling in certain circumstances. “Representative sampling” means investing in a representative sample of securities that collectively has an investment profile similar to the Underlying Index. When the Fund uses representative sampling, it may or may not hold all of the securities that are included in the Underlying Index.

 

During the 12 months ending October 31, 2023, prices on global equity securities generally traded higher. Through Q4 of 2022 global markets rose as falling inflation and the anticipated boost to global growth

 

   FLEXSHARES ANNUAL REPORT     33  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Real Assets Allocation Index Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

resulting from the re-opening of China’s economy all supported equity security prices. Global equities continued higher over the first half of 2023, as investors looked past concerns in the banking sector to falling energy prices, lower inflation and global growth was more resilient than expected. Over the first six months of 2023, technology companies led all sectors as artificial intelligence related companies drew interest, with seven U.S. large cap growth companies contributing a large portion of equity market gains. Global equities declined in Q3 of 2023, as higher energy prices, consumer spending concerns in China, and the U.S. Federal Reserve’s outlook of “higher rates for longer” weighed on investors’ global growth outlook. Global equities continued lower in October of 2023, as slowing global growth concerns and increased geopolitical tensions weighed on markets.

 

The Underlying Index had a negative total return during the 12 months ended October 31, 2023, underperforming global equity markets, as defined by the MSCI All Country World Index (ACWI)1 by -12.19%. All three asset classes within reals assets underperformed global equities. Global real estate and natural resources had negative performance over the 12-month period as rising global interest rates and falling energy prices negatively impacted each asset class, respectively. Infrastructure delivered positive performance for the 12-month period, but still trailed global equities as it was also negatively impacted by the rising rate environment. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the period was -9 basis points (“bps”)2, which is largely reflective of the Fund’s management fee (-57 bps), a reimbursement amount equal to the Acquired Fund Fees and Expenses attributable to the Fund’s investments in the Underlying Funds (+47 bps) and performance calculation differences between the Underlying Index and the Fund (+1 bp).

 

1

The MSCI All Country World Index is a market-capitalization-weighted index maintained by MSCI and is designed to provide a broad measure of stock performance throughout the world.

 

2 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

34    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Quality Dividend Index Fund Ticker:  QDF

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
12/14/2012
 
 

 

 

 

FlexShares Quality Dividend Index Fund (Based on Net Asset Value)

    6.52     7.13     8.49     10.46

FlexShares Quality Dividend Index Fund (Based on Market Price)

    6.50     7.13     8.48     10.46

Russell 1000® Index

    9.48     10.71     10.88     12.44

Northern Trust Quality Dividend IndexSM

    6.96     7.71     9.00     10.98

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.38% and the net expense ratio is 0.37%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally, before fees and expenses, to the price and yield performance of the Northern Trust Quality Dividend IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, provide exposure to a high-quality income-oriented universe of long-only U.S. equity securities, with an emphasis on long-term capital growth and a targeted overall beta1 that is similar to that of the Northern Trust 1250 Index2. As of October 31, 2023, there were 138 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on domestic equity securities generally traded higher. Through Q4 of 2022 U.S. equity markets moved modestly lower as inflation remained elevated, and the U.S. Federal Reserve (the “Fed”) continued to tighten monetary conditions through rate hikes. U.S. equities rose over the first half of 2023, as investors looked past the collapse of Silicon Valley Bank and the potential of a banking crisis, as inflation declined while Gross Domestic Product (GDP)3 growth was

 

1

A statistical measure of the volatility, or sensitivity, of rates of return on a portfolio or security compared to a market index and time period. The beta for an ETF measures the expected change in return of the ETF relative to the return of a designated index. By definition, the beta of the Standard & Poor’s (“S&P”) 500 Index is 1.00. Accordingly, a fund with a 1.10 beta is expected to perform 10% better than the S&P 500 Index in rising markets and 10% worse in falling markets.

 

2

Northern Trust 1250 Index is a float-adjusted market-capitalization weighted index comprised of U.S. domiciled large- and mid-capitalization companies.

 

3 

9 GDP is seen as a comprehensive measure of U.S. economic activity which measures the value of the final goods and services produced in the United States.

 

   FLEXSHARES ANNUAL REPORT     35  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Quality Dividend Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS(cont.)

 

more resilient than expected. The Fed continued to hike interest rates through the first three meetings of the year, but lowered the magnitude of those hikes to one-quarter percent each before pausing at the June meeting. Over the first six months of 2023, technology companies led all sectors as artificial intelligence related companies drew interest, with seven large cap growth companies contributing a large portion of equity market gains. Domestic equity securities declined in Q3 of 2023, as inflation increased in July and August of 2023, and the Fed reiterated their outlook of “higher rates for longer” than we believe markets had priced in at the beginning of Q3 of 2023. U.S. equity markets continued to decline in October of 2023, as inflation remained resilient and there were increased concerns of slowing global growth due to weakness in China’s economy.

 

Because of the resiliency of the economic data, the falling inflation environment, and the rising rate environment, U.S. domestic investments trended higher during the 12 months ended October 31, 2023; however, a large portion of the overall return for market weighted indices was concentrated in seven mega cap growth companies4. We believe the dividend yield factor5 was a negative driver of Fund performance as higher yielding investments underperformed lower yielding and non-dividend paying investments. In addition, we believe that the changes experienced in the macroeconomic environment as well as the increase in interest rates were conducive to high quality factor6 companies, resulting in the high-quality factor exposure augmenting Fund performance over the 12 months. Overall, the positive performance derived from the quality factor exposure was not enough to offset the negative performance from the dividend yield factor of the Underlying Index and was the primary source of the Underlying Index’s underperformance against the Russell 1000® Index7 by

-2.52%. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -44 basis points (“bps”)8, which is reflective of the management fee (-37 bps), stock selection/futures (-8 bps), securities lending (+6 bps), and dividend tax differential (-5 bps).

 

 

4

Size is measured by a stock’s total capitalization which can be found by multiplying the current share price by all the outstanding shares of stock.

 

5

Dividend yield factor is a factor that seeks to identify companies that realize a dividend yield above the Parent Index.

6

The quality factor is a factor that seeks to identify companies that exhibit stable returns relative to the market.

 

7

The Russell 1000® Index refers to a stock market index that represents the 1000 top companies in the United States.

 

8

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

36    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® Quality   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Dividend Defensive Index Fund Ticker:  QDEF

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
12/14/2012
 
 

 

 

 

FlexShares Quality Dividend Defensive Index Fund (Based on Net Asset Value)

    7.82     7.34     8.80     10.50

FlexShares Quality Dividend Defensive Index Fund (Based on Market Price)

    7.74     7.33     8.77     10.50

Russell 1000® Index

    9.48     10.71     10.88     12.44

Northern Trust Quality Dividend Defensive IndexSM

    8.20     7.79     9.35     11.04

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.38% and the net expense ratio is 0.37%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally, before fees and expenses, to the price and yield performance of the Northern Trust Quality Dividend Defensive IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, provide exposure to a high-quality income-oriented universe of long-only U.S. equity securities, with an emphasis on long-term capital growth and a targeted overall beta1 that is generally between 0.5 to 1.0 times that of the Northern Trust 1250 Index2. As of October 31, 2023, there were 127 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on domestic equity securities generally traded higher. Through Q4 of 2022 U.S. equity markets moved modestly lower as inflation remained elevated, and the U.S. Federal Reserve (the “Fed”) continued to tighten monetary conditions through rate hikes. U.S. equities rose over the first half of 2023, as investors looked past the collapse of Silicon Valley Bank and the potential of a banking crisis, as inflation declined while Gross Domestic Product (GDP)3 growth was

 

1

A statistical measure of the volatility, or sensitivity, of rates of return on a portfolio or security compared to a market index and time period. The beta for an ETF measures the expected change in return of the ETF relative to the return of a designated index. By definition, the beta of the S&P 500 Index is 1.00. Accordingly, a fund with a 1.10 beta is expected to perform 10% better than the S&P 500 Index in rising markets and 10% worse in falling markets.

 

2

Northern Trust 1250 Index is a float-adjusted market-capitalization weighted index comprised of U.S. domiciled large- and mid-capitalization companies.

 

3

GDP is seen as a comprehensive measure of U.S. economic activity which measures the value of the final goods and services produced in the United States.

 

   FLEXSHARES ANNUAL REPORT     37  


Table of Contents

 

FlexShares® Quality   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Dividend Defensive Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

more resilient than expected. The Fed continued to hike interest rates through the first three meetings of the year, but lowered the magnitude of those hikes to one-quarter percent each before pausing at the June meeting. Over the first six months of 2023, technology companies led all sectors as artificial intelligence related companies drew interest, with seven large cap growth companies contributing a large portion of equity market gains. Domestic equity securities declined in Q3 of 2023, as inflation increased in July and August of 2023, and the Fed reiterated their outlook of “higher rates for longer” than we believe markets had priced in at the beginning of Q3 of 2023. U.S. equity markets continued to decline in October of 2023, as inflation remained resilient and there were increased concerns of slowing global growth due to weakness in China’s economy.

 

Because of the resiliency of the economic data, the falling inflation environment, and the rising rate environment, U.S. domestic investments trended higher during the 12 months ended October 31, 2023; however, a large portion of the overall return for market weighted indices was concentrated in seven mega cap growth companies4. We believe the dividend yield factor5 was a negative driver of Fund performance as higher yielding investments underperformed lower yielding and non-dividend paying investments. In addition, we believe that the changes experienced in the macroeconomic environment as well as the increase in interest rates were conducive to high quality factor6 companies, resulting in the high-quality factor exposure augmenting Fund performance over the 12 months. Though equity markets were generally higher over the full 12-month period, there were several downturns within the year, and we believe the lower beta exposure benefited the Underlying Index. Overall, the positive performance derived from the quality factor exposure was not enough to offset the negative performance from the dividend yield factor of the Underlying Index, and was the primary source of the Underlying Index’s underperformance against the Russell 1000® Index7 by -1.28%.

Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12month period was -38 basis points (“bps”)8, which is reflective of the management fee (-37 bps), stock selection/futures (-3 bps), securities lending (+6 bps), dividend tax differential (-4 bps).

 

4

Size is measured by a stock’s total capitalization which can be found by multiplying the current share price by all the outstanding shares of stock.

 

5

Dividend yield factor is a factor that seeks to identify companies that realize a dividend yield above the Parent Index.

 

6

The quality factor is a factor that seeks to identify companies that exhibit stable returns relative to the market.

 

7

The Russell 1000® Index refers to a stock market index that represents the 1000 top companies in the United States.

 

8

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

38    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® International   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Quality Dividend Index Fund Ticker:   IQDF

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
4/12/2013
 
 

 

 

 

FlexShares International Quality Dividend Index Fund (Based on Net Asset Value)

    17.45     3.10     1.67     4.44

FlexShares International Quality Dividend Index Fund (Based on Market Price)

    17.92     3.27     1.66     4.44

MSCI AC World ex USA Index

    12.07     3.46     2.54     3.27

Northern Trust International Quality Dividend IndexSM

    18.24     3.40     2.02     2.79

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.48% and the net expense ratio is 0.47%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally, before fees and expenses, to the price and yield performance of the Northern Trust International Quality Dividend IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, provide exposure to a high-quality income-oriented universe of long-only international securities issued by non-U.S. based companies, with an emphasis on long-term capital growth and a targeted overall beta1 that is similar to that of the Northern Trust International Large Cap Index2. As of October 31, 2023, there were 191 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on international equity securities generally traded higher. Over the course of the 12-month period the U.S. dollar (USD) declined and positively impacted U.S. investors as returns in international currencies generally were aided by the falling USD. Through Q4 of 2022, international markets rose as falling inflation and the anticipated boost to global growth resulting from the re-opening of China’s economy all supported equity security prices. International equities continued higher over the first half of 2023, as investors looked past concerns in the

 

1 

A statistical measure of the volatility, or sensitivity, of rates of return on a portfolio or security compared to a market index and time period. The beta for an ETF measures the expected change in return of the ETF relative to the return of a designated index. By definition, the beta of the S&P 500 Index is 1.00. Accordingly, a fund with a 1.10 beta is expected to perform 10% better than the S&P 500 Index in rising markets and 10% worse in falling markets.

 

2 

Northern Trust International Large Cap Index is a float-adjusted market-capitalization weighted index comprised of non-U.S. domiciled large-and mid-capitalization companies.

 

   FLEXSHARES ANNUAL REPORT     39  


Table of Contents

 

FlexShares® International   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Quality Dividend Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

banking sector to falling energy prices, lower inflation, and strength in the technology and consumer discretionary sectors. International equities declined in Q3 of 2023, as higher energy prices and consumer spending concerns in China and Europe weighed on investors’ global growth outlook. International equities continued lower in October of 2023, as slowing global growth concerns and increased geopolitical tensions weighed on markets.

 

Because of the improved inflation outlook over the 12-month period, developed international investments trended higher during the 12 months ended October 31, 2023, and we believe the dividend yield factor3 was a positive driver of Fund performance as higher yielding investments outperformed lower yielding and non-dividend paying investments. In addition, we believe that the changes experienced in the macroeconomic environment as well as the increase in interest rates were conducive to high quality factor4 companies, resulting in the high-quality factor exposure augmenting Fund performance over the 12 months. Overall, the positive performance derived from the dividend and quality factor exposures of the Underlying Index were the primary sources of the Underlying Index’s outperformance against the MSCI All Country World Index Ex-U.S. Index5 by 6.17%. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -79 basis points (“bps”)6, which is reflective of the Fund’s management fee (-47 bps), stock selection/futures (-16 bps), securities lending (+5 bps), India Capital Gains Taxes (-20 bps), and compounding of tracking error over time (-1 bps).

 

3 

Dividend yield factor is a factor that seeks to identify companies that realize a dividend yield above the Parent Index.

 

4 

The quality factor is a factor that seeks to identify companies that exhibit stable returns relative to the market.

 

5

The MSCI All Country World Index Ex-U.S. is a market-capitalization-weighted index maintained by MSCI and is designed to provide a broad measure of stock performance throughout the world, with the exception of U.S.-based companies.

 

6 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

 

40    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® International   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Quality Dividend Defensive Index Fund Ticker:  IQDE

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
4/12/2013
 
 

 

 

 

FlexShares International Quality Dividend Defensive Index Fund (Based on Net Asset Value)

    12.54     2.10     0.89     1.60

FlexShares International Quality Dividend Defensive Index Fund (Based on Market Price)

    13.05     2.22     0.84     1.61

MSCI AC World ex USA Index

    12.07     3.46     2.54     3.27

Northern Trust International Quality Dividend Defensive IndexSM

    13.27     2.46     1.40     2.09

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.48% and the net expense ratio is 0.47%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally, before fees and expenses, to the price and yield performance of the Northern Trust International Quality Dividend Defensive IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, provide exposure to a high-quality income-oriented universe of long-only international securities issued by non-U.S. based companies, with an emphasis on long-term capital growth and a targeted overall beta1 that is generally between 0.5 to 1.0 times that of the Northern Trust International Large Cap Index2. As of October 31, 2023, there were 197 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on international equity securities generally traded higher. Over the course of the 12-month period the U.S. dollar (USD) declined and positively impacted U.S. investors as returns in international currencies generally were aided by the falling USD. Through Q4 of 2022, international markets rose as falling inflation and the anticipated boost to global growth resulting from the re-opening of China’s economy all supported equity security prices. International equities

 

1 

A statistical measure of the volatility, or sensitivity, of rates of return on a portfolio or security compared to a market index and time period. The beta for an ETF measures the expected change in return of the ETF relative to the return of a designated index. By definition, the beta of the S&P 500 Index is 1.00. Accordingly, a fund with a 1.10 beta is expected to perform 10% better than the S&P 500 Index in rising markets and 10% worse in falling markets.

 

2 

Northern Trust International Large Cap Index is a float-adjusted market-capitalization weighted index comprised of non-U.S. domiciled large- and mid-capitalization companies.

 

   FLEXSHARES ANNUAL REPORT     41  


Table of Contents

 

FlexShares® International   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Quality Dividend Defensive Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

continued higher over the first half of 2023, as investors looked past concerns in the banking sector to falling energy prices, lower inflation, and strength in the technology and consumer discretionary sectors. International equities declined in Q3 of 2023, as higher energy prices and consumer spending concerns in China and Europe weighed on investors’ global growth outlook. International equities continued lower in October of 2023, as slowing global growth concerns and increased geopolitical tensions weighed on markets.

 

Because of the improved inflation outlook over the 12-month period, developed international investments trended higher during the 12 months ended October 31, 2023, and we believe the dividend yield factor3 was a positive driver of Fund performance as higher yielding investments outperformed lower yielding and non-dividend paying investments. In addition, we believe that the changes experienced in the macroeconomic environment as well as the increase in interest rates were conducive to high quality factor4 companies, resulting in the high-quality factor exposure augmenting Fund performance over the 12 months. Because international equities moved higher over the 12 months, we believe that the low beta exposure detracted from Fund performance. Overall, the positive performance derived from the dividend and quality factor exposures of the Underlying Index were the primary sources of the Underlying Index’s outperformance against the MSCI All Country World Index Ex-U.S. Index5 by 1.20%.Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -73 basis points (“bps”)6, which is reflective of the Fund’s

management fee (-47 bps), stock selection/futures (-29 bps), securities lending (+5 bps), India Cap Gain Tax (-1 bps) and compounding of tracking error over time (-1 bps).

3 

Dividend yield factor is a factor that seeks to identify companies that realize a dividend yield above the Parent Index.

 

4 

The quality factor is a factor that seeks to identify companies that exhibit stable returns relative to the market.

5 

The MSCI All Country World Index Ex-U.S. is a market-capitalization-weighted index maintained by MSCI and is designed to provide a broad measure of stock performance throughout the world, with the exception of U.S.-based companies.

 

6 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

42    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® International   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Quality Dividend Dynamic Index Fund Ticker:  IQDY

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
4/12/2013
 
 

 

 

 

FlexShares International Quality Dividend Dynamic Index Fund (Based on Net Asset Value)

    19.39     5.20     3.04     3.95

FlexShares International Quality Dividend Dynamic Index Fund (Based on Market Price)

    20.37     5.42     3.09     4.00

MSCI AC World ex USA Index

    12.07     3.46     2.54     3.27

Northern Trust International Quality Dividend Dynamic IndexSM

    20.36     5.61     3.49     4.40

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.48% and the net expense ratio is 0.47%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally, before fees and expenses, to the price and yield performance of the Northern Trust International Quality Dividend Dynamic IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of companies that, in the aggregate, provide exposure to a high-quality income-oriented universe of long-only international securities issued by non-U.S. based companies, with an emphasis on long-term capital growth and a targeted overall beta1 that is generally between 1.0 to 1.5 times that of the Northern Trust International Large Cap Index2. As of October 31, 2023, there were 171 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

During the 12 months ending October 31, 2023, prices on international equity securities generally traded higher. Over the course of the 12-month period the U.S. dollar (USD) declined and positively impacted U.S. investors as returns in international currencies generally were aided by the falling USD. Through Q4 of 2022, international markets rose as falling inflation and the anticipated boost to global growth resulting from the re-opening of China’s economy all supported equity security prices. International equities

 

1 

A statistical measure of the volatility, or sensitivity, of rates of return on a portfolio or security compared to a market index and time period. The beta for an ETF measures the expected change in return of the ETF relative to the return of a designated index. By definition, the beta of the S&P 500 Index is 1.00. Accordingly, a fund with a 1.10 beta is expected to perform 10% better than the S&P 500 Index in rising markets and 10% worse in falling markets.

 

2 

Northern Trust International Large Cap Index is a float-adjusted market-capitalization weighted index comprised of non-U.S. domiciled large- and mid-capitalization companies.

 

   FLEXSHARES ANNUAL REPORT     43  


Table of Contents

 

FlexShares® International   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Quality Dividend Dynamic Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

continued higher over the first half of 2023, as investors looked past concerns in the banking sector to falling energy prices, lower inflation, and strength in the technology and consumer discretionary sectors. International equities declined in Q3 of 2023, as higher energy prices and consumer spending concerns in China and Europe weighed on investors’ global growth outlook. International equities continued lower in October of 2023, as slowing global growth concerns and increased geopolitical tensions weighed on markets.

 

Because of the improved inflation outlook over the 12-month period, developed international investments trended higher during the 12 months ended October 31, 2023 and we believe the dividend yield factor3 was a positive driver of Fund performance as higher yielding investments outperformed lower yielding and non-dividend paying investments. In addition, we believe that the changes experienced in the macroeconomic environment as well as the increase in interest rates were conducive to high quality factor4 companies, resulting in the high-quality factor exposure augmenting Fund performance over the 12 months. Because international equities moved higher over the 12 months, we believe that the high beta exposure also positively contributed to Fund performance. Overall, the positive performance derived from the dividend and quality factor exposures of the Underlying Index were the primary sources of the Underlying Index’s outperformance against the MSCI All Country World Index Ex-U.S. Index5 by 8.29%.

Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -97 basis points (“bps”)6, which is reflective of the Fund’s management fee (47 bps), stock selection/futures (-24 bps), securities lending (+4 bps), dividend tax differential (1 bps), performance calculation differences between the Underlying Index and the Fund (+1 bps), and India Cap Gain Tax (-30 bps).

3 

Dividend yield factor is a factor that seeks to identify companies that realize a dividend yield above the Parent Index.

 

4 

The quality factor is a factor that seeks to identify companies that exhibit stable returns relative to the market.

5 

The MSCI All Country World Index Ex-U.S. is a market-capitalization-weighted index maintained by MSCI and is designed to provide a broad measure of stock performance throughout the world, with the exception of U.S.-based companies.

 

6 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

44    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® iBoxx   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

3-Year Target Duration TIPS Index Fund      Ticker:  TDTT

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
9/19/2011
 
 

 

 

 

FlexShares iBoxx 3-Year Target Duration TIPS
Index Fund (Based on Net Asset Value)

    1.84     3.01     1.59     1.42

FlexShares iBoxx 3-Year Target Duration TIPS
Index Fund (Based on Market Price)

    1.76     3.03     1.60     1.42

iBoxx 3-Year Target Duration TIPS Index

    1.99     3.20     1.77     1.58

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.19% and the net expense ratio is 0.18%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the iBoxx 3-Year Target Duration TIPS Index (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of inflation protected public obligations of the U.S. Treasury, commonly known as “TIPS”, with a targeted average modified adjusted duration1 as defined by S&P Dow Jones Indices LLC as the index provider, of approximately three years. The Underlying Index includes publicly issued TIPS that have maturity dates of at least one year but not more than ten years from an index rebalancing date. As of October 31, 2023, there were 27 TIPS in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to achieve the Fund’s investment objective. NTI generally intends to replicate the constituent securities of the Underlying Index to manage the Fund but may use representative sampling in certain circumstances. “Representative sampling” means investing in a representative sample of securities that collectively has an investment profile similar to the Underlying Index. When the Fund uses representative sampling, it may or may not hold all of the securities that are included in the Underlying Index.

 

In the beginning of the fiscal year ending October 31, 2023, fixed income investments moved higher coming off extremely depressed levels, as market implied odds over a soft landing versus hard landing fluctuated. The beginning of the 2023 calendar year saw fixed income assets continue to post positive results despite significant interest rate volatility. Ultimately, the 2-year and 10-year treasury yields dropped in parallel down 0.40% in Q1 of 2023, while the U.S. Federal Reserve (the “Fed”) raised the Fed Funds rate twice. Overall, the markets entered a period of extreme volatility in March of 2023, following the regional banking disruptions as

 

1 

The duration calculated from the real modified duration of a TIPS security, adjusted for the market’s estimated beta for a TIPS security versus a nominal Treasury security due to the actual and expected changes in inflation.

 

   FLEXSHARES ANNUAL REPORT     45  


Table of Contents

 

FlexShares® iBoxx   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

3-Year Target Duration TIPS Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

well as a rescue of a Swiss Bank. The ICE BofA MOVE Index2, which measures bond market volatility, spiked on March 15, 2023 to a price of 198, which was a level last seen during the Great Financial Crisis. As Q1 of 2023 came to a close, fixed income investments rallied as investors sought relative safety, and systemic banking concerns were diminishing.

 

By the summer of 2023, treasury rates increased as inflation remained elevated as strength persisted in the U.S. labor market amidst the rising rate environment. During Q2 of 2023, the 2-year treasury yields rose 0.87%, the 10-year treasury yields rose 0.37%, and the 30-year treasury yields rose by 0.21%. While the Fed did hike rates heading into the summer, they chose to pause in June of 2023. Inflation remained elevated into Q3 of 2023, and the labor market remained resilient. The Fed left rates unchanged at their September 2023 meeting, though market participants interpreted that decision as a hawkish pause to allow time to further evaluate the influence of the overall tightening on the U.S. economy. Treasuries sold off throughout Q3 of 2023, specifically in the middle to long end of the yield curve3 with 10-year and 30-year treasury yields rising to 4.57% and 4.70%, respectively.

 

During October of 2023, fixed income investments were under pressure as we observed a continuation in the rise of interest rates, which we believe was driven not by the changing expectations for inflation or the Fed, but instead an increase in the required term premium, or the compensation that investors require for bearing the risk that interest rates may change over the life of the bond, given economic uncertainty and interest rate volatility.

TIPS inflation breakeven4 spreads moved lower during the fiscal year as investors weighed the impact of Fed actions and geopolitical events on future inflation potential. Headline inflation measures receded, though core services components remained elevated. The disinflationary period post the pandemic-era inflation shocks coincided with longer-term, structural forces such as labor market demographics, supply chain orientation, and green transition. Inflation expectations diminished, but remained modestly elevated against Fed policy levels. By the end of the fiscal year 2023, the 12-month change in TIPs breakeven spreads were: 1-year: -50 basis points (“bps”)5, 5-year: -28 bps, 10-year: -10 bps and 30-year: -2 bps.

 

Despite rising real interest rates, or an interest rate that has been adjusted for inflation, during the fiscal year 2023, both the Fund and the Underlying Index displayed positive total return performance. For the 12-month period, the NAV performance of the Fund outperformed the Bloomberg U.S. TIPS 1-10 Year Index6 by 79 bps, due in part to lower overall duration in the 1-3-year section of the TIPS yield curve with rising real interest rates. Tracking difference between the Fund’s NAV and the Underlying Index for the 12-month period was -15 bps, reflective of the Fund’s management fee (-18 bps), duration and yield curve positioning (+2 bps), security selection (+1 bps), trading costs (-2 bps), and other factors (+2 bps).

 

2 

The ICE BofA MOVE Index measures U.S. bond market volatility by tracking a basket of OTC options on U.S. interest rate swaps.

 

3 

A yield curve is constructed by plotting a session’s final yields for various maturities including 1-month, 3-month, 6-month, 1-year, 2-year, 3-year, 5-year, 7-year, 10-year, 20-year, and 30-year maturities.

 

4 

Bloomberg. In this analysis we are making a comparison between the difference in the nominal yield and real yield rates of the 1-year, 5-year, 10-year and 30-year maturities using data available as of October 31, 2022 and October 31, 2023.

 

5 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

6 

The Bloomberg US Treasury Inflation Notes: 1-10 Year Index (Series-B) measures the performance of the US Treasury Inflation Protected Securities (TIPS) market with less than 10 years to maturity.

 

46    FLEXSHARES ANNUAL REPORT  


Table of Contents

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year     Fund
Inception
9/19/2011
 
 

 

 

 

FlexShares iBoxx 5-Year Target Duration TIPS Index Fund (Based on Net Asset Value)

    -0.11     2.61     1.47     1.46

FlexShares iBoxx 5-Year Target Duration TIPS Index Fund (Based on Market Price)

    -0.15     2.61     1.48     1.46

iBoxx 5-Year Target Duration TIPS Index

    0.19     2.85     1.64     1.63

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.19% and the net expense ratio is 0.18%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the iBoxx 5-Year Target Duration TIPS Index (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of inflation protected public obligations of the U.S. Treasury, commonly known as “TIPS”, with a targeted average modified adjusted duration1, as defined by S&P Dow Jones Indices LLC as the index provider, of approximately five years. The Underlying Index includes publicly issued TIPS that have maturity dates of at least three years but not more than twenty years from an index rebalancing date. As of October 31, 2023, there were 25 TIPS in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to achieve the Fund’s investment objective. NTI generally intends to replicate the constituent securities of the Underlying Index to manage the Fund but may use representative sampling in certain circumstances. “Representative sampling” means investing in a representative sample of securities that collectively has an investment profile similar to the Underlying Index. When the Fund uses representative sampling, it may or may not hold all of the securities that are included in the Underlying Index.

 

In the beginning of the fiscal year ending October 31, 2023, fixed income investments moved higher coming off extremely depressed levels, as market implied odds over a soft landing versus hard landing fluctuated. The beginning of the 2023 calendar year saw fixed income assets continue to post positive results despite significant interest rate volatility. Ultimately, the 2-year and 10-year treasury yields dropped in parallel down 0.40% in Q1 of 2023, while the U.S. Federal Reserve (the “Fed”) raised the Fed Funds rate twice. Overall, the markets entered a period of extreme volatility in March of 2023, following the regional banking disruptions as well as a rescue of a Swiss Bank. The ICE

 

   FLEXSHARES ANNUAL REPORT     47  

 

FlexShares® iBoxx   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

5-Year Target Duration TIPS Index Fund Ticker:   TDTF

 

 

1 

The duration calculated from the real modified duration of a TIPS security, adjusted for the market’s estimated beta for a TIPS security versus a nominal Treasury security due to the actual and expected changes in inflation.


Table of Contents

PORTFOLIO ANALYSIS (cont.)

 

BofA MOVE Index2, which measures bond market volatility, spiked on March 15, 2023 to a price of 198, which was a level last seen during the Great Financial Crisis. As Q1 of 2023 came to a close, fixed income investments rallied as investors sought relative safety, and systemic banking concerns were diminishing.

 

By the summer of 2023, treasury rates increased as inflation remained elevated as strength persisted in the U.S. labor market amidst the rising rate environment. During Q2 of 2023, the 2-year treasury yields rose 0.87%, the 10-year treasury yields rose 0.37%, and the 30-year treasury yields rose by 0.21%. While the Fed did hike rates heading into the summer, they chose to pause in June of 2023. Inflation remained elevated into Q3 of 2023, and the labor market remained resilient. The Fed left rates unchanged at their September 2023 meeting, though market participants interpreted that decision as a hawkish pause to allow time to further evaluate the influence of the overall tightening on the U.S. economy. Treasuries sold off throughout Q3 of 2023, specifically in the middle to long end of the yield curve3 with 10-year and 30-year treasury yields rising to 4.57% and 4.70%, respectively.

 

During October of 2023, fixed income investments were under pressure as we observed a continuation in the rise of interest rates, which we believe was driven not by the changing expectations for inflation or the Fed, but instead an increase in the required term premium, or the compensation that investors require for bearing the risk that interest rates may change over the life of the bond, given economic uncertainty and interest rate volatility.

TIPS inflation breakeven4 spreads moved lower during the fiscal year as investors weighed the impact of Fed actions and geopolitical events on future inflation potential. Headline inflation measures receded, though core services components remained elevated. The disinflationary period post the pandemic-era inflation shocks coincided with longer-term, structural forces such as labor market demographics, supply chain orientation, and green transition. Inflation expectations diminished, but remained modestly elevated against Fed policy levels. By the end of the fiscal year 2023, the 12-month change in TIPs breakeven spreads were: 1-year: -50 basis points (“bps”) 5, 5-year: -28 bps, 10-year: -10 bps and 30-year: -2 bps.

 

Rising real interest rates, or an interest rate that has been adjusted for inflation, during the fiscal year led to nearly flat total return performance for both the Fund and the Underlying Index. For the 12-month period, the NAV performance of the Fund outperformed the Bloomberg U.S. TIPS 1-10 Year Index6 by 61 bps against the backdrop of rising real interest rates. Tracking difference between the Fund’s NAV and the Underlying Index for the 12-month period was -30 bps, reflective of the Fund’s management fee (-18 bps), duration and yield curve positioning (+2 bps), security selection (-2 bp), trading costs (-3 bps), and other factors (-9 bps).

 

The iBoxx 5-Year Target Duration TIPS Index is the intellectual property (including registered trademarks) of Markit iBoxx and/or its licensors (“Licensors”), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by Markit iBoxx and its Licensors and neither of the Licensors shall have any liability with respect thereto.

2 

The ICE BofA MOVE Index measures U.S. bond market volatility by tracking a basket of OTC options on U.S. interest rate swaps.

 

3 

A yield curve is constructed by plotting a session’s final yields for various maturities including 1-month, 3-month, 6-month, 1-year, 2-year, 3-year, 5-year, 7-year, 10-year, 20-year, and 30-year maturities.

4 

Bloomberg. In this analysis we are making a comparison between the difference in the nominal yield and real yield rates of the 1-year, 5-year, 10-year and 30-year maturities using data available as of October 31, 2022 and October 31, 2023.

 

5

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

6

The Bloomberg US Treasury Inflation Linked Bond Index (Series-L) measures the performance of the US Treasury Inflation Protected Securities (TIPS) market.

 

48    FLEXSHARES ANNUAL REPORT  

 

FlexShares® iBoxx   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

5-Year Target Duration TIPS Index Fund (cont.)

 


Table of Contents

 

FlexShares® Disciplined   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Duration MBS Index Fund Ticker:   MBSD

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     5 Year     Fund
Inception
9/3/2014
 
 

 

 

 

FlexShares Disciplined Duration MBS Index Fund
(Based on Net Asset Value)

    0.98     -4.01     -0.02     0.35

FlexShares Disciplined Duration MBS Index Fund
(Based on Market Price)

    1.13     -3.99     -0.06     0.36

ICE BofA® Constrained Duration US Mortgage Backed Securities IndexSM

    1.57     -3.28     0.52     0.84

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.21% and the net expense ratio is 0.20%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the ICE BofA® Constrained Duration US Mortgage Backed Securities Index (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of investment-grade US agency residential mortgage-backed pass-through securities (“MBS”). Pursuant to the Underlying Index’s methodology, the Underlying Index constituents are capitalization-weighted, based on their outstanding face value times price plus accrued interest, adjusted by the index provider to achieve an effective duration1 that is generally between 3.25 and 4.25 years. As of October 31, 2023, there were 117 securities in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

In the beginning of the fiscal year ending October 31, 2023, fixed income investments moved higher coming off extremely depressed levels, as market implied odds over a soft landing versus hard landing fluctuated. The beginning of the 2023 calendar year saw fixed income assets continue to post positive results despite significant interest rate volatility. Ultimately, the 2-year and 10-year treasury yields dropped in parallel down 0.40% in Q1 of 2023, while the U.S. Federal Reserve (the “Fed”) raised the Fed Funds rate twice. Overall, the markets entered a period

 

   FLEXSHARES ANNUAL REPORT     49  
1 

Effective duration provides a measure of a fund’s interest-rate sensitivity and the longer a fund’s duration, the more sensitive the fund is to shifts in interest rates. Duration also gives an indication of how a fund’s NAV will change as interest rates change. A fund with a five-year duration would be expected to lose 5% of its NAV if interest rates rose by 1 percentage point or gain 5%, if interest rates fell by 1 percentage point. Morningstar surveys fund companies for this information.


Table of Contents

 

FlexShares® Disciplined   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Duration MBS Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS(cont.)

 

of extreme volatility in March of 2023, following the regional banking disruptions as well as a rescue of a Swiss Bank. The ICE BofA MOVE Index2, which measures bond market volatility, spiked on March 15, 2023 to a price of 198, which was a level last seen during the Great Financial Crisis. As Q1 of 2023 came to a close, fixed income investments rallied as investors sought relative safety, and systemic banking concerns were diminishing.

 

By the summer of 2023, treasury rates increased as inflation remained elevated as strength persisted in the U.S. labor market amidst the rising rate environment. During Q2 of 2023, the 2 year treasury yields rose 0.87%, the 10-year treasury yields rose 0.37%, and the 30-year treasury yields rose by 0.21%. While the Fed did hike rates heading into the summer, they chose to pause in June of 2023. Inflation remained elevated into Q3 of 2023, and the labor market remained resilient. The Fed left rates unchanged at their September 2023 meeting, though market participants interpreted that decision as a hawkish pause to allow time to further evaluate the influence of the overall tightening on the U.S. economy. Treasuries sold off throughout Q3 of 2023, specifically in the middle to long end of the yield curve3 with 10-year and 30-year treasury yields rising to 4.57% and 4.70%, respectively.

 

During October of 2023, fixed income investments were under pressure as we observed a continuation in the rise of interest rates, which we believe was driven not by the changing expectations for inflation or the Fed, but instead an increase in the required term premium, or the compensation that investors require for bearing the risk that interest rates may change over the life of the bond, given economic uncertainty and interest rate volatility.

The average 30-year mortgage rates (Freddie Mac Index4) dipped to 5.95% in January of 2023, and subsequently rose the remainder of the fiscal year to finish at 7.79%.

 

Despite rising interest rates and an inverted yield curve during the fiscal year, the Fund and the Underlying Index achieved a positive total return. For the 12-month period, the NAV performance of the Fund outperformed the Bloomberg U.S. Mortgage Backed Securities Index5 by 180 basis points (“bps”)6 due to the Underlying Index’s exposure to a selection of higher coupon7, more seasoned MBS securities, which were both higher yielding and shorter duration and outperformed the newer MBS that skewed heavily toward lower coupon and longer duration. Tracking difference between the Fund’s NAV and the Underlying Index’s total return for the 12-month period was -59 bps, reflective of the Fund’s management fee (-20 bps), trading costs and fees (-46 bps), yield curve positioning (+23 bps), sector allocation (+3 bps), security selection (-74 bps), and other factors (+55 bps).

 

The ICE BofA® Constrained Duration US Mortgage Backed Securities Index is the intellectual property (including registered trademarks) of ICE BofA® and/or its licensors ("Licensors"), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by ICE BofA® and its Licensors and neither of the Licensors shall have any liability with respect thereto.

 

2 

The ICE BofA MOVE Index measures U.S. bond market volatility by tracking a basket of OTC options on U.S. interest rate swaps.

 

3 

A yield curve is constructed by plotting a session’s final yields for various maturities including 1-month, 3-month, 6-month, 1-year, 2-year, 3-year, 5-year, 7-year, 10-year, 20-year, and 30-year maturities.

 

4

Source: Bloomberg, Freddie Mac US Mortgage Market Survey 30 Year Homeowner Commitment National. October 31, 2022 through November 1, 2023.

 

5 

The Bloomberg U.S. Mortgage Backed Securities Index tracks fixed-rate agency mortgage backed passthrough securities guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC).

 

6 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

7 

A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity.

 

50    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® Credit-Scored   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Corporate Bond Index Fund Ticker:  SKOR

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

*

The hybrid index performance information reflects the performance of the Northern Trust Credit-Scored US Corporate Bond IndexSM (Previous Index) through April 30, 2020 and the Northern Trust US Corporate Bond Quality Value IndexSM thereafter. The Previous Index terminated as of May 1, 2020.

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     5 Year     Fund
Inception
11/12/2014
 
 

 

 

 

FlexShares Credit-Scored US Corporate Bond Index Fund (Based on Net Asset Value)

    3.92     -3.05     1.76     1.76

FlexShares Credit-Scored US Corporate Bond Index Fund (Based on Market Price)

    3.94     -3.00     1.77     1.78

Bloomberg Intermediate U.S. Corporate Index

    3.75     -2.82     1.53     1.74

Hybrid Northern Trust Credit-Scored US Corporate Bond IndexSM/Northern Trust US Corporate Bond Quality Value IndexSM

    4.41     -2.49     2.31 %*      2.50 %* 

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.23% and the net expense ratio is 0.22%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust US Corporate Bond Quality Value IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a diversified universe of intermediate maturity, US-dollar denominated bonds of companies with investment grade credit quality, favorable valuations, and enhanced short-term and long-term solvency. As of October 31, 2023, there were 2,851 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

In the beginning of the fiscal year ending October 31, 2023, fixed income investments moved higher coming off extremely depressed levels, as market implied odds over a soft landing versus hard landing fluctuated. The beginning of the 2023 calendar year saw fixed income assets continue to post positive results despite significant interest rate volatility. Ultimately, the 2-year and 10-year treasury yields dropped in parallel down 0.40% in Q1 of 2023, while the U.S. Federal Reserve (the “Fed”) raised the Fed Funds rate twice. Overall, the markets entered a period of extreme volatility in March of 2023, following the regional banking disruptions as well as a rescue of a Swiss Bank. The ICE BofA MOVE Index1, which measures bond market volatility, spiked on March 15, 2023 to a price of 198, which was a level last seen during the Great Financial Crisis. As Q1 of 2023 came to a close, fixed income investments rallied as investors sought relative safety, and systemic banking concerns were diminishing.

 

1 

The ICE BofA MOVE Index measures U.S. bond market volatility by tracking a basket of OTC options on U.S. interest rate swaps.

 

   FLEXSHARES ANNUAL REPORT     51  


Table of Contents

 

FlexShares® Credit-Scored   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Corporate Bond Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

By the summer of 2023, treasury rates increased as inflation remained elevated as strength persisted in the U.S. labor market amidst the rising rate environment. During Q2 of 2023, the 2-year treasury yields rose 0.87%, the 10-year treasury yields rose 0.37%, and the 30-year treasury yields rose by 0.21%. While the Fed did hike rates heading into the summer, they chose to pause in June of 2023. Inflation remained elevated into Q3 of 2023, and the labor market remained resilient. The Fed left rates unchanged at their September 2023 meeting, though market participants interpreted that decision as a hawkish pause to allow time to further evaluate the influence of the overall tightening on the U.S. economy. Treasuries sold off throughout Q3 of 2023, specifically in the middle to long end of the yield curve2 with 10-year and 30-year treasury yields rising to 4.57% and 4.70%, respectively.

 

During October of 2023, fixed income investments were under pressure as we observed a continuation in the rise of interest rates, which we believe was driven not by the changing expectations for inflation or the Fed, but instead an increase in the required term premium, or the compensation that investors require for bearing the risk that interest rates may change over the life of the bond, given economic uncertainty and interest rate volatility.

 

Credit fundamentals remained relatively stable throughout the year as the U.S. economy was resilient, and fears of a recession seemed to subside or at least pushed out further into the future. Investment grade credit spreads3 generally tightened throughout the fiscal year with a short-lived spike wider in March of 2023. The option adjusted spread (“OAS”)4 of the Bloomberg U.S. Credit Index5 peaked at 150 basis points

(“bps”)6 on March 15, 2023 amidst the extreme market volatility centered around regional bank uncertainty, then declined to a low of 104 bps at the end of July 2023. OAS then held relatively steady around these period low levels until October of 2023, which saw spreads mildly widen back out to finish the fiscal year at 119 bps. Credit spreads in the U.S. high yield7 market followed a similar path, as investment grade spreads during the fiscal year spiked up to 520 bps in March, measured by the OAS of the ICE BofA U.S. High Yield Index8. High yield spreads then tightened to a period low at the end of July 2023, and subsequently widened gently to finish the fiscal year at 448 bps.

 

During the fiscal year, the Fund’s NAV outperformed the Bloomberg U.S. Intermediate Corporate Bond Index9 by 17 bps. Overall, credit performed well as investment grade spreads generally tightened throughout the trailing 12-month period. The Fund is designed to be sector neutral with performance predominantly driven by security selection within sectors and industries. The tracking difference between the Fund’s NAV and the Underlying Index’s total return for the period was -49 bps, which is reflective of the Fund’s management fee (-22 bps), trading costs (-15 bps), sampling (-15 bps), and other factors (+3 bps).

2 

A yield curve is constructed by plotting a session’s final yields for various maturities including 1-month, 3-month, 6-month, 1-year, 2-year, 3-year, 5-year, 7-year, 10-year, 20-year, and 30-year maturities.

 

3 

Credit spread is the difference in yield between one debt security and another debt security with the same maturity but of lesser quality.

 

4 

The option-adjusted spread (OAS) is the measurement of the spread of a fixed-income security rate or portfolio and typically the Treasury securities yield (often referred to as the riskfree rate) and that spread is added to the fixed-income security for comparison purposes.

 

5 

Bloomberg U.S. Credit Index measures the investment grade, US dollar-denominated, taxable corporate and government related bond markets.

6 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

7 

High yield are fixed income securities that are rated in the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below.

 

8 

The ICE BofA US High Yield Index is market capitalization weighted and is designed to measure the performance of U.S. dollar denominated below investment grade (commonly referred to as “junk”) corporate debt publicly issued in the U.S. domestic market.

 

9

Bloomberg U.S. Intermediate Corporate Bond Index measures the investment grade, fixedrate, taxable corporate bond market that have between 1 and up to, but not including, 10 years to maturity.

 

52    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® Credit-Scored   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Long Corporate Bond Index Fund Ticker:  LKOR

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

*

The hybrid index performance information reflects the performance of the Northern Trust Credit-Scored US Long Corporate Bond IndexSM (Previous Index) through April 30, 2020 and the Northern Trust US Long Corporate Bond Quality Value IndexSM thereafter. The Previous Index terminated as of May 1, 2020.

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     5 Year     Fund
Inception
9/23/2015
 
 

 

 

 

FlexShares Credit-Scored US Long Corp Bond Index Fund (Based on Net Asset Value)

    1.59     -9.92     0.24     1.33

FlexShares Credit-Scored US Long Corp Bond Index Fund (Based on Market Price)

    1.26     -9.84     0.34     1.34

Bloomberg Long U.S. Corporate Index

    0.50     -10.18     -0.28     1.20

Hybrid Northern Trust Credit-Scored US Long Corporate Bond IndexSM/Northern Trust US Long Corporate Bond Quality Value IndexSM

    2.38     -9.30     1.04 %*      2.28 %* 

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.23% and the net expense ratio is 0.22%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust US Long Corporate Bond Quality Value IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a diversified universe of longer term maturity, US-dollar denominated bonds of companies with investment grade credit quality, favorable valuations, and enhanced short-term and long-term solvency. As of October 31, 2023, there were 1,463 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

In the beginning of the fiscal year ending October 31, 2023, fixed income investments moved higher coming off extremely depressed levels, as market implied odds over a soft landing versus hard landing fluctuated. The beginning of the 2023 calendar year saw fixed income assets continue to post positive results despite significant interest rate volatility. Ultimately, the 2-year and 10-year treasury yields dropped in parallel down 0.40% in Q1 of 2023, while the U.S. Federal Reserve (the “Fed”) raised the Fed Funds rate twice. Overall, the markets entered a period of extreme volatility in March of 2023, following the regional banking disruptions as well as a rescue of a Swiss Bank. The ICE BofA MOVE Index1, which measures bond market volatility, spiked on March 15, 2023 to a price of 198, which was a level last seen during the Great Financial Crisis. As Q1 of 2023 came to a close, fixed income investments rallied as investors sought relative safety, and systemic banking concerns were diminishing.

 

By the summer of 2023, treasury rates increased as inflation remained elevated as

 

1 

The ICE BofA MOVE Index measures U.S. bond market volatility by tracking a basket of OTC options on U.S. interest rate swaps.

 

   FLEXSHARES ANNUAL REPORT     53  


Table of Contents

 

FlexShares® Credit-Scored   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

US Long Corporate Bond Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

strength persisted in the U.S. labor market amidst the rising rate environment. During Q2 of 2023, the 2-year treasury yields rose 0.87%, the 10-year treasury yields rose 0.37%, and the 30-year treasury yields rose by 0.21%. While the Fed did hike rates heading into the summer, they chose to pause in June of 2023. Inflation remained elevated into Q3 of 2023, and the labor market remained resilient. The Fed left rates unchanged at their September 2023 meeting, though market participants interpreted that decision as a hawkish pause to allow time to further evaluate the influence of the overall tightening on the U.S. economy. Treasuries sold off throughout Q3 of 2023, specifically in the middle to long end of the yield curve2 with 10-year and 30-year treasury yields rising to 4.57% and 4.70%, respectively.

 

During October of 2023, fixed income investments were under pressure as we observed a continuation in the rise of interest rates, which we believe was driven not by the changing expectations for inflation or the Fed, but instead an increase in the required term premium, or the compensation that investors require for bearing the risk that interest rates may change over the life of the bond, given economic uncertainty and interest rate volatility.

 

Credit fundamentals remained relatively stable throughout the year as the U.S. economy was resilient, and fears of a recession seemed to subside or at least pushed out further into the future. Investment grade credit spreads3 generally tightened throughout the fiscal year with a short-lived spike wider in March of 2023. The option adjusted spread (“OAS”)4 of the Bloomberg U.S. Credit Index5 peaked at 150 basis points (“bps”)6

on March 15, 2023 amidst the extreme market volatility centered around regional bank uncertainty, then declined to a low of 104 bps at the end of July 2023. OAS then held relatively steady around these period low levels until October of 2023, which saw spreads mildly widen back out to finish the fiscal year at 119 bps. Credit spreads in the U.S. high yield7 market followed a similar path, as investment grade spreads during the fiscal year spiked up to 520 bps in March, measured by the OAS of the ICE BofA U.S. High Yield Index8. High yield spreads then tightened to a period low at the end of July 2023, and subsequently widened gently to finish the fiscal year at 448 bps.

 

During the fiscal year, the Fund’s NAV outperformed the Bloomberg U.S. Long Corporate Bond Index9 by 109 bps. Overall, credit performed well as investment grade spreads generally tightened throughout the trailing 12-month period. The Fund is designed to be sector neutral with performance predominantly driven by security selection within sectors and industries. The tracking difference between the Fund’s NAV and the Underlying Index’s total return for the period was -79 bps, which is reflective of the Fund’s management fee (-22 bps), trading costs (-19 bps), sampling (-33 bps), and other factors (-5 bps).

 

2 

A yield curve is constructed by plotting a session’s final yields for various maturities including 1-month, 3-month, 6-month, 1-year, 2-year, 3-year, 5-year, 7-year, 10-year, 20-year, and 30-year maturities.

 

3 

Credit spread is the difference in yield between one debt security and another debt security with the same maturity but of lesser quality.

 

4 

The option-adjusted spread (OAS) is the measurement of the spread of a fixed-income security rate or portfolio and typically the Treasury securities yield (often referred to as the riskfree rate) and that spread is added to the fixed-income security for comparison purposes.

 

5 

Bloomberg U.S. Credit Index measures the investment grade, US dollar-denominated, taxable corporate and government related bond markets.

 

6 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

7 

High yield are fixed income securities that are rated in the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below.

 

8

The ICE BofA US High Yield Index is market capitalization weighted and is designed to measure the performance of U.S. dollar denominated below investment grade (commonly referred to as “junk”) corporate debt publicly issued in the U.S. domestic market.

 

9 

Bloomberg U.S. Long Corporate Bond Index measures the investment grade, fixed-rate, taxable corporate bond market that have a maturity of greater than or equal to 10 years.

 

54    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® High Yield   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Value-Scored Bond Index Fund Ticker:  HYGV

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     3 Year     5 Year    

Fund
Inception

7/17/2018

 
 

 

 

 

FlexShares High Yield Value-Scored US Bond Index Fund (Based on Net Asset Value)

    5.45     1.30     2.85     2.73

FlexShares High Yield Value-Scored US Bond Index Fund (Based on Market Price)

    5.48     1.28     2.89     2.76

ICE BofA® US High Yield Index

    5.82     1.24     2.88     2.76

Northern Trust High Yield Value-Scored US Corporate Bond IndexSM

    7.14     2.50     4.27     4.11

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.38% and the net expense ratio is 0.37%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust High Yield Value-Scored US Corporate Bond IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a diversified universe of U.S.-dollar denominated bonds of companies exhibiting favorable fundamental qualities, market valuations and liquidity, as defined by Northern Trust Investments, Inc.’s (“NTI”) proprietary scoring models. The securities included in the Underlying Index are a subset of the securities included in the Northern Trust High Yield US Corporate Bond IndexSM (the “Parent Index”) 1. The Underlying Index begins with the Parent Index and then follows a rules-based methodology to select and weight securities, subject to certain constraints, to optimize exposure to a proprietary value score2, credit-score3, and

 

1 

The Northern Trust High Yield US Corporate Bond IndexSM is a market capitalization weighted index comprised of U.S. dollar-denominated high yield corporate bonds.

 

2

The value score has multiple components, including: (a) valuation (e.g., to assess the relative value of the security versus other similar securities); (b) spread analysis (e.g., to assess the risk/return trade-off associated with each security versus other similar securities); and (c) financial solvency (e.g., debt servicing capacity).

 

3

The credit score has three components: (i) management efficiency (e.g., corporate finance activities and corporate governance), (ii) profitability (e.g., reliability and sustainability of financial performance); and (iii) financial solvency.

 

   FLEXSHARES ANNUAL REPORT     55  


Table of Contents

 

FlexShares® High Yield   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Value-Scored Bond Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

liquidity score4, each as determined by NTI, acting in its capacity as index provider. The primary objective of the optimization process is to maximize exposure to the value score relative to the Underlying Index’s eligible universe. As of October 31, 2023, there were 952 issues in the Underlying Index. NTI uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

In the beginning of the fiscal year ending October 31, 2023, fixed income investments moved higher coming off extremely depressed levels, as market implied odds over a soft landing versus hard landing fluctuated. The beginning of the 2023 calendar year saw fixed income assets continue to post positive results despite significant interest rate volatility. Ultimately, the 2-year and 10-year treasury yields dropped in parallel down 0.40% in Q1 of 2023, while the U.S. Federal Reserve (the “Fed”) raised the Fed Funds rate twice. Overall, the markets entered a period of extreme volatility in March of 2023, following the regional banking disruptions as well as a rescue of a Swiss Bank. The ICE BofA MOVE Index5, which measures bond market volatility, spiked on March 15, 2023 to a price of 198, which was a level last seen during the Great Financial Crisis. As Q1 of 2023 came to a close, fixed income investments rallied as investors sought relative safety, and systemic banking concerns were diminishing.

 

By the summer of 2023, treasury rates increased as inflation remained elevated as strength persisted in the U.S. labor market amidst the rising rate environment. During Q2 of 2023, the 2year treasury yields rose 0.87%, the 10-year treasury yields rose 0.37%, and the 30-year treasury yields rose by 0.21%. While the Fed

did hike rates heading into the summer, they chose to pause in June of 2023. Inflation remained elevated into Q3 of 2023, and the labor market remained resilient. The Fed left rates unchanged at their September 2023 meeting, though market participants interpreted that decision as a hawkish pause to allow time to further evaluate the influence of the overall tightening on the U.S. economy. Treasuries sold off throughout Q3 of 2023, specifically in the middle to long end of the yield curve6 with 10-year and 30-year treasury yields rising to 4.57% and 4.70%, respectively.

 

During October of 2023, fixed income investments were under pressure as we observed a continuation in the rise of interest rates, which we believe was driven not by the changing expectations for inflation or the Fed, but instead an increase in the required term premium, or the compensation that investors require for bearing the risk that interest rates may change over the life of the bond, given economic uncertainty and interest rate volatility.

 

Credit fundamentals remained relatively stable throughout the year as the U.S. economy was resilient, and fears of a recession seemed to subside or at least pushed out further into the future. Investment grade credit spreads7 generally tightened throughout the fiscal year with a short-lived spike wider in March of 2023. The option adjusted spread (“OAS”)8 of the Bloomberg U.S. Credit Index9 peaked at 150 basis points

(“bps”)10 on March 15, 2023 amidst the extreme market volatility centered around regional bank uncertainty, then declined to a low of 104 bps at the end of July 2023. OAS then held relatively steady around these period low levels until October of 2023, which saw spreads mildly widen back out to finish the

 

4 

The core components of the proprietary liquidity score are based on a quantitative ranking of security characteristics obtained from company filings. Examples of data sets utilized to determine liquidity include time to maturity (e.g. time until the security reaches its maturity date as measured in in years), total issuer debt outstanding (e.g. the sum of all debt outstanding for a single corporate issuer), and time since original issuance (e.g. the time that has elapsed since the security was originally issued as measured in years).

 

5 

The ICE BofA MOVE Index measures U.S. bond market volatility by tracking a basket of OTC options on U.S. interest rate swaps.

 

6 

A yield curve is constructed by plotting a session’s final yields for various maturities including 1-month, 3-month, 6-month, 1-year, 2-year, 3-year, 5-year, 7-year, 10-year, 20-year, and 30-year maturities.

 

7 

Credit spread is the difference in yield between one debt security and another debt security with the same maturity but of lesser quality.

 

8 

The option-adjusted spread (OAS) is the measurement of the spread of a fixed-income security rate or portfolio and typically the Treasury securities yield (often referred to as the risk-free rate) and that spread is added to the fixed-income security for comparison purposes.

 

9 

Bloomberg U.S. Credit Index measures the investment grade, US dollar-denominated, taxable corporate and government related bond markets.

 

10 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

56    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® High Yield   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Value-Scored Bond Index Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

fiscal year at 119 bps. Credit spreads in the U.S. high yield11 market followed a similar path, as investment grade spreads during the fiscal year spiked up to 520 bps in March, measured by the OAS of the ICE BofA U.S. High Yield Index12. High yield spreads then tightened to a period low at the end of July 2023, and subsequently widened gently to finish the fiscal year at 448 bps.

 

During the fiscal year, the Fund’s NAV underperformed the ICE® BofA® U.S. High Yield Index by -37 bps. Both the Fund and the market index posted mid-single digit total returns for the fiscal year period. The Fund is designed to be sector neutral with performance predominantly driven by security selection within sectors and industries. The tracking difference between the Fund’s NAV and the Underlying Index’s total return for the period was -169 bps, which is reflective of the Fund’s management fee (-37 bps), trading costs (-53 bps), sampling (-60 bps), and other factors (-19 bps).

 

 

 

11 

High yield are fixed income securities that are rated in the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below.

 

12 

The ICE® BofA® US High Yield Index is market capitalization weighted and is designed to measure the performance of U.S. dollar denominated below investment grade (commonly referred to as “junk”) corporate debt publicly issued in the U.S. domestic market.

 

   FLEXSHARES ANNUAL REPORT     57  


Table of Contents

 

FlexShares® ESG & Climate   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Investment Grade Corporate Core Index Fund  Ticker:  FEIG

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year    

Fund

Inception
9/20/2021

 
 

 

 

 

FlexShares ESG & Climate Investment Grade Corporate Core Index Fund (Based on Net Asset Value)

    2.41     -9.43

FlexShares ESG & Climate Investment Grade Corporate Core Index Fund (Based on Market Price)

    2.28     -9.41

Bloomberg US Corporate Total Return Value Unhedged Index

    2.77     -9.16

Northern Trust ESG & Climate Investment Grade U.S. Corporate Core IndexSM

    2.88     -9.12

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.13% and the net expense ratio is 0.12%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust ESG & Climate Investment Grade U.S. Corporate Core IndexSM (the “Underlying Index”). The Underlying Index is designed to reflect the performance of a selection of U.S.-dollar-denominated corporate bonds issued by companies that exhibit certain environmental, social and governance (“ESG”) characteristics, while also seeking to provide broad-market, core exposure to U.S.-dollar-denominated investment grade corporate bonds of U.S. and non-U.S. issuers. The Underlying Index is designed to minimize tracking differences relative to the Northern Trust US Corporate Bond IndexSM (the “Parent Index”) while also seeking (a) an aggregate higher scoring of certain ESG characteristics, as measured by the Northern Trust ESG Vector Score, and (b) reduction of aggregate climate-related risk, as measured by certain carbon-related risk metrics, each relative to the Parent Index. As of October 31, 2023, there were 3,667 issues in the Underlying Index. Northern Trust Investments, Inc. (“NTI”) uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. NTI uses a representative sampling strategy to manage the Fund. This means that the Fund invests 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.

 

In the beginning of the fiscal year ending October 31, 2023, fixed income investments moved higher coming off extremely depressed levels, as market implied odds over a soft landing versus hard landing fluctuated. The beginning of the 2023 calendar year saw fixed income assets continue to post positive results despite significant interest rate volatility. Ultimately, the 2-year and 10-year treasury yields dropped in parallel down 0.40% in Q1 of 2023, while the U.S. Federal Reserve (the “Fed”) raised the Fed Funds rate twice. Overall, the markets entered a period of extreme volatility in March of 2023, following the regional banking disruptions as well as a rescue of a Swiss Bank. The ICE

 

58    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® ESG & Climate   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Investment Grade Corporate Core Index Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

BofA MOVE Index1, which measures bond market volatility, spiked on March 15, 2023 to a price of 198, which was a level last seen during the Great Financial Crisis. As Q1 of 2023 came to a close, fixed income investments rallied as investors sought relative safety, and systemic banking concerns were diminishing.

 

By the summer of 2023, treasury rates increased as inflation remained elevated as strength persisted in the U.S. labor market amidst the rising rate environment. During Q2 of 2023, the 2year treasury yields rose 0.87%, the 10-year treasury yields rose 0.37%, and the 30-year treasury yields rose by 0.21%. While the Fed did hike rates heading into the summer, they chose to pause in June of 2023. Inflation remained elevated into Q3 of 2023, and the labor market remained resilient. The Fed left rates unchanged at their September 2023 meeting, though market participants interpreted that decision as a hawkish pause to allow time to further evaluate the influence of the overall tightening on the U.S. economy. Treasuries sold off throughout Q3 of 2023, specifically in the middle to long end of the yield curve2 with 10-year and 30-year treasury yields rising to 4.57% and 4.70%, respectively.

 

During October of 2023, fixed income investments were under pressure as we observed a continuation in the rise of interest rates, which we believe was driven not by the changing expectations for inflation or the Fed, but instead an increase in the required term premium, or the compensation that investors require for bearing the risk that interest rates may change over the life of the bond, given economic uncertainty and interest rate volatility.

Credit fundamentals remained relatively stable throughout the year as the U.S. economy was resilient, and fears of a recession seemed to subside or at least pushed out further into the future. Investment grade credit spreads3 generally tightened throughout the fiscal year with a short-lived spike wider in March of 2023. The option adjusted spread (“OAS”)4 of the Bloomberg U.S. Credit Index5 peaked at 150 basis points (“bps”)6 on March 15, 2023 amidst the extreme market volatility centered around regional bank uncertainty, then declined to a low of 104 bps at the end of July 2023. OAS then held relatively steady around these period low levels until October of 2023, which saw spreads mildly widen back out to finish the fiscal year at 119 bps. Credit spreads in the U.S. high yield7 market followed a similar path, as investment grade spreads during the fiscal year spiked up to 520 bps in March, measured by the OAS of the ICE BofA U.S. High Yield Index8. High yield spreads then tightened to a period low at the end of July 2023, and subsequently widened gently to finish the fiscal year at 448 bps.

 

During the fiscal year, the Fund’s NAV underperformed the Bloomberg U.S. Corporate Bond Index9 by -36 bps. Overall, credit performed well as investment grade spreads generally tightened throughout the trailing 12-month period. The Fund is designed to be sector neutral with security selection predominantly driven by ESG and carbon-related risk characteristics within sectors and industries. The tracking difference between the Fund’s NAV and the Underlying Index’s total return for the period was -47 bps, which is reflective of the Fund’s management fee (-12 bps), trading costs (-7 bps), sampling (-29 bps), and other factors (+1 bps).

 

 

1

The ICE BofA MOVE Index measures U.S. bond market volatility by tracking a basket of OTC options on U.S. interest rate swaps.

 

2 

A yield curve is constructed by plotting a session’s final yields for various maturities including 1-month, 3-month, 6-month, 1-year, 2-year, 3-year, 5-year, 7-year, 10-year, 20-year, and 30-year maturities.

 

3 

Credit spread is the difference in yield between one debt security and another debt security with the same maturity but of lesser quality.

 

4 

The option-adjusted spread (OAS) is the measurement of the spread of a fixed-income security rate or portfolio and typically the Treasury securities yield (often referred to as the risk-free rate) and that spread is added to the fixed-income security for comparison purposes.

 

5 

Bloomberg U.S. Credit Index measures the investment grade, US dollar-denominated, taxable corporate and government related bond markets.

6 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

7 

High yield are fixed income securities that are rated in the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below.

 

8 

The ICE BofA US High Yield Index is market capitalization weighted and is designed to measure the performance of U.S. dollar denominated below investment grade (commonly referred to as “junk”) corporate debt publicly issued in the U.S. domestic market.

 

9 

Bloomberg U.S. Corporate Bond Index measures the investment grade, taxable corporate bond market.

 

   FLEXSHARES ANNUAL REPORT     59  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Ultra-Short Income Fund Ticker:  RAVI

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

    1 Year     5 Year     10 Year    

Fund

Inception

10/9/2012

 
 

 

 

 

FlexShares Ultra-Short Income Fund (Based on Net Asset Value)

    5.27     1.99     1.54     1.46

FlexShares Ultra-Short Income Fund (Based on Market Price)

    5.30     1.98     1.53     1.46

Bloomberg 1-3 Month U.S. Treasury Bill Index

    4.88     1.77     1.14     1.03

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.26% and the net expense ratio is 0.25%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks maximum current income consistent with the preservation of capital and liquidity. The Fund seeks to achieve its investment objective by investing under normal circumstances at least 80% of its total assets in a portfolio of fixed-income instruments, including bonds, debt securities and other similar instruments issued by U.S. and non-U.S. public and private sector entities. Such issuers include, without limitation, U.S. and non-U.S. governments and their agencies, instrumentalities or sponsored enterprises, U.S. state and local governments and municipalities, and U.S. and non-U.S. private-sector entities, such as corporations and banks. The average effective duration1 of the Fund will vary based on The Northern Trust Company Investment Policy Committee’s forecast for interest rates and will normally not exceed one year. The dollar-weighted average portfolio maturity of the Fund is normally not expected to exceed two years.

 

In the beginning of the fiscal year ending October 31, 2023, fixed income investments moved higher coming off extremely depressed levels, as market implied odds over a soft landing versus hard landing fluctuated. The beginning of the 2023 calendar year saw fixed income assets continue to post positive results despite significant interest rate volatility. Ultimately, the 2-year and 10-year treasury yields dropped in parallel down 0.40% in Q1 of 2023, while the U.S. Federal Reserve (the “Fed”) raised the Fed Funds rate twice. Overall, the markets entered a period of extreme volatility in March of 2023, following the regional banking disruptions as well as a rescue of a Swiss Bank. The ICE

 

1 

Average effective duration provides a measure of a fund’s interest-rate sensitivity and the longer a fund’s duration, the more sensitive the fund is to shifts in interest rates. Duration also gives an indication of how a fund’s NAV will change as interest rates change. A fund with a five-year duration would be expected to lose 5% of its NAV if interest rates rose by 1 percentage point, or gain 5%, if interest rates fell by 1 percentage point. Morningstar surveys fund companies for this information.

 

60    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Ultra-Short Income Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

BofA MOVE Index2, which measures bond market volatility, spiked on March 15, 2023 to a price of 198, which was a level last seen during the Great Financial Crisis. As Q1 of 2023 came to a close, fixed income investments rallied as investors sought relative safety, and systemic banking concerns were diminishing.

 

By the summer of 2023, treasury rates increased as inflation remained elevated as strength persisted in the U.S. labor market amidst the rising rate environment. During Q2 of 2023, the 2year treasury yields rose 0.87%, the 10-year treasury yields rose 0.37%, and the 30-year treasury yields rose by 0.21%. While the Fed did hike rates heading into the summer, they chose to pause in June of 2023. Inflation remained elevated into Q3 of 2023, and the labor market remained resilient. The Fed left rates unchanged at their September 2023 meeting, though market participants interpreted that decision as a hawkish pause to allow time to further evaluate the influence of the overall tightening on the U.S. economy. Treasuries sold off throughout Q3 of 2023, specifically in the middle to long end of the yield curve3 with 10-year and 30-year treasury yields rising to 4.57% and 4.70%, respectively.

 

During October of 2023, fixed income investments were under pressure as we observed a continuation in the rise of interest rates, which we believe was driven not by the changing expectations for inflation or the Fed, but instead an increase in the required term premium, or the compensation that investors require for bearing the risk that interest rates may change over the life of the bond, given economic uncertainty and interest rate volatility.

 

Credit fundamentals remained relatively stable throughout the year as the U.S. economy was resilient, and

fears of a recession seemed to subside or at least pushed out further into the future. Investment grade credit spreads4 generally tightened throughout the fiscal year with a short-lived spike wider in March of 2023. The option adjusted spread (“OAS”)5 of the Bloomberg U.S. Credit Index6 peaked at 150 basis points (“bps”)7 on March 15, 2023 amidst the extreme market volatility centered around regional bank uncertainty, then declined to a low of 104 bps at the end of July 2023. OAS then held relatively steady around these period low levels until October of 2023, which saw spreads mildly widen back out to finish the fiscal year at 119 bps. Credit spreads in the U.S. high yield8 market followed a similar path, as investment grade spreads during the fiscal year spiked up to 520 bps in March, measured by the OAS of the ICE BofA U.S. High Yield Index9. High yield spreads then tightened to a period low at the end of July 2023, and subsequently widened gently to finish the fiscal year at 448 bps.

 

For the 12 months ended October 31, 2023, the Fund outperformed the generic Treasury Bill index, as defined by the Bloomberg 1-3 Month U.S. Treasury Bill Index10, by 39 basis points (“bps”)11. During this period, 1-3 month Treasury yields rose drastically (1-month Treasury Bill yields rose by 179 bps and 3-month Bill yields rose by 141 bps). The Fund’s underweight to Treasuries, as well as its long to duration positioning, detracted slightly from performance as short-term rates rose, while the Fund’s curve positioning contributed positively to performance. The Fund’s exposure to corporate credit securities positively impacted performance versus the benchmark index.

2 

The ICE BofA MOVE Index measures U.S. bond market volatility by tracking a basket of OTC options on U.S. interest rate swaps.

 

3 

A yield curve is constructed by plotting a session’s final yields for various maturities including 1-month, 3-month, 6-month, 1-year, 2-year, 3-year, 5-year, 7-year, 10-year, 20-year, and 30year maturities.

 

4 

Credit spread is the difference in yield between one debt security and another debt security with the same maturity but of lesser quality.

 

5 

The option-adjusted spread (OAS) is the measurement of the spread of a fixed-income security rate or portfolio and typically the Treasury securities yield (often referred to as the riskfree rate) and that spread is added to the fixed-income security for comparison purposes.

 

6 

Bloomberg U.S. Credit Index measures the investment grade, US dollar-denominated, taxable corporate and government related bond markets.

7 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

8 

High yield are fixed income securities that are rated in the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below.

 

9 

The ICE BofA US High Yield Index is market capitalization weighted and is designed to measure the performance of U.S. dollar denominated below investment grade (commonly referred to as “junk”) corporate debt publicly issued in the U.S. domestic market.

 

10 

The Bloomberg 1-3 Month U.S. Treasury Bill Index is designed to measure the performance of public obligations of the U.S. Treasury that have a remaining maturity of greater than or equal to 1 month and less than 3 months.

 

11 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

   FLEXSHARES ANNUAL REPORT     61  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Core Select Bond Fund Ticker:   BNDC

 

 

CUMULATIVE PERFORMANCE

Through October 31, 2023

 

LOGO

 

 

AVERAGE ANNUAL TOTAL RETURN

For the period ended October 31, 2023

 

     1 Year     3 Year     5 Year     Fund
Inception
11/18/2016
 
  

 

 

 

FlexShares Core Select Bond Fund (Based on Net Asset Value)

     -0.15     -5.71     -0.08     -0.05

FlexShares Core Select Bond Fund (Based on Market Price)

     -0.15     -5.72     -0.10     -0.05

Bloomberg U.S. Aggregate Bond Index

     0.36     -5.57     -0.06     0.13

 

All data as of 10/31/23. Total returns based on market price do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, these returns would be lower. Total returns based on market price and net asset value (“NAV”) assume that dividends and capital gain distributions have been reinvested in the Fund at market price and NAV, respectively. NAV is calculated by dividing the total value of all the securities in the Fund’s portfolio plus cash, interest and receivables less any liabilities by the number of Fund shares outstanding. Market price is determined by the midpoint of the bid/ask spread at 4:00 p.m. Eastern Time from the primary listing exchange. Market price returns may vary from NAV returns.

 

Performance quoted represents past performance and does not guarantee future results. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Unlike the index that the Fund seeks to track, the Fund’s total returns are reduced by operating expenses, such as transaction costs and management fees. An investor cannot invest directly in an index.

 

Performance reflects contractual reimbursements in effect until March 1, 2024. In the absence of such reimbursements, performance would be reduced. The gross expense ratio of the Fund is 0.56% and the net expense ratio is 0.35%. The gross and net expense ratios disclosed are as reported in the Fund’s prospectus, which may differ from the gross and net expense ratios presented in the Fund’s financial reports. Current performance may be higher or lower than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed or sold in the market.

 

FlexShares ETFs’ performance data current to the most recent month-end is available at www.flexshares.com.

 

PORTFOLIO ANALYSIS

 

The Fund seeks total return and preservation of capital. The Fund seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets in U.S. dollar-denominated investment-grade fixed-income securities either directly or indirectly through exchange-traded funds (“ETFs”) and other registered investment companies (together with ETFs, “Underlying Funds”). The Fund primarily invests in fixed-rate securities of varying maturities, including bonds, debt securities and other similar instruments issued by U.S. public and U.S and non-U.S. private sector entities. Such issuers include, without limitation, U.S. governments and their agencies, instrumentalities or sponsored enterprises, and U.S. and non-U.S. private-sector entities, such as corporations and banks. The Fund may invest in fixed income securities of any maturity.

 

The Fund seeks to provide attractive risk-adjusted performance by investing in a portfolio of fixed-income securities and Underlying Funds. The Fund generally adjusts its allocations to securities based on Northern Trust Investment Inc.’s (“NTI”) assessment of potential changes in interest rate levels, the shape of the yield curve1 and credit spread relationships, which is the difference in yield between one debt security and another debt security with the same maturity but of lesser quality. The Fund also seeks to balance the potential for return and risk while emphasizing liquidity and diversification across a spectrum of U.S. dollar-denominated investment-grade fixed income securities.

 

In the beginning of the fiscal year ending October 31, 2023, fixed income investments moved higher coming off extremely depressed levels, as market implied odds over a soft landing versus hard landing fluctuated. The beginning of the 2023 calendar year saw fixed income assets continue to post positive

 

1 

A yield curve is constructed by plotting a session’s final yields for various maturities including 1-month, 3-month, 6-month, 1-year, 2-year, 3-year, 5-year, 7-year, 10-year, 20-year and 30year maturities.

 

62    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Core Select Bond Fund (cont.)

 

 

PORTFOLIO ANALYSIS (cont.)

 

results despite significant interest rate volatility. Ultimately, the 2-year and 10-year treasury yields dropped in parallel down 0.40% in Q1 of 2023, while the U.S. Federal Reserve (the “Fed”) raised the Fed Funds rate twice. Overall, the markets entered a period of extreme volatility in March of 2023, following the regional banking disruptions as well as a rescue of a Swiss Bank. The ICE BofA MOVE Index2, which measures bond market volatility, spiked on March 15, 2023 to a price of 198, which was a level last seen during the Great Financial Crisis. As Q1 of 2023 came to a close, fixed income investments rallied as investors sought relative safety, and systemic banking concerns were diminishing.

 

By the summer of 2023, treasury rates increased as inflation remained elevated as strength persisted in the U.S. labor market amidst the rising rate environment. During Q2 of 2023, the 2year treasury yields rose 0.87%, the 10-year treasury yields rose 0.37%, and the 30-year treasury yields rose by 0.21%. While the Fed did hike rates heading into the summer, they chose to pause in June of 2023. Inflation remained elevated into Q3 of 2023, and the labor market remained resilient. The Fed left rates unchanged at their September 2023 meeting, though market participants interpreted that decision as a hawkish pause to allow time to further evaluate the influence of the overall tightening on the U.S. economy. Treasuries sold off throughout Q3 of 2023, specifically in the middle to long end of the yield curve with 10-year and 30-year treasury yields rising to 4.57% and 4.70%, respectively.

 

During October of 2023, fixed income investments were under pressure as we observed a continuation in the rise of interest rates, which we believe was driven not by the changing expectations for inflation or the

Fed, but instead an increase in the required term premium, or the compensation that investors require for bearing the risk that interest rates may change over the life of the bond, given economic uncertainty and interest rate volatility.

 

Credit fundamentals remained relatively stable throughout the year as the U.S. economy was resilient, and fears of a recession seemed to subside or at least pushed out further into the future. Investment grade credit spreads3 generally tightened throughout the fiscal year with a short-lived spike wider in March of 2023. The option adjusted spread (“OAS”)4 of the Bloomberg U.S. Credit Index5 peaked at 150 basis points (“bps”)6 on March 15, 2023 amidst the extreme market volatility centered around regional bank uncertainty, then declined to a low of 104 bps at the end of July 2023. OAS then held relatively steady around these period low levels until October of 2023, which saw spreads mildly widen back out to finish the fiscal year at 119 bps. Credit spreads in the U.S. high yield7 market followed a similar path, as investment grade spreads during the fiscal year spiked up to 520 bps in March, measured by the OAS of the ICE BofA U.S. High Yield Index8. High yield spreads then tightened to a period low at the end of July 2023, and subsequently widened gently to finish the fiscal year at 448 bps.

 

During the fiscal year, the Fund was generally positioned neutral in comparison to the Bloomberg U.S. Aggregate Bond Index9 from a bond sector standpoint. The Fund did have a modest overweight to mortgage-backed securities (“MBS”) where we saw opportunity, given how cheap MBS spreads were trading relative to historical averages. While MBS spreads rallied through most of the fiscal year, they have sold off since July 2023 on the back of increased interest rate volatility,

 

2 

The ICE BofA MOVE Index measures U.S. bond market volatility by tracking a basket of OTC options on U.S. interest rate swaps.

 

3 

Credit spread is the difference in yield between one debt security and another debt security with the same maturity but of lesser quality.

 

4 

The option-adjusted spread (OAS) is the measurement of the spread of a fixed-income security rate or portfolio and typically the Treasury securities yield (often referred to as the riskfree rate) and that spread is added to the fixed-income security for comparison purposes.

 

5 

Bloomberg U.S. Credit Index measures the investment grade, US dollar-denominated, taxable corporate and government related bond markets.

6 

A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.

 

7 

High yield are fixed income securities that are rated in the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below.

 

8

The ICE BofA US High Yield Index is market capitalization weighted and is designed to measure the performance of U.S. dollar denominated below investment grade (commonly referred to as “junk”) corporate debt publicly issued in the U.S. domestic market.

 

9 

Bloomberg U.S. Aggregate Bond Index is a broad based benchmark that measures the investment grade, US dollar denominated, taxable bond market that includes treasuries, government related and corporate securities, mortgage backed securities, asset backed securities and collateralized mortgage backed securities.

 

   FLEXSHARES ANNUAL REPORT     63  


Table of Contents

 

FlexShares®   MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

Core Select Bond Fund (cont.)

 

 

 

 

 

 

PORTFOLIO ANALYSIS (cont.)

 

which was followed by MBS spread widening. Overall, the allocation to MBS was a modest positive contributor to Fund performance, which was offset by selection effects. Toward the end of the fiscal year, we changed the Fund’s duration positioning, moving from neutral on duration and yield curve positioning to a modest overweight position at the portfolio level. Treasury yields have risen significantly over the last several weeks of the fiscal year with the bulk of the move driven by wider term premiums. Our view is that the current level of term premium, or the added compensation we believe investors expect for the unknowns associated with holding longer-term debt, we see (in 10 year rates) is not justified by relevant macroeconomic factors such as long term growth and inflation expectations. We believe that the term premium could compress closer to our expectations of fair value. Over the fiscal year, the Fund underperformed the broader bond index, as defined by the Bloomberg U.S. Aggregate Bond Index, by -51 basis points.

 

64    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® Trust

Statements of Assets and Liabilities October 31, 2023

 

 

     FlexShares®
US Quality
Low Volatility
Index Fund
    

FlexShares®
Developed Markets ex-  US

Quality Low Volatility

Index Fund

   

FlexShares®

Emerging Markets

Quality Low Volatility

Index Fund

   

FlexShares®
Morningstar US

Market Factor Tilt
Index Fund

 

ASSETS

 

Securities, at cost

   $ 173,345,381      $ 65,665,911     $ 13,811,847     $ 853,779,239  

Affiliate securities, at cost

                        511,950  

Securities Lending Reinvestments, at cost

     2,683,994                    167,140,618  
  

 

 

 

Securities, at value†

     184,796,795        64,658,984       12,867,943       1,323,299,186  

Affiliate securities, at value

                        459,393  

Securities Lending Reinvestments, at value

     2,683,994                    167,151,673  

Cash

            601,264       90,240       10,768,083  

Cash segregated at broker*

     283        163,088       20,694       1,779,829  

Foreign cash††

            457,840       34,302        

Unrealized appreciation on forward foreign currency contracts

            27,699              

Receivables:

                         

Dividends and interest

     149,206        477,672       10,022       889,549  

Securities lending income

     1,261        635             52,209  

Capital shares issued

                         

Investment adviser

     729        286       119       5,223  

Securities sold

     113,852                    411  

Variation margin on futures contracts

     1,976                     
  

 

 

 

Total Assets

     187,748,096        66,387,468       13,023,320       1,504,405,556  
  

 

 

 

LIABILITIES

 

Cash overdraft

     13,058                     

Unrealized depreciation on forward foreign currency contracts

            18,644              

Payables:

         

Cash collateral received from securities loaned

     2,683,994                    167,151,893  

Deferred compensation (Note 7)

     8,045        4,295       729       169,566  

Investment advisory fees (Note 4)

     35,020        18,329       4,464       290,517  

Trustee fees (Note 7)

     1,259        613       125       10,807  

Securities purchased

                         

Deferred non-US capital gains taxes

                  20,095        

Due to Authorized Participant

                        411  

Variation margin on futures contracts

            82,236       14,061       763,593  

Capital shares redeemed

                         

Other

     2,100              4,000       7,708  
  

 

 

 

Total Liabilities

     2,743,476        124,117       43,474       168,394,495  
  

 

 

 

Net Assets

   $ 185,004,620      $ 66,263,351     $ 12,979,846     $ 1,336,011,061  
  

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

   $ 184,240,592      $ 72,298,348     $ 15,413,162     $ 910,599,852  

Distributable earnings (loss)

     764,028        (6,034,997     (2,433,316     425,411,209  
  

 

 

 

Net Assets

   $ 185,004,620      $ 66,263,351     $ 12,979,846     $ 1,336,011,061  
  

 

 

 

Shares Outstanding (unlimited number of shares authorized $ 0.0001 par value)

     3,600,001        2,800,001       600,001       8,500,001  

Net Asset Value

   $ 51.39      $ 23.67     $ 21.63     $ 157.18  

† Securities on loan, at value

   $ 13,821,520      $ 2,212,131     $     $ 206,017,475  

†† Cost of foreign cash

   $      $ 463,825     $ 33,435     $  

 

*

Includes cash pledged by the Fund to cover margin requirements for open futures contracts as of 10/31/23.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     65  


Table of Contents

 

 

Statements of Assets and Liabilities (cont.)

 

 

    

FlexShares®

Morningstar Developed

Markets ex-US Factor

Tilt Index Fund

   

FlexShares®
Morningstar Emerging
Markets Factor Tilt

Index Fund

    FlexShares®
US Quality
Large Cap
Index Fund
   

FlexShares®
STOXX® US

ESG Select

Index Fund

 

ASSETS

 

Securities, at cost

   $ 439,193,329     $ 212,305,889     $ 138,888,823     $ 153,363,355  

Affiliate securities, at cost

                       94,332  

Securities Lending Reinvestments, at cost

     8,760,452       677,315             97,159  
  

 

 

 

Securities, at value†

     462,046,494       218,908,022       145,727,979       164,852,322  

Affiliate securities, at value

                       77,115  

Securities Lending Reinvestments, at value

     8,760,452       677,315             97,159  

Cash

     1,014,072       204,890       927,601       1,747,305  

Cash segregated at broker*

     845,221       120,659       153,608       305,740  

Foreign cash††

     2,442,412       481,779              

Unrealized appreciation on forward foreign currency contracts

     14,407       6,171              

Receivables:

                        

Dividends and interest

     3,421,440       315,948       107,697       119,805  

Securities lending income

     23,942       8,626       442       486  

Capital shares issued

                        

Investment adviser

     5,571       25,931             641  

Securities sold

     84,733                    

Variation margin on futures contracts

                        
  

 

 

 

Total Assets

     478,658,744       220,749,341       146,917,327       167,200,573  
  

 

 

 

LIABILITIES

 

Cash overdraft

                        

Unrealized depreciation on forward foreign currency contracts

     44,298       333              

Payables:

        

Cash collateral received from securities loaned

     8,760,452       677,315             97,159  

Deferred compensation (Note 7)

     94,455       46,877       7,498       9,310  

Investment advisory fees (Note 4)

     158,640       113,389       31,354       46,246  

Trustee fees (Note 7)

     4,045       1,788       2,377       1,281  

Securities purchased

                        

Deferred non-US capital gains taxes

           1,078,422              

Due to Authorized Participant

                        

Variation margin on futures contracts

     331,029       57,692       67,206       121,129  

Capital shares redeemed

                        

Other

     27,000       50,000       3,000       700  
  

 

 

 

Total Liabilities

     9,419,919       2,025,816       111,435       275,825  
  

 

 

 

Net Assets

   $ 469,238,825     $ 218,723,525     $ 146,805,892     $ 166,924,748  
  

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

   $ 573,435,084     $ 291,920,670     $ 147,359,786     $ 162,616,808  

Distributable earnings (loss)

     (104,196,259     (73,197,145     (553,894     4,307,940  
  

 

 

 

Net Assets

   $ 469,238,825     $ 218,723,525     $ 146,805,892     $ 166,924,748  
  

 

 

 

Shares Outstanding (unlimited number of shares authorized $ 0.0001 par value)

     7,800,001       4,700,001       3,150,001       1,625,001  

Net Asset Value

   $ 60.16     $ 46.54     $ 46.61     $ 102.72  

† Securities on loan, at value

   $ 53,104,871     $ 5,168,593     $ 4,023,270     $ 4,105,867  

†† Cost of foreign cash

   $ 2,454,649     $ 432,693     $     $  

 

*

Includes cash pledged by the Fund to cover margin requirements for open futures contracts as of 10/31/23.

 

 

See Accompanying Notes to the Financial Statements.

 

66    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Assets and Liabilities (cont.)

 

 

    

FlexShares®

STOXX®

Global ESG
Select

Index Fund

    

FlexShares®
ESG & Climate US
Large Cap Core

Index Fund

    FlexShares®
ESG & Climate
Developed
Markets ex-US Core
Index  Fund
    FlexShares®
ESG & Climate
Emerging
Markets Core
Index Fund
 

ASSETS

 

Securities, at cost

   $ 125,624,190      $ 36,531,669     $ 38,644,229     $ 4,738,015  

Affiliate securities, at cost

                         

Securities Lending Reinvestments, at cost

     857,504                     
  

 

 

 

Securities, at value†

     150,048,123        36,613,279       36,835,813       4,152,508  

Affiliate securities, at value

                         

Securities Lending Reinvestments, at value

     857,504                     

Cash

     1,149,258        252,917       199,496       9,025  

Cash segregated at broker*

     205,971        20,080       69,280       6,742  

Foreign cash††

     169,454              260,687       30,703  

Unrealized appreciation on forward foreign currency contracts

     7,756              6,492       3  

Receivables:

                         

Dividends and interest

     402,478        30,508       147,985       5,319  

Securities lending income

     1,000                     

Capital shares issued

                         

Investment adviser

            169       208       18  

Securities sold

                         

Variation margin on futures contracts

                         
  

 

 

 

Total Assets

     152,841,544        36,916,953       37,519,961       4,204,318  
  

 

 

 

LIABILITIES

 

Cash overdraft

                         

Unrealized depreciation on forward foreign currency contracts

                  3,294        

Payables:

         

Cash collateral received from securities loaned

     857,504                     

Deferred compensation (Note 7)

     10,464        410       422       81  

Investment advisory fees (Note 4)

     54,993        2,797       3,890       656  

Trustee fees (Note 7)

     7,085        162       193       34  

Securities purchased

                         

Deferred non-US capital gains taxes

                         

Due to Authorized Participant

                         

Variation margin on futures contracts

     95,878        17,698       23,456       3,510  

Capital shares redeemed

                         

Other

                  4,500        
  

 

 

 

Total Liabilities

     1,025,924        21,067       35,755       4,281  
  

 

 

 

Net Assets

   $ 151,815,620      $ 36,895,886     $ 37,484,206     $ 4,200,037  
  

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

   $ 135,039,800      $ 37,339,681     $ 41,394,939     $ 5,009,376  

Distributable earnings (loss)

     16,775,820        (443,795     (3,910,733     (809,339
  

 

 

 

Net Assets

   $ 151,815,620      $ 36,895,886     $ 37,484,206     $ 4,200,037  
  

 

 

 

Shares Outstanding (unlimited number of shares authorized $ 0.0001 par value)

     1,150,001        775,000       900,000       100,000  

Net Asset Value

   $ 132.01      $ 47.61     $ 41.65     $ 42.00  

† Securities on loan, at value

   $ 6,708,462      $     $     $  

†† Cost of foreign cash

   $ 172,364      $     $ 263,945     $ 30,684  

 

*

Includes cash pledged by the Fund to cover margin requirements for open futures contracts as of 10/31/23.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     67  


Table of Contents

 

 

Statements of Assets and Liabilities (cont.)

 

 

    

FlexShares®
Morningstar Global

Upstream Natural
Resources Index
Fund

   

FlexShares®
STOXX®

Global Broad
Infrastructure
Index Fund

    FlexShares®
Global Quality
Real Estate
Index Fund
    FlexShares®
Real Assets
Allocation
Index Fund
 

ASSETS

 

Securities, at cost

   $ 6,639,775,626     $ 2,132,513,770     $ 283,496,998     $  

Affiliate securities, at cost

                       20,377,865  

Securities Lending Reinvestments, at cost

     303,751,788       40,144,363       2,704,220        
  

 

 

 

Securities, at value†

     6,897,383,095       2,006,949,303       241,286,554        

Affiliate securities, at value

                       16,571,447  

Securities Lending Reinvestments, at value

     303,763,185       40,144,363       2,704,220        

Cash

     6,822,064       5,640,536       1,449,049       2,514  

Cash segregated at broker*

     4,513,288       2,107,602       663,575        

Foreign cash††

     14,711,263       6,213,137       502,063        

Due from Custodian

     322,346                    

Unrealized appreciation on forward foreign currency contracts

     805,889       78,847       17,694        

Receivables:

                        

Dividends and interest

     6,938,045       6,579,205       1,154,225        

Securities lending income

     56,938       51,122       3,174        

Capital shares issued

                        

Investment adviser

     81,718       6,879       1,144       54  

Securities sold

           22,684              

Variation margin on futures contracts

                        
  

 

 

 

Total Assets

     7,235,397,831       2,067,793,678       247,781,698       16,574,015  
  

 

 

 

LIABILITIES

 

Cash overdraft

                        

Unrealized depreciation on forward foreign currency contracts

     827,889       14,821       20,492        

Payables:

        

Cash collateral received from securities loaned

     303,760,945       40,144,363       2,704,220        

Deferred compensation (Note 7)

     630,214       187,777       33,220       1,098  

Investment advisory fees (Note 4)

     2,773,369       804,125       102,691       164  

Trustee fees (Note 7)

     56,957       20,170       2,787       202  

Securities purchased

     322,346                    

Deferred non-US capital gains taxes

           467,278              

Due to Authorized Participant

                        

Variation margin on futures contracts

     1,738,563       961,681       240,957        

Capital shares redeemed

                        

Other

     1,500       12,000       4,000        
  

 

 

 

Total Liabilities

     310,111,783       42,612,215       3,108,367       1,464  
  

 

 

 

Net Assets

   $ 6,925,286,048     $ 2,025,181,463     $ 244,673,331     $ 16,572,551  
  

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

   $ 7,763,793,249     $ 2,386,937,469     $ 352,923,923     $ 21,145,503  

Distributable earnings (loss)

     (838,507,201     (361,756,006     (108,250,592     (4,572,952
  

 

 

 

Net Assets

   $ 6,925,286,048     $ 2,025,181,463     $ 244,673,331     $ 16,572,551  
  

 

 

 

Shares Outstanding (unlimited number of shares authorized $ 0.0001 par value)

     179,600,001       42,400,001       5,200,001       600,001  

Net Asset Value

   $ 38.56     $ 47.76     $ 47.05     $ 27.62  

† Securities on loan, at value

   $ 491,197,028     $ 185,056,097     $ 27,759,368     $  

†† Cost of foreign cash

   $ 14,296,646     $ 6,273,330     $ 508,327     $  

 

*

Includes cash pledged by the Fund to cover margin requirements for open futures contracts as of 10/31/23.

 

See Accompanying Notes to the Financial Statements.

 

68    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Assets and Liabilities (cont.)

 

 

     FlexShares®
Quality
Dividend
Index Fund
     FlexShares®
Quality
Dividend
Defensive
Index Fund
    FlexShares®
International
Quality
Dividend
Index Fund
    FlexShares®
International
Quality
Dividend
Defensive
Index Fund
 

ASSETS

 

Securities, at cost

   $ 1,330,163,281      $ 287,654,026     $ 509,465,426     $ 26,583,706  

Affiliate securities, at cost

                         

Securities Lending Reinvestments, at cost

     129,443,897        18,783,683       2,149,574       125,891  
  

 

 

 

Securities, at value†

     1,475,944,235        311,680,030       489,966,079       25,342,351  

Affiliate securities, at value

                         

Securities Lending Reinvestments, at value

     129,449,855        18,783,683       2,149,574       125,891  

Cash

     790,358        1,159,428       1,044,964       362,273  

Cash segregated at broker*

     392,110        276,551       956,449       142,747  

Foreign cash††

                  4,801,677       460,971  

Unrealized appreciation on forward foreign currency contracts

                  212,595        

Receivables:

                         

Dividends and interest

     1,832,869        331,873       3,363,902       288,033  

Securities lending income

     51,201        8,919       11,655       595  

Capital shares issued

                         

Investment adviser

     5,563        992       46,981       45  

Securities sold

                         

Variation margin on futures contracts

                         
  

 

 

 

Total Assets

     1,608,466,191        332,241,476       502,553,876       26,722,906  
  

 

 

 

LIABILITIES

 

Cash overdraft

                         

Unrealized depreciation on forward foreign currency contracts

                  135,605        

Payables:

         

Cash collateral received from securities loaned

     129,448,662        18,783,683       2,149,574       125,891  

Deferred compensation (Note 7)

     195,602        45,058       76,714       9,844  

Investment advisory fees (Note 4)

     473,493        100,017       202,770       7,264  

Trustee fees (Note 7)

     11,840        2,716       3,914       312  

Securities purchased

                         

Deferred non-US capital gains taxes

                  574,995       1,768  

Due to Authorized Participant

                         

Variation margin on futures contracts

     58,788        76,404       522,390       74,455  

Capital shares redeemed

                         

Other

     4,990        2,500       12,000        
  

 

 

 

Total Liabilities

     130,193,375        19,010,378       3,677,962       219,534  
  

 

 

 

Net Assets

   $ 1,478,272,816      $ 313,231,098     $ 498,875,914     $ 26,503,372  
  

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

   $ 1,477,021,150      $ 326,777,651     $ 713,024,210     $ 57,004,550  

Distributable earnings (loss)

     1,251,666        (13,546,553     (214,148,296     (30,501,178
  

 

 

 

Net Assets

   $ 1,478,272,816      $ 313,231,098     $ 498,875,914     $ 26,503,372  
  

 

 

 

Shares Outstanding (unlimited number of shares authorized $ 0.0001 par value)

     27,167,921        5,875,001       24,100,001       1,400,001  

Net Asset Value

   $ 54.41      $ 53.32     $ 20.70     $ 18.93  

† Securities on loan, at value

   $ 149,621,313      $ 26,472,637     $ 24,751,395     $ 1,119,564  

†† Cost of foreign cash

   $      $     $ 4,828,308     $ 460,068  

 

*

Includes cash pledged by the Fund to cover margin requirements for open futures contracts as of 10/31/23.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     69  


Table of Contents

 

 

Statements of Assets and Liabilities (cont.)

 

 

     FlexShares®
International
Quality Dividend
Dynamic Index
Fund
    FlexShares®
iBoxx 3-Year
Target
Duration TIPS
Index Fund
    FlexShares®
iBoxx 5-Year
Target
Duration TIPS
Index Fund
    FlexShares®
Disciplined
Duration MBS
Index Fund
 

ASSETS

 

Securities, at cost

   $ 70,125,114     $ 2,015,549,742     $ 871,004,354     $ 81,464,885  

Affiliate securities, at cost

                        

Securities Lending Reinvestments, at cost

     695,880                    
  

 

 

 

Securities, at value†

     64,781,455       1,923,187,015       809,374,738       73,778,449  

Affiliate securities, at value

                        

Securities Lending Reinvestments, at value

     695,880                    

Cash

     466,450       2,971,936       1,785,614       11,917,382  

Cash segregated at broker*

     117,684                    

Foreign cash††

     120,651                    

Unrealized appreciation on forward foreign currency contracts

     5,506                    

Receivables:

                        

Dividends and interest

     479,002       3,504,025       1,664,433       204,321  

Securities lending income

     1,055       2,335       1,155        

Capital shares issued

                        

Investment adviser

           4,709       1,790       150  

Securities sold

           60,279,072       36,313,271        

Variation margin on futures contracts

                        
  

 

 

 

Total Assets

     66,667,683       1,989,949,092       849,141,001       85,900,302  
  

 

 

 

LIABILITIES

 

Cash overdraft

                        

Unrealized depreciation on forward foreign currency contracts

     1,549                    

Payables:

        

Cash collateral received from securities loaned

     695,880                    

Deferred compensation (Note 7)

     6,642       278,900       98,966       8,144  

Investment advisory fees (Note 4)

     26,663       295,604       124,152       11,320  

Trustee fees (Note 7)

     3,958       15,863       5,056       772  

Securities purchased

           60,275,369       33,947,342       11,454,027  

Deferred non-US capital gains taxes

     147,073                    

Due to Authorized Participant

                        

Variation margin on futures contracts

     68,710                    

Capital shares redeemed

           1,160,119       3,415,083        

Other

     3,500                   2,000  
  

 

 

 

Total Liabilities

     953,975       62,025,855       37,590,599       11,476,263  
  

 

 

 

Net Assets

   $ 65,713,708     $ 1,927,923,237     $ 811,550,402     $ 74,424,039  
  

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

   $ 94,685,648     $ 2,172,291,648     $ 921,517,996     $ 96,332,336  

Distributable earnings (loss)

     (28,971,940     (244,368,411     (109,967,594     (21,908,297
  

 

 

 

Net Assets

   $ 65,713,708     $ 1,927,923,237     $ 811,550,402     $ 74,424,039  
  

 

 

 

Shares Outstanding (unlimited number of shares authorized $ 0.0001 par value)

     2,700,001       83,204,000       35,650,001       3,800,001  

Net Asset Value

   $ 24.34     $ 23.17     $ 22.76     $ 19.59  

† Securities on loan, at value

   $ 2,403,416     $ 1,197,583     $     $  

†† Cost of foreign cash

   $ 121,554     $     $     $  

 

*

Includes cash pledged by the Fund to cover margin requirements for open futures contracts as of 10/31/23.

 

See Accompanying Notes to the Financial Statements.

 

70    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Assets and Liabilities (cont.)

 

 

    

FlexShares®
Credit-Scored

US

Corporate Bond
Index Fund

   

FlexShares®
Credit-Scored
US Long

Corporate Bond
Index Fund

   

FlexShares®

High Yield

Value-Scored

Bond Index

Fund

    FlexShares®
ESG & Climate
Investment Grade
Corporate Core
Index Fund
 

ASSETS

 

Securities, at cost

   $ 280,469,072     $ 34,128,436     $ 1,262,089,529     $ 27,258,976  

Affiliate securities, at cost

                        

Securities Lending Reinvestments, at cost

                        
  

 

 

 

Securities, at value†

     265,621,732       27,787,389       1,199,469,056       23,856,368  

Affiliate securities, at value

                        

Securities Lending Reinvestments, at value

                        

Cash

     4,973,677       444,830       11,721,098       544,398  

Cash segregated at broker*

                        

Foreign cash††

                        

Due from Custodian

                 370,076        

Unrealized appreciation on forward foreign currency contracts

                        

Receivables:

                        

Dividends and interest

     2,871,765       435,805       23,574,590       281,528  

Securities lending income

                        

Capital shares issued

                 3,875,284        

Investment adviser

     686       88       25,072       224  

Securities sold

     25,582,442       2,521,186       100,752,851       688,634  

Variation margin on futures contracts

                        
  

 

 

 

Total Assets

     299,050,302       31,189,298       1,339,788,027       25,371,152  
  

 

 

 

LIABILITIES

 

Cash overdraft

                        

Unrealized depreciation on forward foreign currency contracts

                        

Payables:

        

Cash collateral received from securities loaned

                        

Deferred compensation (Note 7)

     17,626       3,747       24,907       407  

Investment advisory fees (Note 4)

     50,990       5,433       387,076       2,534  

Trustee fees (Note 7)

     1,600       298       6,315       232  

Securities purchased

     24,427,347       2,604,356       111,225,782       693,832  

Deferred non-US capital gains taxes

                        

Due to Authorized Participant

                        

Variation margin on futures contracts

                        

Capital shares redeemed

                 5,812,926        

Other

     3,000             24,500       2,000  
  

 

 

 

Total Liabilities

     24,500,563       2,613,834       117,481,506       699,005  
  

 

 

 

Net Assets

   $ 274,549,739     $ 28,575,464     $ 1,222,306,521     $ 24,672,147  
  

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

   $ 315,628,424     $ 47,053,815     $ 1,434,834,992     $ 36,124,837  

Distributable earnings (loss)

     (41,078,685     (18,478,351     (212,528,471     (11,452,690
  

 

 

 

Net Assets

   $ 274,549,739     $ 28,575,464     $ 1,222,306,521     $ 24,672,147  
  

 

 

 

Shares Outstanding (unlimited number of shares authorized $ 0.0001 par value)

     6,050,001       750,001       31,550,001       650,000  

Net Asset Value

   $ 45.38     $ 38.10     $ 38.74     $ 37.96  

† Securities on loan, at value

   $     $     $     $  

†† Cost of foreign cash

   $     $     $     $  
*

Includes cash pledged by the Fund to cover margin requirements for open futures contracts as of 10/31/23.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     71  


Table of Contents

 

 

Statements of Assets and Liabilities (cont.)

 

 

     FlexShares®
Ultra-Short
Income Fund
     FlexShares®
Core Select
Bond Fund
 

ASSETS

 

Securities, at cost

   $ 1,072,642,754      $ 150,905,727  

Affiliate securities, at cost

            48,573,769  

Securities Lending Reinvestments, at cost

            80,325  
  

 

 

 

Securities, at value†

     1,069,254,268        134,862,826  

Affiliate securities, at value

            47,171,295  

Securities Lending Reinvestments, at value

            80,325  

Cash

     21,785,475        500,987  

Cash segregated at broker*

            30,288  

Foreign cash††

             

Unrealized appreciation on forward foreign currency contracts

             

Receivables:

             

Dividends and interest

     7,100,320         

Securities lending income

            1,207  

Capital shares issued

             

Investment adviser

     3,133        808  

Securities sold

            1,524,606  

Variation margin on futures contracts

             
  

 

 

 

Total Assets

     1,098,143,196        184,172,342  
  

 

 

 

LIABILITIES

 

Cash overdraft

             

Unrealized depreciation on forward foreign currency contracts

             

Payables:

     

Cash collateral received from securities loaned

            80,325  

Deferred compensation (Note 7)

     43,881        8,287  

Investment advisory fees (Note 4)

     226,882        55,310  

Trustee fees (Note 7)

     6,119        1,264  

Securities purchased

     21,475,311         

Deferred non-US capital gains taxes

             

Due to Authorized Participant

             

Variation margin on futures contracts

            37,055  

Capital shares redeemed

            1,559,238  

Other

     1,925         
  

 

 

 

Total Liabilities

     21,754,118        1,741,479  
  

 

 

 

Net Assets

   $ 1,076,389,078      $ 182,430,863  
  

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

   $ 1,075,994,186      $ 218,122,992  

Distributable earnings (loss)

     394,892        (35,692,129
  

 

 

 

Net Assets

   $ 1,076,389,078      $ 182,430,863  
  

 

 

 

Shares Outstanding (unlimited number of shares authorized $ 0.0001 par value)

     14,330,001        8,775,001  

Net Asset Value

   $ 75.11      $ 20.79  

† Securities on loan, at value

   $      $ 12,937,865  

†† Cost of foreign cash

   $      $  

 

*

Includes cash pledged by the Fund to cover margin requirements for open futures contracts as of 10/31/23.

 

 

See Accompanying Notes to the Financial Statements.

 

72    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® Trust

Statements of Operations

For the year ended October 31, 2023

 

 

     FlexShares®
US Quality
Low Volatility
Index Fund
    FlexShares®
Developed Markets ex-US
Quality Low Volatility
Index  Fund
    FlexShares®
Emerging Markets
Quality Low Volatility
Index Fund
    FlexShares®
Morningstar US
Market Factor Tilt
Index Fund
 

INVESTMENT INCOME

 

Dividend income

   $ 3,483,589     $ 2,497,047     $ 625,262     $ 25,401,167  

Income from non-cash dividends

           125,957              

Dividend income received from affiliate

                       19,468  

Interest income

     3,542             1,413        

Securities lending income (net of fees) (Note 2)

     16,398       14,422             748,875  

Foreign withholding tax on dividends

     (6,941     (238,253     (66,575     (12,119

Foreign withholding tax on interest

                        
  

 

 

 

Total Investment Income

     3,496,588       2,399,173       560,100       26,157,391  
  

 

 

 

EXPENSES

 

Deferred compensation (Note 7)

     1,755       735       128       14,333  

Investment advisory fees

     399,546       234,875       59,599       3,564,943  

Trustee fees (Note 7)

     13,356       5,529       1,117       106,872  

Other expenses (Note 4)

                        
  

 

 

 

Total Gross Expenses Before Fees Reimbursed

     414,657       241,139       60,844       3,686,148  
  

 

 

 

Less:

 

Investment advisory fees reimbursed (Note 4)

     (6,191     (2,620     (515     (50,967
  

 

 

 

Total Net Expenses

     408,466       238,519       60,329       3,635,181  
  

 

 

 

Net Investment Income (Loss)

     3,088,122       2,160,654       499,771       22,522,210  
  

 

 

 

NET REALIZED GAIN (LOSS) FROM:

 

Transactions in investment securities of affiliated issuers

                       (27,260

Transactions in investment securities

     (7,143,809     (1,372,962     (396,042 )(1)      (24,155,740

In-kind redemptions on investments in affiliated securities

                       10,777  

In-kind redemptions on investments in securities

     11,134,030       950,797       (2,860     68,199,579  

Expiration or closing of futures contracts

     82,116       202,228       (5,586     292,338  

Settlement of forward foreign currency contracts

           (1,334     (8      

Foreign currency transactions

           4,617       (37,558      
  

 

 

 

Net Realized Gain (Loss)

     4,072,337       (216,654     (442,054     44,319,694  
  

 

 

 

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:

 

Investments in unaffiliated securities

     325,198       4,899,856       362,558 (2)      16,612,800  

Investments in affiliated securities

                       (110,312

Securities lending

                       16,008  

Futures contracts

     (4,832     (36,753     (4,868     (1,016,036

Forward foreign currency contracts

           (5,891            

Translation of other assets and liabilities denominated in foreign currencies

           15,682       1,036        
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation)

     320,366       4,872,894       358,726       15,502,460  
  

 

 

 

Net Realized and Unrealized Gain (Loss)

     4,392,703       4,656,240       (83,328     59,822,154  
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ 7,480,825     $ 6,816,894     $ 416,443     $ 82,344,364  
  

 

 

 

 

(1) 

Net of non-US capital gains tax of $18,661.

 

(2) 

Net of deferred non-US capital gains tax of $20,095.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     73  


Table of Contents

 

 

Statements of Operations (cont.)

 

 

     FlexShares®
Morningstar Developed
Markets ex-US Factor
Tilt Index Fund
    FlexShares®
Morningstar Emerging
Markets Factor Tilt
Index Fund
    FlexShares®
US Quality
Large Cap
Index Fund
    FlexShares®
STOXX® US
ESG Select
Index Fund
 

INVESTMENT INCOME

 

Dividend income

   $ 19,128,162     $ 8,893,222     $ 2,269,040     $ 2,799,817  

Income from non-cash dividends

           435,726              

Dividend income received from affiliate

                       2,449  

Interest income

           16,242              

Securities lending income (net of fees) (Note 2)

     470,436       131,089       8,292       7,363  

Foreign withholding tax on dividends

     (1,821,129     (1,098,147            

Foreign withholding tax on interest

           (8            
  

 

 

 

Total Investment Income

     17,777,469       8,378,124       2,277,332       2,809,629  
  

 

 

 

EXPENSES

        

Deferred compensation (Note 7)

     5,144       2,327       1,293       1,720  

Investment advisory fees

     2,016,539       1,388,377       335,673       551,704  

Trustee fees (Note 7)

     38,626       17,571       9,802       12,924  

Other expenses (Note 4)

     3,381       21,119              
  

 

 

 

Total Gross Expenses Before Fees Reimbursed

     2,063,690       1,429,394       346,768       566,348  
  

 

 

 

Less:

        

Investment advisory fees reimbursed (Note 4)

     (21,291     (45,848     (4,459     (6,051
  

 

 

 

Total Net Expenses

     2,042,399       1,383,546       342,309       560,297  
  

 

 

 

Net Investment Income (Loss)

     15,735,070       6,994,578       1,935,023       2,249,332  
  

 

 

 

NET REALIZED GAIN (LOSS) FROM:

        

Transactions in investment securities of affiliated issuers

                       (7,201

Transactions in investment securities

     (10,341,168     (7,087,688 )(1)      (2,857,571     (861,087

In-kind redemptions on investments in affiliated securities

                       (266

In-kind redemptions on investments in securities

     4,871,522       384,978       3,349,919       7,404,431  

Expiration or closing of futures contracts

     1,184,364       (15,728     20,757       112,767  

Settlement of forward foreign currency contracts

     (47,567     18,704              

Foreign currency transactions

     70,392       (343,019            
  

 

 

 

Net Realized Gain (Loss)

     (4,262,457     (7,042,753     513,105       6,648,644  
  

 

 

 

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:

        

Investments in unaffiliated securities

     49,637,108       27,389,253 (2)      8,250,292       10,548,192  

Investments in affiliated securities

                       (17,217

Securities lending

                        

Futures contracts

     (391,983     125,329       (17,315     (80,050

Forward foreign currency contracts

     21,599       1,326              

Translation of other assets and liabilities denominated in foreign currencies

     172,194       59,719              
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation)

     49,438,918       27,575,627       8,232,977       10,450,925  
  

 

 

 

Net Realized and Unrealized Gain (Loss)

     45,176,461       20,532,874       8,746,082       17,099,569  
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ 60,911,531     $ 27,527,452     $ 10,681,105     $ 19,348,901  
  

 

 

 

 

(1) 

Net of non-US capital gains tax of $239,046.

 

(2) 

Net of deferred non-US capital gains tax of $1,069,681.

 

See Accompanying Notes to the Financial Statements.

 

74    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Operations (cont.)

 

 

    

FlexShares®
STOXX®
Global ESG

Select

Index Fund

    FlexShares®
ESG & Climate US
Large Cap Core
Index Fund
    FlexShares®
ESG & Climate
Developed
Markets ex-US Core
Index  Fund
    FlexShares®
ESG & Climate
Emerging
Markets Core
Index Fund
 

INVESTMENT INCOME

 

Dividend income

   $ 3,724,221     $ 534,743     $ 1,232,134     $ 128,645  

Income from non-cash dividends

                        

Dividend income received from affiliate

                        

Interest income

           1,195              

Securities lending income (net of fees) (Note 2)

     18,246                    

Foreign withholding tax on dividends

     (223,585     (258     (125,217     (18,455

Foreign withholding tax on interest

                        
  

 

 

 

Total Investment Income

     3,518,882       535,680       1,106,917       110,190  
  

 

 

 

EXPENSES

 

Deferred compensation (Note 7)

     1,563       272       293       45  

Investment advisory fees

     656,624       28,256       41,277       8,066  

Trustee fees (Note 7)

     11,717       2,197       2,406       350  

Other expenses (Note 4)

                        
  

 

 

 

Total Gross Expenses Before Fees Reimbursed

     669,904       30,725       43,976       8,461  
  

 

 

 

Less:

 

Investment advisory fees reimbursed (Note 4)

     (5,417     (927     (1,012     (173
  

 

 

 

Total Net Expenses

     664,487       29,798       42,964       8,288  
  

 

 

 

Net Investment Income (Loss)

     2,854,395       505,882       1,063,953       101,902  
  

 

 

 

NET REALIZED GAIN (LOSS) FROM:

 

Transactions in investment securities of affiliated issuers

                        

Transactions in investment securities

     (1,349,624     (399,518     (1,289,113     (175,668 )(1) 

In-kind redemptions on investments in affiliated securities

                        

In-kind redemptions on investments in securities

     3,774,231       358,040              

Expiration or closing of futures contracts

     140,996       23,434       34,251       (1,316

Settlement of forward foreign currency contracts

     957             343       7  

Foreign currency transactions

     8,247             (12,117     (5,294
  

 

 

 

Net Realized Gain (Loss)

     2,574,807       (18,044     (1,266,636     (182,271
  

 

 

 

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:

        

Investments in unaffiliated securities

     14,843,615       2,089,029       1,681,403       513,921  

Investments in affiliated securities

                        

Securities lending

                        

Futures contracts

     (54,222     (12,103     (16,718     3,300  

Forward foreign currency contracts

     3,160             408       3  

Translation of other assets and liabilities denominated in foreign currencies

     14,108             (4,452     310  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation)

     14,806,661       2,076,926       1,660,641       517,534  
  

 

 

 

Net Realized and Unrealized Gain (Loss)

     17,381,468       2,058,882       394,005       335,263  
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ 20,235,863     $ 2,564,764     $ 1,457,958     $ 437,165  
  

 

 

 

 

(1)

Net of non-US capital gains tax of $432.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     75  


Table of Contents

 

 

Statements of Operations (cont.)

 

 

     FlexShares®
Morningstar Global
Upstream Natural
Resources Index
Fund
    FlexShares®
STOXX®
Global Broad
Infrastructure
Index Fund
    FlexShares®
Global Quality
Real Estate
Index Fund
    FlexShares®
Real Assets
Allocation
Index Fund
 

INVESTMENT INCOME

 

Dividend income

   $ 303,850,295     $ 78,759,280     $ 10,952,298     $  

Income from non-cash dividends

                        

Dividend income received from affiliate

                       532,845  

Interest income

           55,626              

Securities lending income (net of fees) (Note 2)

     2,505,995       908,051       60,398        

Foreign withholding tax on dividends

     (17,078,398     (5,143,864     (523,558      

Foreign withholding tax on interest

                        
  

 

 

 

Total Investment Income

     289,277,892       74,579,093       10,489,138       532,845  
  

 

 

 

EXPENSES

        

Deferred compensation (Note 7)

     74,311       24,745       3,362       232  

Investment advisory fees

     33,743,024       10,896,769       1,435,405       118,048  

Administration fees (Note 5)

                 1,573        

Trustee fees (Note 7)

     545,297       179,574       24,562       1,706  

Other expenses (Note 4)

     56,856                    
  

 

 

 

Total Gross Expenses Before Fees Reimbursed

     34,419,488       11,101,088       1,464,902       119,986  
  

 

 

 

Less:

 

Investment advisory fees reimbursed (Note 4)

     (322,945     (90,757     (14,271     (98,833
  

 

 

 

Total Net Expenses

     34,096,543       11,010,331       1,450,631       21,153  
  

 

 

 

Net Investment Income (Loss)

     255,181,349       63,568,762       9,038,507       511,692  
  

 

 

 

NET REALIZED GAIN (LOSS) FROM:

 

Transactions in investment securities of affiliated issuers

                       (574,000

Transactions in investment securities

     26,611,649 (1)      (60,907,295 )(2)      (30,195,487      

In-kind redemptions on investments in affiliated securities

                       (1,193,639

In-kind redemptions on investments in securities

     13,171,091       118,182,191       3,452,008        

Expiration or closing of futures contracts

     (1,699,233     1,789,383       425,518        

Settlement of forward foreign currency contracts

     (492,100     53,105       112,370        

Foreign currency transactions

     (297,240     (351,195     2,470        
  

 

 

 

Net Realized Gain (Loss)

     37,294,167       58,766,189       (26,203,121     (1,767,639
  

 

 

 

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:

 

Investments in unaffiliated securities

     (603,501,036     (59,229,140 )(3)      (2,528,412      

Investments in affiliated securities

                       1,536,542 (4) 

Securities lending

     14,613                    

Futures contracts

     (1,694,521     (921,993     (187,225      

Forward foreign currency contracts

     266,510       112,999       (16,487      

Translation of other assets and liabilities denominated in foreign currencies

     (107,065     104,982       16,041        
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation)

     (605,021,499     (59,933,152     (2,716,083     1,536,542  
  

 

 

 

Net Realized and Unrealized Gain (Loss)

     (567,727,332     (1,166,963     (28,919,204     (231,097
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ (312,545,983   $ 62,401,799     $ (19,880,697   $ 280,595  
  

 

 

 

 

(1) 

Net of non-US capital gains tax of $306.

 

(2) 

Net of non-US capital gains tax of $544,794.

 

(3) 

Net of deferred non-US capital gains tax of $467,278.

 

See Accompanying Notes to the Financial Statements.

 

76    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Operations (cont.)

 

 

    

FlexShares®

Quality

Dividend

Index Fund

   

FlexShares®

Quality

Dividend

Defensive

Index Fund

   

FlexShares®
International

Quality

Dividend

Index Fund

   

FlexShares®

International

Quality

Dividend

Defensive
Index Fund

 

INVESTMENT INCOME

 

Dividend income

   $ 43,558,447     $ 9,322,276     $ 33,308,880     $ 1,851,409  

Income from non-cash dividends

                        

Dividend income received from affiliate

                        

Interest income

                        

Securities lending income (net of fees) (Note 2)

     1,121,444       218,965       261,483       14,727  

Foreign withholding tax on dividends

     (656,478     (147,831     (3,864,449     (191,639

Foreign withholding tax on interest

                        
  

 

 

 

Total Investment Income

     44,023,413       9,393,410       29,705,914       1,674,497  
  

 

 

 

EXPENSES

 

Deferred compensation (Note 7)

     15,772       3,500       5,125       372  

Investment advisory fees

     5,758,194       1,253,222       2,485,060       152,814  

Trustee fees (Note 7)

     116,387       25,461       38,858       2,619  

Other expenses (Note 4)

                 44,638        
  

 

 

 

Total Gross Expenses Before Fees Reimbursed

     5,890,353       1,282,183       2,573,681       155,805  
  

 

 

 

Less:

 

Investment advisory fees reimbursed (Note 4)

     (55,150     (12,200     (62,037     (1,348
  

 

 

 

Total Net Expenses

     5,835,203       1,269,983       2,511,644       154,457  
  

 

 

 

Net Investment Income (Loss)

     38,188,210       8,123,427       27,194,270       1,520,040  
  

 

 

 

NET REALIZED GAIN (LOSS) FROM:

 

Transactions in investment securities of affiliated issuers

                        

Transactions in investment securities

     (92,662,836     (10,859,478     (14,259,749 )(1)      (1,098,205 )(2) 

In-kind redemptions on investments in affiliated securities

                        

In-kind redemptions on investments in securities

     152,543,538       26,282,096       3,130,154       1,103,875  

Expiration or closing of futures contracts

     357,938       154,895       926,785       68,091  

Settlement of forward foreign currency contracts

                 (74,191     (41,670

Foreign currency transactions

                 (120,659     (12,764
  

 

 

 

Net Realized Gain (Loss)

     60,238,640       15,577,513       (10,397,660     19,327  
  

 

 

 

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:

        

Investments in unaffiliated securities

     3,681,484       2,034,842       58,195,156 (3)      3,826,375 (4) 

Securities lending

     7,965                    

Futures contracts

     (101,537     (31,829     (180,632     (41,044

Forward foreign currency contracts

                 93,106       (18,270

Translation of other assets and liabilities denominated in foreign currencies

                 101,623       16,509  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation)

     3,587,912       2,003,013       58,209,253       3,783,570  
  

 

 

 

Net Realized and Unrealized Gain (Loss)

     63,826,552       17,580,526       47,811,593       3,802,897  
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ 102,014,762     $ 25,703,953     $ 75,005,863     $ 5,322,937  
  

 

 

 

 

(1) 

Net of non-US capital gains tax of $456,107.

 

(2) 

Net of non-US capital gains tax of $533.

 

(3) 

Net of deferred non-US capital gains tax of $574,995.

 

(4) 

Net of deferred non-US capital gains tax of $1,768.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     77  


Table of Contents

 

 

Statements of Operations (cont.)

 

 

     FlexShares®
International
Quality Dividend
Dynamic Index
Fund
    FlexShares®
iBoxx 3-Year
Target
Duration TIPS
Index Fund
    FlexShares®
iBoxx 5-Year
Target
Duration TIPS
Index Fund
    FlexShares®
Disciplined
Duration MBS
Index Fund
 

INVESTMENT INCOME

 

Dividend income

   $ 5,371,014     $     $     $  

Income from non-cash dividends

                        

Dividend income received from affiliate

                        

Interest income

           84,496,641       31,719,995       2,376,090  

Securities lending income (net of fees) (Note 2)

     39,993       22,418       37,494        

Foreign withholding tax on dividends

     (635,023                  

Foreign withholding tax on interest

                        
  

 

 

 

Total Investment Income

     4,775,984       84,519,059       31,757,489       2,376,090  
  

 

 

 

EXPENSES

 

Deferred compensation (Note 7)

     882       20,699       6,962       914  

Investment advisory fees

     412,971       3,566,309       1,283,920       163,535  

Trustee fees (Note 7)

     6,874       150,333       51,916       6,496  

Other expenses (Note 4)

                        
  

 

 

 

Total Gross Expenses Before Fees Reimbursed

     420,727       3,737,341       1,342,798       170,945  
  

 

 

 

Less:

 

Investment advisory fees reimbursed (Note 4)

     (3,318     (74,099     (24,059     (3,410
  

 

 

 

Total Net Expenses

     417,409       3,663,242       1,318,739       167,535  
  

 

 

 

Net Investment Income (Loss)

     4,358,575       80,855,817       30,438,750       2,208,555  
  

 

 

 

NET REALIZED GAIN (LOSS) FROM:

 

Transactions in investment securities of affiliated issuers

                        

Transactions in investment securities

     (4,515,937 )(1)      (65,630,974     (34,032,343     (3,912,271

In-kind redemptions on investments in affiliated securities

                        

In-kind redemptions on investments in securities

     4,726,915       (4,342,963     394,493        

Expiration or closing of futures contracts

     234,106                    

Settlement of forward foreign currency contracts

     (4,559                  

Foreign currency transactions

     (26,497                  
  

 

 

 

Net Realized Gain (Loss)

     414,028       (69,973,937     (33,637,850     (3,912,271
  

 

 

 

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:

        

Investments in unaffiliated securities

     9,195,011 (2)      26,655,120       1,002,375       3,495,416  

Securities lending

                        

Futures contracts

     (24,231                  

Forward foreign currency contracts

     (6,064                  

Translation of other assets and liabilities denominated in foreign currencies

     5,958                    
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation)

     9,170,674       26,655,120       1,002,375       3,495,416  
  

 

 

 

Net Realized and Unrealized Gain (Loss)

     9,584,702       (43,318,817     (32,635,475     (416,855
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ 13,943,277     $ 37,537,000     $ (2,196,725   $ 1,791,700  
  

 

 

 

 

(1) 

Net of non-US capital gains tax of $53,469.

 

(2) 

Net of deferred non-US capital gains tax of $147,073.

 

See Accompanying Notes to the Financial Statements.

 

78    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Operations (cont.)

 

 

    

FlexShares®
Credit-Scored
US

Corporate Bond
Index Fund

    FlexShares®
Credit-Scored
US Long
Corporate Bond
Index Fund
    FlexShares®
High Yield
Value-Scored
Bond Index
Fund
    FlexShares®
ESG & Climate
Investment Grade
Corporate Core
Index Fund
 

INVESTMENT INCOME

 

Dividend income

   $     $     $     $  

Income from non-cash dividends

                        

Dividend income received from affiliate

                        

Interest income

     9,866,877       1,761,884       100,562,917       1,372,483  

Securities lending income (net of fees) (Note 2)

                        

Foreign withholding tax on dividends

                        

Foreign withholding tax on interest

                 (47,362      
  

 

 

 

Total Investment Income

     9,866,877       1,761,884       100,515,555       1,372,483  
  

 

 

 

EXPENSES

        

Deferred compensation (Note 7)

     2,438       359       10,094       310  

Investment advisory fees

     547,702       73,984       4,010,051       39,929  

Trustee fees (Note 7)

     18,203       2,648       77,019       2,580  

Other expenses (Note 4)

                        
  

 

 

 

Total Gross Expenses Before Fees Reimbursed

     568,343       76,991       4,097,164       42,819  
  

 

 

 

Less:

        

Investment advisory fees reimbursed (Note 4)

     (8,442     (3,529     (119,275     (1,263
  

 

 

 

Total Net Expenses

     559,901       73,462       3,977,889       41,556  
  

 

 

 

Net Investment Income (Loss)

     9,306,976       1,688,422       96,537,666       1,330,927  
  

 

 

 

NET REALIZED GAIN (LOSS) FROM:

        

Transactions in investment securities of affiliated issuers

                        

Transactions in investment securities

     (16,010,333     (7,142,718     (73,703,129     (2,757,523

In-kind redemptions on investments in affiliated securities

                        

In-kind redemptions on investments in securities

                        

Expiration or closing of futures contracts

                        

Settlement of forward foreign currency contracts

                        

Foreign currency transactions

                        
  

 

 

 

Net Realized Gain (Loss)

     (16,010,333     (7,142,718     (73,703,129     (2,757,523
  

 

 

 

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:

        

Investments in unaffiliated securities

     15,511,584       6,730,934       27,158,390       1,697,139  

Investments in affiliated securities

                        

Securities lending

                        

Futures contracts

                        

Forward foreign currency contracts

                        

Translation of other assets and liabilities denominated in foreign currencies

                        
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation)

     15,511,584       6,730,934       27,158,390       1,697,139  
  

 

 

 

Net Realized and Unrealized Gain (Loss)

     (498,749     (411,784     (46,544,739     (1,060,384
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ 8,808,227     $ 1,276,638     $ 49,992,927     $ 270,543  
  

 

 

 

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     79  


Table of Contents

 

 

Statements of Operations (cont.)

 

 

     FlexShares®
Ultra-Short
Income Fund
    FlexShares®
Core Select
Bond Fund
 

INVESTMENT INCOME

 

Dividend income

   $     $ 4,175,668  

Income from non-cash dividends

            

Dividend income received from affiliate

           1,698,833  

Interest income

     43,894,643       20,770  

Securities lending income (net of fees) (Note 2)

           60,907  

Foreign withholding tax on dividends

            

Foreign withholding tax on interest

            
  

 

 

 

Total Investment Income

     43,894,643       5,956,178  
  

 

 

 

EXPENSES

    

Deferred compensation (Note 7)

     9,162       1,771  

Investment advisory fees

     2,391,804       646,164  

Trustee fees (Note 7)

     68,480       13,518  

Other expenses (Note 4)

            
  

 

 

 

Total Gross Expenses Before Fees Reimbursed

     2,469,446       661,453  
  

 

 

 

Less:

    

Investment advisory fees reimbursed (Note 4)

     (30,684     (200,471
  

 

 

 

Total Net Expenses

     2,438,762       460,982  
  

 

 

 

Net Investment Income (Loss)

     41,455,881       5,495,196  
  

 

 

 

NET REALIZED GAIN (LOSS) FROM:

    

Transactions in investment securities of affiliated issuers

           (1,126,110

Transactions in investment securities

     14,152       (2,046,267

In-kind redemptions on investments in affiliated securities

           25,550  

In-kind redemptions on investments in securities

           103,017  

Expiration or closing of futures contracts

           (145,963

Settlement of forward foreign currency contracts

            

Foreign currency transactions

            
  

 

 

 

Net Realized Gain (Loss)

     14,152       (3,189,773
  

 

 

 

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:

    

Investments in unaffiliated securities

     7,484,444       (5,423,104

Investments in affiliated securities

           1,535,186  

Securities lending

            

Futures contracts

           (33,289

Forward foreign currency contracts

            

Translation of other assets and liabilities denominated in foreign currencies

            
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation)

     7,484,444       (3,921,207
  

 

 

 

Net Realized and Unrealized Gain (Loss)

     7,498,596       (7,110,980
  

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

   $ 48,954,477     $ (1,615,784
  

 

 

 

 

See Accompanying Notes to the Financial Statements.

 

80    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

FlexShares® Trust

Statements of Changes in Net Assets

 

 

     FlexShares® US Quality Low
Volatility Index Fund
    FlexShares® Developed Markets
ex-US Quality  Low Volatility Index Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 3,088,122     $ 2,565,712     $ 2,160,654     $ 1,827,612  

Net realized gain (loss)

     4,072,337       4,986,550       (216,654     (2,233,170

Net change in unrealized appreciation (depreciation)

     320,366       (19,711,109     4,872,894       (13,557,671
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     7,480,825       (12,158,847     6,816,894       (13,963,229
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (3,156,833     (2,196,287     (2,014,225     (2,140,729
  

 

 

 

Total distributions

     (3,156,833     (2,196,287     (2,014,225     (2,140,729
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

     69,071,863       51,896,738       7,306,967       10,600,255  

Cost of shares redeemed

     (50,959,758     (36,047,573     (7,698,033     (8,015,506
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     18,112,105       15,849,165       (391,066     2,584,749  
  

 

 

 

Total Increase (Decrease) in Net Assets

     22,436,097       1,494,031       4,411,603       (13,519,209
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 162,568,523     $ 161,074,492     $ 61,851,748     $ 75,370,957  
  

 

 

 

End of Period

   $ 185,004,620     $ 162,568,523     $ 66,263,351     $ 61,851,748  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     3,250,001       2,950,001       2,800,001       2,700,001  

Shares issued

                       100,000  

Shares issued in-kind

     1,325,000       1,000,000       300,000       300,000  

Shares redeemed

                        

Shares redeemed in-kind

     (975,000     (700,000     (300,000     (300,000
  

 

 

 

Shares Outstanding, End of Period

     3,600,001       3,250,001       2,800,001       2,800,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     81  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® Emerging Markets
Quality Low Volatility Index Fund
    FlexShares® Morningstar US
Market Factor Tilt Index Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 499,771     $ 388,332     $ 22,522,210     $ 22,502,916  

Net realized gain (loss)

     (442,054     (866,287     44,319,694       68,387,164  

Net change in unrealized appreciation (depreciation)

     358,726       (2,322,376     15,502,460       (329,620,719
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     416,443       (2,800,331     82,344,364       (238,730,639
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (436,593     (416,284     (21,821,054     (22,299,297

Tax return of capital

           (24,777            
  

 

 

 

Total distributions

     (436,593     (441,061     (21,821,054     (22,299,297
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

     9,401,694                   59,308,274  

Cost of shares redeemed

     (4,615,590     (4,388,407     (121,919,751     (127,889,854
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     4,786,104       (4,388,407     (121,919,751     (68,581,580
  

 

 

 

Total Increase (Decrease) in Net Assets

     4,765,954       (7,629,799     (61,396,441     (329,611,516
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 8,213,892     $ 15,843,691     $ 1,397,407,502     $ 1,727,019,018  
  

 

 

 

End of Period

   $ 12,979,846     $ 8,213,892     $ 1,336,011,061     $ 1,397,407,502  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     400,001       600,001       9,250,001       9,650,001  

Shares issued

                        

Shares issued in-kind

     400,000                   350,000  

Shares redeemed

                        

Shares redeemed in-kind

     (200,000     (200,000     (750,000     (750,000
  

 

 

 

Shares Outstanding, End of Period

     600,001       400,001       8,500,001       9,250,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

82    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® Morningstar
Developed Markets  ex-US
Factor Tilt Index Fund
    FlexShares® Morningstar
Emerging Markets Factor Tilt
Index  Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 15,735,070     $ 16,741,670     $ 6,994,578     $ 9,809,271  

Net realized gain (loss)

     (4,262,457     1,512,421       (7,042,753     (13,258,134

Net change in unrealized appreciation (depreciation)

     49,438,918       (161,673,906     27,575,627       (79,920,628
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     60,911,531       (143,419,815     27,527,452       (83,369,491
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (13,198,440     (22,504,833     (7,099,686     (12,431,512

Tax return of capital

           (992,999            
  

 

 

 

Total distributions

     (13,198,440     (23,497,832     (7,099,686     (12,431,512
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

           14,617,000       10,189,317       10,793,304  

Cost of shares redeemed

     (25,228,446     (49,583,666     (18,782,471     (42,475,383
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     (25,228,446     (34,966,666     (8,593,154     (31,682,079
  

 

 

 

Total Increase (Decrease) in Net Assets

     22,484,645       (201,884,313     11,834,612       (127,483,082
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 446,754,180     $ 648,638,493     $ 206,888,913     $ 334,371,995  
  

 

 

 

End of Period

   $ 469,238,825     $ 446,754,180     $ 218,723,525     $ 206,888,913  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     8,200,001       8,800,001       4,900,001       5,500,001  

Shares issued

                        

Shares issued in-kind

           200,000       200,000       200,000  

Shares redeemed

                        

Shares redeemed in-kind

     (400,000     (800,000     (400,000     (800,000
  

 

 

 

Shares Outstanding, End of Period

     7,800,001       8,200,001       4,700,001       4,900,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     83  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® US Quality
Large Cap Index Fund
    FlexShares® STOXX® US
ESG Select Index Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 1,935,023     $ 1,866,119     $ 2,249,332     $ 2,217,868  

Net realized gain (loss)

     513,105       11,695,699       6,648,644       4,095,701  

Net change in unrealized appreciation (depreciation)

     8,232,977       (32,784,418     10,450,925       (39,534,134
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     10,681,105       (19,222,600     19,348,901       (33,220,565
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (1,897,433     (1,808,374     (2,147,796     (2,266,829
  

 

 

 

Total distributions

     (1,897,433     (1,808,374     (2,147,796     (2,266,829
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

     26,273,873       57,305,777       7,197,512       37,713,363  

Cost of shares redeemed

     (15,601,493     (53,400,212     (29,453,795     (21,888,788
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     10,672,380       3,905,565       (22,256,283     15,824,575  
  

 

 

 

Total Increase (Decrease) in Net Assets

     19,456,052       (17,125,409     (5,055,178     (19,662,819
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 127,349,840     $ 144,475,249     $ 171,979,926     $ 191,642,745  
  

 

 

 

End of Period

   $ 146,805,892     $ 127,349,840     $ 166,924,748     $ 171,979,926  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     2,950,001       2,875,001       1,850,001       1,700,001  

Shares issued

                        

Shares issued in-kind

     550,000       1,300,000       75,000       350,000  

Shares redeemed

                        

Shares redeemed in-kind

     (350,000     (1,225,000     (300,000     (200,000
  

 

 

 

Shares Outstanding, End of Period

     3,150,001       2,950,001       1,625,001       1,850,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

84    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® STOXX®  Global
ESG Select Index Fund
    FlexShares® ESG & Climate US
Large Cap Core Index  Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 2,854,395     $ 2,805,170     $ 505,882     $ 162,899  

Net realized gain (loss)

     2,574,807       3,353,319       (18,044     (133,446

Net change in unrealized appreciation (depreciation)

     14,806,661       (41,798,644     2,076,926       (2,180,219
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     20,235,863       (35,640,155     2,564,764       (2,150,766
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (2,604,964     (3,114,461     (460,917     (129,697
  

 

 

 

Total distributions

     (2,604,964     (3,114,461     (460,917     (129,697
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

           14,352,429       13,970,255       24,984,332  

Cost of shares redeemed

     (12,740,756     (14,389,810     (1,281,601     (3,269,970
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     (12,740,756     (37,381     12,688,654       21,714,362  
  

 

 

 

Total Increase (Decrease) in Net Assets

     4,890,143       (38,791,997     14,792,501       19,433,899  
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 146,925,477     $ 185,717,474     $ 22,103,385     $ 2,669,486  
  

 

 

 

End of Period

   $ 151,815,620     $ 146,925,477     $ 36,895,886     $ 22,103,385  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     1,250,001       1,250,001       500,000       50,000  

Shares issued

           50,000              

Shares issued in-kind

           50,000       300,000       525,000  

Shares redeemed

                        

Shares redeemed in-kind

     (100,000     (100,000     (25,000     (75,000
  

 

 

 

Shares Outstanding, End of Period

     1,150,001       1,250,001       775,000       500,000  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     85  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® ESG & Climate
Developed  Markets ex-US Core
Index Fund
    FlexShares® ESG & Climate
Emerging Markets Core  Index
Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    April 20, 2022*
through
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 1,063,953     $ 441,657     $ 101,902     $ 75,840  

Net realized gain (loss)

     (1,266,636     (966,117     (182,271     (45,285

Net change in unrealized appreciation (depreciation)

     1,660,641       (3,597,163     517,534       (1,106,532
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     1,457,958       (4,121,623     437,165       (1,075,977
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (958,970     (406,987     (104,863     (65,664
  

 

 

 

Total distributions

     (958,970     (406,987     (104,863     (65,664
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

     19,816,298       16,578,470              

Cost of shares redeemed

                        
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     19,816,298       16,578,470              
  

 

 

 

Total Increase (Decrease) in Net Assets

     20,315,286       12,049,860       332,302       (1,141,641
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 17,168,920     $ 5,119,060     $ 3,867,735     $ 5,009,376 (2),(3) 
  

 

 

 

End of Period

   $ 37,484,206     $ 17,168,920     $ 4,200,037     $ 3,867,735  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     450,000       100,000       100,000       100,000 (2) 

Shares issued

                        

Shares issued in-kind

     450,000       350,000              

Shares redeemed

                        

Shares redeemed in-kind

                        
  

 

 

 

Shares Outstanding, End of Period

     900,000       450,000       100,000       100,000  
  

 

 

 

 

*

Commencement of investment operations.

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

(2) 

Amount includes the initial subscription.

 

(3) 

Includes amounts paid in capital from the Authorized Participant in addition to the order’s original cash component. This amount is made to offset taxes, commissions, and price differences from the NAV that would otherwise impact the fund on these order trades.

 

 

See Accompanying Notes to the Financial Statements.

 

86    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® Morningstar
Global Upstream Natural
Resources Index Fund
    FlexShares® STOXX®
Global Broad Infrastructure
Index Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 255,181,349     $ 326,558,353     $ 63,568,762     $ 64,519,296  

Net realized gain (loss)

     37,294,167       543,920,180       58,766,189       (34,284,707

Net change in unrealized appreciation (depreciation)

     (605,021,499     (257,516,529     (59,933,152     (413,573,085
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     (312,545,983     612,962,004       62,401,799       (383,338,496
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (217,789,649     (349,767,759     (54,907,766     (71,164,043
  

 

 

 

Total distributions

     (217,789,649     (349,767,759     (54,907,766     (71,164,043
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

     660,926,417       2,228,186,786       12,129,246       376,096,311  

Cost of shares redeemed

     (40,156,731     (1,709,239,303     (494,960,229     (64,981,425
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     620,769,686       518,947,483       (482,830,983     311,114,886  
  

 

 

 

Total Increase (Decrease) in Net Assets

     90,434,054       782,141,728       (475,336,950     (143,387,653
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 6,834,851,994     $ 6,052,710,266     $ 2,500,518,413     $ 2,643,906,066  
  

 

 

 

End of Period

   $ 6,925,286,048     $ 6,834,851,994     $ 2,025,181,463     $ 2,500,518,413  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     165,300,001       156,550,001       51,750,001       45,800,001  

Shares issued

                        

Shares issued in-kind

     15,250,000       51,400,000       250,000       7,100,000  

Shares redeemed

                        

Shares redeemed in-kind

     (950,000     (42,650,000     (9,600,000     (1,150,000
  

 

 

 

Shares Outstanding, End of Period

     179,600,001       165,300,001       42,400,001       51,750,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     87  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® Global Quality
Real Estate Index Fund
    FlexShares® Real Assets
Allocation Index Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 9,038,507     $ 10,527,149     $ 511,692     $ 1,052,524  

Net realized gain (loss)

     (26,203,121     (1,205,777     (1,767,639     (347,185

Net change in unrealized appreciation (depreciation)

     (2,716,083     (112,605,358     1,536,542       (6,504,289
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     (19,880,697     (103,283,986     280,595       (5,798,950
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (8,872,134     (12,433,295     (512,404     (1,056,448

Tax return of capital

           (212,283            
  

 

 

 

Total distributions

     (8,872,134     (12,645,578     (512,404     (1,056,448
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

     13,506,842       61,391,019       744,410       31,091,126  

Cost of shares redeemed

     (68,461,361     (35,678,157     (12,804,666     (25,670,798
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     (54,954,519     25,712,862       (12,060,256     5,420,328  
  

 

 

 

Total Increase (Decrease) in Net Assets

     (83,707,350     (90,216,702     (12,292,065     (1,435,070
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 328,380,681     $ 418,597,383     $ 28,864,616     $ 30,299,686  
  

 

 

 

End of Period

   $ 244,673,331     $ 328,380,681     $ 16,572,551     $ 28,864,616  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     6,300,001       5,950,001       1,000,001       900,001  

Shares issued

                        

Shares issued in-kind

     250,000       900,000       25,000       925,000  

Shares redeemed

                        

Shares redeemed in-kind

     (1,350,000     (550,000     (425,000     (825,000
  

 

 

 

Shares Outstanding, End of Period

     5,200,001       6,300,001       600,001       1,000,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

88    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® Quality Dividend
Index Fund
    FlexShares® Quality
Dividend
Defensive Index Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 38,188,210     $ 36,130,232     $ 8,123,427     $ 8,686,945  

Net realized gain (loss)

     60,238,640       74,523,974       15,577,513       35,613,228  

Net change in unrealized appreciation (depreciation)

     3,587,912       (248,957,784     2,003,013       (74,967,194
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     102,014,762       (138,303,578     25,703,953       (30,667,021
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

        

Distributable earnings

     (36,041,105     (36,901,147     (7,830,976     (9,019,363
  

 

 

 

Total distributions

     (36,041,105     (36,901,147     (7,830,976     (9,019,363
  

 

 

 

CAPITAL TRANSACTIONS(1)

        

Proceeds from shares issued

     481,283,890       512,092,494       57,240,190       100,491,773  

Cost of shares redeemed

     (608,656,345     (456,702,830     (107,325,647     (163,419,797

From merger

     16,941,795                    
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     (110,430,660     55,389,664       (50,085,457     (62,928,024
  

 

 

 

Total Increase (Decrease) in Net Assets

     (44,457,003     (119,815,061     (32,212,480     (102,614,408
  

 

 

 

NET ASSETS

        

Beginning of Period

   $ 1,522,729,819     $ 1,642,544,880     $ 345,443,578     $ 448,057,986  
  

 

 

 

End of Period

   $ 1,478,272,816     $ 1,522,729,819     $ 313,231,098     $ 345,443,578  
  

 

 

 

SHARE TRANSACTIONS

        

Beginning of period

     29,125,001       28,150,001       6,825,001       8,000,001  

Shares issued

                        

Shares issued in-kind

     8,675,000       9,150,000       1,075,000       1,850,000  

Shares redeemed

                        

Shares redeemed in-kind

     (10,925,060     (8,175,000     (2,025,000     (3,025,000

From Merger (Note12)

     292,980                    
  

 

 

 

Shares Outstanding, End of Period

     27,167,921       29,125,001       5,875,001       6,825,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     89  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® International
Quality Dividend
Index Fund
    FlexShares® International
Quality Dividend Defensive
Index Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 27,194,270     $ 28,081,621     $ 1,520,040     $ 2,830,675  

Net realized gain (loss)

     (10,397,660     (35,389,643     19,327       (4,890,674

Net change in unrealized appreciation (depreciation)

     58,209,253       (140,731,898     3,783,570       (12,707,606
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     75,005,863       (148,039,920     5,322,937       (14,767,605
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (25,465,739     (29,536,094     (1,463,869     (2,940,092
  

 

 

 

Total distributions

     (25,465,739     (29,536,094     (1,463,869     (2,940,092
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

     44,718,076       30,204,474              

Cost of shares redeemed

     (27,479,378     (36,538,271     (17,901,037     (13,205,553
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     17,238,698       (6,333,797     (17,901,037     (13,205,553
  

 

 

 

Total Increase (Decrease) in Net Assets

     66,778,822       (183,909,811     (14,041,969     (30,913,250
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 432,097,092     $ 616,006,903     $ 40,545,341     $ 71,458,591  
  

 

 

 

End of Period

   $ 498,875,914     $ 432,097,092     $ 26,503,372     $ 40,545,341  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     23,400,001       23,900,001       2,300,001       3,000,001  

Shares issued

                        

Shares issued in-kind

     2,000,000       1,200,000              

Shares redeemed

                        

Shares redeemed in-kind

     (1,300,000     (1,700,000     (900,000     (700,000
  

 

 

 

Shares Outstanding, End of Period

     24,100,001       23,400,001       1,400,001       2,300,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

90    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® International
Quality Dividend Dynamic
Index Fund
    FlexShares® iBoxx
3-Year Target Duration TIPS
Index Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 4,358,575     $ 4,143,080     $ 80,855,817     $ 129,946,912  

Net realized gain (loss)

     414,028       (6,336,149     (69,973,937     (61,202,821

Net change in unrealized appreciation (depreciation)

     9,170,674       (19,667,897     26,655,120       (171,934,382
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     13,943,277       (21,860,966     37,537,000       (103,190,291
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (4,043,930     (4,368,329     (70,475,144     (131,367,411

Tax return of capital

                       (2,470,987
  

 

 

 

Total distributions

     (4,043,930     (4,368,329     (70,475,144     (133,838,398
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

     41,723,239       14,075,676       357,413,947       1,154,710,930  

Cost of shares redeemed

     (47,697,235     (2,032,721     (554,491,181     (197,328,045
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     (5,973,996     12,042,955       (197,077,234     957,382,885  
  

 

 

 

Total Increase (Decrease) in Net Assets

     3,925,351       (14,186,340     (230,015,378     720,354,196  
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 61,788,357     $ 75,974,697     $ 2,157,938,615     $ 1,437,584,419  
  

 

 

 

End of Period

   $ 65,713,708     $ 61,788,357     $ 1,927,923,237     $ 2,157,938,615  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     2,900,001       2,500,001       91,504,000       54,504,000  

Shares issued

                        

Shares issued in-kind

     1,600,000       500,000       15,150,000       45,050,000  

Shares redeemed

                        

Shares redeemed in-kind

     (1,800,000     (100,000     (23,450,000     (8,050,000
  

 

 

 

Shares Outstanding, End of Period

     2,700,001       2,900,001       83,204,000       91,504,000  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     91  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® iBoxx 5-Year
Target  Duration TIPS Index
Fund
    FlexShares® Disciplined
Duration MBS Index
Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 30,438,750     $ 52,412,741     $ 2,208,555     $ 1,315,458  

Net realized gain (loss)

     (33,637,850     (23,575,612     (3,912,271     (4,182,658

Net change in unrealized appreciation (depreciation)

     1,002,375       (102,258,738     3,495,416       (11,405,968
  

 

 

 

Net Increase (Decrease) in Net Assets

        

Resulting from Operations

     (2,196,725     (73,421,609     1,791,700       (14,273,168
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

 

Distributable earnings

     (25,865,870     (53,319,431     (2,711,658     (2,906,209

Tax return of capital

           (769,089            
  

 

 

 

Total distributions

     (25,865,870     (54,088,520     (2,711,658     (2,906,209
  

 

 

 

CAPITAL TRANSACTIONS(1)

 

Proceeds from shares issued

     377,819,623       259,127,932       19,682,625       24,467,825  

Cost of shares redeemed

     (182,093,124     (202,210,614     (41,527,581     (21,342,283
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     195,726,499       56,917,318       (21,844,956     3,125,542  
  

 

 

 

Total Increase (Decrease) in Net Assets

     167,663,904       (70,592,811     (22,764,914     (14,053,835
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 643,886,498     $ 714,479,309     $ 97,188,953     $ 111,242,788  
  

 

 

 

End of Period

   $ 811,550,402     $ 643,886,498     $ 74,424,039     $ 97,188,953  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     27,250,001       25,500,001       4,850,001       4,750,001  

Shares issued

                 1,000,000       1,100,000  

Shares issued in-kind

     16,100,000       9,600,000              

Shares redeemed

                 (2,050,000     (1,000,000

Shares redeemed in-kind

     (7,700,000     (7,850,000            
  

 

 

 

Shares Outstanding, End of Period

     35,650,001       27,250,001       3,800,001       4,850,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

92    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® Credit-Scored
US Corporate Bond
Index Fund
    FlexShares® Credit-Scored
US Long Corporate Bond
Index Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 9,306,976     $ 5,647,170     $ 1,688,422     $ 1,897,648  

Net realized gain (loss)

     (16,010,333     (11,524,528     (7,142,718     (5,104,776

Net change in unrealized appreciation (depreciation)

     15,511,584       (31,515,973     6,730,934       (14,928,195
  

 

 

 

Net Increase (Decrease) in Net Assets

Resulting from Operations

     8,808,227       (37,393,331     1,276,638       (18,135,323
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

  

Distributable earnings

     (8,908,201     (8,289,209     (1,709,535     (2,837,455
  

 

 

 

Total distributions

     (8,908,201     (8,289,209     (1,709,535     (2,837,455
  

 

 

 

CAPITAL TRANSACTIONS(1)

  

Proceeds from shares issued

     55,818,255       54,188,645              

Cost of shares redeemed

     (23,307,499     (82,107,127     (6,489,373     (4,384,065
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     32,510,756       (27,918,482     (6,489,373     (4,384,065
  

 

 

 

Total Increase (Decrease) in Net Assets

     32,410,782       (73,601,022     (6,922,270     (25,356,843
  

 

 

 

NET ASSETS

 

Beginning of Period

   $ 242,138,957     $ 315,739,979     $ 35,497,734     $ 60,854,577  
  

 

 

 

End of Period

   $ 274,549,739     $ 242,138,957     $ 28,575,464     $ 35,497,734  
  

 

 

 

SHARE TRANSACTIONS

 

Beginning of period

     5,350,001       5,900,001       900,001       1,000,001  

Shares issued

     1,150,000       950,000              

Shares issued in-kind

     50,000       150,000              

Shares redeemed

     (500,000     (1,500,000     (150,000     (100,000

Shares redeemed in-kind

           (150,000            
  

 

 

 

Shares Outstanding, End of Period

     6,050,001       5,350,001       750,001       900,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     93  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® High Yield
Value-Scored Bond Index
Fund
    FlexShares®
ESG & Climate
Investment Grade
Corporate Core
Index Fund
 
     Year Ended
October 31,
2023
    Year Ended
October 31,
2022
    Year Ended
October 31,
2023
    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 96,537,666     $ 54,264,979     $ 1,330,927     $ 1,023,293  

Net realized gain (loss)

     (73,703,129     (84,823,660     (2,757,523     (5,269,138

Net change in unrealized appreciation (depreciation)

     27,158,390       (89,845,656     1,697,139       (4,417,178
  

 

 

 

Net Increase (Decrease) in Net Assets

Resulting from Operations

     49,992,927       (120,404,337     270,543       (8,663,023
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

        

Distributable earnings

     (93,229,360     (56,016,563     (1,318,208     (1,093,741
  

 

 

 

Total distributions

     (93,229,360     (56,016,563     (1,318,208     (1,093,741
  

 

 

 

CAPITAL TRANSACTIONS(1)

        

Proceeds from shares issued

     811,946,065       746,832,545       14,243,947       6,485,716  

Cost of shares redeemed

     (434,348,479     (257,649,977     (11,679,660     (22,920,483
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     377,597,586       489,182,568       2,564,287       (16,434,767
  

 

 

 

Total Increase (Decrease) in Net Assets

     334,361,153       312,761,668       1,516,622       (26,191,531
  

 

 

 

NET ASSETS

        

Beginning of Period

   $ 887,945,368     $ 575,183,700     $ 23,155,525     $ 49,347,056  
  

 

 

 

End of Period

   $ 1,222,306,521     $ 887,945,368     $ 24,672,147     $ 23,155,525  
  

 

 

 

SHARE TRANSACTIONS

        

Beginning of period

     22,150,001       11,600,001       600,000       1,000,000  

Shares issued

     20,050,000       14,850,000       350,000       150,000  

Shares issued in-kind

     200,000       1,700,000              

Shares redeemed

     (10,850,000     (5,500,000     (300,000     (550,000

Shares redeemed in-kind

           (500,000            
  

 

 

 

Shares Outstanding, End of Period

     31,550,001       22,150,001       650,000       600,000  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

See Accompanying Notes to the Financial Statements.

 

94    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Statements of Changes in Net Assets (cont.)

 

 

     FlexShares® Ultra-Short
Income Fund
    FlexShares® Core Select
Bond Fund
 
    

Year Ended
October 31,

2023

    Year Ended
October 31,
2022
   

Year Ended
October 31,

2023

    Year Ended
October 31,
2022
 

OPERATIONS

 

Net investment income (loss)

   $ 41,455,881     $ 8,594,946     $ 5,495,196     $ 3,278,852  

Net realized gain (loss)

     14,152       (815,721     (3,189,773     (14,903,388

Net change in unrealized appreciation (depreciation)

     7,484,444       (11,518,881     (3,921,207     (13,967,521
  

 

 

 

Net Increase (Decrease) in Net Assets

Resulting from Operations

     48,954,477       (3,739,656     (1,615,784     (25,592,057
  

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS

        

Distributable earnings

     (38,566,601     (7,907,561     (5,547,838     (3,352,156
  

 

 

 

Total distributions

     (38,566,601     (7,907,561     (5,547,838     (3,352,156
  

 

 

 

CAPITAL TRANSACTIONS(1)

        

Proceeds from shares issued

     250,651,014       583,737,232       51,364,787       73,291,854  

Cost of shares redeemed

     (41,006,742     (90,072,224     (21,132,381     (11,502,530
  

 

 

 

Net Increase (Decrease) from Capital Transactions

     209,644,272       493,665,008       30,232,406       61,789,324  
  

 

 

 

Total Increase (Decrease) in Net Assets

     220,032,148       482,017,791       23,068,784       32,845,111  
  

 

 

 

NET ASSETS

        

Beginning of Period

   $ 856,356,930     $ 374,339,139     $ 159,362,079     $ 126,516,968  
  

 

 

 

End of Period

   $ 1,076,389,078     $ 856,356,930     $ 182,430,863     $ 159,362,079  
  

 

 

 

SHARE TRANSACTIONS

        

Beginning of period

     11,525,001       4,925,001       7,425,001       4,825,001  

Shares issued

     3,355,000       7,800,000              

Shares issued in-kind

                 2,325,000       3,075,000  

Shares redeemed

     (550,000     (1,200,000            

Shares redeemed in-kind

                 (975,000     (475,000
  

 

 

 

Shares Outstanding, End of Period

     14,330,001       11,525,001       8,775,001       7,425,001  
  

 

 

 

 

(1) 

Capital transactions may include transaction fees associated with creation and redemption transactions which occurred during the period. See Note 9 to the Financial Statements.

 

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     95  


Table of Contents

 

FlexShares® Trust

Financial Highlights

 

 

    FlexShares® US Quality Low Volatility Index Fund  
                               

For the

period
07/15/19*
through

10/31/19

 
                            
    Year ended October 31,  
    2023      2022      2021      2020  

Net asset value, beginning of period

  $ 50.02      $ 54.60      $ 40.93      $ 40.44      $ 40.00  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    0.88        0.82        0.57        0.64        0.17  

Net Realized and Unrealized Gain (Loss)

    1.40        (4.70      13.69        0.38        0.35  
 

 

 

 

Total from Operations

    2.28        (3.88      14.26        1.02        0.52  
 

 

 

 

Distributions

             

Net Investment Income

    (0.91      (0.70      (0.59      (0.53      (0.08
 

 

 

 

Total from Distributions

    (0.91      (0.70      (0.59      (0.53      (0.08
 

 

 

 

Net Asset Value, end of period

  $ 51.39      $ 50.02      $ 54.60      $ 40.93      $ 40.44  
 

 

 

 

Total Return(b)

             

Net Asset Value(d)

    4.56      (7.12 )%       35.05      2.63      1.30

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets(c)

             

Expenses

    0.23      0.23      0.23      0.23      0.23

Expenses net of reimbursements

    0.22      0.22      0.22      0.22      0.22

Net Investment Income Before Reimbursements

    1.70      1.58      1.17      1.55      1.45

Net Investment Income Net of Reimbursements

    1.70      1.58      1.17      1.56      1.45

Supplemental Data

             

Portfolio Turnover Rate(b)(e)

    51      48      43      47      9

Net assets, end of period (thousands)

  $ 185,005      $ 162,569      $ 161,074      $ 110,524      $ 6,067  

 

*

Commencement of investment operations.

 

See Accompanying Notes to the Financial Statements.

 

96    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Developed Markets  ex-US
Quality Low Volatility Index Fund
 
                               

For the
period
07/15/19*
through

10/31/19

 
                            
    Year ended October 31,  
    2023      2022      2021      2020  

Net asset value, beginning of period

  $ 22.09      $ 27.92      $ 23.48      $ 25.60      $ 25.00  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    0.73        0.66        0.73        0.64        0.16  

Net Realized and Unrealized Gain (Loss)

    1.55        (5.71      4.43        (2.22      0.53  
 

 

 

 

Total from Operations

    2.28        (5.05      5.16        (1.58      0.69  
 

 

 

 

Distributions

             

Net Investment Income

    (0.70      (0.78      (0.72      (0.54      (0.09
 

 

 

 

Total from Distributions

    (0.70      (0.78      (0.72      (0.54      (0.09
 

 

 

 

Net Asset Value, end of period

  $ 23.67      $ 22.09      $ 27.92      $ 23.48      $ 25.60  
 

 

 

 

Total Return(b)

             

Net Asset Value(d)

    10.16      (18.36 )%       22.05      (6.24 )%       2.76

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets(c)

             

Expenses

    0.33      0.33      0.33      0.33      0.32

Expenses net of reimbursements

    0.32      0.32      0.32      0.32      0.32

Net Investment Income Before Reimbursements

    2.94      2.60      2.68      2.63      2.21

Net Investment Income Net of Reimbursements

    2.94      2.60      2.68      2.64      2.21

Supplemental Data

             

Portfolio Turnover Rate(b)(e)

    52      56      56      62      14

Net assets, end of period (thousands)

  $ 66,263      $ 61,852      $ 75,371      $ 65,747      $ 5,120  

 

*

Commencement of investment operations.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     97  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Emerging Markets Quality
Low Volatility Index Fund
 
                               

For the
period
07/15/19*
through

10/31/19

 
                            
    Year ended October 31,  
    2023      2022      2021      2020  

Net asset value, beginning of period

  $ 20.53      $ 26.41      $ 23.95      $ 24.94      $ 25.00  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    0.76        0.67        0.69        0.56        0.23  

Net Realized and Unrealized Gain (Loss)

    1.02        (5.82      2.22        (0.91      (0.18
 

 

 

 

Total from Operations

    1.78        (5.15      2.91        (0.35      0.05  
 

 

 

 

Distributions

             

Net Investment Income

    (0.68      (0.69      (0.45      (0.64      (0.11

Tax Return of Capital

           (0.04                     
 

 

 

 

Total from Distributions

    (0.68      (0.73      (0.45      (0.64      (0.11
 

 

 

 

Net Asset Value, end of period

  $ 21.63      $ 20.53      $ 26.41      $ 23.95      $ 24.94  
 

 

 

 

Total Return(b)

             

Net Asset Value(d)

    8.52      (19.77 )%       12.09      (1.41 )%       0.19

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets(c)

             

Expenses

    0.41      0.41      0.41      0.41      0.40

Expenses net of reimbursements

    0.40      0.40      0.40      0.40      0.40

Net Investment Income Before Reimbursements

    3.35      2.75      2.57      2.38      3.18

Net Investment Income Net of Reimbursements

    3.35      2.75      2.58      2.39      3.18

Supplemental Data

             

Portfolio Turnover Rate(b)(e)

    75      53      54      81      12

Net assets, end of period (thousands)

  $ 12,980      $ 8,214      $ 15,844      $ 9,578      $ 4,989  

 

*

Commencement of investment operations.

 

See Accompanying Notes to the Financial Statements.

 

98    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Morningstar US Market Factor Tilt Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 151.07      $ 178.97      $ 121.11      $ 119.52      $ 110.13  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    2.53        2.39        2.08        2.10        1.95  

Net Realized and Unrealized Gain (Loss)

    6.03        (27.93      57.80        1.60        9.33  
 

 

 

 

Total from Operations

    8.56        (25.54      59.88        3.70        11.28  
 

 

 

 

Distributions

             

Net Investment Income

    (2.45      (2.36      (2.02      (2.11      (1.89
 

 

 

 

Total from Distributions

    (2.45      (2.36      (2.02      (2.11      (1.89
 

 

 

 

Net Asset Value, end of period

  $ 157.18      $ 151.07      $ 178.97      $ 121.11      $ 119.52  
 

 

 

 

Total Return

             

Net Asset Value(d)

    5.67      (14.33 )%       49.68      3.28      10.41

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

             

Expenses

    0.26      0.26      0.26      0.26      0.26

Expenses net of reimbursements

    0.25      0.25      0.25      0.25      0.25

Net Investment Income Before Reimbursements

    1.58      1.47      1.28      1.78      1.72

Net Investment Income Net of Reimbursements

    1.58      1.47      1.29      1.79      1.72

Supplemental Data

             

Portfolio Turnover Rate(e)

    15      14      24      26      28

Net assets, end of period (thousands)

  $ 1,336,011      $ 1,397,408      $ 1,727,019      $ 1,174,786      $ 1,446,137  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     99  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Morningstar Developed
Markets  ex-US Factor Tilt Index Fund
 
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 54.48      $ 73.71      $ 54.24      $ 62.67      $ 59.76  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.93        1.94        1.71        1.31        1.85  

Net Realized and Unrealized Gain (Loss)

    5.37        (18.44      19.27        (7.88      2.89  
 

 

 

 

Total from Operations

    7.30        (16.50      20.98        (6.57      4.74  
 

 

 

 

Distributions

             

Net Investment Income

    (1.62      (2.61      (1.51      (1.86      (1.83

Tax Return of Capital

           (0.12                     
 

 

 

 

Total from Distributions

    (1.62      (2.73      (1.51      (1.86      (1.83
 

 

 

 

Net Asset Value, end of period

  $ 60.16      $ 54.48      $ 73.71      $ 54.24      $ 62.67  
 

 

 

 

Total Return

             

Net Asset Value(d)

    13.21      (22.83 )%       38.79      (10.57 )%       8.13

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

             

Expenses

    0.40      0.40      0.40      0.40      0.40

Expenses net of reimbursements

    0.39      0.39      0.39      0.39      0.39

Net Investment Income Before Reimbursements

    3.04      3.02      2.42      2.28      3.09

Net Investment Income Net of Reimbursements

    3.04      3.02      2.42      2.28      3.09

Supplemental Data

             

Portfolio Turnover Rate(e)

    22      27      29      21      25

Net assets, end of period (thousands)

  $ 469,239      $ 446,754      $ 648,638      $ 499,016      $ 965,142  

 

See Accompanying Notes to the Financial Statements.

 

100    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Morningstar Emerging Markets
Factor Tilt Index Fund
 
    Year ended October 31,  
    2023     2022      2021      2020      2019  

Net asset value, beginning of period

  $ 42.22     $ 60.79      $ 48.05      $ 50.42      $ 47.92  
 

 

 

 

PER SHARE

            

Investment Operations

            

Net Investment Income(a)

    1.45       1.86        1.51        1.02        1.49  

Net Realized and Unrealized Gain (Loss)

    4.36       (18.06      12.40        (1.97      2.46  
 

 

 

 

Total from Operations

    5.81       (16.20      13.91        (0.95      3.95  
 

 

 

 

Distributions

            

Net Investment Income

    (1.49     (2.37      (1.17      (1.42      (1.45
 

 

 

 

Total from Distributions

    (1.49     (2.37      (1.17      (1.42      (1.45
 

 

 

 

Net Asset Value, end of period

  $ 46.54     $ 42.22      $ 60.79      $ 48.05      $ 50.42  
 

 

 

 

Total Return

            

Net Asset Value(d)

    13.63 %(f)      (27.32 )%       28.95      (1.86 )%       8.29

RATIOS/SUPPLEMENT DATA

            

Ratios to Average Net Assets

            

Expenses

    0.61     0.60      0.60      0.60      0.60

Expenses net of reimbursements

    0.59     0.59      0.59      0.59      0.59

Net Investment Income Before Reimbursements

    2.95     3.49      2.46      2.13      2.92

Net Investment Income Net of Reimbursements

    2.97     3.49      2.47      2.14      2.93

Supplemental Data

            

Portfolio Turnover Rate(e)

    39     34      40      41      45

Net assets, end of period (thousands)

  $ 218,724     $ 206,889      $ 334,372      $ 225,847      $ 413,414  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     101  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® US Quality Large Cap Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 43.17      $ 50.25      $ 35.48      $ 34.69      $ 33.44  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    0.67        0.61        0.50        0.62        0.68  

Net Realized and Unrealized Gain (Loss)

    3.43        (7.11      14.76        0.76        1.29  
 

 

 

 

Total from Operations

    4.10        (6.50      15.26        1.38        1.97  
 

 

 

 

Distributions

             

Net Investment Income

    (0.66      (0.58      (0.49      (0.59      (0.72
 

 

 

 

Total from Distributions

    (0.66      (0.58      (0.49      (0.59      (0.72
 

 

 

 

Net Asset Value, end of period

  $ 46.61      $ 43.17      $ 50.25      $ 35.48      $ 34.69  
 

 

 

 

Total Return

             

Net Asset Value(d)

    9.54      (12.98 )%       43.21      4.13      6.04

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

             

Expenses

    0.26      0.30      0.33      0.33      0.33

Expenses net of reimbursements

    0.25      0.30      0.32      0.32      0.32

Net Investment Income Before Reimbursements

    1.44      1.31      1.11      1.77      2.04

Net Investment Income Net of Reimbursements

    1.44      1.31      1.11      1.77      2.05

Supplemental Data

             

Portfolio Turnover Rate(e)

    20      22      30      48      69

Net assets, end of period (thousands)

  $ 146,806      $ 127,350      $ 144,475      $ 71,842      $ 51,171  

 

See Accompanying Notes to the Financial Statements.

 

102    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® STOXX® US ESG Select Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 92.96      $ 112.73      $ 79.16      $ 72.29      $ 64.33  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.32        1.22        1.26        1.27        1.21  

Net Realized and Unrealized Gain (Loss)

    9.71        (19.75      33.50        6.81        7.83  
 

 

 

 

Total from Operations

    11.03        (18.53      34.76        8.08        9.04  
 

 

 

 

Distributions

             

Net Investment Income

    (1.27      (1.24      (1.19      (1.21      (1.08
 

 

 

 

Total from Distributions

    (1.27      (1.24      (1.19      (1.21      (1.08
 

 

 

 

Net Asset Value, end of period

  $ 102.72      $ 92.96      $ 112.73      $ 79.16      $ 72.29  
 

 

 

 

Total Return

             

Net Asset Value(d)

    11.91      (16.51 )%       44.15      11.40      14.21

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

             

Expenses

    0.33      0.33      0.33      0.33      0.33

Expenses net of reimbursements

    0.32      0.32      0.32      0.32      0.32

Net Investment Income Before Reimbursements

    1.30      1.20      1.25      1.67      1.78

Net Investment Income Net of Reimbursements

    1.30      1.20      1.26      1.68      1.79

Supplemental Data

             

Portfolio Turnover Rate(e)

    28      46      40      66      75

Net assets, end of period (thousands)

  $ 166,925      $ 171,980      $ 191,643      $ 89,052      $ 56,024  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     103  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® STOXX® Global ESG Select Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 117.54      $ 148.57      $ 106.02      $ 101.77      $ 91.61  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    2.42        2.24        2.03        1.72        2.05  

Net Realized and Unrealized Gain (Loss)

    14.27        (30.82      42.38        4.26        10.12  
 

 

 

 

Total from Operations

    16.69        (28.58      44.41        5.98        12.17  
 

 

 

 

Distributions

             

Net Investment Income

    (2.22      (2.45      (1.86      (1.73      (2.01
 

 

 

 

Total from Distributions

    (2.22      (2.45      (1.86      (1.73      (2.01
 

 

 

 

Net Asset Value, end of period

  $ 132.01      $ 117.54      $ 148.57      $ 106.02      $ 101.77  
 

 

 

 

Total Return

             

Net Asset Value(d)

    14.17      (19.35 )%       42.10      6.03      13.49

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

             

Expenses

    0.43      0.43      0.43      0.43      0.43

Expenses net of reimbursements

    0.42      0.42      0.42      0.42      0.42

Net Investment Income Before Reimbursements

    1.82      1.69      1.50      1.66      2.15

Net Investment Income Net of Reimbursements

    1.83      1.69      1.51      1.66      2.16

Supplemental Data

             

Portfolio Turnover Rate(e)

    35      54      48      58      66

Net assets, end of period (thousands)

  $ 151,816      $ 146,925      $ 185,717      $ 111,323      $ 91,590  

 

See Accompanying Notes to the Financial Statements.

 

104    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® ESG & Climate US Large
Cap Core Index Fund
 
          

For the
period
09/20/21*
through

10/31/21

 
              
    Year ended October 31,  
    2023      2022  

Net asset value, beginning of period

  $ 44.21      $ 53.39      $ 50.00  
 

 

 

 

PER SHARE

       

Investment Operations

       

Net Investment Income(a)

    0.77        0.70        0.06  

Net Realized and Unrealized Gain (Loss)

    3.35        (9.25      3.33  
 

 

 

 

Total from Operations

    4.12        (8.55      3.39  
 

 

 

 

Distributions

       

Net Investment Income

    (0.72      (0.62       

From Net Realized Gains

           (0.01       
 

 

 

 

Total from Distributions

    (0.72      (0.63       
 

 

 

 

Net Asset Value, end of period

  $ 47.61      $ 44.21      $ 53.39  
 

 

 

 

Total Return(b)

       

Net Asset Value(d)

    9.33      (16.09 )%       6.78

RATIOS/SUPPLEMENT DATA

       

Ratios to Average Net Assets(c)

 

Expenses

    0.10      0.10      0.09

Expenses net of reimbursements

    0.09      0.09      0.09

Net Investment Income Before Reimbursements

    1.61      1.53      0.96

Net Investment Income Net of Reimbursements

    1.61      1.53      0.96

Supplemental Data

       

Portfolio Turnover Rate(b)(e)

    16      18      %(g) 

Net assets, end of period (thousands)

  $ 36,896      $ 22,103      $ 2,669  

 

*

Commencement of investment operations.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     105  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® ESG & Climate  Developed
Markets ex-US Core Index Fund
 
                 

For the
period
09/20/21*
through

10/31/21

 
              
    Year ended October 31,  
    2023      2022  

Net asset value, beginning of period

  $ 38.15      $ 51.19      $ 50.00  
 

 

 

 

PER SHARE

       

Investment Operations

       

Net Investment Income(a)

    1.38        1.44        0.16  

Net Realized and Unrealized Gain (Loss)

    3.31        (13.28      1.03  
 

 

 

 

Total from Operations

    4.69        (11.84      1.19  
 

 

 

 

Distributions

       

Net Investment Income

    (1.19      (1.20       
 

 

 

 

Total from Distributions

    (1.19      (1.20       
 

 

 

 

Net Asset Value, end of period

  $ 41.65      $ 38.15      $ 51.19  
 

 

 

 

Total Return(b)

       

Net Asset Value(d)

    12.08      (23.36 )%       2.38

RATIOS/SUPPLEMENT DATA

       

Ratios to Average Net Assets(c)

 

Expenses

    0.13      0.13      0.12

Expenses net of reimbursements

    0.12      0.12      0.12

Net Investment Income Before Reimbursements

    3.09      3.35      2.72

Net Investment Income Net of Reimbursements

    3.09      3.35      2.72

Supplemental Data

       

Portfolio Turnover Rate(b)(e)

    32      33      %(g) 

Net assets, end of period (thousands)

  $ 37,484      $ 17,169      $ 5,119  

 

*

Commencement of investment operations.

 

See Accompanying Notes to the Financial Statements.

 

106    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® ESG & Climate Emerging
Markets Core Index Fund
 
   

Year ended October 31,

2023

     For the period
04/20/22* through
10/31/22
 

Net asset value, beginning of period

  $ 38.68      $ 50.00  
 

 

 

 

PER SHARE

    

Investment Operations

    

Net Investment Income(a)

    1.02        0.76  

Net Realized and Unrealized Gain (Loss)

    3.35        (11.42
 

 

 

 

Total from Operations

    4.37        (10.66
 

 

 

 

Distributions

    

Net Investment Income

    (1.05      (0.66
 

 

 

 

Total from Distributions

    (1.05      (0.66
 

 

 

 

Net Asset Value, end of period

  $ 42.00      $ 38.68  
 

 

 

 

Total Return(b)

    

Net Asset Value(d)

    11.14      (21.47 )% 

RATIOS/SUPPLEMENT DATA

    

Ratios to Average Net Assets(c)

 

Expenses

    0.19      0.19

Expenses net of reimbursements

    0.18      0.18

Net Investment Income Before Reimbursements

    2.27      3.15

Net Investment Income Net of Reimbursements

    2.27      3.15

Supplemental Data

    

Portfolio Turnover Rate(b)(e)

    36      18

Net assets, end of period (thousands)

  $ 4,200      $ 3,868  

 

*

Commencement of investment operations.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     107  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Morningstar Global Upstream Natural Resources Index  Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 41.35      $ 38.66      $ 26.71      $ 31.40      $ 31.51  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.46        1.88        1.44        0.89        1.08  

Net Realized and Unrealized Gain (Loss)

    (3.01      2.76        11.72        (4.65      (0.09
 

 

 

 

Total from Operations

    (1.55      4.64        13.16        (3.76      0.99  
 

 

 

 

Distributions

             

Net Investment Income

    (1.24      (1.95      (1.21      (0.93      (1.10
 

 

 

 

Total from Distributions

    (1.24      (1.95      (1.21      (0.93      (1.10
 

 

 

 

Net Asset Value, end of period

  $ 38.56      $ 41.35      $ 38.66      $ 26.71      $ 31.40  
 

 

 

 

Total Return

             

Net Asset Value(d)

    (3.92 )%       12.20      49.70      (11.87 )%       3.16

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.47      0.47      0.47      0.47      0.47

Expenses net of reimbursements

    0.46      0.46      0.46      0.46      0.46

Net Investment Income Before Reimbursements

    3.48      4.48      3.95      3.03      3.40

Net Investment Income Net of Reimbursements

    3.48      4.48      3.95      3.04      3.41

Supplemental Data

             

Portfolio Turnover Rate(e)

    27      32      28      29      24

Net assets, end of period (thousands)

  $ 6,925,286      $ 6,834,852      $ 6,052,710      $ 2,924,726      $ 5,510,201  

 

See Accompanying Notes to the Financial Statements.

 

108    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® STOXX® Global Broad Infrastructure Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 48.32      $ 57.73      $ 48.10      $ 52.56      $ 45.09  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.40        1.35        1.38        1.25        1.35  

Net Realized and Unrealized Gain (Loss)

    (0.73      (9.27      9.57        (4.53      7.34  
 

 

 

 

Total from Operations

    0.67        (7.92      10.95        (3.28      8.69  
 

 

 

 

Distributions

             

Net Investment Income

    (1.23      (1.49      (1.32      (1.18      (1.22
 

 

 

 

Total from Distributions

    (1.23      (1.49      (1.32      (1.18      (1.22
 

 

 

 

Net Asset Value, end of period

  $ 47.76      $ 48.32      $ 57.73      $ 48.10      $ 52.56  
 

 

 

 

Total Return

             

Net Asset Value(d)

    1.24      (13.92 )%       22.85      (6.23 )%       19.52

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.48      0.48      0.48      0.48      0.48

Expenses net of reimbursements

    0.47      0.47      0.47      0.47      0.47

Net Investment Income Before Reimbursements

    2.74      2.51      2.45      2.51      2.73

Net Investment Income Net of Reimbursements

    2.74      2.51      2.45      2.52      2.74

Supplemental Data

             

Portfolio Turnover Rate(e)

    12      16      13      13      12

Net assets, end of period (thousands)

  $ 2,025,181      $ 2,500,518      $ 2,643,906      $ 1,856,596      $ 1,477,030  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     109  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Global Quality Real Estate Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 52.12      $ 70.35      $ 50.88      $ 66.60      $ 57.96  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.50        1.67        1.38        1.43        1.76  

Net Realized and Unrealized Gain(Loss)

    (5.09      (17.88      19.13        (14.62      8.68  
 

 

 

 

Total from Operations

    (3.59      (16.21      20.51        (13.19      10.44  
 

 

 

 

Distributions

             

Net Investment Income

    (1.48      (1.99      (1.04      (2.50      (1.80

Tax Return of Capital

           (0.03             (0.03       
 

 

 

 

Total from Distributions

    (1.48      (2.02      (1.04      (2.53      (1.80
 

 

 

 

Net Asset Value, end of period

  $ 47.05      $ 52.12      $ 70.35      $ 50.88      $ 66.60  
 

 

 

 

Total Return

             

Net Asset Value(d)

    (7.16 )%       (23.51 )%       40.58      (20.29 )%       18.37

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.46      0.46      0.46      0.46      0.46

Expenses net of reimbursements

    0.45      0.45      0.45      0.45      0.45

Net Investment Income Before Reimbursements

    2.83      2.63      2.16      2.53      2.80

Net Investment Income Net of Reimbursements

    2.83      2.63      2.17      2.54      2.81

Supplemental Data

             

Portfolio Turnover Rate(e)

    49      54      52      56      53

Net assets, end of period (thousands)

  $ 244,673      $ 328,381      $ 418,597      $ 264,574      $ 376,264  

 

See Accompanying Notes to the Financial Statements.

 

110    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Real Assets Allocation Index Fund  
    Year ended October 31,  
    2023     2022     2021     2020     2019  

Net asset value, beginning of period

  $ 28.86     $ 33.67     $ 25.72     $ 30.30     $ 26.45  
 

 

 

 

PER SHARE

         

Investment Operations

         

Net Investment Income(a)

    0.73       0.93       0.83       0.86       0.76  

Net Realized and Unrealized Gain(Loss)

    (1.21     (4.72     7.78       (4.58     3.85  
 

 

 

 

Total from Operations

    (0.48     (3.79     8.61       (3.72     4.61  
 

 

 

 

Distributions

         

Net Investment Income

    (0.76     (1.02     (0.66     (0.86     (0.76
 

 

 

 

Total from Distributions

    (0.76     (1.02     (0.66     (0.86     (0.76
 

 

 

 

Net Asset Value, end of period

  $ 27.62     $ 28.86     $ 33.67     $ 25.72     $ 30.30  
 

 

 

 

Total Return

         

Net Asset Value(d)

    (1.78 )%      (11.49 )%      33.66     (12.45 )%      17.69

RATIOS/SUPPLEMENT DATA

         

Ratios to Average Net Assets

 

Expenses

    0.57 %(h)      0.58 %(h)      0.58 %(h)      0.58 %(h)      0.58 %(h) 

Expenses net of reimbursements

    0.10 %(h)      0.11 %(h)      0.12 %(h)      0.11 %(h)      0.11 %(h) 

Net Investment Income Before Reimbursements

    1.96     2.40     2.07     2.65     2.22

Net Investment Income Net of Reimbursements

    2.42     2.86     2.53     3.11     2.69

Supplemental Data

         

Portfolio Turnover Rate(e)

    11     7     40     14     4

Net assets, end of period(thousands)

  $ 16,573     $ 28,865     $ 30,300     $ 4,502     $ 11,361  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     111  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Quality Dividend Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 52.28      $ 58.35      $ 43.40      $ 46.33      $ 44.53  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.36        1.25        1.16        1.24        1.24  

Net Realized and Unrealized Gain(Loss)

    2.05        (6.05      14.89        (2.67      2.29  
 

 

 

 

Total from Operations

    3.41        (4.80      16.05        (1.43      3.53  
 

 

 

 

Distributions

             

Net Investment Income

    (1.28      (1.27      (1.10      (1.25      (1.19

From Net Realized Gains

                         (0.25      (0.54
 

 

 

 

Total from Distributions

    (1.28      (1.27      (1.10      (1.50      (1.73
 

 

 

 

Net Asset Value, end of period

  $ 54.41      $ 52.28      $ 58.35      $ 43.40      $ 46.33  
 

 

 

 

Total Return

             

Net Asset Value(d)

    6.52      (8.29 )%       37.27      (2.98 )%       8.45

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.38      0.38      0.38      0.38      0.38

Expenses net of reimbursements

    0.37      0.37      0.37      0.37      0.37

Net Investment Income Before Reimbursements

    2.45      2.24      2.16      2.79      2.80

Net Investment Income Net of Reimbursements

    2.45      2.24      2.16      2.79      2.81

Supplemental Data

             

Portfolio Turnover Rate(e)

    51      40      51      75      95

Net assets, end of period (thousands)

  $ 1,478,273      $ 1,522,730      $ 1,642,545      $ 1,265,177      $ 1,707,344  

 

See Accompanying Notes to the Financial Statements.

 

112    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Quality Dividend Defensive Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 50.61      $ 56.01      $ 42.61      $ 46.25      $ 44.46  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.29        1.16        1.09        1.21        1.22  

Net Realized and Unrealized Gain(Loss)

    2.66        (5.35      13.39        (3.28      3.35  
 

 

 

 

Total from Operations

    3.95        (4.19      14.48        (2.07      4.57  
 

 

 

 

Distributions

             

Net Investment Income

    (1.24      (1.21      (1.08      (1.21      (1.14

From Net Realized Gains

                         (0.36      (1.64
 

 

 

 

Total from Distributions

    (1.24      (1.21      (1.08      (1.57      (2.78
 

 

 

 

Net Asset Value, end of period

  $ 53.32      $ 50.61      $ 56.01      $ 42.61      $ 46.25  
 

 

 

 

Total Return

             

Net Asset Value(d)

    7.82      (7.53 )%       34.28      (4.45 )%       11.40

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.38      0.38      0.38      0.38      0.38

Expenses net of reimbursements

    0.37      0.37      0.37      0.37      0.37

Net Investment Income Before Reimbursements

    2.39      2.16      2.10      2.77      2.76

Net Investment Income Net of Reimbursements

    2.40      2.16      2.11      2.77      2.76

Supplemental Data

             

Portfolio Turnover Rate(e)

    51      47      57      76      91

Net assets, end of period(thousands)

  $ 313,231      $ 345,444      $ 448,058      $ 411,173      $ 450,963  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     113  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® International Quality Dividend Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 18.47      $ 25.77      $ 20.15      $ 23.06      $ 22.37  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.12        1.15        0.97        0.79        1.13  

Net Realized and Unrealized Gain(Loss)

    2.14        (7.23      5.55        (2.86      0.70  
 

 

 

 

Total from Operations

    3.26        (6.08      6.52        (2.07      1.83  
 

 

 

 

Distributions

             

Net Investment Income

    (1.03      (1.22      (0.90      (0.84      (1.14
 

 

 

 

Total from Distributions

    (1.03      (1.22      (0.90      (0.84      (1.14
 

 

 

 

Net Asset Value, end of period

  $ 20.70      $ 18.47      $ 25.77      $ 20.15      $ 23.06  
 

 

 

 

Total Return

             

Net Asset Value(d)

    17.45      (24.11 )%       32.42      (8.94 )%       8.41

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.49      0.48      0.48      0.48      0.48

Expenses net of reimbursements

    0.47      0.47      0.47      0.47      0.47

Net Investment Income Before Reimbursements

    5.13      5.11      3.80      3.68      4.98

Net Investment Income Net of Reimbursements

    5.14      5.11      3.81      3.68      4.98

Supplemental Data

             

Portfolio Turnover Rate(e)

    49      69      68      74      71

Net assets, end of period(thousands)

  $ 498,876      $ 432,097      $ 616,007      $ 453,477      $ 774,685  

 

See Accompanying Notes to the Financial Statements.

 

114    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® International Quality Dividend Defensive Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 17.63      $ 23.82      $ 19.16      $ 21.87      $ 21.39  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    0.93        0.99        0.93        0.74        1.09  

Net Realized and Unrealized Gain(Loss)

    1.32        (6.14      4.62        (2.70      0.51  
 

 

 

 

Total from Operations

    2.25        (5.15      5.55        (1.96      1.60  
 

 

 

 

Distributions

             

Net Investment Income

    (0.95      (1.04      (0.89      (0.75      (1.12
 

 

 

 

Total from Distributions

    (0.95      (1.04      (0.89      (0.75      (1.12
 

 

 

 

Net Asset Value, end of period

  $ 18.93      $ 17.63      $ 23.82      $ 19.16      $ 21.87  
 

 

 

 

Total Return

             

Net Asset Value(d)

    12.54      (22.06 )%       29.03      (8.92 )%       7.66

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.48      0.48      0.48      0.48      0.48

Expenses net of reimbursements

    0.47      0.47      0.47      0.47      0.47

Net Investment Income Before Reimbursements

    4.67      4.62      3.91      3.65      5.02

Net Investment Income Net of Reimbursements

    4.67      4.62      3.92      3.66      5.03

Supplemental Data

             

Portfolio Turnover Rate(e)

    67      65      65      75      63

Net assets, end of period(thousands)

  $ 26,503      $ 40,545      $ 71,459      $ 59,404      $ 78,719  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     115  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® International Quality Dividend Dynamic Index Fund  
    Year ended October 31,  
          2023            2022            2021            2020            2019  

Net asset value, beginning of period

  $ 21.31      $ 30.39      $ 22.38      $ 24.94      $ 23.51  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.28        1.45        1.28        0.70        1.05  

Net Realized and Unrealized Gain(Loss)

    2.91        (9.01      7.63        (2.45      1.52  
 

 

 

 

Total from Operations

    4.19        (7.56      8.91        (1.75      2.57  
 

 

 

 

Distributions

             

Net Investment Income

    (1.16      (1.52      (0.90      (0.81      (1.14
 

 

 

 

Total from Distributions

    (1.16      (1.52      (0.90      (0.81      (1.14
 

 

 

 

Net Asset Value, end of period

  $ 24.34      $ 21.31      $ 30.39      $ 22.38      $ 24.94  
 

 

 

 

Total Return

             

Net Asset Value(d)

    19.39      (25.48 )%       39.87      (6.99 )%       11.30

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.48      0.48      0.48      0.48      0.48

Expenses net of reimbursements

    0.47      0.47      0.47      0.47      0.47

Net Investment Income Before Reimbursements

    4.96      5.49      4.24      2.90      4.36

Net Investment Income Net of Reimbursements

    4.96      5.49      4.25      2.91      4.37

Supplemental Data

             

Portfolio Turnover Rate(e)

    78      74      72      85      88

Net assets, end of period(thousands)

  $ 65,714      $ 61,788      $ 75,975      $ 22,376      $ 47,391  

 

See Accompanying Notes to the Financial Statements.

 

116    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® iBoxx 3-Year Target Duration TIPS Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 23.58      $ 26.38      $ 25.73      $ 24.58      $ 23.81  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    0.96        1.72        1.09        0.33        0.46  

Net Realized and Unrealized Gain(Loss)

    (0.52      (2.83      0.68        1.09        0.79  
 

 

 

 

Total from Operations

    0.44        (1.11      1.77        1.42        1.25  
 

 

 

 

Distributions

             

Net Investment Income

    (0.85      (1.66      (1.12      (0.27      (0.48

Tax Return of Capital

           (0.03                     
 

 

 

 

Total from Distributions

    (0.85      (1.69      (1.12      (0.27      (0.48
 

 

 

 

Net Asset Value, end of period

  $ 23.17      $ 23.58      $ 26.38      $ 25.73      $ 24.58  
 

 

 

 

Total Return

             

Net Asset Value(d)

    1.84      (4.44 )%       6.95      5.81      5.30

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.19      0.19      0.19      0.19      0.19

Expenses net of reimbursements

    0.18      0.18      0.18      0.18      0.18

Net Investment Income Before Reimbursements

    4.08      6.82      4.14      1.33      1.89

Net Investment Income Net of Reimbursements

    4.08      6.83      4.15      1.33      1.89

Supplemental Data

             

Portfolio Turnover Rate(e)

    63      116      53      71      52

Net assets, end of period(thousands)

  $ 1,927,923      $ 2,157,939      $ 1,437,584      $ 1,429,491      $ 1,178,722  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     117  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® iBoxx 5-Year Target Duration TIPS Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 23.63      $ 28.02      $ 27.34      $ 25.50      $ 23.95  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.01        1.83        1.16        0.36        0.44  

Net Realized and Unrealized Gain(Loss)

    (1.01      (4.35      0.70        1.76        1.59  
 

 

 

 

Total from Operations

    0.00        (2.52      1.86        2.12        2.03  
 

 

 

 

Distributions

             

Net Investment Income

    (0.87      (1.84      (1.18      (0.28      (0.48

Tax Return of Capital

           (0.03                     
 

 

 

 

Total from Distributions

    (0.87      (1.87      (1.18      (0.28      (0.48
 

 

 

 

Net Asset Value, end of period

  $ 22.76      $ 23.63      $ 28.02      $ 27.34      $ 25.50  
 

 

 

 

Total Return

             

Net Asset Value(d)

    (0.11 )%       (9.46 )%       6.88      8.39      8.53

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.19      0.19      0.19      0.19      0.19

Expenses net of reimbursements

    0.18      0.18      0.18      0.18      0.18

Net Investment Income Before Reimbursements

    4.26      6.98      4.17      1.35      1.77

Net Investment Income Net of Reimbursements

    4.27      6.98      4.17      1.35      1.78

Supplemental Data

             

Portfolio Turnover Rate(e)

    52      80      46      66      41

Net assets, end of period(thousands)

  $ 811,550      $ 643,886      $ 714,479      $ 596,095      $ 557,185  

 

See Accompanying Notes to the Financial Statements.

 

118    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Disciplined Duration MBS Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 20.04      $ 23.42      $ 24.10      $ 23.55      $ 22.74  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    0.55        0.26        0.09        0.37        0.61  

Net Realized and Unrealized Gain (Loss)

    (0.34      (3.07      (0.16      0.85        1.03  
 

 

 

 

Total from Operations

    0.21        (2.81      (0.07      1.22        1.64  
 

 

 

 

Distributions

             

Net Investment Income

    (0.66      (0.57      (0.61      (0.67      (0.83
 

 

 

 

Total from Distributions

    (0.66      (0.57      (0.61      (0.67      (0.83
 

 

 

 

Net Asset Value, end of period

  $ 19.59      $ 20.04      $ 23.42      $ 24.10      $ 23.55  
 

 

 

 

Total Return

             

Net Asset Value(d)

    0.98      (12.16 )%       (0.28 )%       5.19      7.36

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.21      0.21      0.21      0.21      0.21

Expenses net of reimbursements

    0.20      0.20      0.20      0.20      0.20

Net Investment Income Before Reimbursements

    2.70      1.19      0.35      1.54      2.64

Net Investment Income Net of Reimbursements

    2.70      1.19      0.36      1.54      2.65

Supplemental Data

             

Portfolio Turnover Rate(e)

    46      222      476      175      61

Net assets, end of period (thousands)

  $ 74,424      $ 97,189      $ 111,243      $ 100,020      $ 35,330  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     119  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Credit-Scored US Corporate Bond Index Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 45.26      $ 53.52      $ 54.70      $ 52.58      $ 48.59  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    1.74        1.04        0.91        1.32        1.63  

Net Realized and Unrealized Gain (Loss)

    0.05        (7.83      (0.51      2.39        3.94  
 

 

 

 

Total from Operations

    1.79        (6.79      0.40        3.71        5.57  
 

 

 

 

Distributions

             

Net Investment Income

    (1.67      (1.06      (0.96      (1.37      (1.58

From Net Realized Gains

           (0.41      (0.62      (0.22       
 

 

 

 

Total from Distributions

    (1.67      (1.47      (1.58      (1.59      (1.58
 

 

 

 

Net Asset Value, end of period

  $ 45.38      $ 45.26      $ 53.52      $ 54.70      $ 52.58  
 

 

 

 

Total Return

             

Net Asset Value(d)

    3.92      (12.91 )%       0.70      7.20      11.66

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.23      0.23      0.23      0.23      0.23

Expenses net of reimbursements

    0.22      0.22      0.22      0.22      0.22

Net Investment Income Before Reimbursements

    3.74      2.11      1.68      2.46      3.20

Net Investment Income Net of Reimbursements

    3.74      2.11      1.69      2.46      3.21

Supplemental Data

             

Portfolio Turnover Rate(e)

    121      66      53      62      65

Net assets, end of period (thousands)

  $ 274,550      $ 242,139      $ 315,740      $ 202,397      $ 97,275  

 

See Accompanying Notes to the Financial Statements.

 

120    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Credit-Scored US Long Corporate  Bond Index Fund  
    Year ended October 31,  
        2023         2022          2021          2020          2019  

Net asset value, beginning of period

  $ 39.44     $ 60.85      $ 61.81      $ 57.84      $ 48.04  
 

 

 

 

PER SHARE

            

Investment Operations

            

Net Investment Income(a)

    2.14       1.93        1.90        1.99        2.11  

Net Realized and Unrealized Gain (Loss)

    (1.33     (20.48      1.22        3.90        9.89  
 

 

 

 

Total from Operations

    0.81       (18.55      3.12        5.89        12.00  
 

 

 

 

Distributions

            

Net Investment Income

    (2.15     (1.92      (1.88      (1.92      (2.20

From Net Realized Gains

          (0.94      (2.20              
 

 

 

 

Total from Distributions

    (2.15     (2.86      (4.08      (1.92      (2.20
 

 

 

 

Net Asset Value, end of period

  $ 38.10     $ 39.44      $ 60.85      $ 61.81      $ 57.84  
 

 

 

 

Total Return

            

Net Asset Value(d)

    1.59 %(i)      (31.58 )%       5.14      10.34      25.57

RATIOS/SUPPLEMENT DATA

            

Ratios to Average Net Assets

 

Expenses

    0.23     0.23      0.23      0.23      0.23

Expenses net of reimbursements

    0.22     0.22      0.22      0.22      0.22

Net Investment Income Before Reimbursements

    5.01     3.86      3.13      3.27      4.06

Net Investment Income Net of Reimbursements

    5.02     3.86      3.14      3.28      4.07

Supplemental Data

            

Portfolio Turnover Rate(e)

    103     58      88      74      44

Net assets, end of period (thousands)

  $ 28,575     $ 35,498      $ 60,855      $ 46,360      $ 17,352  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     121  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® High Yield Value-Scored Bond Index Fund  
    Year ended October 31,  
    2023     2022      2021      2020      2019  

Net asset value, beginning of period

  $ 40.09     $ 49.58      $ 46.25      $ 47.85      $ 48.84  
 

 

 

 

PER SHARE

            

Investment Operations

            

Net Investment Income(a)

    3.57       2.98        2.67        3.12        2.67  

Net Realized and Unrealized Gain (Loss)

    (1.40     (9.24      3.42        (1.77      0.78  
 

 

 

 

Total from Operations

    2.17       (6.26      6.09        1.35        3.45  
 

 

 

 

Distributions

            

Net Investment Income

    (3.52     (2.86      (2.76      (2.95      (3.57

From Net Realized Gains

          (0.37                     

Tax Return of Capital

                               (0.87
 

 

 

 

Total from Distributions

    (3.52     (3.23      (2.76      (2.95      (4.44
 

 

 

 

Net Asset Value, end of period

  $ 38.74     $ 40.09      $ 49.58      $ 46.25      $ 47.85  
 

 

 

 

Total Return

            

Net Asset Value(d)

    5.45 %(j)      (13.06 )%       13.38      3.07      7.48

RATIOS/SUPPLEMENT DATA

            

Ratios to Average Net Assets

 

Expenses

    0.38     0.38      0.38      0.38      0.38

Expenses net of reimbursements

    0.37     0.37      0.37      0.37      0.37

Net Investment Income Before Reimbursements

    8.90     6.81      5.40      6.78      5.56

Net Investment Income Net of Reimbursements

    8.91     6.81      5.40      6.78      5.57

Supplemental Data

            

Portfolio Turnover Rate(e)

    167     146      128      95      44

Net assets, end of period (thousands)

  $ 1,222,307     $ 887,945      $ 575,184      $ 189,623      $ 100,480  

 

See Accompanying Notes to the Financial Statements.

 

122    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® ESG & Climate Investment Grade
Corporate Core Index Fund
 
                 

For the

period

09/20/21*

through

10/31/21

 
              
    Year ended October 31,  
    2023      2022  

Net asset value, beginning of period

  $ 38.59      $ 49.35      $ 50.00  
 

 

 

 

PER SHARE

       

Investment Operations

       

Net Investment Income(a)

    1.61        1.07        0.10  

Net Realized and Unrealized Gain (Loss)

    (0.62      (10.68      (0.75
 

 

 

 

Total from Operations

    0.99        (9.61      (0.65
 

 

 

 

Distributions

       

Net Investment Income

    (1.62      (1.15       
 

 

 

 

Total from Distributions

    (1.62      (1.15       
 

 

 

 

Net Asset Value, end of period

  $ 37.96      $ 38.59      $ 49.35  
 

 

 

 

Total Return(b)

       

Net Asset Value(d)

    2.41      (19.73 )%       (1.32 )% 

RATIOS/SUPPLEMENT DATA

       

Ratios to Average Net Assets(c)

 

Expenses

    0.13      0.13      0.12

Expenses net of reimbursements

    0.12      0.12      0.12

Net Investment Income Before Reimbursements

    4.00      2.41      1.81

Net Investment Income Net of Reimbursements

    4.00      2.41      1.81

Supplemental Data

       

Portfolio Turnover Rate(b)(e)

    87      66      8

Net assets, end of period(thousands)

  $ 24,672      $ 23,156      $ 49,347  

 

*

Commencement of investment operations.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     123  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Ultra-Short Income Fund  
    Year ended October 31,  
    2023      2022      2021      2020      2019  

Net asset value, beginning of period

  $ 74.30      $ 76.01      $ 76.29      $ 75.89      $ 75.48  
 

 

 

 

PER SHARE

             

Investment Operations

             

Net Investment Income(a)

    3.24        1.07        0.48        1.07        1.98  

Net Realized and Unrealized Gain (Loss)

    0.59        (1.80      (0.22      0.57        0.41  
 

 

 

 

Total from Operations

    3.83        (0.73      0.26        1.64        2.39  
 

 

 

 

Distributions

             

Net Investment Income

    (3.02      (0.78      (0.52      (1.23      (1.98

From Net Realized Gains

           (0.20      (0.02      (0.01       
 

 

 

 

Total from Distributions

    (3.02      (0.98      (0.54      (1.24      (1.98
 

 

 

 

Net Asset Value, end of period

  $ 75.11      $ 74.30      $ 76.01      $ 76.29      $ 75.89  
 

 

 

 

Total Return

             

Net Asset Value(d)

    5.27      (0.94 )%       0.34      2.18      3.21

RATIOS/SUPPLEMENT DATA

             

Ratios to Average Net Assets

 

Expenses

    0.26      0.26      0.26      0.26      0.26

Expenses net of reimbursements

    0.25      0.25      0.25      0.25      0.25

Net Investment Income Before Reimbursements

    4.33      1.43      0.62      1.41      2.61

Net Investment Income Net of Reimbursements

    4.33      1.43      0.63      1.41      2.62

Supplemental Data

             

Portfolio Turnover Rate(e)

    37      50      84      79      73

Net assets, end of period(thousands)

  $ 1,076,389      $ 856,357      $ 374,339      $ 469,201      $ 275,097  

 

See Accompanying Notes to the Financial Statements.

 

124    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

    FlexShares® Core Select Bond Fund  
    Year ended October 31,  
    2023     2022     2021     2020     2019  

Net asset value, beginning of period

  $ 21.46     $ 26.22     $ 26.78     $ 25.66     $ 23.74  
 

 

 

 

PER SHARE

         

Investment Operations

         

Net Investment Income(a)

    0.65       0.53       0.46       0.51       0.73  

Net Realized and Unrealized Gain (Loss)

    (0.66     (4.75     (0.39     1.19       1.93  
 

 

 

 

Total from Operations

    (0.01     (4.22     0.07       1.70       2.66  
 

 

 

 

Distributions

         

Net Investment Income

    (0.66     (0.54     (0.52     (0.58     (0.74

From Net Realized Gains

                (0.11            
 

 

 

 

Total from Distributions

    (0.66     (0.54     (0.63     (0.58     (0.74
 

 

 

 

Net Asset Value, end of period

  $ 20.79     $ 21.46     $ 26.22     $ 26.78     $ 25.66  
 

 

 

 

Total Return

         

Net Asset Value(d)

    (0.15 )%      (16.27 )%      0.26     6.69     11.38

RATIOS/SUPPLEMENT DATA

         

Ratios to Average Net Assets

 

Expenses

    0.36 %(h)      0.36 %(h)      0.36 %(h)      0.36 %(h)      0.36 %(h) 

Expenses net of reimbursements

    0.25 %(h)      0.22 %(h)      0.20 %(h)      0.20 %(h)      0.19 %(h) 

Net Investment Income Before Reimbursements

    2.87     2.10     1.56     1.76     2.80

Net Investment Income Net of Reimbursements

    2.98     2.24     1.72     1.93     2.97

Supplemental Data

         

Portfolio Turnover Rate(e)

    26     121     50     91     135

Net assets, end of period(thousands)

  $ 182,431     $ 159,362     $ 126,517     $ 109,123     $ 26,299  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     125  


Table of Contents

 

 

Financial Highlights (cont.)

 

 

(a)

Net investment income per share is based on average shares outstanding.

 

(b)

Not annualized for periods less than one year.

 

(c)

Annualized for periods less than one year.

 

(d)

Net asset value total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period at adjusted net asset value.

 

(e)

In-kind transactions are not included in portfolio turnover calculations.

 

(f)

Northern Trust Investments, Inc. voluntarily reimbursed expenses of the Fund in the amount of approximately $16,693. Total return excluding the voluntary reimbursement would have been 13.62% (see Note 4).

 

(g)

Less than 0.5%.

 

(h)

The Fund indirectly bears its proportionate share of fees and expenses incurred by the Underlying Fund(s) in which the Fund is invested. This ratio does not include these indirect fees and expenses.

 

(i)

Northern Trust Investments, Inc. voluntarily reimbursed expenses of the Fund in the amount of approximately $2,167. Total return excluding the voluntary reimbursement would have been 1.59% (see Note 4).

 

(j)

Northern Trust Investments, Inc. voluntarily reimbursed expenses of the Fund in the amount of approximately $84,821. Total return excluding the voluntary reimbursement would have been 5.44% (see Note 4).

 

See Accompanying Notes to the Financial Statements.

 

126    FLEXSHARES ANNUAL REPORT  


Table of Contents

Schedule of Investments

FlexShares® US Quality Low Volatility Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 99.8%  
Aerospace & Defense – 2.8%  

General Dynamics Corp.

    1,872     $ 451,732  

Huntington Ingalls Industries, Inc.(a)

    4,608       1,012,931  

Lockheed Martin Corp.

    5,184       2,356,854  

Northrop Grumman Corp.

    2,880       1,357,718  
              5,179,235  
Air Freight & Logistics – 1.7%  

CH Robinson Worldwide, Inc.

    14,400       1,178,352  

Expeditors International of Washington, Inc.

    13,392       1,463,076  

United Parcel Service, Inc., Class B

    4,176       589,860  
              3,231,288  
Automobiles – 0.5%  

Tesla, Inc.*

    4,896       983,313  
Banks – 0.0%(b)  

JPMorgan Chase & Co.

    432       60,074  
Beverages – 2.0%  

PepsiCo, Inc.

    22,320       3,644,410  
Biotechnology – 6.4%  

AbbVie, Inc.

    3,024       426,928  

Amgen, Inc.

    12,384       3,166,589  

Biogen, Inc.*

    6,192       1,470,848  

BioMarin Pharmaceutical, Inc.*

    6,336       516,067  

Gilead Sciences, Inc.

    28,512       2,239,333  

Regeneron Pharmaceuticals, Inc.*

    2,461       1,919,309  

Vertex Pharmaceuticals, Inc.*

    5,904       2,137,897  
              11,876,971  
Broadline Retail – 0.3%  

Dillard’s, Inc., Class A(a)

    1,728       536,458  
Capital Markets – 1.0%  

CME Group, Inc.

    8,784       1,875,033  
Investments   Shares     Value  
Chemicals – 0.5%  

Ashland, Inc.

    9,360     $ 717,257  

Linde plc

    576       220,124  
              937,381  
Commercial Services & Supplies – 2.4%  

Republic Services, Inc., Class A

    7,632       1,133,276  

Tetra Tech, Inc.(a)

    6,336       956,166  

Waste Connections, Inc.

    8,208       1,062,936  

Waste Management, Inc.

    7,920       1,301,493  
              4,453,871  
Consumer Staples Distribution & Retail – 1.7%  

Costco Wholesale Corp.

    2,889       1,595,999  

Kroger Co. (The)

    32,400       1,469,988  
              3,065,987  
Containers & Packaging – 1.7%  

AptarGroup, Inc.

    7,488       915,558  

Packaging Corp. of America

    10,368       1,586,822  

Sonoco Products Co.

    12,960       671,458  
              3,173,838  
Diversified Consumer Services – 1.0%  

Grand Canyon Education, Inc.*

    8,496       1,005,331  

Service Corp. International(a)

    15,264       830,667  
              1,835,998  
Diversified Telecommunication Services – 2.3%  

AT&T, Inc.

    101,520       1,563,408  

Iridium Communications, Inc.

    26,640       987,012  

Verizon Communications, Inc.

    48,528       1,704,789  
              4,255,209  
Electric Utilities – 3.2%  

American Electric Power Co., Inc.

    13,104       989,876  

Constellation Energy Corp.

    2,880       325,210  

Duke Energy Corp.

    19,008       1,689,621  

Eversource Energy

    14,256       766,830  

Pinnacle West Capital Corp.

    12,960       961,373  

Xcel Energy, Inc.

    19,296       1,143,674  
              5,876,584  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     127  


Table of Contents

 

 

FlexShares® US Quality Low Volatility Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Entertainment – 0.7%  

Electronic Arts, Inc.

    3,168     $ 392,167  

Madison Square Garden Sports Corp.*

    5,616       944,274  
              1,336,441  
Financial Services – 5.2%  

Berkshire Hathaway, Inc., Class B*

    15,264       5,210,061  

Visa, Inc., Class A(a)

    18,576       4,367,218  
              9,577,279  
Food Products – 2.4%  

Flowers Foods, Inc.

    17,280       378,950  

General Mills, Inc.

    1,440       93,946  

Hershey Co. (The)

    5,040       944,244  

Hormel Foods Corp.

    22,608       735,890  

J M Smucker Co. (The)

    7,344       836,041  

Lancaster Colony Corp.

    8,064       1,364,187  
              4,353,258  
Gas Utilities – 0.8%  

Atmos Energy Corp.(a)

    6,480       697,637  

Spire, Inc.(a)

    13,536       753,007  
              1,450,644  
Ground Transportation – 2.0%  

JB Hunt Transport Services, Inc.

    5,328       915,724  

Landstar System, Inc.(a)

    7,776       1,281,329  

Old Dominion Freight Line, Inc.

    4,032       1,518,693  
              3,715,746  
Health Care Equipment & Supplies – 1.3%  

Abbott Laboratories

    26,352       2,491,582  
Health Care Providers & Services – 1.2%  

Chemed Corp.(a)

    2,892       1,627,184  

Laboratory Corp. of America Holdings

    1,008       201,328  

UnitedHealth Group, Inc.

    576       308,482  
              2,136,994  
Investments   Shares     Value  
Hotels, Restaurants & Leisure – 3.0%  

McDonald’s Corp.

    15,552     $ 4,077,268  

Restaurant Brands International, Inc.(a)

    22,320       1,499,904  
              5,577,172  
Household Products – 3.1%  

Clorox Co. (The)

    8,640       1,016,928  

Procter & Gamble Co. (The)

    25,920       3,888,778  

WD-40 Co.(a)

    4,320       913,248  
              5,818,954  
Insurance – 6.3%  

Allstate Corp. (The)

    14,976       1,918,875  

American Financial Group, Inc.

    12,960       1,417,305  

Assurant, Inc.

    10,512       1,565,237  

Chubb Ltd.

    6,624       1,421,643  

Erie Indemnity Co., Class A

    3,600       994,284  

Markel Group, Inc.*

    720       1,058,774  

RLI Corp.

    7,488       997,701  

Travelers Cos., Inc. (The)

    7,056       1,181,457  

W R Berkley Corp.

    16,704       1,126,184  
              11,681,460  
Interactive Media & Services – 2.0%  

Alphabet, Inc., Class A*

    12,240       1,518,739  

Alphabet, Inc., Class C*

    9,072       1,136,722  

Meta Platforms, Inc., Class A*

    3,600       1,084,572  
              3,740,033  
IT Services – 1.7%  

Amdocs Ltd.

    17,280       1,385,165  

International Business Machines Corp.

    11,808       1,707,909  
              3,093,074  
Life Sciences Tools & Services – 0.5%  

ICON plc*

    144       35,130  

QIAGEN NV*

    23,184       867,777  
              902,907  
Metals & Mining – 0.8%  

Newmont Corp.

    41,760       1,564,747  

 

See Accompanying Notes to the Financial Statements.

 

128    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® US Quality Low Volatility Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Multi-Utilities – 2.5%  

Ameren Corp.

    13,248     $ 1,003,006  

CMS Energy Corp.(a)

    18,432       1,001,595  

Consolidated Edison, Inc.

    17,856       1,567,578  

WEC Energy Group, Inc.

    12,816       1,043,094  
              4,615,273  
Oil, Gas & Consumable Fuels – 1.3%  

Chesapeake Energy Corp.(a)

    5,328       458,634  

Chevron Corp.

    2,160       314,777  

Coterra Energy, Inc.

    42,480       1,168,200  

Exxon Mobil Corp.

    4,032       426,787  
              2,368,398  
Pharmaceuticals – 7.9%  

Eli Lilly & Co.

    12,096       6,700,337  

Johnson & Johnson

    20,592       3,054,617  

Merck & Co., Inc.

    47,952       4,924,671  
              14,679,625  
Professional Services – 2.2%  

Automatic Data Processing, Inc.

    7,344       1,602,608  

CACI International, Inc., Class A*

    3,024       982,074  

Verisk Analytics, Inc., Class A

    6,336       1,440,553  
              4,025,235  
Residential REITs – 0.2%  

Essex Property Trust, Inc., REIT

    1,872       400,458  
Semiconductors & Semiconductor Equipment – 2.7%  

Broadcom, Inc.

    715       601,579  

NVIDIA Corp.

    7,275       2,966,745  

Texas Instruments, Inc.

    10,368       1,472,360  
              5,040,684  
Software – 12.8%  

Cadence Design Systems, Inc.*

    3,024       725,306  

Check Point Software Technologies Ltd.*

    11,376       1,527,228  

Dolby Laboratories, Inc., Class A

    8,640       699,322  

Microsoft Corp.

    45,792       15,482,733  

Qualys, Inc.* (a)

    9,360       1,431,612  

Roper Technologies, Inc.

    3,456       1,688,498  
Investments   Shares     Value  
Software – (continued)  

SPS Commerce, Inc.*

    2,016     $ 323,245  

Tyler Technologies, Inc.*

    4,032       1,503,533  

VMware, Inc., Class A*

    2,465       359,027  
              23,740,504  
Specialized REITs – 1.4%  

Equinix, Inc., REIT

    1,728       1,260,818  

Public Storage, REIT

    5,472       1,306,221  
              2,567,039  
Specialty Retail – 3.0%  

AutoZone, Inc.*

    176       435,975  

Home Depot, Inc. (The)

    8,496       2,418,726  

O’Reilly Automotive, Inc.*

    1,837       1,709,218  

Tractor Supply Co.

    5,040       970,503  
              5,534,422  
Technology Hardware, Storage & Peripherals – 5.7%  

Apple, Inc.

    61,632       10,524,897  
Tobacco – 0.8%  

Altria Group, Inc.

    36,000       1,446,120  
Wireless Telecommunication Services – 0.8%  

T-Mobile US, Inc.*

    9,792       1,408,677  
Total Common Stocks
(Cost $173,325,857)

 

    184,777,273  
    Principal
Amount
       
SECURITIES LENDING REINVESTMENTS – 1.5%(c)  
REPURCHASE AGREEMENTS – 1.5%  

CF Secured LLC, 5.30%, dated 10/31/2023, due 11/1/2023, repurchase price $2,684,389, collateralized by various U.S. Treasury Securities, ranging from 0.00% – 7.63%, maturing 11/15/2023 – 5/15/2051; total market value $2,706,537
(Cost $2,683,994)

  $ 2,683,994       2,683,994  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     129  


Table of Contents

 

 

FlexShares® US Quality Low Volatility Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
SHORT-TERM INVESTMENTS – 0.0%(b)(d)(e)  
U.S. TREASURY OBLIGATIONS – 0.0%  

U.S. Treasury Bills
5.43%, 4/11/2024
(Cost $19,524)

  $      20,000     $ 19,522  
Total Investments – 101.3%
(Cost $176,029,375)

 

    187,480,789  

Liabilities in excess of other assets – (1.3%)

 

    (2,476,169
NET ASSETS – 100.0%

 

  $ 185,004,620  

 

*

Non-income producing security.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $13,821,520, collateralized in the form of cash with a value of $2,683,994 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $11,006,326 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 7, 2023 – August 15, 2053 and $327,945 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% –

  4.25%, and maturity dates ranging from November 13, 2023 – October 22, 2071; a total value of $14,018,264.

 

(b) 

Represents less than 0.05% of net assets.

 

(c) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $2,683,994.

 

(d) 

All or a portion of the security pledged as collateral for Futures Contracts.

 

(e) 

The rate shown was the current yield as of October 31, 2023.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

REIT – Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 19,540,583  

Aggregate gross unrealized depreciation

    (8,248,947

Net unrealized appreciation

  $ 11,291,636  

Federal income tax cost

  $ 176,191,118  

 

Futures Contracts

FlexShares® US Quality Low Volatility Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Appreciation/
(Depreciation)*
 

Long Contracts

 

S&P 500 E-Mini Index

    1       12/15/2023       USD     $ 210,612     $ 2,310  

S&P 500 Micro E-Mini Index

    7       12/15/2023       USD       147,429       (345
                                    $ 1,965  

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Abbreviations:

 

USD – US Dollar

 

Security Type   % of Net Assets  

Common Stocks

    99.8

Securities Lending Reinvestments

    1.5  

Short-Term Investments

     0.0  

Others(1)

    (1.3
      100.0

 

 

Amount represents less than 0.05%.

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

130    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 97.6%  
Aerospace & Defense – 2.3%  

BAE Systems plc(a)

    51,828     $ 694,313  

Dassault Aviation SA

    1,400       277,463  

Thales SA

    3,976       584,796  
              1,556,572  
Air Freight & Logistics – 0.8%  

Yamato Holdings Co. Ltd.

    30,800       509,249  
Automobile Components – 0.2%  

Bridgestone Corp.

    2,800       104,775  
Automobiles – 1.0%  

Ferrari NV

    2,212       667,523  
Banks – 12.8%  

Bank Hapoalim BM

    67,676       482,952  

Bank Leumi Le-Israel BM

    69,664       447,545  

Banque Cantonale Vaudoise (Registered)

    5,012       565,058  

BOC Hong Kong Holdings Ltd.

    210,000       555,556  

DBS Group Holdings Ltd.

    30,800       738,499  

Hang Seng Bank Ltd.

    22,400       256,647  

HSBC Holdings plc

    10,696       76,875  

Japan Post Bank Co. Ltd.

    70,000       646,868  

Mizrahi Tefahot Bank Ltd.

    14,952       461,989  

Mizuho Financial Group, Inc.

    39,200       658,877  

Oversea-Chinese Banking Corp. Ltd.

    56,000       518,288  

Resona Holdings, Inc.

    53,200       282,256  

Royal Bank of Canada

    12,292       980,704  

Sumitomo Mitsui Financial Group, Inc.

    21,300       1,015,458  

Toronto-Dominion Bank (The)

    6,944       387,453  

United Overseas Bank Ltd.

    19,600       386,549  
              8,461,574  
Beverages – 0.7%  

Budweiser Brewing Co. APAC Ltd.(b)

    168,000       319,485  

Suntory Beverage & Food Ltd.

    5,600       165,583  
              485,068  
Investments   Shares     Value  
Biotechnology – 0.2%  

Genmab A/S*

    532     $ 149,926  
Broadline Retail – 2.2%  

Dollarama, Inc.

    5,208       355,266  

Pan Pacific International Holdings Corp.

    28,000       537,370  

Wesfarmers Ltd.

    18,088       578,576  
              1,471,212  
Capital Markets – 1.7%  

Deutsche Boerse AG

    3,640       597,129  

Singapore Exchange Ltd.

    78,400       541,913  
              1,139,042  
Chemicals – 2.3%  

Air Liquide SA

    6,692       1,143,635  

ICL Group Ltd.

    84,672       410,221  
              1,553,856  
Commercial Services & Supplies – 1.6%  

Brambles Ltd.

    26,936       223,585  

Dai Nippon Printing Co. Ltd.

    9,500       245,208  

Secom Co. Ltd.

    8,400       579,616  
              1,048,409  
Construction & Engineering – 0.3%  

Obayashi Corp.

    11,200       95,253  

Taisei Corp.

    2,800       94,273  
              189,526  
Consumer Staples Distribution & Retail – 2.7%  

Carrefour SA

    1,400       24,535  

Jeronimo Martins SGPS SA

    13,692       315,210  

Koninklijke Ahold Delhaize NV

    19,992       591,683  

Loblaw Cos. Ltd.

    3,276       267,649  

Metro, Inc., Class A

    11,312       573,973  
              1,773,050  
Containers & Packaging – 0.3%  

CCL Industries, Inc., Class B

    5,096       199,031  
Diversified Consumer Services – 0.1%  

Pearson plc

    3,892       44,942  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     131  


Table of Contents

 

 

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Diversified Telecommunication Services – 5.0%  

BCE, Inc.

    784     $ 29,110  

Deutsche Telekom AG (Registered)

    21,112       456,907  

Elisa OYJ

    11,312       479,228  

Koninklijke KPN NV

    164,752       552,904  

Nippon Telegraph & Telephone Corp.

    498,400       581,842  

Orange SA

    32,760       384,709  

Singapore Telecommunications Ltd.

    81,200       141,058  

Swisscom AG (Registered)

    980       585,814  

Telefonica Deutschland Holding AG

    72,184       122,345  
              3,333,917  
Electric Utilities – 4.7%  

Chubu Electric Power Co., Inc.

    14,000       168,477  

CLP Holdings Ltd.

    41,000       299,983  

Emera, Inc.(a)

    1,568       51,301  

Fortis, Inc.(a)

    7,732       306,662  

Hydro One Ltd.(a) (b)

    20,020       518,580  

Iberdrola SA

    59,556       660,982  

Kansai Electric Power Co., Inc. (The)

    22,400       284,946  

Power Assets Holdings Ltd.

    51,000       243,770  

Redeia Corp. SA

    35,280       548,364  
              3,083,065  
Entertainment – 0.5%  

Nintendo Co. Ltd.

    2,800       115,017  

Toho Co. Ltd.

    6,600       223,610  
              338,627  
Food Products – 5.7%  

JDE Peet’s NV(a)

    4,060       112,607  

MEIJI Holdings Co. Ltd.

    10,400       255,322  

Nestle SA (Registered)

    26,376       2,842,075  

Nissin Foods Holdings Co. Ltd.

    2,200       191,026  

Yakult Honsha Co. Ltd.

    16,200       380,491  
              3,781,521  
Gas Utilities – 1.4%  

Naturgy Energy Group SA(a)

    3,668       103,518  

Osaka Gas Co. Ltd.

    16,800       315,267  

Snam SpA

    51,548       235,925  

Tokyo Gas Co. Ltd.

    12,400       276,666  
              931,376  
Investments   Shares     Value  
Ground Transportation – 4.3%  

Canadian National Railway Co.

    8,568     $ 905,588  

Central Japan Railway Co.

    12,500       280,300  

East Japan Railway Co.

    5,600       291,084  

Hankyu Hanshin Holdings, Inc.

    8,400       262,186  

Keisei Electric Railway Co. Ltd.

    7,100       265,210  

Kintetsu Group Holdings Co. Ltd.

    8,400       235,119  

Tobu Railway Co. Ltd.(a)

    19,600       469,018  

West Japan Railway Co.

    3,400       129,000  
              2,837,505  
Health Care Providers & Services – 0.2%  

Fresenius Medical Care AG & Co. KGaA

    3,080       101,964  
Hotels, Restaurants & Leisure – 0.7%  

Compass Group plc

    3,220       80,998  

Genting Singapore Ltd.

    352,800       221,458  

La Francaise des Jeux SAEM(b)

    952       30,610  

Sodexo SA

    1,512       159,627  
              492,693  
Household Durables – 1.1%  

Sekisui Chemical Co. Ltd.

    35,800       485,544  

Sekisui House Ltd.

    14,000       271,689  
              757,233  
Household Products – 0.8%  

Henkel AG & Co. KGaA

    168       10,594  

Reckitt Benckiser Group plc

    7,504       500,997  
              511,591  
Independent Power and Renewable Electricity
Producers – 0.0%(c)
 

Meridian Energy Ltd.

    11,480       32,252  
Industrial Conglomerates – 1.7%  

CK Hutchison Holdings Ltd.

    56,000       283,056  

Jardine Cycle & Carriage Ltd.

    22,400       461,063  

Jardine Matheson Holdings Ltd.

    5,600       226,520  

Keppel Corp. Ltd.

    30,800       139,607  
              1,110,246  
Insurance – 3.4%  

Fairfax Financial Holdings Ltd.

    364       302,587  

Hannover Rueck SE

    1,400       308,242  

 

See Accompanying Notes to the Financial Statements.

 

132    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Insurance – (continued)  

Insurance Australia Group Ltd.

    45,416     $ 163,042  

Medibank Pvt Ltd.

    249,872       542,648  

Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Registered)

    196       78,415  

Sampo OYJ, Class A

    12,376       485,452  

Talanx AG

    1,764       110,847  

Zurich Insurance Group AG

    588       278,219  
              2,269,452  
IT Services – 2.1%  

CGI, Inc.*

    3,416       329,432  

Obic Co. Ltd.

    3,400       499,409  

Otsuka Corp.

    400       15,908  

SCSK Corp.

    30,800       522,367  
              1,367,116  
Machinery – 0.9%  

Hoshizaki Corp.

    4,000       128,046  

Kone OYJ, Class B

    10,976       474,391  
              602,437  
Marine Transportation – 0.5%  

Kuehne + Nagel International AG (Registered)

    1,232       330,997  
Metals & Mining – 0.7%  

BHP Group Ltd.

    2,072       58,379  

Franco-Nevada Corp.

    3,228       392,266  
              450,645  
Multi-Utilities – 1.1%  

Canadian Utilities Ltd., Class A(a)

    18,704       395,300  

National Grid plc

    29,176       346,460  
              741,760  
Office REITs – 0.0%(c)  

Keppel REIT, REIT

    6,160       3,575  
Oil, Gas & Consumable Fuels – 3.5%  

ENEOS Holdings, Inc.

    75,600       278,399  

Galp Energia SGPS SA

    22,624       339,812  

Idemitsu Kosan Co. Ltd.

    11,200       252,849  

Pembina Pipeline Corp.

    4,368       134,288  
Investments   Shares     Value  
Oil, Gas & Consumable Fuels – (continued)  

Shell plc

    30,940     $ 993,606  

TotalEnergies SE

    4,480       299,275  
              2,298,229  
Passenger Airlines – 0.8%  

Cathay Pacific Airways Ltd.*

    504,000       506,280  
Personal Care Products – 2.7%  

Beiersdorf AG

    952       124,827  

Unilever plc

    35,336       1,667,544  
              1,792,371  
Pharmaceuticals – 11.0%  

AstraZeneca plc

    2,828       351,743  

GSK plc

    44,296       783,367  

Novartis AG (Registered)

    7,056       655,474  

Novo Nordisk A/S, Class B

    10,528       1,009,362  

Otsuka Holdings Co. Ltd.

    2,800       93,367  

Roche Holding AG

    84       22,817  

Roche Holding AG – BR

    9,436       2,424,712  

Sanofi SA

    19,124       1,732,346  

UCB SA

    3,304       241,180  
              7,314,368  
Professional Services – 2.6%  

RELX plc

    6,608       229,970  

SGS SA (Registered)

    5,908       480,274  

Thomson Reuters Corp.

    2,632       314,930  

Wolters Kluwer NV

    5,544       709,647  
              1,734,821  
Real Estate Management & Development – 1.6%  

CK Asset Holdings Ltd.

    102,000       509,700  

Sino Land Co. Ltd.

    11,163       11,142  

Sun Hung Kai Properties Ltd.

    52,000       533,983  
              1,054,825  
Retail REITs – 0.6%  

Link REIT, REIT

    81,200       372,553  
Semiconductors & Semiconductor Equipment – 0.8%  

ASML Holding NV

    868       518,649  
Software – 1.7%  

Constellation Software, Inc.(a)

    28       56,071  

Oracle Corp. Japan

    7,600       535,455  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     133  


Table of Contents

 

 

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Software – (continued)  

SAP SE

    4,004     $ 536,393  
              1,127,919  
Specialty Retail – 1.0%  

Industria de Diseno Textil SA(a)

    18,844       648,334  
Technology Hardware, Storage & Peripherals – 0.6%  

Canon, Inc.

    16,800       393,917  
Textiles, Apparel & Luxury Goods – 0.6%  

LVMH Moet Hennessy Louis Vuitton SE

    560       399,250  
Tobacco – 0.4%  

Japan Tobacco, Inc.

    10,200       237,144  
Trading Companies & Distributors – 2.2%  

Bunzl plc

    7,392       262,995  

Ferguson plc

    3,528       527,854  

ITOCHU Corp.

    19,600       695,373  
              1,486,222  
Transportation Infrastructure – 0.8%  

Aena SME SA(b)

    1,988       287,355  

Auckland International Airport Ltd.

    1,098       4,688  

Flughafen Zurich AG (Registered)

    1,372       255,087  

Getlink SE

    28       451  
              547,581  
Wireless Telecommunication Services – 2.7%  

KDDI Corp.

    25,200       746,623  

Rogers Communications, Inc., Class B

    4,844       179,279  

SoftBank Corp.

    47,600       535,891  

Vodafone Group plc

    362,516       333,001  
              1,794,794  
Total Common Stocks
(Cost $65,665,911)

 

    64,658,984  
Investments   Number of
Warrants
    Value  
WARRANTS – 0.0%  
Software – 0.0%  

Constellation Software, Inc., expiring 3/31/2040, price 11.50 CAD* ‡
(Cost $–)

    28     $  
Total Investments – 97.6%
(Cost $65,665,911)

 

    64,658,984  

Other assets less liabilities – 2.4%

 

    1,604,367  
NET ASSETS – 100.0%

 

  $ 66,263,351  

 

*

Non-income producing security.

 

 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $2,212,131, collateralized by $1,823,311 in U.S. Government Treasury Securities, interest rates ranging from 0.00% – 6.13%, and maturity dates ranging from November 16, 2023 – August 15, 2053 and $627,612 in Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 5.75%, and maturity dates ranging from November 13, 2023 – October 22, 2071; a total value of $2,450,923.

 

(b) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(c) 

Represents less than 0.05% of net assets.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

OYJ – Public Limited Company

 

REIT – Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 4,588,367  

Aggregate gross unrealized depreciation

    (5,879,577

Net unrealized depreciation

  $ (1,291,210

Federal income tax cost

  $ 65,879,973  

 

See Accompanying Notes to the Financial Statements.

 

134    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund (cont.)

 

 

Futures Contracts

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund had the following open futures contracts as of October 31, 2023:    

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

MSCI EAFE E-Mini Index

    13       12/15/2023       USD     $ 1,283,165     $ (79,276

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Forward Foreign Currency Contracts

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive         Counterparty   In Exchange For     Maturity
Date
    Unrealized
Appreciation/
(Depreciation)
 

USD

    77,079       Toronto-Dominion Bank (The)  

AUD

    119,288       12/20/2023     $ 1,427  

USD

    189,827       Toronto-Dominion Bank (The)  

CHF

    167,993       12/20/2023       4,186  

USD

    43,617       JPMorgan Chase Bank NA  

DKK

    303,190       12/20/2023       562  

USD

    301,456       Morgan Stanley  

EUR

    281,420       12/20/2023       3,310  

USD

    24,818       Citibank NA  

GBP

    19,939       12/20/2023       614  

USD

    540,444       JPMorgan Chase Bank NA  

JPY

    78,676,131       12/20/2023       16,570  

USD

    12,263       Citibank NA  

NOK

    131,563       12/20/2023       469  

USD

    24,409       Morgan Stanley  

NZD

    41,229       12/20/2023       424  

USD

    69,008         Goldman Sachs & Co.   SEK     767,599       12/20/2023       137  

Total unrealized appreciation

 

          $ 27,699  

CAD

    91,112       Citibank NA  

USD

    67,349       12/20/2023     $ (1,661

EUR

    63,000       Toronto-Dominion Bank (The)  

USD

    67,466       12/20/2023       (722

HKD

    282,833       Toronto-Dominion Bank (The)  

USD

    36,198       12/20/2023       (22

ILS

    73,522         Citibank NA   USD     19,320       12/20/2023       (1,096

JPY

    71,113,000       JPMorgan Chase Bank NA  

USD

    488,314       12/20/2023       (14,800

SGD

    16,357       BNP Paribas SA  

USD

    12,078       12/20/2023       (113

USD

    64,395         Toronto-Dominion Bank (The)   EUR     61,000       12/20/2023       (230

Total unrealized depreciation

 

          $ (18,644

Net unrealized appreciation

 

          $ 9,055  

 

Abbreviations:

 

AUD – Australian Dollar

CAD – Canadian Dollar

CHF – Swiss Franc

DKK – Danish Krone

EUR – Euro

GBP – British Pound

HKD – Hong Kong Dollar

ILS – Israeli Shekel

JPY– Japanese Yen

NOK – Norwegian Krone

NZD – New Zealand Dollar

SEK – Swedish Krona

SGD – Singapore Dollar

USD – US Dollar

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     135  


Table of Contents

 

 

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund (cont.)

 

 

FlexShares® Developed Markets ex-US Quality Low Volatility Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    2.4

Belgium

    0.4  

Canada

    10.1  

Denmark

    1.7  

Finland

    2.2  

France

    7.6  

Germany

    3.7  

Hong Kong

    5.9  

Israel

    2.7  

Italy

    0.3  

Japan

    23.2  

Netherlands

    4.8  

New Zealand

     0.0  

Portugal

    1.0  

Singapore

    5.1  

Spain

    3.4  

Switzerland

    12.7  

United Kingdom

    10.4  

Other1

    2.4  
      100.0

 

 

Amount represents less than 0.05%.

1 

Includes any non-equity securities and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    97.6

Warrants

     

Others(1)

    2.4  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

136    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® Emerging Markets Quality Low Volatility Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 99.1%  
Automobile Components – 1.1%  

Cheng Shin Rubber Industry Co. Ltd.

    48,000     $ 65,337  

Hyundai Mobis Co. Ltd.

    24       3,705  

MRF Ltd.

    54       70,240  
              139,282  
Automobiles – 2.4%  

Bajaj Auto Ltd.

    1,938       123,694  

Hero MotoCorp Ltd.

    2,064       76,561  

Maruti Suzuki India Ltd.

    864       107,844  
              308,099  
Banks – 18.3%  

Abu Dhabi Islamic Bank PJSC

    22,170       62,170  

Agricultural Bank of China Ltd., Class H

    372,000       137,397  

Al Rajhi Bank

    2,106       37,667  

Axis Bank Ltd.

    738       8,703  

Banco BBVA Peru SA

    5,514       2,013  

Bank Central Asia Tbk. PT

    117,600       64,778  

Bank of China Ltd., Class H

    408,000       142,872  

Bank of Communications Co. Ltd., Class H

    138,000       81,658  

Boubyan Bank KSCP

    36,360       68,832  

Chang Hwa Commercial Bank Ltd.

    126,000       66,623  

China CITIC Bank Corp. Ltd., Class H

    174,000       77,609  

China Construction Bank Corp., Class H

    443,000       251,376  

China Zheshang Bank Co. Ltd., Class H

    234,000       58,017  

Dubai Islamic Bank PJSC

    71,100       104,530  

Emirates NBD Bank PJSC

    18,090       83,481  

First Financial Holding Co. Ltd.

    120,000       95,822  

Grupo Financiero Banorte SAB de CV, Class O

    600       4,863  

HDFC Bank Ltd.

    528       9,364  

Hong Leong Bank Bhd.

    16,800       68,406  

Hong Leong Financial Group Bhd.

    15,000       55,284  

ICICI Bank Ltd.

    7,194       79,091  

Industrial & Commercial Bank of China Ltd., Class H

    570,000       273,905  
Investments   Shares     Value  
Banks – (continued)  

Itau Unibanco Holding SA (Preference)

    3,000     $ 15,955  

Kuwait Finance House KSCP

    43,728       96,624  

Malayan Banking Bhd.

    44,400       84,057  

National Bank of Kuwait SAKP

    39,480       111,853  

Qatar International Islamic Bank QSC

    26,130       66,384  

Qatar National Bank QPSC

    24,612       100,652  

Saudi Investment Bank (The)

    15,870       62,184  

Sberbank of Russia PJSC‡

    12,360        
              2,372,170  
Beverages – 0.7%  

Emperador, Inc.

    181,200       66,425  

Nongfu Spring Co. Ltd., Class H(a)

    4,800       27,329  
              93,754  
Broadline Retail – 3.7%  

Alibaba Group Holding Ltd., ADR*

    4,950       408,573  

PDD Holdings, Inc., ADR*

    576       58,418  

Prosus NV*

    170       4,749  

Robinson PCL* ‡

    600        

Vipshop Holdings Ltd., ADR*

    222       3,166  
              474,906  
Capital Markets – 0.8%  

Macquarie Korea Infrastructure Fund

    12,084       107,549  
Chemicals – 3.8%  

Asian Paints Ltd.

    2,952       106,215  

Berger Paints India Ltd.

    2,181       14,633  

Fertiglobe plc

    105,726       92,399  

Mesaieed Petrochemical Holding Co.

    137,448       60,022  

PhosAgro PJSC‡

    1,158        

Pidilite Industries Ltd.

    2,538       74,928  

SABIC Agri-Nutrients Co.

    3,192       113,842  

Saudi Basic Industries Corp.

    1,740       35,713  
              497,752  
Construction & Engineering – 0.4%  

China Railway Group Ltd., Class H

    102,000       48,102  

Larsen & Toubro Ltd.

    156       5,488  
              53,590  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     137  


Table of Contents

 

 

FlexShares® Emerging Markets Quality Low Volatility Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Construction Materials – 0.8%  

Asia Cement Corp.

    32,000     $ 39,464  

LafargeHolcim Maroc SA

    396       71,723  
              111,187  
Consumer Finance – 0.6%  

Bajaj Finance Ltd.

    78       7,019  

Samsung Card Co. Ltd.

    3,030       70,335  
              77,354  
Consumer Staples Distribution & Retail – 0.8%  

Nahdi Medical Co.

    162       6,123  

President Chain Store Corp.

    12,000       95,268  

Wal-Mart de Mexico SAB de CV

    1,200       4,289  
              105,680  
Diversified Telecommunication Services – 4.3%  

Chunghwa Telecom Co. Ltd.

    39,000       139,479  

Emirates Integrated Telecommunications Co. PJSC

    46,146       67,592  

Itissalat Al-Maghrib

    8,532       79,501  

LG Uplus Corp.

    7,902       59,153  

Ooredoo QPSC

    6,852       18,612  

Saudi Telecom Co.

    8,334       85,304  

Telkom Indonesia Persero Tbk. PT

    511,200       112,313  
              561,954  
Electric Utilities – 3.7%  

CPFL Energia SA

    15,000       99,465  

CTEEP-Cia de Transmissao de Energia Eletrica Paulista (Preference)

    4,800       20,169  

Manila Electric Co.

    11,340       70,950  

Power Grid Corp. of India Ltd.

    54,280       131,790  

Saudi Electricity Co.

    13,404       63,597  

Transmissora Alianca de Energia Eletrica SA

    14,400       96,485  
              482,456  
Electrical Equipment – 0.8%  

ABB India Ltd.

    2,028       100,094  
Electronic Equipment, Instruments & Components – 0.7%  

MOG Digitech Holdings Ltd.*

    6,000       1,687  

WPG Holdings Ltd.

    42,000       92,715  
              94,402  
Investments   Shares     Value  
Entertainment – 0.8%  

NetEase, Inc., ADR

    1,020     $ 109,058  
Food Products – 4.4%  

Almarai Co. JSC

    4,266       63,565  

Nestle India Ltd.

    114       33,183  

Nestle Malaysia Bhd.

    3,600       93,542  

Orion Corp.

    600       53,223  

Tingyi Cayman Islands Holding Corp.

    74,000       98,167  

Uni-President China Holdings Ltd.

    60,000       40,871  

Uni-President Enterprises Corp.

    42,000       87,924  

Want Want China Holdings Ltd.

    156,000       96,894  
              567,369  
Gas Utilities – 0.8%  

Petronas Gas Bhd.

    28,200       101,803  
Health Care Providers & Services – 3.6%  

Bangkok Dusit Medical Services PCL, NVDR

    102,000       75,203  

Bumrungrad Hospital PCL, NVDR

    15,000       108,507  

Dr Sulaiman Al Habib Medical Services Group Co.

    1,134       76,172  

Mitra Keluarga Karyasehat Tbk. PT(b)

    523,200       90,247  

Mouwasat Medical Services Co.

    2,328       62,053  

Sinopharm Group Co. Ltd., Class H

    24,000       57,358  
              469,540  
Hotels, Restaurants & Leisure – 0.8%  

Kangwon Land, Inc.

    2,490       27,047  

Meituan, Class B* (b)

    4,200       59,366  

Yum China Holdings, Inc.

    228       11,984  
              98,397  
Household Products – 0.6%  

Unilever Indonesia Tbk. PT

    346,200       78,895  
Independent Power and Renewable Electricity
Producers – 0.8%
 

ACWA Power Co.

    648       39,209  

Engie Brasil Energia SA

    1,800       14,027  

NTPC Ltd.

    18,318       51,879  

Unipro PJSC* ‡

    726,000        
              105,115  

 

See Accompanying Notes to the Financial Statements.

 

138    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Emerging Markets Quality Low Volatility Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Industrial Conglomerates – 2.1%  

Alpha Dhabi Holding PJSC*

    14,796     $ 76,054  

Far Eastern New Century Corp.

    72,000       65,485  

Samsung C&T Corp.

    780       61,624  

Sime Darby Bhd.

    139,200       66,905  
              270,068  
Insurance – 2.2%  

Bupa Arabia for Cooperative Insurance Co.

    1,356       76,988  

DB Insurance Co. Ltd.

    246       16,011  

PICC Property & Casualty Co. Ltd., Class H

    72,000       82,264  

Ping An Insurance Group Co. of China Ltd., Class H

    6,000       30,749  

Samsung Fire & Marine Insurance Co. Ltd.

    420       80,389  
              286,401  
Interactive Media & Services – 3.4%  

Tencent Holdings Ltd.

    11,800       436,132  
IT Services – 4.4%  

Arabian Internet & Communications Services Co.

    798       66,535  

HCL Technologies Ltd.

    2,184       33,471  

Infosys Ltd.

    4,644       76,327  

Samsung SDS Co. Ltd.

    726       74,291  

Tata Consultancy Services Ltd.

    7,806       315,840  
              566,464  
Life Sciences Tools & Services – 0.1%  

Divi’s Laboratories Ltd.

    72       2,930  

Samsung Biologics Co. Ltd.* (b)

    24       12,599  
              15,529  
Marine Transportation – 0.5%  

MISC Bhd.

    45,600       69,388  
Metals & Mining – 0.5%  

China Steel Corp.

    12,000       8,935  

Industrias CH SAB de CV, Class B, Series B*

    350       3,742  

Polyus PJSC* ‡

    546        
Investments   Shares     Value  
Metals & Mining – (continued)  

Vale SA

    3,600     $ 49,256  
              61,933  
Multi-Utilities – 0.6%  

Dubai Electricity & Water Authority PJSC

    113,886       73,795  
Office REITs – 0.2%  

Embassy Office Parks REIT, REIT

    6,396       23,942  
Oil, Gas & Consumable Fuels – 3.2%  

China Shenhua Energy Co. Ltd., Class H

    6,000       18,404  

PetroChina Co. Ltd., Class H

    36,000       23,464  

Petroleo Brasileiro SA

    1,800       13,506  

Petroleo Brasileiro SA (Preference)

    3,600       24,800  

Petronas Dagangan Bhd.

    13,800       66,212  

Petronet LNG Ltd.

    1,554       3,726  

Qatar Fuel QSC

    23,838       97,224  

Qatar Gas Transport Co. Ltd.

    68,034       65,773  

Reliance Industries Ltd.

    2,964       81,449  

Surgutneftegas PJSC (Preference)‡

    156,600        

United Tractors Tbk. PT

    13,800       21,827  
              416,385  
Personal Care Products – 2.2%  

Colgate-Palmolive India Ltd.

    348       8,835  

Hengan International Group Co. Ltd.

    28,500       95,430  

Hindustan Unilever Ltd.

    6,318       188,496  
              292,761  
Pharmaceuticals – 3.4%  

Alkem Laboratories Ltd.

    414       18,507  

Cipla Ltd.

    7,806       112,507  

Dr Reddy’s Laboratories Ltd.

    1,638       105,599  

Kalbe Farma Tbk. PT

    508,800       54,131  

Sun Pharmaceutical Industries Ltd.

    6,786       88,726  

Torrent Pharmaceuticals Ltd.

    192       4,437  

Yuhan Corp.

    1,332       56,612  
              440,519  
Real Estate Management & Development – 0.3%  

Aldar Properties PJSC

    26,538       37,571  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     139  


Table of Contents

 

 

FlexShares® Emerging Markets Quality Low Volatility Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Semiconductors & Semiconductor Equipment – 6.3%  

MediaTek, Inc.

    1,200     $ 31,152  

Taiwan Semiconductor Manufacturing Co. Ltd.

    48,000       782,857  
              814,009  
Specialty Retail – 2.1%  

Abu Dhabi National Oil Co. for Distribution PJSC

    68,688       62,835  

Home Product Center PCL, NVDR

    181,200       59,993  

Jarir Marketing Co.

    26,376       101,803  

MR DIY Group M Bhd.(b)

    148,200       46,035  
              270,666  
Technology Hardware, Storage & Peripherals – 4.2%  

Compal Electronics, Inc.

    102,000       88,210  

Pegatron Corp.

    25,000       58,116  

Samsung Electronics Co. Ltd.

    7,938       393,212  
              539,538  
Textiles, Apparel & Luxury Goods – 0.7%  

Titan Co. Ltd.

    2,520       96,541  
Tobacco – 0.6%  

KT&G Corp.

    1,236       78,065  
Transportation Infrastructure – 2.0%  

Airports of Thailand PCL, NVDR*

    42,000       77,999  

Salik Co. PJSC

    112,398       97,618  

Taiwan High Speed Rail Corp.

    93,000       84,298  
              259,915  
Water Utilities – 0.7%  

Emirates Central Cooling Systems Corp.

    200,406       97,666  
Wireless Telecommunication Services – 4.7%  

Advanced Info Service PCL, NVDR

    18,000       110,176  

America Movil SAB de CV, Series B

    35,400       29,198  

Etihad Etisalat Co.

    8,010       98,427  

Far EasTone Telecommunications Co. Ltd.

    43,000       100,623  

Intouch Holdings PCL, NVDR

    48,000       94,818  

Mobile Telecommunications Co. KSCP

    43,584       67,724  
Investments   Shares     Value  
Wireless Telecommunication Services – (continued)  

Taiwan Mobile Co. Ltd.

    37,000     $ 109,283  
              610,249  
Total Common Stocks
(Cost $13,811,847)

 

    12,867,943  
                 
Total Investments – 99.1%
(Cost $13,811,847)

 

    12,867,943  

Other assets less liabilities – 0.9%

 

    111,903  
NET ASSETS – 100.0%

 

  $ 12,979,846  

 

*

Non-income producing security.

 

 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(a) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(b) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

ADR – American Depositary Receipt

NVDR – Non-Voting Depositary Receipt

PJSC – Public Joint Stock Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.

REIT – Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 727,786  

Aggregate gross unrealized depreciation

    (1,776,759

Net unrealized depreciation

  $ (1,048,973

Federal income tax cost

  $ 13,904,379  

 

See Accompanying Notes to the Financial Statements.

 

140    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Emerging Markets Quality Low Volatility Index Fund (cont.)

 

 

Futures Contracts

FlexShares® Emerging Markets Quality Low Volatility Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

 

MSCI Emerging Markets E-Mini Index

    4       12/15/2023       USD     $ 183,840     $ (12,537

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Abbreviations:

 

USD – US Dollar

 

FlexShares® Emerging Markets Quality Low Volatility Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Brazil

    2.6

China

    21.0  

India

    16.7  

Indonesia

    3.2  

Kuwait

    2.7  

Malaysia

    5.0  

Mexico

    0.3  

Morocco

    1.2  

Peru

     0.0  

Philippines

    1.1  

Qatar

    3.1  

Saudi Arabia

    7.6  

South Africa

     0.0  

South Korea

    8.4  

Taiwan

    15.5  

Thailand

    4.1  

United Arab Emirates

    6.6  

Other1

    0.9  
      100.0

 

Amount represents less than 0.05%.

 

1 

Includes any non-equity securities and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    99.1

Others(1)

    0.9  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     141  


Table of Contents

 

Schedule of Investments

FlexShares® Morningstar US Market Factor Tilt Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 99.1%  
Aerospace & Defense – 1.4%  

AAR Corp.*

    2,565     $ 152,259  

AeroVironment, Inc.* (a)

    1,197       137,248  

Axon Enterprise, Inc.* (a)

    1,539       314,710  

Boeing Co. (The)*

    16,830       3,144,181  

BWX Technologies, Inc.(a)

    3,933       292,143  

Curtiss-Wright Corp.

    2,210       439,370  

Ducommun, Inc.*

    513       24,542  

General Dynamics Corp.

    6,669       1,609,296  

HEICO Corp.(a)

    1,360       215,438  

HEICO Corp., Class A

    1,710       217,392  

Hexcel Corp.

    3,060       189,475  

Howmet Aerospace, Inc.

    10,880       479,808  

Huntington Ingalls Industries, Inc.

    1,197       263,125  

Kratos Defense & Security Solutions, Inc.*

    3,933       67,058  

L3Harris Technologies, Inc.

    4,930       884,491  

Lockheed Martin Corp.

    6,630       3,014,263  

Mercury Systems, Inc.* (a)

    1,020       36,700  

Moog, Inc., Class A

    2,040       236,742  

Northrop Grumman Corp.

    3,570       1,683,005  

Parsons Corp.*

    3,238       183,109  

Rocket Lab USA, Inc.* (a)

    22,610       95,640  

RTX Corp.

    37,060       3,016,313  

Spirit AeroSystems Holdings, Inc., Class A* (a)

    4,104       92,750  

Textron, Inc.

    6,120       465,120  

TransDigm Group, Inc.*

    1,360       1,126,202  

Triumph Group, Inc.*

    6,498       48,475  

V2X, Inc.* (a)

    850       43,410  

Woodward, Inc.(a)

    3,078       383,827  
              18,856,092  
Air Freight & Logistics – 0.5%  

Air Transport Services Group, Inc.* (a)

    13,600       266,152  

CH Robinson Worldwide, Inc.(a)

    3,591       293,852  

Expeditors International of Washington, Inc.(a)

    4,250       464,312  

FedEx Corp.

    7,310       1,755,131  
Investments   Shares     Value  
Air Freight & Logistics – (continued)  

Forward Air Corp.

    855     $ 55,071  

GXO Logistics, Inc.* (a)

    6,800       343,468  

Hub Group, Inc., Class A* (a)

    7,820       537,625  

United Parcel Service, Inc., Class B

    21,590       3,049,587  
              6,765,198  
Automobile Components – 0.5%  

Adient plc* (a)

    21,930       738,822  

American Axle & Manufacturing Holdings, Inc.* (a)

    13,430       90,652  

Aptiv plc*

    7,011       611,359  

Autoliv, Inc.(a)

    3,570       327,190  

BorgWarner, Inc.

    7,990       294,831  

Dana, Inc.

    6,120       70,257  

Dorman Products, Inc.* (a)

    850       52,853  

Fox Factory Holding Corp.* (a)

    1,870       152,349  

Garrett Motion, Inc.* (a)

    23,290       164,427  

Gentex Corp.

    11,050       316,914  

Gentherm, Inc.* (a)

    1,026       41,266  

Goodyear Tire & Rubber Co. (The)*

    57,782       687,606  

LCI Industries(a)

    5,130       556,554  

Lear Corp.

    2,380       308,829  

Mobileye Global, Inc., Class A* (a)

    4,080       145,534  

Modine Manufacturing Co.*

    9,520       376,040  

Patrick Industries, Inc.(a)

    5,440       408,816  

QuantumScape Corp., Class A* (a)

    72,250       377,145  

Standard Motor Products, Inc.

    4,420       154,391  

Stoneridge, Inc.*

    6,669       108,505  

Visteon Corp.*

    1,700       195,721  

XPEL, Inc.* (b)

    1,197       55,421  
              6,235,482  
Automobiles – 1.4%  

Fisker, Inc., Class A* (a)

    15,810       71,145  

Ford Motor Co.

    120,336       1,173,276  

General Motors Co.

    39,610       1,117,002  

 

See Accompanying Notes to the Financial Statements.

 

142    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Automobiles – (continued)  

Harley-Davidson, Inc.

    28,560     $ 766,836  

Lucid Group, Inc.* (a)

    31,620       130,274  

Rivian Automotive, Inc., Class A* (a)

    22,780       369,492  

Tesla, Inc.*

    68,170       13,691,263  

Thor Industries, Inc.(a)

    11,050       971,626  

Winnebago Industries, Inc.(a)

    5,440       315,248  
              18,606,162  
Banks – 5.6%  

1st Source Corp.

    2,210       100,820  

Amalgamated Financial Corp.(a)

    6,120       111,629  

Amerant Bancorp, Inc., Class A

    8,500       154,955  

Ameris Bancorp

    14,790       551,667  

Associated Banc-Corp.

    36,890       597,987  

Atlantic Union Bankshares
Corp.(a)

    16,150       465,282  

Axos Financial, Inc.* (a)

    11,286       406,635  

Banc of California, Inc.

    18,020       202,004  

BancFirst Corp.(a)

    1,535       124,504  

Bancorp, Inc. (The)*

    4,760       169,694  

Bank of America Corp.

    206,720       5,445,005  

Bank of Hawaii Corp.

    170       8,396  

Bank OZK(a)

    24,650       882,717  

BankUnited, Inc.

    19,890       433,801  

Banner Corp.

    9,520       401,839  

Berkshire Hills Bancorp, Inc.

    7,310       143,349  

BOK Financial Corp.

    5,270       345,290  

Brookline Bancorp, Inc.

    11,970       97,436  

Byline Bancorp, Inc.(a)

    7,480       141,896  

Cadence Bank(a)

    35,870       759,727  

Camden National Corp.(a)

    340       9,914  

Capitol Federal Financial, Inc.(a)

    19,890       103,428  

Cathay General Bancorp(a)

    15,130       513,058  

Central Pacific Financial Corp.(a)

    2,550       40,239  

Citigroup, Inc.

    57,120       2,255,669  
Investments   Shares     Value  
Banks – (continued)  

Citizens Financial Group, Inc.(a)

    17,170     $ 402,293  

City Holding Co.(a)

    342       31,047  

Coastal Financial Corp.*

    3,400       126,378  

Columbia Banking System, Inc.

    50,150       986,451  

Comerica, Inc.

    30,770       1,212,338  

Commerce Bancshares, Inc.(a)

    3,740       164,036  

Community Bank System, Inc.(a)

    1,530       61,123  

Community Trust Bancorp, Inc.

    1,881       70,650  

ConnectOne Bancorp, Inc.

    12,750       207,698  

CrossFirst Bankshares, Inc.* (a)

    5,780       61,152  

Cullen/Frost Bankers, Inc.

    2,040       185,620  

Customers Bancorp, Inc.*

    5,301       213,153  

CVB Financial Corp.(a)

    26,520       414,242  

Dime Community Bancshares, Inc.(a)

    11,900       218,841  

Eagle Bancorp, Inc.

    10,370       202,008  

East West Bancorp, Inc.(a)

    5,130       275,071  

Eastern Bankshares, Inc.

    36,040       396,800  

Enterprise Financial Services Corp.

    3,230       112,307  

Farmers National Banc Corp.(a)

    9,350       105,562  

FB Financial Corp.

    1,020       29,957  

Fifth Third Bancorp

    22,059       523,019  

First Bancorp/NC(a)

    3,249       94,286  

First Bancorp/PR(a)

    43,883       585,838  

First Bancshares, Inc. (The)(a)

    9,350       226,457  

First Busey Corp.(a)

    15,810       313,987  

First Citizens BancShares, Inc., Class A

    342       472,213  

First Commonwealth Financial
Corp.(a)

    23,256       283,258  

First Financial Bancorp(a)

    17,271       319,514  

First Financial Bankshares, Inc.(a)

    3,060       73,593  

First Financial Corp.

    1,020       35,098  

First Hawaiian, Inc.(a)

    32,640       585,235  

First Horizon Corp.

    19,040       204,680  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     143  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Banks – (continued)  

First Interstate BancSystem, Inc., Class A

    14,620     $ 337,283  

First Merchants Corp.

    16,150       441,056  

First Mid Bancshares, Inc.

    7,310       199,709  

FNB Corp.(a)

    71,570       765,083  

Fulton Financial Corp.(a)

    36,550       474,785  

Glacier Bancorp, Inc.(a)

    2,210       66,720  

Great Southern Bancorp, Inc.(a)

    340       16,905  

Hancock Whitney Corp.

    17,613       606,416  

Hanmi Financial Corp.

    11,900       174,692  

HarborOne Bancorp, Inc.

    1,881       18,509  

Heartland Financial USA, Inc.

    11,390       312,086  

Heritage Commerce Corp.

    23,290       190,512  

Heritage Financial Corp.

    2,720       44,254  

Hilltop Holdings, Inc.(a)

    4,760       131,471  

Home BancShares, Inc.(a)

    37,060       757,877  

Hope Bancorp, Inc.

    17,850       156,366  

Horizon Bancorp, Inc.

    5,440       51,626  

Huntington Bancshares, Inc.

    46,410       447,857  

Independent Bank Corp.

    10,880       530,944  

Independent Bank Group, Inc.

    5,610       198,314  

International Bancshares Corp.

    12,312       539,635  

JPMorgan Chase & Co.

    88,230       12,269,264  

KeyCorp

    23,800       243,236  

Lakeland Bancorp, Inc.

    11,115       125,377  

Lakeland Financial Corp.

    684       33,687  

Live Oak Bancshares, Inc.

    680       19,618  

M&T Bank Corp.(a)

    5,723       645,268  

Mercantile Bank Corp.(a)

    2,210       72,797  

Midland States Bancorp, Inc.

    4,446       97,012  

National Bank Holdings Corp., Class A

    7,990       249,128  

NBT Bancorp, Inc.(a)

    340       11,380  

New York Community Bancorp, Inc.(a)

    156,910       1,487,507  

Nicolet Bankshares, Inc.(a)

    1,499       109,157  

Northfield Bancorp, Inc.

    4,420       38,012  
Investments   Shares     Value  
Banks – (continued)  

Northwest Bancshares, Inc.(a)

    26,010     $ 271,024  

OceanFirst Financial Corp.(a)

    14,535       184,013  

OFG Bancorp

    12,410       367,584  

Old National Bancorp(a)

    63,070       864,059  

Old Second Bancorp, Inc.(a)

    4,250       57,630  

Origin Bancorp, Inc.(a)

    3,570       105,636  

Pacific Premier Bancorp, Inc.

    18,639       354,141  

PacWest Bancorp

    32,470       229,888  

Park National Corp.(a)

    342       34,675  

Pathward Financial, Inc.

    2,736       123,913  

Peoples Bancorp, Inc.(a)

    5,472       150,918  

Pinnacle Financial Partners, Inc.(a)

    17,850       1,113,126  

PNC Financial Services Group, Inc. (The)

    11,730       1,342,733  

Popular, Inc.

    16,320       1,061,453  

Preferred Bank(a)

    4,250       253,172  

Premier Financial Corp.

    12,580       218,263  

Prosperity Bancshares, Inc.

    19,152       1,044,550  

Provident Financial Services, Inc.(a)

    20,740       291,397  

QCR Holdings, Inc.

    1,881       89,253  

Regions Financial Corp.(a)

    30,600       444,618  

Renasant Corp.(a)

    10,370       252,924  

S&T Bancorp, Inc.(a)

    7,310       188,306  

Sandy Spring Bancorp, Inc.

    7,140       146,013  

Seacoast Banking Corp. of Florida(a)

    7,650       154,607  

ServisFirst Bancshares, Inc.(a)

    3,910       184,396  

Simmons First National Corp., Class A

    24,795       352,337  

Southern Missouri Bancorp, Inc.(a)

    4,250       171,912  

Southside Bancshares, Inc.(a)

    4,250       113,475  

SouthState Corp.(a)

    15,300       1,011,330  

Stellar Bancorp, Inc.(a)

    9,180       199,573  

Stock Yards Bancorp, Inc.(a)

    513       20,063  

Synovus Financial Corp.(a)

    34,680       904,108  

Texas Capital Bancshares, Inc.* (a)

    3,060       168,484  

Tompkins Financial Corp.(a)

    171       8,564  

 

See Accompanying Notes to the Financial Statements.

 

144    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Banks – (continued)  

Towne Bank

    12,996     $ 311,124  

TriCo Bancshares(a)

    513       16,596  

Triumph Financial, Inc.* (a)

    2,210       137,573  

Truist Financial Corp.

    43,520       1,234,227  

TrustCo Bank Corp. NY(a)

    3,249       82,947  

Trustmark Corp.

    17,000       341,870  

UMB Financial Corp.

    9,690       607,757  

United Bankshares, Inc.(a)

    8,160       232,070  

United Community Banks, Inc.(a)

    23,800       525,742  

Univest Financial Corp.

    5,472       91,164  

US Bancorp(a)

    47,430       1,512,068  

Valley National Bancorp(a)

    86,665       674,254  

Veritex Holdings, Inc.(a)

    6,970       120,023  

WaFd, Inc.(a)

    15,640       385,995  

Washington Trust Bancorp, Inc.

    2,209       51,227  

Webster Financial Corp.

    38,930       1,478,172  

Wells Fargo & Co.

    111,690       4,441,911  

WesBanco, Inc.

    11,799       287,778  

Westamerica Bancorp

    5,780       273,047  

Western Alliance Bancorp

    24,650       1,013,115  

Wintrust Financial Corp.

    12,483       932,355  

WSFS Financial Corp.(a)

    11,900       421,260  

Zions Bancorp NA(a)

    34,680       1,069,878  
              74,244,680  
Beverages – 1.1%  

Boston Beer Co., Inc. (The), Class A*

    340       113,543  

Brown-Forman Corp., Class A

    1,368       78,551  

Brown-Forman Corp., Class B(a)

    3,740       210,038  

Celsius Holdings, Inc.* (a)

    1,881       286,081  

Coca-Cola Co. (The)

    94,350       5,329,832  

Coca-Cola Consolidated, Inc.

    340       216,379  

Constellation Brands, Inc., Class A

    4,080       955,332  

Duckhorn Portfolio, Inc. (The)*

    7,650       79,790  
Investments   Shares     Value  
Beverages – (continued)  

Keurig Dr Pepper, Inc.(a)

    27,880     $ 845,600  

MGP Ingredients, Inc.

    170       16,092  

Molson Coors Beverage Co., Class B(a)

    6,327       365,511  

Monster Beverage Corp.*

    18,810       961,191  

National Beverage Corp.*

    1,026       47,586  

PepsiCo, Inc.

    34,000       5,551,520  

Vita Coco Co., Inc. (The)* (a)

    4,080       110,568  
              15,167,614  
Biotechnology – 2.4%  

AbbVie, Inc.

    53,720       7,584,190  

ACADIA Pharmaceuticals, Inc.*

    6,800       153,476  

Agios Pharmaceuticals, Inc.*

    4,695       98,642  

Akero Therapeutics, Inc.*

    2,380       28,370  

Alkermes plc*

    5,440       131,594  

Alnylam Pharmaceuticals, Inc.*

    3,060       464,508  

Amgen, Inc.

    16,490       4,216,493  

Amicus Therapeutics, Inc.*

    6,669       73,159  

Anavex Life Sciences Corp.* (a)

    10,370       57,865  

Apellis Pharmaceuticals, Inc.* (a)

    3,400       165,444  

Arrowhead Pharmaceuticals, Inc.*

    5,610       137,950  

Aurinia Pharmaceuticals, Inc.* (a)

    13,430       98,576  

BioCryst Pharmaceuticals, Inc.* (a)

    17,170       94,263  

Biogen, Inc.*

    3,740       888,400  

Biohaven Ltd.* (a)

    14,280       378,563  

BioMarin Pharmaceutical, Inc.*

    4,760       387,702  

Blueprint Medicines Corp.*

    3,230       190,118  

Bridgebio Pharma, Inc.* (a)

    5,270       137,231  

CareDx, Inc.*

    21,930       118,641  

Catalyst Pharmaceuticals, Inc.* (a)

    9,153       113,589  

Cerevel Therapeutics Holdings, Inc.*

    2,907       68,750  

CRISPR Therapeutics AG* (a)

    18,020       701,519  

Cytokinetics, Inc.* (a)

    2,890       100,745  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     145  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Biotechnology – (continued)  

Deciphera Pharmaceuticals, Inc.*

    2,907     $ 34,855  

Denali Therapeutics, Inc.*

    3,400       64,022  

Dynavax Technologies Corp.* (a)

    25,479       362,057  

Editas Medicine, Inc.* (a)

    11,390       76,085  

EQRx, Inc.* (a)

    89,080       194,194  

Exact Sciences Corp.*

    5,440       335,050  

Exelixis, Inc.*

    17,850       367,531  

Geron Corp.* (a)

    14,877       28,266  

Gilead Sciences, Inc.

    37,060       2,910,692  

Halozyme Therapeutics, Inc.*

    7,140       241,832  

ImmunoGen, Inc.* (a)

    5,440       80,838  

Immunovant, Inc.*

    2,210       73,040  

Incyte Corp.*

    3,570       192,530  

Inhibrx, Inc.*

    513       7,936  

Insmed, Inc.* (a)

    9,690       242,831  

Intellia Therapeutics, Inc.* (a)

    5,270       132,013  

Ionis Pharmaceuticals, Inc.* (a)

    6,840       302,807  

Iovance Biotherapeutics, Inc.*

    2,736       10,451  

Ironwood Pharmaceuticals, Inc., Class A* (a)

    20,230       181,463  

Karuna Therapeutics, Inc.* (a)

    1,020       169,942  

Karyopharm Therapeutics, Inc.* (a)

    6,669       5,802  

Krystal Biotech, Inc.* (a)

    1,700       198,679  

Kura Oncology, Inc.* (a)

    25,160       212,602  

Lyell Immunopharma, Inc.* (a)

    28,220       46,704  

Madrigal Pharmaceuticals, Inc.*

    340       44,669  

MannKind Corp.* (a)

    7,182       30,811  

Mirati Therapeutics, Inc.*

    3,570       198,242  

Moderna, Inc.* (a)

    10,540       800,618  

Morphic Holding, Inc.*

    2,890       57,655  

Myriad Genetics, Inc.* (a)

    2,907       45,291  

Natera, Inc.* (a)

    4,959       195,732  

Neurocrine Biosciences, Inc.*

    2,052       227,649  
Investments   Shares     Value  
Biotechnology – (continued)  

Novavax, Inc.* (a)

    12,070     $ 80,386  

OmniAb, Inc.* ‡ (a)

    281       149  

Prothena Corp. plc* (a)

    1,700       61,982  

PTC Therapeutics, Inc.*

    3,249       60,919  

Recursion Pharmaceuticals, Inc., Class A* (a)

    14,450       76,296  

Regeneron Pharmaceuticals, Inc.*

    2,720       2,121,301  

Relay Therapeutics, Inc.*

    9,520       62,832  

Replimune Group, Inc.*

    15,980       232,829  

REVOLUTION Medicines, Inc.* (a)

    6,120       121,176  

Rocket Pharmaceuticals, Inc.*

    6,460       116,926  

Sarepta Therapeutics, Inc.* (a)

    2,720       183,083  

Seagen, Inc.* (a)

    3,230       687,376  

Seres Therapeutics, Inc.* (a)

    2,052       3,140  

SpringWorks Therapeutics, Inc.* (a)

    4,080       93,432  

TG Therapeutics, Inc.* (a)

    7,353       56,839  

Travere Therapeutics, Inc.*

    1,710       11,081  

Twist Bioscience Corp.*

    1,530       24,113  

Ultragenyx Pharmaceutical, Inc.*

    1,530       54,162  

uniQure NV* (a)

    5,270       30,039  

United Therapeutics Corp.*

    1,530       340,976  

Vaxcyte, Inc.* (a)

    18,870       907,647  

Veracyte, Inc.* (a)

    3,249       67,319  

Vertex Pharmaceuticals, Inc.*

    6,460       2,339,231  

Vir Biotechnology, Inc.*

    10,200       80,886  

Zymeworks, Inc.*

    15,130       106,213  
              32,383,010  
Broadline Retail – 2.6%  

Amazon.com, Inc.*

    224,400       29,865,396  

Coupang, Inc., Class A*

    31,620       537,540  

Dillard’s, Inc., Class A(a)

    510       158,329  

eBay, Inc.

    17,340       680,248  

Etsy, Inc.* (a)

    2,550       158,865  

Kohl’s Corp.(a)

    21,930       494,521  

Macy’s, Inc.(a)

    52,020       633,604  

MercadoLibre, Inc.*

    1,190       1,476,481  

 

See Accompanying Notes to the Financial Statements.

 

146    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Broadline Retail – (continued)  

Nordstrom, Inc.(a)

    24,990     $ 349,360  

Ollie’s Bargain Outlet Holdings,
Inc.* (a)

    3,078       237,745  
              34,592,089  
Building Products – 0.8%  

A O Smith Corp.

    3,249       226,650  

AAON, Inc.(a)

    3,591       195,638  

Advanced Drainage Systems,
Inc.(a)

    2,720       290,578  

Allegion plc(a)

    1,870       183,933  

American Woodmark Corp.*

    4,080       274,298  

Apogee Enterprises, Inc.(a)

    2,720       116,742  

Armstrong World Industries, Inc.

    850       64,507  

AZEK Co., Inc. (The), Class A*

    4,080       106,896  

AZZ, Inc.(a)

    7,140       337,508  

Builders FirstSource, Inc.*

    4,420       479,658  

Carlisle Cos., Inc.(a)

    1,368       347,595  

Carrier Global Corp.

    22,230       1,059,482  

Fortune Brands Innovations, Inc.(a)

    3,933       219,461  

Gibraltar Industries, Inc.* (a)

    855       52,035  

Griffon Corp.

    9,747       389,295  

Hayward Holdings, Inc.* (a)

    11,730       123,165  

Insteel Industries, Inc.(a)

    2,550       71,171  

JELD-WEN Holding, Inc.*

    12,070       136,753  

Johnson Controls International plc

    19,380       950,008  

Lennox International, Inc.

    1,020       377,951  

Masco Corp.

    6,840       356,296  

Masonite International Corp.*

    4,250       336,345  

Masterbrand, Inc.*

    24,650       273,862  

Owens Corning

    3,400       385,458  

PGT Innovations, Inc.*

    5,780       173,053  

Quanex Building Products Corp.(a)

    4,275       114,784  

Resideo Technologies, Inc.* (a)

    28,557       413,505  
Investments   Shares     Value  
Building Products – (continued)  

Simpson Manufacturing Co., Inc.

    1,539     $ 204,964  

Trane Technologies plc

    5,472       1,041,376  

Trex Co., Inc.* (a)

    6,120       344,005  

UFP Industries, Inc.

    12,654       1,204,281  

Zurn Elkay Water Solutions Corp.(a)

    4,446       117,641  
              10,968,894  
Capital Markets – 2.8%  

Affiliated Managers Group, Inc.

    8,330       1,022,591  

Ameriprise Financial, Inc.

    2,720       855,630  

Ares Management Corp., Class A

    3,420       337,178  

Artisan Partners Asset Management, Inc., Class A(a)

    2,040       67,320  

Avantax, Inc.*

    4,590       118,468  

B. Riley Financial, Inc.(a)

    3,591       130,030  

Bank of New York Mellon Corp. (The)

    21,760       924,800  

BGC Group, Inc., Class A(a)

    69,530       408,141  

BlackRock, Inc.

    4,250       2,602,190  

Blackstone, Inc.(a)

    16,660       1,538,551  

Blue Owl Capital, Inc., Class A(a)

    18,468       227,710  

Brightsphere Investment Group, Inc.

    5,130       80,336  

Carlyle Group, Inc. (The)(a)

    5,100       140,454  

Charles Schwab Corp. (The)

    36,210       1,884,368  

CME Group, Inc.

    8,500       1,814,410  

Cohen & Steers, Inc.(a)

    1,530       79,927  

Coinbase Global, Inc., Class A* (a)

    5,100       393,312  

Donnelley Financial Solutions, Inc.*

    1,190       64,772  

Evercore, Inc., Class A(a)

    1,870       243,437  

FactSet Research Systems, Inc.

    855       369,266  

Federated Hermes, Inc., Class B

    5,610       177,837  

Franklin Resources, Inc.(a)

    10,089       229,928  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     147  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Capital Markets – (continued)  

Goldman Sachs Group, Inc. (The)

    10,030     $ 3,045,208  

Hamilton Lane, Inc., Class A

    2,550       214,506  

Houlihan Lokey, Inc., Class A(a)

    1,710       171,889  

Interactive Brokers Group, Inc., Class A

    3,570       285,850  

Intercontinental Exchange, Inc.

    14,096       1,514,474  

Invesco Ltd.

    13,509       175,212  

Janus Henderson Group plc(a)

    29,410       678,489  

Jefferies Financial Group, Inc.

    37,910       1,219,944  

KKR & Co., Inc.

    18,190       1,007,726  

LPL Financial Holdings, Inc.

    2,210       496,189  

MarketAxess Holdings, Inc.

    855       182,756  

Moelis & Co., Class A(a)

    3,249       135,288  

Moody’s Corp.

    4,080       1,256,640  

Morgan Stanley

    39,780       2,817,220  

Morningstar, Inc.(a)

    513       129,912  

MSCI, Inc., Class A

    1,881       886,986  

Nasdaq, Inc.

    8,208       407,117  

Northern Trust Corp.(c)

    6,970       459,393  

Oppenheimer Holdings, Inc., Class A

    342       11,994  

Piper Sandler Cos.(a)

    1,190       166,421  

PJT Partners, Inc., Class A

    342       26,799  

Raymond James Financial, Inc.(a)

    5,440       519,194  

Robinhood Markets, Inc., Class A* (a)

    19,210       175,579  

S&P Global, Inc.

    8,160       2,850,370  

SEI Investments Co.

    2,907       155,990  

State Street Corp.

    10,431       674,155  

Stifel Financial Corp.(a)

    21,590       1,230,630  

StoneX Group, Inc.* (a)

    4,250       405,110  

T. Rowe Price Group, Inc.(a)

    5,440       492,320  

TPG, Inc., Class A(a)

    2,223       61,444  

Tradeweb Markets, Inc., Class A

    5,610       504,956  

Victory Capital Holdings, Inc., Class A

    5,472       161,205  

Virtu Financial, Inc., Class A

    22,780       421,202  
Investments   Shares     Value  
Capital Markets – (continued)  

Virtus Investment Partners, Inc.(a)

    1,190     $ 219,234  

WisdomTree, Inc.(a)

    171       1,060  
              36,873,118  
Chemicals – 1.6%  

AdvanSix, Inc.

    7,650       210,758  

Air Products and Chemicals, Inc.

    5,270       1,488,459  

Albemarle Corp.(a)

    3,400       431,052  

Ashland, Inc.

    1,881       144,141  

Avient Corp.

    20,230       639,673  

Axalta Coating Systems Ltd.*

    8,721       228,752  

Balchem Corp.

    1,881       218,647  

Cabot Corp.

    3,570       237,334  

Celanese Corp., Class A(a)

    3,420       391,624  

CF Industries Holdings, Inc.

    6,630       528,941  

Chase Corp.(a)

    171       21,727  

Chemours Co. (The)

    34,170       823,839  

Corteva, Inc.

    16,660       802,012  

Dow, Inc.

    22,440       1,084,750  

DuPont de Nemours, Inc.(a)

    11,390       830,103  

Eastman Chemical Co.

    3,933       293,913  

Ecolab, Inc.

    5,780       969,537  

Ecovyst, Inc.*

    1,197       11,012  

Element Solutions, Inc.(a)

    13,167       240,034  

FMC Corp.

    3,570       189,924  

Ginkgo Bioworks Holdings, Inc., Class A* (a)

    77,860       106,668  

Hawkins, Inc.(a)

    513       29,462  

HB Fuller Co.

    1,539       101,805  

Huntsman Corp.

    39,270       916,169  

Innospec, Inc.

    684       67,032  

International Flavors & Fragrances, Inc.(a)

    5,100       348,585  

Koppers Holdings, Inc.

    3,570       130,555  

Kronos Worldwide, Inc.

    3,230       22,287  

Linde plc

    12,240       4,677,638  

Livent Corp.* (a)

    7,182       104,785  

LSB Industries, Inc.* (a)

    13,770       125,445  

LyondellBasell Industries NV, Class A

    7,695       694,397  

Mativ Holdings, Inc.(a)

    5,780       75,718  

 

See Accompanying Notes to the Financial Statements.

 

148    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Chemicals – (continued)  

Minerals Technologies, Inc.

    3,060     $ 165,424  

Mosaic Co. (The)

    11,730       380,990  

NewMarket Corp.(a)

    510       245,896  

Olin Corp.

    5,270       225,134  

Perimeter Solutions SA* (a)

    19,210       61,472  

PPG Industries, Inc.

    5,270       646,998  

PureCycle Technologies, Inc.* (a)

    29,750       132,387  

Quaker Chemical Corp.

    855       122,881  

RPM International, Inc.

    2,736       249,715  

Scotts Miracle-Gro Co. (The)(a)

    3,400       151,096  

Sensient Technologies Corp.(a)

    2,210       124,688  

Sherwin-Williams Co. (The)

    5,610       1,336,358  

Stepan Co.

    1,530       114,444  

Trinseo plc

    4,250       26,308  

Tronox Holdings plc(a)

    21,546       230,327  

Westlake Corp.(a)

    510       58,834  
              21,459,730  
Commercial Services & Supplies – 0.8%  

ABM Industries, Inc.(a)

    12,240       481,522  

ACCO Brands Corp.

    28,900       146,234  

ACV Auctions, Inc., Class A* (a)

    7,820       104,241  

Brady Corp., Class A

    1,026       52,798  

BrightView Holdings, Inc.*

    7,011       47,254  

Brink’s Co. (The)

    9,918       663,117  

Casella Waste Systems, Inc., Class A* (a)

    2,052       154,823  

Cimpress plc*

    5,100       304,317  

Cintas Corp.

    2,052       1,040,610  

Clean Harbors, Inc.* (a)

    1,870       287,363  

Copart, Inc.*

    21,760       946,995  

CoreCivic, Inc.*

    17,000       215,900  

Deluxe Corp.(a)

    10,370       176,809  

Ennis, Inc.(a)

    4,590       98,042  

Enviri Corp.* (a)

    21,250       121,975  

GEO Group, Inc. (The)* (a)

    22,780       199,097  

Healthcare Services Group, Inc.

    6,290       59,755  
Investments   Shares     Value  
Commercial Services & Supplies – (continued)  

HNI Corp.

    3,420     $ 118,640  

Interface, Inc., Class A

    21,590       191,935  

Liquidity Services, Inc.*

    513       9,886  

Matthews International Corp., Class A(a)

    3,400       120,496  

MillerKnoll, Inc.(a)

    21,590       507,365  

Montrose Environmental Group, Inc.*

    2,890       66,817  

MSA Safety, Inc.(a)

    2,210       348,915  

OPENLANE, Inc.*

    3,060       41,096  

Republic Services, Inc., Class A

    5,130       761,754  

Rollins, Inc.

    6,327       237,958  

SP Plus Corp.*

    3,230       163,212  

Steelcase, Inc., Class A(a)

    30,260       330,137  

Stericycle, Inc.* (a)

    5,440       224,346  

Tetra Tech, Inc.(a)

    1,710       258,056  

UniFirst Corp.(a)

    1,026       168,705  

Viad Corp.* (a)

    2,223       53,863  

Waste Management, Inc.

    9,234       1,517,423  
              10,221,456  
Communications Equipment – 0.8%  

ADTRAN Holdings, Inc.(a)

    22,270       146,314  

Arista Networks, Inc.*

    6,120       1,226,264  

Calix, Inc.*

    3,591       118,934  

Ciena Corp.* (a)

    6,120       258,264  

Cisco Systems, Inc.

    122,060       6,362,988  

CommScope Holding Co., Inc.*

    56,950       84,286  

Digi International, Inc.* (a)

    3,420       86,116  

Extreme Networks, Inc.* (a)

    9,350       192,797  

F5, Inc.*

    1,368       207,375  

Harmonic, Inc.* (a)

    2,565       27,676  

Infinera Corp.* (a)

    6,669       19,540  

Juniper Networks, Inc.

    10,370       279,160  

Lumentum Holdings, Inc.* (a)

    1,190       46,660  

Motorola Solutions, Inc.

    4,275       1,190,417  

NetScout Systems, Inc.* (a)

    5,359       116,987  

Viasat, Inc.* (a)

    15,810       291,537  

Viavi Solutions, Inc.*

    6,630       51,581  
              10,706,896  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     149  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Construction & Engineering – 0.4%  

AECOM(a)

    4,330     $ 331,462  

Ameresco, Inc., Class A* (a)

    1,197       31,302  

API Group Corp.* (a)

    6,630       171,518  

Arcosa, Inc.

    1,368       94,488  

Argan, Inc.

    1,710       78,215  

Comfort Systems USA, Inc.(a)

    2,040       370,974  

Construction Partners, Inc., Class A*

    855       32,875  

Dycom Industries, Inc.* (a)

    1,368       116,526  

EMCOR Group, Inc.

    1,530       316,174  

Fluor Corp.*

    5,814       193,548  

Granite Construction, Inc.(a)

    3,420       138,442  

IES Holdings, Inc.*

    1,870       116,370  

MasTec, Inc.*

    3,570       212,201  

MDU Resources Group, Inc.

    42,221       785,733  

MYR Group, Inc.*

    1,360       157,529  

Primoris Services Corp.

    10,431       313,556  

Quanta Services, Inc.(a)

    3,910       653,439  

Sterling Infrastructure, Inc.* (a)

    5,985       436,007  

Valmont Industries, Inc.

    850       167,373  

WillScot Mobile Mini Holdings Corp.*

    6,815       268,579  
              4,986,311  
Construction Materials – 0.1%  

Eagle Materials, Inc.

    1,710       263,186  

Martin Marietta Materials, Inc.

    1,539       629,359  

Summit Materials, Inc., Class A*

    5,050       166,145  

Vulcan Materials Co.(a)

    3,078       604,796  
              1,663,486  
Consumer Finance – 0.7%  

Ally Financial, Inc.(a)

    11,050       267,300  

American Express Co.

    17,510       2,556,985  

Bread Financial Holdings, Inc.

    11,900       321,657  

Capital One Financial Corp.

    12,335       1,249,412  

Credit Acceptance Corp.*

    286       115,095  

Discover Financial Services

    7,820       641,866  
Investments   Shares     Value  
Consumer Finance – (continued)  

Encore Capital Group, Inc.* (a)

    6,290     $ 237,007  

Enova International, Inc.*

    7,353       293,238  

EZCORP, Inc., Class A* (a)

    3,400       27,880  

FirstCash Holdings, Inc.

    1,368       149,003  

Green Dot Corp., Class A* (a)

    13,940       155,849  

LendingClub Corp.*

    6,290       32,645  

Navient Corp.(a)

    23,256       370,003  

Nelnet, Inc., Class A

    1,530       129,759  

NerdWallet, Inc., Class A* (a)

    10,540       113,621  

OneMain Holdings, Inc.

    25,500       916,215  

PROG Holdings, Inc.* (a)

    7,650       209,533  

SLM Corp.

    55,590       722,670  

SoFi Technologies, Inc.* (a)

    43,350       327,293  

Synchrony Financial

    10,030       281,342  

Upstart Holdings, Inc.* (a)

    4,080       98,042  

World Acceptance Corp.*

    342       33,728  
              9,250,143  
Consumer Staples Distribution & Retail – 1.5%  

Albertsons Cos., Inc., Class A

    8,670       188,139  

Andersons, Inc. (The)

    6,800       340,884  

BJ’s Wholesale Club Holdings,
Inc.* (a)

    4,185       285,082  

Casey’s General Stores, Inc.(a)

    1,190       323,573  

Chefs’ Warehouse, Inc. (The)*

    3,570       67,937  

Costco Wholesale Corp.

    11,050       6,104,462  

Dollar General Corp.

    5,100       607,104  

Dollar Tree, Inc.* (a)

    4,930       547,674  

Grocery Outlet Holding Corp.* (a)

    2,907       80,437  

Ingles Markets, Inc., Class A(a)

    1,360       109,099  

Kroger Co. (The)

    21,080       956,400  

Performance Food Group Co.*

    3,740       216,022  

PriceSmart, Inc.

    342       21,371  

SpartanNash Co.

    8,160       183,518  

Sprouts Farmers Market, Inc.* (a)

    24,310       1,021,506  

 

See Accompanying Notes to the Financial Statements.

 

150    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Consumer Staples Distribution & Retail – (continued)  

Sysco Corp.

    12,312     $ 818,625  

Target Corp.

    14,280       1,582,081  

United Natural Foods, Inc.*

    13,600       198,288  

US Foods Holding Corp.*

    7,140       278,032  

Walgreens Boots Alliance, Inc.(a)

    20,400       430,032  

Walmart, Inc.

    34,680       5,667,059  

Weis Markets, Inc.(a)

    1,676       109,108  
              20,136,433  
Containers & Packaging – 0.6%  

Amcor plc

    34,510       306,794  

AptarGroup, Inc.

    2,210       270,217  

Avery Dennison Corp.

    1,710       297,660  

Ball Corp.(a)

    9,180       442,017  

Berry Global Group, Inc.

    25,330       1,393,150  

Crown Holdings, Inc.

    4,250       342,550  

Graphic Packaging Holding Co.(a)

    63,410       1,363,949  

Greif, Inc., Class A(a)

    5,643       358,331  

Greif, Inc., Class B

    170       10,890  

International Paper Co.

    7,990       269,503  

Myers Industries, Inc.

    171       2,868  

O-I Glass, Inc.* (a)

    29,920       462,264  

Packaging Corp. of America

    2,907       444,916  

Pactiv Evergreen, Inc.

    13,260       114,301  

Sealed Air Corp.

    4,590       141,326  

Silgan Holdings, Inc.(a)

    5,440       217,926  

Sonoco Products Co.(a)

    20,060       1,039,309  

TriMas Corp.(a)

    1,368       33,119  

Westrock Co.

    5,440       195,459  
              7,706,549  
Distributors – 0.1%  

Genuine Parts Co.

    3,910       503,843  

LKQ Corp.

    9,234       405,557  

Pool Corp.(a)

    1,190       375,766  
              1,285,166  
Diversified Consumer Services – 0.2%  

Adtalem Global Education, Inc.* (a)

    4,080       211,344  

Bright Horizons Family Solutions, Inc.* (a)

    3,400       251,804  
Investments   Shares     Value  
Diversified Consumer Services – (continued)  

Coursera, Inc.*

    7,820     $ 135,599  

Duolingo, Inc., Class A* (a)

    1,020       148,971  

Frontdoor, Inc.*

    2,380       68,853  

Graham Holdings Co., Class B

    855       494,806  

Grand Canyon Education, Inc.*

    1,190       140,813  

H&R Block, Inc.(a)

    9,010       369,861  

Laureate Education, Inc.

    9,180       129,805  

OneSpaWorld Holdings Ltd.* (a)

    8,721       91,396  

Perdoceo Education Corp.

    11,970       216,537  

Rover Group, Inc., Class A* (a)

    18,360       118,422  

Service Corp. International(a)

    4,446       241,951  

Strategic Education, Inc.(a)

    1,710       140,750  

Stride, Inc.* (a)

    3,719       204,471  

Udemy, Inc.* (a)

    1,368       12,216  
              2,977,599  
Diversified REITs – 0.1%  

Alexander & Baldwin, Inc., REIT

    2,907       45,931  

Armada Hoffler Properties, Inc., REIT

    1,360       13,546  

Broadstone Net Lease, Inc., REIT

    2,890       40,893  

Empire State Realty Trust, Inc., Class A, REIT(a)

    15,470       125,152  

Essential Properties Realty Trust, Inc., REIT(a)

    8,037       176,412  

Global Net Lease, Inc., REIT(a)

    48,791       387,401  

WP Carey, Inc., REIT

    5,440       291,856  
              1,081,191  
Diversified Telecommunication Services – 0.7%  

Anterix, Inc.* (a)

    3,230       98,483  

AT&T, Inc.

    210,800       3,246,320  

ATN International, Inc.

    680       21,046  

Cogent Communications Holdings, Inc.

    3,060       198,839  

Consolidated Communications Holdings, Inc.*

    12,996       54,193  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     151  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Diversified Telecommunication Services – (continued)  

EchoStar Corp., Class A*

    6,290     $ 87,179  

Frontier Communications Parent, Inc.* (a)

    15,640       280,269  

Iridium Communications, Inc.

    6,840       253,422  

Liberty Latin America Ltd., Class A*

    10,880       74,310  

Liberty Latin America Ltd., Class C*

    15,300       104,805  

Lumen Technologies, Inc.* (a)

    159,290       232,563  

Verizon Communications, Inc.

    124,950       4,389,494  
              9,040,923  
Electric Utilities – 1.3%  

ALLETE, Inc.

    1,700       91,018  

Alliant Energy Corp.

    7,182       350,410  

American Electric Power Co., Inc.

    15,980       1,207,129  

Constellation Energy Corp.

    7,480       844,642  

Duke Energy Corp.

    23,970       2,130,693  

Edison International

    10,710       675,373  

Entergy Corp.

    5,950       568,760  

Evergy, Inc.

    5,950       292,383  

Eversource Energy

    7,140       384,061  

Exelon Corp.

    26,520       1,032,689  

FirstEnergy Corp.(a)

    16,758       596,585  

Hawaiian Electric Industries, Inc.

    6,156       79,905  

IDACORP, Inc.(a)

    2,736       259,126  

MGE Energy, Inc.

    1,026       73,492  

NextEra Energy, Inc.

    51,000       2,973,300  

NRG Energy, Inc.(a)

    8,721       369,596  

OGE Energy Corp.

    7,728       264,298  

Otter Tail Corp.(a)

    3,060       235,436  

PG&E Corp.*

    58,480       953,224  

Pinnacle West Capital Corp.

    3,591       266,380  

PNM Resources, Inc.

    4,788       202,341  

Portland General Electric Co.

    5,610       224,512  

PPL Corp.

    15,810       388,452  

Southern Co. (The)

    32,640       2,196,672  

Xcel Energy, Inc.

    13,770       816,148  
              17,476,625  
Investments   Shares     Value  
Electrical Equipment – 0.8%  

Acuity Brands, Inc.(a)

    1,870     $ 302,884  

AMETEK, Inc.

    5,270       741,858  

Array Technologies, Inc.* (a)

    4,080       70,706  

Atkore, Inc.* (a)

    8,840       1,098,635  

Blink Charging Co.* (a)

    17,680       42,078  

Bloom Energy Corp., Class A* (a)

    15,130       157,352  

ChargePoint Holdings, Inc.* (a)

    1,190       3,023  

Eaton Corp. plc

    9,747       2,026,499  

Emerson Electric Co.

    14,790       1,315,866  

Encore Wire Corp.(a)

    3,933       703,338  

EnerSys

    1,026       87,805  

Enovix Corp.* (a)

    10,030       89,367  

Fluence Energy, Inc., Class A* (a)

    6,669       115,507  

FREYR Battery SA* (a)

    25,840       82,946  

FuelCell Energy, Inc.* (a)

    42,330       46,140  

Generac Holdings, Inc.* (a)

    3,230       271,546  

Hubbell, Inc., Class B

    1,197       323,310  

NEXTracker, Inc., Class A* (a)

    3,060       106,366  

nVent Electric plc

    9,010       433,651  

Plug Power, Inc.* (a)

    29,920       176,229  

Preformed Line Products Co.

    170       23,010  

Regal Rexnord Corp.(a)

    2,052       242,977  

Rockwell Automation, Inc.

    2,736       719,048  

Sensata Technologies Holding plc

    6,460       205,945  

Shoals Technologies Group, Inc., Class A* (a)

    6,290       96,615  

Stem, Inc.* (a)

    35,360       119,517  

SunPower Corp.* (a)

    5,985       25,556  

Sunrun, Inc.* (a)

    43,931       423,934  

Vertiv Holdings Co., Class A

    13,430       527,396  

Vicor Corp.* (a)

    2,210       85,616  
              10,664,720  
Electronic Equipment, Instruments & Components – 1.2%  

Advanced Energy Industries, Inc.(a)

    1,026       89,529  

Amphenol Corp., Class A

    13,940       1,122,867  

Arrow Electronics, Inc.*

    11,730       1,330,299  

 

See Accompanying Notes to the Financial Statements.

 

152    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electronic Equipment, Instruments & Components –
(continued)
 

Avnet, Inc.

    19,836     $ 919,002  

Badger Meter, Inc.

    1,870       259,088  

Bel Fuse, Inc., Class B

    680       36,842  

Belden, Inc.

    2,720       192,848  

Benchmark Electronics, Inc.

    8,208       198,716  

CDW Corp.

    3,078       616,831  

Cognex Corp.(a)

    5,270       189,667  

Coherent Corp.*

    28,221       835,329  

Corning, Inc.

    21,250       568,650  

Crane NXT Co.(a)

    9,180       477,360  

CTS Corp.

    855       31,986  

ePlus, Inc.*

    6,460       403,750  

Fabrinet* (a)

    2,052       318,060  

Flex Ltd.*

    17,271       444,210  

Insight Enterprises, Inc.* (a)

    6,970       998,801  

IPG Photonics Corp.*

    2,040       175,236  

Itron, Inc.*

    1,881       107,744  

Jabil, Inc.(a)

    4,760       584,528  

Keysight Technologies, Inc.*

    4,446       542,634  

Kimball Electronics, Inc.*

    3,400       89,080  

Knowles Corp.* (a)

    2,565       33,319  

Lightwave Logic, Inc.* (a)

    855       3,873  

Littelfuse, Inc.

    1,020       221,003  

Methode Electronics, Inc.

    3,400       77,758  

Mirion Technologies, Inc.,
Class A* (a)

    28,390       196,743  

nLight, Inc.*

    8,160       67,973  

Novanta, Inc.*

    1,881       248,405  

OSI Systems, Inc.*

    510       53,178  

PC Connection, Inc.

    171       9,162  

Plexus Corp.* (a)

    680       66,858  

Rogers Corp.*

    680       83,565  

Sanmina Corp.* (a)

    13,260       674,536  

ScanSource, Inc.*

    3,933       119,563  

SmartRent, Inc., Class A* (a)

    33,490       80,711  

TD SYNNEX Corp.

    684       62,709  

TE Connectivity Ltd.

    8,500       1,001,725  

Teledyne Technologies, Inc.*

    1,197       448,384  

Trimble, Inc.*

    6,156       290,132  

TTM Technologies, Inc.*

    20,691       237,740  
Investments   Shares     Value  
Electronic Equipment, Instruments & Components –
(continued)
 

Vishay Intertechnology, Inc.(a)

    25,308     $ 562,850  

Vontier Corp.

    33,150       979,914  

Zebra Technologies Corp.,
Class A* (a)

    1,190       249,222  
              16,302,380  
Energy Equipment & Services – 0.8%  

Archrock, Inc.

    12,825       162,493  

Atlas Energy Solutions, Inc.(a)

    2,720       49,531  

Baker Hughes Co., Class A

    22,572       776,928  

Cactus, Inc., Class A(a)

    4,275       200,669  

ChampionX Corp.(a)

    11,220       345,576  

Dril-Quip, Inc.*

    171       3,704  

Halliburton Co.

    27,710       1,090,111  

Helix Energy Solutions Group, Inc.*

    13,940       136,612  

Helmerich & Payne, Inc.(a)

    23,630       935,039  

Liberty Energy, Inc., Class A(a)

    38,930       766,921  

Nabors Industries Ltd.*

    850       83,019  

NOV, Inc.

    21,760       434,330  

Oceaneering International, Inc.*

    8,330       183,177  

Oil States International, Inc.*

    513       3,724  

Patterson-UTI Energy, Inc.(a)

    75,835       963,105  

ProPetro Holding Corp.* (a)

    27,370       286,838  

RPC, Inc.(a)

    12,240       101,837  

Schlumberger NV

    41,820       2,327,701  

Select Water Solutions, Inc., Class A

    12,410       92,330  

Tidewater, Inc.* (a)

    1,360       92,956  

Transocean Ltd.* (a)

    143,310       948,712  

US Silica Holdings, Inc.*

    17,000       205,190  

Valaris Ltd.*

    1,700       112,268  

Weatherford International plc* (a)

    4,080       379,807  
              10,682,578  
Entertainment – 1.0%  

AMC Entertainment Holdings, Inc., Class A*

    271       2,894  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     153  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Entertainment – (continued)  

Atlanta Braves Holdings, Inc., Class C* (a)

    203     $ 7,060  

Cinemark Holdings, Inc.* (a)

    9,860       162,591  

Electronic Arts, Inc.

    6,120       757,595  

Endeavor Group Holdings, Inc., Class A

    10,200       232,152  

IMAX Corp.*

    1,881       34,253  

Liberty Media Corp-Liberty Formula One, Class A*

    1,710       98,411  

Liberty Media Corp-Liberty Formula One, Class C*

    5,301       342,922  

Lions Gate Entertainment Corp., Class B*

    10,200       76,092  

Live Nation Entertainment, Inc.*

    4,420       353,688  

Madison Square Garden Sports Corp.*

    510       85,751  

Netflix, Inc.*

    11,050       4,549,175  

Playtika Holding Corp.*

    8,670       72,828  

ROBLOX Corp., Class A* (a)

    10,880       346,093  

Roku, Inc., Class A* (a)

    5,440       324,061  

Sphere Entertainment Co.*

    6,630       218,193  

Take-Two Interactive Software, Inc.*

    4,250       568,438  

TKO Group Holdings, Inc.(a)

    2,380       195,112  

Walt Disney Co. (The)*

    44,710       3,647,889  

Warner Bros Discovery, Inc.*

    72,760       723,234  

Warner Music Group Corp., Class A

    4,080       127,704  
              12,926,136  
Financial Services – 4.1%  

Affirm Holdings, Inc., Class A* (a)

    47,940       844,223  

A-Mark Precious Metals, Inc.(a)

    2,736       74,091  

Apollo Global Management, Inc.

    14,280       1,105,843  

AvidXchange Holdings, Inc.* (a)

    14,620       126,317  

Berkshire Hathaway, Inc., Class B*

    55,590       18,974,535  

Block, Inc., Class A*

    11,900       478,975  
Investments   Shares     Value  
Financial Services – (continued)  

Cantaloupe, Inc.*

    2,550     $ 16,779  

Compass Diversified Holdings

    3,740       64,253  

Enact Holdings, Inc.

    3,570       98,389  

Equitable Holdings, Inc.

    12,750       338,768  

Essent Group Ltd.(a)

    21,590       1,019,912  

Euronet Worldwide, Inc.*

    1,870       143,691  

EVERTEC, Inc.(a)

    5,100       162,078  

Federal Agricultural Mortgage Corp., Class C

    1,020       151,531  

Fidelity National Information Services, Inc.

    17,340       851,567  

Fiserv, Inc.*

    19,040       2,165,800  

FleetCor Technologies, Inc.*

    1,530       344,510  

Flywire Corp.* (a)

    5,270       141,710  

Global Payments, Inc.

    7,310       776,468  

International Money Express, Inc.*

    2,394       38,208  

Jack Henry & Associates, Inc.(a)

    1,881       265,202  

Jackson Financial, Inc., Class A(a)

    13,770       505,497  

Marqeta, Inc., Class A*

    24,820       128,319  

Mastercard, Inc., Class A

    20,570       7,741,520  

Merchants Bancorp(a)

    3,078       92,001  

MGIC Investment Corp.

    58,480       984,803  

Mr Cooper Group, Inc.*

    16,320       922,570  

NMI Holdings, Inc., Class A*

    18,810       514,454  

PayPal Holdings, Inc.*

    31,960       1,655,528  

PennyMac Financial Services, Inc.(a)

    7,480       502,656  

Radian Group, Inc.(a)

    36,908       935,249  

Remitly Global, Inc.* (a)

    8,840       238,061  

Repay Holdings Corp., Class A* (a)

    27,370       163,946  

Rocket Cos., Inc., Class A* (a)

    7,140       52,765  

Shift4 Payments, Inc., Class A* (a)

    2,040       90,821  

Toast, Inc., Class A* (a)

    13,600       217,464  

Visa, Inc., Class A(a)

    39,950       9,392,245  

Voya Financial, Inc.(a)

    21,930       1,464,266  

Walker & Dunlop, Inc.(a)

    6,630       429,624  

 

See Accompanying Notes to the Financial Statements.

 

154    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Financial Services – (continued)  

Western Union Co. (The)

    75,140     $ 848,331  

WEX, Inc.*

    1,530       254,714  
              55,317,684  
Food Products – 0.9%  

Archer-Daniels-Midland Co.

    17,000       1,216,690  

B&G Foods, Inc.(a)

    7,650       61,736  

Beyond Meat, Inc.* (a)

    8,500       50,745  

Bunge Ltd.

    3,910       414,382  

Calavo Growers, Inc.

    171       4,333  

Cal-Maine Foods, Inc.(a)

    7,480       338,919  

Campbell Soup Co.(a)

    5,985       241,854  

Conagra Brands, Inc.

    15,048       411,713  

Darling Ingredients, Inc.*

    4,446       196,913  

Flowers Foods, Inc.

    11,286       247,502  

Freshpet, Inc.* (a)

    2,210       126,854  

General Mills, Inc.

    15,640       1,020,354  

Hershey Co. (The)

    3,420       640,737  

Hormel Foods Corp.

    5,440       177,072  

Hostess Brands, Inc., Class A*

    3,910       130,594  

Ingredion, Inc.

    13,851       1,296,177  

J & J Snack Foods Corp.(a)

    1,197       187,462  

J M Smucker Co. (The)

    3,060       348,350  

John B Sanfilippo & Son, Inc.

    1,190       121,689  

Kellogg Co.

    6,120       308,876  

Kraft Heinz Co. (The)

    22,780       716,659  

Lamb Weston Holdings, Inc.

    3,591       322,472  

Lancaster Colony Corp.

    1,190       201,312  

McCormick & Co., Inc. (Non-Voting)

    5,440       347,616  

Mondelez International, Inc., Class A

    34,510       2,284,907  

Pilgrim’s Pride Corp.*

    5,270       134,385  

Post Holdings, Inc.* (a)

    3,078       247,102  

Seaboard Corp.(a)

    62       217,431  

Simply Good Foods Co. (The)* (a)

    2,394       89,272  

Tootsie Roll Industries, Inc.

    2,455       76,376  

TreeHouse Foods, Inc.*

    1,020       42,524  

Tyson Foods, Inc., Class A

    7,140       330,939  

Utz Brands, Inc.(a)

    7,353       89,633  
              12,643,580  
Investments   Shares     Value  
Gas Utilities – 0.2%  

Atmos Energy Corp.(a)

    3,078     $ 331,377  

Chesapeake Utilities Corp.(a)

    513       45,457  

National Fuel Gas Co.

    21,590       1,100,011  

New Jersey Resources Corp.

    5,780       234,552  

ONE Gas, Inc.(a)

    3,420       206,568  

Southwest Gas Holdings, Inc.

    2,223       130,290  

Spire, Inc.(a)

    3,570       198,599  

UGI Corp.(a)

    49,640       1,032,512  
              3,279,366  
Ground Transportation – 1.0%  

ArcBest Corp.(a)

    4,788       521,317  

Avis Budget Group, Inc.*

    1,020       166,056  

CSX Corp.

    52,139       1,556,349  

Heartland Express, Inc.(a)

    5,301       61,810  

Hertz Global Holdings, Inc.* (a)

    23,800       200,634  

JB Hunt Transport Services, Inc.(a)

    2,052       352,677  

Knight-Swift Transportation Holdings, Inc., Class A

    4,446       217,365  

Landstar System, Inc.(a)

    1,710       281,774  

Lyft, Inc., Class A*

    19,210       176,156  

Marten Transport Ltd.

    2,565       45,093  

Norfolk Southern Corp.

    6,460       1,232,503  

Old Dominion Freight Line, Inc.

    2,394       901,724  

RXO, Inc.*

    850       14,883  

Ryder System, Inc.

    9,918       967,402  

Saia, Inc.* (a)

    1,197       429,113  

Schneider National, Inc., Class B(a)

    7,140       180,856  

Uber Technologies, Inc.*

    52,360       2,266,141  

U-Haul Holding Co.* (a)

    171       8,399  

U-Haul Holding Co.

    2,040       96,308  

Union Pacific Corp.

    14,960       3,105,846  

Werner Enterprises, Inc.

    13,090       475,429  

XPO, Inc.*

    5,270       399,519  
              13,657,354  
Health Care Equipment & Supplies – 2.0%  

Abbott Laboratories

    41,990       3,970,155  

Align Technology, Inc.*

    1,870       345,183  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     155  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Health Care Equipment & Supplies – (continued)  

Alphatec Holdings, Inc.* (a)

    171     $ 1,570  

AtriCure, Inc.*

    3,740       129,554  

Avanos Medical, Inc.*

    1,026       18,837  

Axonics, Inc.* (a)

    2,736       140,111  

Baxter International, Inc.

    14,790       479,640  

Becton Dickinson & Co.

    7,140       1,804,849  

Boston Scientific Corp.*

    36,380       1,862,292  

CONMED Corp.(a)

    2,040       198,818  

Cooper Cos., Inc. (The)

    1,197       373,165  

Dentsply Sirona, Inc.

    7,480       227,467  

Dexcom, Inc.*

    9,576       850,636  

Edwards Lifesciences Corp.*

    15,300       974,916  

Enovis Corp.* (a)

    3,740       171,682  

Envista Holdings Corp.* (a)

    8,840       205,707  

Establishment Labs Holdings,
Inc.* (a)

    1,368       40,055  

GE HealthCare Technologies, Inc.(a)

    9,690       645,063  

Glaukos Corp.* (a)

    2,394       163,271  

Globus Medical, Inc., Class A* (a)

    3,751       171,458  

Haemonetics Corp.*

    2,736       233,189  

Hologic, Inc.*

    6,970       461,205  

ICU Medical, Inc.* (a)

    510       50,011  

IDEXX Laboratories, Inc.*

    2,040       814,919  

Inari Medical, Inc.* (a)

    3,230       196,093  

Inspire Medical Systems, Inc.*

    1,368       201,315  

Insulet Corp.*

    1,539       204,025  

Integer Holdings Corp.* (a)

    855       69,400  

Integra LifeSciences Holdings
Corp.* (a)

    1,530       55,019  

Intuitive Surgical, Inc.*

    8,840       2,318,025  

iRhythm Technologies, Inc.* (a)

    1,870       146,832  

Lantheus Holdings, Inc.*

    4,167       269,188  

LeMaitre Vascular, Inc.

    171       8,307  

LivaNova plc*

    2,040       100,062  

Masimo Corp.* (a)

    1,700       137,921  

Medtronic plc

    39,270       2,770,891  

Merit Medical Systems, Inc.*

    1,700       116,858  

Neogen Corp.* (a)

    12,070       179,722  
Investments   Shares     Value  
Health Care Equipment & Supplies – (continued)  

Novocure Ltd.* (a)

    2,394     $ 31,840  

Omnicell, Inc.*

    2,210       78,543  

OrthoPediatrics Corp.* (a)

    2,550       62,373  

Penumbra, Inc.* (a)

    1,190       227,469  

PROCEPT BioRobotics Corp.* (a)

    1,710       45,811  

Pulmonx Corp.* (a)

    7,480       65,749  

QuidelOrtho Corp.*

    1,360       83,069  

ResMed, Inc.

    3,420       482,972  

Shockwave Medical, Inc.*

    1,190       245,449  

STAAR Surgical Co.*

    510       21,328  

STERIS plc(a)

    2,736       574,505  

Stryker Corp.

    8,330       2,250,933  

Tandem Diabetes Care, Inc.* (a)

    5,950       102,935  

Teleflex, Inc.(a)

    850       157,038  

TransMedics Group, Inc.* (a)

    1,368       51,273  

Treace Medical Concepts, Inc.*

    2,394       24,012  

Zimmer Biomet Holdings, Inc.

    5,643       589,186  
              26,201,896  
Health Care Providers & Services – 2.9%  

Acadia Healthcare Co., Inc.*

    3,060       224,941  

Accolade, Inc.*

    9,350       60,775  

AdaptHealth Corp., Class A* (a)

    23,290       170,716  

Addus HomeCare Corp.* (a)

    1,020       80,478  

Agiliti, Inc.* (a)

    342       1,925  

agilon health, Inc.* (a)

    4,420       79,560  

Amedisys, Inc.*

    1,700       155,533  

AMN Healthcare Services, Inc.* (a)

    9,234       700,491  

Apollo Medical Holdings, Inc.* (a)

    2,720       84,891  

Brookdale Senior Living, Inc.* (a)

    49,745       194,503  

Cardinal Health, Inc.

    8,670       788,970  

Cencora, Inc.(a)

    4,959       918,159  

Centene Corp.*

    17,680       1,219,566  

Chemed Corp.(a)

    342       192,426  

Cigna Group (The)

    9,350       2,891,020  

 

See Accompanying Notes to the Financial Statements.

 

156    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Health Care Providers & Services – (continued)  

Community Health Systems,
Inc.* (a)

    24,795     $ 53,061  

Cross Country Healthcare, Inc.*

    7,353       170,296  

CVS Health Corp.

    38,760       2,674,828  

DaVita, Inc.* (a)

    2,380       183,807  

Elevance Health, Inc.

    7,353       3,309,512  

Encompass Health Corp.

    3,570       223,339  

Ensign Group, Inc. (The)(a)

    1,870       180,642  

Guardant Health, Inc.*

    6,120       158,386  

HCA Healthcare, Inc.

    5,950       1,345,533  

HealthEquity, Inc.* (a)

    3,762       269,660  

Henry Schein, Inc.*

    4,275       277,790  

Humana, Inc.

    3,740       1,958,601  

Laboratory Corp. of America Holdings

    2,907       580,615  

McKesson Corp.

    4,250       1,935,280  

ModivCare, Inc.* (a)

    170       7,181  

Molina Healthcare, Inc.*

    1,530       509,414  

National Research Corp.(a)

    2,223       93,944  

NeoGenomics, Inc.* (a)

    3,249       45,551  

OPKO Health, Inc.* (a)

    134,980       168,725  

Option Care Health, Inc.*

    9,234       256,059  

Owens & Minor, Inc.* (a)

    12,580       180,271  

Patterson Cos., Inc.

    18,639       567,744  

Pediatrix Medical Group, Inc.* (a)

    23,800       272,748  

Premier, Inc., Class A(a)

    22,270       428,029  

Privia Health Group, Inc.* (a)

    5,440       114,349  

Progyny, Inc.*

    3,570       110,170  

Quest Diagnostics, Inc.

    3,400       442,340  

R1 RCM, Inc.* (a)

    3,933       46,370  

RadNet, Inc.*

    1,026       27,661  

Select Medical Holdings Corp.(a)

    4,080       92,738  

Surgery Partners, Inc.*

    3,249       75,149  

Tenet Healthcare Corp.* (a)

    23,290       1,250,673  

UnitedHealth Group, Inc.

    22,780       12,200,057  

Universal Health Services, Inc., Class B

    1,870       235,414  

US Physical Therapy, Inc.

    171       14,383  
              38,224,274  
Investments   Shares     Value  
Health Care REITs – 0.2%  

CareTrust REIT, Inc., REIT

    7,182     $ 154,557  

Community Healthcare Trust, Inc., REIT(a)

    3,230       92,604  

Healthcare Realty Trust, Inc., Class A, REIT(a)

    13,770       197,600  

Healthpeak Properties, Inc., REIT

    17,850       277,567  

Medical Properties Trust, Inc., REIT(a)

    117,640       562,319  

National Health Investors, Inc., REIT

    680       34,027  

Omega Healthcare Investors, Inc., REIT(a)

    8,500       281,350  

Physicians Realty Trust, REIT(a)

    16,490       179,081  

Sabra Health Care REIT, Inc., REIT

    11,220       153,041  

Ventas, Inc., REIT

    9,520       404,219  

Welltower, Inc., REIT

    12,070       1,009,173  
              3,345,538  
Health Care Technology – 0.1%  

Doximity, Inc., Class A* (a)

    7,310       149,343  

Evolent Health, Inc., Class A* (a)

    5,780       141,205  

Health Catalyst, Inc.*

    10,200       76,398  

HealthStream, Inc.

    171       4,344  

Multiplan Corp.* (a)

    63,070       106,588  

NextGen Healthcare, Inc.*

    513       12,271  

Phreesia, Inc.* (a)

    4,590       62,699  

Teladoc Health, Inc.* (a)

    3,570       59,048  

Veeva Systems, Inc., Class A*

    3,570       687,975  

Veradigm, Inc.* (a)

    9,442       124,540  
              1,424,411  
Hotel & Resort REITs – 0.2%  

Apple Hospitality REIT, Inc., REIT(a)

    6,290       98,627  

Chatham Lodging Trust, REIT

    7,011       64,852  

DiamondRock Hospitality Co., REIT(a)

    17,606       136,094  

Host Hotels & Resorts, Inc., REIT

    16,245       251,473  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     157  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Hotel & Resort REITs – (continued)  

Park Hotels & Resorts, Inc., REIT(a)

    15,597     $ 179,833  

Pebblebrook Hotel Trust, REIT(a)

    31,620       377,227  

RLJ Lodging Trust, REIT

    15,470       145,418  

Ryman Hospitality Properties, Inc., REIT(a)

    3,249       278,114  

Service Properties Trust, REIT

    37,740       273,615  

Summit Hotel Properties, Inc., REIT(a)

    38,930       219,565  

Sunstone Hotel Investors, Inc., REIT(a)

    8,550       79,515  

Xenia Hotels & Resorts, Inc., REIT(a)

    9,601       111,660  
              2,215,993  
Hotels, Restaurants & Leisure – 2.0%  

Airbnb, Inc., Class A*

    10,030       1,186,449  

Aramark

    5,814       156,571  

Bally’s Corp.* (a)

    6,120       55,814  

BJ’s Restaurants, Inc.*

    2,052       52,778  

Bloomin’ Brands, Inc.(a)

    17,271       403,105  

Booking Holdings, Inc.*

    850       2,371,126  

Boyd Gaming Corp.

    3,933       217,298  

Brinker International, Inc.* (a)

    7,650       259,488  

Caesars Entertainment, Inc.*

    6,970       278,033  

Carnival Corp.* (a)

    25,330       290,282  

Cheesecake Factory, Inc. (The)(a)

    3,060       95,074  

Chipotle Mexican Grill, Inc., Class A*

    684       1,328,465  

Choice Hotels International, Inc.

    1,026       113,373  

Churchill Downs, Inc.(a)

    1,710       187,826  

Cracker Barrel Old Country Store, Inc.(a)

    1,020       67,687  

Darden Restaurants, Inc.

    2,736       398,170  

Dave & Buster’s Entertainment,
Inc.* (a)

    3,740       130,676  

Denny’s Corp.* (a)

    1,539       13,266  

Dine Brands Global, Inc.

    3,570       175,965  

Domino’s Pizza, Inc.

    680       230,513  
Investments   Shares     Value  
Hotels, Restaurants & Leisure – (continued)  

DoorDash, Inc., Class A* (a)

    6,460     $ 484,177  

DraftKings, Inc., Class A*

    14,110       389,718  

Dutch Bros, Inc., Class A*

    2,720       66,205  

Everi Holdings, Inc.*

    7,695       83,029  

Expedia Group, Inc.*

    3,910       372,584  

Hilton Grand Vacations, Inc.* (a)

    17,955       645,482  

Hilton Worldwide Holdings, Inc.

    6,327       958,730  

Hyatt Hotels Corp., Class A(a)

    2,890       296,052  

Jack in the Box, Inc.(a)

    342       21,608  

Las Vegas Sands Corp.

    7,140       338,864  

Life Time Group Holdings, Inc.*

    7,480       88,414  

Light & Wonder, Inc.* (a)

    5,270       385,290  

Lindblad Expeditions Holdings, Inc.*

    8,500       52,870  

Marriott International, Inc., Class A

    6,630       1,250,153  

Marriott Vacations Worldwide Corp.

    2,210       198,591  

McDonald’s Corp.

    18,126       4,752,094  

MGM Resorts International(a)

    9,010       314,629  

Norwegian Cruise Line Holdings
Ltd.* (a)

    14,110       191,896  

Papa John’s International, Inc.(a)

    510       33,160  

Penn Entertainment, Inc.* (a)

    29,920       590,322  

Planet Fitness, Inc., Class A*

    3,910       216,106  

Red Rock Resorts, Inc., Class A(a)

    2,052       81,157  

Royal Caribbean Cruises Ltd.* (a)

    6,970       590,568  

Sabre Corp.*

    57,460       201,110  

SeaWorld Entertainment, Inc.*

    3,230       139,148  

Shake Shack, Inc., Class A*

    680       38,107  

Six Flags Entertainment Corp.*

    18,530       368,747  

Starbucks Corp.

    27,370       2,524,609  

Sweetgreen, Inc., Class A* (a)

    9,180       94,829  

 

See Accompanying Notes to the Financial Statements.

 

158    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Hotels, Restaurants & Leisure – (continued)  

Texas Roadhouse, Inc., Class A

    3,910     $ 397,021  

Travel + Leisure Co.

    15,810       538,014  

Vail Resorts, Inc.(a)

    1,026       217,769  

Wendy’s Co. (The)(a)

    11,220       213,404  

Wingstop, Inc.

    1,881       343,790  

Wyndham Hotels & Resorts, Inc.

    3,249       235,228  

Wynn Resorts Ltd.(a)

    3,060       268,607  

Yum! Brands, Inc.

    7,480       904,033  
              26,898,074  
Household Durables – 1.1%  

Beazer Homes USA, Inc.* (a)

    3,400       82,246  

Cavco Industries, Inc.* (a)

    1,530       381,750  

Century Communities, Inc.

    7,182       441,693  

Cricut, Inc., Class A(a)

    684       5,835  

DR Horton, Inc.

    9,747       1,017,587  

Dream Finders Homes, Inc., Class A* (a)

    1,700       33,473  

Ethan Allen Interiors, Inc.(a)

    4,275       112,261  

Garmin Ltd.

    4,104       420,783  

GoPro, Inc., Class A* (a)

    12,750       32,003  

Green Brick Partners, Inc.* (a)

    7,650       296,055  

Helen of Troy Ltd.* (a)

    4,930       484,718  

Hovnanian Enterprises, Inc., Class A*

    340       23,623  

Installed Building Products, Inc.

    684       76,382  

iRobot Corp.*

    1,368       45,048  

KB Home

    18,700       826,540  

La-Z-Boy, Inc.(a)

    7,866       230,002  

Leggett & Platt, Inc.

    2,720       63,730  

Lennar Corp., Class A

    8,160       870,509  

Lennar Corp., Class B(a)

    513       50,587  

LGI Homes, Inc.* (a)

    4,959       468,675  

M/I Homes, Inc.* (a)

    7,182       589,427  

MDC Holdings, Inc.(a)

    12,312       467,240  

Meritage Homes Corp.

    8,208       935,876  

Mohawk Industries, Inc.*

    12,410       997,516  

Newell Brands, Inc.

    74,630       501,514  

NVR, Inc.*

    104       562,912  
Investments   Shares     Value  
Household Durables – (continued)  

PulteGroup, Inc.

    7,820     $ 575,474  

Skyline Champion Corp.*

    3,570       209,309  

Sonos, Inc.*

    6,630       71,471  

Taylor Morrison Home Corp., Class A* (a)

    24,820       951,102  

Tempur Sealy International, Inc.(a)

    9,690       386,922  

Toll Brothers, Inc.(a)

    22,780       1,610,774  

TopBuild Corp.*

    1,190       272,224  

Tri Pointe Homes, Inc.*

    24,140       604,948  

Vizio Holding Corp., Class A*

    10,540       53,649  

Whirlpool Corp.(a)

    2,052       214,557  
              14,968,415  
Household Products – 1.0%  

Central Garden & Pet Co.* (a)

    1,539       67,147  

Central Garden & Pet Co., Class A*

    4,080       161,935  

Church & Dwight Co., Inc.

    6,630       602,932  

Clorox Co. (The)

    3,230       380,171  

Colgate-Palmolive Co.

    20,060       1,506,907  

Energizer Holdings, Inc.(a)

    11,730       370,433  

Kimberly-Clark Corp.

    7,990       955,924  

Procter & Gamble Co. (The)

    58,650       8,799,260  

Reynolds Consumer Products, Inc.(a)

    340       8,646  

Spectrum Brands Holdings, Inc.

    2,720       204,870  

WD-40 Co.(a)

    340       71,876  
              13,130,101  
Independent Power and Renewable Electricity
Producers – 0.1%
 

AES Corp. (The)(a)

    20,910       311,559  

Clearway Energy, Inc., Class A

    510       10,389  

Clearway Energy, Inc., Class C(a)

    1,360       29,525  

Ormat Technologies, Inc.(a)

    1,530       94,156  

Vistra Corp.

    13,090       428,305  
              873,934  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     159  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Industrial Conglomerates – 0.5%  

3M Co.

    15,810     $ 1,437,919  

General Electric Co.

    26,520       2,880,868  

Honeywell International, Inc.

    15,810       2,897,341  
              7,216,128  
Industrial REITs – 0.3%  

Americold Realty Trust, Inc., REIT

    5,610       147,094  

EastGroup Properties, Inc., REIT

    1,469       239,814  

First Industrial Realty Trust, Inc., REIT

    7,182       303,799  

Innovative Industrial Properties, Inc., REIT

    340       24,422  

LXP Industrial Trust, REIT

    5,780       45,720  

Plymouth Industrial REIT, Inc., REIT(a)

    5,440       108,474  

Prologis, Inc., REIT

    22,928       2,309,996  

Rexford Industrial Realty, Inc., REIT(a)

    4,617       199,639  

STAG Industrial, Inc., REIT(a)

    10,200       338,844  

Terreno Realty Corp., REIT

    3,933       209,550  
              3,927,352  
Insurance – 2.8%  

Aflac, Inc.

    17,510       1,367,706  

Allstate Corp. (The)

    7,140       914,848  

Ambac Financial Group, Inc.*

    6,630       80,422  

American Equity Investment Life Holding Co.(a)

    15,130       801,285  

American Financial Group, Inc.(a)

    2,565       280,508  

American International Group, Inc.

    22,950       1,407,065  

AMERISAFE, Inc.

    342       17,432  

Aon plc, Class A

    5,130       1,587,222  

Arch Capital Group Ltd.*

    12,410       1,075,699  

Argo Group International Holdings Ltd.(a)

    8,330       248,567  

Arthur J Gallagher & Co.

    4,930       1,160,966  

Assurant, Inc.

    11,560       1,721,284  

Assured Guaranty Ltd.

    3,910       243,984  
Investments   Shares     Value  
Insurance – (continued)  

Axis Capital Holdings Ltd.

    15,390     $ 878,769  

Brighthouse Financial, Inc.*

    15,980       723,894  

Brown & Brown, Inc.

    5,643       391,737  

BRP Group, Inc., Class A* (a)

    1,539       32,211  

Chubb Ltd.

    12,920       2,772,890  

Cincinnati Financial Corp.

    3,762       374,959  

CNO Financial Group, Inc.

    27,374       634,529  

Employers Holdings, Inc.

    684       25,992  

Enstar Group Ltd.*

    2,720       644,558  

Erie Indemnity Co., Class A(a)

    340       93,905  

Everest Group Ltd.

    1,026       405,906  

F&G Annuities & Life, Inc.(a)

    680       20,869  

Fidelity National Financial, Inc.

    9,918       387,695  

First American Financial Corp.

    21,717       1,117,122  

Genworth Financial, Inc., Class A* (a)

    85,850       514,242  

Globe Life, Inc.

    2,394       278,566  

Goosehead Insurance, Inc.,
Class A* (a)

    2,210       143,363  

Hanover Insurance Group, Inc. (The)

    2,040       239,108  

Hartford Financial Services Group, Inc. (The)

    10,540       774,163  

Horace Mann Educators Corp.

    510       16,182  

Kemper Corp.(a)

    4,420       176,270  

Kinsale Capital Group, Inc.(a)

    680       227,059  

Lincoln National Corp.

    37,060       806,796  

Loews Corp.

    6,970       446,150  

Markel Group, Inc.*

    422       620,559  

Marsh & McLennan Cos., Inc.

    12,580       2,385,797  

MBIA, Inc.* (a)

    5,985       41,177  

Mercury General Corp.(a)

    8,330       257,230  

MetLife, Inc.

    20,400       1,224,204  

National Western Life Group, Inc., Class A

    342       163,784  

Old Republic International Corp.

    11,050       302,549  

Oscar Health, Inc., Class A*

    27,370       140,134  

 

See Accompanying Notes to the Financial Statements.

 

160    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Insurance – (continued)  

Primerica, Inc.

    1,360     $ 259,978  

Principal Financial Group, Inc.(a)

    7,820       529,258  

ProAssurance Corp.(a)

    1,539       26,163  

Progressive Corp. (The)

    14,790       2,338,151  

Prudential Financial, Inc.

    11,286       1,031,992  

Reinsurance Group of America, Inc.(a)

    1,530       228,689  

RenaissanceRe Holdings Ltd.

    2,040       447,964  

RLI Corp.

    1,360       181,206  

Ryan Specialty Holdings, Inc., Class A* (a)

    2,550       110,160  

Safety Insurance Group, Inc.

    170       12,779  

Selective Insurance Group, Inc.

    3,570       371,673  

SiriusPoint Ltd.* (a)

    13,851       136,432  

Stewart Information Services Corp.

    6,327       276,300  

Travelers Cos., Inc. (The)

    7,480       1,252,451  

Trupanion, Inc.* (a)

    510       10,506  

Universal Insurance Holdings, Inc.(a)

    5,440       85,190  

Unum Group

    5,780       282,642  

W R Berkley Corp.

    4,617       311,278  

White Mountains Insurance Group Ltd.(a)

    170       243,228  

Willis Towers Watson plc

    2,736       645,395  
              36,950,792  
Interactive Media & Services – 4.0%  

Alphabet, Inc., Class A*

    147,390       18,288,151  

Alphabet, Inc., Class C*

    124,950       15,656,235  

Bumble, Inc., Class A* (a)

    7,990       107,385  

Cargurus, Inc., Class A*

    3,910       67,369  

Cars.com, Inc.*

    6,630       100,975  

IAC, Inc.*

    15,300       651,015  

Match Group, Inc.*

    5,270       182,342  

Meta Platforms, Inc., Class A*

    54,910       16,542,736  

Pinterest, Inc., Class A*

    13,940       416,527  

QuinStreet, Inc.*

    1,539       17,406  

Shutterstock, Inc.(a)

    1,360       55,325  
Investments   Shares     Value  
Interactive Media & Services – (continued)  

Snap, Inc., Class A* (a)

    25,330     $ 253,553  

Taboola.com Ltd.* (a)

    39,440       144,745  

TripAdvisor, Inc.* (a)

    5,643       83,291  

Vimeo, Inc.*

    54,400       167,552  

Yelp, Inc., Class A*

    4,590       193,652  

Ziff Davis, Inc.*

    680       41,113  

ZipRecruiter, Inc., Class A*

    7,140       76,041  

ZoomInfo Technologies, Inc., Class A*

    7,480       96,941  
              53,142,354  
IT Services – 1.2%  

Accenture plc, Class A

    15,810       4,696,993  

Akamai Technologies, Inc.*

    3,420       353,389  

Cloudflare, Inc., Class A*

    6,156       348,984  

Cognizant Technology Solutions Corp., Class A

    16,150       1,041,190  

DigitalOcean Holdings, Inc.* (a)

    2,380       48,695  

DXC Technology Co.* (a)

    47,600       960,092  

EPAM Systems, Inc.*

    1,530       332,882  

Fastly, Inc., Class A* (a)

    4,760       69,829  

Gartner, Inc.*

    2,040       677,362  

GoDaddy, Inc., Class A* (a)

    3,933       288,014  

International Business Machines Corp.(a)

    27,030       3,909,619  

Kyndryl Holdings, Inc.* (a)

    48,280       706,336  

MongoDB, Inc., Class A*

    1,539       530,324  

Okta, Inc., Class A*

    3,249       219,015  

Perficient, Inc.* (a)

    2,380       138,492  

Snowflake, Inc., Class A*

    8,500       1,233,605  

Squarespace, Inc., Class A*

    1,710       48,581  

Twilio, Inc., Class A* (a)

    4,420       226,569  

VeriSign, Inc.*

    2,394       477,986  
              16,307,957  
Leisure Products – 0.3%  

Acushnet Holdings Corp.(a)

    1,026       52,285  

Brunswick Corp.(a)

    15,903       1,104,781  

Funko, Inc., Class A* (a)

    7,820       60,292  

Hasbro, Inc.(a)

    4,760       214,914  

Malibu Boats, Inc., Class A* (a)

    3,762       164,099  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     161  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Leisure Products – (continued)  

MasterCraft Boat Holdings, Inc.*

    2,890     $ 59,072  

Mattel, Inc.*

    15,980       304,898  

Peloton Interactive, Inc., Class A* (a)

    19,550       93,058  

Polaris, Inc.(a)

    11,050       954,941  

Smith & Wesson Brands, Inc.

    7,695       113,347  

Sturm Ruger & Co., Inc.

    1,360       75,276  

Topgolf Callaway Brands Corp.* (a)

    8,330       101,793  

Vista Outdoor, Inc.* (a)

    10,944       274,913  

YETI Holdings, Inc.* (a)

    2,040       86,741  
              3,660,410  
Life Sciences Tools & Services – 1.0%  

10X Genomics, Inc., Class A*

    4,760       167,933  

Agilent Technologies, Inc.

    6,630       685,343  

Avantor, Inc.*

    19,890       346,683  

Azenta, Inc.* (a)

    4,420       200,889  

Bio-Rad Laboratories, Inc., Class A*

    510       140,393  

Bio-Techne Corp.

    3,060       167,168  

Bruker Corp.

    2,394       136,458  

Charles River Laboratories International, Inc.* (a)

    1,700       286,212  

CryoPort, Inc.* (a)

    1,539       14,928  

Danaher Corp.

    15,980       3,068,480  

Illumina, Inc.*

    3,400       372,028  

IQVIA Holdings, Inc.*

    4,930       891,492  

Maravai LifeSciences Holdings, Inc., Class A*

    10,880       74,637  

Medpace Holdings, Inc.*

    1,026       248,979  

Mesa Laboratories, Inc.(a)

    850       79,755  

Mettler-Toledo International, Inc.*

    513       505,408  

OmniAb, Inc.* ‡ (a)

    281       90  

Pacific Biosciences of California, Inc.* (a)

    8,500       52,530  

Repligen Corp.* (a)

    1,368       184,078  

Revvity, Inc.

    3,910       323,943  

Sotera Health Co.* (a)

    10,200       129,132  
Investments   Shares     Value  
Life Sciences Tools & Services – (continued)  

Thermo Fisher Scientific, Inc.

    9,520     $ 4,234,210  

Waters Corp.* (a)

    1,539       367,098  

West Pharmaceutical Services, Inc.

    2,040       649,312  
              13,327,179  
Machinery – 2.0%  

3D Systems Corp.* (a)

    11,220       41,851  

AGCO Corp.(a)

    2,394       274,496  

Alamo Group, Inc.

    342       54,823  

Albany International Corp., Class A(a)

    2,052       167,464  

Allison Transmission Holdings, Inc.

    18,190       917,140  

Astec Industries, Inc.

    1,539       61,622  

Barnes Group, Inc.

    1,368       28,441  

Caterpillar, Inc.

    15,300       3,458,565  

Chart Industries, Inc.* (a)

    1,530       177,832  

Columbus McKinnon Corp.

    513       15,682  

Crane Co.

    1,190       115,823  

Cummins, Inc.

    4,275       924,682  

Deere & Co.

    8,160       2,981,338  

Desktop Metal, Inc., Class A* (a)

    58,650       50,814  

Donaldson Co., Inc.(a)

    6,630       382,286  

Douglas Dynamics, Inc.(a)

    342       8,304  

Dover Corp.

    3,420       444,429  

Energy Recovery, Inc.* (a)

    170       2,584  

Enerpac Tool Group Corp., Class A

    4,788       135,500  

EnPro Industries, Inc.(a)

    1,197       132,939  

Esab Corp.

    3,740       236,742  

ESCO Technologies, Inc.

    340       33,055  

Federal Signal Corp.

    1,710       99,248  

Flowserve Corp.

    6,840       251,165  

Fortive Corp.

    7,650       499,392  

Franklin Electric Co., Inc.(a)

    1,190       103,197  

Gates Industrial Corp. plc*

    21,760       237,619  

Gorman-Rupp Co. (The)(a)

    1,539       45,477  

Graco, Inc.

    5,156       383,349  

Greenbrier Cos., Inc. (The)(a)

    6,800       235,212  

Helios Technologies, Inc.(a)

    2,550       131,886  

Hillenbrand, Inc.

    5,100       193,953  

 

See Accompanying Notes to the Financial Statements.

 

162    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Machinery – (continued)  

Hillman Solutions Corp.*

    8,330     $ 54,645  

Hyster-Yale Materials Handling, Inc.

    2,210       88,422  

IDEX Corp.

    2,040       390,476  

Illinois Tool Works, Inc.

    6,970       1,562,116  

Ingersoll Rand, Inc.

    9,010       546,727  

ITT, Inc.(a)

    4,446       415,034  

John Bean Technologies Corp.(a)

    1,368       142,299  

Kadant, Inc.(a)

    342       75,240  

Kennametal, Inc.(a)

    4,788       110,651  

Lincoln Electric Holdings, Inc.(a)

    1,870       326,876  

Lindsay Corp.

    342       42,723  

Luxfer Holdings plc

    5,950       49,206  

Middleby Corp. (The)* (a)

    1,710       193,008  

Mueller Industries, Inc.(a)

    25,836       974,276  

Mueller Water Products, Inc., Class A(a)

    4,959       61,343  

Nikola Corp.* (a)

    24,650       26,622  

Nordson Corp.

    1,197       254,470  

Oshkosh Corp.

    13,851       1,215,148  

Otis Worldwide Corp.

    10,431       805,377  

PACCAR, Inc.

    15,300       1,262,709  

Parker-Hannifin Corp.

    3,078       1,135,505  

Pentair plc

    4,590       266,771  

RBC Bearings, Inc.* (a)

    1,020       224,237  

REV Group, Inc.

    6,498       92,532  

Shyft Group, Inc. (The)

    4,590       50,398  

Snap-on, Inc.

    1,539       396,970  

SPX Technologies, Inc.*

    1,368       109,604  

Standex International Corp.

    171       24,550  

Stanley Black & Decker, Inc.

    2,720       231,336  

Tennant Co.

    1,870       138,791  

Terex Corp.(a)

    13,509       618,712  

Timken Co. (The)

    3,910       270,259  

Titan International, Inc.*

    11,900       135,184  

Toro Co. (The)(a)

    3,078       248,825  

Trinity Industries, Inc.

    2,736       56,991  

Wabash National Corp.(a)

    8,160       168,830  

Watts Water Technologies, Inc., Class A

    855       147,924  
Investments   Shares     Value  
Machinery – (continued)  

Westinghouse Air Brake Technologies Corp.

    4,617     $ 489,494  

Xylem, Inc.

    6,800       636,072  
              26,867,263  
Marine Transportation – 0.1%  

Eagle Bulk Shipping, Inc.(a)

    3,230       131,784  

Genco Shipping & Trading Ltd.(a)

    11,900       156,723  

Kirby Corp.*

    3,740       279,378  

Matson, Inc.(a)

    6,800       591,940  
              1,159,825  
Media – 1.0%  

Altice USA, Inc., Class A* (a)

    26,520       76,643  

Cable One, Inc.(a)

    170       93,478  

Charter Communications, Inc., Class A* (a)

    3,230       1,301,044  

Clear Channel Outdoor Holdings, Inc.* (a)

    119,340       131,274  

Comcast Corp., Class A

    126,990       5,243,417  

DISH Network Corp., Class A* (a)

    39,610       194,089  

EW Scripps Co. (The), Class A* (a)

    4,590       25,107  

Fox Corp., Class A

    9,860       299,645  

Fox Corp., Class B

    1,870       52,192  

Gray Television, Inc.

    11,560       75,371  

Integral Ad Science Holding Corp.* (a)

    6,800       78,064  

Interpublic Group of Cos., Inc. (The)(a)

    10,431       296,240  

John Wiley & Sons, Inc., Class A(a)

    11,220       339,629  

Liberty Broadband Corp., Class A*

    1,360       113,315  

Liberty Broadband Corp., Class C*

    2,550       212,441  

Liberty Media Corp-Liberty SiriusXM* (a)

    4,446       109,149  

Liberty Media Corp-Liberty SiriusXM, Class A*

    1,881       46,066  

Magnite, Inc.* (a)

    13,090       86,918  

New York Times Co. (The), Class A

    9,234       372,223  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     163  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Media – (continued)  

News Corp., Class A

    8,892     $ 183,887  

News Corp., Class B(a)

    2,907       62,326  

Nexstar Media Group, Inc., Class A(a)

    7,990       1,119,239  

Omnicom Group, Inc.

    6,498       486,765  

Paramount Global, Class B(a)

    11,730       127,622  

PubMatic, Inc., Class A* (a)

    6,630       74,720  

Scholastic Corp.(a)

    684       25,240  

Sinclair, Inc.(a)

    10,710       116,418  

Sirius XM Holdings, Inc.(a)

    28,010       119,883  

Stagwell, Inc., Class A*

    24,140       99,457  

TechTarget, Inc.* (a)

    1,026       25,835  

TEGNA, Inc.(a)

    44,710       648,742  

Thryv Holdings, Inc.* (a)

    850       14,815  

Trade Desk, Inc. (The), Class A*

    10,431       740,184  

WideOpenWest, Inc.*

    6,156       43,338  
              13,034,776  
Metals & Mining – 0.9%  

Alcoa Corp.(a)

    9,860       252,810  

Alpha Metallurgical Resources,
Inc.(a)

    3,060       673,078  

Arch Resources, Inc.

    3,933       593,214  

ATI, Inc.* (a)

    7,650       288,940  

Carpenter Technology Corp.

    3,400       213,248  

Century Aluminum Co.* (a)

    9,234       61,037  

Cleveland-Cliffs, Inc.*

    17,442       292,677  

Coeur Mining, Inc.* (a)

    6,327       15,881  

Commercial Metals Co.

    26,520       1,121,531  

Compass Minerals International, Inc.

    855       21,067  

Freeport-McMoRan, Inc.

    44,880       1,516,046  

Hecla Mining Co.(a)

    13,680       55,678  

Materion Corp.

    513       49,751  

MP Materials Corp.* (a)

    10,370       170,068  

Newmont Corp.(a)

    28,560       1,070,143  

Nucor Corp.

    8,160       1,205,966  

Olympic Steel, Inc.

    340       17,262  

Piedmont Lithium, Inc.*

    3,078       84,553  
Investments   Shares     Value  
Metals & Mining – (continued)  

Reliance Steel & Aluminum Co.

    2,040     $ 518,935  

Royal Gold, Inc.(a)

    2,380       248,305  

Ryerson Holding Corp.

    3,570       103,709  

Schnitzer Steel Industries, Inc., Class A

    3,230       73,353  

Southern Copper Corp.(a)

    1,710       121,239  

Steel Dynamics, Inc.

    5,610       597,521  

SunCoke Energy, Inc.

    9,350       88,918  

TimkenSteel Corp.* (a)

    8,550       173,822  

United States Steel Corp.(a)

    46,580       1,578,596  

Warrior Met Coal, Inc.

    9,520       463,910  

Worthington Industries, Inc.

    7,480       460,918  
              12,132,176  
Mortgage Real Estate Investment Trusts (REITs) – 0.6%  

AGNC Investment Corp.(a)

    124,610       919,622  

Annaly Capital Management, Inc.(a)

    10,880       169,837  

Apollo Commercial Real Estate Finance, Inc.(a)

    20,400       203,184  

Arbor Realty Trust, Inc.(a)

    41,650       525,206  

Ares Commercial Real Estate Corp.

    20,230       185,509  

ARMOUR Residential REIT, Inc.(a)

    12,648       184,281  

Blackstone Mortgage Trust, Inc., Class A(a)

    34,000       678,300  

BrightSpire Capital, Inc., Class A(a)

    27,030       152,990  

Chimera Investment Corp.(a)

    36,890       177,072  

Claros Mortgage Trust, Inc.(a)

    34,000       354,620  

Ellington Financial, Inc.(a)

    14,706       176,913  

Franklin BSP Realty Trust, Inc.(a)

    17,510       220,801  

Hannon Armstrong Sustainable Infrastructure Capital, Inc.(a)

    7,820       134,035  

Invesco Mortgage Capital, Inc.

    1       4  

KKR Real Estate Finance Trust,
Inc.(a)

    16,490       172,156  

 

See Accompanying Notes to the Financial Statements.

 

164    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Mortgage Real Estate Investment Trusts (REITs) – (continued)  

Ladder Capital Corp., Class A

    31,280     $ 316,241  

MFA Financial, Inc.(a)

    19,380       172,288  

New York Mortgage Trust, Inc.(a)

    7,310       56,945  

PennyMac Mortgage Investment Trust(a)

    19,720       249,458  

Ready Capital Corp.(a)

    26,010       245,274  

Redwood Trust, Inc.(a)

    18,700       117,436  

Rithm Capital Corp.(a)

    110,330       1,029,379  

Starwood Property Trust, Inc.(a)

    63,580       1,128,545  

TPG RE Finance Trust, Inc.

    2,210       12,177  

Two Harbors Investment Corp.

    18,870       219,081  
              7,801,354  
Multi-Utilities – 0.5%  

Ameren Corp.

    5,985       453,124  

Avista Corp.(a)

    5,950       188,555  

Black Hills Corp.

    1,700       82,195  

CenterPoint Energy, Inc.

    17,340       466,099  

CMS Energy Corp.

    5,780       314,085  

Consolidated Edison, Inc.

    9,350       820,837  

Dominion Energy, Inc.

    27,200       1,096,704  

DTE Energy Co.

    5,270       507,923  

NiSource, Inc.(a)

    12,166       306,097  

Northwestern Energy Group, Inc.(a)

    3,910       187,719  

Public Service Enterprise Group, Inc.(a)

    13,090       806,998  

Sempra

    18,020       1,261,941  

Unitil Corp.

    2,040       93,167  

WEC Energy Group, Inc.

    6,800       553,452  
              7,138,896  
Office REITs – 0.2%  

Alexandria Real Estate Equities, Inc., REIT

    3,060       284,978  

Boston Properties, Inc., REIT(a)

    4,930       264,100  

Brandywine Realty Trust, REIT(a)

    40,460       151,321  
Investments   Shares     Value  
Office REITs – (continued)  

COPT Defense Properties, REIT

    2,890     $ 65,892  

Cousins Properties, Inc., REIT

    2,890       51,644  

Douglas Emmett, Inc., REIT(a)

    14,110       158,173  

Easterly Government Properties, Inc., Class A, REIT(a)

    9,350       100,606  

Equity Commonwealth, REIT

    2,210       41,857  

Highwoods Properties, Inc., REIT(a)

    8,670       155,106  

Hudson Pacific Properties, Inc., REIT(a)

    40,460       180,452  

Kilroy Realty Corp., REIT

    7,310       208,920  

Paramount Group, Inc., REIT(a)

    37,230       159,344  

Piedmont Office Realty Trust, Inc., Class A, REIT

    13,090       68,199  

SL Green Realty Corp., REIT(a)

    16,150       473,034  

Vornado Realty Trust, REIT(a)

    35,360       678,912  
              3,042,538  
Oil, Gas & Consumable Fuels – 5.4%  

Antero Midstream Corp.

    22,440       276,910  

Antero Resources Corp.*

    63,070       1,856,781  

APA Corp.

    11,390       452,411  

Berry Corp.

    24,990       208,667  

California Resources Corp.(a)

    14,280       750,985  

Callon Petroleum Co.* (a)

    9,918       370,437  

Cheniere Energy, Inc.

    7,695       1,280,602  

Chesapeake Energy Corp.(a)

    3,609       310,663  

Chevron Corp.

    54,174       7,894,777  

Chord Energy Corp.

    8,670       1,433,324  

Civitas Resources, Inc.(a)

    17,850       1,346,432  

Clean Energy Fuels Corp.* (a)

    2,907       10,145  

CNX Resources Corp.* (a)

    39,270       852,944  

Comstock Resources, Inc.(a)

    16,416       206,842  

ConocoPhillips

    37,060       4,402,728  

CONSOL Energy, Inc.(a)

    5,950       546,746  

Coterra Energy, Inc.

    24,796       681,889  

Crescent Energy Co., Class A

    18,360       223,625  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     165  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

CVR Energy, Inc.(a)

    7,990     $ 261,673  

Delek US Holdings, Inc.(a)

    11,900       313,565  

Denbury, Inc.*

    3,060       272,003  

Devon Energy Corp.

    17,680       823,358  

Diamondback Energy, Inc.(a)

    5,814       932,100  

Dorian LPG Ltd.(a)

    7,695       246,009  

DT Midstream, Inc.(a)

    5,950       321,121  

Earthstone Energy, Inc., Class A*

    9,860       208,736  

EOG Resources, Inc.

    17,000       2,146,250  

EQT Corp.(a)

    11,115       471,054  

Equitrans Midstream Corp.

    93,160       826,329  

Exxon Mobil Corp.

    122,230       12,938,045  

Green Plains, Inc.* (a)

    4,617       135,647  

Gulfport Energy Corp.* (a)

    1,870       231,151  

Hess Corp.

    7,310       1,055,564  

HF Sinclair Corp.

    5,610       310,682  

HighPeak Energy, Inc.(a)

    5,950       105,374  

International Seaways, Inc.

    6,120       294,311  

Kinder Morgan, Inc.(a)

    56,610       917,082  

Kosmos Energy Ltd.* (a)

    89,401       647,263  

Magnolia Oil & Gas Corp., Class A(a)

    37,570       843,447  

Marathon Oil Corp.

    21,590       589,623  

Marathon Petroleum Corp.

    12,750       1,928,437  

Matador Resources Co.(a)

    23,460       1,447,247  

Murphy Oil Corp.

    30,600       1,373,022  

New Fortress Energy, Inc.(a)

    16,660       504,798  

NextDecade Corp.* (a)

    3,078       13,512  

Northern Oil and Gas, Inc.(a)

    16,830       645,262  

Occidental Petroleum Corp.(a)

    20,060       1,239,909  

ONEOK, Inc.

    17,680       1,152,736  

Ovintiv, Inc.

    9,023       433,104  

Par Pacific Holdings, Inc.*

    10,200       334,764  

PBF Energy, Inc., Class A

    23,651       1,124,132  

Peabody Energy Corp.(a)

    23,769       560,711  

Permian Resources Corp., Class A(a)

    61,200       891,684  

Phillips 66

    13,940       1,590,136  
Investments   Shares     Value  
Oil, Gas & Consumable Fuels – (continued)  

Pioneer Natural Resources Co.

    6,800     $ 1,625,200  

Range Resources Corp.(a)

    50,150       1,797,376  

SandRidge Energy, Inc.

    1,700       26,945  

SilverBow Resources, Inc.* (a)

    1,020       34,782  

Sitio Royalties Corp., Class A

    1,190       29,417  

SM Energy Co.(a)

    27,370       1,103,558  

Southwestern Energy Co.* (a)

    253,810       1,809,665  

Talos Energy, Inc.* (a)

    18,190       281,945  

Targa Resources Corp.(a)

    6,460       540,121  

Tellurian, Inc.* (a)

    166,090       114,602  

Texas Pacific Land Corp.(a)

    171       315,657  

Uranium Energy Corp.* (a)

    3,249       19,332  

VAALCO Energy, Inc.(a)

    12,580       56,233  

Valero Energy Corp.(a)

    11,390       1,446,530  

Vertex Energy, Inc.* (a)

    20,570       88,657  

Vital Energy, Inc.* (a)

    2,720       136,109  

Vitesse Energy, Inc.

    2,380       56,382  

W&T Offshore, Inc.* (a)

    28,390       117,818  

Williams Cos., Inc. (The)

    31,620       1,087,728  

World Kinect Corp.(a)

    12,141       224,608  
              72,149,414  
Paper & Forest Products – 0.0%(d)  

Clearwater Paper Corp.*

    2,223       75,160  

Louisiana-Pacific Corp.

    4,420       226,658  

Mercer International, Inc.(a)

    9,576       76,033  

Sylvamo Corp.(a)

    5,814       257,560  
              635,411  
Passenger Airlines – 0.2%  

Alaska Air Group, Inc.* (a)

    26,350       833,450  

Allegiant Travel Co.(a)

    1,360       90,603  

American Airlines Group, Inc.* (a)

    25,500       284,325  

Delta Air Lines, Inc.

    18,639       582,469  

Frontier Group Holdings, Inc.* (a)

    7,053       23,910  

Hawaiian Holdings, Inc.* (a)

    9,690       40,795  

JetBlue Airways Corp.* (a)

    64,093       240,990  

Joby Aviation, Inc.* (a)

    11,390       60,025  

SkyWest, Inc.*

    11,220       473,147  

 

See Accompanying Notes to the Financial Statements.

 

166    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Passenger Airlines – (continued)  

Southwest Airlines Co.(a)

    16,320     $ 362,794  

United Airlines Holdings, Inc.*

    7,990       279,730  
              3,272,238  
Personal Care Products – 0.2%  

BellRing Brands, Inc.*

    4,788       209,379  

Coty, Inc., Class A* (a)

    16,320       152,918  

Edgewell Personal Care Co.(a)

    4,262       148,744  

elf Beauty, Inc.* (a)

    1,870       173,218  

Estee Lauder Cos., Inc. (The), Class A

    5,270       679,145  

Herbalife Ltd.* (a)

    15,810       225,293  

Inter Parfums, Inc.

    513       65,207  

Medifast, Inc.(a)

    3,400       235,144  

Nu Skin Enterprises, Inc., Class A

    5,270       100,077  

USANA Health Sciences, Inc.*

    1,530       69,692  
              2,058,817  
Pharmaceuticals – 3.1%  

Aclaris Therapeutics, Inc.* (a)

    684       3,406  

Amphastar Pharmaceuticals, Inc.* (a)

    1,026       46,447  

ANI Pharmaceuticals, Inc.* (a)

    171       10,558  

Arvinas, Inc.* (a)

    5,440       87,693  

Axsome Therapeutics, Inc.* (a)

    1,710       106,499  

Bristol-Myers Squibb Co.

    62,730       3,232,477  

Catalent, Inc.*

    4,590       157,850  

Collegium Pharmaceutical, Inc.* (a)

    9,405       204,653  

Corcept Therapeutics, Inc.* (a)

    4,159       116,785  

Elanco Animal Health, Inc.* (a)

    112,540       991,477  

Eli Lilly & Co.

    19,720       10,923,500  

Evolus, Inc.*

    1,881       14,296  

Harmony Biosciences Holdings, Inc.*

    684       16,101  
Investments   Shares     Value  
Pharmaceuticals – (continued)  

Innoviva, Inc.* (a)

    18,020     $ 223,628  

Intra-Cellular Therapies, Inc.*

    2,890       143,806  

Jazz Pharmaceuticals plc*

    2,550       323,901  

Johnson & Johnson

    59,500       8,826,230  

Ligand Pharmaceuticals, Inc.*

    684       35,766  

Merck & Co., Inc.

    63,410       6,512,207  

Organon & Co.

    51,510       761,833  

Perrigo Co. plc

    6,120       169,157  

Pfizer, Inc.

    173,740       5,309,494  

Prestige Consumer Healthcare, Inc.*

    3,740       222,007  

Revance Therapeutics, Inc.* (a)

    2,907       22,936  

Royalty Pharma plc, Class A

    14,620       392,839  

Scilex Holding Co.*

    14,036       26,247  

Supernus Pharmaceuticals, Inc.*

    4,420       105,417  

Tilray Brands, Inc.*

    171,190       308,142  

Viatris, Inc.

    30,940       275,366  

Zoetis, Inc., Class A

    11,900       1,868,300  
              41,439,018  
Professional Services – 1.2%  

Alight, Inc., Class A*

    75,480       501,187  

ASGN, Inc.* (a)

    10,540       879,668  

Automatic Data Processing, Inc.

    10,370       2,262,941  

Barrett Business Services, Inc.

    855       78,198  

Booz Allen Hamilton Holding Corp., Class A

    3,078       369,145  

Broadridge Financial Solutions, Inc.

    2,550       435,132  

CACI International, Inc., Class A*

    1,190       386,464  

CBIZ, Inc.*

    1,710       88,852  

Ceridian HCM Holding, Inc.* (a)

    4,760       304,688  

Clarivate plc* (a)

    84,150       536,877  

Concentrix Corp.(a)

    8,330       634,829  

Conduent, Inc.*

    44,273       141,231  

CSG Systems International, Inc.(a)

    2,736       128,209  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     167  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Professional Services – (continued)  

Dun & Bradstreet Holdings, Inc.(a)

    52,360     $ 458,674  

Equifax, Inc.(a)

    3,230       547,711  

ExlService Holdings, Inc.*

    5,950       155,355  

Exponent, Inc.

    1,870       137,052  

First Advantage Corp.

    684       8,899  

FTI Consulting, Inc.* (a)

    1,190       252,589  

Genpact Ltd.

    3,591       120,442  

Heidrick & Struggles International, Inc.

    5,610       136,547  

Huron Consulting Group, Inc.*

    513       50,972  

ICF International, Inc.(a)

    513       65,013  

Insperity, Inc.

    1,190       125,950  

Jacobs Solutions, Inc.

    3,570       475,881  

KBR, Inc.(a)

    4,760       276,794  

Kelly Services, Inc., Class A

    7,524       134,304  

Kforce, Inc.(a)

    342       20,876  

Korn Ferry

    9,860       448,827  

Legalzoom.com, Inc.*

    11,220       111,863  

Leidos Holdings, Inc.

    3,591       355,940  

ManpowerGroup, Inc.

    9,860       689,904  

Maximus, Inc.

    3,570       266,751  

NV5 Global, Inc.*

    170       16,040  

Paychex, Inc.

    7,695       854,530  

Paycom Software, Inc.

    1,197       293,229  

Paylocity Holding Corp.*

    1,026       184,064  

Resources Connection, Inc.

    5,472       73,708  

Robert Half, Inc.(a)

    3,420       255,713  

Science Applications International Corp.(a)

    3,060       334,274  

SS&C Technologies Holdings, Inc.

    5,301       266,375  

Sterling Check Corp.* (a)

    8,160       91,229  

TransUnion

    3,740       164,111  

TriNet Group, Inc.*

    1,870       192,143  

TrueBlue, Inc.*

    1,870       20,701  

TTEC Holdings, Inc.

    340       6,997  

Upwork, Inc.*

    11,900       124,355  

Verisk Analytics, Inc., Class A

    3,762       855,328  

Verra Mobility Corp., Class A*

    10,260       202,840  
              15,523,402  
Investments   Shares     Value  
Real Estate Management & Development – 0.4%  

Anywhere Real Estate, Inc.* (a)

    28,730     $ 134,169  

CBRE Group, Inc., Class A*

    9,918       687,714  

Compass, Inc., Class A* (a)

    76,500       151,470  

CoStar Group, Inc.*

    10,030       736,302  

Cushman & Wakefield plc* (a)

    47,430       349,559  

DigitalBridge Group, Inc.

    8,840       140,114  

eXp World Holdings, Inc.(a)

    2,565       34,038  

Forestar Group, Inc.* (a)

    7,140       169,575  

Howard Hughes Holdings, Inc.* (a)

    2,040       135,313  

Jones Lang LaSalle, Inc.* (a)

    10,370       1,326,530  

Kennedy-Wilson Holdings, Inc.(a)

    7,310       94,080  

Newmark Group, Inc., Class A(a)

    38,590       218,805  

Opendoor Technologies, Inc.* (a)

    132,430       251,617  

Redfin Corp.* (a)

    4,930       22,974  

Seritage Growth Properties, Class A, REIT* (a)

    13,338       96,567  

St Joe Co. (The)

    513       23,926  

Zillow Group, Inc., Class A*

    513       18,227  

Zillow Group, Inc., Class C* (a)

    5,610       203,363  
              4,794,343  
Residential REITs – 0.3%  

American Homes 4 Rent, Class A, REIT

    6,156       201,548  

Apartment Income REIT Corp., Class A, REIT

    9,010       263,182  

AvalonBay Communities, Inc., REIT

    3,230       535,340  

Camden Property Trust, REIT

    3,060       259,733  

Equity LifeStyle Properties, Inc., REIT(a)

    4,446       292,547  

Equity Residential, REIT

    7,310       404,462  

Essex Property Trust, Inc., REIT(a)

    1,530       327,298  

Independence Realty Trust, Inc., REIT(a)

    6,290       77,933  

 

See Accompanying Notes to the Financial Statements.

 

168    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Residential REITs – (continued)  

Invitation Homes, Inc., REIT(a)

    12,996     $ 385,851  

Mid-America Apartment Communities, Inc., REIT

    2,736       323,258  

NexPoint Residential Trust, Inc., REIT

    2,720       73,413  

Sun Communities, Inc., REIT(a)

    3,740       416,038  

UDR, Inc., REIT

    9,520       302,831  
              3,863,434  
Retail REITs – 0.4%  

Acadia Realty Trust, REIT(a)

    9,690       138,761  

Agree Realty Corp., REIT(a)

    5,780       323,333  

Alexander’s, Inc., REIT(a)

    510       95,875  

Brixmor Property Group, Inc., REIT(a)

    10,431       216,860  

CBL & Associates Properties, Inc., REIT(a)

    3,740       77,530  

Federal Realty Investment Trust, REIT(a)

    1,710       155,935  

Getty Realty Corp., REIT

    171       4,552  

Kimco Realty Corp., REIT

    18,126       325,180  

Kite Realty Group Trust, REIT(a)

    46,070       982,212  

Macerich Co. (The), REIT(a)

    51,680       502,330  

NNN REIT, Inc., REIT(a)

    2,907       105,611  

Phillips Edison & Co., Inc., REIT(a)

    3,230       114,051  

Realty Income Corp., REIT(a)

    16,660       789,351  

Regency Centers Corp., REIT

    4,456       268,519  

Retail Opportunity Investments Corp., REIT

    11,900       139,706  

RPT Realty, REIT

    8,550       92,255  

Simon Property Group, Inc., REIT

    7,480       821,977  

SITE Centers Corp., REIT

    4,959       57,822  

Spirit Realty Capital, Inc., REIT

    5,950       214,141  

Tanger Factory Outlet Centers, Inc., REIT(a)

    8,330       187,841  

Urban Edge Properties, REIT(a)

    4,617       73,226  
Investments   Shares     Value  
Retail REITs – (continued)  

Whitestone REIT, REIT(a)

    3,060     $ 30,447  
              5,717,515  
Semiconductors & Semiconductor Equipment – 5.5%  

ACM Research, Inc., Class A*

    10,540       143,344  

Advanced Micro Devices, Inc.*

    39,827       3,922,960  

Allegro MicroSystems, Inc.*

    1,700       44,132  

Alpha & Omega Semiconductor Ltd.*

    3,910       92,745  

Ambarella, Inc.*

    850       38,242  

Amkor Technology, Inc.

    18,810       392,377  

Analog Devices, Inc.

    12,920       2,032,704  

Applied Materials, Inc.

    21,250       2,812,437  

Axcelis Technologies, Inc.*

    1,026       130,815  

Broadcom, Inc.

    12,578       10,582,752  

Cirrus Logic, Inc.* (a)

    2,040       136,537  

Cohu, Inc.*

    1,197       36,078  

Credo Technology Group Holding Ltd.* (a)

    5,780       82,192  

Diodes, Inc.* (a)

    9,234       600,949  

Enphase Energy, Inc.* (a)

    2,890       229,986  

Entegris, Inc.(a)

    3,910       344,236  

First Solar, Inc.*

    2,210       314,815  

FormFactor, Inc.*

    2,223       75,315  

Ichor Holdings Ltd.* (a)

    3,740       90,732  

Impinj, Inc.* (a)

    1,368       88,386  

indie Semiconductor, Inc., Class A* (a)

    9,180       44,890  

Intel Corp.

    100,980       3,685,770  

KLA Corp.

    3,570       1,676,829  

Kulicke & Soffa Industries, Inc.(a)

    4,250       176,843  

Lam Research Corp.

    4,250       2,499,935  

Lattice Semiconductor Corp.*

    4,250       236,342  

MACOM Technology Solutions Holdings, Inc.* (a)

    1,368       96,499  

Magnachip Semiconductor Corp.*

    4,959       36,647  

Marvell Technology, Inc.

    20,691       977,029  

MaxLinear, Inc., Class A*

    340       5,168  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     169  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Semiconductors & Semiconductor Equipment – (continued)  

Microchip Technology, Inc.

    12,750     $ 908,948  

Micron Technology, Inc.

    28,050       1,875,703  

MKS Instruments, Inc.(a)

    3,570       234,406  

Monolithic Power Systems, Inc.

    1,190       525,671  

Navitas Semiconductor Corp., Class A*

    13,600       71,264  

NVIDIA Corp.

    61,200       24,957,360  

NXP Semiconductors NV

    7,650       1,319,089  

ON Semiconductor Corp.*

    11,560       724,118  

Onto Innovation, Inc.*

    2,890       324,749  

PDF Solutions, Inc.* (a)

    342       9,073  

Photronics, Inc.*

    14,877       273,142  

Power Integrations, Inc.

    2,550       176,791  

Qorvo, Inc.*

    2,720       237,782  

QUALCOMM, Inc.

    33,150       3,613,018  

Rambus, Inc.* (a)

    3,420       185,809  

Semtech Corp.* (a)

    4,760       66,450  

Silicon Laboratories, Inc.* (a)

    1,870       172,377  

Skyworks Solutions, Inc.

    5,610       486,611  

SMART Global Holdings, Inc.* (a)

    13,260       181,662  

SolarEdge Technologies, Inc.* (a)

    1,368       103,900  

Synaptics, Inc.* (a)

    9,690       810,665  

Teradyne, Inc.(a)

    3,570       297,274  

Texas Instruments, Inc.

    21,760       3,090,138  

Ultra Clean Holdings, Inc.*

    4,760       113,574  

Universal Display Corp.(a)

    2,565       356,997  

Veeco Instruments, Inc.* (a)

    1,368       32,750  

Wolfspeed, Inc.* (a)

    5,610       189,842  
              72,966,849  
Software – 8.5%  

ACI Worldwide, Inc.* (a)

    4,959       101,015  

Adeia, Inc.(a)

    20,740       174,838  

Adobe, Inc.*

    11,220       5,969,713  

Agilysys, Inc.* (a)

    342       29,340  

Alarm.com Holdings, Inc.* (a)

    850       43,461  

Alkami Technology, Inc.* (a)

    7,140       128,163  

Altair Engineering, Inc., Class A* (a)

    3,400       211,208  
Investments   Shares     Value  
Software – (continued)  

Alteryx, Inc., Class A* (a)

    510     $ 16,325  

Amplitude, Inc., Class A*

    9,860       98,206  

ANSYS, Inc.*

    2,380       662,259  

Appfolio, Inc., Class A*

    1,360       255,095  

Appian Corp., Class A* (a)

    680       26,833  

AppLovin Corp., Class A* (a)

    6,800       247,792  

Asana, Inc., Class A* (a)

    3,230       59,658  

Aspen Technology, Inc.*

    855       151,976  

Atlassian Corp., Class A*

    4,080       737,011  

Aurora Innovation, Inc., Class A* (a)

    59,670       104,423  

Autodesk, Inc.*

    5,100       1,007,913  

Bentley Systems, Inc., Class B(a)

    6,630       322,483  

BILL Holdings, Inc.* (a)

    2,052       187,327  

Blackbaud, Inc.*

    2,736       178,934  

BlackLine, Inc.*

    680       33,388  

Box, Inc., Class A*

    4,959       123,281  

Braze, Inc., Class A* (a)

    3,910       166,488  

C3.ai, Inc., Class A* (a)

    4,420       107,848  

Cadence Design Systems, Inc.*

    6,669       1,599,560  

CCC Intelligent Solutions Holdings, Inc.* (a)

    12,410       133,656  

Cerence, Inc.* (a)

    4,420       67,670  

CommVault Systems, Inc.*

    2,736       178,798  

Confluent, Inc., Class A* (a)

    6,800       196,588  

Crowdstrike Holdings, Inc., Class A*

    5,610       991,680  

Datadog, Inc., Class A*

    7,650       623,245  

Digital Turbine, Inc.*

    8,500       40,290  

DocuSign, Inc., Class A*

    3,230       125,582  

Dolby Laboratories, Inc., Class A

    2,720       220,157  

DoubleVerify Holdings, Inc.* (a)

    5,780       160,857  

Dropbox, Inc., Class A* (a)

    10,370       272,731  

Dynatrace, Inc.*

    6,460       288,827  

Ebix, Inc.(a)

    5,950       36,235  

Elastic NV*

    4,590       344,434  

Enfusion, Inc., Class A* (a)

    684       5,677  

EngageSmart, Inc.* (a)

    4,760       107,814  

Envestnet, Inc.*

    1,530       56,610  

 

See Accompanying Notes to the Financial Statements.

 

170    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Software – (continued)  

Everbridge, Inc.*

    3,400     $ 70,074  

EverCommerce, Inc.* (a)

    8,500       81,430  

Fair Isaac Corp.*

    684       578,575  

Five9, Inc.* (a)

    4,250       245,948  

Fortinet, Inc.*

    16,245       928,727  

Freshworks, Inc., Class A* (a)

    9,690       173,839  

Gen Digital, Inc.

    17,000       283,220  

Gitlab, Inc., Class A* (a)

    3,910       169,225  

Guidewire Software, Inc.*

    4,590       413,697  

HashiCorp, Inc., Class A*

    5,780       113,808  

HubSpot, Inc.* (a)

    1,360       576,327  

Informatica, Inc., Class A*

    5,780       110,860  

Intapp, Inc.* (a)

    684       23,393  

InterDigital, Inc.(a)

    680       51,170  

Intuit, Inc.

    7,140       3,533,943  

Jamf Holding Corp.* (a)

    4,590       73,715  

JFrog Ltd.*

    6,290       141,462  

LiveRamp Holdings, Inc.*

    3,249       89,867  

Manhattan Associates, Inc.* (a)

    2,040       397,759  

Marathon Digital Holdings, Inc.* (a)

    7,480       65,899  

Matterport, Inc.* (a)

    36,040       73,522  

MeridianLink, Inc.* (a)

    4,930       80,951  

Microsoft Corp.

    183,770       62,134,475  

MicroStrategy, Inc., Class A* (a)

    342       144,799  

Mitek Systems, Inc.* (a)

    855       9,131  

Model N, Inc.*

    684       16,484  

nCino, Inc.* (a)

    680       19,108  

NCR Voyix Corp.* (a)

    26,690       408,090  

New Relic, Inc.*

    2,550       221,008  

Nutanix, Inc., Class A* (a)

    8,330       301,463  

Olo, Inc., Class A* (a)

    12,410       63,415  

ON24, Inc.(a)

    12,070       74,230  

OneSpan, Inc.* (a)

    1,368       10,807  

Oracle Corp.

    38,080       3,937,472  

PagerDuty, Inc.* (a)

    7,820       157,729  

Palantir Technologies, Inc., Class A*

    46,410       686,868  

Palo Alto Networks, Inc.*

    7,650       1,859,103  

Pegasystems, Inc.

    680       29,063  
Investments   Shares     Value  
Software – (continued)  

PowerSchool Holdings, Inc., Class A* (a)

    2,052     $ 40,876  

Procore Technologies, Inc.*

    3,060       186,935  

Progress Software Corp.(a)

    680       34,938  

PTC, Inc.*

    2,380       334,200  

Q2 Holdings, Inc.* (a)

    4,250       127,628  

Qualys, Inc.* (a)

    1,368       209,236  

Rapid7, Inc.* (a)

    2,890       134,356  

RingCentral, Inc., Class A*

    15,640       415,711  

Riot Platforms, Inc.* (a)

    7,820       76,480  

Roper Technologies, Inc.

    2,550       1,245,853  

Salesforce, Inc.*

    23,800       4,779,754  

Samsara, Inc., Class A*

    7,990       184,329  

SentinelOne, Inc., Class A* (a)

    13,430       209,911  

ServiceNow, Inc.*

    4,930       2,868,521  

Smartsheet, Inc., Class A*

    6,120       241,985  

SolarWinds Corp.*

    10,880       100,205  

Splunk, Inc.*

    3,740       550,378  

Sprinklr, Inc., Class A* (a)

    9,350       127,066  

Sprout Social, Inc., Class A* (a)

    3,740       161,867  

SPS Commerce, Inc.*

    1,190       190,805  

Synopsys, Inc.*

    3,740       1,755,706  

Tenable Holdings, Inc.*

    5,270       221,920  

Teradata Corp.*

    2,890       123,461  

Tyler Technologies, Inc.*

    1,190       443,751  

UiPath, Inc., Class A* (a)

    15,470       240,249  

Unity Software, Inc.* (a)

    3,910       99,197  

Varonis Systems, Inc., Class B* (a)

    4,590       154,408  

Verint Systems, Inc.*

    1,881       35,382  

VMware, Inc., Class A*

    5,780       841,857  

Workday, Inc., Class A*

    5,440       1,151,702  

Workiva, Inc., Class A* (a)

    2,890       251,690  

Yext, Inc.*

    11,560       69,707  

Zoom Video Communications, Inc., Class A* (a)

    7,480       448,650  

Zscaler, Inc.*

    1,710       271,360  
              113,276,119  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     171  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Specialized REITs – 0.8%  

American Tower Corp., REIT

    12,070     $ 2,150,753  

Crown Castle, Inc., REIT

    9,860       916,783  

CubeSmart, REIT

    6,669       227,346  

Digital Realty Trust, Inc., REIT(a)

    6,800       845,648  

EPR Properties, REIT(a)

    5,130       219,051  

Equinix, Inc., REIT

    2,223       1,621,990  

Extra Space Storage, Inc., REIT(a)

    5,697       590,152  

Four Corners Property Trust, Inc., REIT(a)

    1,539       32,781  

Gaming and Leisure Properties, Inc., REIT(a)

    6,669       302,706  

Gladstone Land Corp., REIT(a)

    7,140       97,532  

Iron Mountain, Inc., REIT(a)

    6,840       404,039  

Lamar Advertising Co., Class A, REIT(a)

    2,736       225,091  

National Storage Affiliates Trust, REIT(a)

    1,360       38,787  

PotlatchDeltic Corp., REIT

    3,910       167,543  

Public Storage, REIT(a)

    3,762       898,027  

Rayonier, Inc., REIT(a)

    8,208       207,170  

SBA Communications Corp., Class A, REIT

    3,060       638,408  

Uniti Group, Inc., REIT(a)

    70,210       322,966  

VICI Properties, Inc., Class A, REIT

    27,370       763,623  

Weyerhaeuser Co., REIT

    15,300       438,957  
              11,109,353  
Specialty Retail – 2.5%  

Aaron’s Co., Inc. (The)

    7,990       59,206  

Abercrombie & Fitch Co., Class A* (a)

    3,910       237,806  

Academy Sports & Outdoors, Inc.(a)

    17,442       782,099  

Advance Auto Parts, Inc.(a)

    340       17,690  

American Eagle Outfitters, Inc.(a)

    44,710       781,084  

America’s Car-Mart, Inc.* (a)

    340       22,773  

Arko Corp.(a)

    2,565       19,366  
Investments   Shares     Value  
Specialty Retail – (continued)  

Asbury Automotive Group, Inc.* (a)

    4,446     $ 850,831  

AutoNation, Inc.* (a)

    6,460       840,317  

AutoZone, Inc.*

    459       1,137,003  

Bath & Body Works, Inc.

    7,353       218,016  

Best Buy Co., Inc.(a)

    6,840       457,049  

Boot Barn Holdings, Inc.* (a)

    2,380       165,410  

Buckle, Inc. (The)(a)

    6,498       219,437  

Burlington Stores, Inc.*

    1,539       186,265  

Caleres, Inc.(a)

    8,840       226,127  

Camping World Holdings, Inc., Class A(a)

    10,370       173,697  

CarMax, Inc.* (a)

    4,080       249,247  

Carvana Co., Class A* (a)

    22,780       615,060  

Chewy, Inc., Class A* (a)

    5,130       99,163  

Chico’s FAS, Inc.*

    23,970       179,296  

Designer Brands, Inc., Class A(a)

    18,020       182,182  

Dick’s Sporting Goods, Inc.(a)

    2,550       272,723  

Five Below, Inc.* (a)

    1,026       178,503  

Floor & Decor Holdings, Inc., Class A* (a)

    3,400       280,160  

Foot Locker, Inc.(a)

    18,020       378,240  

GameStop Corp., Class A* (a)

    11,560       159,181  

Gap, Inc. (The)(a)

    38,930       498,304  

Group 1 Automotive, Inc.(a)

    3,400       857,922  

Guess?, Inc.(a)

    6,669       143,384  

Haverty Furniture Cos., Inc.

    340       8,857  

Hibbett, Inc.

    1,360       62,655  

Home Depot, Inc. (The)

    24,820       7,066,006  

Lithia Motors, Inc., Class A(a)

    5,950       1,441,150  

Lowe’s Cos., Inc.

    18,020       3,434,071  

MarineMax, Inc.* (a)

    5,643       154,505  

Monro, Inc.(a)

    513       12,733  

Murphy USA, Inc.

    850       308,287  

National Vision Holdings, Inc.*

    3,078       47,832  

ODP Corp. (The)*

    9,350       420,002  

O’Reilly Automotive, Inc.*

    1,530       1,423,573  

Overstock.com, Inc.* (a)

    11,900       185,640  

Penske Automotive Group, Inc.(a)

    1,190       170,265  

 

See Accompanying Notes to the Financial Statements.

 

172    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Specialty Retail – (continued)  

Petco Health & Wellness Co., Inc., Class A*

    5,780     $ 19,999  

RH* (a)

    1,020       222,319  

Ross Stores, Inc.

    8,037       932,051  

Sally Beauty Holdings, Inc.* (a)

    15,130       128,605  

Shoe Carnival, Inc.(a)

    7,480       171,142  

Signet Jewelers Ltd.(a)

    8,721       608,987  

Sleep Number Corp.* (a)

    4,250       69,147  

Sonic Automotive, Inc., Class A(a)

    4,760       227,766  

TJX Cos., Inc. (The)

    28,050       2,470,364  

Tractor Supply Co.(a)

    2,736       526,844  

Ulta Beauty, Inc.*

    1,197       456,428  

Upbound Group, Inc.(a)

    12,312       320,851  

Urban Outfitters, Inc.* (a)

    10,370       359,009  

Valvoline, Inc.(a)

    8,037       238,458  

Victoria’s Secret & Co.* (a)

    18,020       322,198  

Warby Parker, Inc., Class A* (a)

    9,860       127,983  

Wayfair, Inc., Class A* (a)

    18,360       782,320  

Williams-Sonoma, Inc.(a)

    2,223       333,984  
              33,541,572  
Technology Hardware, Storage & Peripherals – 5.1%  

Apple, Inc.

    363,290       62,039,033  

Dell Technologies, Inc., Class C

    6,290       420,864  

Hewlett Packard Enterprise Co.

    40,853       628,319  

HP, Inc.

    29,070       765,413  

IonQ, Inc.* (a)

    12,070       116,355  

NetApp, Inc.

    6,156       448,034  

Pure Storage, Inc., Class A*

    11,050       373,601  

Seagate Technology Holdings plc(a)

    6,120       417,690  

Super Micro Computer, Inc.*

    10,260       2,456,962  

Western Digital Corp.*

    9,690       389,053  

Xerox Holdings Corp.(a)

    21,250       272,850  
              68,328,174  
Investments   Shares     Value  
Textiles, Apparel & Luxury Goods – 0.8%  

Capri Holdings Ltd.*

    24,820     $ 1,270,288  

Carter’s, Inc.(a)

    9,180       616,529  

Columbia Sportswear Co.(a)

    1,881       138,818  

Crocs, Inc.* (a)

    12,996       1,160,803  

Deckers Outdoor Corp.*

    855       510,486  

Figs, Inc., Class A*

    10,200       56,202  

G-III Apparel Group Ltd.* (a)

    11,730       299,701  

Kontoor Brands, Inc.(a)

    9,010       418,515  

Lululemon Athletica, Inc.*

    2,736       1,076,561  

NIKE, Inc., Class B

    29,580       3,039,937  

Oxford Industries, Inc.(a)

    1,026       86,594  

PVH Corp.

    13,680       1,017,108  

Ralph Lauren Corp., Class A

    2,550       286,951  

Skechers USA, Inc., Class A*

    5,985       288,597  

Steven Madden Ltd.(a)

    3,570       117,060  

Tapestry, Inc.

    8,840       243,630  

Under Armour, Inc., Class A* (a)

    29,580       202,623  

Under Armour, Inc., Class C* (a)

    30,940       198,944  

VF Corp.(a)

    8,840       130,213  

Wolverine World Wide, Inc.

    10,370       83,479  
              11,243,039  
Tobacco – 0.5%  

Altria Group, Inc.

    52,020       2,089,644  

Philip Morris International, Inc.

    46,070       4,107,601  

Universal Corp.(a)

    6,460       290,700  

Vector Group Ltd.(a)

    27,030       277,868  
              6,765,813  
Trading Companies & Distributors – 0.9%  

Air Lease Corp., Class A

    20,570       712,339  

Applied Industrial Technologies, Inc.(a)

    2,210       339,257  

Beacon Roofing Supply, Inc.* (a)

    12,070       859,022  

BlueLinx Holdings, Inc.* (a)

    1,881       133,758  

Boise Cascade Co.

    8,208       769,500  

Core & Main, Inc., Class A* (a)

    19,380       582,950  

DXP Enterprises, Inc.*

    2,040       66,504  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     173  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Trading Companies & Distributors – (continued)  

Fastenal Co.

    12,996     $ 758,187  

Ferguson plc

    4,420       663,884  

FTAI Aviation Ltd.(a)

    2,040       76,724  

GATX Corp.(a)

    2,210       231,122  

GMS, Inc.* (a)

    10,200       596,496  

H&E Equipment Services, Inc.

    6,800       276,896  

Herc Holdings, Inc.

    5,610       599,092  

McGrath RentCorp

    1,870       188,122  

MRC Global, Inc.*

    17,340       182,243  

MSC Industrial Direct Co., Inc., Class A(a)

    2,890       273,828  

NOW, Inc.*

    11,223       123,677  

Rush Enterprises, Inc., Class A

    11,730       417,353  

Rush Enterprises, Inc., Class B(a)

    766       30,977  

SiteOne Landscape Supply, Inc.* (a)

    2,223       306,263  

Titan Machinery, Inc.*

    3,230       80,233  

United Rentals, Inc.

    1,870       759,725  

Veritiv Corp.

    2,550       431,996  

Watsco, Inc.(a)

    684       238,641  

WESCO International, Inc.

    9,747       1,249,565  

WW Grainger, Inc.

    1,026       748,806  
              11,697,160  
Water Utilities – 0.1%  

American States Water Co.

    2,394       186,852  

American Water Works Co., Inc.

    4,275       502,954  

California Water Service Group(a)

    3,420       166,485  

Essential Utilities, Inc.

    4,420       147,893  

Middlesex Water Co.

    513       32,591  

SJW Group

    513       32,052  

York Water Co. (The)

    2,040       73,583  
              1,142,410  
Wireless Telecommunication Services – 0.2%  

Gogo, Inc.* (a)

    8,037       84,389  

Shenandoah Telecommunications Co.(a)

    2,052       48,550  
Investments   Shares     Value  
Wireless Telecommunication Services – (continued)  

Telephone and Data Systems, Inc.

    21,760     $ 395,814  

T-Mobile US, Inc.* (a)

    16,150       2,323,339  
              2,852,092  
Total Common Stocks
(Cost $854,268,940)

 

    1,323,526,454  
    Number of
Warrants
       
WARRANTS – 0.0%(d)  
Oil, Gas & Consumable Fuels – 0.0%(d)  

Occidental Petroleum Corp., expiring 8/3/2027, price 22.00*
(Cost $21,117)

    4,266       170,043  
    Number of
Rights
       
RIGHTS – 0.0%(d)  
Biotechnology – 0.0%(d)  

Achillion Pharmaceuticals, Inc., CVR* ‡

    44,344       62,082  
Financial Services – 0.0%  

Resolute Forest Products, Inc., CVR* ‡

    6,734        
Health Care Equipment & Supplies – 0.0%  

ABIOMED, Inc., CVR* ‡

    1,110        
Total Rights
(Cost $1,132)

 

    62,082  
    Principal
Amount
       
SECURITIES LENDING REINVESTMENTS – 12.5%(e)  
CERTIFICATES OF DEPOSIT – 3.8%  

Barclays Bank plc, New York

 

 

(SOFR + 0.32%),
5.48%, 11/24/2023(f)

  $ 2,000,000       2,000,186  

Citibank NA, New York

 

 

(SOFR + 0.40%),
5.62%, 12/15/2023(f)

    5,000,000       5,000,540  

 

See Accompanying Notes to the Financial Statements.

 

174    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – (continued)  
CERTIFICATES OF DEPOSIT – (continued)  

Credit Industriel et Commercial, London

   

5.69%, 1/16/2024

  $ 3,000,000     $ 2,964,270  

Mizuho Bank Ltd., New York

 

 

(SOFR + 0.40%),
5.71%, 3/12/2024(f)

    4,000,000       4,001,152  

MUFG Bank Ltd., London Branch

   

5.63%, 11/27/2023

    4,000,000       4,000,000  

National Westminster Bank PLC

   

5.88%, 5/2/2024

    4,000,000       4,002,680  

Nordea Bank Abp, New York Branch

   

(SOFR + 0.47%),
5.78%, 4/26/2024(f)

    4,000,000       4,003,104  

Oversea-Chinese Banking Corp. Ltd., New York

   

(SOFR + 0.37%),
5.68%, 11/16/2023(f)

    3,000,000       3,000,000  

Royal Bank of Canada, New York

   

(SOFR + 0.53%),
5.84%, 5/23/2024(f)

    3,000,000       3,002,712  

Sumitomo Mitsui Trust Bank Ltd., New York

   

(SOFR + 0.23%),
5.54%, 11/22/2023(f)

    4,000,000       4,000,000  

Svenska Handelsbanken, New York
5.80%, 4/4/2024

    1,000,000       999,882  

(SOFR + 0.33%),
5.64%, 4/4/2024(f)

    1,000,000       999,870  

The Sumitomo Bank Ltd., New York

   

(SOFR + 0.47%),
5.60%, 1/9/2024(f)

    3,000,000       3,001,839  

Toronto-Dominion Bank, New York 5.64%, 2/28/2024

    2,000,000       2,000,000  
Investments   Principal
Amount
    Value  
CERTIFICATES OF DEPOSIT – (continued)  

(US Federal Funds Effective Rate (continuous series) + 0.61%),
5.94%, 7/26/2024(f)

  $ 4,000,000     $ 4,001,992  

Wells Fargo Bank (San Francisco) NA

   

(SOFR + 0.37%),
5.62%, 12/12/2023(f)

    4,000,000       4,000,290  
Total Certificates Of Deposit
(Cost $50,967,462)

 

    50,978,517  
   
COMMERCIAL PAPER – 0.4%(f)  

Bank of Montreal, Montreal

 

 

(SOFR + 0.35%),
5.66%, 11/9/2023 (Cost $6,000,000)

    6,000,000       6,000,000  
INVESTMENT COMPANIES – 1.3%  

BlackRock Liquidity FedFund, Institutional Shares
5.35%, 11/1/2023

    2,000,000       2,000,000  

Dreyfus Treasury Obligations Cash Management Fund
5.38%, 11/1/2023

    5,000,000       5,000,000  

Fidelity Government Portfolio, Institutional Class
5.34%, 11/1/2023

    2,000,000       2,000,000  

Goldman Sachs Financial Square Government Fund, Institutional Class
5.36%, 11/1/2023

    5,000,000       5,000,000  

Morgan Stanley Institutional Liquidity Fund – Government Portfolio
5.35%, 11/1/2023

    3,000,000       3,000,000  
Total Investment Companies
(Cost $17,000,000)

 

    17,000,000  
   

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     175  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – (continued)  
REPURCHASE AGREEMENTS – 7.0%  

BofA Securities, Inc., 5.77%, dated 10/31/2023, due 1/31/2024, repurchase price $6,088,473, collateralized by various U.S. Treasury Securities, ranging from 0.13% – 6.13%, maturing 7/15/2024 – 11/15/2044; total market value $6,042,385

  $ 6,000,000     $ 6,000,000  

CF Secured LLC, 5.30%, dated 10/31/2023, due 11/1/2023, repurchase price $5,000,736, collateralized by various U.S. Treasury Securities, ranging from 0.00% – 7.63%, maturing 11/15/2023 – 5/15/2051; total market value $5,041,997

    5,000,000       5,000,000  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $5,173,914, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $5,231,980

    5,173,156       5,173,156  
Investments   Principal
Amount
    Value  
REPURCHASE AGREEMENTS – (continued)  

MetLife, Inc., 5.32%, dated 10/31/2023, due 11/1/2023, repurchase price $30,004,433, collateralized by various U.S. Treasury Securities, 0.00%, maturing 8/15/2041 – 11/15/2050; total market value $30,216,462

  $ 30,000,000     $ 30,000,000  

TD Prime Services LLC, 5.42%, dated 10/31/2023, due 11/1/2023, repurchase price $47,007,076, collateralized by various Common Stocks; total market value $52,052,944

    47,000,000       47,000,000  
Total Repurchase Agreements
(Cost $93,173,156)

 

    93,173,156  
Total Securities Lending Reinvestments
(Cost $167,140,618)

 

    167,151,673  
Total Investments – 111.6%
(Cost $1,021,431,807)

 

    1,490,910,252  

Liabilities in excess of other assets – (11.6%)

 

    (154,899,191
NET ASSETS – 100.0%

 

  $ 1,336,011,061  

 

*

Non-income producing security.

 

 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $206,017,475, collateralized in the form of cash with a value of $167,151,893 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $36,526,260 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 7, 2023 – August 15, 2053 and $5,775,820 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 4.50%, and maturity dates ranging from November 13, 2023 – October 22, 2071; a total value of $209,453,973.

 

See Accompanying Notes to the Financial Statements.

 

176    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (cont.)

 

 

(b) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(c) 

Investment in affiliated company. Northern Trust Investments, Inc., the Investment Adviser of the Fund, is a subsidiary of Northern Trust Corporation.

 

(d) 

Represents less than 0.05% of net assets.

 

(e) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $167,151,673.

 

(f) 

Variable or floating rate security, linked to the referenced benchmark. The interest rate shown is the rate in effect as of October 31, 2023.

 

Percentages shown are based on Net Assets.

Abbreviations

 

CVR – Contingent Value Rights

REIT – Real Estate Investment Trust

SOFR – Secured Overnight Financing Rate

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

   

Aggregate gross unrealized appreciation

   $ 524,557,601  

Aggregate gross unrealized depreciation

     (54,592,043

Net unrealized appreciation

   $ 469,965,558  

Federal income tax cost

   $ 1,020,214,088  

 

Investment in a company which was affiliated for the period ended October 31, 2023, was as follows:

 

Security   Value
October 31,
2022
    Purchases
at Cost
    Sales
Proceeds
    Shares
October 31,
2023
    Value
October 31,
2023
    Change in
Unrealized
Appreciation
(Depreciation)
    Dividend
Income
    Realized
Loss
 

Northern Trust Corp.

  $ 564,807     $ 210,086     $ 188,705       6,970     $ 459,393     $ (110,312   $ 19,468     $ (16,483

 

 

Futures Contracts

FlexShares® Morningstar US Market Factor Tilt Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

 

Russell 2000 E-Mini Index

    33       12/15/2023       USD     $ 2,752,860     $ (260,959

S&P 500 E-Mini Index

    36       12/15/2023       USD       7,582,050       (370,690

S&P Midcap 400 E-Mini Index

    6       12/15/2023       USD       1,425,060       (98,957
                                    $ (730,606

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Abbreviations:

 

USD – US Dollar

 

Security Type   % of Net Assets  

Common Stocks

    99.1

Warrants

     0.0   

Rights

     0.0   

Securities Lending Reinvestments

    12.5  

Others(1)

    (11.6
      100.0

 

Amount represents less than 0.05%.

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     177  


Table of Contents

 

Schedule of Investments

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 98.4%  
Aerospace & Defense – 1.0%  

Airbus SE

    9,087     $ 1,212,914  

Babcock International Group plc* (a)

    29,289       138,893  

BAE Systems plc

    46,839       627,478  

Bombardier, Inc., Class B*

    1,886       60,442  

CAE, Inc.*

    4,716       98,380  

Chemring Group plc

    15,334       52,007  

Dassault Aviation SA

    369       73,131  

Elbit Systems Ltd.

    412       76,411  

Hensoldt AG

    800       23,592  

INVISIO AB

    2,552       38,282  

Kongsberg Gruppen ASA

    1,540       62,859  

Leonardo SpA

    8,715       131,129  

LISI SA

    880       20,324  

Melrose Industries plc

    22,161       125,582  

Montana Aerospace AG* (b)

    1,496       17,951  

MTU Aero Engines AG

    702       131,337  

QinetiQ Group plc

    14,473       58,131  

Rheinmetall AG

    741       211,787  

Rolls-Royce Holdings plc*

    130,611       341,387  

Saab AB, Class B

    1,596       81,710  

Safran SA

    5,148       800,000  

Senior plc

    16,810       31,903  

Singapore Technologies Engineering Ltd.

    17,900       49,125  

Thales SA

    1,521       223,711  
              4,688,466  
Air Freight & Logistics – 0.7%  

bpost SA(a)

    33,228       179,825  

Cargojet, Inc.

    943       53,663  

Cia de Distribucion Integral Logista Holdings SA

    2,419       59,269  

Deutsche Post AG

    20,124       781,925  

DSV A/S

    2,730       406,715  

Freightways Group Ltd.(a)

    12,878       55,804  

Hamakyorex Co. Ltd.

    3,900       96,699  

ID Logistics Group SACA*

    81       21,918  

InPost SA*

    3,608       35,574  
Investments   Shares     Value  
Air Freight & Logistics – (continued)  

International Distributions Services plc*

    14,455     $ 44,307  

Kerry Logistics Network Ltd.

    18,500       15,676  

Konoike Transport Co. Ltd.(a)

    11,700       153,275  

Mainfreight Ltd.(a)

    1,312       43,681  

Mitsui-Soko Holdings Co. Ltd.

    7,800       220,436  

Nippon Express Holdings, Inc.

    1,600       81,550  

PostNL NV(a)

    25,992       48,312  

Sankyu, Inc.

    1,333       39,758  

SBS Holdings, Inc.(a)

    7,800       137,309  

Senko Group Holdings Co. Ltd.

    46,800       319,839  

SG Holdings Co. Ltd.

    8,000       112,622  

Trancom Co. Ltd.

    900       41,183  

Yamato Holdings Co. Ltd.

    6,200       102,511  
              3,051,851  
Automobile Components – 1.4%  

Aisan Industry Co. Ltd.(a)

    12,000       93,975  

Aisin Corp.

    4,100       140,831  

ARB Corp. Ltd.(a)

    4,845       89,482  

Brembo SpA

    1,435       15,396  

Bridgestone Corp.

    11,700       437,808  

CIE Automotive SA

    2,091       53,177  

Cie Generale des Etablissements Michelin SCA

    14,274       422,755  

Cie Plastic Omnium SE

    19,227       215,423  

Continental AG

    2,223       144,366  

Denso Corp.

    31,200       453,131  

Dometic Group AB(c)

    5,962       36,660  

Dowlais Group plc

    75,855       92,046  

Eagle Industry Co. Ltd.(a)

    8,200       88,419  

Exedy Corp.

    11,700       193,371  

FCC Co. Ltd.

    11,700       137,515  

Forvia SE*

    2,542       42,561  

Gestamp Automocion SA(b)

    50,388       184,919  

G-Tekt Corp.

    8,000       92,284  

GUD Holdings Ltd.(a)

    6,543       44,078  

Hella GmbH & Co. KGaA

    328       24,927  

Johnson Electric Holdings Ltd.(a)

    136,500       169,042  

JTEKT Corp.

    6,700       54,261  

Koito Manufacturing Co. Ltd.

    5,000       73,938  

 

See Accompanying Notes to the Financial Statements.

 

178    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Automobile Components – (continued)  

KYB Corp.(a)

    7,800     $ 227,390  

Linamar Corp.

    1,066       46,042  

Magna International, Inc.(a)

    5,499       263,968  

Musashi Seimitsu Industry Co. Ltd.

    4,100       38,849  

NHK Spring Co. Ltd.

    2,900       20,240  

Nifco, Inc.

    2,400       55,482  

Niterra Co. Ltd.

    2,700       59,725  

NOK Corp.(a)

    4,100       47,837  

Nokian Renkaat OYJ(a)

    8,364       63,017  

Pacific Industrial Co. Ltd.

    23,400       211,526  

Pirelli & C SpA(b)

    3,854       17,114  

PWR Holdings Ltd.

    3,772       23,453  

Schaeffler AG (Preference)

    55,380       285,893  

Seiren Co. Ltd.

    4,100       60,182  

Shoei Co. Ltd.(a)

    1,600       21,056  

Stanley Electric Co. Ltd.

    4,100       64,690  

Sumitomo Electric Industries Ltd.

    19,500       202,024  

Tokai Rika Co. Ltd.(a)

    18,000       278,596  

Topre Corp.(a)

    19,500       206,530  

Toyo Tire Corp.

    4,500       65,846  

Toyoda Gosei Co. Ltd.

    2,000       39,156  

Toyota Boshoku Corp.

    2,700       46,300  

TS Tech Co. Ltd.

    4,700       52,091  

Valeo SE

    4,746       62,406  

Vitesco Technologies Group AG*

    7,254       706,175  

Yokohama Rubber Co. Ltd. (The)

    4,100       74,625  
              6,540,578  
Automobiles – 2.3%  

Aston Martin Lagonda Global Holdings plc* (b)

    16,400       43,542  

Bayerische Motoren Werke AG

    5,850       541,856  

Bayerische Motoren Werke AG (Preference)

    1,198       101,493  

Ferrari NV

    1,872       564,920  

Honda Motor Co. Ltd.

    105,300       1,047,472  

Isuzu Motors Ltd.

    15,600       171,044  

Mazda Motor Corp.

    12,400       116,594  

Mercedes-Benz Group AG

    16,575       971,121  

Mitsubishi Motors Corp.

    13,500       43,020  
Investments   Shares     Value  
Automobiles – (continued)  

Nissan Motor Co. Ltd.

    42,900     $ 160,728  

Piaggio & C SpA

    48,438       129,943  

PIERER Mobility AG

    440       25,190  

Porsche Automobil Holding SE (Preference)

    3,432       152,904  

Renault SA

    4,056       141,692  

Stellantis NV

    46,176       859,021  

Subaru Corp.

    12,100       204,496  

Suzuki Motor Corp.

    7,800       297,898  

Toyota Motor Corp.(a)

    261,300       4,468,731  

Trigano SA

    2,769       362,342  

Volkswagen AG (Preference)

    3,549       374,492  

Volvo Car AB, Class B* (a)

    10,332       35,428  

Yamaha Motor Co. Ltd.(a)

    7,800       187,320  
              11,001,247  
Banks – 11.2%  

77 Bank Ltd. (The)

    27,300       601,179  

ABN AMRO Bank NV, CVA(b)

    8,612       115,470  

AIB Group plc

    18,788       81,302  

Aktia Bank OYJ(a)

    19,734       186,061  

Alior Bank SA*

    2,640       41,461  

AMCO - Asset Management Co. SpA* ‡ (a)

    239        

ANZ Group Holdings Ltd.

    43,329       677,888  

Aozora Bank Ltd.(a)

    2,900       58,710  

Awa Bank Ltd. (The)(a)

    15,600       256,386  

Banca Popolare di Sondrio SpA

    154,596       841,551  

Banco Bilbao Vizcaya Argentaria SA(a)

    123,318       967,436  

Banco BPM SpA

    30,638       156,190  

Banco Comercial Portugues SA, Class R*

    189,546       58,021  

Banco de Sabadell SA

    119,847       148,340  

Banco Santander SA(a)

    347,958       1,274,766  

Bank Hapoalim BM

    25,779       183,965  

Bank Leumi Le-Israel BM

    31,902       204,949  

Bank Millennium SA*

    25,740       44,712  

Bank of Cyprus Holdings plc

    129,480       395,936  

Bank of East Asia Ltd. (The)

    24,600       29,176  

Bank of Georgia Group plc

    13,104       529,505  

Bank of Ireland Group plc

    21,021       187,752  

Bank of Montreal

    15,171       1,145,161  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     179  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Banks – (continued)  

Bank of Nova Scotia (The)

    25,194     $ 1,019,012  

Bank of Queensland Ltd.(a)

    13,492       43,567  

Bank Polska Kasa Opieki SA

    3,907       118,397  

Bankinter SA(a)

    13,940       87,848  

Banque Cantonale de Geneve

    663       163,920  

Banque Cantonale Vaudoise (Registered)(a)

    410       46,224  

Barclays plc

    303,849       485,217  

BAWAG Group AG(b)

    2,105       93,316  

Bendigo & Adelaide Bank Ltd.

    16,482       90,790  

Berner Kantonalbank AG (Registered)

    328       85,780  

BNP Paribas SA

    22,464       1,289,086  

BPER Banca

    28,167       91,372  

CaixaBank SA

    80,145       324,875  

Canadian Imperial Bank of Commerce

    19,865       699,872  

Canadian Western Bank

    33,891       670,862  

Chiba Bank Ltd. (The)

    17,000       125,666  

Chugin Financial Group, Inc.

    66,300       524,683  

Close Brothers Group plc(a)

    52,338       506,171  

Commerzbank AG

    21,489       230,546  

Commonwealth Bank of Australia

    24,726       1,511,673  

Concordia Financial Group Ltd.

    30,921       142,207  

Credit Agricole SA

    22,230       267,350  

Credito Emiliano SpA

    26,715       216,019  

Dah Sing Banking Group Ltd.

    149,440       97,977  

Dah Sing Financial Holdings Ltd.

    62,400       140,995  

Daishi Hokuetsu Financial Group, Inc.

    15,600       403,275  

Danske Bank A/S

    13,845       324,001  

DBS Group Holdings Ltd.

    27,356       655,921  

DNB Bank ASA

    19,344       348,555  

EQB, Inc.

    9,048       448,538  

Erste Group Bank AG

    7,020       250,430  

FIBI Holdings Ltd.

    533       18,735  

FinecoBank Banca Fineco SpA

    8,736       102,635  

First International Bank of Israel Ltd. (The)

    1,144       38,882  

Fukuoka Financial Group, Inc.

    2,800       73,159  

Graubuendner Kantonalbank

    7       12,692  
Investments   Shares     Value  
Banks – (continued)  

Gunma Bank Ltd. (The)

    16,400     $ 78,619  

Hachijuni Bank Ltd. (The)

    15,500       87,343  

Hang Seng Bank Ltd.

    11,700       134,052  

Heartland Group Holdings Ltd.(a)

    222,222       197,761  

Hirogin Holdings, Inc.

    9,200       57,960  

Hokkoku Financial Holdings, Inc.

    1,300       42,619  

Hokuhoku Financial Group, Inc.

    42,900       495,300  

HSBC Holdings plc

    417,651       3,001,768  

Hyakugo Bank Ltd. (The)

    85,800       321,229  

ING Bank Slaski SA*

    1,281       66,421  

ING Groep NV

    74,334       945,052  

Intesa Sanpaolo SpA(a)

    331,695       861,253  

Israel Discount Bank Ltd., Class A

    28,410       124,650  

Iyogin Holdings, Inc.

    8,200       58,504  

Japan Post Bank Co. Ltd.

    27,300       252,279  

Judo Capital Holdings Ltd.* (a)

    31,857       17,044  

Juroku Financial Group, Inc.(a)

    11,700       312,886  

Jyske Bank A/S (Registered)*

    1,292       90,789  

KBC Ancora

    803       30,301  

KBC Group NV

    7,098       389,384  

Keiyo Bank Ltd. (The)

    42,900       192,908  

Kiyo Bank Ltd. (The)(a)

    21,700       221,807  

Kyoto Financial Group, Inc.

    1,600       89,907  

Kyushu Financial Group, Inc.

    12,000       74,807  

Laurentian Bank of Canada(a)

    15,054       275,434  

Liechtensteinische Landesbank AG

    1,025       70,845  

Lloyds Banking Group plc

    1,377,207       667,466  

Luzerner Kantonalbank AG (Registered)

    697       54,685  

Mebuki Financial Group, Inc.(a)

    28,010       84,153  

Mediobanca Banca di Credito Finanziario SpA(a)

    13,104       156,100  

Mitsubishi UFJ Financial Group, Inc.

    269,100       2,233,542  

Mizrahi Tefahot Bank Ltd.

    3,510       108,452  

Mizuho Financial Group, Inc.

    54,600       917,721  

Musashino Bank Ltd. (The)

    11,700       218,402  

Nanto Bank Ltd. (The)

    11,700       208,591  

National Australia Bank Ltd.

    47,502       843,629  

National Bank of Canada

    5,460       339,104  

NatWest Group plc

    115,986       250,804  

 

See Accompanying Notes to the Financial Statements.

 

180    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Banks – (continued)  

Nishi-Nippon Financial Holdings, Inc.

    46,800     $ 551,915  

Nordea Bank Abp

    71,799       753,807  

Norion Bank AB*

    1,353       4,366  

North Pacific Bank Ltd.

    101,400       257,777  

Oberbank AG

    902       60,637  

Ogaki Kyoritsu Bank Ltd. (The)

    15,600       216,007  

Oversea-Chinese Banking Corp. Ltd.

    78,000       721,901  

Powszechna Kasa Oszczednosci Bank Polski SA*

    15,902       164,228  

Raiffeisen Bank International AG*

    1,107       15,995  

Resona Holdings, Inc.

    46,800       248,300  

Ringkjoebing Landbobank A/S

    492       66,923  

Royal Bank of Canada

    20,814       1,660,622  

San-In Godo Bank Ltd. (The)

    54,600       372,785  

Santander Bank Polska SA*

    836       90,544  

Senshu Ikeda Holdings, Inc.(a)

    101,400       236,351  

Seven Bank Ltd.

    28,700       56,530  

Shiga Bank Ltd. (The)

    16,600       435,155  

Shizuoka Financial Group, Inc.

    13,100       110,417  

Skandinaviska Enskilda Banken AB, Class A

    35,763       397,877  

Skandinaviska Enskilda Banken AB, Class C

    684       7,849  

Societe Generale SA

    15,561       347,792  

Spar Nord Bank A/S

    25,311       382,818  

SpareBank 1 Nord Norge

    32,253       272,535  

Sparebank 1 Oestlandet

    1,329       14,751  

SpareBank 1 SMN

    3,103       37,608  

SpareBank 1 Sorost-Norge

    25,506       135,616  

SpareBank 1 SR-Bank ASA

    4,796       52,031  

Sparebanken Vest

    32,136       294,559  

St Galler Kantonalbank AG (Registered)

    41       22,233  

Standard Chartered plc

    47,814       365,525  

Sumitomo Mitsui Financial Group, Inc.

    28,600       1,363,478  

Sumitomo Mitsui Trust Holdings, Inc.

    7,800       288,937  

Suruga Bank Ltd.(a)

    67,100       284,448  
Investments   Shares     Value  
Banks – (continued)  

Svenska Handelsbanken AB, Class A

    31,590     $ 268,607  

Svenska Handelsbanken AB, Class B(a)

    908       9,346  

Swedbank AB, Class A

    18,681       305,563  

Sydbank A/S

    19,656       851,783  

TBC Bank Group plc

    14,586       475,228  

Tokyo Kiraboshi Financial Group, Inc.(a)

    11,700       340,312  

Toronto-Dominion Bank (The)

    38,844       2,167,373  

Unicaja Banco SA(a) (b)

    441,129       457,880  

UniCredit SpA

    37,947       947,598  

United Overseas Bank Ltd.

    31,226       615,836  

Valiant Holding AG (Registered)

    5,499       598,210  

Virgin Money UK plc

    30,176       54,541  

Walliser Kantonalbank (Registered)

    485       58,090  

Westpac Banking Corp.(a)

    50,739       661,783  

Yamaguchi Financial Group, Inc.

    4,100       37,198  

Zuger Kantonalbank AG

    10       86,369  
              52,737,770  
Beverages – 1.0%  

Anheuser-Busch InBev SA/NV

    15,483       877,683  

Asahi Group Holdings Ltd.

    6,700       240,491  

Britvic plc

    3,520       35,794  

Budweiser Brewing Co. APAC Ltd.(b)

    22,600       42,978  

C&C Group plc(a)

    27,840       47,025  

Carlsberg A/S, Class B

    1,521       180,934  

Coca-Cola Europacific Partners plc(a)

    3,092       180,913  

Coca-Cola HBC AG

    3,806       98,464  

Davide Campari-Milano NV(a)

    9,602       105,857  

Diageo plc

    33,306       1,255,699  

Fevertree Drinks plc

    5,658       68,932  

Heineken Holding NV

    1,391       105,567  

Heineken NV

    3,627       324,871  

Ito En Ltd.

    800       25,868  

Kirin Holdings Co. Ltd.

    11,700       163,744  

Pernod Ricard SA

    3,042       538,578  

Primo Water Corp.

    8,385       109,263  

Remy Cointreau SA

    398       45,077  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     181  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Beverages – (continued)  

Royal Unibrew A/S

    836     $ 60,356  

Sapporo Holdings Ltd.

    1,900       66,543  

Suntory Beverage & Food Ltd.

    1,800       53,223  

Takara Holdings, Inc.

    4,100       33,868  

Treasury Wine Estates Ltd.

    8,668       66,407  
              4,728,135  
Biotechnology – 0.5%  

Argenx SE*

    897       421,064  

Bavarian Nordic A/S* (a)

    3,730       70,914  

BioGaia AB, Class B

    5,670       50,546  

BoneSupport Holding AB* (b)

    2,665       34,634  

Clinuvel Pharmaceuticals Ltd.(a)

    1,368       12,724  

CSL Ltd.

    7,137       1,049,941  

Galapagos NV* (a)

    2,964       97,842  

Genmab A/S*

    975       274,770  

Genus plc

    3,640       94,435  

Grifols SA*

    6,478       72,478  

Idorsia Ltd.* (a)

    7,462       14,079  

Imugene Ltd.*

    411,693       11,208  

Nykode Therapeutics ASA*

    11,562       17,770  

PeptiDream, Inc.*

    2,500       18,002  

Pharma Mar SA

    824       28,045  

PureTech Health plc*

    12,751       23,457  

Swedish Orphan Biovitrum AB*

    3,561       73,115  

Takara Bio, Inc.

    400       3,500  

Telix Pharmaceuticals Ltd.*

    4,018       22,489  

Valneva SE* (a)

    3,485       19,707  

Vitrolife AB(a)

    880       11,429  

Zealand Pharma A/S, Class A*

    2,519       104,451  
              2,526,600  
Broadline Retail – 0.6%  

Allegro.eu SA* (b)

    6,278       44,917  

ASKUL Corp.(a)

    1,000       12,922  

B&M European Value Retail SA

    16,102       103,322  

Belluna Co. Ltd.(a)

    15,600       63,041  

Boozt AB* (b)

    2,508       17,509  

Canadian Tire Corp. Ltd., Class A(a)

    1,108       106,758  

Dollarama, Inc.(a)

    3,939       268,701  

Europris ASA(b)

    12,997       73,584  
Investments   Shares     Value  
Broadline Retail – (continued)  

Harvey Norman Holdings Ltd.(a)

    17,952     $ 41,714  

Isetan Mitsukoshi Holdings Ltd.

    5,000       55,928  

Izumi Co. Ltd.

    1,300       32,645  

J Front Retailing Co. Ltd.

    4,100       38,727  

Mercari, Inc.* (a)

    1,900       37,650  

Next plc

    2,106       175,923  

Pan Pacific International Holdings Corp.

    7,800       149,696  

Prosus NV*

    22,659       633,013  

Rakuten Group, Inc.

    35,100       129,048  

Ryohin Keikaku Co. Ltd.

    6,000       84,050  

Seria Co. Ltd.

    1,000       13,853  

Takashimaya Co. Ltd.

    4,300       58,007  

THG plc, Class B* (a)

    50,904       43,189  

Tokmanni Group Corp.(a)

    14,664       197,623  

Warehouse Group Ltd. (The)(a)

    30,712       30,726  

Wesfarmers Ltd.

    15,834       506,478  
              2,919,024  
Building Products – 1.0%  

AGC, Inc.

    4,800       161,992  

Arbonia AG

    3,837       32,634  

Assa Abloy AB, Class B

    14,118       300,110  

Belimo Holding AG (Registered)

    123       51,495  

Bunka Shutter Co. Ltd.

    21,200       177,501  

Carel Industries SpA(b)

    840       17,474  

Central Glass Co. Ltd.

    7,800       146,374  

Cie de Saint-Gobain SA

    11,076       601,757  

Daikin Industries Ltd.

    4,200       599,861  

dormakaba Holding AG

    126       57,320  

Fletcher Building Ltd.(a)

    3,362       8,448  

Forbo Holding AG (Registered)

    41       45,052  

Geberit AG (Registered)

    468       216,914  

Genuit Group plc

    15,480       49,872  

Inwido AB

    20,748       211,516  

James Halstead plc

    18,023       41,881  

Kingspan Group plc

    2,341       157,077  

Lindab International AB

    4,346       66,789  

Lixil Corp.

    6,000       65,410  

Munters Group AB(b)

    4,428       53,821  

Nibe Industrier AB, Class B(a)

    22,581       129,714  

Nichias Corp.(a)

    20,300       398,909  

Nichiha Corp.

    11,700       228,677  

 

See Accompanying Notes to the Financial Statements.

 

182    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Building Products – (continued)  

Nitto Boseki Co. Ltd.

    1,900     $ 42,154  

Reliance Worldwide Corp. Ltd.(a)

    13,860       30,626  

ROCKWOOL A/S, Class A

    88       19,441  

ROCKWOOL A/S, Class B

    174       38,637  

Sanwa Holdings Corp.

    5,400       71,973  

Schweiter Technologies AG

    56       31,260  

Sekisui Jushi Corp.(a)

    11,700       189,045  

Systemair AB

    4,018       22,009  

Takara Standard Co. Ltd.(a)

    19,500       235,115  

Takasago Thermal Engineering Co. Ltd.

    4,100       80,378  

TOTO Ltd.

    3,000       71,769  

Uponor OYJ

    3,440       103,846  

Volution Group plc

    11,378       50,063  
              4,806,914  
Capital Markets – 3.0%  

3i Group plc

    19,968       468,733  

abrdn plc

    16,031       30,473  

AJ Bell plc

    21,520       66,119  

Allfunds Group plc

    4,048       20,615  

Alpha Group International plc

    1,804       34,149  

Altshuler Shaham Finance Ltd.(a)

    22,509       25,260  

Amundi SA(b)

    1,312       68,258  

Anima Holding SpA(b)

    65,754       268,000  

Ashmore Group plc

    22,554       46,389  

ASX Ltd.(a)

    3,471       123,355  

Avanza Bank Holding AB(a)

    2,704       45,500  

Azimut Holding SpA

    2,501       52,554  

Banca Generali SpA

    1,397       45,214  

Brederode SA(a)

    285       25,305  

Bridgepoint Group plc(b)

    16,760       36,912  

Brookfield Asset Management Ltd., Class A

    5,265       150,754  

Brookfield Corp., Class A(a)

    29,914       870,524  

Bure Equity AB

    968       19,286  

CI Financial Corp.

    51,441       465,776  

Cie Financiere Tradition SA

    615       78,391  

Daiwa Securities Group, Inc.

    27,300       155,748  

Deutsche Bank AG (Registered)

    43,563       476,853  

Deutsche Boerse AG

    2,808       460,642  
Investments   Shares     Value  
Capital Markets – (continued)  

EFG International AG

    1,680     $ 20,085  

EQT AB(a)

    4,756       86,371  

Euronext NV(b)

    1,394       96,954  

Fairfax India Holdings Corp.* (a) (b)

    4,510       54,977  

flatexDEGIRO AG*

    4,400       44,424  

Flow Traders Ltd.(a)

    11,193       204,321  

Gimv NV(a)

    6,456       249,076  

GMO Financial Holdings, Inc.(a)

    8,200       36,981  

Hargreaves Lansdown plc

    5,061       43,394  

Hong Kong Exchanges & Clearing Ltd.

    17,358       610,057  

HUB24 Ltd.

    4,532       86,743  

iFAST Corp. Ltd.

    16,400       79,004  

IG Group Holdings plc

    8,448       65,403  

IGM Financial, Inc.(a)

    2,200       49,475  

Impax Asset Management Group plc

    2,132       9,960  

Insignia Financial Ltd.(a)

    223,002       290,859  

IntegraFin Holdings plc(b)

    15,498       41,148  

Intermediate Capital Group plc

    6,435       101,863  

Investec plc

    16,636       92,073  

IP Group plc

    362,154       192,701  

JAFCO Group Co. Ltd.

    5,000       53,452  

Japan Exchange Group, Inc.

    7,800       152,683  

JTC plc(b)

    7,558       58,558  

Julius Baer Group Ltd.

    4,446       261,860  

Jupiter Fund Management plc

    181,233       172,635  

Kingkey Financial International Holdings Ltd.* (a)

    410,000       45,587  

Leonteq AG

    2,964       126,859  

London Stock Exchange Group plc

    6,162       619,119  

Macquarie Group Ltd.

    5,304       540,607  

Magellan Financial Group Ltd.

    7,995       32,853  

Man Group plc

    32,340       86,138  

Matsui Securities Co. Ltd.

    8,200       40,609  

Monex Group, Inc.(a)

    12,300       53,360  

Ninety One plc(a)

    15,252       29,260  

Nomura Holdings, Inc.

    66,300       253,870  

Nordnet AB publ

    2,420       34,115  

Okasan Securities Group, Inc.

    78,000       348,681  

Onex Corp.

    1,394       78,042  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     183  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Capital Markets – (continued)  

Partners Group Holding AG

    312     $ 328,028  

Perpetual Ltd.(a)

    5,289       64,128  

Pinnacle Investment Management Group Ltd.(a)

    10,281       50,383  

Quilter plc(a) (b)

    475,137       460,667  

Rathbones Group plc

    3,608       65,584  

Ratos AB, Class B

    71,097       197,395  

SBI Holdings, Inc.

    4,800       102,279  

Schroders plc

    12,054       54,017  

Singapore Exchange Ltd.

    12,300       85,020  

Sprott, Inc.(a)

    1,056       30,587  

St James’s Place plc

    7,920       61,469  

Swissquote Group Holding SA (Registered)

    205       39,173  

Tamburi Investment Partners SpA

    6,642       55,533  

Tel Aviv Stock Exchange Ltd.*

    4,141       18,425  

Tikehau Capital SCA(a)

    1,672       34,462  

TMX Group Ltd.

    4,180       86,957  

Tokai Tokyo Financial Holdings, Inc.

    28,700       96,649  

TP ICAP Group plc

    265,473       506,079  

UBS Group AG (Registered)

    63,882       1,489,562  

UOB-Kay Hian Holdings Ltd.

    5,767       5,514  

Van Lanschot Kempen NV, CVA

    13,494       361,571  

Vontobel Holding AG (Registered)

    339       19,743  

VZ Holding AG

    285       27,935  

WealthNavi, Inc.* (a)

    2,400       17,416  

XTB SA(b)

    13,760       106,841  

Yangzijiang Financial Holding Ltd.

    881,400       205,867  
              14,050,251  
Chemicals – 3.1%  

ADEKA Corp.

    2,300       37,952  

Aica Kogyo Co. Ltd.

    1,500       34,250  

Air Liquide SA

    7,683       1,312,992  

Air Water, Inc.

    4,100       51,343  

Akzo Nobel NV

    2,730       182,544  

Arkema SA

    1,521       142,088  

Asahi Kasei Corp.

    35,100       214,014  

ASAHI YUKIZAI Corp.

    4,000       96,669  
Investments   Shares     Value  
Chemicals – (continued)  

BASF SE

    18,252     $ 839,893  

Borregaard ASA

    1,692       22,930  

C Uyemura & Co. Ltd.

    600       32,329  

Chr Hansen Holding A/S

    1,546       105,200  

Clariant AG (Registered)

    5,002       70,739  

Corbion NV

    3,321       57,323  

Covestro AG* (b)

    2,730       137,644  

Croda International plc

    2,262       120,168  

Daicel Corp.

    8,900       74,899  

Denka Co. Ltd.

    1,400       25,084  

DIC Corp.

    2,899       45,319  

DSM-Firmenich AG

    3,198       289,319  

Elementis plc*

    41,976       60,308  

Elkem ASA(b)

    5,870       9,079  

EMS-Chemie Holding AG (Registered)(a)

    126       85,841  

Essentra plc

    16,940       30,546  

Evonik Industries AG

    4,160       76,334  

FUCHS SE

    711       23,823  

FUCHS SE (Preference)

    1,182       47,876  

Fujimori Kogyo Co. Ltd.

    4,000       99,838  

Fuso Chemical Co. Ltd.

    1,100       29,453  

Givaudan SA (Registered)

    117       388,264  

Grupa Azoty SA*

    3,720       19,421  

Hexpol AB

    5,784       51,096  

ICL Group Ltd.

    18,163       87,997  

Incitec Pivot Ltd.

    36,784       63,814  

Israel Corp. Ltd.*

    104       22,396  

JCU Corp.

    1,400       30,090  

Johnson Matthey plc

    4,320       78,317  

JSR Corp.

    3,100       82,267  

K+S AG (Registered)

    4,961       83,219  

Kaneka Corp.

    1,300       31,495  

Kansai Paint Co. Ltd.

    5,300       76,957  

Kanto Denka Kogyo Co. Ltd.(a)

    19,500       101,720  

Kemira OYJ

    2,992       48,324  

KH Neochem Co. Ltd.(a)

    11,700       175,139  

Kumiai Chemical Industry Co. Ltd.(a)

    31,200       224,969  

Kuraray Co. Ltd.

    8,000       90,858  

Kureha Corp.

    800       47,067  

LANXESS AG

    2,156       49,224  

Lenzing AG* (a)

    1,068       41,486  

 

See Accompanying Notes to the Financial Statements.

 

184    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Chemicals – (continued)  

Lintec Corp.

    15,600     $ 255,665  

Methanex Corp.

    1,290       53,208  

Mitsubishi Chemical Group Corp.

    31,200       174,722  

Mitsubishi Gas Chemical Co., Inc.

    6,200       83,004  

Mitsui Chemicals, Inc.

    5,300       131,691  

Nihon Nohyaku Co. Ltd.

    16,400       69,306  

Nihon Parkerizing Co. Ltd.

    4,100       29,347  

Nippon Kayaku Co. Ltd.

    3,800       32,343  

Nippon Paint Holdings Co. Ltd.

    15,600       103,729  

Nippon Pillar Packing Co. Ltd.

    7,800       191,594  

Nippon Sanso Holdings Corp.(a)

    2,800       69,720  

Nippon Shokubai Co. Ltd.

    1,400       51,629  

Nippon Soda Co. Ltd.

    9,539       338,868  

Nissan Chemical Corp.

    2,900       116,712  

Nitto Denko Corp.(a)

    1,800       115,087  

NOF Corp.

    1,200       47,011  

Novozymes A/S, Class B(a)

    3,393       152,127  

Nufarm Ltd.(a)

    20,418       55,977  

Nutrien Ltd.

    10,218       548,198  

OCI NV(a)

    1,933       44,970  

Okamoto Industries, Inc.(a)

    5,700       195,715  

Orica Ltd.(a)

    6,731       62,477  

Osaka Soda Co. Ltd.(a)

    8,400       486,989  

Recticel SA(a)

    2,200       19,743  

Resonac Holdings Corp.

    4,200       67,183  

Sanyo Chemical Industries Ltd.

    3,900       103,136  

Shikoku Kasei Holdings Corp.

    3,200       35,836  

Shin-Etsu Chemical Co. Ltd.

    42,900       1,265,655  

Shin-Etsu Polymer Co. Ltd.

    800       7,163  

Sika AG (Registered)

    2,262       539,122  

SOL SpA

    3,009       86,510  

Solvay SA

    1,599       168,575  

Sumitomo Chemical Co. Ltd.(a)

    46,800       118,047  

Symrise AG, Class A

    2,067       210,180  

T Hasegawa Co. Ltd.

    900       18,541  

Taiyo Holdings Co. Ltd.(a)

    1,800       29,001  

Teijin Ltd.

    4,100       36,764  

Tessenderlo Group SA(a)

    8,931       259,602  

Toagosei Co. Ltd.

    42,900       389,639  
Investments   Shares     Value  
Chemicals – (continued)  

Tokai Carbon Co. Ltd.

    6,600     $ 49,986  

Tokuyama Corp.

    23,400       350,896  

Tokyo Ohka Kogyo Co. Ltd.

    700       39,838  

Toray Industries, Inc.

    19,500       93,325  

Tosoh Corp.

    7,800       94,638  

Toyo Gosei Co. Ltd.(a)

    300       12,321  

Toyo Ink SC Holdings Co. Ltd.(a)

    13,300       224,382  

Toyobo Co. Ltd.

    27,300       181,886  

UBE Corp.

    4,100       62,646  

Umicore SA

    3,034       71,996  

Victrex plc

    5,289       88,375  

Wacker Chemie AG

    256       31,253  

W-Scope Corp.*

    4,100       23,364  

Yara International ASA

    2,583       84,391  

Zeon Corp.

    3,600       29,417  
              14,353,417  
Commercial Services & Supplies – 1.1%  

Aker Carbon Capture ASA*

    23,288       22,054  

Befesa SA(b)

    1,394       40,579  

Big Technologies plc*

    11,924       26,044  

Bilfinger SE

    9,360       342,514  

Boyd Group Services, Inc.

    372       63,354  

Brambles Ltd.

    22,737       188,731  

Bravida Holding AB(b)

    984       6,139  

Caverion OYJ

    8,888       80,136  

Cleanaway Waste Management Ltd.(a)

    35,024       49,673  

Coor Service Management Holding AB(b)

    6,692       23,048  

Dai Nippon Printing Co. Ltd.(a)

    3,900       100,664  

Daiseki Co. Ltd.(a)

    1,499       40,928  

Derichebourg SA

    30,264       130,579  

DO & CO AG

    369       43,060  

Downer EDI Ltd.(a)

    229,515       547,847  

Duskin Co. Ltd.

    4,100       88,987  

Elis SA

    4,777       77,785  

GFL Environmental, Inc.

    2,416       69,526  

Intrum AB(a)

    26,715       136,771  

ISS A/S

    2,508       36,228  

Japan Elevator Service Holdings Co. Ltd.

    4,200       55,050  

Kokuyo Co. Ltd.

    4,100       63,025  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     185  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Commercial Services & Supplies – (continued)  

Loomis AB, Class B

    984     $ 25,488  

Matsuda Sangyo Co. Ltd.

    4,100       70,795  

Mitie Group plc

    481,455       575,458  

Mitsubishi Pencil Co. Ltd.

    1,800       22,036  

Nippon Kanzai Holdings Co. Ltd.

    1,300       21,426  

Okamura Corp.

    29,100       410,238  

Park24 Co. Ltd.*

    2,200       24,565  

Prestige International, Inc.

    4,000       16,085  

Prosegur Cash SA(b)

    90,528       49,184  

Prosegur Cia de Seguridad SA

    57,195       85,363  

RB Global, Inc.

    2,691       175,911  

Rentokil Initial plc

    35,256       178,313  

Sdiptech AB, Class B*

    1,958       38,309  

Secom Co. Ltd.

    2,700       186,305  

Securitas AB, Class B(a)

    11,275       90,078  

Serco Group plc

    59,046       102,459  

Smart Metering Systems plc

    7,215       55,945  

Societe BIC SA

    328       20,542  

Sohgo Security Services Co. Ltd.

    9,500       55,302  

SPIE SA

    2,992       78,557  

Takkt AG

    2,728       34,890  

TOPPAN Holdings, Inc.

    4,100       93,454  

Veridis Environment Ltd.* (a)

    2,870       14,855  

Waste Connections, Inc.

    3,744       484,259  
              5,142,539  
Communications Equipment – 0.2%  

Nokia OYJ

    79,911       265,223  

Spirent Communications plc

    25,338       29,901  

Telefonaktiebolaget LM Ericsson, Class A

    3,789       17,703  

Telefonaktiebolaget LM Ericsson, Class B

    65,169       291,703  

VTech Holdings Ltd.

    54,600       317,848  
              922,378  
Construction & Engineering – 2.0%  

Ackermans & van Haaren NV

    454       67,327  

ACS Actividades de Construccion y Servicios SA

    4,873       176,002  

AF Gruppen ASA

    704       7,335  
Investments   Shares     Value  
Construction & Engineering – (continued)  

Ashtrom Group Ltd.(a)

    1,861     $ 20,019  

Balfour Beatty plc

    18,286       68,609  

Bouygues SA

    2,760       96,884  

Burkhalter Holding AG

    615       57,307  

Chiyoda Corp.* (a)

    58,500       136,356  

Chudenko Corp.

    4,100       66,382  

Daiho Corp.

    3,900       99,016  

Eiffage SA

    1,560       141,313  

Elco Ltd.

    3,666       87,428  

Elecnor SA

    14,781       248,414  

Electra Ltd.

    15       4,745  

EXEO Group, Inc.

    4,100       84,629  

Ferrovial SE

    6,772       203,574  

Fugro NV*

    6,864       113,109  

Gold Finance Holdings Ltd.* ‡

    89,827        

Hazama Ando Corp.

    57,000       437,723  

HOCHTIEF AG

    442       45,598  

INFRONEER Holdings, Inc.

    4,100       42,951  

Instalco AB(a) (b)

    11,606       32,389  

JGC Holdings Corp.

    5,400       65,679  

Johns Lyng Group Ltd.(a)

    4,879       18,844  

Kajima Corp.

    11,800       193,154  

Kinden Corp.

    2,300       34,611  

Kumagai Gumi Co. Ltd.

    12,500       311,169  

Kvutzat Acro Ltd.(a)

    4,223       34,082  

Kyudenko Corp.

    2,100       62,191  

Maire Tecnimont SpA

    53,820       249,737  

MIRAIT ONE Corp.

    35,100       462,144  

Monadelphous Group Ltd.(a)

    7,216       64,192  

Morgan Sindall Group plc

    14,898       339,866  

NCC AB, Class B

    25,467       260,308  

Nippon Densetsu Kogyo Co. Ltd.

    1,700       22,933  

Nippon Road Co. Ltd. (The)

    6,900       90,029  

Nishimatsu Construction Co. Ltd.

    1,700       40,781  

NRW Holdings Ltd.(a)

    161,694       255,941  

NYAB OYJ(a)

    33,784       16,926  

Obayashi Corp.

    12,000       102,057  

Okumura Corp.

    11,700       355,377  

Peab AB, Class B(a)

    63,102       234,275  

Penta-Ocean Construction Co. Ltd.

    9,700       56,588  

Raito Kogyo Co. Ltd.

    3,200       41,203  

Raiznext Corp.(a)

    11,700       108,776  

 

See Accompanying Notes to the Financial Statements.

 

186    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Construction & Engineering – (continued)  

Sacyr SA(a)

    29,203     $ 84,145  

Sanki Engineering Co. Ltd.(a)

    17,200       199,093  

Shapir Engineering and Industry Ltd.(a)

    2,525       13,531  

Shikun & Binui Ltd.* (a)

    20,336       45,945  

Shimizu Corp.

    12,000       84,863  

Shinnihon Corp.

    12,300       98,030  

SHO-BOND Holdings Co. Ltd.

    1,200       46,908  

Skanska AB, Class B

    8,190       122,674  

SNC-Lavalin Group, Inc.

    2,068       57,381  

Stantec, Inc.

    1,758       107,449  

Sumitomo Densetsu Co. Ltd.(a)

    6,400       111,312  

Sumitomo Mitsui Construction Co. Ltd.

    62,400       164,812  

Sweco AB, Class B

    4,708       43,192  

Taihei Dengyo Kaisha Ltd.

    5,200       134,940  

Taikisha Ltd.

    1,000       28,855  

Taisei Corp.

    4,400       148,144  

Takamatsu Construction Group Co. Ltd.

    7,800       141,224  

Toa Corp.

    7,800       193,139  

Toda Corp.

    5,200       28,691  

Toenec Corp.

    4,000       108,290  

Toyo Construction Co. Ltd.

    8,200       66,544  

Veidekke ASA

    3,088       26,646  

Ventia Services Group Pty. Ltd.(a)

    28,618       49,829  

Vinci SA

    7,683       848,475  

Webuild SpA(a)

    28,249       50,820  

Worley Ltd.

    7,728       80,196  

WSP Global, Inc.

    1,677       219,239  

Yokogawa Bridge Holdings Corp.

    14,200       232,815  
              9,195,155  
Construction Materials – 0.7%  

Adbri Ltd.* (a)

    123,864       154,496  

Boral Ltd.* (a)

    3,476       9,904  

Breedon Group plc

    97,165       368,453  

Brickworks Ltd.(a)

    1,435       22,269  

Buzzi SpA

    3,148       83,186  

Cementir Holding NV

    17,199       143,071  
Investments   Shares     Value  
Construction Materials – (continued)  

CSR Ltd.

    24,887     $ 88,398  

Heidelberg Materials AG

    2,925       211,721  

Holcim AG

    11,583       713,779  

Ibstock plc(b)

    27,720       41,205  

Imerys SA

    1,103       29,170  

James Hardie Industries plc, CHDI*

    5,889       145,752  

Marshalls plc

    88,491       220,987  

Mitani Sekisan Co. Ltd.(a)

    1,200       35,894  

RHI Magnesita NV(a)

    11,037       343,660  

Sumitomo Osaka Cement Co. Ltd.

    1,700       39,210  

Taiheiyo Cement Corp.

    2,200       37,312  

Titan Cement International SA(a)

    12,324       232,913  

Vicat SACA

    5,226       160,193  

Wienerberger AG

    2,596       62,947  
              3,144,520  
Consumer Finance – 0.3%  

Acom Co. Ltd.

    20,500       47,770  

AEON Financial Service Co. Ltd.

    4,100       33,516  

Cembra Money Bank AG

    1,638       112,404  

Credit Corp. Group Ltd.(a)

    6,068       46,372  

Credit Saison Co. Ltd.

    2,100       31,137  

Direct Finance of Direct Group 2006 Ltd.(a)

    574       43,558  

goeasy Ltd.(a)

    4,290       339,924  

Gruppo MutuiOnline SpA

    1,056       29,691  

Isracard Ltd.

    15,211       47,375  

J Trust Co. Ltd.(a)

    32,800       102,659  

Jaccs Co. Ltd.

    9,500       323,055  

KRUK SA

    738       81,506  

Latitude Group Holdings Ltd.(a)

    88,452       66,084  

Marui Group Co. Ltd.

    3,200       50,067  

Orient Corp.

    4,100       30,402  

Sun Hung Kai & Co. Ltd.

    246,000       82,057  
              1,467,577  
Consumer Staples Distribution & Retail – 1.6%  

Aeon Co. Ltd.

    13,213       276,309  

Ain Holdings, Inc.

    800       22,408  

Alimentation Couche-Tard, Inc.

    11,271       612,892  

Arcs Co. Ltd.

    18,418       349,887  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     187  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Consumer Staples Distribution & Retail – (continued)  

Axfood AB

    1,496     $ 33,019  

Axial Retailing, Inc.

    7,800       198,032  

Belc Co. Ltd.

    800       37,294  

Carrefour SA

    11,934       209,144  

Casino Guichard Perrachon SA* (a)

    14,640       13,927  

Coles Group Ltd.

    20,046       193,809  

Cosmos Pharmaceutical Corp.(a)

    200       20,727  

Create SD Holdings Co. Ltd.

    500       10,647  

Dino Polska SA* (b)

    988       93,431  

Distribuidora Internacional de Alimentacion SA*

    3,367,945       43,431  

Empire Co. Ltd., Class A

    3,918       107,246  

Endeavour Group Ltd.

    17,056       53,347  

Etablissements Franz Colruyt NV

    1,044       43,114  

Fuji Co. Ltd.

    4,200       52,859  

George Weston Ltd.

    1,092       118,321  

GrainCorp Ltd., Class A(a)

    74,841       328,856  

HelloFresh SE*

    2,970       64,544  

Inageya Co. Ltd.(a)

    2,998       31,634  

J Sainsbury plc

    36,677       114,513  

Jeronimo Martins SGPS SA

    4,905       112,920  

Kansai Food Market Ltd.(a)

    8,200       72,771  

Kato Sangyo Co. Ltd.

    700       19,505  

Kesko OYJ, Class A

    2,248       38,683  

Kesko OYJ, Class B

    4,715       79,566  

Kobe Bussan Co. Ltd.(a)

    1,900       46,959  

Koninklijke Ahold Delhaize NV

    20,865       617,521  

Kusuri no Aoki Holdings Co. Ltd.

    600       38,988  

Life Corp.

    7,800       182,324  

Loblaw Cos. Ltd.

    2,340       191,178  

Marks & Spencer Group plc*

    46,416       122,109  

MARR SpA

    4,018       47,567  

MatsukiyoCocokara & Co.

    7,100       123,674  

Maxvalu Tokai Co. Ltd.

    500       9,865  

Metcash Ltd.

    18,048       42,052  

METRO AG*

    4,346       27,562  

Metro, Inc., Class A

    3,432       174,140  

Mitsubishi Shokuhin Co. Ltd.

    7,800       203,698  

North West Co., Inc. (The)

    2,419       61,614  

Ocado Group plc*

    13,301       75,100  

Oisix ra daichi, Inc.* (a)

    2,000       15,055  
Investments   Shares     Value  
Consumer Staples Distribution & Retail – (continued)  

Olam Group Ltd.

    28,700     $ 20,739  

Rami Levy Chain Stores Hashikma Marketing 2006 Ltd.

    574       30,931  

Redcare Pharmacy NV* (b)

    748       83,214  

Seven & i Holdings Co. Ltd.

    12,000       435,247  

Sheng Siong Group Ltd.

    17,900       20,251  

Shufersal Ltd.*

    3,578       15,062  

Sugi Holdings Co. Ltd.

    800       32,165  

Sundrug Co. Ltd.

    1,600       43,253  

Tesco plc

    143,715       470,332  

Tsuruha Holdings, Inc.

    900       65,667  

United Super Markets Holdings,
Inc.(a)

    2,000       14,144  

Valor Holdings Co. Ltd.

    15,600       242,480  

Welcia Holdings Co. Ltd.

    2,300       37,960  

Woolworths Group Ltd.

    19,383       432,232  
              7,275,919  
Containers & Packaging – 0.3%  

Billerud Aktiebolag

    5,485       50,811  

CCL Industries, Inc., Class B

    2,625       102,523  

DS Smith plc

    26,376       91,281  

FP Corp.

    1,200       22,907  

Fuji Seal International, Inc.

    2,000       22,094  

Huhtamaki OYJ

    2,051       70,262  

Mayr Melnhof Karton AG(a)

    275       32,265  

Metsa Board OYJ, Class B(a)

    3,813       28,777  

Orora Ltd.

    26,585       41,407  

Rengo Co. Ltd.

    5,200       34,240  

SIG Group AG

    5,850       128,500  

Smurfit Kappa Group plc(a)

    5,499       178,675  

Toyo Seikan Group Holdings Ltd.

    5,600       93,367  

Transcontinental, Inc., Class A

    24,141       177,547  

Verallia SA(b)

    1,364       44,319  

Vidrala SA

    560       41,494  

Winpak Ltd.

    1,716       46,675  
              1,207,144  
Distributors – 0.1%  

Arata Corp.

    5,700       210,017  

Bapcor Ltd.(a)

    17,917       60,578  

D’ieteren Group

    343       50,793  

 

See Accompanying Notes to the Financial Statements.

 

188    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Distributors – (continued)  

Inchcape plc

    6,396     $ 51,690  

Inter Cars SA

    205       27,729  

PALTAC Corp.

    800       25,672  
              426,479  
Diversified Consumer Services – 0.1%  

AcadeMedia AB(b)

    29,406       121,702  

Auction Technology Group plc*

    2,583       17,584  

G8 Education Ltd.(a)

    51,492       30,972  

IDP Education Ltd.(a)

    2,501       34,283  

InvoCare Ltd.

    6,933       55,573  

Pearson plc

    12,792       147,711  
              407,825  
Diversified REITs – 0.5%  

Argosy Property Ltd., REIT

    68,432       42,192  

British Land Co. plc (The), REIT

    12,400       44,764  

Centuria Capital Group, REIT(a)

    55,661       40,352  

Charter Hall Group, REIT(a)

    8,140       44,684  

Charter Hall Long Wale REIT, REIT(a)

    20,910       39,982  

Cromwell European REIT, REIT(b)

    93,674       113,865  

Daiwa House REIT Investment Corp., REIT

    42       74,213  

GPT Group (The), REIT

    14,186       32,514  

Growthpoint Properties Australia Ltd., REIT(a)

    27,019       33,701  

H&R REIT, REIT

    45,942       282,287  

Hankyu Hanshin REIT, Inc., REIT(a)

    82       76,886  

Heiwa Real Estate REIT, Inc., REIT(a)

    43       40,119  

Hulic Reit, Inc., REIT

    24       24,437  

ICADE, REIT

    836       27,216  

Land Securities Group plc, REIT

    6,027       41,614  

LXI REIT plc, REIT(b)

    107,679       112,044  

Merlin Properties Socimi SA, REIT

    7,011       58,248  

Mirvac Group, REIT

    36,859       42,474  

Mori Trust Reit, Inc., REIT

    82       39,905  

NIPPON REIT Investment Corp., REIT

    18       41,480  
Investments   Shares     Value  
Diversified REITs – (continued)  

Nomura Real Estate Master Fund, Inc., REIT

    82     $ 90,368  

NTT UD REIT Investment Corp., REIT(a)

    24       19,762  

OUE Commercial REIT, REIT

    175,177       30,048  

Reit 1 Ltd., REIT

    65,325       235,913  

Sekisui House Reit, Inc., REIT(a)

    55       28,908  

Sella Capital Real Estate Ltd., REIT

    81,042       143,832  

Star Asia Investment Corp., REIT

    240       90,330  

Stockland, REIT

    23,534       52,748  

Stride Property Group, REIT(a)

    33,231       26,287  

Suntec REIT, REIT

    43,500       34,926  

Takara Leben Real Estate Investment Corp., REIT(a)

    312       203,955  

Tokyu REIT, Inc., REIT

    22       26,206  

United Urban Investment Corp., REIT

    40       40,252  
              2,276,512  
Diversified Telecommunication Services – 1.2%  

BCE, Inc.(a)

    3,549       131,606  

Bezeq The Israeli Telecommunication Corp. Ltd.

    38,130       46,881  

BT Group plc(a)

    121,173       165,785  

Cellnex Telecom SA(b)

    8,502       249,109  

Chorus Ltd.(a)

    8,733       36,446  

Deutsche Telekom AG (Registered)

    72,540       1,569,916  

Elisa OYJ

    2,262       95,829  

Gamma Communications plc

    4,867       61,775  

Helios Towers plc*

    26,527       19,491  

HKBN Ltd.

    51,500       17,837  

HKT Trust & HKT Ltd.

    53,400       55,280  

Infrastrutture Wireless Italiane SpA(b)

    5,179       56,494  

Internet Initiative Japan, Inc.

    2,000       32,018  

Koninklijke KPN NV

    50,934       170,933  

Nippon Telegraph & Telephone Corp.

    460,200       537,247  

NOS SGPS SA

    9,348       34,128  

Orange Polska SA

    38,417       71,145  

Orange SA

    35,568       417,685  

PCCW Ltd.

    77,035       37,707  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     189  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Diversified Telecommunication Services – (continued)  

Proximus SADP

    3,640     $ 30,095  

Quebecor, Inc., Class B(a)

    2,728       56,220  

RAI Way SpA(b)

    8,120       40,339  

Singapore Telecommunications Ltd.

    101,400       176,148  

Spark New Zealand Ltd.

    29,930       86,522  

Swisscom AG (Registered)

    429       256,443  

Telecom Italia SpA*

    69,160       17,969  

Telecom Italia SpA* (a)

    169,960       43,852  

Telefonica Deutschland Holding AG

    10,209       17,303  

Telefonica SA(a)

    115,869       446,538  

Telekom Austria AG, Class A

    4,091       28,540  

Telenor ASA

    7,093       72,475  

Telia Co. AB

    35,720       75,483  

Telstra Group Ltd.

    60,801       146,670  

TELUS Corp.

    8,385       135,054  

TPG Telecom Ltd.

    11,890       38,996  

United Internet AG (Registered)

    1,720       35,724  
              5,511,683  
Electric Utilities – 1.5%  

Acciona SA

    369       46,414  

BKW AG

    440       73,781  

Chubu Electric Power Co., Inc.

    15,600       187,732  

Chugoku Electric Power Co., Inc. (The)

    4,206       26,142  

CK Infrastructure Holdings Ltd.

    11,000       50,961  

CLP Holdings Ltd.

    24,500       179,258  

Contact Energy Ltd.

    11,528       52,234  

EDP – Energias de Portugal SA

    44,655       187,385  

Elia Group SA/NV

    640       60,646  

Emera, Inc.(a)

    3,978       130,150  

Endesa SA(a)

    4,510       84,687  

Enea SA*

    80,808       139,889  

Enel SpA

    160,875       1,018,229  

EVN AG

    748       20,280  

Fortis, Inc.(a)

    7,017       278,304  

Fortum OYJ

    10,023       118,656  

Genesis Energy Ltd.

    16,699       22,437  

HK Electric Investments & HK Electric Investments Ltd.(b)

    44,500       24,682  
Investments   Shares     Value  
Electric Utilities – (continued)  

Hokkaido Electric Power Co., Inc.

    74,100     $ 309,523  

Hokuriku Electric Power Co.*

    70,200       346,121  

Hydro One Ltd.(a) (b)

    4,407       114,155  

Iberdrola SA

    82,797       918,922  

Kansai Electric Power Co., Inc. (The)

    15,600       198,444  

Kyushu Electric Power Co., Inc.*

    9,100       57,913  

Manawa Energy Ltd.(a)

    5,123       12,724  

Mercury NZ Ltd.

    11,013       37,794  

Origin Energy Ltd.

    25,077       144,962  

Orsted A/S

    2,730       131,371  

PGE Polska Grupa Energetyczna SA*

    25,070       43,417  

Power Assets Holdings Ltd.

    22,500       107,545  

Redeia Corp. SA

    6,474       100,627  

Romande Energie Holding SA (Registered)

    525       32,652  

Shikoku Electric Power Co., Inc.

    70,200       476,745  

SSE plc

    15,591       308,946  

Tauron Polska Energia SA*

    377,520       331,383  

Terna—Rete Elettrica Nazionale

    20,372       155,599  

Tohoku Electric Power Co., Inc.

    10,900       67,662  

Tokyo Electric Power Co. Holdings, Inc.*

    22,400       94,218  

Verbund AG

    1,326       114,930  
              6,807,520  
Electrical Equipment – 1.2%  

ABB Ltd. (Registered)

    24,687       825,748  

Accelleron Industries AG

    4,290       105,311  

Alfen N.V.* (a) (b)

    1,230       38,574  

Ballard Power Systems, Inc.* (a)

    13,202       44,031  

Ceres Power Holdings plc* (a)

    5,412       13,003  

Daihen Corp.(a)

    7,800       243,098  

DiscoverIE Group plc

    4,796       35,908  

Energiekontor AG

    410       30,206  

Fagerhult Group AB

    6,336       31,984  

Fuji Electric Co. Ltd.

    1,500       56,238  

Fujikura Ltd.

    8,200       57,989  

Furukawa Electric Co. Ltd.

    23,400       346,569  

GS Yuasa Corp.

    4,100       65,150  

Hexatronic Group AB

    2,337       5,432  

 

See Accompanying Notes to the Financial Statements.

 

190    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electrical Equipment – (continued)  

Huber + Suhner AG (Registered)

    867     $ 59,162  

Idec Corp.

    2,200       38,961  

Legrand SA

    4,056       349,320  

Mabuchi Motor Co. Ltd.

    1,600       45,366  

Mersen SA

    8,580       283,862  

Mitsubishi Electric Corp.

    31,200       345,591  

NEL ASA*

    12,688       8,314  

Nexans SA

    451       31,796  

Nidec Corp.(a)

    7,910       283,140  

NKT A/S*

    3,217       161,275  

Nordex SE*

    7,130       74,806  

PNE AG

    2,173       27,516  

Prysmian SpA

    3,744       139,657  

Sanyo Denki Co. Ltd.(a)

    3,900       142,666  

Schneider Electric SE

    8,073       1,237,138  

Siemens Energy AG*

    6,229       55,109  

Signify NV(b)

    2,730       70,582  

TKH Group NV, CVA

    2,141       78,030  

Varta AG*

    1,008       20,340  

Vestas Wind Systems A/S*

    14,859       320,396  
              5,672,268  
Electronic Equipment, Instruments & Components – 1.9%  

Ai Holdings Corp.

    4,100       62,808  

Alps Alpine Co. Ltd.

    5,348       43,400  

ALSO Holding AG (Registered)

    369       93,664  

Amano Corp.

    800       16,222  

Anritsu Corp.

    8,200       60,751  

AT&S Austria Technologie & Systemtechnik AG(a)

    8,307       207,922  

Azbil Corp.

    2,100       61,206  

Barco NV

    3,731       57,144  

Canon Electronics, Inc.

    8,000       101,317  

Canon Marketing Japan, Inc.

    1,500       35,647  

Celestica, Inc.* (a)

    38,727       903,002  

Citizen Watch Co. Ltd.

    8,200       47,269  

Codan Ltd.(a)

    7,304       35,979  

Comet Holding AG (Registered)

    440       86,110  

Daiwabo Holdings Co. Ltd.

    4,100       76,981  

Dexerials Corp.(a)

    19,500       436,624  

Elematec Corp.

    8,000       90,066  

FIH Mobile Ltd.*

    328,000       24,313  
Investments   Shares     Value  
Electronic Equipment, Instruments & Components –
(continued)
 

FIT Hon Teng Ltd.* (a) (b)

    600,000     $ 80,515  

Halma plc

    6,201       138,829  

Hamamatsu Photonics KK

    2,700       99,072  

Hexagon AB, Class B

    29,289       237,769  

Hioki EE Corp.

    700       30,136  

Hirose Electric Co. Ltd.(a)

    582       65,139  

Horiba Ltd.

    800       39,919  

Hosiden Corp.

    19,500       226,746  

Ibiden Co. Ltd.

    2,800       117,236  

Inficon Holding AG (Registered)

    82       88,753  

Iriso Electronics Co. Ltd.

    1,200       28,010  

Japan Display, Inc.* (a)

    80,000       19,545  

Jenoptik AG

    2,585       61,095  

Kaga Electronics Co. Ltd.(a)

    7,900       311,420  

Keyence Corp.

    3,000       1,151,903  

Kitron ASA

    9,471       24,924  

Koa Corp.(a)

    4,100       38,984  

Kyocera Corp.

    5,500       267,800  

Lagercrantz Group AB, Class B

    2,640       24,031  

Landis+Gyr Group AG

    1,102       81,374  

LEM Holding SA (Registered)

    27       54,590  

Macnica Holdings, Inc.

    1,600       63,653  

Maxell Ltd.(a)

    15,600       165,636  

Meiko Electronics Co. Ltd.

    7,800       158,632  

MOG Digitech Holdings Ltd.*

    30,000       8,435  

Murata Manufacturing Co. Ltd.

    27,000       441,695  

Mycronic AB

    924       20,179  

NCAB Group AB

    9,298       44,357  

Nichicon Corp.

    3,200       26,370  

Nissha Co. Ltd.(a)

    15,600       160,074  

Nohmi Bosai Ltd.

    2,500       29,813  

Omron Corp.

    2,800       98,858  

Optex Group Co. Ltd.

    4,100       45,536  

Oxford Instruments plc

    3,036       66,386  

PAX Global Technology Ltd.

    234,000       161,491  

Renishaw plc

    880       32,932  

Restar Holdings Corp.

    7,800       126,751  

Riken Keiki Co. Ltd.

    1,200       48,414  

Ryosan Co. Ltd.(a)

    7,800       243,098  

Sensirion Holding AG* (a) (b)

    733       54,771  

Sesa SpA

    294       29,600  

SES-imagotag SA* (a)

    246       24,546  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     191  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electronic Equipment, Instruments & Components –
(continued)
 

Shimadzu Corp.

    4,700     $ 110,017  

Siix Corp.

    11,700       107,772  

Softwareone Holding AG

    5,917       115,863  

Spectris plc

    2,112       79,447  

Taiyo Yuden Co. Ltd.(a)

    2,500       55,070  

TDK Corp.

    6,500       238,549  

Tokyo Electron Device Ltd.

    5,600       141,437  

Topcon Corp.

    4,100       36,859  

Vaisala OYJ, Class A

    836       28,454  

Venture Corp. Ltd.

    4,500       38,429  

VSTECS Holdings Ltd.

    238,000       120,147  

Yokogawa Electric Corp.

    4,900       87,763  
              8,839,249  
Energy Equipment & Services – 0.5%  

Aker Solutions ASA(b)

    7,560       30,127  

Borr Drilling Ltd.* (a)

    4,018       24,960  

BW Offshore Ltd.

    23,042       48,098  

John Wood Group plc*

    33,661       57,961  

Lapidoth Capital Ltd.(a)

    7,527       101,698  

Modec, Inc.*

    8,000       86,949  

Odfjell Drilling Ltd.

    33,899       118,340  

PGS ASA*

    303,108       273,760  

Saipem SpA*

    24,641       37,415  

SBM Offshore NV(a)

    60,996       757,555  

Schoeller-Bleckmann Oilfield Equipment AG

    615       31,008  

Secure Energy Services, Inc.

    82,290       456,426  

Subsea 7 SA

    3,608       47,281  

Technip Energies NV

    3,977       86,806  

Tenaris SA

    9,321       146,208  

TGS ASA

    1,927       26,253  

Vallourec SACA*

    5,740       68,712  
              2,399,557  
Entertainment – 0.5%  

Bollore SE

    12,858       69,993  

Capcom Co. Ltd.

    3,400       108,638  

CD Projekt SA

    1,193       29,726  

COLOPL, Inc.* (a)

    8,200       31,296  

CTS Eventim AG & Co. KGaA

    704       42,453  
Investments   Shares     Value  
Entertainment – (continued)  

Daiichikosho Co. Ltd.

    2,200     $ 32,220  

DeNA Co. Ltd.

    1,100       10,659  

Embracer Group AB, Class B* (a)

    13,161       21,328  

EVT Ltd.(a)

    6,232       40,997  

Kahoot! ASA*

    22,755       71,086  

Kinepolis Group NV(a)

    1,030       50,625  

Koei Tecmo Holdings Co. Ltd.

    2,492       32,317  

Konami Group Corp.

    1,000       51,200  

Modern Times Group MTG AB, Class B*

    7,040       56,300  

Nexon Co. Ltd.

    7,800       141,404  

Nintendo Co. Ltd.

    17,200       706,535  

Paradox Interactive AB

    952       18,064  

Shochiku Co. Ltd.(a)

    800       50,521  

Square Enix Holdings Co. Ltd.

    1,800       59,428  

Stillfront Group AB*

    152,529       157,476  

Toei Animation Co. Ltd.(a)

    200       17,842  

Toho Co. Ltd.

    1,200       40,656  

Ubisoft Entertainment SA*

    1,425       40,487  

Universal Music Group NV

    10,920       266,630  
              2,147,881  
Financial Services – 1.5%  

Adyen NV* (b)

    468       313,575  

AMP Ltd.(a)

    65,142       43,101  

Banca Mediolanum SpA

    4,444       36,197  

BFF Bank SpA(b)

    58,110       557,407  

Burford Capital Ltd.

    3,280       40,478  

Challenger Ltd.

    9,812       36,343  

Creades AB, Class A

    22,464       119,632  

Deutsche Pfandbriefbank AG(b)

    45,903       305,673  

Edenred SE

    3,861       205,033  

Element Fleet Management Corp.

    7,332       99,080  

Eurazeo SE

    1,144       64,269  

EXOR NV(a)

    2,496       213,542  

Financial Partners Group Co. Ltd.(a)

    19,500       182,710  

First National Financial Corp.

    123       3,066  

Fuyo General Lease Co. Ltd.

    1,000       80,425  

GMO Payment Gateway, Inc.

    1,000       39,526  

GRENKE AG

    1,804       38,518  

 

See Accompanying Notes to the Financial Statements.

 

192    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Financial Services – (continued)  

Groupe Bruxelles Lambert NV

    1,326     $ 96,709  

HAL Trust

    1,131       127,198  

Helia Group Ltd.

    104,013       238,398  

Hypoport SE*

    252       30,659  

Industrivarden AB, Class A

    5,109       131,787  

Industrivarden AB, Class C(a)

    2,173       55,858  

Investment AB Oresund

    9,198       81,914  

Investor AB, Class A(a)

    9,789       177,597  

Investor AB, Class B(a)

    25,311       463,057  

Japan Securities Finance Co. Ltd.

    4,700       46,272  

Kinnevik AB, Class A*

    2,665       23,042  

Kinnevik AB, Class B*

    902       7,668  

L E Lundbergforetagen AB, Class B

    1,348       54,860  

Liberty Financial Group Ltd.(a) (b)

    14,555       35,940  

M&G plc

    46,020       110,681  

Mitsubishi HC Capital, Inc.

    19,529       127,520  

Mizuho Leasing Co. Ltd.

    11,838       372,857  

Network International Holdings plc* (b)

    14,574       68,582  

Nexi SpA* (b)

    14,840       85,896  

Nuvei Corp.(a) (b)

    1,328       18,472  

ORIX Corp.

    24,900       446,390  

OSB Group plc

    147,381       536,161  

Paragon Banking Group plc

    81,159       436,868  

PEUGEOT INVEST

    308       29,853  

Plus500 Ltd.

    22,659       387,962  

Ricoh Leasing Co. Ltd.(a)

    5,200       154,340  

Sofina SA

    316       59,788  

Tokyo Century Corp.

    600       22,796  

Tyro Payments Ltd.* (a)

    8,888       4,840  

Washington H Soul Pattinson & Co. Ltd.(a)

    2,856       60,433  

Wendel SE

    497       37,088  

Wise plc, Class A*

    9,328       75,340  

Worldline SA* (b)

    3,978       50,373  

Zenkoku Hosho Co. Ltd.

    600       19,076  
              7,054,850  
Food Products – 2.6%  

a2 Milk Co. Ltd. (The)* (a)

    12,579       30,583  

AAK AB

    2,860       54,268  
Investments   Shares     Value  
Food Products – (continued)  

Agrana Beteiligungs AG(a)

    5,742     $ 91,343  

Ajinomoto Co., Inc.

    7,800       282,241  

Ariake Japan Co. Ltd.

    800       25,144  

Aryzta AG*

    62,524       114,255  

Associated British Foods plc

    4,797       117,932  

Ausnutria Dairy Corp. Ltd.

    98,000       34,443  

Austevoll Seafood ASA

    3,432       23,440  

Bakkafrost P/F

    820       36,957  

Barry Callebaut AG (Registered)

    78       117,851  

Bega Cheese Ltd.(a)

    2,583       4,546  

Bell Food Group AG (Registered)

    123       36,492  

Bumitama Agri Ltd.

    269,100       111,957  

Calbee, Inc.

    600       11,509  

Chocoladefabriken Lindt & Spruengli AG

    24       265,040  

Chocoladefabriken Lindt & Spruengli AG (Registered)

    2       217,570  

Costa Group Holdings Ltd.(a)

    28,801       56,530  

Cranswick plc

    2,860       121,258  

Danone SA

    9,165       543,948  

DyDo Group Holdings, Inc.

    500       19,281  

Ebro Foods SA

    1,618       27,500  

Elders Ltd.(a)

    56,199       211,004  

Emmi AG (Registered)

    41       38,655  

First Pacific Co. Ltd.

    780,000       295,069  

First Resources Ltd.

    5,100       5,621  

Fuji Oil Holdings, Inc.

    1,200       18,941  

Glanbia plc(a)

    3,500       55,049  

Golden Agri-Resources Ltd.

    213,400       42,055  

Grieg Seafood ASA

    3,299       21,896  

Hilton Food Group plc

    25,779       204,268  

Hokuto Corp.

    4,100       49,137  

House Foods Group, Inc.

    2,400       50,442  

Inghams Group Ltd.(a)

    17,712       41,269  

Itoham Yonekyu Holdings, Inc.

    1,240       34,102  

JDE Peet’s NV(a)

    1,804       50,035  

Kagome Co. Ltd.(a)

    900       18,631  

Kameda Seika Co. Ltd.

    900       24,246  

Kerry Group plc, Class A

    2,457       189,273  

Kikkoman Corp.

    3,400       191,300  

Kotobuki Spirits Co. Ltd.

    2,500       32,900  

Leroy Seafood Group ASA

    5,456       21,586  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     193  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Food Products – (continued)  

Lotus Bakeries NV

    6     $ 44,394  

Maple Leaf Foods, Inc.(a)

    3,772       75,019  

Maruha Nichiro Corp.(a)

    15,600       265,863  

Megmilk Snow Brand Co. Ltd.

    17,600       282,516  

MEIJI Holdings Co. Ltd.

    3,400       83,471  

Morinaga & Co. Ltd.

    1,100       39,571  

Morinaga Milk Industry Co. Ltd.

    1,200       46,742  

Mowi ASA

    5,412       87,829  

Nestle SA (Registered)

    39,507       4,256,971  

Neto Malinda Trading Ltd.* (a)

    615       5,585  

NH Foods Ltd.

    3,200       95,718  

Nichirei Corp.

    1,600       34,526  

Nippn Corp.

    4,000       60,722  

Nisshin Oillio Group Ltd. (The)(a)

    8,900       247,410  

Nisshin Seifun Group, Inc.

    2,690       40,445  

Nissin Foods Holdings Co. Ltd.

    1,500       130,245  

Nissui Corp.

    109,200       527,235  

Orkla ASA

    8,856       60,992  

Premier Foods plc

    46,494       66,122  

Premium Brands Holdings Corp., Class A

    660       42,445  

Prima Meat Packers Ltd.

    11,700       177,147  

Riken Vitamin Co. Ltd.

    1,800       26,742  

S Foods, Inc.

    7,200       150,946  

Sakata Seed Corp.

    1,400       37,393  

Salmar ASA

    788       37,299  

Saputo, Inc.

    4,403       88,805  

Savencia SA

    1,676       98,143  

Schouw & Co. A/S

    656       40,412  

Societe LDC SADIR

    1,326       173,796  

Strauss Group Ltd.*

    952       17,616  

Suedzucker AG

    1,979       29,913  

SunOpta, Inc.* (a)

    4,428       16,905  

Tate & Lyle plc

    5,494       42,033  

Toyo Suisan Kaisha Ltd.

    1,800       82,723  

United Malt Grp Ltd.*

    15,129       47,895  

Viscofan SA

    943       54,423  

Vitasoy International Holdings
Ltd.(a)

    60,000       73,921  

WH Group Ltd.(b)

    214,500       128,021  

Wilmar International Ltd.

    66,300       172,277  

Yakult Honsha Co. Ltd.

    4,900       115,087  
Investments   Shares     Value  
Food Products – (continued)  

Yamazaki Baking Co. Ltd.

    2,900     $ 61,372  
              12,106,257  
Gas Utilities – 0.3%  

AltaGas Ltd.(a)

    5,772       107,104  

APA Group

    15,548       81,116  

Brookfield Infrastructure Corp., Class A(a)

    1,506       38,739  

Enagas SA(a)

    4,223       70,504  

Hong Kong & China Gas Co. Ltd.

    156,000       108,657  

Italgas SpA

    6,908       35,034  

K&O Energy Group, Inc.

    4,100       63,837  

Keppel Infrastructure Trust

    114,394       36,738  

Naturgy Energy Group SA(a)

    3,034       85,625  

Nippon Gas Co. Ltd.

    1,900       28,360  

Osaka Gas Co. Ltd.

    9,100       170,770  

Rubis SCA

    3,034       65,871  

Saibu Gas Holdings Co. Ltd.

    1,400       17,647  

Shizuoka Gas Co. Ltd.(a)

    15,600       105,068  

Snam SpA

    28,002       128,160  

Superior Plus Corp.

    10,208       68,531  

Toho Gas Co. Ltd.

    2,000       34,243  

Tokyo Gas Co. Ltd.

    7,800       174,032  
              1,420,036  
Ground Transportation – 1.2%  

ALD SA(b)

    2,214       14,825  

Aurizon Holdings Ltd.(a)

    15,826       34,269  

Canadian National Railway Co.(a)

    8,814       931,589  

Canadian Pacific Kansas City Ltd.

    13,533       959,812  

Central Japan Railway Co.

    14,200       318,421  

ComfortDelGro Corp. Ltd.

    73,800       71,104  

East Japan Railway Co.

    5,300       275,490  

Firstgroup plc

    31,646       60,635  

Hankyu Hanshin Holdings, Inc.

    4,100       127,972  

Jungfraubahn Holding AG (Registered)

    287       48,630  

Keikyu Corp.

    5,700       48,101  

Keio Corp.(a)

    1,800       53,128  

Keisei Electric Railway Co. Ltd.

    2,900       108,325  

 

See Accompanying Notes to the Financial Statements.

 

194    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Ground Transportation – (continued)  

Kelsian Group Ltd.(a)

    14,850     $ 56,602  

Kintetsu Group Holdings Co. Ltd.

    2,200       61,579  

Kyushu Railway Co.

    2,100       42,722  

Maruzen Showa Unyu Co. Ltd.

    7,800       195,200  

Mobico Group plc

    193,128       146,469  

MTR Corp. Ltd.

    25,264       94,442  

Mullen Group Ltd.(a)

    29,211       276,907  

Nagoya Railroad Co. Ltd.

    4,400       61,230  

Nankai Electric Railway Co. Ltd.

    3,000       57,149  

Nikkon Holdings Co. Ltd.(a)

    22,100       465,217  

Nishi-Nippon Railroad Co. Ltd.

    1,100       17,643  

NTG Nordic Transport Group A/S* (a)

    792       31,349  

Odakyu Electric Railway Co. Ltd.(a)

    4,600       65,031  

Redde Northgate plc

    81,471       332,173  

Seibu Holdings, Inc.

    6,700       65,011  

Seino Holdings Co. Ltd.

    3,100       44,818  

Sixt SE

    308       26,468  

Sixt SE (Preference)

    298       17,104  

Stef SA

    1,326       142,401  

TFI International, Inc.

    1,209       133,602  

Tobu Railway Co. Ltd.(a)

    3,900       93,325  

Tokyu Corp.

    8,300       93,169  

West Japan Railway Co.

    3,900       147,970  
              5,719,882  
Health Care Equipment & Supplies – 1.1%  

Alcon, Inc.

    7,410       527,791  

Ambu A/S, Class B* (a)

    3,172       31,211  

Ansell Ltd.

    2,200       29,558  

Arjo AB, Class B

    11,562       38,558  

Asahi Intecc Co. Ltd.

    3,200       53,067  

BioMerieux

    825       78,918  

Carl Zeiss Meditec AG

    715       61,775  

Cochlear Ltd.

    942       143,644  

Coloplast A/S, Class B

    1,443       150,199  

ConvaTec Group plc(b)

    26,387       65,383  

Demant A/S*

    1,980       75,343  

DiaSorin SpA

    293       26,170  

Eckert & Ziegler Strahlen- und Medizintechnik AG

    820       32,191  
Investments   Shares     Value  
Health Care Equipment & Supplies – (continued)  

Eiken Chemical Co. Ltd.

    1,600     $ 15,689  

El.En. SpA

    2,684       24,994  

Elekta AB, Class B

    6,069       41,229  

EssilorLuxottica SA

    1,622       292,554  

EssilorLuxottica SA

    2,629       473,016  

Fisher & Paykel Healthcare Corp. Ltd.

    9,617       116,405  

Fukuda Denshi Co. Ltd.

    7,800       277,091  

Getinge AB, Class B

    2,980       53,451  

Hogy Medical Co. Ltd.

    1,200       25,871  

Hoya Corp.

    5,600       530,067  

Japan Lifeline Co. Ltd.

    3,000       22,642  

Koninklijke Philips NV* (a)

    14,001       264,874  

Medacta Group SA(b)

    336       38,472  

Medistim ASA

    1,188       20,577  

Medmix AG(b)

    1,517       31,439  

Menicon Co. Ltd.

    1,900       21,773  

Nagaileben Co. Ltd.

    1,500       20,522  

Nanosonics Ltd.* (a)

    16,777       39,621  

Nihon Kohden Corp.

    2,300       54,035  

Nipro Corp.

    4,100       31,039  

Olympus Corp.

    19,500       257,390  

Paramount Bed Holdings Co. Ltd.

    1,600       26,983  

PolyNovo Ltd.* (a)

    32,604       23,843  

Revenio Group OYJ

    574       13,324  

Siemens Healthineers AG(b)

    4,485       219,587  

Smith & Nephew plc

    10,881       121,578  

Sonova Holding AG (Registered)

    747       176,069  

STRATEC SE

    308       14,194  

Straumann Holding AG (Registered)

    1,738       204,252  

Surgical Science Sweden AB*

    1,584       17,935  

Sysmex Corp.

    2,700       127,526  

Terumo Corp.

    11,700       316,131  

Xvivo Perfusion AB*

    1,892       39,287  

Ypsomed Holding AG (Registered)

    123       33,789  
              5,301,057  
Health Care Providers & Services – 0.4%  

Alfresa Holdings Corp.

    1,500       23,652  

Amplifon SpA

    2,112       59,471  

Arvida Group Ltd.

    256,833       168,807  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     195  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Health Care Providers & Services – (continued)  

As One Corp.

    800     $ 25,245  

BML, Inc.(a)

    7,800       146,528  

Chartwell Retirement Residences(a)

    5,472       40,047  

Clariane SE(a)

    24,180       91,039  

CVS Group plc

    4,250       75,552  

dentalcorp Holdings Ltd.* (a)

    6,768       26,814  

EBOS Group Ltd.(a)

    2,066       42,047  

Fagron

    3,775       66,157  

Fresenius Medical Care AG & Co. KGaA

    2,574       85,213  

Fresenius SE & Co. KGaA

    8,346       213,839  

Galenica AG(b)

    792       59,658  

H.U. Group Holdings, Inc.

    4,100       68,561  

Healius Ltd.*

    27,347       31,340  

Medicover AB, Class B

    3,403       38,317  

Medipal Holdings Corp.

    5,100       85,199  

NMC Health plc* ‡

    2,074        

Raffles Medical Group Ltd.

    4,124       3,582  

Ramsay Health Care Ltd.(a)

    2,894       89,198  

Ryman Healthcare Ltd.(a)

    11,375       37,580  

Ship Healthcare Holdings, Inc.

    1,900       29,169  

Sonic Healthcare Ltd.

    7,098       129,205  

Spire Healthcare Group plc(b)

    14,036       36,363  

Summerset Group Holdings Ltd.(a)

    13,895       78,719  

Suzuken Co. Ltd.

    1,880       57,277  

Terveystalo OYJ(b)

    4,480       30,922  

Tokai Corp.

    4,100       51,384  

Uniphar plc(a)

    15,050       33,327  

Well Health Technologies Corp.* (a)

    10,947       29,176  
              1,953,388  
Health Care REITs – 0.1%  

Aedifica SA, REIT

    832       45,246  

Assura plc, REIT

    174,391       86,635  

Cofinimmo SA, REIT

    41       2,544  

NorthWest Healthcare Properties REIT, REIT(a)

    46,683       134,845  

Parkway Life REIT, REIT

    12,500       30,656  
Investments   Shares     Value  
Health Care REITs – (continued)  

Primary Health Properties plc, REIT

    79,089     $ 86,134  

Vital Healthcare Property Trust, REIT(a)

    30,155       35,079  
              421,139  
Health Care Technology – 0.1%  

CompuGroup Medical SE & Co. KGaA

    1,599       58,378  

M3, Inc.

    6,500       99,317  

Medley, Inc.*

    1,000       28,558  

Nexus AG

    984       47,896  

Pro Medicus Ltd.(a)

    1,100       51,914  

Sectra AB, Class B*

    2,948       31,821  
              317,884  
Hotel & Resort REITs – 0.0%(d)  

CapitaLand Ascott Trust, REIT

    32,566       21,393  

CDL Hospitality Trusts, REIT

    38,294       27,112  

Far East Hospitality Trust, REIT

    53,976       23,244  

Frasers Hospitality Trust, REIT

    39,200       14,592  

Hoshino Resorts REIT, Inc., REIT(a)

    12       47,067  

Invincible Investment Corp., REIT

    121       46,420  

Japan Hotel REIT Investment Corp., REIT

    77       34,930  
              214,758  
Hotels, Restaurants & Leisure – 1.7%  

Accor SA

    2,133       67,795  

Amadeus IT Group SA

    6,435       366,073  

AmRest Holdings SE*

    6,191       39,226  

Aristocrat Leisure Ltd.

    8,619       210,263  

Atom Corp.*

    5,800       34,736  

Basic-Fit NV* (a) (b)

    2,632       67,102  

Betsson AB, Class B*

    7,708       77,407  

Cafe de Coral Holdings Ltd.

    4,000       5,035  

Carnival plc*

    8,307       84,411  

Colowide Co. Ltd.(a)

    3,500       54,148  

Compass Group plc

    25,818       649,447  

Corporate Travel Management Ltd.(a)

    3,366       35,250  

Create Restaurants Holdings, Inc.

    4,400       30,332  

Dalata Hotel Group plc

    8,159       34,582  

 

See Accompanying Notes to the Financial Statements.

 

196    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Hotels, Restaurants & Leisure – (continued)  

Deliveroo plc, Class A* (a) (b)

    60,106     $ 94,816  

Delivery Hero SE* (b)

    3,315       83,990  

Domino’s Pizza Enterprises Ltd.(a)

    1,408       45,287  

Domino’s Pizza Group plc

    22,191       92,362  

Entain plc

    9,087       102,592  

Evolution AB(b)

    2,886       256,217  

Flight Centre Travel Group Ltd.(a)

    4,576       53,977  

Flutter Entertainment plc*

    2,691       421,144  

Food & Life Cos. Ltd.

    2,000       33,411  

Fuji Kyuko Co. Ltd.

    1,000       27,964  

Galaxy Entertainment Group Ltd.

    36,000       201,748  

Genting Singapore Ltd.

    104,400       65,533  

Greggs plc

    1,558       44,806  

Heiwa Corp.(a)

    2,450       34,490  

Hongkong & Shanghai Hotels Ltd. (The)*

    61,500       47,395  

Ichibanya Co. Ltd.

    1,000       35,128  

InterContinental Hotels Group plc

    2,769       195,219  

J D Wetherspoon plc*

    6,583       50,485  

Jumbo Interactive Ltd.

    3,476       30,504  

Just Eat Takeaway.com NV* (a) (b)

    3,403       41,170  

Kappa Create Co. Ltd.* (a)

    4,100       42,910  

Kindred Group plc, SDR

    5,043       41,192  

KOMEDA Holdings Co. Ltd.

    1,200       21,790  

Kyoritsu Maintenance Co. Ltd.(a)

    1,100       41,793  

La Francaise des Jeux SAEM(b)

    1,897       60,996  

Lottery Corp. Ltd. (The)

    31,280       89,716  

Mandarin Oriental International Ltd.

    8,000       12,000  

McDonald’s Holdings Co. Japan
Ltd.(a)

    1,100       42,781  

Melco International Development Ltd.*

    41,000       28,557  

Melia Hotels International SA*

    9,988       55,373  

Mitchells & Butlers plc*

    22,924       57,693  

Monogatari Corp. (The)

    1,500       40,312  

MOS Food Services, Inc.(a)

    2,100       45,690  

MTY Food Group, Inc.

    1,452       54,576  
Investments   Shares     Value  
Hotels, Restaurants & Leisure – (continued)  

NagaCorp Ltd.*

    40,372     $ 17,336  

Ohsho Food Service Corp.

    704       32,447  

Oriental Land Co. Ltd.

    17,200       551,622  

Playtech plc*

    16,197       77,163  

Resorttrust, Inc.

    4,100       58,585  

Restaurant Brands International,
Inc.(a)

    4,251       285,237  

Restaurant Brands New Zealand Ltd.

    1,154       2,524  

Round One Corp.(a)

    78,000       279,666  

Royal Holdings Co. Ltd.

    1,600       27,120  

Saizeriya Co. Ltd.

    1,800       72,739  

Sands China Ltd.*

    38,800       104,133  

Scandic Hotels Group AB* (a) (b)

    9,870       33,172  

SkiStar AB

    2,828       26,831  

SKYCITY Entertainment Group
Ltd.(a)

    56,129       61,051  

Skylark Holdings Co. Ltd.* (a)

    3,700       54,372  

Societe des Bains de Mer et du Cercle des Etrangers a Monaco

    451       49,578  

Sodexo SA

    1,326       139,990  

SSP Group plc*

    41,223       90,040  

Star Entertainment Grp Ltd. (The)*

    146,381       49,121  

Tabcorp Holdings Ltd.

    125,870       61,763  

Tokyotokeiba Co. Ltd.

    1,200       30,823  

Toridoll Holdings Corp.

    1,100       26,468  

Trainline plc* (b)

    31,585       99,803  

TUI AG*

    153,660       771,164  

Webjet Ltd.*

    20,377       78,571  

Whitbread plc

    2,446       98,778  

Wynn Macau Ltd.*

    12,800       11,304  

Yoshinoya Holdings Co. Ltd.

    4,900       114,278  

Zensho Holdings Co. Ltd.(a)

    1,800       94,193  
              7,749,296  
Household Durables – 1.2%  

Ariston Holding NV

    5,411       30,256  

Azorim-Investment Development & Construction Co. Ltd.* (a)

    5,535       17,307  

Barratt Developments plc

    21,567       108,320  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     197  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Household Durables – (continued)  

Bellway plc

    2,640     $ 66,889  

Berkeley Group Holdings plc

    1,312       64,255  

Breville Group Ltd.(a)

    2,420       32,483  

Cairn Homes plc(a)

    198,042       231,903  

Casio Computer Co. Ltd.

    3,600       28,573  

Danya Cebus Ltd.

    2,870       71,510  

De’ Longhi SpA

    1,012       22,592  

Dom Development SA

    2,244       83,391  

Duniec Brothers Ltd.* (a)

    451       16,722  

Electra Consumer Products 1970 Ltd.(a)

    656       9,499  

Electrolux AB, Class B*

    3,198       26,792  

Fiskars OYJ Abp

    574       8,773  

Fujitsu General Ltd.

    2,100       37,162  

GN Store Nord A/S*

    2,064       34,286  

Haseko Corp.

    3,500       42,766  

Iida Group Holdings Co. Ltd.

    5,400       83,044  

JM AB(a)

    22,815       242,594  

JS Global Lifestyle Co. Ltd.(a) (b)

    22,000       3,458  

JVCKenwood Corp.

    8,200       34,870  

Ki-Star Real Estate Co. Ltd.(a)

    3,300       91,954  

Man Wah Holdings Ltd.

    52,000       32,298  

Maytronics Ltd.(a)

    2,870       26,674  

Nagawa Co. Ltd.

    500       20,205  

Nikon Corp.

    5,800       54,230  

Open House Group Co. Ltd.(a)

    1,800       58,572  

Panasonic Holdings Corp.

    50,700       438,221  

Persimmon plc

    2,091       25,779  

Pressance Corp.

    8,000       85,364  

Redrow plc

    100,269       592,053  

Rinnai Corp.

    1,800       32,846  

Sangetsu Corp.

    2,256       42,053  

SEB SA

    616       60,651  

Sekisui Chemical Co. Ltd.

    10,100       136,983  

Sekisui House Ltd.

    15,600       302,740  

Sony Group Corp.

    18,400       1,509,591  

Sumitomo Forestry Co. Ltd.

    3,300       77,006  

Tama Home Co. Ltd.(a)

    4,400       98,782  

Tamron Co. Ltd.

    7,800       209,878  

Taylor Wimpey plc

    49,487       66,535  

Token Corp.(a)

    2,600       135,627  
Investments   Shares     Value  
Household Durables – (continued)  

Victoria plc* (a)

    5,192     $ 20,287  

Vistry Group plc

    7,920       67,946  

YIT OYJ(a)

    56,628       100,678  

Zojirushi Corp.

    5,400       54,982  
              5,639,380  
Household Products – 0.3%  

Earth Corp.

    600       19,651  

Essity AB, Class A

    2,009       45,942  

Essity AB, Class B

    7,332       166,883  

Henkel AG & Co. KGaA

    1,148       72,394  

Henkel AG & Co. KGaA (Preference)

    2,613       188,033  

Lion Corp.

    8,200       78,592  

Pigeon Corp.(a)

    2,400       25,364  

Reckitt Benckiser Group plc

    10,686       713,440  

Sano-Brunos Enterprises Ltd.(a)

    308       18,637  

Unicharm Corp.

    7,800       263,751  
              1,592,687  
Independent Power and Renewable Electricity
Producers – 0.3%
 

Boralex, Inc., Class A

    2,081       38,689  

Brookfield Renewable Corp., Class A

    2,068       46,998  

Capital Power Corp.

    1,845       47,167  

Corp. ACCIONA Energias Renovables SA

    1,276       34,501  

Doral Group Renewable Energy Resources Ltd.* (a)

    34,563       46,271  

Drax Group plc

    9,389       48,147  

EDP Renovaveis SA

    3,946       63,356  

Electric Power Development Co. Ltd.(a)

    3,100       47,274  

Encavis AG*

    2,296       29,863  

Enlight Renewable Energy Ltd.*

    1,428       19,206  

ERG SpA

    704       17,264  

Greenvolt-Energias Renovaveis SA* (a)

    6,900       46,021  

Grenergy Renovables SA* (a)

    861       20,422  

Innergex Renewable Energy, Inc.

    9,635       59,271  

Meridian Energy Ltd.

    20,828       58,514  

Neoen SA(b)

    1,514       39,815  

Northland Power, Inc.(a)

    3,566       50,064  

 

See Accompanying Notes to the Financial Statements.

 

198    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Independent Power and Renewable Electricity
Producers – (continued)
 

RENOVA, Inc.*

    1,000     $ 7,125  

RWE AG

    10,062       384,262  

Scatec ASA(b)

    8,405       42,357  

Solaria Energia y Medio Ambiente SA* (a)

    4,811       71,956  

TransAlta Corp.

    11,271       82,406  

Uniper SE*

    7,462       38,206  

Voltalia SA (Registered)*

    2,112       17,614  
              1,356,769  
Industrial Conglomerates – 1.0%  

Aker ASA, Class A

    264       15,833  

Arad Investment & Industrial Development Ltd.(a)

    920       89,486  

Bonheur ASA

    5,889       101,843  

Brookfield Business Corp., Class A(a)

    9,438       133,386  

CK Hutchison Holdings Ltd.

    58,856       297,492  

DCC plc

    2,028       112,339  

Hikari Tsushin, Inc.

    400       57,103  

Hitachi Ltd.

    14,500       907,369  

Infratil Ltd.

    8,272       47,248  

Investment AB Latour, Class B(a)

    2,024       34,918  

Italmobiliare SpA(a)

    1,024       25,814  

Jardine Matheson Holdings Ltd.

    3,900       157,755  

Keihan Holdings Co. Ltd.

    2,500       60,600  

Keppel Corp. Ltd.

    20,500       92,920  

Lifco AB, Class B

    4,576       83,471  

Nisshinbo Holdings, Inc.

    54,100       387,232  

Nolato AB, Class B

    11,029       48,666  

Noritsu Koki Co. Ltd.

    7,800       163,525  

NWS Holdings Ltd.

    44,000       52,072  

Siemens AG (Registered)

    11,232       1,483,553  

Smiths Group plc

    5,109       100,029  

Storskogen Group AB, Class B(a)

    531,609       313,370  

TOKAI Holdings Corp.(a)

    4,100       26,342  
              4,792,366  
Industrial REITs – 0.3%  

AIMS APAC REIT, REIT

    55,165       48,318  
Investments   Shares     Value  
Industrial REITs – (continued)  

ARGAN SA, REIT

    533     $ 36,394  

CapitaLand Ascendas REIT, REIT

    57,235       108,617  

Centuria Industrial REIT, REIT(a)

    20,824       37,445  

CRE Logistics REIT, Inc., REIT(a)

    44       46,195  

Dream Industrial REIT, REIT(a)

    7,125       60,100  

ESR-LOGOS REIT, REIT

    188,600       37,856  

GLP J-REIT, REIT

    74       66,209  

Goodman Group, REIT(a)

    24,453       321,105  

Goodman Property Trust, REIT(a)

    19,085       22,313  

Granite REIT, REIT(a)

    484       22,017  

Japan Logistics Fund, Inc., REIT

    19       35,116  

LaSalle Logiport REIT, REIT

    44       43,057  

LondonMetric Property plc, REIT

    60,255       120,934  

Mapletree Industrial Trust, REIT

    35,086       55,060  

Mapletree Logistics Trust, REIT

    62,253       66,795  

Montea NV, REIT

    672       47,377  

Nippon Prologis REIT, Inc., REIT(a)

    41       72,771  

Property for Industry Ltd., REIT

    26,697       32,765  

Segro plc, REIT

    20,514       177,435  

Tritax Big Box REIT plc, REIT

    33,836       56,168  

Urban Logistics REIT plc, REIT

    29,257       36,993  

Warehouses De Pauw CVA, REIT

    3,077       75,846  
              1,626,886  
Insurance – 4.3%  

Admiral Group plc

    4,173       123,707  

Aegon Ltd.

    29,562       143,236  

Ageas SA/NV

    3,510       134,527  

AIA Group Ltd.

    170,800       1,481,070  

Allianz SE (Registered)

    8,385       1,957,824  

Alm Brand A/S

    57,708       83,358  

ASR Nederland NV

    3,210       119,432  

Assicurazioni Generali SpA

    24,843       492,226  

AUB Group Ltd.(a)

    5,730       97,701  

Aviva plc

    57,681       278,292  

AXA SA

    35,451       1,047,522  

Baloise Holding AG (Registered)

    936       133,913  

Beazley plc

    14,268       89,078  

Clal Insurance Enterprises Holdings Ltd.*

    4,387       54,741  

Coface SA

    36,387       437,687  

Conduit Holdings Ltd.

    55,770       296,413  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     199  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Insurance – (continued)  

Dai-ichi Life Holdings, Inc.

    19,500     $ 408,940  

Definity Financial Corp.

    1,025       28,308  

Direct Line Insurance Group plc*

    28,600       52,508  

Fairfax Financial Holdings Ltd.(a)

    507       421,461  

Gjensidige Forsikring ASA

    4,360       65,292  

Great-West Lifeco, Inc.

    5,624       155,645  

Grupo Catalana Occidente SA

    704       22,510  

Hannover Rueck SE

    975       214,669  

Harel Insurance Investments & Financial Services Ltd.(a)

    3,957       25,372  

Helvetia Holding AG (Registered)

    838       112,157  

Hiscox Ltd.

    5,060       57,594  

iA Financial Corp., Inc.

    2,262       131,475  

Insurance Australia Group Ltd.

    40,287       144,629  

Intact Financial Corp.

    2,652       372,206  

Japan Post Holdings Co. Ltd.

    42,900       377,884  

Japan Post Insurance Co. Ltd.

    4,400       84,153  

Just Group plc

    349,050       320,207  

Lancashire Holdings Ltd.

    83,616       576,315  

Legal & General Group plc

    121,758       312,338  

Linea Directa Aseguradora SA Cia de Seguros y Reaseguros(a)

    40,084       34,488  

Manulife Financial Corp.

    37,986       660,531  

Mapfre SA

    22,440       46,537  

Medibank Pvt Ltd.

    46,515       101,017  

Menora Mivtachim Holdings Ltd.

    492       9,790  

Migdal Insurance & Financial Holdings Ltd.

    135,252       127,043  

MS&AD Insurance Group Holdings, Inc.

    9,200       333,689  

Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Registered)

    2,886       1,154,615  

nib holdings Ltd.(a)

    11,260       51,616  

NN Group NV

    5,817       186,056  

Phoenix Group Holdings plc

    19,656       108,238  

Phoenix Holdings Ltd. (The)

    5,085       43,151  

Poste Italiane SpA(b)

    10,869       107,303  

Power Corp. of Canada

    11,475       276,160  
Investments   Shares     Value  
Insurance – (continued)  

Powszechny Zaklad Ubezpieczen SA

    11,833     $ 133,690  

Protector Forsikring ASA

    4,092       64,099  

Prudential plc

    39,624       412,445  

PSC Insurance Group Ltd.

    14,212       40,043  

QBE Insurance Group Ltd.

    29,484       291,218  

Sampo OYJ, Class A

    6,357       249,355  

SCOR SE

    3,124       92,953  

Sompo Holdings, Inc.

    7,800       335,135  

Steadfast Group Ltd.

    17,908       61,228  

Storebrand ASA

    12,259       102,205  

Sun Life Financial, Inc.

    11,934       544,498  

Suncorp Group Ltd.

    25,974       220,040  

Swiss Life Holding AG (Registered)

    624       398,927  

Swiss Re AG

    5,967       649,908  

T&D Holdings, Inc.

    11,700       206,466  

Talanx AG

    968       60,828  

Tokio Marine Holdings, Inc.

    42,900       946,975  

Topdanmark A/S

    880       39,381  

Trisura Group Ltd.*

    3,061       67,228  

Tryg A/S

    4,880       95,128  

Unipol Gruppo SpA

    6,080       32,853  

UnipolSai Assicurazioni SpA

    11,528       27,270  

Wuestenrot & Wuerttembergische AG

    6,669       92,485  

Zurich Insurance Group AG

    2,262       1,070,290  
              20,329,272  
Interactive Media & Services – 0.2%  

Adevinta ASA*

    1,107       9,716  

Auto Trader Group plc(b)

    14,118       106,421  

Baltic Classifieds Group plc

    16,280       38,996  

Better Collective A/S*

    2,464       59,545  

carsales.com Ltd.

    6,510       113,885  

Domain Holdings Australia Ltd.(a)

    12,956       27,726  

Hemnet Group AB

    2,993       51,890  

Infocom Corp.

    1,600       26,381  

Kakaku.com, Inc.

    1,600       15,309  

Karnov Group AB*

    5,418       23,762  

LY Corp.

    38,600       97,440  

 

See Accompanying Notes to the Financial Statements.

 

200    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Interactive Media & Services – (continued)  

Moneysupermarket.com Group plc

    29,179     $ 91,705  

New Work SE

    159       11,361  

REA Group Ltd.(a)

    1,030       93,720  

Rightmove plc

    13,244       76,015  

Scout24 SE(b)

    1,232       75,555  

SEEK Ltd.(a)

    5,397       70,427  

Wirtualna Polska Holding SA(b)

    1,107       28,213  
              1,018,067  
IT Services – 1.1%  

Addnode Group AB, Class B

    9,440       58,680  

Adesso SE

    220       20,719  

Alten SA

    616       72,469  

Atea ASA

    2,420       25,171  

Atos SE* (a)

    38,610       268,861  

Bechtle AG

    1,364       60,669  

BIPROGY, Inc.

    1,100       27,238  

CANCOM SE

    1,981       49,249  

Capgemini SE

    2,262       398,091  

CGI, Inc.*

    3,081       297,125  

Change Holdings, Inc.(a)

    3,500       35,175  

Computacenter plc

    1,092       34,002  

Data#3 Ltd.(a)

    12,760       54,695  

Digital Garage, Inc.

    1,300       25,752  

DTS Corp.

    2,100       42,639  

Econocom Group SA/NV

    34,295       83,918  

FDM Group Holdings plc

    5,818       30,816  

Formula Systems 1985 Ltd.

    389       22,029  

Fujitsu Ltd.

    2,600       333,316  

Future Corp.

    3,400       38,368  

GFT Technologies SE

    924       27,523  

GMO internet group, Inc.

    1,200       17,293  

Indra Sistemas SA(a)

    39,507       553,305  

Kainos Group plc

    4,469       60,845  

Keywords Studios plc

    4,346       68,821  

KNOW IT AB

    1,144       14,335  

Kontron AG

    3,168       63,623  

Matrix IT Ltd.

    11,427       192,834  

Megaport Ltd.* (a)

    10,561       63,591  

NEC Corp.

    3,900       185,543  
Investments   Shares     Value  
IT Services – (continued)  

NEC Networks & System Integration Corp.

    2,400     $ 32,186  

NET One Systems Co. Ltd.

    2,300       34,869  

Netcompany Group A/S* (a) (b)

    1,886       58,813  

NEXTDC Ltd.*

    12,078       89,854  

Nomura Research Institute Ltd.

    6,245       162,635  

NS Solutions Corp.

    800       23,084  

NTT Data Group Corp.

    9,400       114,424  

Obic Co. Ltd.

    800       117,508  

One Software Technologies Ltd.

    3,880       39,351  

Otsuka Corp.

    2,500       99,426  

Reply SpA

    484       45,455  

SCSK Corp.

    2,700       45,792  

Secunet Security Networks AG

    123       16,667  

SHIFT, Inc.*

    300       53,782  

Shopify, Inc., Class A*

    17,940       846,311  

Simplex Holdings, Inc.

    4,100       67,952  

Societe pour l’Informatique Industrielle

    656       31,133  

Softcat plc

    369       5,664  

Sopra Steria Group SACA

    396       70,864  

SUNeVision Holdings Ltd.

    90,000       33,471  

TechMatrix Corp.

    3,300       32,380  

TietoEVRY OYJ

    2,254       47,125  

TIS, Inc.

    4,600       97,349  
              5,392,790  
Leisure Products – 0.5%  

Bandai Namco Holdings, Inc.

    11,700       239,724  

Beneteau SACA

    13,143       158,093  

BRP, Inc.(a)

    12,207       824,176  

Games Workshop Group plc

    684       81,962  

MIPS AB(b)

    1,517       37,271  

Mizuno Corp.

    7,800       226,102  

Sanlorenzo SpA(a)

    984       34,947  

Sega Sammy Holdings, Inc.

    2,600       40,276  

Shimano, Inc.

    1,100       156,562  

Spin Master Corp.(b)

    1,936       46,230  

Technogym SpA(b)

    4,905       36,836  

Thule Group AB(b)

    2,024       45,887  

Tomy Co. Ltd.

    4,600       62,920  

Universal Entertainment Corp.

    300       4,241  

Yamaha Corp.

    2,800       73,566  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     201  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Leisure Products – (continued)  

Yonex Co. Ltd.(a)

    5,600     $ 60,088  
              2,128,881  
Life Sciences Tools & Services – 0.3%  

AddLife AB, Class B

    6,847       44,553  

Bachem Holding AG(a)

    328       23,644  

Biotage AB

    3,690       37,585  

Chemometec A/S

    902       37,172  

Eurofins Scientific SE(a)

    1,950       98,585  

Evotec SE*

    3,042       52,314  

Gerresheimer AG

    574       53,331  

Lonza Group AG (Registered)

    1,092       380,139  

Oxford Nanopore Technologies plc*

    35,096       86,708  

QIAGEN NV*

    3,377       125,360  

Sartorius AG (Preference)

    390       97,369  

Sartorius Stedim Biotech

    390       72,779  

Siegfried Holding AG (Registered)

    88       69,574  

SKAN Group AG

    451       33,749  

Tecan Group AG (Registered)

    220       62,950  

Wuxi Biologics Cayman, Inc.* (b)

    55,500       344,720  
              1,620,532  
Machinery – 3.4%  

Aalberts NV

    1,454       45,215  

Alfa Laval AB

    4,680       151,048  

Alstom SA(a)

    6,346       85,523  

Amada Co. Ltd.

    7,200       68,936  

ANDRITZ AG

    1,517       69,591  

Atlas Copco AB, Class A

    38,142       492,280  

Atlas Copco AB, Class B

    24,609       275,437  

ATS Corp.*

    1,476       49,652  

AutoStore Holdings Ltd.* (b)

    15,006       16,548  

Beijer Alma AB

    2,304       36,583  

Bodycote plc

    11,283       78,588  

Bucher Industries AG (Registered)

    82       29,140  

Burckhardt Compression Holding AG

    132       66,722  

Bystronic AG

    55       26,229  
Investments   Shares     Value  
Machinery – (continued)  

Cargotec OYJ, Class B

    684     $ 26,910  

CKD Corp.

    4,100       50,978  

CNH Industrial NV

    19,227       212,680  

Concentric AB

    902       12,643  

Construcciones y Auxiliar de Ferrocarriles SA(a)

    5,967       177,861  

Daetwyler Holding AG

    176       30,905  

Daifuku Co. Ltd.

    6,900       112,376  

Daimler Truck Holding AG

    11,154       349,213  

Danieli & C Officine Meccaniche SpA(a)

    4,095       108,210  

Danieli & C Officine Meccaniche SpA (Retirement Savings Plan)

    13,221       266,356  

DMG Mori Co. Ltd.

    2,100       34,243  

Duerr AG

    3,240       66,336  

Ebara Corp.

    1,100       47,938  

Electrolux Professional AB, Class B

    13,038       52,583  

Epiroc AB, Class A

    9,048       148,605  

Epiroc AB, Class B

    6,280       86,955  

FANUC Corp.

    14,900       359,402  

FLSmidth & Co. A/S(a)

    2,730       102,143  

Fluidra SA

    912       16,021  

Fuji Corp.

    1,000       14,900  

Fujitec Co. Ltd.

    2,400       51,551  

GEA Group AG

    2,886       98,318  

Georg Fischer AG (Registered)

    1,517       78,213  

Giken Ltd.(a)

    1,200       14,104  

Glory Ltd.

    4,200       77,555  

Harmonic Drive Systems, Inc.

    1,500       32,091  

Hitachi Construction Machinery Co. Ltd.

    2,800       71,218  

Hitachi Zosen Corp.

    58,500       301,684  

Hoshizaki Corp.

    2,400       76,828  

Husqvarna AB, Class B

    7,480       48,270  

IHI Corp.

    2,500       47,278  

IMI plc

    3,784       67,268  

Indutrade AB

    4,894       86,358  

Interpump Group SpA

    1,584       65,967  

Iveco Group NV*

    68,328       574,459  

Japan Steel Works Ltd. (The)

    900       14,399  

Jungheinrich AG (Preference)

    3,036       81,317  

Kardex Holding AG (Registered)

    264       50,882  

 

See Accompanying Notes to the Financial Statements.

 

202    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Machinery – (continued)  

Kawasaki Heavy Industries Ltd.

    2,800     $ 60,864  

KION Group AG

    1,419       43,257  

Kitz Corp.(a)

    27,300       182,246  

Komatsu Ltd.

    19,500       445,895  

Komax Holding AG (Registered)

    258       50,973  

Kone OYJ, Class B

    5,460       235,985  

Konecranes OYJ

    1,394       45,545  

Krones AG

    246       23,870  

KSB SE & Co. KGaA (Preference)

    273       152,360  

Kubota Corp.

    15,600       207,458  

Kurita Water Industries Ltd.

    2,500       74,912  

Kyokuto Kaihatsu Kogyo Co. Ltd.

    11,700       141,146  

Makino Milling Machine Co. Ltd.(a)

    7,800       321,384  

Makita Corp.

    4,400       112,175  

Manitou BF SA

    3,958       83,421  

Max Co. Ltd.

    2,800       46,758  

Meidensha Corp.

    15,600       241,759  

METAWATER Co. Ltd.

    4,100       51,194  

Metso OYJ

    12,051       105,801  

MINEBEA MITSUMI, Inc.

    7,311       112,457  

MISUMI Group, Inc.

    4,100       61,170  

Mitsubishi Heavy Industries Ltd.

    7,800       396,168  

Mitsubishi Logisnext Co. Ltd.

    4,300       33,334  

Mitsuboshi Belting Ltd.

    1,300       37,169  

Miura Co. Ltd.

    2,100       40,261  

Morgan Advanced Materials plc

    19,516       53,284  

Morita Holdings Corp.

    15,600       158,632  

Nabtesco Corp.

    2,900       50,745  

Nachi-Fujikoshi Corp.

    7,800       192,624  

NGK Insulators Ltd.

    4,100       49,597  

Nikkiso Co. Ltd.

    4,100       25,908  

Nitta Corp.

    7,800       174,598  

Noritake Co. Ltd.(a)

    3,900       150,649  

NTN Corp.

    175,500       307,208  

OC Oerlikon Corp. AG (Registered)(a)

    60,723       241,010  

Organo Corp.

    7,800       253,141  

OSG Corp.

    1,600       18,066  

Palfinger AG

    787       19,008  

Pfeiffer Vacuum Technology AG

    220       33,904  
Investments   Shares     Value  
Machinery – (continued)  

Rational AG

    55     $ 31,248  

Rotork plc

    13,640       48,463  

Sandvik AB

    16,224       275,321  

Schindler Holding AG

    626       126,019  

Schindler Holding AG (Registered)

    400       77,578  

Seatrium Ltd.*

    649,543       53,099  

SFS Group AG

    220       21,854  

Shibaura Machine Co. Ltd.(a)

    7,800       190,049  

Shibuya Corp.

    7,800       126,081  

Shima Seiki Manufacturing Ltd.

    4,100       41,286  

Shinmaywa Industries Ltd.(a)

    19,500       154,383  

SKF AB, Class A

    1,408       22,709  

SKF AB, Class B

    5,760       92,850  

SMC Corp.

    900       408,148  

Spirax-Sarco Engineering plc

    1,092       108,551  

Stabilus SE

    1,516       95,985  

Stadler Rail AG

    1,056       35,647  

Star Micronics Co. Ltd.

    11,700       139,138  

Sulzer AG (Registered)

    280       22,983  

Sumitomo Heavy Industries Ltd.

    3,300       74,587  

Tadano Ltd.

    8,900       65,966  

Takeuchi Manufacturing Co. Ltd.

    2,600       72,964  

Takuma Co. Ltd.(a)

    27,500       263,660  

Techtronic Industries Co. Ltd.

    19,500       177,690  

THK Co. Ltd.

    1,700       29,971  

Tocalo Co. Ltd.

    3,800       33,949  

TOMRA Systems ASA

    3,872       30,604  

Toyota Industries Corp.

    3,900       284,688  

Trelleborg AB, Class B

    4,454       112,260  

Troax Group AB

    1,806       28,837  

Tsubakimoto Chain Co.

    10,000       250,586  

Tsugami Corp.

    19,500       137,773  

Union Tool Co.

    500       11,753  

Valmet OYJ(a)

    3,228       72,198  

VAT Group AG(b)

    429       151,179  

Vesuvius plc

    74,763       365,606  

Volvo AB, Class A

    3,212       64,225  

Volvo AB, Class B

    33,150       655,425  

Wacker Neuson SE

    10,023       183,282  

Wartsila OYJ Abp

    5,720       67,958  

Weir Group plc (The)

    3,920       81,197  

Yaskawa Electric Corp.

    3,900       125,592  
              16,055,788  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     203  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Marine Transportation – 0.8%  

AP Moller – Maersk A/S, Class A

    65     $ 105,858  

AP Moller – Maersk A/S, Class B

    117       194,272  

Clarkson plc

    1,408       45,191  

D/S Norden A/S

    7,839       444,717  

Dfds A/S

    11,154       321,604  

Golden Ocean Group Ltd.

    4,796       35,417  

Gram Car Carriers ASA

    4,879       89,529  

Hoegh Autoliners ASA

    25,350       204,902  

Iino Kaiun Kaisha Ltd.

    35,100       248,455  

Irish Continental Group plc

    7,708       35,034  

Kawasaki Kisen Kaisha Ltd.(a)

    5,900       200,361  

Kuehne + Nagel International AG (Registered)(a)

    780       209,560  

Mitsui OSK Lines Ltd.(a)

    8,900       228,193  

MPC Container Ships ASA

    111,618       157,610  

Nippon Yusen KK(a)

    11,700       284,070  

NS United Kaiun Kaisha Ltd.(a)

    4,000       112,780  

Odfjell SE, Class A

    11,760       124,740  

Pacific Basin Shipping Ltd.

    1,755,000       506,901  

SITC International Holdings Co. Ltd.

    24,000       36,930  

Stolt-Nielsen Ltd.

    1,435       47,205  

Wallenius Wilhelmsen ASA

    2,952       24,772  

Wilh Wilhelmsen Holding ASA, Class A

    5,187       145,790  

Wilh Wilhelmsen Holding ASA, Class B

    2,091       58,771  
              3,862,662  
Media – 1.0%  

4imprint Group plc

    1,517       92,408  

Ascential plc*

    26,292       83,525  

Atresmedia Corp. de Medios de Comunicacion SA

    32,019       119,740  

Cogeco Communications, Inc.

    5,460       214,821  

CyberAgent, Inc.

    6,300       32,851  

Dentsu Group, Inc.

    3,900       112,021  

Eutelsat Communications SACA(a)

    48,594       206,996  

Future plc

    38,649       414,818  

Hakuhodo DY Holdings, Inc.

    4,700       37,660  

Informa plc

    18,720       161,646  
Investments   Shares     Value  
Media – (continued)  

IPSOS SA

    12,909     $ 625,751  

ITV plc

    84,280       65,309  

JCDecaux SE*

    968       15,102  

Kadokawa Corp.

    2,200       41,902  

Lagardere SA(a)

    1,722       34,110  

Metropole Television SA

    23,322       291,626  

MFE-MediaForEurope NV, Class A(a)

    59,459       107,748  

MFE-MediaForEurope NV, Class B(a)

    21,558       57,081  

Next 15 Group plc

    5,104       39,143  

Nine Entertainment Co. Holdings
Ltd.(a)

    34,440       40,231  

oOh!media Ltd.(a)

    47,520       39,264  

ProSiebenSat.1 Media SE

    60,333       336,588  

Publicis Groupe SA

    3,627       274,956  

RTL Group SA(a)

    1,056       36,790  

S4 Capital plc* (a)

    22,509       17,330  

Sanoma OYJ

    3,895       30,095  

Schibsted ASA, Class A

    2,870       57,340  

SES SA, Class A, ADR

    17,940       104,389  

SKY Perfect JSAT Holdings, Inc.

    54,600       250,206  

Stroeer SE & Co. KGaA

    620       28,337  

Television Francaise 1 SA(a)

    29,796       209,752  

TV Asahi Holdings Corp.

    8,400       89,799  

TX Group AG

    205       19,035  

Viaplay Group AB, Class B* (a)

    1,188       2,533  

Vivendi SE

    11,795       105,424  

WPP plc

    21,684       185,924  

YouGov plc

    4,715       48,632  
              4,630,883  
Metals & Mining – 5.0%  

Acerinox SA

    66,924       650,654  

Agnico Eagle Mines Ltd.

    7,421       347,676  

Alamos Gold, Inc., Class A

    4,007       49,559  

Alleima AB

    73,788       448,435  

Allkem Ltd.* (a)

    8,316       50,231  

Alumina Ltd.*

    7,667       3,786  

AMG Critical Materials NV

    10,920       283,713  

Anglo American plc

    27,456       698,480  

Antofagasta plc

    5,371       87,660  

Aperam SA(a)

    1,640       45,330  

 

See Accompanying Notes to the Financial Statements.

 

204    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Metals & Mining – (continued)  

ArcelorMittal SA

    10,881     $ 240,145  

ARE Holdings, Inc.(a)

    27,300       344,303  

Aurubis AG

    738       60,580  

AVZ Minerals Ltd.* ‡ (a)

    111,012       13,355  

Aya Gold & Silver, Inc.*

    5,002       27,059  

B2Gold Corp.

    28,059       89,740  

Barrick Gold Corp.

    25,662       411,585  

Bekaert SA

    11,817       477,140  

Bellevue Gold Ltd.* (a)

    49,941       45,691  

BHP Group Ltd.

    107,757       3,036,072  

BlueScope Steel Ltd.

    9,711       115,592  

Boliden AB

    5,577       142,637  

Capricorn Metals Ltd.* (a)

    19,272       57,716  

Capstone Copper Corp.*

    7,626       25,928  

Centamin plc

    402,129       402,326  

Centerra Gold, Inc.

    17,010       86,382  

Chalice Mining Ltd.* (a)

    6,068       6,877  

Champion Iron Ltd.(a)

    6,468       29,158  

Chubu Steel Plate Co. Ltd.

    7,800       105,222  

Core Lithium Ltd.* (a)

    98,236       22,391  

De Grey Mining Ltd.* (a)

    86,240       65,250  

Deterra Royalties Ltd.

    29,807       88,700  

Dowa Holdings Co. Ltd.

    1,100       33,252  

Dundee Precious Metals, Inc.(a)

    66,222       433,609  

Eldorado Gold Corp.*

    9,840       106,321  

Emerald Resources NL*

    21,402       35,096  

Endeavour Mining plc

    3,344       68,982  

Equinox Gold Corp.* (a)

    14,247       62,294  

Eramet SA

    3,627       250,151  

ERO Copper Corp.* (a)

    4,268       57,860  

Evolution Mining Ltd.

    35,786       80,889  

Falcon Metals Ltd.*

    1       (e) 

Ferrexpo plc*

    104,040       95,632  

Filo Corp.*

    4,428       57,605  

First Majestic Silver Corp.(a)

    14,596       75,070  

First Quantum Minerals Ltd.(a)

    8,697       100,674  

Fortescue Metals Group Ltd.(a)

    35,958       507,700  

Fortuna Silver Mines, Inc.*

    9,512       26,653  

Franco-Nevada Corp.

    2,821       342,808  

Fresnillo plc

    3,872       26,020  

Glencore plc

    233,571       1,233,331  
Investments   Shares     Value  
Metals & Mining – (continued)  

Gold Road Resources Ltd.(a)

    59,580     $ 71,485  

Granges AB

    37,167       356,945  

Grupa Kety SA

    308       51,894  

Hill & Smith plc

    3,280       65,592  

Hudbay Minerals, Inc.

    119,301       519,914  

IAMGOLD Corp.*

    25,911       66,259  

IGO Ltd.

    10,332       62,212  

Iluka Resources Ltd.

    9,909       45,423  

Imdex Ltd.

    25,872       27,028  

Ivanhoe Mines Ltd., Class A* (a)

    10,250       75,458  

Jastrzebska Spolka Weglowa SA*

    18,681       221,388  

JFE Holdings, Inc.

    11,700       161,040  

K92 Mining, Inc.* (a)

    16,544       59,586  

KGHM Polska Miedz SA

    3,160       84,174  

Kinross Gold Corp.

    21,865       114,030  

Kobe Steel Ltd.(a)

    10,800       125,654  

Kyoei Steel Ltd.(a)

    7,800       97,754  

Labrador Iron Ore Royalty Corp.

    22,074       484,968  

Liontown Resources Ltd.* (a)

    27,470       28,002  

Lithium Americas Corp.* (a)

    2,508       13,857  

Lundin Gold, Inc.

    6,342       76,383  

Lundin Mining Corp.

    12,726       79,386  

Lynas Rare Earths Ltd.* (a)

    13,899       62,041  

MAG Silver Corp.*

    4,656       46,518  

Maruichi Steel Tube Ltd.

    2,000       49,166  

Mineral Resources Ltd.(a)

    2,808       102,691  

Mitsubishi Materials Corp.

    4,100       65,164  

Mitsui Mining & Smelting Co. Ltd.

    19,500       502,034  

Nickel Industries Ltd.(a)

    886,548       418,182  

Nippon Light Metal Holdings Co. Ltd.

    19,500       212,453  

Nippon Steel Corp.

    19,415       414,337  

Nittetsu Mining Co. Ltd.(a)

    3,900       121,420  

Norsk Hydro ASA

    28,470       162,282  

Northern Star Resources Ltd.

    16,700       123,605  

Novagold Resources, Inc.*

    7,749       26,960  

OceanaGold Corp.

    237,716       397,264  

Orla Mining Ltd.* (a)

    10,780       33,002  

OSAKA Titanium Technologies
Co. Ltd.(a)

    1,300       27,297  

Osisko Gold Royalties Ltd.

    8,590       104,881  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     205  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Metals & Mining – (continued)  

Osisko Mining, Inc.*

    17,794     $ 34,479  

Outokumpu OYJ(a)

    7,392       30,261  

Pan American Silver Corp.(a)

    6,630       96,758  

Perseus Mining Ltd.

    37,802       40,808  

Pilbara Minerals Ltd.(a)

    34,446       80,041  

Regis Resources Ltd.*

    40,098       43,921  

Resolute Mining Ltd.*

    109,347       24,924  

Rio Tinto Ltd.

    7,761       577,774  

Rio Tinto plc

    23,517       1,499,604  

Salzgitter AG

    13,221       328,683  

Sandfire Resources Ltd.* (a)

    11,931       45,098  

Sandstorm Gold Ltd.

    13,772       62,995  

Sanyo Special Steel Co. Ltd.

    8,200       137,691  

Sayona Mining Ltd.* (a)

    407,175       19,335  

Seabridge Gold, Inc.*

    5,588       61,062  

Silver Lake Resources Ltd.* (a)

    2,337       1,554  

SilverCrest Metals, Inc.* (a)

    9,416       46,597  

Sims Ltd.(a)

    3,192       25,222  

South32 Ltd.

    97,266       204,459  

SSAB AB, Class A

    6,150       36,792  

SSAB AB, Class B

    12,333       71,442  

SSR Mining, Inc.

    3,864       53,413  

Stelco Holdings, Inc.

    11,856       333,753  

Straits Trading Co. Ltd.

    53,300       74,695  

Sumitomo Metal Mining Co. Ltd.

    5,700       158,679  

Teck Resources Ltd., Class B

    9,438       333,126  

thyssenkrupp AG

    8,316       57,645  

Toho Titanium Co. Ltd.(a)

    1,700       21,822  

Tokyo Steel Manufacturing Co. Ltd.

    4,100       46,890  

UACJ Corp.

    10,700       215,491  

voestalpine AG

    1,880       46,817  

Vulcan Energy Resources Ltd.* (a)

    6,732       8,823  

Wesdome Gold Mines Ltd.*

    8,888       47,505  

West African Resources Ltd.* (a)

    335,049       156,981  

Wheaton Precious Metals Corp.(a)

    6,591       278,073  

Yamato Kogyo Co. Ltd.

    1,300       61,616  

Yodogawa Steel Works Ltd.

    10,700       247,991  

Zimplats Holdings Ltd.

    2,255       28,541  
              23,552,410  
Investments   Shares     Value  
Multi-Utilities – 0.7%  

A2A SpA

    29,479     $ 55,183  

ACEA SpA

    1,552       18,652  

AGL Energy Ltd.

    12,344       84,018  

Algonquin Power & Utilities Corp.(a)

    11,661       58,630  

Atco Ltd., Class I

    1,968       50,396  

Canadian Utilities Ltd., Class A

    1,628       34,407  

Centrica plc

    126,555       241,563  

E.ON SE

    48,633       576,765  

Engie SA

    38,454       609,851  

Hera SpA

    19,272       54,063  

Iren SpA

    210,717       420,733  

National Grid plc

    53,469       634,935  

REN – Redes Energeticas Nacionais SGPS SA

    17,917       46,588  

Sembcorp Industries Ltd.

    16,300       54,609  

Telecom Plus plc

    4,728       88,582  

Veolia Environnement SA

    12,675       346,057  
              3,375,032  
Office REITs – 0.3%  

Allied Properties REIT, REIT(a)

    22,464       256,477  

Centuria Office REIT, REIT(a)

    187,161       129,759  

Champion REIT, REIT

    108,000       34,092  

CLS Holdings plc, REIT

    14,403       15,153  

Covivio SA, REIT

    760       32,454  

Cromwell Property Group, REIT(a)

    581,100       117,736  

Derwent London plc, REIT

    2,870       63,488  

Dexus, REIT

    14,476       59,392  

Gecina SA, REIT

    440       43,066  

Global One Real Estate Investment Corp., REIT

    48       36,386  

Great Portland Estates plc, REIT

    12,800       60,575  

Ichigo Office REIT Investment Corp., REIT

    41       22,985  

Japan Excellent, Inc., REIT(a)

    41       35,898  

Japan Prime Realty Investment Corp., REIT

    13       30,387  

Japan Real Estate Investment Corp., REIT

    24       88,904  

KDX Realty Investment Corp., REIT(a)

    143       148,833  

 

See Accompanying Notes to the Financial Statements.

 

206    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Office REITs – (continued)  

Keppel REIT, REIT

    73,833     $ 42,843  

Mirai Corp., REIT(a)

    88       26,526  

Mori Hills REIT Investment Corp., REIT

    16       14,949  

Nippon Building Fund, Inc., REIT(a)

    24       96,193  

One REIT, Inc., REIT

    14       24,202  

Orix JREIT, Inc., REIT

    49       56,233  

Precinct Properties Group, REIT(a)

    103,566       66,865  

Workspace Group plc, REIT

    8,954       52,392  
              1,555,788  
Oil, Gas & Consumable Fuels – 7.2%  

Advantage Energy Ltd.*

    59,046       428,304  

Africa Oil Corp.

    140,972       259,959  

Aker BP ASA

    6,011       172,770  

Ampol Ltd.

    5,226       105,420  

ARC Resources Ltd.

    14,313       230,018  

Athabasca Oil Corp.*

    204,633       607,303  

Baytex Energy Corp.

    232,323       1,004,097  

Beach Energy Ltd.

    39,336       38,479  

Birchcliff Energy Ltd.(a)

    88,842       490,207  

Bluenord ASA*

    8,424       447,151  

Boss Energy Ltd.*

    21,197       57,978  

BP plc

    361,686       2,205,851  

BRIGHTOIL* ‡

    50,147        

BW Energy Ltd.*

    31,818       79,462  

BW LPG Ltd.(b)

    25,545       361,280  

Cameco Corp.(a)

    6,435       262,962  

Canadian Natural Resources Ltd.

    23,166       1,469,475  

Cardinal Energy Ltd.(a)

    39,585       211,576  

Cenovus Energy, Inc.(a)

    28,275       538,106  

Cool Co. Ltd.

    7,917       103,111  

Cosmo Energy Holdings Co. Ltd.(a)

    1,600       58,107  

Crescent Point Energy Corp.

    12,163       97,427  

CropEnergies AG

    9,640       82,739  

Denison Mines Corp.*

    53,196       85,068  

Diversified Energy Co. plc(a) (b)

    326,079       264,512  

DNO ASA

    290,667       295,826  

Enbridge, Inc.

    31,551       1,009,996  
Investments   Shares     Value  
Oil, Gas & Consumable Fuels – (continued)  

ENEOS Holdings, Inc.

    66,300     $ 244,151  

Energean plc

    4,182       43,236  

Energy Fuels, Inc.* (a)

    10,296       82,249  

Enerplus Corp.

    5,535       93,496  

Eni SpA

    51,519       840,141  

Equinor ASA

    20,982       703,269  

Equital Ltd.* (a)

    6,201       134,717  

Etablissements Maurel et Prom SA

    20,428       121,241  

Euronav NV

    2,829       50,505  

FLEX LNG Ltd.

    1,176       36,001  

Freehold Royalties Ltd.(a)

    5,060       52,049  

Frontera Energy Corp.*

    17,667       149,659  

Galp Energia SGPS SA

    11,154       167,533  

Gaztransport Et Technigaz SA

    410       52,308  

Gibson Energy, Inc.

    7,137       108,321  

Hafnia Ltd.

    7,872       51,650  

Harbour Energy plc

    13,992       43,092  

Headwater Exploration, Inc.(a)

    78,195       420,194  

Idemitsu Kosan Co. Ltd.

    5,882       132,791  

Imperial Oil Ltd.(a)

    4,134       235,339  

Inpex Corp.

    21,500       309,840  

International Petroleum Corp.* (a)

    28,977       302,450  

Itochu Enex Co. Ltd.(a)

    19,600       191,542  

Iwatani Corp.

    1,397       66,306  

Japan Petroleum Exploration Co.
Ltd.(a)

    1,700       57,810  

Karoon Energy Ltd.*

    188,916       301,423  

Keyera Corp.

    3,108       72,201  

Koninklijke Vopak NV

    1,558       52,385  

MEG Energy Corp.*

    4,928       97,264  

Naphtha Israel Petroleum Corp. Ltd.(a)

    10,742       41,183  

Neste OYJ(a)

    6,045       202,613  

New Hope Corp. Ltd.

    17,010       62,142  

NexGen Energy Ltd.*

    21,987       132,563  

NuVista Energy Ltd.*

    57,798       559,973  

Oil Refineries Ltd.

    814,086       222,963  

Okeanis Eco Tankers Corp.(b)

    4,680       134,681  

OMV AG(a)

    2,691       117,644  

ORLEN SA

    11,503       181,526  

Paladin Energy Ltd.* (a)

    151,044       90,374  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     207  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

Paramount Resources Ltd., Class A

    2,772     $ 66,552  

Parex Resources, Inc.

    36,075       690,707  

Parkland Corp.

    3,878       117,241  

Paz Oil Co. Ltd.* (a)

    575       40,815  

Pembina Pipeline Corp.

    7,956       244,597  

Peyto Exploration & Development Corp.(a)

    59,787       628,770  

PrairieSky Royalty Ltd.

    3,977       69,757  

Repsol SA

    26,871       392,667  

San-Ai Obbli Co. Ltd.(a)

    19,500       208,076  

Santos Ltd.

    66,105       321,023  

Saras SpA(a)

    151,281       219,468  

Serica Energy plc

    96,486       272,564  

Shell plc

    140,088       4,498,780  

Spartan Delta Corp.(a)

    8,979       28,847  

Strike Energy Ltd.* (a)

    129,355       31,941  

Suncor Energy, Inc.

    27,690       895,774  

Tamarack Valley Energy Ltd.(a)

    183,963       555,235  

TC Energy Corp.(a)

    15,054       517,903  

Topaz Energy Corp.

    3,731       56,976  

TORM plc, Class A(a)

    10,764       328,041  

TotalEnergies SE

    48,594       3,246,196  

Tourmaline Oil Corp.

    6,334       334,574  

United Energy Group Ltd.(a)

    358,000       57,191  

Var Energi ASA

    7,339       24,720  

VERBIO Vereinigte BioEnergie AG

    1,107       37,291  

Vermilion Energy, Inc.(a)

    54,951       792,054  

Viva Energy Group Ltd.(b)

    17,630       31,590  

Whitecap Resources, Inc.

    12,245       94,467  

Whitehaven Coal Ltd.(a)

    16,702       78,254  

Woodside Energy Group Ltd.

    39,859       864,608  
              33,672,688  
Paper & Forest Products – 0.5%  

Altri SGPS SA

    21,115       101,951  

Canfor Corp.*

    20,241       206,748  

Daio Paper Corp.

    3,745       30,564  

Ence Energia y Celulosa SA

    11,726       34,977  

Hokuetsu Corp.(a)

    54,600       415,327  

Holmen AB, Class B

    1,540       57,988  
Investments   Shares     Value  
Paper & Forest Products – (continued)  

Interfor Corp.*

    2,378     $ 29,308  

Mondi plc

    11,778       189,941  

Navigator Co. SA (The)

    5,269       20,941  

Nippon Paper Industries Co. Ltd.*

    39,000       336,835  

Oji Holdings Corp.(a)

    23,400       99,413  

Semapa-Sociedade de Investimento e Gestao

    4,873       68,814  

Stella-Jones, Inc.(a)

    2,574       134,684  

Stora Enso OYJ, Class A(a)

    2,501       30,533  

Stora Enso OYJ, Class R

    9,711       116,246  

Svenska Cellulosa AB SCA, Class A

    2,068       28,208  

Svenska Cellulosa AB SCA, Class B(a)

    6,314       86,437  

UPM-Kymmene OYJ(a)

    7,956       267,170  

West Fraser Timber Co. Ltd.(a)

    1,271       85,685  
              2,341,770  
Passenger Airlines – 0.2%  

Air Canada*

    5,192       62,570  

Air France-KLM*

    3,677       41,408  

Air New Zealand Ltd.(a)

    11,968       4,664  

ANA Holdings, Inc.*

    2,400       46,781  

Deutsche Lufthansa AG (Registered)*

    11,462       80,010  

easyJet plc*

    6,806       30,227  

Exchange Income Corp.

    2,255       69,278  

Finnair OYJ* (a)

    82,324       5,012  

Japan Airlines Co. Ltd.

    2,800       51,102  

JET2 plc

    4,018       48,854  

Norwegian Air Shuttle ASA*

    158,886       113,977  

Qantas Airways Ltd.*

    22,968       71,402  

Singapore Airlines Ltd.

    16,799       74,918  

Wizz Air Holdings plc* (b)

    1,394       26,160  
              726,363  
Personal Care Products – 1.0%  

Beiersdorf AG

    1,560       204,548  

Best World International Ltd.*

    57,400       70,805  

euglena Co. Ltd.* (a)

    4,400       21,180  

Fancl Corp.

    400       5,955  

Haleon plc

    72,774       290,974  

 

See Accompanying Notes to the Financial Statements.

 

208    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Personal Care Products – (continued)  

Interparfums SA

    159     $ 7,487  

Jamieson Wellness, Inc.(b)

    2,330       38,217  

Kao Corp.

    7,300       264,824  

Kobayashi Pharmaceutical Co. Ltd.

    900       36,964  

Kose Corp.

    700       45,792  

L’Occitane International SA

    4,500       11,560  

L’Oreal SA

    3,471       1,453,414  

Mandom Corp.

    4,100       37,414  

Milbon Co. Ltd.

    1,000       26,260  

Noevir Holdings Co. Ltd.(a)

    1,000       34,864  

Pola Orbis Holdings, Inc.

    2,000       19,994  

PZ Cussons plc

    17,220       27,958  

Rohto Pharmaceutical Co. Ltd.

    4,000       92,231  

Shiseido Co. Ltd.

    6,200       194,951  

Unilever plc

    37,011       1,746,558  
              4,631,950  
Pharmaceuticals – 4.9%  

ALK-Abello A/S, Class B*

    7,913       87,575  

Almirall SA

    4,564       41,439  

Astellas Pharma, Inc.

    27,300       342,501  

AstraZeneca plc

    23,166       2,881,355  

Bausch Health Cos., Inc.* (a)

    97,851       665,380  

Bayer AG (Registered)

    20,748       891,700  

Camurus AB*

    1,435       42,950  

Chugai Pharmaceutical Co. Ltd.

    8,900       262,102  

COSMO Pharmaceuticals NV

    741       28,132  

Daiichi Sankyo Co. Ltd.

    28,400       723,479  

Dechra Pharmaceuticals plc

    2,142       98,978  

Eisai Co. Ltd.

    4,300       226,038  

Euroapi SA*

    3,444       18,001  

Faes Farma SA

    17,897       56,089  

Financiere de Tubize SA

    510       34,932  

GSK plc

    60,879       1,076,634  

H Lundbeck A/S, Class A

    5,650       25,540  

Haw Par Corp. Ltd.

    8,200       57,218  

Hikma Pharmaceuticals plc

    2,800       64,607  

Hutchmed China Ltd.* (a)

    27,388       106,016  

Indivior plc*

    7,254       138,637  

Ipsen SA

    751       88,509  

JCR Pharmaceuticals Co. Ltd.

    2,400       18,129  
Investments   Shares     Value  
Pharmaceuticals – (continued)  

Kaken Pharmaceutical Co. Ltd.

    1,500     $ 33,012  

Kissei Pharmaceutical Co. Ltd.

    1,400       29,351  

Kyowa Kirin Co. Ltd.

    4,300       66,951  

Laboratorios Farmaceuticos Rovi SA

    1,435       76,522  

Merck KGaA

    1,989       299,273  

Mochida Pharmaceutical Co. Ltd.

    900       19,671  

Nippon Shinyaku Co. Ltd.

    1,400       56,335  

Novartis AG (Registered)

    30,888       2,869,371  

Novo Nordisk A/S, Class B

    48,282       4,628,989  

Ono Pharmaceutical Co. Ltd.

    7,800       133,987  

Orion OYJ, Class A

    352       13,952  

Orion OYJ, Class B

    1,855       73,606  

Otsuka Holdings Co. Ltd.

    7,900       263,429  

Recordati Industria Chimica e Farmaceutica SpA

    1,628       75,027  

Roche Holding AG

    429       116,531  

Roche Holding AG—BR

    10,530       2,705,830  

Sanofi SA

    16,692       1,512,043  

Santen Pharmaceutical Co. Ltd.

    4,500       38,851  

Sawai Group Holdings Co. Ltd.

    15,600       495,055  

Shionogi & Co. Ltd.

    4,200       193,769  

Sumitomo Pharma Co. Ltd.(a)

    3,600       10,935  

Taisho Pharmaceutical Holdings Co. Ltd.

    600       23,617  

Takeda Pharmaceutical Co. Ltd.

    23,400       627,780  

Teva Pharmaceutical Industries Ltd.*

    23,868       201,833  

Torii Pharmaceutical Co. Ltd.

    800       19,228  

Towa Pharmaceutical Co. Ltd.

    9,200       168,090  

Tsumura & Co.

    900       16,028  

UCB SA

    2,067       150,884  

Vetoquinol SA

    308       25,947  

Virbac SACA(a)

    132       37,811  

ZERIA Pharmaceutical Co. Ltd.

    1,800       23,723  
              22,983,372  
Professional Services – 1.6%  

Adecco Group AG (Registered)

    3,549       133,529  

AFRY AB

    2,640       27,646  

ALS Ltd.

    8,712       59,187  

APM Human Services International Ltd.(a)

    211,185       279,458  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     209  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Professional Services – (continued)  

Applus Services SA

    44,577     $ 468,823  

Arcadis NV

    1,189       50,170  

BayCurrent Consulting, Inc.

    1,400       34,749  

Bell System24 Holdings, Inc.(a)

    12,900       131,602  

Benefit One, Inc.

    1,000       7,085  

Bureau Veritas SA

    4,797       108,964  

Computershare Ltd.

    8,463       132,833  

Danel Adir Yeoshua Ltd.(a)

    533       38,194  

dip Corp.

    1,400       27,456  

DKSH Holding AG

    660       40,396  

en Japan, Inc.

    2,000       29,450  

Experian plc

    14,157       427,924  

Funai Soken Holdings, Inc.

    2,700       43,911  

GlobalData plc

    17,900       32,581  

Hays plc

    567,918       662,264  

Hilan Ltd.

    1,025       43,984  

Infomart Corp.

    17,600       41,488  

Insource Co. Ltd.

    3,800       22,081  

Intertek Group plc

    2,106       97,698  

IPH Ltd.

    14,227       61,433  

JAC Recruitment Co. Ltd.

    1,300       20,481  

Learning Technologies Group plc

    32,868       24,668  

Link Administration Holdings Ltd.(a)

    180,570       136,050  

McMillan Shakespeare Ltd.

    3,198       33,936  

MEITEC Group Holdings, Inc.

    2,400       41,821  

Nihon M&A Center Holdings, Inc.

    4,800       21,727  

Nomura Co. Ltd.

    6,000       34,191  

Open Up Group, Inc.(a)

    4,400       53,865  

Outsourcing, Inc.(a)

    35,100       256,566  

Pagegroup plc

    21,372       97,408  

Persol Holdings Co. Ltd.

    42,000       62,205  

Randstad NV

    2,301       118,787  

Recruit Holdings Co. Ltd.

    26,100       746,748  

RELX plc

    28,860       1,004,378  

RWS Holdings plc(a)

    105,144       264,871  

SGS SA (Registered)

    3,315       269,484  

SmartGroup Corp. Ltd.(a)

    7,766       42,188  

SMS Co. Ltd.

    2,000       31,298  

Synergie SE

    2,870       89,946  

TechnoPro Holdings, Inc.

    1,100       21,354  
Investments   Shares     Value  
Professional Services – (continued)  

Teleperformance SE

    780     $ 89,165  

TELUS International CDA, Inc.*

    2,214       14,162  

Thomson Reuters Corp.(a)

    2,223       265,991  

Tinexta Spa

    1,056       18,138  

Transcosmos, Inc.(a)

    7,800       157,344  

Wolters Kluwer NV

    3,705       474,250  
              7,393,928  
Real Estate Management & Development – 2.5%  

Aeon Mall Co. Ltd.

    1,990       22,509  

AFI Properties Ltd.* (a)

    2,460       66,341  

Africa Israel Residences Ltd.(a)

    2,120       89,819  

Airport City Ltd.*

    1,928       25,311  

Allreal Holding AG (Registered)

    366       58,637  

Alony Hetz Properties & Investments Ltd.

    7,216       35,085  

Altus Group Ltd.

    2,578       87,465  

Amot Investments Ltd.

    5,448       22,786  

Aroundtown SA* (a)

    317,109       712,937  

Atrium Ljungberg AB, Class B

    792       12,150  

Aura Investments Ltd.(a)

    44,280       91,941  

Azrieli Group Ltd.

    532       22,842  

Big Shopping Centers Ltd.*

    287       20,077  

Blue Square Real Estate Ltd.(a)

    1,833       89,712  

Bukit Sembawang Estates Ltd.

    8,200       21,666  

CA Immobilien Anlagen AG

    572       19,287  

Capitaland India Trust

    55,054       38,577  

CapitaLand Investment Ltd.

    42,131       90,409  

Castellum AB

    10,335       98,562  

Catena AB

    924       30,517  

Cibus Nordic Real Estate AB publ

    21,762       203,642  

City Developments Ltd.

    9,400       43,362  

Citycon OYJ

    7,298       38,524  

CK Asset Holdings Ltd.

    39,000       194,885  

Colliers International Group, Inc.(a)

    748       67,734  

Corem Property Group AB, Class B(a)

    184,002       118,412  

Daito Trust Construction Co. Ltd.

    1,500       159,959  

Daiwa House Industry Co. Ltd.

    14,700       400,587  

Deutsche EuroShop AG

    4,592       83,193  

Deutsche Wohnen SE

    1,012       21,715  

 

See Accompanying Notes to the Financial Statements.

 

210    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Real Estate Management & Development – (continued)  

Dios Fastigheter AB

    7,480     $ 40,404  

Electra Real Estate Ltd.(a)

    1,476       11,876  

Entra ASA(b)

    2,068       16,132  

ESR Group Ltd.(b)

    32,800       42,087  

Fabege AB(a)

    5,412       40,234  

Fastighets AB Balder, Class B* (a)

    12,348       52,154  

FastPartner AB, Class A

    3,124       10,849  

FirstService Corp.

    676       95,553  

G City Ltd.(a)

    28,290       68,285  

Gav-Yam Lands Corp. Ltd.

    593       3,349  

Goldcrest Co. Ltd.

    4,100       58,044  

Grainger plc

    39,273       108,369  

Grand City Properties SA*

    27,417       244,444  

Great Eagle Holdings Ltd.(a)

    79,451       129,362  

GuocoLand Ltd.*

    95,200       104,925  

Hang Lung Group Ltd.

    273,000       363,553  

Hang Lung Properties Ltd.

    44,000       58,032  

Heiwa Real Estate Co. Ltd.(a)

    1,300       33,005  

Henderson Land Development Co. Ltd.

    33,239       86,660  

Ho Bee Land Ltd.

    75,000       99,084  

Hufvudstaden AB, Class A

    2,610       27,752  

Hulic Co. Ltd.

    11,700       106,381  

Ichigo, Inc.

    17,800       38,551  

IES Holdings Ltd.*

    943       45,500  

IMMOFINANZ AG*

    2,132       42,817  

Intershop Holding AG

    76       50,358  

Israel Canada T.R Ltd.(a)

    44,720       93,960  

Isras Investment Co. Ltd.

    533       90,064  

IWG plc*

    41,041       65,738  

Jeudan A/S

    3,237       104,976  

K Wah International Holdings Ltd.

    390,000       104,670  

Katitas Co. Ltd.

    1,100       14,578  

Keihanshin Building Co. Ltd.

    4,100       37,333  

Kerry Properties Ltd.

    16,500       27,751  

Kojamo OYJ

    3,579       30,491  

Kowloon Development Co. Ltd.

    117,000       103,175  

LEG Immobilien SE*

    1,120       69,657  

Lendlease Corp. Ltd.(a)

    14,582       57,334  

Lifestyle Communities Ltd.(a)

    6,920       68,218  
Investments   Shares     Value  
Real Estate Management & Development – (continued)  

Mega Or Holdings Ltd., REIT(a)

    2,542     $ 34,773  

Melisron Ltd.

    460       24,890  

Mitsubishi Estate Co. Ltd.

    19,500       246,446  

Mitsui Fudosan Co. Ltd.

    15,600       334,466  

Mivne Real Estate KD Ltd.

    14,248       30,715  

Mobimo Holding AG (Registered)

    352       97,085  

Morguard Corp.

    1,025       74,949  

New World Development Co. Ltd.(a)

    33,590       61,560  

Nexity SA(a)

    14,898       207,548  

Nomura Real Estate Holdings, Inc.

    1,400       32,401  

NP3 Fastigheter AB

    1,462       19,484  

Nyfosa AB(a)

    48,945       235,686  

OUE Ltd.

    140,400       105,552  

Pandox AB, Class B

    5,412       53,090  

PEXA Group Ltd.*

    7,380       50,792  

Platzer Fastigheter Holding AB, Class B

    3,080       16,127  

Prashkovsky Investments and Construction Ltd.(a)

    3,040       55,276  

PSP Swiss Property AG (Registered)

    736       90,337  

Relo Group, Inc.

    2,270       22,289  

Sagax AB, Class B(a)

    2,420       43,645  

Samhallsbyggnadsbolaget i Norden AB(a)

    22,748       6,588  

SAMTY Co. Ltd.(a)

    15,600       255,047  

Savills plc(a)

    48,867       466,969  

Sino Land Co. Ltd.

    73,785       73,647  

Sirius Real Estate Ltd.

    58,680       56,822  

Starts Corp., Inc.(a)

    11,700       219,947  

StorageVault Canada, Inc.

    12,833       39,749  

Sumitomo Realty & Development Co. Ltd.(a)

    10,800       267,709  

Summit Real Estate Holdings Ltd.*

    2,706       25,832  

Sun Frontier Fudousan Co. Ltd.(a)

    11,700       112,484  

Sun Hung Kai Properties Ltd.

    33,500       344,008  

Swire Pacific Ltd., Class A

    10,500       67,230  

Swire Properties Ltd.

    16,400       31,733  

Swiss Prime Site AG (Registered)

    1,197       111,012  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     211  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Real Estate Management & Development – (continued)  

TAG Immobilien AG*

    59,709     $ 649,111  

Tokyo Tatemono Co. Ltd.

    5,200       68,294  

Tokyu Fudosan Holdings Corp.

    11,200       64,473  

Tosei Corp.(a)

    8,000       93,605  

Tricon Residential, Inc.(a)

    16,263       107,659  

UOL Group Ltd.

    6,799       29,279  

VGP NV

    738       59,870  

Villar International Ltd.

    1,599       59,999  

Vonovia SE

    17,004       390,019  

Wallenstam AB, Class B(a)

    8,888       29,943  

Wharf Holdings Ltd. (The)

    17,000       43,105  

Wharf Real Estate Investment Co. Ltd.

    25,000       87,385  

Wihlborgs Fastigheter AB

    7,304       47,167  

Wing Tai Holdings Ltd.

    57,400       56,560  

Yanlord Land Group Ltd.*

    192,000       79,180  

YH Dimri Construction & Development Ltd.(a)

    452       24,256  
              11,640,141  
Residential REITs – 0.1%  

Advance Residence Investment Corp., REIT(a)

    18       39,044  

Altarea SCA, REIT

    92       6,535  

Boardwalk REIT, REIT(a)

    1,000       46,649  

Canadian Apartment Properties REIT, REIT(a)

    1,012       29,757  

Comforia Residential REIT, Inc., REIT

    19       40,272  

Daiwa Securities Living Investments Corp., REIT

    26       19,194  

Ingenia Communities Group, REIT

    20,254       50,013  

InterRent REIT, REIT

    4,600       38,967  

Killam Apartment REIT, REIT

    2,624       29,618  

Nippon Accommodations Fund, Inc., REIT

    8       32,170  

UNITE Group plc (The), REIT

    8,364       88,146  

Xior Student Housing NV, REIT(b)

    1,581       45,371  
              465,736  
Investments   Shares     Value  
Retail REITs – 0.7%  

AEON REIT Investment Corp., REIT

    29     $ 27,574  

BWP Trust, REIT

    32,513       66,903  

CapitaLand China Trust, REIT

    44,000       25,371  

CapitaLand Integrated Commercial Trust, REIT

    75,746       97,305  

Carmila SA, REIT* (a)

    20,748       289,923  

Charter Hall Retail REIT, REIT

    35,342       68,249  

Choice Properties REIT, REIT

    3,957       34,318  

Crombie REIT, REIT(a)

    3,256       28,567  

Eurocommercial Properties NV, REIT

    15,249       326,232  

First Capital REIT, REIT

    5,822       54,687  

Fortune REIT, REIT

    41,000       22,951  

Frasers Centrepoint Trust, REIT

    12,749       19,262  

Fukuoka REIT Corp., REIT

    82       88,148  

Hammerson plc, REIT(a)

    237,021       63,390  

HMC Capital Ltd., REIT(a)

    9,954       26,785  

HomeCo Daily Needs REIT, REIT(a) (b)

    636,012       430,879  

Japan Metropolitan Fund Invest, REIT

    103       66,311  

Kiwi Property Group Ltd., REIT

    37,660       16,976  

Klepierre SA, REIT

    3,861       93,457  

Lendlease Global Commercial REIT, REIT

    143,500       53,418  

Link REIT, REIT

    38,323       175,829  

Mapletree Pan Asia Commercial Trust, REIT

    30,462       29,572  

Mercialys SA, REIT(a)

    31,200       265,146  

Primaris REIT, REIT(a)

    2,706       24,229  

Region RE Ltd., REIT(a)

    19,923       24,787  

Retail Estates NV, REIT

    3,978       241,773  

Scentre Group, REIT

    82,290       126,608  

Shaftesbury Capital plc, REIT

    109,824       138,597  

SmartCentres REIT, REIT(a)

    1,558       24,118  

Starhill Global REIT, REIT

    80,696       26,211  

Unibail-Rodamco-Westfield, REIT*

    2,145       105,791  

Unibail-Rodamco-Westfield, REIT, CHDI*

    5       12  

Vicinity Ltd., REIT

    65,692       70,708  

Waypoint REIT Ltd., REIT

    47,560       63,839  
              3,217,926  

 

See Accompanying Notes to the Financial Statements.

 

212    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Semiconductors & Semiconductor Equipment – 2.1%  

Advantest Corp.

    12,100     $ 304,807  

AEM Holdings Ltd.

    13,200       33,336  

AIXTRON SE

    2,337       65,362  

Alphawave IP Group plc* (a)

    19,492       23,179  

ams-OSRAM AG* (a)

    87,360       309,967  

ASM International NV

    702       288,272  

ASML Holding NV

    6,084       3,635,324  

ASMPT Ltd.

    5,000       42,175  

BE Semiconductor Industries NV

    1,400       143,985  

Camtek Ltd.*

    1,025       53,080  

Disco Corp.

    1,200       207,244  

Elmos Semiconductor SE

    410       26,739  

Ferrotec Holdings Corp.(a)

    15,600       269,365  

Furuya Metal Co. Ltd.

    1,000       63,786  

Infineon Technologies AG

    19,149       556,108  

Japan Material Co. Ltd.

    2,500       34,583  

Lasertec Corp.

    1,300       216,359  

Megachips Corp.

    4,900       124,890  

Melexis NV

    495       36,285  

Meyer Burger Technology AG* (a)

    187,149       50,054  

Nordic Semiconductor ASA*

    3,828       30,893  

Nova Ltd.*

    352       33,490  

Optorun Co. Ltd.

    2,900       33,032  

REC Silicon ASA*

    22,352       29,021  

Renesas Electronics Corp.*

    21,900       282,779  

Rohm Co. Ltd.

    6,300       99,256  

Rorze Corp.(a)

    400       29,291  

SCREEN Holdings Co. Ltd.

    2,200       100,728  

Shinko Electric Industries Co. Ltd.

    1,400       44,104  

Siltronic AG

    5,421       463,557  

SMA Solar Technology AG*

    328       20,022  

Socionext, Inc.(a)

    600       57,130  

SOITEC*

    369       54,800  

STMicroelectronics NV

    9,672       367,834  

SUMCO Corp.(a)

    5,700       72,828  

Tokyo Electron Ltd.

    7,300       952,237  

Tokyo Seimitsu Co. Ltd.

    1,600       73,775  

Tower Semiconductor Ltd.*

    2,139       49,484  

Tri Chemical Laboratories, Inc.

    1,800       37,558  

u-blox Holding AG* (a)

    2,418       227,705  
Investments   Shares     Value  
Semiconductors & Semiconductor Equipment – (continued)  

Ulvac, Inc.

    1,000     $ 33,880  

Weebit Nano Ltd.* (a)

    9,758       20,450  

X-Fab Silicon Foundries SE* (b)

    4,480       40,440  
              9,639,194  
Software – 1.1%  

Altium Ltd.

    1,716       42,894  

Appier Group, Inc.*

    4,100       33,191  

Asseco Poland SA

    3,362       61,472  

Atoss Software AG

    176       37,020  

BlackBerry Ltd.*

    28,587       102,755  

Bytes Technology Group plc

    15,205       90,813  

Constellation Software, Inc.

    312       624,789  

Crayon Group Holding ASA* (b)

    4,100       23,635  

Darktrace plc*

    19,721       83,757  

Dassault Systemes SE

    10,035       411,710  

Descartes Systems Group, Inc. (The)*

    1,375       99,273  

Enghouse Systems Ltd.

    2,552       59,855  

Fortnox AB

    7,995       31,586  

Fuji Soft, Inc.

    1,400       49,919  

GB Group plc

    8,897       25,803  

Hansen Technologies Ltd.

    5,576       18,323  

IRESS Ltd.(a)

    10,123       31,983  

Kinaxis, Inc.* (a)

    520       50,725  

Lectra

    1,762       44,512  

Lightspeed Commerce, Inc.*

    7,761       96,771  

Money Forward, Inc.*

    1,100       27,397  

Nemetschek SE

    884       65,781  

Nice Ltd.*

    937       144,665  

Open Text Corp.

    5,577       186,000  

Oracle Corp. Japan

    800       56,364  

QT Group OYJ* (a)

    308       17,938  

Rakus Co. Ltd.(a)

    1,600       19,608  

Sage Group plc (The)

    16,731       197,053  

SAP SE

    15,132       2,027,146  

Sinch AB* (b)

    14,637       23,063  

SiteMinder Ltd.*

    17,179       44,269  

Systena Corp.

    24,600       41,421  

TeamViewer SE* (b)

    3,239       49,625  

Technology One Ltd.

    5,166       47,493  

Temenos AG (Registered)

    779       55,760  

TomTom NV*

    6,776       40,467  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     213  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Software – (continued)  

Trend Micro, Inc.

    2,500     $ 93,136  

Truecaller AB, Class B* (a)

    16,113       38,852  

Vitec Software Group AB, Class B

    1,025       40,807  

WiseTech Global Ltd.

    3,081       113,455  
              5,351,086  
Specialized REITs – 0.0%(d)  

Arena REIT, REIT

    15,269       30,646  

Big Yellow Group plc, REIT

    4,224       48,950  

Charter Hall Social Infrastructure REIT, REIT

    16,831       25,363  

Keppel DC REIT, REIT

    21,100       26,027  

National Storage REIT, REIT(a)

    20,921       26,492  

Safestore Holdings plc, REIT

    4,488       37,223  
              194,701  
Specialty Retail – 1.4%  

ABC-Mart, Inc.

    2,100       32,316  

Accent Group Ltd.

    42,845       50,864  

Alpen Co. Ltd.(a)

    4,600       59,381  

ARCLANDS Corp.(a)

    19,518       207,881  

Aritzia, Inc.*

    1,716       26,662  

Autobacs Seven Co. Ltd.

    2,100       21,507  

Bic Camera, Inc.(a)

    4,200       31,699  

Bilia AB, Class A

    22,854       211,712  

Carasso Motors Ltd.(a)

    11,193       32,897  

CECONOMY AG*

    64,623       122,269  

Currys plc

    366,912       199,285  

DCM Holdings Co. Ltd.

    4,100       31,891  

Delek Automotive Systems Ltd.

    18,837       86,885  

Dufry AG (Registered)* (a)

    1,330       46,343  

Dunelm Group plc

    3,649       43,194  

Eagers Automotive Ltd.(a)

    4,180       34,061  

EDION Corp.(a)

    27,300       271,477  

Fast Retailing Co. Ltd.

    3,000       654,099  

Fenix Outdoor International AG

    369       21,864  

Fielmann Group AG

    607       26,062  

Fnac Darty SA(a)

    7,051       165,305  

Fox Wizel Ltd.(a)

    533       30,237  

Frasers Group plc*

    4,620       45,017  

Geo Holdings Corp.(a)

    8,000       123,768  
Investments   Shares     Value  
Specialty Retail – (continued)  

H & M Hennes & Mauritz AB, Class B

    7,596     $ 101,505  

Hornbach Holding AG & Co. KGaA

    3,081       183,348  

Hour Glass Ltd. (The)

    93,600       112,726  

IDOM, Inc.

    19,600       117,254  

Industria de Diseno Textil SA(a)

    16,380       563,560  

JB Hi-Fi Ltd.(a)

    1,722       49,248  

JD Sports Fashion plc

    53,934       83,444  

JINS Holdings, Inc.(a)

    900       24,662  

Joyful Honda Co. Ltd.

    2,000       23,348  

Kingfisher plc

    39,898       101,573  

KMD Brands Ltd.(a)

    64,862       31,313  

Kohnan Shoji Co. Ltd.(a)

    9,300       240,107  

Komeri Co. Ltd.

    11,700       241,811  

K’s Holdings Corp.

    6,100       56,592  

Leon’s Furniture Ltd.

    6,840       83,514  

Luk Fook Holdings International Ltd.

    117,672       291,450  

MEKO AB

    14,235       114,414  

Musti Group OYJ

    492       9,678  

Nick Scali Ltd.(a)

    1,599       10,914  

Nishimatsuya Chain Co. Ltd.

    15,600       199,835  

Nitori Holdings Co. Ltd.

    1,600       173,370  

Nojima Corp.

    23,400       207,045  

Pet Valu Holdings Ltd.(a)

    1,716       30,704  

Pets at Home Group plc

    24,204       82,472  

Premier Investments Ltd.(a)

    1,517       21,813  

Sanrio Co. Ltd.

    1,800       76,067  

Shimamura Co. Ltd.

    500       49,176  

Super Retail Group Ltd.(a)

    5,324       44,428  

T-Gaia Corp.

    5,100       60,515  

USS Co. Ltd.

    5,600       97,120  

VT Holdings Co. Ltd.

    35,100       117,506  

Watches of Switzerland Group plc*(c)

    13,640       82,923  

WH Smith plc

    6,786       95,520  

Yamada Holdings Co. Ltd.

    17,300       54,580  

Yellow Hat Ltd.

    11,900       143,088  

Zalando SE* (b)

    3,444       80,050  

ZOZO, Inc.(a)

    2,800       52,813  
              6,686,162  

 

See Accompanying Notes to the Financial Statements.

 

214    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Technology Hardware, Storage & Peripherals – 0.3%  

Brother Industries Ltd.

    4,000     $ 61,778  

Canon, Inc.(a)

    15,600       365,780  

Eizo Corp.(a)

    1,500       47,691  

Elecom Co. Ltd.

    1,600       17,982  

FUJIFILM Holdings Corp.

    6,200       335,822  

Konica Minolta, Inc.*

    14,200       39,343  

Logitech International SA (Registered)

    2,759       215,736  

MCJ Co. Ltd.

    23,400       167,336  

Ricoh Co. Ltd.(a)

    12,100       96,875  

Riso Kagaku Corp.

    1,700       26,222  

Seiko Epson Corp.

    7,800       106,948  

Toshiba TEC Corp.

    1,100       23,642  
              1,505,155  
Textiles, Apparel & Luxury Goods – 1.7%  

adidas AG

    2,574       454,904  

Asics Corp.

    3,400       106,168  

Brunello Cucinelli SpA

    660       52,914  

Burberry Group plc

    5,889       120,910  

Canada Goose Holdings, Inc.* (a)

    2,464       27,298  

Chow Sang Sang Holdings International Ltd.

    137,000       157,580  

Cie Financiere Richemont SA (Registered)

    7,605       893,329  

Coats Group plc

    93,931       77,051  

Crystal International Group Ltd.(b)

    209,500       63,456  

Delta Galil Ltd.

    3,588       113,257  

Descente Ltd.

    1,200       33,002  

Dr. Martens plc

    33,087       46,734  

Gildan Activewear, Inc.

    2,703       76,695  

Goldwin, Inc.

    1,000       62,425  

Hermes International SCA

    507       942,968  

HUGO BOSS AG

    1,232       71,753  

Japan Wool Textile Co. Ltd. (The)

    21,900       197,967  

Kering SA

    1,053       426,510  

LPP SA

    24       77,228  

LVMH Moet Hennessy Louis Vuitton SE

    3,861       2,752,686  
Investments   Shares     Value  
Textiles, Apparel & Luxury Goods – (continued)  

Moncler SpA

    2,925     $ 151,309  

New Wave Group AB, Class B

    5,104       33,216  

Pandora A/S

    1,170       132,254  

Puma SE

    1,599       90,085  

Samsonite International SA* (b)

    24,600       76,083  

Seiko Group Corp.

    1,200       18,526  

Stella International Holdings Ltd.

    175,500       198,275  

Swatch Group AG (The)

    429       109,460  

Swatch Group AG (The) (Registered)

    792       38,205  

Tod’s SpA*

    778       25,986  

Wacoal Holdings Corp.

    4,100       92,886  

Yue Yuen Industrial Holdings Ltd.

    273,000       319,592  
              8,040,712  
Tobacco – 0.5%  

British American Tobacco plc

    46,761       1,392,452  

Imperial Brands plc

    19,461       413,498  

Japan Tobacco, Inc.

    15,600       362,690  

Scandinavian Tobacco Group A/S(b)

    19,734       292,600  
              2,461,240  
Trading Companies & Distributors – 2.3%  

AddTech AB, Class B

    4,180       61,133  

Ashtead Group plc

    6,591       376,219  

Azelis Group NV

    1,148       19,536  

BayWa AG

    828       27,569  

Beijer Ref AB, Class B(a)

    6,100       57,710  

Bossard Holding AG (Registered), Class A

    220       45,255  

Brenntag SE

    2,228       165,132  

Bufab AB

    968       22,908  

Bunzl plc

    5,304       188,708  

Chori Co. Ltd.

    4,100       78,673  

Daiichi Jitsugyo Co. Ltd.

    11,700       149,644  

Diploma plc

    1,979       68,248  

Finning International, Inc.

    2,562       68,578  

Grafton Group plc

    11,661       109,111  

Hanwa Co. Ltd.

    14,500       431,807  

Howden Joinery Group plc

    11,221       86,816  

IMCD NV

    936       112,291  

Inaba Denki Sangyo Co. Ltd.

    4,100       84,737  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     215  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Trading Companies & Distributors – (continued)  

Inabata & Co. Ltd.(a)

    15,600     $ 322,414  

ITOCHU Corp.(a)

    31,200       1,106,921  

Japan Pulp & Paper Co. Ltd.

    3,900       121,420  

Kanamoto Co. Ltd.(a)

    11,700       188,118  

Kanematsu Corp.

    27,300       365,214  

Kloeckner & Co. SE

    26,793       165,956  

Marubeni Corp.

    35,100       504,789  

Mitani Corp.

    11,700       106,999  

Mitsubishi Corp.

    29,500       1,354,766  

Mitsui & Co. Ltd.

    32,800       1,173,215  

MonotaRO Co. Ltd.

    5,600       44,391  

Nagase & Co. Ltd.

    2,200       33,027  

Nishio Holdings Co. Ltd.

    8,100       177,837  

OEM International AB, Class B

    9,061       58,797  

Reece Ltd.(a)

    3,403       37,620  

Rexel SA

    4,415       89,763  

Richelieu Hardware Ltd.

    3,422       102,247  

RS GROUP plc

    4,346       35,713  

Russel Metals, Inc.

    21,489       534,806  

Scope Metals Group Ltd.* (a)

    1,845       47,476  

Seven Group Holdings Ltd.(a)

    3,036       53,323  

Sojitz Corp.

    3,999       82,016  

Sumitomo Corp.

    25,600       496,719  

Theme International Holdings Ltd.* (a)

    1,560,000       115,635  

Thermador Groupe(a)

    396       28,086  

Toromont Industries Ltd.

    1,230       92,499  

Toyota Tsusho Corp.

    4,800       250,578  

Travis Perkins plc

    74,568       669,224  

Trusco Nakayama Corp.

    1,800       26,873  

Yamazen Corp.

    23,400       187,886  

Yellow Cake plc* (b)

    7,602       50,920  

Yuasa Trading Co. Ltd.(a)

    7,800       211,681  
              10,991,004  
Transportation Infrastructure – 0.3%  

Aena SME SA(b)

    975       140,931  

Aeroports de Paris SA

    555       62,066  

Atlas Arteria Ltd.

    18,448       62,023  

Auckland International Airport Ltd.

    21,921       93,588  

Dalrymple Bay Infrastructure Ltd.

    15,200       26,081  
Investments   Shares     Value  
Transportation Infrastructure – (continued)  

Enav SpA(b)

    12,657     $ 42,062  

Flughafen Zurich AG (Registered)

    320       59,496  

Fraport AG Frankfurt Airport Services Worldwide*

    890       43,960  

Getlink SE

    6,552       105,509  

Hamburger Hafen und Logistik AG

    9,009       159,407  

Japan Airport Terminal Co. Ltd.

    1,200       52,534  

Kamigumi Co. Ltd.

    3,100       62,432  

Mitsubishi Logistics Corp.

    1,700       44,014  

Port of Tauranga Ltd.

    5,225       15,499  

Qube Holdings Ltd.(a)

    36,652       61,728  

SATS Ltd.*

    8,200       14,723  

Sumitomo Warehouse Co. Ltd. (The)

    4,100       65,191  

Transurban Group

    41,106       307,630  

Westshore Terminals Investment
Corp.(a)

    1,647       27,750  
              1,446,624  
Water Utilities – 0.1%  

Pennon Group plc

    6,109       53,855  

Severn Trent plc

    3,666       118,153  

United Utilities Group plc

    9,945       128,280  
              300,288  
Wireless Telecommunication Services – 0.7%  

1&1 AG

    13,338       228,674  

Airtel Africa plc(b)

    34,804       47,850  

Freenet AG

    4,141       104,786  

KDDI Corp.

    23,400       693,293  

Millicom International Cellular SA, SDR*

    4,102       64,251  

Okinawa Cellular Telephone Co.

    7,800       164,555  

Orange Belgium SA*

    1,188       17,002  

Partner Communications Co. Ltd.*

    10,619       38,559  

Rogers Communications, Inc., Class B

    5,811       215,069  

SoftBank Corp.

    42,900       482,977  

SoftBank Group Corp.(a)

    15,600       630,819  

StarHub Ltd.

    61,500       46,236  

Tele2 AB, Class B

    8,052       57,035  

 

See Accompanying Notes to the Financial Statements.

 

216    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Wireless Telecommunication Services – (continued)  

Vodafone Group plc

    474,123     $ 435,521  
              3,226,627  
Total Common Stocks
(Cost $439,086,097)

 

    461,953,866  
   
CLOSED END FUNDS – 0.0%(d)  
Independent Power and Renewable Electricity
Producers – 0.0%(d)
 

Renewables Infrastructure Group Ltd. (The)
(Cost $70,852)

    47,630       58,143  
    Number of
Rights
       
RIGHTS – 0.0%(d)  
Containers & Packaging – 0.0%(d)  

Vidrala SA, expiring 11/2/2023*

    560       2,063  
Passenger Airlines – 0.0%(d)  

Finnair OYJ, expiring 11/3/2023, price 0.03 EUR*

    82,324       32,422  
Total Rights
(Cost $36,380)

 

    34,485  
    Number of
Warrants
       
WARRANTS – 0.0%  
Construction & Engineering – 0.0%  

Webuild SpA, expiring 8/2/2030*‡(a)

    10,785        
Software – 0.0%  

Constellation Software, Inc., expiring 3/31/2040, price 11.50 CAD* ‡

    280        
Total Warrants
(Cost $–)
             
Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – 1.9%(f)  
INVESTMENT COMPANIES – 0.2%  

Dreyfus Treasury Obligations Cash Management Fund 5.38%, 11/1/2023 (Cost $1,000,000)

  $ 1,000,000     $ 1,000,000  
   
REPURCHASE AGREEMENTS – 1.7%  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $7,382,140, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $7,464,989

    7,381,058       7,381,058  

TD Prime Services LLC, 5.42%, dated 10/31/2023, due 11/1/2023, repurchase price $379,451, collateralized by various Common Stocks; total market value $420,182

    379,394       379,394  
Total Repurchase Agreements
(Cost $7,760,452)

 

    7,760,452  
Total Securities Lending Reinvestments
(Cost $8,760,452)

 

    8,760,452  

Total Investments – 100.3%

(Cost $447,953,781)

 

 

    470,806,946  

Liabilities in excess of other
assets – (0.3%)

 

    (1,568,121
NET ASSETS – 100.0%

 

  $ 469,238,825  

 

*

Non-income producing security.

 

 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $53,104,871, collateralized in the form of cash with a value of $8,760,452 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $38,403,500 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 15, 2023 –

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     217  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

  August 15, 2053 and $11,001,357 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 5.75%, and maturity dates ranging from November 13, 2023 – October 22, 2073; a total value of $58,165,309.

 

(b) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(d) 

Represents less than 0.05% of net assets.

 

(e) 

Amount less than one dollar.

 

(f) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $8,760,452.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

ADR – American Depositary Receipt

CHDI – Clearing House Electronic Subregister System (CHESS) Depository Interest

CVA – Dutch Certification

OYJ – Public Limited Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.

REIT – Real Estate Investment Trust

SCA – Limited partnership with share capital

SDR – Swedish Depositary Receipt

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 77,056,355  

Aggregate gross unrealized depreciation

    (58,985,396

Net unrealized appreciation

  $ 18,070,959  

Federal income tax cost

  $ 452,376,331  

 

Futures Contracts

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
   

Expiration

Date

   

Trading

Currency

    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

EURO STOXX 50 Index

    45       12/15/2023       EUR     $ 1,935,896     $ (83,880

FTSE 100 Index

    17       12/15/2023       GBP       1,511,667       (52,659

Nikkei 225 Index

    18       12/07/2023       JPY       1,834,825       (79,339

S&P/TSX 60 Index

    9       12/14/2023       CAD       1,471,637       (73,953

SPI 200 Index

    6       12/21/2023       AUD       644,198       (39,934
                                    $ (329,765

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

See Accompanying Notes to the Financial Statements.

 

218    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Forward Foreign Currency Contracts

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive   Counterparty   In Exchange For     Maturity
Date
    Unrealized
Appreciation/
(Depreciation)
 

USD

    680,268         BNP Paribas SA   JPY     100,000,000       12/20/2023     $ 14,407  

Total unrealized appreciation

 

          $ 14,407  

CAD

    723,792       Citibank NA   USD     534,925       12/20/2023     $ (13,108

GBP

    323,203       Toronto-Dominion Bank (The)   USD     402,451       12/20/2023       (10,107

JPY

    96,108,298         Toronto-Dominion Bank (The)   USD     661,031       12/20/2023       (21,083

Total unrealized depreciation

 

  $ (44,298

Net unrealized depreciation

 

  $ (29,891

 

Abbreviations:

 

AUD – Australian Dollar

CAD – Canadian Dollar

EUR – Euro

GBP – British Pound

JPY – Japanese Yen

USD – US Dollar

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    5.7

Austria

    0.3  

Belgium

    1.1  

Canada

    10.9  

Denmark

    2.4  

Finland

    0.7  

France

    7.3  

Germany

    6.4  

Hong Kong

    2.1  

Ireland

    0.3  

Israel

    1.1  

Italy

    3.0  

Japan

    26.6  

Netherlands

    3.1  

New Zealand

    0.3  

Norway

    1.4  

Poland

    0.5  

Portugal

    0.2  

Singapore

    1.2  

Spain

    2.3  

Sweden

    3.1  

Switzerland

    5.8  

United Kingdom

    12.6  

Other1

    1.6  
      100.0

 

1 

Includes any non-equity securities, securities lending reinvestments and net other assets (liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     219  


Table of Contents

 

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (cont.)

 

 

Security Type   % of Net Assets  

Common Stocks

    98.4

Closed End Funds

     0.0  

Rights

     0.0  

Warrants

     

Securities Lending Reinvestments

    1.9  

Others(1)

    (0.3
      100.0

 

 

Amount represents less than 0.05%.

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

220    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 100.1%  
Aerospace & Defense – 0.3%  

AECC Aviation Power Co. Ltd., Class A

    4,700     $ 22,703  

Aselsan Elektronik Sanayi ve Ticaret A/S

    34,545       50,475  

AviChina Industry & Technology Co. Ltd., Class H(a)

    81,000       36,646  

Bharat Dynamics Ltd.(b)

    705       8,249  

Bharat Electronics Ltd.

    59,406       95,075  

Colt CZ Group SE

    3,149       75,292  

Data Patterns India Ltd.

    588       13,188  

Embraer SA*

    9,400       32,787  

Hanwha Aerospace Co. Ltd.

    564       42,178  

Hanwha Systems Co. Ltd.

    689       6,479  

Hindustan Aeronautics Ltd.(b)

    3,279       71,798  

Korea Aerospace Industries Ltd.

    1,128       36,917  

Kuang-Chi Technologies Co. Ltd., Class A

    5,600       10,706  

LIG Nex1 Co. Ltd.

    250       16,123  

Mazagon Dock Shipbuilders Ltd.

    1,175       27,757  

United Aircraft Corp. PAO* ‡

    25,155,036        
              546,373  
Air Freight & Logistics – 0.3%  

Abu Dhabi Aviation Co.

    5,978       10,953  

Agility Public Warehousing Co. KSC*

    26,571       45,151  

Allcargo Logistics Ltd.

    29,563       90,810  

Aramex PJSC

    32,940       20,627  

Blue Dart Express Ltd.

    245       19,361  

CJ Logistics Corp.

    245       13,769  

Delhivery Ltd.*

    7,008       34,792  

Hyundai Glovis Co. Ltd.

    658       83,361  

JD Logistics, Inc.* (a) (b)

    28,200       33,373  

Kerry Express Thailand PCL, NVDR*

    8,700       1,123  

Kerry TJ Logistics Co. Ltd.

    8,000       9,151  

SCGJWD Logistics PCL, NVDR

    29,300       9,456  

SF Holding Co. Ltd., Class A

    7,300       39,203  

Sinotrans Ltd., Class A

    4,700       2,820  
Investments   Shares     Value  
Air Freight & Logistics – (continued)  

Sinotrans Ltd., Class H

    47,000     $ 15,437  

YTO Express Group Co. Ltd., Class A

    4,700       8,722  

Yunda Holding Co. Ltd., Class A

    5,800       7,220  

ZTO Express Cayman, Inc.

    7,050       164,974  
              610,303  
Automobile Components – 1.2%  

Apollo Tyres Ltd.

    4,465       20,448  

Asahi India Glass Ltd.

    4,900       32,905  

Balkrishna Industries Ltd.

    1,225       37,574  

Bharat Forge Ltd.

    3,791       46,414  

Bosch Ltd.

    147       34,342  

Ceat Ltd.

    799       20,235  

Cheng Shin Rubber Industry Co. Ltd.

    34,272       46,650  

CIE Automotive India Ltd.

    1,715       9,478  

Cub Elecparts, Inc.

    3,269       13,203  

Depo Auto Parts Ind Co. Ltd.

    43,152       172,954  

DN Automotive Corp.

    1,457       85,335  

Endurance Technologies Ltd.(b)

    350       6,711  

Exide Industries Ltd.

    8,526       26,154  

Fuyao Glass Industry Group Co. Ltd., Class A

    4,800       24,400  

Fuyao Glass Industry Group Co. Ltd., Class H(b)

    8,400       38,272  

Hankook & Co. Co Ltd.

    907       8,247  

Hankook Tire & Technology Co. Ltd.

    2,392       67,657  

Hanon Systems

    2,756       14,040  

HL Mando Co. Ltd.

    1,045       25,341  

Hota Industrial Manufacturing Co. Ltd.

    12,134       23,157  

Huayu Automotive Systems Co. Ltd., Class A

    9,400       22,530  

Hyundai Mobis Co. Ltd.

    1,692       261,214  

Hyundai Wia Corp.

    583       24,174  

Iljin Hysolus Co. Ltd.*

    383       5,445  

JBM Auto Ltd.

    784       11,305  

Kordsa Teknik Tekstil A/S

    23,265       68,662  

Kumho Tire Co., Inc.*

    5,635       17,545  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     221  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Automobile Components – (continued)  

Minda Corp. Ltd.

    3,724     $ 14,572  

Minth Group Ltd.

    22,000       49,035  

Motherson Sumi Wiring India Ltd.

    30,126       21,692  

MRF Ltd.

    38       49,428  

Myoung Shin Industrial Co. Ltd.*

    11,609       134,696  

Nan Kang Rubber Tire Co. Ltd.*

    14,000       15,798  

Nexen Tire Corp.

    12,517       69,047  

Nexteer Automotive Group Ltd.

    282,000       135,871  

Ningbo Tuopu Group Co. Ltd., Class A

    1,200       10,567  

Samvardhana Motherson International Ltd.

    37,565       41,486  

Sebang Global Battery Co. Ltd.

    2,115       77,283  

SL Corp.

    550       12,095  

SNT Motiv Co. Ltd.

    3,290       98,294  

Sona Blw Precision Forgings Ltd.(b)

    5,145       33,462  

Sri Trang Agro-Industry PCL, NVDR

    305,500       122,395  

Sundram Fasteners Ltd.

    1,504       22,663  

Sungwoo Hitech Co. Ltd.

    2,205       12,865  

Tianneng Power International
Ltd.(a)

    264,000       238,203  

Tong Yang Industry Co. Ltd.

    9,072       20,502  

Tube Investments of India Ltd.

    1,645       62,241  

Tung Thih Electronic Co. Ltd.

    2,872       11,732  

TVS Holdings Ltd.

    2,115       137,547  

TVS Holdings Pvt Ltd.*

    2,160       26,496  

UNO Minda Ltd.

    3,740       26,175  

Weifu High-Technology Group Co. Ltd., Class A

    4,700       10,372  
              2,618,909  
Automobiles – 2.0%  

Bajaj Auto Ltd.

    1,105       70,528  

Brilliance China Automotive Holdings Ltd.

    96,000       44,046  

BYD Co. Ltd., Class A

    2,600       84,749  

BYD Co. Ltd., Class H

    15,000       455,103  
Investments   Shares     Value  
Automobiles – (continued)  

China Motor Corp.

    7,000     $ 18,711  

Chongqing Changan Automobile Co. Ltd., Class A

    17,108       35,370  

Chongqing Changan Automobile Co. Ltd., Class B

    4,890       2,250  

Dongfeng Motor Group Co. Ltd., Class H

    940,000       413,261  

DRB-Hicom Bhd.

    347,800       101,468  

Eicher Motors Ltd.

    2,370       93,809  

Ford Otomotiv Sanayi A/S

    1,736       48,246  

Geely Automobile Holdings Ltd.

    141,000       159,838  

Great Wall Motor Co. Ltd., Class A

    4,700       18,869  

Great Wall Motor Co. Ltd., Class H

    47,000       65,593  

Guangzhou Automobile Group Co. Ltd., Class A

    13,500       18,484  

Guangzhou Automobile Group Co. Ltd., Class H

    94,000       43,969  

Hero MotoCorp Ltd.

    2,021       74,966  

Hyundai Motor Co.

    3,713       466,548  

Hyundai Motor Co. (2nd Preference)

    893       66,187  

Hyundai Motor Co. (3rd Preference)

    54       3,978  

Hyundai Motor Co. (Preference)

    624       46,019  

Kia Corp.

    6,815       388,045  

Li Auto, Inc., Class A*

    18,100       309,277  

Mahindra & Mahindra Ltd.

    15,134       265,131  

Maruti Suzuki India Ltd.

    2,115       263,993  

NIO, Inc., Class A* (a)

    22,090       163,460  

Oriental Holdings Bhd.

    8,500       11,239  

SAIC Motor Corp. Ltd., Class A

    23,500       46,627  

Sanyang Motor Co. Ltd.

    10,824       22,192  

Seres Group Co. Ltd., Class A*

    4,800       53,450  

Tata Motors Ltd.

    26,461       199,795  

Tata Motors Ltd., Class A

    8,059       40,663  

Tofas Turk Otomobil Fabrikasi A/S

    3,233       27,505  

TVS Motor Co. Ltd.

    3,351       64,027  

UMW Holdings Bhd.

    14,100       14,353  

XPeng, Inc., Class A* (a)

    18,800       138,875  

 

See Accompanying Notes to the Financial Statements.

 

222    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Automobiles – (continued)  

Yadea Group Holdings Ltd.(b)

    16,000     $ 29,241  

Yulon Motor Co. Ltd.

    18,120       41,396  
              4,411,261  
Banks – 13.7%  

Absa Group Ltd.

    22,889       207,464  

Abu Dhabi Commercial Bank PJSC

    84,698       185,169  

Abu Dhabi Islamic Bank PJSC

    39,950       112,030  

AFFIN Bank Bhd.

    6,973       2,956  

Agricultural Bank of China Ltd., Class A

    377,100       184,992  

Agricultural Bank of China Ltd., Class H

    799,000       295,109  

Akbank TAS, ADR(a)

    37,378       75,130  

Al Ahli Bank of Kuwait KSCP

    12,693       8,775  

Al Rajhi Bank

    30,033       537,161  

Alinma Bank

    15,169       133,026  

Alliance Bank Malaysia Bhd.

    27,600       19,869  

Alpha Services and Holdings SA*

    60,442       90,081  

AMMB Holdings Bhd.

    51,700       41,451  

AU Small Finance Bank Ltd.(b)

    4,794       38,526  

Axis Bank Ltd.

    36,049       425,117  

BAC Holding International Corp.

    98,352       4,945  

Banco Bradesco SA

    43,800       106,742  

Banco Bradesco SA (Preference)

    145,700       404,193  

Banco de Bogota SA

    3,242       19,514  

Banco de Chile

    1,145,202       117,275  

Banco de Credito e Inversiones SA

    2,081       49,597  

Banco del Bajio SA(b)

    18,800       57,463  

Banco do Brasil SA

    37,600       360,492  

Banco do Estado do Rio Grande do Sul SA (Preference), Class B

    79,900       172,697  

Banco Itau Chile SA

    2,352       20,588  

Banco Santander Chile

    1,814,341       78,846  

Bancolombia SA

    8,460       60,021  

Bancolombia SA (Preference)

    13,187       84,154  
Investments   Shares     Value  
Banks – (continued)  

Bandhan Bank Ltd.(b)

    11,877     $ 30,549  

Bangkok Bank PCL, NVDR

    14,400       63,101  

Bank Aladin Syariah Tbk. PT*

    279,300       18,286  

Bank AlBilad

    8,024       79,564  

Bank Al-Jazira*

    6,066       26,453  

Bank BTPN Syariah Tbk. PT

    949,400       94,133  

Bank Central Asia Tbk. PT

    836,600       460,828  

Bank Ina Perdana PT*

    14,100       3,675  

Bank Islam Malaysia Bhd.

    44,100       19,900  

Bank Jago Tbk. PT*

    9,800       972  

Bank Mandiri Persero Tbk. PT

    1,226,700       438,245  

Bank Negara Indonesia Persero Tbk. PT

    413,600       124,718  

Bank OCBC Nisp Tbk. PT

    1,217,300       85,062  

Bank of Ayudhya PCL, NVDR

    51,600       40,915  

Bank of Baroda

    30,406       71,652  

Bank of Beijing Co. Ltd., Class A

    67,200       41,873  

Bank of Changsha Co. Ltd., Class A

    9,400       9,441  

Bank of Chengdu Co. Ltd., Class A

    10,600       17,903  

Bank of China Ltd., Class A

    192,700       102,695  

Bank of China Ltd., Class H

    2,303,000       806,459  

Bank of Chongqing Co. Ltd., Class A

    14,700       15,306  

Bank of Communications Co. Ltd., Class A

    98,100       75,471  

Bank of Communications Co. Ltd., Class H

    564,000       333,732  

Bank of Hangzhou Co. Ltd., Class A

    18,800       27,488  

Bank of India

    21,338       24,565  

Bank of Jiangsu Co. Ltd., Class A

    41,780       39,393  

Bank of Nanjing Co. Ltd., Class A

    31,200       33,425  

Bank of Ningbo Co. Ltd., Class A

    15,750       53,783  

Bank of Qingdao Co. Ltd., Class H(b)

    23,500       5,977  

Bank of Shanghai Co. Ltd., Class A

    45,000       37,325  

Bank of the Philippine Islands

    30,534       54,083  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     223  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Banks – (continued)  

Bank of Xi’an Co. Ltd., Class A

    4,900     $ 2,323  

Bank of Zhengzhou Co. Ltd., Class A*

    19,239       5,495  

Bank Pan Indonesia Tbk. PT*

    71,500       5,109  

Bank Pembangunan Daerah Jawa Barat Dan Banten Tbk. PT

    2,331,200       166,567  

Bank Pembangunan Daerah Jawa Timur Tbk. PT

    1,311,300       49,943  

Bank Rakyat Indonesia Persero Tbk. PT

    1,137,400       355,147  

Bank Tabungan Negara Persero Tbk. PT

    2,293,624       176,877  

Banque Saudi Fransi

    16,121       154,051  

BDO Unibank, Inc.

    32,900       73,929  

BNK Financial Group, Inc.

    8,037       40,347  

BOC Hong Kong Holdings Ltd.

    94,000       248,677  

Boubyan Bank KSCP

    20,257       38,348  

Burgan Bank SAK

    31,504       16,589  

Canara Bank

    9,343       43,130  

Capitec Bank Holdings Ltd.

    1,432       126,410  

Chang Hwa Commercial Bank Ltd.

    113,791       60,167  

China Banking Corp.

    44,100       23,511  

China Bohai Bank Co. Ltd., Class H* (a) (b)

    1,057,500       155,423  

China CITIC Bank Corp. Ltd., Class H

    235,000       104,817  

China Construction Bank Corp., Class A

    28,200       24,161  

China Construction Bank Corp., Class H

    2,679,000       1,520,175  

China Everbright Bank Co. Ltd., Class A

    112,800       45,779  

China Everbright Bank Co. Ltd., Class H

    53,000       15,105  

China Merchants Bank Co. Ltd., Class A

    42,300       177,799  

China Merchants Bank Co. Ltd., Class H

    94,000       357,999  

China Minsheng Banking Corp. Ltd., Class A

    79,900       40,615  
Investments   Shares     Value  
Banks – (continued)  

China Minsheng Banking Corp. Ltd., Class H(a)

    141,000     $ 46,852  

China Zheshang Bank Co. Ltd., Class A

    61,100       21,290  

China Zheshang Bank Co. Ltd., Class H

    68,900       17,083  

Chongqing Rural Commercial Bank Co. Ltd., Class A

    18,800       10,918  

Chongqing Rural Commercial Bank Co. Ltd., Class H

    47,000       17,780  

CIMB Group Holdings Bhd.

    199,640       239,258  

City Union Bank Ltd.

    9,675       16,048  

CNPC Capital Co. Ltd., Class A

    28,800       23,337  

Commercial Bank PSQC (The)

    87,561       123,273  

Commercial International Bank Egypt SAE

    65,326       127,483  

Credicorp Ltd.

    1,786       223,179  

Credit Agricole Egypt SAE*

    200,173       118,712  

Credit Bank of Moscow PJSC* ‡

    229,590        

CTBC Financial Holding Co. Ltd.

    517,000       388,129  

DGB Financial Group, Inc.

    5,243       30,514  

Doha Bank QPSC

    885,292       368,365  

Dubai Islamic Bank PJSC

    80,981       119,057  

Dukhan Bank

    40,138       39,973  

E.Sun Financial Holding Co. Ltd.

    255,160       187,623  

Emirates NBD Bank PJSC

    69,560       321,002  

Equitas Small Finance Bank Ltd.(b)

    23,177       25,819  

Eurobank Ergasias Services and Holdings SA*

    57,716       94,071  

Faisal Islamic Bank of Egypt

    60,912       60,364  

Far Eastern International Bank

    111,625       39,577  

Federal Bank Ltd.

    29,186       49,304  

First Abu Dhabi Bank PJSC

    66,599       229,914  

First Financial Holding Co. Ltd.

    183,520       146,544  

Grupo Aval Acciones y Valores SA (Preference)

    116,179       12,918  

Grupo Bolivar SA

    1,518       18,626  

Grupo Elektra SAB de CV(a)

    940       60,072  

Grupo Financiero Banorte SAB de CV, Class O

    65,800       533,311  

 

See Accompanying Notes to the Financial Statements.

 

224    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Banks – (continued)  

Grupo Financiero Inbursa SAB de CV, Class O* (a)

    27,946     $ 57,555  

Grupo Security SA

    458,250       104,072  

Gulf Bank KSCP

    45,156       34,573  

Haci Omer Sabanci Holding A/S

    30,173       57,055  

Hana Financial Group, Inc.

    7,990       231,911  

HDFC Bank Ltd.

    86,809       1,539,460  

Hong Leong Bank Bhd.

    14,100       57,412  

Hong Leong Financial Group Bhd.

    4,900       18,059  

Hua Nan Financial Holdings Co. Ltd.

    155,065       97,050  

Huaxia Bank Co. Ltd., Class A

    47,000       35,966  

ICICI Bank Ltd.

    79,665       875,840  

IDFC First Bank Ltd.*

    44,885       44,584  

Indian Bank

    7,425       37,460  

IndusInd Bank Ltd.

    9,135       158,137  

Industrial & Commercial Bank of China Ltd., Class A

    244,400       157,966  

Industrial & Commercial Bank of China Ltd., Class H

    1,927,000       925,992  

Industrial Bank Co. Ltd., Class A

    51,700       106,535  

Industrial Bank of Korea

    7,144       59,086  

Intercorp Financial Services, Inc.(b)

    1,040       19,594  

Itau Unibanco Holding SA (Preference)

    131,600       699,883  

Itausa SA*

    2,548       4,337  

Itausa SA

    28,065       48,862  

Itausa SA (Preference)

    136,300       233,518  

JB Financial Group Co. Ltd.

    3,370       25,202  

Jiangsu Changshu Rural Commercial Bank Co. Ltd., Class A

    6,700       6,738  

KakaoBank Corp.

    5,029       67,622  

Karur Vysya Bank Ltd. (The)

    156,416       268,838  

Kasikornbank PCL, NVDR

    32,800       120,003  

KB Financial Group, Inc.

    10,152       387,122  

Kiatnakin Phatra Bank PCL, NVDR

    9,800       13,428  

King’s Town Bank Co. Ltd.

    24,000       27,489  
Investments   Shares     Value  
Banks – (continued)  

Komercni Banka A/S

    2,068     $ 60,473  

Kotak Mahindra Bank Ltd.

    16,638       347,593  

Krung Thai Bank PCL, NVDR

    108,000       56,490  

Kuwait Finance House KSCP

    133,292       294,530  

Kuwait International Bank KSCP

    38,492       18,279  

Kuwait Projects Co. Holding KSCP*

    56,513       19,352  

LH Financial Group PCL, NVDR

    1,616,800       44,533  

Malayan Banking Bhd.

    192,700       364,814  

Malaysia Building Society Bhd.

    14,100       2,146  

Masraf Al Rayan QSC

    83,848       48,361  

Mega Financial Holding Co. Ltd.

    182,269       206,236  

Metropolitan Bank & Trust Co.

    30,870       28,454  

Moneta Money Bank A/S(b)

    143,115       552,052  

National Bank of Greece SA* (a)

    14,852       84,772  

National Bank of Kuwait SAKP

    121,119       343,148  

Nedbank Group Ltd.

    12,267       131,243  

O-Bank Co. Ltd.

    47,000       13,505  

OTP Bank Nyrt.

    5,875       218,132  

Ping An Bank Co. Ltd., Class A

    45,300       64,749  

Piraeus Financial Holdings SA*

    15,328       45,203  

Postal Savings Bank of China Co. Ltd., Class A

    65,800       41,091  

Postal Savings Bank of China Co. Ltd., Class H(a) (b)

    188,000       85,776  

Public Bank Bhd.

    418,300       365,228  

Punjab National Bank

    59,188       51,895  

Qatar International Islamic Bank QSC

    14,288       36,299  

Qatar Islamic Bank SAQ

    25,331       121,055  

Qatar National Bank QPSC

    121,307       496,089  

Qingdao Rural Commercial Bank Corp., Class A*

    18,800       6,962  

RBL Bank Ltd.(b)

    171,080       452,980  

Regional SAB de CV

    4,900       37,226  

RHB Bank Bhd.

    42,300       49,540  

Riyad Bank

    36,942       261,438  

Saudi Awwal Bank

    6,674       59,507  

Saudi Investment Bank (The)

    13,489       52,854  

Saudi National Bank (The)

    80,088       716,215  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     225  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Banks – (continued)  

Sberbank of Russia PJSC‡

    369,050     $  

Sberbank of Russia PJSC (Preference)‡

    39,708        

SCB X PCL, NVDR

    23,400       64,127  

Security Bank Corp.

    122,200       165,834  

Shanghai Commercial & Savings Bank Ltd. (The)

    74,888       99,050  

Shanghai Pudong Development Bank Co. Ltd., Class A

    70,500       65,702  

Shanghai Rural Commercial Bank Co. Ltd., Class A

    38,400       31,274  

Sharjah Islamic Bank

    516,765       329,221  

Shinhan Financial Group Co. Ltd.

    13,724       353,122  

SinoPac Financial Holdings Co. Ltd.

    358,191       197,124  

Standard Bank Group Ltd.

    35,709       348,368  

State Bank of India

    26,602       180,699  

Taichung Commercial Bank Co. Ltd.

    54,149       24,541  

Taishin Financial Holding Co. Ltd.

    356,238       189,459  

Taiwan Business Bank

    92,269       36,270  

Taiwan Cooperative Financial Holding Co. Ltd.

    148,350       115,030  

Thanachart Capital PCL, NVDR

    19,300       26,312  

Tisco Financial Group PCL, NVDR

    9,300       24,904  

TMBThanachart Bank PCL, NVDR

    1,236,200       57,438  

Turkiye Garanti Bankasi A/S

    13,849       23,006  

Turkiye Halk Bankasi A/S*

    15,557       7,236  

Turkiye Is Bankasi A/S, Class C

    94,423       70,018  

Union Bank of India Ltd.

    42,770       52,192  

Union Bank of Taiwan

    52,500       21,366  

Union Bank of the Philippines

    7,980       8,368  

VTB Bank PJSC* ‡

    136,511,531        

Warba Bank KSCP

    13,740       7,635  

Woori Financial Group, Inc.

    18,573       163,651  
Investments   Shares     Value  
Banks – (continued)  

Yapi ve Kredi Bankasi A/S

    76,200     $ 46,432  

Yes Bank Ltd.*

    228,275       43,731  
              29,920,923  
Beverages – 1.1%  

Ambev SA

    65,800       167,795  

Anadolu Efes Biracilik ve Malt Sanayii A/S, Class B

    5,350       18,881  

Anhui Gujing Distillery Co. Ltd., Class A

    700       26,689  

Anhui Gujing Distillery Co. Ltd., Class B

    2,200       34,302  

Arca Continental SAB de CV

    6,572       58,854  

Becle SAB de CV(a)

    4,700       8,276  

Carabao Group PCL, NVDR

    4,600       8,639  

Carlsberg Brewery Malaysia Bhd.

    4,900       20,466  

China Foods Ltd.

    282,000       97,669  

China Resources Beer Holdings Co. Ltd.

    23,107       122,259  

Chongqing Brewery Co. Ltd., Class A

    600       6,436  

Cia Cervecerias Unidas SA

    2,156       12,217  

Coca-Cola Femsa SAB de CV

    9,400       71,225  

Coca-Cola Icecek A/S

    1,269       16,497  

Embotelladora Andina SA (Preference), Class B

    5,243       10,627  

Emperador, Inc.

    28,200       10,338  

Fomento Economico Mexicano SAB de CV

    28,714       324,565  

Fraser & Neave Holdings Bhd.

    3,700       20,269  

Hebei Hengshui Laobaigan Liquor Co. Ltd., Class A

    2,300       7,480  

Heineken Malaysia Bhd.

    3,800       19,014  

Hite Jinro Co. Ltd.

    1,274       20,046  

Jiangsu King’s Luck Brewery JSC Ltd., Class A

    2,300       18,386  

Jiangsu Yanghe Brewery Joint-Stock Co. Ltd., Class A

    2,100       35,038  

JiuGui Liquor Co. Ltd., Class A

    500       5,225  

Kweichow Moutai Co. Ltd., Class A

    1,600       368,310  

Lotte Chilsung Beverage Co. Ltd.

    47       5,064  

 

See Accompanying Notes to the Financial Statements.

 

226    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Beverages – (continued)  

Luzhou Laojiao Co. Ltd., Class A

    2,400     $ 70,382  

Nongfu Spring Co. Ltd.,
Class H(a) (c)

    28,800       163,975  

Osotspa PCL, NVDR

    31,700       20,726  

Radico Khaitan Ltd.

    3,384       49,460  

Shanxi Xinghuacun Fen Wine Factory Co. Ltd., Class A

    1,960       66,207  

Tsingtao Brewery Co. Ltd., Class A

    1,100       12,562  

Tsingtao Brewery Co. Ltd., Class H

    10,000       75,787  

United Breweries Ltd.

    1,379       26,751  

United Spirits Ltd.*

    5,358       66,426  

Varun Beverages Ltd.

    7,144       77,979  

Vina Concha y Toro SA

    190,397       211,237  

Wuliangye Yibin Co. Ltd., Class A

    4,700       100,190  

ZJLD Group, Inc.* (b)

    9,800       14,253  
              2,470,502  
Biotechnology – 0.6%  

3SBio, Inc.(b)

    47,000       41,807  

ABLBio, Inc.*

    1,585       18,672  

AIM Vaccine Co. Ltd.*

    4,200       4,917  

Akeso, Inc.* (a) (b)

    7,000       39,274  

Alteogen, Inc.*

    384       17,742  

BeiGene Ltd.* (a)

    12,600       182,448  

Beijing Wantai Biological Pharmacy Enterprise Co. Ltd., Class A

    1,421       8,517  

Biocon Ltd.

    6,644       17,528  

Bioneer Corp.*

    392       9,201  

Blau Farmaceutica SA

    14,100       42,498  

Bloomage Biotechnology Corp. Ltd., Class A

    611       6,384  

CARsgen Therapeutics Holdings Ltd.* (b)

    24,500       32,501  

Celltrion, Inc.

    1,700       188,183  

Daan Gene Co. Ltd., Class A

    4,700       6,255  

Ever Supreme Bio Technology Co. Ltd.

    2,480       15,254  
Investments   Shares     Value  
Biotechnology – (continued)  

GC Cell Corp.

    329     $ 7,028  

Genexine, Inc.*

    441       2,570  

Green Cross Corp.

    163       11,586  

Green Cross Holdings Corp.

    11,844       118,743  

Hugel, Inc.*

    126       13,248  

InnoCare Pharma Ltd.* (b)

    31,000       24,484  

Innovent Biologics, Inc.* (a) (b)

    23,500       138,304  

Keymed Biosciences, Inc.* (b)

    3,000       22,314  

L&C Bio Co. Ltd.

    605       12,677  

Medigen Vaccine Biologics Corp.*

    11,148       23,922  

Medytox, Inc.

    48       7,304  

Naturecell Co. Ltd.*

    1,833       9,501  

OBI Pharma, Inc.*

    10,354       25,729  

PharmaEngine, Inc.

    6,816       23,851  

PharmaEssentia Corp.*

    4,000       39,772  

PharmaResearch Co. Ltd.

    349       30,079  

Pharmicell Co. Ltd.*

    980       4,484  

Remegen Co. Ltd., Class A*

    245       2,176  

Seegene, Inc.

    637       8,999  

Shanghai Junshi Biosciences Co. Ltd., Class A*

    1,113       6,978  

Shanghai Junshi Biosciences Co. Ltd., Class H* (b)

    2,200       6,101  

Shanghai RAAS Blood Products Co. Ltd., Class A

    9,400       8,966  

SillaJen, Inc.*

    4,263       13,715  

SK Bioscience Co. Ltd.*

    468       20,999  

TaiMed Biologics, Inc.*

    6,192       16,513  

Vaxcell-Bio Therapeutics Co. Ltd.*

    371       6,208  

Voronoi, Inc.*

    384       9,511  

Zai Lab Ltd.*

    9,800       24,849  
              1,271,792  
Broadline Retail – 3.4%  

Alibaba Group Holding Ltd.*

    420,400       4,300,925  

Bukalapak.com PT Tbk.*

    700,000       9,254  

Central Retail Corp. PCL, NVDR

    51,475       52,631  

Easyhome New Retail Group Co. Ltd., Class A

    14,400       6,887  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     227  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Broadline Retail – (continued)  

El Puerto de Liverpool SAB de CV, Class C1

    6,185     $ 31,403  

Falabella SA*

    20,645       41,904  

Far Eastern Department Stores Ltd.

    49,000       36,182  

Global Digital Niaga Tbk. PT*

    387,100       11,063  

GoTo Gojek Tokopedia Tbk. PT, Class A*

    13,789,800       52,086  

Hyundai Department Store Co. Ltd.

    224       8,857  

Hyundai Home Shopping Network Corp.

    1,956       60,104  

JD.com, Inc., Class A

    65,800       839,256  

Lotte Shopping Co. Ltd.

    245       13,080  

Magazine Luiza SA*

    52,300       13,793  

MINISO Group Holding Ltd., ADR

    3,431       86,839  

Mitra Adiperkasa Tbk. PT

    171,500       18,732  

momo.com, Inc.

    1,716       28,199  

Naspers Ltd., Class N*

    2,961       459,517  

PDD Holdings, Inc., ADR* (a)

    10,716       1,086,817  

Shinsegae, Inc.

    212       26,497  

Shoppers Stop Ltd.*

    1,421       10,925  

Vipshop Holdings Ltd., ADR*

    7,943       113,267  

Woolworths Holdings Ltd.

    12,502       46,275  

Zhejiang China Commodities City Group Co. Ltd., Class A

    5,500       5,848  
              7,360,341  
Building Products – 0.3%  

Astral Ltd.

    2,214       49,215  

Beijing New Building Materials plc, Class A

    5,300       17,736  

Blue Star Ltd.

    5,405       57,430  

Cera Sanitaryware Ltd.

    245       24,963  

China Lesso Group Holdings Ltd.

    33,000       17,713  

Dynasty Ceramic PCL, NVDR

    215,500       9,533  

Kajaria Ceramics Ltd.

    1,150       17,422  

KCC Glass Corp.

    4,277       128,258  

Kyung Dong Navien Co. Ltd.

    2,585       91,682  

Prince Pipes & Fittings Ltd.*

    1,960       14,837  
Investments   Shares     Value  
Building Products – (continued)  

Qua Granite Hayal*

    19,943     $ 3,891  

Ras Al Khaimah Ceramics

    165,111       109,235  

Saudi Ceramic Co.

    935       5,932  

Taiwan Glass Industry Corp.*

    37,152       20,904  

Xinyi Glass Holdings Ltd.(a)

    59,975       68,908  

Zhuzhou Kibing Group Co. Ltd., Class A

    5,300       5,779  
              643,438  
Capital Markets – 2.1%  

360 ONE WAM Ltd.

    7,712       48,638  

Angel One Ltd.

    1,551       48,098  

B3 SA - Brasil Bolsa Balcao

    89,300       196,556  

Banco BTG Pactual SA

    18,800       110,347  

Bangkok Commercial Asset Management PCL, NVDR

    26,500       6,599  

Beyond Securities PCL, NVDR*

    37,500       4,278  

Bolsa Mexicana de Valores SAB de CV

    19,200       29,896  

Boursa Kuwait Securities Co. KPSC

    5,096       28,530  

Bursa Malaysia Bhd.

    8,000       11,401  

Caitong Securities Co. Ltd., Class A

    12,220       13,258  

Capital Securities Corp.

    49,000       21,528  

Changjiang Securities Co. Ltd., Class A

    14,100       10,963  

China Cinda Asset Management Co. Ltd., Class H

    3,525,000       342,382  

China Everbright Ltd.

    346,000       205,621  

China Galaxy Securities Co. Ltd., Class A

    5,200       8,619  

China Galaxy Securities Co. Ltd., Class H

    115,500       59,044  

China Huarong Asset Management Co. Ltd., Class H* (a) (b)

    423,000       18,921  

China International Capital Corp. Ltd., Class A

    1,600       8,055  

China International Capital Corp. Ltd., Class H(b)

    19,600       31,211  

China Merchants Securities Co. Ltd., Class A

    21,220       41,001  

 

See Accompanying Notes to the Financial Statements.

 

228    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Capital Markets – (continued)  

China Merchants Securities Co. Ltd., Class H(b)

    16,600     $ 13,726  

Chinalin Securities Co. Ltd., Class A

    4,900       9,354  

CITIC Securities Co. Ltd., Class A

    28,200       83,659  

CITIC Securities Co. Ltd., Class H

    47,000       91,422  

Coronation Fund Managers Ltd.(a)

    105,186       169,504  

CRISIL Ltd.

    342       16,829  

CSC Financial Co. Ltd., Class A

    7,500       24,781  

CSC Financial Co. Ltd., Class H(b)

    352,500       317,154  

Daishin Securities Co. Ltd.

    212       2,198  

Daishin Securities Co. Ltd. (Preference)

    530       5,219  

Daou Data Corp.

    4,700       39,777  

Daou Technology, Inc.

    10,199       123,093  

Dubai Financial Market PJSC

    33,628       11,994  

EFG Holding S.A.E.*

    444,327       239,944  

Egypt Kuwait Holding Co. SAE

    10,976       10,197  

Everbright Securities Co. Ltd., Class A

    4,700       10,571  

GF Securities Co. Ltd., Class A

    14,100       28,593  

GF Securities Co. Ltd., Class H

    28,200       36,689  

Guangzhou Yuexiu Capital Holdings Group Co. Ltd., Class A

    11,664       10,456  

Guosen Securities Co. Ltd., Class A

    24,000       31,516  

Guotai Junan Securities Co. Ltd., Class A

    18,800       37,944  

Guotai Junan Securities Co. Ltd., Class H(b)

    21,200       23,653  

Haitong Securities Co. Ltd., Class A

    18,800       25,099  

Haitong Securities Co. Ltd., Class H

    75,200       43,152  

Hanwha Investment & Securities Co. Ltd.*

    40,749       69,245  

HDFC Asset Management Co. Ltd.(b)

    1,150       37,763  
Investments   Shares     Value  
Capital Markets – (continued)  

Huatai Securities Co. Ltd., Class A

    14,400     $ 31,543  

Huatai Securities Co. Ltd., Class H(b)

    47,000       61,509  

IBF Financial Holdings Co. Ltd.*

    56,381       19,990  

ICICI Securities Ltd.(b)

    1,880       14,431  

IDFC Ltd.

    51,747       71,164  

Indian Energy Exchange Ltd.(b)

    16,732       25,291  

Industrial Securities Co. Ltd., Class A

    34,450       29,375  

Investec Ltd.

    4,353       23,677  

Is Yatirim Menkul Degerler A/S

    193,076       289,483  

JM Financial Ltd.

    165,017       162,027  

JSE Ltd.

    6,027       28,452  

KIWOOM Securities Co. Ltd.

    392       23,365  

Korea Investment Holdings Co. Ltd.

    720       26,816  

Minmetals Capital Co. Ltd., Class A

    14,400       9,996  

Mirae Asset Securities Co. Ltd.

    7,176       35,068  

Mirae Asset Securities Co. Ltd. (Preference)

    5,733       14,857  

Moscow Exchange MICEX-RTS PJSC‡

    29,911        

Motilal Oswal Financial Services Ltd.

    13,348       166,420  

Multi Commodity Exchange of India Ltd.

    583       16,322  

NH Investment & Securities Co. Ltd.

    5,356       38,389  

Ninety One Ltd.

    12,691       24,655  

Nippon Life India Asset Management Ltd.(b)

    7,791       36,630  

Noah Holdings Ltd., ADR

    20,492       234,428  

Norte Grande SA

    1,265,334       10,493  

Orient Securities Co. Ltd., Class A

    12,032       14,255  

Orient Securities Co. Ltd., Class H(b)

    20,400       9,490  

Oyak Yatirim Menkul Degerler A/S*

    36,237       61,196  

Pacific Strategic Financial Tbk. PT*

    448,500       30,775  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     229  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Capital Markets – (continued)  

Pihsiang Machinery Manufacturing Co. Ltd.* ‡

    5,000     $  

President Securities Corp.

    15,000       8,047  

PSG Financial Services Ltd.

    57,669       44,482  

Reinet Investments SCA

    1,152       23,797  

Samsung Securities Co. Ltd.

    1,927       50,367  

Saratoga Investama Sedaya Tbk. PT

    27,500       2,476  

Saudi Tadawul Group Holding Co.

    763       33,802  

SDIC Capital Co. Ltd., Class A

    19,200       17,919  

Shenwan Hongyuan Group Co. Ltd., Class A

    47,900       28,734  

Shenwan Hongyuan Group Co. Ltd., Class H(b)

    78,400       14,528  

Shinyoung Securities Co. Ltd.

    1,551       64,312  

Sociedad de Inversiones Oro Blanco SA

    1,353,420       8,721  

SPIC Industry-Finance Holdings Co. Ltd., Class A

    10,000       5,684  

Tata Investment Corp. Ltd.

    517       19,285  

UTI Asset Management Co. Ltd.

    3,250       29,366  

Western Securities Co. Ltd., Class A

    10,000       9,101  

Yuanta Securities Korea Co. Ltd.

    36,331       63,621  

Zheshang Securities Co. Ltd., Class A

    4,700       6,467  
              4,699,284  
Chemicals – 3.9%  

Aarti Industries Ltd.

    2,880       15,720  

Abou Kir Fertilizers & Chemical Industries

    9,849       24,523  

Advanced Nano Products Co. Ltd.

    147       12,985  

Advanced Petrochemical Co.

    2,025       20,133  

AECI Ltd.

    43,146       254,109  

Akzo Nobel India Ltd.

    539       15,642  

Alkyl Amines Chemicals

    220       5,662  

Allied Supreme Corp.

    2,352       22,588  

Alpek SAB de CV, Class A(a)

    24,500       14,168  
Investments   Shares     Value  
Chemicals – (continued)  

Alujain Corp.*

    13,677     $ 137,805  

Anupam Rasayan India Ltd.

    980       10,400  

Archean Chemical Industries Ltd.

    2,352       16,180  

Asia Polymer Corp.

    141,000       102,376  

Asian Paints Ltd.

    7,121       256,218  

Atul Ltd.

    259       19,417  

Avia Avian Tbk. PT

    277,300       8,728  

Balaji Amines Ltd.

    350       8,599  

Barito Pacific Tbk. PT

    466,498       33,038  

BASF India Ltd.

    400       12,126  

Batu Kawan Bhd.

    6,300       27,107  

Bayer CropScience Ltd.

    141       8,333  

Berger Paints India Ltd.

    5,901       39,591  

Boubyan Petrochemicals Co. KSCP

    7,344       14,543  

Braskem SA (Preference), Class A*

    4,900       15,614  

Carborundum Universal Ltd.

    2,499       32,174  

Castrol India Ltd.

    18,650       30,498  

Chambal Fertilisers and Chemicals Ltd.

    65,518       227,066  

Chandra Asri Petrochemical Tbk. PT

    91,200       17,109  

Chemplast Sanmar Ltd.*

    2,585       13,790  

Chengxin Lithium Group Co. Ltd., Class A

    4,900       15,728  

China General Plastics Corp.

    141,000       92,812  

China Hainan Rubber Industry Group Co. Ltd., Class A*

    9,600       5,877  

China Lumena New Materials Corp.* ‡

    22,200        

China Man-Made Fiber Corp.*

    50,000       12,224  

China Petrochemical Development Corp.*

    107,520       33,647  

China Risun Group Ltd.(b)

    49,000       20,039  

Chunbo Co. Ltd.

    47       3,438  

CNNC Hua Yuan Titanium Dioxide Co. Ltd., Class A

    7,975       5,187  

Coromandel International Ltd.

    1,898       23,777  

Cosmochemical Co. Ltd.*

    583       13,490  

D&L Industries, Inc.

    4,900       553  

DCM Shriram Ltd.

    2,303       25,628  

 

See Accompanying Notes to the Financial Statements.

 

230    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Chemicals – (continued)  

Deepak Fertilisers & Petrochemicals Corp. Ltd.

    26,367     $ 203,456  

Deepak Nitrite Ltd.

    1,105       26,368  

DL Holdings Co. Ltd.

    397       12,493  

Dongjin Semichem Co. Ltd.

    725       16,078  

Dongyue Group Ltd.

    42,000       33,441  

Eastern Polymer Group PCL, NVDR

    63,600       11,679  

Ecopro Co. Ltd.

    282       129,458  

EID Parry India Ltd.

    3,871       21,459  

Enchem Co. Ltd.*

    235       8,996  

Eternal Materials Co. Ltd.

    27,550       23,613  

Fertiglobe plc

    43,901       38,367  

Fine Organic Industries Ltd.

    343       18,208  

Finolex Industries Ltd.

    9,600       22,144  

Foosung Co. Ltd.

    1,768       13,039  

Formosa Chemicals & Fibre Corp.

    66,000       123,922  

Formosa Plastics Corp.

    81,592       193,698  

Fufeng Group Ltd.(a)

    517,000       268,259  

Galaxy Surfactants Ltd.(b)

    250       8,197  

Ganfeng Lithium Group Co. Ltd., Class A

    4,080       24,687  

Ganfeng Lithium Group Co. Ltd., Class H(b)

    9,480       33,984  

Grand Pacific Petrochemical

    47,000       22,895  

Guangzhou Tinci Materials Technology Co. Ltd., Class A

    5,000       19,001  

Gubre Fabrikalari TAS*

    833       9,660  

Gujarat Fluorochemicals Ltd.

    715       23,819  

Gujarat Narmada Valley Fertilizers & Chemicals Ltd.

    36,707       304,846  

Han Kuk Carbon Co. Ltd.

    1,470       12,397  

Hangzhou Oxygen Plant Group Co. Ltd., Class A

    2,400       10,829  

Hansol Chemical Co. Ltd.

    141       15,681  

Hanwha Solutions Corp.*

    1,786       37,887  

Hektas Ticaret TAS*

    16,074       12,453  

Hengli Petrochemical Co. Ltd., Class A*

    14,100       28,207  

Hengyi Petrochemical Co. Ltd., Class A*

    14,100       13,853  
Investments   Shares     Value  
Chemicals – (continued)  

Hoshine Silicon Industry Co. Ltd., Class A

    1,900     $ 14,864  

Huabao International Holdings Ltd.(a)

    17,000       5,714  

Huafon Chemical Co. Ltd., Class A

    14,400       14,266  

Hunan Changyuan Lico Co. Ltd., Class A

    784       913  

Hyosung Advanced Materials Corp.

    55       14,539  

Hyosung TNC Corp.

    98       25,905  

Indorama Ventures PCL, NVDR

    43,200       28,485  

Inner Mongolia Junzheng Energy & Chemical Industry Group Co. Ltd., Class A

    23,500       12,845  

Inner Mongolia Yuan Xing Energy Co. Ltd., Class A

    14,100       13,121  

International CSRC Investment Holdings Co.

    43,008       25,326  

ISU Chemical Co. Ltd.

    641       5,620  

Jiangsu Eastern Shenghong Co. Ltd., Class A

    11,000       15,993  

Jinan Acetate Chemical Co. Ltd.

    714       21,309  

Jubilant Ingrevia Ltd.

    2,701       13,619  

Kansai Nerolac Paints Ltd.

    3,294       12,466  

KCC Corp.

    106       18,641  

Kimteks Poliuretan Sanayi ve Ticaret A/S

    31,960       81,897  

Kolon Industries, Inc.

    674       21,684  

Korea Petrochemical Ind Co. Ltd.

    1,504       177,177  

KuibyshevAzot PJSC‡

    9,900        

Kum Yang Co. Ltd.*

    553       35,951  

Kumho Petrochemical Co. Ltd.

    423       39,683  

Lake Materials Co. Ltd.*

    1,715       14,324  

Laxmi Organic Industries Ltd.(b)

    2,107       6,476  

LB Group Co. Ltd., Class A

    4,700       11,965  

Levima Advanced Materials Corp., Class A

    4,800       12,475  

LG Chem Ltd.

    705       229,684  

LG Chem Ltd. (Preference)

    167       34,685  

Linde India Ltd.

    282       20,305  

Lotte Chemical Corp.

    562       60,921  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     231  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Chemicals – (continued)  

Lotte Chemical Titan Holding Bhd.(b)

    235,000     $ 55,735  

LOTTE Fine Chemical Co. Ltd.

    397       16,461  

Luxi Chemical Group Co. Ltd., Class A

    6,500       10,081  

Mesaieed Petrochemical Holding Co.

    68,381       29,862  

Miwon Commercial Co. Ltd.

    125       15,262  

MNTech Co. Ltd.

    833       9,369  

Nan Pao Resins Chemical Co. Ltd.

    20,488       125,701  

Nan Ya Plastics Corp.

    94,000       179,393  

National Industrialization Co.*

    5,584       17,296  

Navin Fluorine International Ltd.

    645       26,636  

Ningxia Baofeng Energy Group Co. Ltd., Class A

    10,600       20,887  

Nizhnekamskneftekhim PJSC‡

    28,600        

Nizhnekamskneftekhim PJSC (Preference)‡

    26,400        

OCI Holdings Co. Ltd.

    414       29,827  

Omnia Holdings Ltd.

    68,996       212,984  

Orbia Advance Corp. SAB de CV

    28,733       46,490  

Organichesky Sintez PJSC‡

    11,550        

Oriental Union Chemical Corp.

    38,000       21,323  

Petkim Petrokimya Holding A/S*

    38,400       26,710  

Petronas Chemicals Group Bhd.

    84,600       130,331  

PhosAgro PJSC‡

    1,540        

PI Advanced Materials Co. Ltd.

    520       9,433  

PI Industries Ltd.

    1,189       48,573  

Pidilite Industries Ltd.

    2,303       67,990  

PTT Global Chemical PCL, NVDR

    46,900       45,018  

Qinghai Salt Lake Industry Co. Ltd., Class A*

    18,800       43,493  

Rongsheng Petrochemical Co. Ltd., Class A

    23,500       36,576  

SABIC Agri-Nutrients Co.

    3,749       133,707  
Investments   Shares     Value  
Chemicals – (continued)  

Sahara International Petrochemical Co.

    9,679     $ 83,204  

Sasa Polyester Sanayi A/S*

    15,664       23,674  

Sasol Ltd.

    15,181       191,256  

Satellite Chemical Co. Ltd., Class A*

    4,662       10,365  

Saudi Aramco Base Oil Co.

    784       26,958  

Saudi Basic Industries Corp.

    13,536       277,821  

Saudi Industrial Investment Group

    6,214       39,686  

Saudi Kayan Petrochemical Co.*

    11,562       32,606  

Scientex Bhd.

    34,300       26,277  

Shandong Hualu Hengsheng Chemical Co. Ltd., Class A

    6,110       26,859  

Shanghai Chlor-Alkali Chemical Co. Ltd., Class B

    164,500       72,873  

Shanghai Putailai New Energy Technology Co. Ltd., Class A

    4,060       13,870  

Shinkong Synthetic Fibers Corp.

    49,000       22,736  

Sichuan Hebang Biotechnology Co. Ltd., Class A

    37,600       12,228  

Sichuan Yahua Industrial Group Co. Ltd., Class A

    3,600       6,926  

Sinofert Holdings Ltd.

    672,000       76,436  

Sinoma Science & Technology Co. Ltd., Class A

    4,700       11,104  

Sinon Corp.

    141,000       158,671  

Sinopec Shanghai Petrochemical Co. Ltd., Class H*

    98,000       13,151  

SK Chemicals Co. Ltd.

    196       8,185  

SK IE Technology Co. Ltd.* (b)

    349       15,324  

SKC Co. Ltd.

    294       17,132  

Solar Applied Materials Technology Corp.

    24,096       29,047  

Solar Industries India Ltd.

    405       26,756  

Soulbrain Co. Ltd.

    47       8,074  

Soulbrain Holdings Co. Ltd.

    1,833       44,246  

SRF Ltd.

    2,484       65,496  

Sumitomo Chemical India Ltd.

    2,585       11,589  

Supreme Industries Ltd.

    1,156       60,109  

Supreme Petrochem Ltd.

    3,456       23,785  

 

See Accompanying Notes to the Financial Statements.

 

232    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Chemicals – (continued)  

Surya Esa Perkasa Tbk. PT

    4,347,500     $ 164,212  

Taekwang Industrial Co. Ltd.

    94       40,230  

Taiwan Fertilizer Co. Ltd.

    16,360       29,911  

Tata Chemicals Ltd.

    2,679       30,864  

Tianqi Lithium Corp., Class A

    5,400       40,584  

Tianqi Lithium Corp., Class H(a)

    47,000       253,483  

TKG Huchems Co. Ltd.

    7,755       125,465  

Tongkun Group Co. Ltd., Class A*

    9,400       18,548  

TSRC Corp.

    235,000       165,916  

Unipar Carbocloro SA (Preference), Class B

    18,800       265,131  

UPL Ltd.

    9,024       58,582  

USI Corp.

    22,000       13,057  

Vinati Organics Ltd.

    539       11,198  

Wanhua Chemical Group Co. Ltd., Class A

    4,700       57,031  

Xinjiang Zhongtai Chemical Co. Ltd., Class A

    10,600       9,705  

Yanbu National Petrochemical Co.

    3,384       34,141  

Yunnan Energy New Material Co. Ltd., Class A

    1,200       10,986  

Yunnan Yuntianhua Co. Ltd., Class A

    4,700       10,693  

Zangge Mining Co. Ltd., Class A

    4,700       14,380  

Zhejiang Longsheng Group Co. Ltd., Class A

    9,600       11,675  

Zhejiang Yongtai Technology Co. Ltd., Class A

    2,800       4,855  
              8,568,798  
Commercial Services & Supplies – 0.2%  

Beijing GeoEnviron Engineering & Technology, Inc., Class A

    15,300       16,433  

China Everbright Environment Group Ltd.

    98,000       33,441  

Cleanaway Co. Ltd.

    5,000       26,669  

Dynagreen Environmental Protection Group Co. Ltd., Class H(a) (b)

    159,000       47,144  
Investments   Shares     Value  
Commercial Services & Supplies – (continued)  

Ecopro HN Co. Ltd.

    376     $ 16,036  

Frontken Corp. Bhd.

    42,300       28,232  

GPS Participacoes e Empreendimentos SA(c)

    14,100       44,903  

Indian Railway Catering & Tourism Corp. Ltd.

    6,110       48,827  

KEPCO Plant Service & Engineering Co. Ltd.

    100       2,414  

PNB Holdings Corp.* ‡

    46,815       27,518  

S-1 Corp.

    347       14,028  

Saudi Airlines Catering Co.

    1,774       49,367  

Sungeel Hitech Co. Ltd.*

    98       6,872  

Sunny Friend Environmental Technology Co. Ltd.

    622       1,985  

Taiwan Secom Co. Ltd.

    3,165       11,514  
              375,383  
Communications Equipment – 0.5%  

Accton Technology Corp.

    9,000       138,323  

Advanced Ceramic X Corp.

    2,000       13,134  

Arcadyan Technology Corp.

    69,856       331,673  

BYD Electronic International Co. Ltd.

    11,000       45,830  

Hengtong Optic-electric Co. Ltd., Class A

    4,700       8,465  

Intelbras SA Industria de Telecomunicacao Eletronica Brasileira

    4,900       18,607  

Intellian Technologies, Inc.

    254       13,259  

KMW Co. Ltd.*

    563       4,169  

Seojin System Co. Ltd.*

    10,528       130,104  

Sercomm Corp.

    95,000       329,505  

Sterlite Technologies Ltd.

    6,627       11,103  

Tejas Networks Ltd.* (b)

    2,202       22,667  

Tianjin 712 Communication & Broadcasting Co. Ltd., Class A

    900       3,272  

Wistron NeWeb Corp.

    5,000       19,655  

ZTE Corp., Class A

    4,800       17,152  

ZTE Corp., Class H

    9,800       21,768  
              1,128,686  
Construction & Engineering – 1.4%  

Acter Group Corp. Ltd.

    44,256       244,919  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     233  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Construction & Engineering – (continued)  

BES Engineering Corp.

    531,552     $ 191,742  

CH Karnchang PCL, NVDR

    4,900       2,972  

China Conch Venture Holdings Ltd.

    47,000       38,863  

China Energy Engineering Corp. Ltd., Class A

    80,000       23,831  

China Energy Engineering Corp. Ltd., Class H(a)

    198,000       21,509  

China Railway Group Ltd., Class A

    43,400       35,880  

China Railway Group Ltd., Class H

    115,000       54,233  

China Railway Hi-tech Industry Co. Ltd., Class A

    19,200       21,094  

Continental Holdings Corp.

    188,000       155,918  

CTCI Corp.

    21,456       26,096  

Daewoo Engineering & Construction Co. Ltd.*

    3,901       11,352  

DL E&C Co. Ltd.

    799       20,263  

Enka Insaat ve Sanayi A/S

    51,174       55,022  

Estithmar Holding QPSC*

    30,456       16,897  

Gamuda Bhd.

    34,826       33,916  

GEK Terna Holding Real Estate Construction SA

    1,470       20,510  

GS Engineering & Construction Corp.

    2,450       23,873  

Guangdong No. 2 Hydropower Engineering Co. Ltd., Class A

    4,900       3,549  

HDC Hyundai Development Co-Engineering & Construction, Class E

    15,322       131,942  

Hydro Lithium, Inc.*

    539       4,198  

Hyundai Engineering & Construction Co. Ltd.

    2,188       54,111  

IJM Corp. Bhd.

    37,600       14,994  

IRB Infrastructure Developers Ltd.

    48,040       19,329  

IRCON International Ltd.(b)

    101,332       168,869  

IS Dongseo Co. Ltd.*

    5,217       97,151  

Jeio Co. Ltd.*

    931       13,015  

Kalpataru Projects International Ltd.

    3,479       27,708  
Investments   Shares     Value  
Construction & Engineering – (continued)  

KEC International Ltd.

    6,678     $ 50,395  

KEPCO Engineering & Construction Co., Inc.

    141       5,460  

KNR Constructions Ltd.

    6,325       20,052  

Kontrolmatik Enerji ve Muhendislik A/S

    736       6,829  

Larsen & Toubro Ltd.

    10,387       365,416  

Larsen & Toubro Ltd., GDR(b)

    296       10,419  

Metallurgical Corp. of China Ltd., Class A

    42,300       19,132  

Metallurgical Corp. of China Ltd., Class H

    106,000       20,998  

NBCC India Ltd.

    41,870       32,990  

NCC Ltd.

    191,478       332,205  

PNC Infratech Ltd.(b)

    2,700       10,835  

Power Construction Corp. of China Ltd., Class A

    34,100       24,510  

Praj Industries Ltd.

    5,935       38,176  

PSG Corp. PCL, NVDR*

    300,700       5,438  

Rail Vikas Nigam Ltd.(b)

    9,261       17,146  

Ruentex Engineering & Construction Co.

    26,000       79,760  

Run Long Construction Co. Ltd.

    6,768       19,594  

Samsung Engineering Co. Ltd.*

    3,901       68,601  

Shaanxi Construction Engineering Group Corp. Ltd., Class A

    4,900       2,832  

Shanghai Construction Group Co. Ltd., Class A

    23,500       8,445  

Shanghai Tunnel Engineering Co. Ltd., Class A

    14,100       10,847  

Sichuan Road and Bridge Group Co. Ltd., Class A

    20,440       21,535  

Sino-Thai Engineering & Construction PCL, NVDR

    39,100       9,301  

Tekfen Holding A/S

    73,696       106,379  

United Integrated Services Co. Ltd.

    5,504       40,726  

Voltas Ltd.

    3,887       39,099  

Waskita Karya Persero Tbk. PT* ‡

    173,900       2,021  

Yankey Engineering Co. Ltd.

    22,055       179,853  
              3,082,750  

 

See Accompanying Notes to the Financial Statements.

 

234    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Construction Materials – 1.1%  

ACC Ltd.

    1,376     $ 31,206  

Ambuja Cements Ltd.

    10,904       55,588  

Anhui Conch Cement Co. Ltd., Class A

    9,800       32,394  

Anhui Conch Cement Co. Ltd., Class H

    34,500       86,067  

Arabian Cement Co.

    2,310       19,180  

Asia Cement Corp.

    77,000       94,959  

BBMG Corp., Class A

    42,300       11,965  

Berkah Beton Sadaya Tbk. PT*

    425,000       1,338  

Birla Corp. Ltd.

    750       11,469  

Bursa Cimento Fabrikasi A/S*

    266,772       88,538  

Cementos Argos SA

    182,971       209,469  

Cemex SAB de CV*

    410,600       246,319  

Chia Hsin Cement Corp.

    20,400       11,195  

China Jushi Co. Ltd., Class A

    9,600       15,178  

China National Building Material Co. Ltd., Class H

    94,000       44,690  

China Resources Cement Holdings Ltd.

    68,000       17,468  

Cimsa Cimento Sanayi ve Ticaret A/S

    13,776       17,899  

City Cement Co.

    4,208       19,517  

CSG Holding Co. Ltd., Class B

    4,700       1,394  

Dalmia Bharat Ltd.

    1,710       43,218  

Eastern Province Cement Co.

    1,199       11,809  

GCC SAB de CV

    1,872       16,646  

Goldsun Building Materials Co. Ltd.

    27,000       20,977  

Grasim Industries Ltd.

    5,734       129,936  

Grupo Argos SA

    117,500       253,354  

Grupo Argos SA (Preference)

    73,605       115,650  

Hanil Cement Co. Ltd.

    7,802       70,420  

Huaxin Cement Co. Ltd., Class A

    3,700       7,533  

Huaxin Cement Co. Ltd., Class H

    10,400       9,929  

Indocement Tunggal Prakarsa Tbk. PT

    28,800       16,816  

JK Cement Ltd.

    530       20,077  

JK Lakshmi Cement Ltd.

    2,744       22,627  

Nuh Cimento Sanayi A/S

    2,068       24,998  
Investments   Shares     Value  
Construction Materials – (continued)  

Nuvoco Vistas Corp. Ltd.*

    3,650     $ 14,925  

Oyak Cimento Fabrikalari A/S*

    4,416       11,136  

Qassim Cement Co. (The)

    1,998       33,446  

Ramco Cements Ltd. (The)

    2,289       27,264  

Rhi Magnesita India Ltd.

    1,850       15,234  

Riyadh Cement Co.

    1,967       15,362  

Saudi Cement Co.

    441       5,842  

Semen Indonesia Persero Tbk. PT

    29,417       11,296  

Shree Cement Ltd.

    188       57,930  

Siam Cement PCL (The), NVDR

    6,100       48,878  

Siam City Cement PCL, NVDR

    4,800       17,829  

Southern Province Cement Co.

    1,634       17,727  

SSANGYONG C&E Co. Ltd.

    4,263       17,582  

Taiwan Cement Corp.

    94,000       93,464  

Tangshan Jidong Cement Co. Ltd., Class A

    4,700       4,592  

Tipco Asphalt PCL, NVDR

    23,400       12,240  

TPI Polene PCL, NVDR

    1,870,700       71,825  

UltraTech Cement Ltd.

    1,739       175,913  

Universal Cement Corp.

    26,142       20,432  

Yamama Cement Co.

    3,763       29,088  

Yanbu Cement Co.

    2,888       24,826  
              2,506,654  
Consumer Finance – 1.0%  

AEON Credit Service M Bhd.

    42,300       100,856  

Bajaj Finance Ltd.

    4,089       367,979  

BFI Finance Indonesia Tbk. PT

    343,100       22,139  

Capri Global Capital Ltd.

    1,948       17,805  

Cholamandalam Investment and Finance Co. Ltd.

    5,781       78,967  

CreditAccess Grameen Ltd.*

    1,166       22,368  

FinVolution Group, ADR

    58,891       278,554  

Gentera SAB de CV(a)

    408,900       433,067  

JMT Network Services PCL, NVDR

    14,200       11,655  

Krungthai Card PCL, NVDR

    9,800       11,929  

Mahindra & Mahindra Financial Services Ltd.

    9,024       26,592  

Manappuram Finance Ltd.

    206,753       341,324  

Muangthai Capital PCL, NVDR

    9,300       9,444  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     235  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Consumer Finance – (continued)  

Muthoot Finance Ltd.

    2,226     $ 34,722  

Ngern Tid Lor PCL, NVDR

    26,653       14,238  

Poonawalla Fincorp Ltd.

    5,720       24,238  

Qifu Technology, Inc., Class A, ADR

    3,713       54,915  

Ratchthani Leasing PCL, NVDR

    117,400       9,146  

Samsung Card Co. Ltd.

    539       12,512  

SBI Cards & Payment Services Ltd.

    4,747       42,542  

Shriram Finance Ltd.

    7,379       166,606  

Srisawad Corp. PCL, NVDR

    14,000       16,165  

Sundaram Finance Ltd.

    1,445       55,064  

Yulon Finance Corp.

    4,672       25,783  
              2,178,610  
Consumer Staples Distribution & Retail – 1.2%  

Abdullah Al Othaim Markets Co.

    7,595       26,359  

Aeon Co. M Bhd.

    282,000       63,923  

Al-Dawaa Medical Services Co.

    1,104       27,868  

Alibaba Health Information Technology Ltd.*

    94,000       55,382  

Almacenes Exito SA

    63,638       55,071  

Almacenes Exito SA, BDR*

    51,700       178,895  

Almunajem Foods Co.

    7,473       123,899  

Atacadao SA

    9,400       16,720  

Avenue Supermarts Ltd.* (b)

    2,573       112,285  

Berli Jucker PCL

    14,300       11,239  

BGF retail Co. Ltd.

    141       14,428  

Bid Corp. Ltd.

    5,440       114,735  

BIM Birlesik Magazalar A/S

    12,721       122,297  

Cencosud SA

    33,276       53,737  

Clicks Group Ltd.

    3,995       58,526  

CP ALL PCL, NVDR

    70,500       108,371  

CP Axtra PCL, NVDR

    28,900       22,715  

Dada Nexus Ltd., ADR* (a)

    2,805       10,771  

DaShenLin Pharmaceutical Group Co. Ltd., Class A

    4,320       14,050  

Dis-Chem Pharmacies Ltd.(b)

    6,949       9,048  

Dongsuh Cos., Inc.

    859       10,978  

E-MART, Inc.

    392       21,101  
Investments   Shares     Value  
Consumer Staples Distribution & Retail – (continued)  

Great Tree Pharmacy Co. Ltd.

    1,543     $ 16,151  

Grupo Comercial Chedraui SA de CV

    4,700       27,250  

Grupo Mateus SA*

    9,800       11,310  

GS Retail Co. Ltd.

    1,332       23,966  

InRetail Peru Corp.(b)

    406       12,606  

JD Health International, Inc.* (b)

    16,450       74,738  

La Comer SAB de CV

    18,800       37,438  

Magnit PJSC‡

    2,296        

Medplus Health Services Ltd.*

    1,824       17,338  

Migros Ticaret A/S

    2,632       31,415  

Nahdi Medical Co.

    611       23,094  

Philippine Seven Corp.*

    10,780       14,439  

Pick n Pay Stores Ltd.(a)

    6,784       9,047  

Ping An Healthcare and Technology Co. Ltd.* (a) (b)

    9,600       22,452  

President Chain Store Corp.

    9,840       78,119  

Puregold Price Club, Inc.

    26,060       12,447  

Raia Drogasil SA

    19,064       97,531  

Robinsons Retail Holdings, Inc.

    187,620       135,573  

Sendas Distribuidora SA

    32,900       71,371  

Shenzhen Pagoda Industrial Group Corp. Ltd.

    24,500       18,912  

Shoprite Holdings Ltd.

    7,238       92,210  

SMU SA

    891,825       153,951  

Sok Marketler Ticaret A/S

    6,048       12,783  

SPAR Group Ltd. (The)

    2,560       15,363  

Sumber Alfaria Trijaya Tbk. PT

    330,600       60,147  

Sun Art Retail Group Ltd.

    70,500       14,867  

Wal-Mart de Mexico SAB de CV

    79,900       285,601  
              2,602,517  
Containers & Packaging – 0.1%  

Cheng Loong Corp.

    27,600       24,081  

Klabin SA

    23,552       99,943  

Pantai Indah Kapuk Dua Tbk. PT*

    81,600       22,448  

SCG Packaging PCL, NVDR

    18,700       18,730  

Taiwan Hon Chuan Enterprise Co. Ltd.

    9,000       27,887  

Ton Yi Industrial Corp.

    21,000       10,165  

 

See Accompanying Notes to the Financial Statements.

 

236    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Containers & Packaging – (continued)  

Youlchon Chemical Co. Ltd.

    470     $ 9,762  
              213,016  
Distributors – 0.1%  

Autohellas Tourist and Trading SA

    8,098       108,878  

Digidrive Distributors Ltd.*

    500       809  

Sinomach Automobile Co. Ltd., Class A

    4,800       4,788  

Transaction Capital Ltd.(a)

    256,291       66,168  

Wuchan Zhongda Group Co. Ltd., Class A

    13,800       8,618  
              189,261  
Diversified Consumer Services – 0.3%  

Advtech Ltd.

    24,310       27,517  

China Education Group Holdings
Ltd.(b)

    47,000       38,983  

Cogna Educacao SA*

    52,400       24,938  

East Buy Holding Ltd.* (a) (b)

    3,000       12,231  

Fenbi Ltd.* (a)

    24,500       14,873  

Gaotu Techedu, Inc., ADR* (a)

    5,978       13,391  

Humansoft Holding Co. KSC

    3,251       31,927  

Lung Yen Life Service Corp.*

    8,448       9,272  

MegaStudyEdu Co. Ltd.

    2,820       129,250  

National Co. for Learning & Education

    735       19,317  

New Oriental Education & Technology Group, Inc.*

    23,500       153,771  

Offcn Education Technology Co. Ltd., Class A*

    4,700       2,537  

TAL Education Group, ADR*

    13,301       116,650  
              594,657  
Diversified REITs – 0.2%  

Axis REIT, REIT

    70,600       26,820  

Concentradora Fibra Danhos SA de CV, REIT

    14,700       15,756  

Fibra Uno Administracion SA de CV, REIT

    70,500       106,885  

Growthpoint Properties Ltd., REIT

    88,642       45,818  
Investments   Shares     Value  
Diversified REITs – (continued)  

Is Gayrimenkul Yatirim Ortakligi A/S, REIT*

    183,112     $ 140,055  

Redefine Properties Ltd., REIT

    234,980       43,870  

SK REITs Co. Ltd., REIT

    6,195       17,247  

Yuexiu REIT, REIT

    98,000       14,028  
              410,479  
Diversified Telecommunication Services – 1.0%  

AL Yah Satellite Communications Co. PJSC

    43,340       29,971  

China Tower Corp. Ltd., Class H(b)

    1,222,000       114,007  

Chunghwa Telecom Co. Ltd.

    55,000       196,701  

CITIC Telecom International Holdings Ltd.

    611,000       232,700  

Converge Information and Communications Technology Solutions, Inc.*

    81,600       12,037  

Dayamitra Telekomunikasi PT

    202,100       7,888  

Emirates Telecommunications Group Co. PJSC

    52,734       265,034  

Hellenic Telecommunications Organization SA

    5,405       75,584  

HFCL Ltd.

    34,742       27,207  

Indus Towers Ltd.*

    24,404       50,532  

KT Corp.

    3,444       83,260  

LG Uplus Corp.

    7,161       53,606  

Magyar Telekom Telecommunications plc

    116,372       180,540  

Ooredoo QPSC

    17,376       47,198  

Operadora De Sites Mexicanos SAB de CV, Series A-1(a)

    9,400       7,982  

PT Tower Bersama Infrastructure Tbk.

    42,300       5,512  

Rostelecom PJSC* ‡

    33,770        

Rostelecom PJSC (Preference)‡

    15,392        

Sarana Menara Nusantara Tbk. PT

    315,700       17,688  

Saudi Telecom Co.

    27,313       279,566  

Sitios Latinoamerica SAB de CV* (a)

    63,700       22,759  

Tata Communications Ltd.

    1,612       32,203  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     237  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Diversified Telecommunication Services – (continued)  

Tata Teleservices Maharashtra Ltd.*

    24,255     $ 25,068  

Telefonica Brasil SA

    9,400       84,326  

Telekom Malaysia Bhd.

    19,600       20,857  

Telkom Indonesia Persero Tbk. PT

    709,700       155,924  

Telkom SA SOC Ltd.* (a)

    107,818       125,665  

TIME dotCom Bhd.

    9,000       10,049  

Turk Telekomunikasyon A/S*

    19,746       13,407  
              2,177,271  
Electric Utilities – 1.2%  

Adani Energy Solutions Ltd.*

    5,969       55,189  

Alupar Investimento SA

    3,640       20,210  

Can2 Termik A/S*

    74,119       48,334  

Centrais Eletricas Brasileiras SA

    28,200       194,822  

Centrais Eletricas Brasileiras SA (Preference), Class B

    4,700       35,835  

CESC Ltd.

    256,291       260,881  

CEZ A/S

    2,726       116,465  

Cia Energetica de Minas Gerais

    4,700       14,353  

Cia Energetica de Minas Gerais (Preference)

    45,002       104,764  

Cia Energetica do Ceara (Preference), Class A

    4,700       37,223  

Cia Paranaense de Energia

    9,400       76,963  

CPFL Energia SA

    4,700       31,166  

CTEEP-Cia de Transmissao de Energia Eletrica Paulista (Preference)

    5,200       21,850  

Enel Americas SA*

    507,571       52,006  

Enel Chile SA

    795,214       46,939  

Energisa SA

    4,700       43,440  

Enerjisa Enerji A/S(b)

    7,676       13,196  

Equatorial Energia SA

    14,100       88,352  

Federal Grid Co. - Rosseti PJSC (Registered)* ‡

    22,532,366        

Inter RAO UES PJSC‡

    1,596,292        

Interconexion Electrica SA ESP

    12,408       43,490  

Korea Electric Power Corp.*

    6,345       79,492  

Manila Electric Co.

    5,840       36,539  
Investments   Shares     Value  
Electric Utilities – (continued)  

Mosenergo PJSC‡

    4,455,000     $  

Neoenergia SA

    4,700       16,328  

ODAS Elektrik Uretim ve Sanayi Ticaret A/S*

    429,486       179,277  

Power Grid Corp. of India Ltd.

    119,380       289,851  

Public Power Corp. SA*

    3,381       34,415  

RusHydro PJSC‡

    2,361,000        

Saudi Electricity Co.

    22,654       107,485  

SJVN Ltd.

    205,813       175,633  

Synergy Grid & Development Phils, Inc.

    394,800       51,490  

Tata Power Co. Ltd. (The)

    25,051       72,016  

Tenaga Nasional Bhd.

    75,200       156,256  

Torrent Power Ltd.

    1,927       16,824  

Transmissora Alianca de Energia Eletrica SA

    5,000       33,502  
              2,554,586  
Electrical Equipment – 1.2%  

ABB India Ltd.

    1,002       49,454  

AcBel Polytech, Inc.

    22,918       26,850  

Amara Raja Energy & Mobility Ltd.

    4,361       32,119  

Bharat Heavy Electricals Ltd.

    21,300       30,917  

Bizlink Holding, Inc.

    2,070       16,051  

CG Power & Industrial Solutions Ltd.

    12,320       57,724  

Chicony Power Technology Co. Ltd.

    5,232       18,066  

Chung-Hsin Electric & Machinery Manufacturing Corp.

    7,728       22,206  

CS Wind Corp.

    581       19,660  

Dongfang Electric Corp. Ltd., Class A

    5,000       10,180  

Doosan Enerbility Co. Ltd.*

    6,856       68,126  

Doosan Fuel Cell Co. Ltd.*

    690       8,394  

Ecopro BM Co. Ltd.

    705       102,418  

ElSewedy Electric Co.

    21,462       18,821  

Fangda Carbon New Material Co. Ltd., Class A*

    5,300       4,273  

Farasis Energy Gan Zhou Co. Ltd., Class A*

    784       1,887  

Finolex Cables Ltd.

    3,178       34,221  

 

See Accompanying Notes to the Financial Statements.

 

238    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electrical Equipment – (continued)  

Fortune Electric Co. Ltd.

    7,560     $ 52,210  

Goldwind Science & Technology Co. Ltd.

    15,000       7,151  

Goldwind Science & Technology Co. Ltd., Class A

    9,600       11,531  

GoodWe Technologies Co. Ltd., Class A

    343       5,460  

Gotion High-tech Co. Ltd., Class A*

    4,600       14,306  

Graphite India Ltd.

    3,381       18,948  

Gulf Cables & Electrical Industries Group Co. KSCP

    4,140       15,782  

Havells India Ltd.

    4,270       63,910  

HD Hyundai Electric Co. Ltd.

    441       24,490  

Hitachi Energy India Ltd.

    371       18,462  

Hongfa Technology Co. Ltd., Class A

    4,800       19,021  

Hyosung Heavy Industries Corp.*

    1,645       207,916  

Jiangsu Zhongtian Technology Co. Ltd., Class A

    4,500       8,603  

Jiangxi Special Electric Motor Co. Ltd., Class A*

    4,900       8,008  

KEI Industries Ltd.

    960       27,700  

Korea Electric Terminal Co. Ltd.

    2,491       116,384  

LG Energy Solution Ltd.*

    658       187,819  

LS Corp.

    480       27,829  

LS Electric Co. Ltd.

    490       23,220  

Ming Yang Smart Energy Group Ltd., Class A

    4,500       8,590  

NARI Technology Co. Ltd., Class A

    12,000       36,977  

Ningbo Ronbay New Energy Technology Co. Ltd., Class A

    658       3,978  

Polycab India Ltd.

    950       56,162  

POSCO Future M Co. Ltd.

    479       83,880  

Pylon Technologies Co. Ltd., Class A

    343       5,338  

Sarkuysan Elektrolitik Bakir Sanayi ve Ticaret A/S

    150,118       167,454  

Shanghai Electric Group Co. Ltd., Class A*

    24,000       14,561  
Investments   Shares     Value  
Electrical Equipment – (continued)  

Shihlin Electric & Engineering Corp.

    5,136     $ 14,996  

Sociedad Quimica y Minera de Chile SA (Preference), Class B

    3,901       188,120  

SPG Co. Ltd.

    686       13,714  

Suzlon Energy Ltd.*

    365,014       134,153  

Ta Ya Electric Wire & Cable

    26,249       25,897  

Taihan Electric Wire Co. Ltd.*

    2,058       16,930  

Tatung Co. Ltd.*

    30,816       34,013  

TBEA Co. Ltd., Class A

    11,050       21,124  

Teco Electric and Machinery Co. Ltd.

    22,000       31,269  

Triveni Turbine Ltd.*

    6,484       27,974  

V-Guard Industries Ltd.

    6,399       23,026  

Voltronic Power Technology Corp.

    1,000       39,926  

Walsin Lihwa Corp.

    84,769       89,774  

WEG SA

    23,500       153,824  

XTC New Energy Materials Xiamen Co. Ltd., Class A

    539       3,102  

Zhejiang Chint Electrics Co. Ltd., Class A

    4,700       14,829  

Zhejiang HangKe Technology, Inc. Co., Class A

    490       1,644  
              2,591,372  
Electronic Equipment, Instruments & Components – 4.1%  

AAC Technologies Holdings, Inc.

    14,000       25,192  

Asia Optical Co., Inc.

    17,664       32,948  

AUO Corp.

    199,872       96,131  

Aurora Corp.

    4,316       9,847  

BH Co. Ltd.

    8,460       117,139  

BOE Technology Group Co. Ltd., Class A

    89,300       47,834  

BOE Varitronix Ltd.

    7,000       5,958  

Chang Wah Electromaterials, Inc.

    141,000       131,284  

Channel Well Technology Co. Ltd.

    8,742       22,020  

Cheng Uei Precision Industry Co. Ltd.

    134,384       159,305  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     239  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electronic Equipment, Instruments & Components –
(continued)
 

China Railway Signal & Communication Corp. Ltd., Class A

    31,500     $ 20,231  

Chroma ATE, Inc.

    8,000       53,769  

Compeq Manufacturing Co. Ltd.

    33,000       53,720  

Coretronic Corp.

    9,168       20,634  

Co-Tech Development Corp.

    10,464       18,841  

Cowell e Holdings, Inc.*

    12,000       28,771  

Daeduck Electronics Co. Ltd.

    893       13,204  

Daejoo Electronic Materials Co. Ltd.

    250       12,773  

DataTec Ltd.

    81,010       152,324  

Delta Electronics Thailand PCL, NVDR

    73,000       160,451  

Delta Electronics, Inc.

    31,696       283,881  

Dreamtech Co. Ltd.

    10,837       83,531  

E Ink Holdings, Inc.

    15,000       77,694  

Elite Material Co. Ltd.

    8,464       93,682  

EM-Tech Co. Ltd.

    4,841       177,969  

Everdisplay Optronics Shanghai Co. Ltd., Class A*

    26,592       9,520  

FLEXium Interconnect, Inc.

    11,896       30,625  

Forth Corp. PCL, NVDR

    14,600       9,058  

Foxconn Industrial Internet Co. Ltd., Class A

    32,900       66,177  

Foxconn Technology Co. Ltd.

    37,880       61,197  

Genius Electronic Optical Co. Ltd.

    2,237       26,243  

Global Brands Manufacture Ltd.

    109,632       208,211  

GoerTek, Inc., Class A

    3,800       9,362  

Gold Circuit Electronics Ltd.

    5,240       28,434  

Hana Microelectronics PCL, NVDR

    9,800       14,246  

Hannstar Board Corp.

    118,616       203,697  

HannStar Display Corp.*

    69,288       23,605  

Hollysys Automation Technologies Ltd.* (a)

    21,902       449,210  

Holy Stone Enterprise Co. Ltd.

    60,442       176,844  
Investments   Shares     Value  
Electronic Equipment, Instruments & Components –
(continued)
 

Hon Hai Precision Industry Co. Ltd.

    329,000     $ 978,835  

Honeywell Automation India Ltd.

    32       13,835  

Innolux Corp.

    251,684       94,280  

INTOPS Co. Ltd.

    3,666       64,875  

ITEQ Corp.

    86,264       201,863  

Jaymart Group Holdings PCL, NVDR

    277,300       126,528  

KCE Electronics PCL, NVDR

    9,300       13,131  

Kingboard Holdings Ltd.

    23,500       57,124  

Kingboard Laminates Holdings Ltd.

    27,500       25,762  

L&F Co. Ltd.

    412       39,780  

Largan Precision Co. Ltd.

    1,672       106,707  

LG Display Co. Ltd.*

    6,102       55,076  

LG Innotek Co. Ltd.

    423       69,845  

Lingyi iTech Guangdong Co., Class A

    15,900       13,188  

Lotes Co. Ltd.

    1,332       33,798  

Lotte Energy Materials Corp.

    235       6,699  

Luxshare Precision Industry Co. Ltd., Class A

    9,600       42,988  

Mcnex Co. Ltd.

    657       13,475  

MH Development Ltd.* ‡

    22,000        

Nan Ya Printed Circuit Board Corp.

    4,000       29,104  

Nationgate Holdings Bhd.

    267,900       64,663  

Nex Point Parts PCL, NVDR*

    47,500       11,498  

Nichidenbo Corp.

    76,952       131,911  

OFILM Group Co. Ltd., Class A*

    4,700       6,570  

Pan-International Industrial Corp.

    24,000       25,121  

Park Systems Corp.

    200       20,732  

Primax Electronics Ltd.

    14,600       31,059  

Quest Holdings SA

    10,011       55,554  

Raytron Technology Co. Ltd., Class A

    343       2,207  

Redington Ltd.

    235,846       404,508  

Samsung Electro-Mechanics Co. Ltd.

    1,598       147,075  

Samsung SDI Co. Ltd.

    846       266,538  

 

See Accompanying Notes to the Financial Statements.

 

240    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electronic Equipment, Instruments & Components –
(continued)
 

Seronics Co. Ltd.*

    1,488     $ 27,434  

Shanghai Friendess Electronic Technology Corp. Ltd., Class A

    376       12,311  

Shengyi Technology Co. Ltd., Class A

    9,600       23,075  

Shenzhen Kaifa Technology Co. Ltd., Class A

    4,700       11,034  

Simplo Technology Co. Ltd.

    6,040       62,104  

Sinbon Electronics Co. Ltd.

    3,000       25,621  

SOLUM Co. Ltd.*

    588       12,582  

Solus Advanced Materials Co. Ltd.

    377       6,113  

STCUBE*

    1,739       12,876  

Sunny Optical Technology Group Co. Ltd.

    11,800       98,854  

SUPCON Technology Co. Ltd., Class A

    1,771       10,551  

Supreme Electronics Co. Ltd.

    178,484       305,957  

Synnex Technology International Corp.

    38,784       82,148  

Taiwan Surface Mounting Technology Corp.

    1,000       2,818  

Taiwan Union Technology Corp.

    105,208       345,449  

TCL Technology Group Corp., Class A*

    41,360       22,211  

Test Research, Inc.

    69,176       128,179  

Tong Hsing Electronic Industries Ltd.

    5,956       24,606  

TPK Holding Co. Ltd.

    143,000       141,303  

Tripod Technology Corp.

    14,000       71,219  

TXC Corp.

    10,336       30,560  

Unimicron Technology Corp.

    35,952       158,506  

Unisplendour Corp. Ltd., Class A*

    4,900       13,130  

Unitech Printed Circuit Board Corp.

    247,696       141,279  

Universal Scientific Industrial Shanghai Co. Ltd., Class A

    4,700       9,332  

VS Industry Bhd.

    137,700       25,722  

Wah Lee Industrial Corp.

    66,640       193,746  
Investments   Shares     Value  
Electronic Equipment, Instruments & Components –
(continued)
 

Walsin Technology Corp.

    9,378     $ 30,214  

Weikeng Industrial Co. Ltd.

    141,000       116,939  

Wingtech Technology Co. Ltd., Class A*

    3,100       21,083  

Wintek Corp.* ‡

    64,000        

WPG Holdings Ltd.

    47,440       104,723  

WT Microelectronics Co. Ltd.

    14,000       51,149  

WUS Printed Circuit Kunshan Co. Ltd., Class A

    5,170       13,804  

Yageo Corp.

    8,347       135,364  

Zhejiang Dahua Technology Co. Ltd., Class A

    2,900       8,084  

Zhen Ding Technology Holding Ltd.

    17,150       51,553  
              8,901,524  
Energy Equipment & Services – 0.3%  

ADNOC Drilling Co. PJSC

    38,152       37,809  

Bumi Armada Bhd.*

    1,330,100       153,543  

China Oilfield Services Ltd., Class A

    5,000       10,658  

China Oilfield Services Ltd., Class H

    28,000       33,065  

COFCO Capital Holdings Co. Ltd., Class A

    4,900       4,808  

Dialog Group Bhd.

    51,700       23,330  

Gulf International Services QSC

    360,114       271,000  

Velesto Energy Bhd.*

    340,800       18,240  

Yinson Holdings Bhd.

    35,800       18,409  
              570,862  
Entertainment – 0.9%  

37 Interactive Entertainment Network Technology Group Co. Ltd., Class A

    4,700       13,294  

Alibaba Pictures Group Ltd.*

    540,000       34,507  

Bilibili, Inc., Class Z* (a)

    3,760       50,889  

China Ruyi Holdings Ltd.* (a)

    88,000       20,244  

CJ CGV Co. Ltd.*

    35,720       135,416  

CJ ENM Co. Ltd.*

    392       15,122  

Cloud Music, Inc.* (b)

    2,400       27,283  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     241  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Entertainment – (continued)  

CMGE Technology Group Ltd.*

    98,000     $ 16,407  

Com2uSCorp

    133       4,131  

Devsisters Co. Ltd.*

    235       8,422  

Gamania Digital Entertainment Co. Ltd.

    47,000       97,087  

HYBE Co. Ltd.*

    270       43,882  

International Games System Co. Ltd.

    2,320       44,562  

iQIYI, Inc., ADR* (a)

    7,595       35,393  

JYP Entertainment Corp.

    470       35,706  

Kakao Games Corp.*

    956       16,493  

Kingsoft Corp. Ltd.

    15,800       55,126  

Krafton, Inc.*

    564       68,404  

MD Pictures Tbk. PT*

    28,800       4,369  

MNC Digital Entertainment Tbk. PT*

    37,600       7,125  

NCSoft Corp.

    271       46,653  

Neowiz*

    470       9,588  

NetDragon Websoft Holdings Ltd.

    94,000       166,746  

NetEase, Inc.

    28,800       619,462  

Netmarble Corp.* (b)

    410       11,718  

Nexon Games Co. Ltd.*

    1,034       11,484  

NHN Corp.*

    630       9,959  

Pearl Abyss Corp.*

    517       18,853  

Perfect World Co. Ltd., Class A

    4,100       6,723  

PVR Inox Ltd.*

    2,961       56,840  

Saregama India Ltd.

    2,498       9,665  

SM Entertainment Co. Ltd.

    144       10,748  

SMI Holdings Group Ltd.* ‡

    72,000        

Studio Dragon Corp.*

    188       6,800  

Tencent Music Entertainment Group, ADR*

    7,897       57,332  

Tencent Music Entertainment Group, Class A*

    4,700       16,308  

Webzen, Inc.

    5,640       57,254  

Wemade Co. Ltd.

    388       11,276  

Wemade Max Co. Ltd.*

    784       6,026  

Wysiwyg Studios Co. Ltd.*

    34,216       59,537  

XD, Inc.* (b)

    8,000       12,105  

XPEC Entertainment, Inc.* ‡

    14,800        
Investments   Shares     Value  
Entertainment – (continued)  

YG Entertainment, Inc.

    605     $ 24,593  

Zhejiang Century Huatong Group Co. Ltd., Class A*

    11,280       9,033  
              1,972,565  
Financial Services – 1.4%  

Aavas Financiers Ltd.*

    2,016       34,088  

Aditya Birla Capital Ltd.*

    8,967       18,573  

Al Waha Capital PJSC

    387,750       200,579  

Alliance International Education Leasing Holdings Ltd.* (b)

    21,000       3,811  

Aptus Value Housing Finance India Ltd.

    3,822       13,255  

AVIC Industry-Finance Holdings Co. Ltd., Class A

    23,500       10,693  

Bajaj Finserv Ltd.

    6,224       117,332  

Bajaj Holdings & Investment Ltd.

    552       45,922  

Can Fin Homes Ltd.

    4,678       42,895  

Chailease Holding Co. Ltd.

    25,881       140,037  

Cielo SA

    32,900       22,964  

Corp. Financiera Colombiana SA

    37,459       114,272  

CSSC Hong Kong Shipping
Co. Ltd.(b)

    658,000       116,049  

E-Finance for Digital & Financial Investments

    7,889       4,482  

Far East Horizon Ltd.(a)

    52,000       36,618  

Fawry for Banking & Payment Technology Services SAE*

    44,933       7,497  

FirstRand Ltd.

    139,825       458,254  

Genertec Universal Medical Group Co. Ltd.(b)

    305,500       155,003  

Grupo de Inversiones Suramericana SA

    2,695       21,042  

Grupo de Inversiones Suramericana SA (Preference)

    3,587       10,414  

Home First Finance Co. India Ltd.(b)

    1,225       13,275  

Housing & Urban Development Corp. Ltd.

    144,478       130,581  

IIFL Finance Ltd.

    3,626       26,989  

 

See Accompanying Notes to the Financial Statements.

 

242    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Financial Services – (continued)  

Indian Railway Finance Corp.
Ltd.(b)

    50,666     $ 44,180  

Kakaopay Corp.*

    398       10,079  

L&T Finance Holdings Ltd.

    11,562       18,469  

LIC Housing Finance Ltd.

    9,682       53,399  

Meritz Financial Group, Inc.

    2,868       106,604  

National Investments Co. KSCP

    20,286       12,189  

NICE Holdings Co. Ltd.

    6,170       54,776  

One 97 Communications Ltd.*

    4,042       44,700  

Piramal Enterprises Ltd.

    3,384       39,643  

PNB Housing Finance Ltd.* (b)

    18,800       166,281  

Power Finance Corp. Ltd.

    42,939       127,179  

REC Ltd.

    29,397       101,546  

Remgro Ltd.

    15,463       118,841  

Shandong Hi-Speed Holdings Group Ltd.*

    49,500       34,415  

Turkiye Sinai Kalkinma Bankasi A/S*

    488,330       115,641  

Yeahka Ltd.*

    13,200       24,158  

Yuanta Financial Holding Co. Ltd.

    368,228       275,873  
              3,092,598  
Food Products – 2.7%  

Adani Wilmar Ltd.*

    2,491       9,772  

Agthia Group PJSC

    10,622       12,869  

Alicorp SAA

    108,194       163,629  

Almarai Co. JSC

    3,679       54,818  

Anjoy Foods Group Co. Ltd., Class A

    500       8,828  

Astra Agro Lestari Tbk. PT

    131,600       58,406  

AVI Ltd.

    14,137       52,493  

Balrampur Chini Mills Ltd.

    3,850       19,105  

Beijing Dabeinong Technology Group Co. Ltd., Class A

    5,300       5,062  

Betagro PCL

    24,400       13,917  

Bombay Burmah Trading Co.

    235       3,821  

BRF SA*

    343,100       725,932  

Britannia Industries Ltd.

    1,871       99,473  

CCL Products India Ltd.

    2,597       18,408  

Century Pacific Food, Inc.

    17,700       8,735  

Charoen Pokphand Enterprise

    13,300       37,110  
Investments   Shares     Value  
Food Products – (continued)  

Charoen Pokphand Foods PCL, NVDR

    79,900     $ 41,570  

Charoen Pokphand Indonesia Tbk. PT*

    115,100       42,026  

Cherkizovo Group PJSC‡

    2,594        

China Feihe Ltd.(b)

    94,000       58,385  

China Huiyuan Juice Group Ltd.* ‡

    24,000        

China Mengniu Dairy Co. Ltd.

    47,000       153,471  

China Modern Dairy Holdings Ltd.(a)

    1,001,000       102,344  

China Youran Dairy Group Ltd.(b)

    470,000       88,299  

Chongqing Fuling Zhacai Group Co. Ltd., Class A

    3,120       6,587  

CJ CheilJedang Corp.

    215       44,972  

CJ CheilJedang Corp. (Preference)

    104       9,549  

COFCO Joycome Foods Ltd.* (b)

    1,128,000       262,373  

Daesang Corp.

    7,549       111,121  

Dongwon Industries Co. Ltd.

    735       16,245  

Foshan Haitian Flavouring & Food Co. Ltd., Class A

    5,880       30,251  

Garudafood Putra Putri Jaya Tbk. PT

    463,100       12,244  

Great Wall Enterprise Co. Ltd.

    15,840       24,809  

Gruma SAB de CV, Class B

    3,615       62,823  

Grupo Bimbo SAB de CV, Class A, Series A(a)

    20,700       84,139  

Grupo Nutresa SA

    1,692       19,943  

Guan Chong Bhd.*

    29,400       13,390  

Guangdong Haid Group Co. Ltd., Class A

    3,400       20,926  

Harim Holdings Co. Ltd.

    15,698       76,831  

Health & Happiness H&H International Holdings Ltd.

    94,000       106,198  

Heilongjiang Agriculture Co. Ltd., Class A

    5,200       9,053  

Henan Shuanghui Investment & Development Co. Ltd., Class A

    5,000       17,908  

Huishan Dairy* ‡

    158,000        

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     243  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Food Products – (continued)  

Indofood CBP Sukses Makmur Tbk. PT

    51,800     $ 33,751  

Indofood Sukses Makmur Tbk. PT

    122,200       51,157  

Inner Mongolia Yili Industrial Group Co. Ltd., Class A

    8,200       30,724  

IOI Corp. Bhd.

    39,200       32,334  

Japfa Comfeed Indonesia Tbk. PT

    2,091,500       161,290  

JBS SA

    18,900       75,068  

Jonjee Hi-Tech Industrial And Commercial Holding Co. Ltd., Class A*

    4,800       22,039  

Kuala Lumpur Kepong Bhd.

    14,131       65,190  

Leong Hup International Bhd.(b)

    465,300       61,037  

Lien Hwa Industrial Holdings Corp.

    17,301       33,018  

Lotte Wellfood Co. Ltd.

    1,128       95,215  

M Dias Branco SA

    4,700       30,373  

Marfrig Global Foods SA

    169,200       216,742  

Marico Ltd.

    8,460       54,519  

Mayora Indah Tbk. PT

    83,900       15,053  

Minerva SA

    89,300       134,047  

Monde Nissin Corp.* (b)

    107,400       15,521  

Muyuan Foods Co. Ltd., Class A

    7,120       36,738  

Nestle India Ltd.

    564       164,168  

Nestle Malaysia Bhd.

    900       23,386  

New Hope Liuhe Co. Ltd., Class A*

    9,000       12,495  

NongShim Co. Ltd.

    56       18,431  

Orion Corp.

    500       44,352  

Orion Holdings Corp.

    8,037       94,441  

Ottogi Corp.

    15       4,159  

Patanjali Foods Ltd.

    1,030       16,922  

PPB Group Bhd.

    14,080       44,860  

QL Resources Bhd.

    25,395       29,475  

RCL Foods Ltd.*

    76,845       33,612  

Samyang Foods Co. Ltd.

    141       19,147  

Samyang Holdings Corp.

    2,350       118,148  
Investments   Shares     Value  
Food Products – (continued)  

San Miguel Food and Beverage, Inc.

    19,470     $ 17,466  

Sao Martinho SA

    3,500       24,603  

Sarawak Oil Palms Bhd.

    75,200       40,248  

Saudia Dairy & Foodstuff Co.

    294       23,510  

Savola Group (The)

    5,095       49,434  

Sawit Sumbermas Sarana Tbk. PT

    1,311,300       94,519  

Shree Renuka Sugars Ltd.*

    30,100       17,606  

Sime Darby Plantation Bhd.

    52,203       47,552  

SLC Agricola SA

    4,800       34,989  

SPC Samlip Co. Ltd.

    940       45,032  

Srinanaporn Marketing PCL, NVDR

    19,500       8,789  

Sumber Tani Agung Resources Tbk. PT

    1,203,200       65,898  

Taisun Enterprise Co. Ltd.

    94,000       58,252  

Taiwan TEA Corp.*

    24,104       14,714  

Tata Consumer Products Ltd.

    9,983       107,973  

Thai Union Group PCL, NVDR

    58,800       22,085  

Thai Vegetable Oil PCL, NVDR

    44,000       25,830  

Thaifoods Group PCL, NVDR

    1,123,300       100,009  

Tiger Brands Ltd.

    1,666       15,320  

Tingyi Cayman Islands Holding Corp.

    30,000       39,798  

Toly Bread Co. Ltd., Class A

    5,640       6,736  

Tres Tentos Agroindustrial SA

    42,300       92,518  

Triveni Engineering & Industries Ltd.

    4,263       18,248  

Ulker Biskuvi Sanayi A/S*

    68,009       174,273  

Uni-President Enterprises Corp.

    81,944       171,543  

United Plantations Bhd.

    9,800       34,720  

Universal Robina Corp.

    13,530       26,063  

Want Want China Holdings Ltd.

    94,000       58,385  

Yuan Longping High-tech Agriculture Co. Ltd., Class A*

    5,100       11,485  

Zad Holding Co.

    3,286       12,184  

Zhou Hei Ya International Holdings Co. Ltd.(a) (b)

    47,000       15,497  

Zydus Wellnes Ltd.

    882       16,221  
              5,986,747  

 

See Accompanying Notes to the Financial Statements.

 

244    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Gas Utilities – 0.6%  

Adani Total Gas Ltd.

    4,361     $ 29,557  

Aygaz A/S

    26,038       126,451  

Beijing Enterprises Holdings Ltd.

    17,500       58,262  

China Gas Holdings Ltd.

    84,600       76,009  

China Resources Gas Group Ltd.

    23,400       69,232  

ENN Energy Holdings Ltd.

    19,300       147,378  

ENN Natural Gas Co. Ltd., Class A

    10,000       23,585  

GAIL India Ltd.

    64,766       92,958  

Grupo Energia Bogota SA ESP

    50,764       20,431  

Gujarat Gas Ltd.

    2,679       13,162  

Gujarat State Petronet Ltd.

    12,995       41,751  

Indraprastha Gas Ltd.

    4,564       20,959  

Korea Gas Corp.*

    999       16,902  

Kunlun Energy Co. Ltd.

    94,000       78,327  

Mahanagar Gas Ltd.(b)

    1,456       18,054  

National Gas & Industrialization Co.

    1,155       17,856  

Perusahaan Gas Negara Tbk. PT

    311,200       24,587  

Petronas Gas Bhd.

    14,100       50,902  

Promigas SA ESP

    122,294       125,608  

Samchully Co. Ltd.

    799       54,724  

Towngas Smart Energy Co. Ltd.(a)

    423,000       175,155  
              1,281,850  
Ground Transportation – 0.3%  

BTS Group Holdings PCL, NVDR

    119,640       24,798  

Container Corp. of India Ltd.

    4,387       36,262  

Daqin Railway Co. Ltd., Class A

    38,400       37,833  

Full Truck Alliance Co. Ltd.,
ADR* (a)

    10,105       66,390  

GMexico Transportes SAB de CV(b)

    9,400       19,359  

Grupo Traxion SAB de CV,
Class A* (a) (b)

    9,800       14,461  

Localiza Rent a Car SA

    11,814       119,171  

Lotte Rental Co. Ltd.

    5,828       110,903  
Investments   Shares     Value  
Ground Transportation – (continued)  

Rumo SA

    18,800     $ 83,170  

SIMPAR SA

    117,500       161,233  

Theeb Rent A Car Co.

    441       7,171  

United International Transportation Co.

    996       17,841  

Vamos Locacao de Caminhoes Maquinas e Equipamentos SA

    5,500       8,540  
              707,132  
Health Care Equipment & Supplies – 0.2%  

AK Medical Holdings Ltd.(b)

    26,000       25,254  

Beijing Chunlizhengda Medical Instruments Co. Ltd., Class H

    12,000       22,115  

Classys, Inc.

    144       3,508  

Dentium Co. Ltd.

    147       11,875  

Eoflow Co. Ltd.*

    799       12,838  

Hartalega Holdings Bhd.*

    30,800       13,382  

HLB, Inc.*

    1,811       38,815  

iRay Technology Co. Ltd., Class A

    698       21,313  

Jeisys Medical, Inc.*

    1,942       15,127  

Jiangsu Yuyue Medical Equipment & Supply Co. Ltd., Class A

    4,800       22,071  

Kangji Medical Holdings Ltd.

    25,000       20,544  

Kossan Rubber Industries Bhd.

    68,600       19,438  

Lifetech Scientific Corp.*

    110,000       33,740  

Microport Scientific Corp.*

    11,498       18,074  

Qingdao Haier Biomedical Co. Ltd., Class A

    539       2,691  

SD Biosensor, Inc.

    990       7,066  

Shandong Weigao Group Medical Polymer Co. Ltd., Class H

    36,000       33,356  

Shanghai MicroPort Endovascular MedTech Group Co. Ltd., Class A

    98       2,605  

Sri Trang Gloves Thailand PCL, NVDR

    68,600       11,165  

St Shine Optical Co. Ltd.

    2,000       11,192  

Supermax Corp. Bhd.

    667,400       110,661  

TaiDoc Technology Corp.

    3,000       13,180  

Top Glove Corp. Bhd.*

    68,600       10,439  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     245  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Health Care Equipment & Supplies – (continued)  

Visco Vision, Inc.

    3,264     $ 18,617  
              499,066  
Health Care Providers & Services – 1.0%  

Al Hammadi Holding

    1,862       26,801  

Apollo Hospitals Enterprise Ltd.

    1,544       89,383  

Aster DM Healthcare Ltd.* (b)

    6,324       25,039  

Bangkok Chain Hospital PCL, NVDR

    20,800       11,632  

Bangkok Dusit Medical Services PCL, NVDR

    69,200       51,020  

Bumrungrad Hospital PCL, NVDR

    4,900       35,446  

Celltrion Healthcare Co. Ltd.

    1,515       74,597  

Chabiotech Co. Ltd.*

    1,200       14,261  

China Meheco Co. Ltd., Class A

    4,700       7,668  

China Resources Medical Holdings Co. Ltd.

    24,500       14,435  

Chularat Hospital PCL, NVDR

    101,400       8,915  

CM Hospitalar SA

    5,000       14,763  

Dallah Healthcare Co.

    585       23,078  

Diagnosticos da America SA*

    9,800       18,831  

Dr Lal PathLabs Ltd.(b)

    822       23,884  

Dr Sulaiman Al Habib Medical Services Group Co.

    1,355       91,017  

Fleury SA

    89,300       265,439  

Fortis Healthcare Ltd.

    11,121       43,137  

Global Health Ltd.*

    2,401       22,626  

Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd., Class H

    12,000       31,899  

Gushengtang Holdings Ltd.

    7,800       46,653  

Hapvida Participacoes e Investimentos SA* (b)

    75,200       55,024  

HLB Life Science Co. Ltd.*

    3,167       20,894  

Huadong Medicine Co. Ltd., Class A

    3,300       19,381  

Hygeia Healthcare Holdings
Co. Ltd.(a) (b)

    6,400       38,647  

IHH Healthcare Bhd.

    56,400       71,025  
Investments   Shares     Value  
Health Care Providers & Services – (continued)  

Jinxin Fertility Group Ltd.* (a) (b)

    73,500     $ 36,916  

KPJ Healthcare Bhd.

    49,024       13,171  

Krishna Institute of Medical Sciences Ltd.* (b)

    1,616       36,628  

Life Healthcare Group Holdings Ltd.

    17,346       17,182  

Max Healthcare Institute Ltd.

    11,045       76,113  

Medikaloka Hermina Tbk. PT(b)

    367,500       35,281  

Meinian Onehealth Healthcare Holdings Co. Ltd., Class A*

    9,400       7,925  

Metro Healthcare Indonesia Tbk. PT*

    286,700       8,663  

Metropolis Healthcare Ltd.(b)

    1,104       18,636  

Middle East Healthcare Co.*

    1,617       29,740  

Mitra Keluarga Karyasehat Tbk. PT(b)

    100,200       17,284  

MLP Saglik Hizmetleri A/S,
Class B* (b)

    34,498       186,435  

Mouwasat Medical Services Co.

    1,320       35,185  

Narayana Hrudayalaya Ltd.(b)

    2,750       32,898  

National Medical Care Co.

    931       30,425  

Netcare Ltd.

    39,592       27,265  

New Horizon Health Ltd.* (a) (b)

    4,000       9,703  

Odontoprev SA

    5,390       11,158  

Oncoclinicas do Brasil Servicos Medicos SA*

    14,400       27,070  

Rainbow Children’s Medicare Ltd.

    2,496       31,872  

Ramkhamhaeng Hospital PCL, NVDR

    9,300       10,350  

Rede D’Or Sao Luiz SA(b)

    18,800       80,598  

Selcuk Ecza Deposu Ticaret ve Sanayi A/S

    2,597       4,870  

Shanghai Pharmaceuticals Holding Co. Ltd., Class A

    4,700       11,580  

Shanghai Pharmaceuticals Holding Co. Ltd., Class H

    23,500       34,178  

Sikarin PCL, NVDR

    44,000       12,854  

Siloam International Hospitals Tbk. PT

    165,000       24,929  

 

See Accompanying Notes to the Financial Statements.

 

246    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Health Care Providers & Services – (continued)  

Sinopharm Group Co. Ltd., Class H

    37,600     $ 89,860  

Thonburi Healthcare Group PCL, NVDR

    9,300       16,107  

Topchoice Medical Corp., Class A*

    500       6,118  

Universal Vision Biotechnology Co. Ltd.

    2,226       20,383  
              2,146,872  
Health Care Technology – 0.0%(d)  

Lunit, Inc.*

    329       31,766  
Hotels, Restaurants & Leisure – 2.1%  

Abu Dhabi National Hotels

    3,825,800       1,000,978  

Alamar Foods

    539       19,137  

Alsea SAB de CV*

    23,500       77,765  

Ambassador Hotel (The)

    65,200       95,081  

Americana Restaurants International plc

    39,997       40,291  

Ananti, Inc.*

    23,453       115,481  

Asset World Corp. PCL, NVDR

    171,900       16,548  

Bloomberry Resorts Corp.*

    93,100       14,948  

Central Plaza Hotel PCL*

    7,300       9,139  

Chalet Hotels Ltd.*

    2,891       19,016  

China Travel International Investment Hong Kong Ltd.

    122,000       21,673  

DoubleUGames Co. Ltd.

    3,525       108,056  

Easy Trip Planners Ltd.*

    16,003       7,602  

EIH Ltd.

    8,250       22,290  

Erawan Group PCL (The), NVDR*

    137,100       19,835  

Genting Bhd.

    47,000       39,754  

Genting Malaysia Bhd.

    61,100       31,034  

Grand Korea Leisure Co. Ltd.*

    1,323       15,292  

H World Group Ltd.* (a)

    23,500       87,848  

Haichang Ocean Park Holdings Ltd.* (b)

    54,000       6,901  

Haidilao International Holding Ltd.(b)

    21,164       52,906  

Hana Tour Service, Inc.*

    450       14,644  

Helens International Holdings Co. Ltd.(a)

    6,500       4,843  
Investments   Shares     Value  
Hotels, Restaurants & Leisure – (continued)  

Indian Hotels Co. Ltd., Class A

    13,329     $ 61,379  

Jahez International Co.*

    94       11,050  

Jiumaojiu International Holdings Ltd.(a) (b)

    14,000       15,208  

Jollibee Foods Corp.

    7,840       28,326  

Jubilant Foodworks Ltd.

    4,950       29,783  

Kangwon Land, Inc.

    2,240       24,331  

Leejam Sports Co. JSC

    1,131       46,306  

Lemon Tree Hotels Ltd.* (b)

    19,505       25,734  

Lotte Tour Development Co. Ltd.*

    1,961       15,696  

Magnum Bhd.

    446,594       100,295  

Meituan, Class B* (b)

    68,070       962,163  

Minor International PCL, NVDR

    48,500       37,783  

MK Restaurants Group PCL, NVDR

    4,800       5,409  

Nayuki Holdings Ltd.* (b)

    25,000       12,429  

OPAP SA

    2,491       42,128  

Paradise Co. Ltd.*

    421       4,570  

Sapphire Foods India Ltd.*

    800       12,447  

Seera Group Holding*

    6,332       39,832  

Smartfit Escola de Ginastica e Danca SA

    9,400       36,105  

Sports Toto Bhd.

    361,900       110,139  

Sun International Ltd.

    61,194       122,408  

Tongcheng Travel Holdings Ltd.* (a) (b)

    18,800       35,896  

Travellers International Hotel Group, Inc.* ‡

    209,900        

TravelSky Technology Ltd., Class H

    21,000       33,119  

Trip.com Group Ltd.*

    8,350       286,849  

Tsogo Sun Ltd.

    216,341       139,174  

Westlife Foodworld Ltd.

    3,000       28,595  

Wowprime Corp.

    3,259       24,014  

Yum China Holdings, Inc.

    6,439       338,434  

Zomato Ltd.*

    78,114       98,606  
              4,569,270  
Household Durables – 0.9%  

Amber Enterprises India Ltd.*

    935       32,951  

Arcelik A/S

    5,782       27,753  

Bajaj Electricals Ltd.

    2,173       26,633  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     247  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Household Durables – (continued)  

Coway Co. Ltd.

    1,153     $ 36,881  

Crompton Greaves Consumer Electricals Ltd.

    7,896       26,744  

Cyrela Brazil Realty SA Empreendimentos e Participacoes

    103,400       368,861  

Dixon Technologies India Ltd.(b)

    650       39,828  

Eureka Forbes Ltd.*

    1,960       11,759  

Gree Electric Appliances, Inc. of Zhuhai, Class A

    14,100       65,374  

Haier Smart Home Co. Ltd., Class A

    10,600       32,185  

Haier Smart Home Co. Ltd., Class H

    37,600       107,640  

Hanssem Co. Ltd.

    303       11,005  

Konka Group Co. Ltd., Class B*

    347,800       49,783  

LG Electronics, Inc.

    2,867       211,647  

LG Electronics, Inc. (Preference)

    584       19,480  

Merry Electronics Co. Ltd.

    80,936       221,086  

MRV Engenharia e Participacoes SA*

    141,000       230,666  

Nien Made Enterprise Co. Ltd.

    3,000       26,453  

PIK Group PJSC* ‡

    4,646        

Shenzhen MTC Co. Ltd., Class A

    9,600       7,031  

Skyworth Group Ltd.

    470,000       169,990  

TCL Electronics Holdings Ltd.

    329,000       114,368  

TTK Prestige Ltd.

    1,825       17,551  

Vestel Beyaz Esya Sanayi ve Ticaret A/S

    18,669       11,066  

Vestel Elektronik Sanayi ve Ticaret A/S*

    52,264       112,590  

Whirlpool of India Ltd.

    674       13,294  

Zinus, Inc.

    3,567       50,314  
              2,042,933  
Household Products – 0.1%  

Blue Moon Group Holdings Ltd.(b)

    72,000       19,692  

Jyothy Labs Ltd.

    6,860       29,876  
Investments   Shares     Value  
Household Products – (continued)  

Kimberly-Clark de Mexico SAB de CV, Class A

    23,500     $ 43,022  

Unilever Indonesia Tbk. PT

    75,200       17,137  

Vinda International Holdings Ltd.

    3,000       7,415  
              117,142  
Independent Power and Renewable Electricity
Producers – 1.3%
 

Aboitiz Power Corp.

    34,200       21,669  

Absolute Clean Energy PCL, NVDR*

    279,200       11,807  

ACEN Corp.

    100,197       9,359  

ACWA Power Co.

    1,974       119,442  

Adani Green Energy Ltd.*

    5,358       58,668  

Adani Power Ltd.*

    21,009       91,610  

AES Brasil Energia SA*

    14,700       29,353  

Aksa Enerji Uretim A/S, Class B

    3,760       4,657  

Auren Energia SA

    5,000       13,306  

B Grimm Power PCL, NVDR

    19,500       11,990  

Bajel Projects Ltd.*

    2,173       3,418  

Banpu Power PCL, NVDR

    19,300       7,571  

BCPG PCL, NVDR

    78,300       19,280  

Canvest Environmental Protection Group Co. Ltd.(b)

    188,000       91,061  

CECEP Solar Energy Co. Ltd., Class A

    9,600       7,530  

CGN New Energy Holdings Co. Ltd.(a)

    470,000       122,537  

CGN Power Co. Ltd., Class A

    44,000       17,857  

CGN Power Co. Ltd., Class H(b)

    329,000       79,048  

China Longyuan Power Group Corp. Ltd., Class H

    94,000       79,649  

China National Nuclear Power Co. Ltd., Class A

    39,900       40,456  

China Power International Development Ltd.(a)

    141,000       54,781  

China Resources Power Holdings Co. Ltd.

    54,000       104,624  

China Three Gorges Renewables Group Co. Ltd., Class A

    47,000       30,828  

 

See Accompanying Notes to the Financial Statements.

 

248    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Independent Power and Renewable Electricity
Producers – (continued)
 

China Yangtze Power Co. Ltd., Class A

    32,900     $ 101,468  

CK Power PCL, NVDR

    112,600       9,461  

Colbun SA

    169,153       24,479  

Datang International Power Generation Co. Ltd., Class H

    128,000       19,303  

Electricity Generating PCL, NVDR

    4,900       16,632  

Enel Generacion Peru SAA

    13,072       11,589  

Energy Absolute PCL, NVDR

    28,100       32,836  

Eneva SA*

    18,800       40,336  

Engie Brasil Energia SA

    4,700       36,627  

First Gen Corp.

    136,300       43,431  

Fujian Funeng Co. Ltd., Class A

    12,740       14,902  

GD Power Development Co. Ltd., Class A

    42,500       21,139  

Global Power Synergy PCL, NVDR

    13,700       14,865  

Guangdong Electric Power Development Co. Ltd., Class A*

    4,900       3,589  

Guangdong Electric Power Development Co. Ltd., Class B*

    67,200       18,980  

Gulf Energy Development PCL, NVDR

    92,900       111,788  

Huadian Power International Corp. Ltd., Class A

    26,500       17,780  

Huadian Power International Corp. Ltd., Class H

    38,000       15,249  

Huaneng Lancang River Hydropower, Inc., Class A

    15,000       15,742  

Huaneng Power International, Inc., Class A*

    24,000       24,957  

Huaneng Power International, Inc., Class H* (a)

    96,000       44,905  

Hubei Energy Group Co. Ltd., Class A

    4,700       2,762  

Inner Mongolia MengDian HuaNeng Thermal Power Corp. Ltd., Class A

    9,800       4,808  
Investments   Shares     Value  
Independent Power and Renewable Electricity
Producers – (continued)
 

Jilin Electric Power Co. Ltd., Class A

    28,800     $ 18,418  

JSW Energy Ltd.

    5,875       27,223  

Malakoff Corp. Bhd.

    841,300       104,180  

Margun Enerji Uretim Sanayi ve Ticaret A/S

    4,508       9,361  

Mega First Corp. Bhd.

    249,100       180,897  

NHPC Ltd.

    79,420       47,885  

NLC India Ltd.

    88,830       142,967  

NTPC Ltd.

    127,953       362,380  

OGK-2 PJSC‡

    11,431,280        

Omega Energia SA*

    47,000       70,831  

Ratch Group PCL, NVDR

    24,500       21,983  

Shamal Az-Zour Al-Oula for the First Phase of Az-Zour Power Plant KSC

    26,687       15,001  

Shandong Hi-Speed New Energy Group Ltd.*

    207,600       67,391  

Shanghai Electric Power Co. Ltd., Class A

    10,000       11,943  

Shenergy Co. Ltd., Class A

    4,900       3,944  

Shenzhen Energy Group Co. Ltd., Class A

    10,600       8,951  

Sichuan Chuantou Energy Co. Ltd., Class A

    9,400       18,895  

Super Energy Corp. PCL, NVDR*

    431,200       5,159  

Terna Energy SA

    1,276       19,138  

TPI Polene Power PCL, NVDR

    1,018,800       93,539  

Unipro PJSC* ‡

    5,337,000        

Wintime Energy Group Co. Ltd., Class A*

    76,800       14,377  

Xinyi Energy Holdings Ltd.

    3,265       572  

Zhejiang Zheneng Electric Power Co. Ltd., Class A*

    28,800       17,946  

Zorlu Enerji Elektrik Uretim A/S*

    49,256       9,227  
              2,950,337  
Industrial Conglomerates – 2.3%  

3M India Ltd.

    69       24,666  

Aamal Co.

    550,652       124,165  

Aboitiz Equity Ventures, Inc.

    64,390       51,975  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     249  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Industrial Conglomerates – (continued)  

AG Anadolu Grubu Holding A/S

    3,478     $ 25,250  

Alarko Holding A/S

    2,646       9,464  

Alfa SAB de CV, Class A

    89,300       55,599  

Alliance Global Group, Inc.

    56,400       10,536  

Alpha Dhabi Holding PJSC*

    39,433       202,694  

AntarChile SA

    3,206       25,886  

Apar Industries Ltd.

    637       39,627  

Astra Industrial Group

    1,753       42,521  

Astra International Tbk. PT

    549,900       199,916  

Ayala Corp.

    4,030       43,006  

Bidvest Group Ltd. (The)

    5,033       70,825  

China Baoan Group Co. Ltd., Class A

    5,500       7,764  

CITIC Ltd.

    188,000       159,778  

CJ Corp.

    343       21,359  

DMCI Holdings, Inc.

    121,000       19,555  

Doosan Co. Ltd.

    352       19,391  

Dubai Investments PJSC

    38,220       23,517  

Far Eastern New Century Corp.

    94,000       85,494  

Fosun International Ltd.

    48,000       28,709  

Godrej Industries Ltd.*

    3,377       25,502  

Grupo Carso SAB de CV, Series A1

    9,400       59,858  

GS Holdings Corp.

    1,200       35,008  

GT Capital Holdings, Inc.

    2,400       23,222  

Hanwha Corp.

    1,692       27,813  

HAP Seng Consolidated Bhd.

    11,900       12,263  

Hong Leong Industries Bhd.

    9,800       18,512  

Hosken Consolidated Investments Ltd.

    17,202       178,949  

Hyosung Corp.

    201       8,781  

Industries Qatar QSC

    30,540       102,499  

International Holding Co. PJSC*

    13,301       1,447,068  

JG Summit Holdings, Inc.

    34,311       22,223  

KOC Holding A/S

    34,451       166,576  

LG Corp.

    3,055       174,630  

Lotte Corp.

    1,392       26,798  

LT Group, Inc.

    98,000       15,286  

LX Holdings Corp.

    752       3,758  

Multiply Group PJSC*

    96,713       89,525  
Investments   Shares     Value  
Industrial Conglomerates – (continued)  

Mytilineos SA

    2,685     $ 99,275  

National Industries Group Holding SAK

    35,856       20,618  

Quinenco SA

    8,136       21,950  

Reunert Ltd.

    65,659       205,555  

Samsung C&T Corp.

    2,450       193,562  

San Miguel Corp.

    13,510       25,025  

Shanghai Industrial Holdings Ltd.

    146,000       178,568  

Siemens Ltd.

    1,281       51,249  

Sigdo Koppers SA

    111,860       146,805  

Sime Darby Bhd.

    79,800       38,355  

SK Square Co. Ltd.*

    2,820       88,846  

SK, Inc.

    1,034       108,717  

SM Investments Corp.

    7,990       112,795  

Sunway Bhd.

    44,100       17,124  

Turkiye Sise ve Cam Fabrikalari A/S

    34,639       57,959  
              5,096,371  
Industrial REITs – 0.5%  

Equites Property Fund Ltd., REIT(a)

    327,355       199,938  

ESR Kendall Square REIT Co. Ltd., REIT

    3,896       9,231  

FIBRA Macquarie Mexico, REIT(b)

    286,700       443,716  

Prologis Property Mexico SA de CV, REIT(a)

    9,400       33,642  

TF Administradora Industrial S de RL de CV, REIT

    305,500       495,149  
              1,181,676  
Insurance – 2.9%  

Abu Dhabi National Insurance Co. PSC

    111,437       182,947  

Al Rajhi Co. for Co-operative Insurance*

    705       27,962  

Allianz Malaysia Bhd.

    23,500       79,016  

Anadolu Anonim Turk Sigorta Sirketi*

    63,920       133,069  

Bangkok Insurance PCL, NVDR

    9,400       78,197  

Bangkok Life Assurance PCL, NVDR

    19,600       12,651  

 

See Accompanying Notes to the Financial Statements.

 

250    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Insurance – (continued)  

BB Seguridade Participacoes SA

    9,400     $ 57,336  

Bupa Arabia for Cooperative Insurance Co.

    327       18,566  

Caixa Seguridade Participacoes SA

    15,000       32,183  

Capital Financial Indonesia Tbk. PT*

    156,800       5,478  

Cathay Financial Holding Co. Ltd.

    262,552       355,358  

Central Reinsurance Co. Ltd.*

    13,263       9,180  

China Development Financial Holding Corp.*

    470,000       163,743  

China Life Insurance Co. Ltd., Class H

    191,000       258,748  

China Pacific Insurance Group Co. Ltd., Class A

    18,600       70,531  

China Pacific Insurance Group Co. Ltd., Class H

    65,800       162,133  

China Taiping Insurance Holdings Co. Ltd.

    31,800       29,343  

Co. for Cooperative Insurance (The)

    1,168       37,609  

DB Insurance Co. Ltd.

    1,363       88,710  

Dhipaya Group Holdings PCL, NVDR

    14,600       13,811  

Discovery Ltd.

    8,046       55,185  

Fubon Financial Holding Co. Ltd.

    232,496       430,800  

General Insurance Corp. of India(b)

    7,546       20,669  

Hanwha Life Insurance Co. Ltd.*

    12,318       25,264  

HDFC Life Insurance Co. Ltd.(b)

    15,980       118,681  

Hyundai Marine & Fire Insurance Co. Ltd.

    1,262       29,435  

ICICI Lombard General Insurance Co. Ltd.(b)

    3,465       57,174  

ICICI Prudential Life Insurance Co. Ltd.(b)

    5,552       35,026  

Korean Reinsurance Co.

    33,511       220,090  

LPI Capital Bhd.

    4,900       12,321  

Max Financial Services Ltd.*

    2,721       29,874  
Investments   Shares     Value  
Insurance – (continued)  

Mercuries & Associates Holding Ltd.*

    165,975     $ 64,476  

Mercuries Life Insurance Co. Ltd.*

    147,000       22,842  

Mirae Asset Life Insurance Co. Ltd.*

    15,604       58,347  

Momentum Metropolitan Holdings

    39,089       43,724  

New China Life Insurance Co. Ltd., Class A

    4,700       21,451  

New China Life Insurance Co. Ltd., Class H

    23,500       51,477  

Old Mutual Ltd.

    123,046       77,778  

OUTsurance Group Ltd.

    10,487       22,555  

PB Fintech Ltd.*

    4,982       41,928  

People’s Insurance Co. Group of China Ltd. (The), Class H

    217,000       71,551  

PICC Property & Casualty Co. Ltd., Class H

    188,000       214,800  

Ping An Insurance Group Co. of China Ltd., Class A

    23,600       146,603  

Ping An Insurance Group Co. of China Ltd., Class H

    171,000       876,352  

Porto Seguro SA*

    5,000       24,995  

Qatar Insurance Co. SAQ*

    638,166       431,871  

Qualitas Controladora SAB de CV

    4,700       38,768  

Samsung Fire & Marine Insurance Co. Ltd.

    955       182,790  

Samsung Life Insurance Co. Ltd.

    2,444       130,836  

Sanlam Ltd.

    46,765       163,068  

Santam Ltd.(a)

    723       10,532  

SBI Life Insurance Co. Ltd.(b)

    7,078       116,284  

Shin Kong Financial Holding Co. Ltd.*

    423,000       113,330  

Shinkong Insurance Co. Ltd.

    91,856       188,895  

Star Health & Allied Insurance Co. Ltd.*

    1,470       10,240  

Syarikat Takaful Malaysia Keluarga Bhd.

    235,000       181,509  

Thai Life Insurance PCL, NVDR

    63,600       19,641  

Tongyang Life Insurance Co. Ltd.*

    12,850       41,722  

Waterdrop, Inc., ADR*

    7,350       7,571  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     251  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Insurance – (continued)  

ZhongAn Online P&C Insurance Co. Ltd., Class H* (a) (b)

    11,000     $ 30,155  
              6,257,181  
Interactive Media & Services – 2.6%  

AfreecaTV Co. Ltd.

    275       13,622  

Autohome, Inc., Class A(a)

    5,000       32,621  

Baidu, Inc., Class A*

    35,250       462,666  

Connectwave Co. Ltd.*

    882       6,772  

Info Edge India Ltd.

    1,266       62,104  

JOYY, Inc., ADR

    17,625       685,965  

Kakao Corp.

    4,794       134,177  

Kuaishou Technology* (b)

    37,600       241,950  

Meitu, Inc.* (a) (b)

    98,000       39,202  

NAVER Corp.

    2,303       319,560  

Tencent Holdings Ltd.

    97,400       3,599,939  

Weibo Corp., Class A(a)

    1,960       22,983  
              5,621,561  
IT Services – 1.3%  

Al Moammar Information Systems Co.

    505       18,307  

Arabian Internet & Communications Services Co.

    551       45,941  

Chinasoft International Ltd.

    46,000       33,333  

Chindata Group Holdings Ltd., ADR* (a)

    7,285       64,691  

Coforge Ltd.

    987       59,086  

Elm Co.

    336       62,801  

GDS Holdings Ltd., Class A*

    14,700       18,186  

Happiest Minds Technologies Ltd.

    2,940       28,931  

HCL Technologies Ltd.

    16,309       249,947  

Hyundai Autoever Corp.

    94       9,048  

Infosys Ltd.

    55,294       908,785  

Jasmine Technology Solution PCL, NVDR*

    4,100       3,793  

LTIMindtree Ltd.(b)

    1,408       85,577  

Mphasis Ltd.

    833       21,244  
Investments   Shares     Value  
IT Services – (continued)  

Perfect Presentation For Commercial Services Co.

    1,715     $ 9,417  

Persistent Systems Ltd.

    884       65,406  

Posco DX Co. Ltd.

    816       29,636  

Samsung SDS Co. Ltd.

    1,128       115,427  

Sonata Software Ltd.

    2,795       38,728  

Systex Corp.

    13,000       40,080  

Tata Consultancy Services Ltd.

    15,745       637,062  

Tech Mahindra Ltd.

    10,058       136,889  

Wipro Ltd.

    20,539       94,186  
              2,776,501  
Leisure Products – 0.2%  

Advanced International Multitech Co. Ltd.

    47,000       96,072  

Ferretti SpA

    32,900       96,287  

Fusheng Precision Co. Ltd.

    4,416       27,570  

Giant Manufacturing Co. Ltd.

    5,181       26,037  

GOLFZON Co. Ltd.

    1,645       105,968  

Johnson Health Tech Co. Ltd.

    2,000       4,064  

Merida Industry Co. Ltd.

    5,350       27,298  

Topkey Corp.

    3,456       17,155  
              400,451  
Life Sciences Tools & Services – 0.2%  

Divi’s Laboratories Ltd.

    1,927       78,422  

EirGenix, Inc.*

    6,144       20,174  

Genscript Biotech Corp.*

    20,000       58,022  

Hangzhou Tigermed Consulting Co. Ltd., Class H(b)

    4,900       27,523  

LegoChem Biosciences, Inc.*

    1,224       33,488  

Samsung Biologics Co. Ltd.* (b)

    282       148,042  

ST Pharm Co. Ltd.

    141       7,099  

Syngene International Ltd.(b)

    1,400       11,439  

WuXi AppTec Co. Ltd., Class A

    4,060       47,995  

WuXi AppTec Co. Ltd., Class H(a) (b)

    4,718       56,679  
              488,883  
Machinery – 0.8%  

AIA Engineering Ltd.

    600       25,335  

Airtac International Group

    1,913       62,518  

Ashok Leyland Ltd.

    29,258       58,932  

 

See Accompanying Notes to the Financial Statements.

 

252    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Machinery – (continued)  

China CSSC Holdings Ltd., Class A

    5,900     $ 20,865  

China International Marine Containers Group Co. Ltd., Class A

    9,600       8,684  

China International Marine Containers Group Co. Ltd., Class H

    9,400       4,949  

CIMC Enric Holdings Ltd.

    30,000       25,458  

Cochin Shipyard Ltd.(b)

    1,536       17,551  

Craftsman Automation Ltd.

    343       20,058  

Creative & Innovative System*

    2,703       17,953  

CSBC Corp. Taiwan*

    25,144       15,621  

Cummins India Ltd.

    2,280       45,911  

Doosan Bobcat, Inc.

    1,222       35,062  

Elgi Equipments Ltd.

    8,504       51,616  

Enplus Co. Ltd.*

    2,695       8,082  

Escorts Kubota Ltd.

    564       21,220  

GMM Pfaudler Ltd.

    490       10,211  

Grindwell Norton Ltd.

    771       19,858  

Haitian International Holdings Ltd.

    16,000       38,116  

Hana Technology Co. Ltd.*

    245       11,882  

Hanwha Ocean Co. Ltd.*

    705       12,319  

HD Hyundai Construction Equipment Co. Ltd.

    392       12,916  

HD Hyundai Heavy Industries Co. Ltd.*

    282       21,319  

HD Hyundai Infracore Co. Ltd.

    3,822       18,932  

HD Korea Shipbuilding & Offshore Engineering Co. Ltd.*

    1,269       84,847  

Hiwin Technologies Corp.

    5,535       33,362  

Hyundai Elevator Co. Ltd.

    882       28,212  

Hyundai Mipo Dockyard Co. Ltd.*

    400       20,525  

Hyundai Rotem Co. Ltd.*

    1,175       20,228  

Jiangsu Hengli Hydraulic Co. Ltd., Class A

    2,500       19,233  

Kangwon Energy Co. Ltd.*

    637       8,584  

Kaori Heat Treatment Co. Ltd.

    3,640       23,455  

Kinik Co.

    6,000       30,060  
Investments   Shares     Value  
Machinery – (continued)  

KSB Ltd.

    539     $ 19,820  

Lakshmi Machine Works Ltd.

    282       44,723  

LK Technology Holdings Ltd.

    22,000       18,866  

Ningbo Deye Technology Co. Ltd., Class A

    900       8,501  

Otokar Otomotiv ve Savunma Sanayi A/S*

    2,058       29,059  

Pentamaster Corp. Bhd.

    21,200       22,248  

People & Technology, Inc.

    441       16,049  

Rainbow Robotics*

    144       15,034  

Sam Engineering & Equipment M Bhd.

    4,700       4,271  

Samsung Heavy Industries Co. Ltd.*

    10,763       54,351  

Sany Heavy Equipment International Holdings Co. Ltd.

    12,000       15,766  

Sany Heavy Industry Co. Ltd., Class A

    14,100       27,880  

Schaeffler India Ltd.

    846       28,628  

SFA Engineering Corp.

    704       14,517  

Shanghai Zhenhua Heavy Industries Co. Ltd., Class B*

    96,000       19,392  

Sinotruk Hong Kong Ltd.

    23,500       44,209  

SK oceanplant Co. Ltd.*

    1,219       14,478  

SKF India Ltd.

    385       22,707  

Sunonwealth Electric Machine Industry Co. Ltd.

    8,464       22,703  

Thermax Ltd.

    944       32,106  

Tian Di Science & Technology Co. Ltd., Class A

    4,900       3,455  

Timken India Ltd.

    329       11,463  

Turk Traktor ve Ziraat Makineleri A/S

    793       20,315  

UWC Bhd.*

    20,400       15,628  

Waffer Technology Corp.

    5,280       17,581  

Weichai Power Co. Ltd., Class A

    23,500       44,572  

Weichai Power Co. Ltd., Class H

    47,000       70,278  

XCMG Construction Machinery Co. Ltd., Class A

    28,800       22,550  

Yangzijiang Shipbuilding Holdings Ltd.

    70,500       74,614  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     253  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Machinery – (continued)  

Zhejiang Sanhua Intelligent Controls Co. Ltd., Class A

    4,800     $ 17,539  

Zhengzhou Coal Mining Machinery Group Co. Ltd., Class H

    10,000       9,432  

Zhuzhou CRRC Times Electric Co. Ltd., Class H

    11,600       37,433  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class A

    17,700       15,528  

Zoomlion Heavy Industry Science and Technology Co. Ltd., Class H

    29,200       15,151  
              1,704,721  
Marine Transportation – 0.4%  

Cia Sud Americana de Vapores SA

    402,367       22,272  

COSCO SHIPPING Holdings Co. Ltd., Class H

    94,000       95,507  

Evergreen Marine Corp. Taiwan Ltd.

    29,023       96,192  

Far-Eastern Shipping Co. plc* ‡

    302,500        

HMM Co. Ltd.

    6,251       67,437  

Korea Line Corp.*

    57,669       71,310  

Log-in Logistica Intermodal SA*

    2,112       17,104  

MISC Bhd.

    22,400       34,085  

Orient Overseas International Ltd.(a)

    3,500       44,127  

Pan Ocean Co. Ltd.

    6,321       20,125  

Precious Shipping PCL, NVDR

    305,500       71,397  

Qatar Navigation QSC

    18,292       45,270  

Regional Container Lines PCL, NVDR

    89,200       48,642  

Shanghai Zhonggu Logistics Co. Ltd., Class A

    7,252       9,384  

Shipping Corp. of India Land & Assets Ltd.* ‡

    61,005       23,403  

Temas Tbk. PT

    4,107,800       40,082  

Transcoal Pacific Tbk. PT

    14,100       7,745  

U-Ming Marine Transport Corp.

    14,000       19,121  
Investments   Shares     Value  
Marine Transportation – (continued)  

Wan Hai Lines Ltd.

    47,000     $ 66,946  

Wisdom Marine Lines Co. Ltd.

    11,898       15,297  

Yang Ming Marine Transport Corp.

    50,000       64,899  
              880,345  
Media – 0.3%  

Affle India Ltd.*

    2,401       30,319  

Arabian Contracting Services Co.

    588       31,629  

Astro Malaysia Holdings Bhd.

    1,095,100       95,386  

Cheil Worldwide, Inc.

    1,392       20,469  

China Literature Ltd.* (b)

    6,200       20,879  

China South Publishing & Media Group Co. Ltd., Class A

    14,200       21,985  

Chinese Universe Publishing and Media Group Co. Ltd., Class A

    12,600       19,921  

Elang Mahkota Teknologi Tbk. PT

    648,000       20,396  

Focus Media Information Technology Co. Ltd., Class A

    23,500       22,222  

Grupo Televisa SAB, Series CPO(a)

    48,514       22,224  

Innocean Worldwide, Inc.

    3,384       109,246  

Megacable Holdings SAB de CV(a)

    14,100       27,539  

MultiChoice Group*

    7,200       26,811  

Network18 Media & Investments Ltd.*

    80,934       66,296  

Saudi Research & Media Group*

    605       22,738  

Surya Citra Media Tbk. PT

    11,801,700       112,185  

TY Holdings Co. Ltd.

    5,232       20,300  

VGI PCL, NVDR

    127,300       6,800  

Zee Entertainment Enterprises Ltd.*

    16,732       52,090  
              749,435  
Metals & Mining – 5.0%  

Adaro Minerals Indonesia Tbk. PT*

    120,400       8,337  

African Rainbow Minerals Ltd.

    3,744       30,672  

 

See Accompanying Notes to the Financial Statements.

 

254    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Metals & Mining – (continued)  

Al Masane Al Kobra Mining Co.

    1,403     $ 19,708  

Alrosa PJSC‡

    85,800        

Aluminum Corp. of China Ltd., Class A

    4,800       4,067  

Aluminum Corp. of China Ltd., Class H

    94,000       50,336  

Aneka Tambang Tbk.

    201,400       21,617  

Angang Steel Co. Ltd., Class H

    38,000       8,353  

Anglo American Platinum Ltd.

    1,410       46,933  

Anglogold Ashanti plc

    6,533       120,053  

APL Apollo Tubes Ltd.

    3,225       60,631  

Baoshan Iron & Steel Co. Ltd., Class A

    56,400       48,245  

Beijing Shougang Co. Ltd., Class A*

    10,600       5,620  

Borusan Mannesmann Boru Sanayi ve Ticaret A/S*

    14,852       484,520  

Bradespar SA

    14,100       57,261  

Bradespar SA (Preference)

    98,700       437,231  

Bumi Resources Minerals Tbk. PT*

    1,235,000       15,083  

CAP SA

    26,743       145,703  

Century Iron & Steel Industrial Co. Ltd.

    6,000       27,840  

China Gold International Resources Corp. Ltd.

    4,900       20,916  

China Hongqiao Group Ltd.(a)

    70,500       65,954  

China Metal Recycling Holdings Ltd.* ‡

    51,000        

China Nonferrous Mining Corp. Ltd.

    49,000       29,746  

China Northern Rare Earth Group High-Tech Co. Ltd., Class A

    5,300       15,136  

China Steel Corp.

    194,000       144,446  

China Zhongwang Holdings Ltd.* ‡

    699,600        

Chung Hung Steel Corp.

    23,000       15,281  

Cia de Ferro Ligas da Bahia FERBASA (Preference)

    14,100       135,967  

Cia Siderurgica Nacional SA

    18,800       43,841  
Investments   Shares     Value  
Metals & Mining – (continued)  

Citic Pacific Special Steel Group Co. Ltd., Class A

    10,600     $ 21,017  

CMOC Group Ltd., Class A

    43,200       32,704  

CMOC Group Ltd., Class H

    102,000       60,747  

Dongkuk Holdings Co. Ltd.

    3,869       24,666  

DRDGOLD Ltd.

    10,054       8,806  

Eregli Demir ve Celik Fabrikalari TAS*

    38,728       51,824  

EVERGREEN Steel Corp.

    87,896       191,049  

Ezz Steel Co. SAE*

    74,166       179,653  

Feng Hsin Steel Co. Ltd.

    15,408       29,880  

GEM Co. Ltd., Class A

    28,800       23,062  

Gerdau SA (Preference)

    29,670       128,082  

Gloria Material Technology Corp.

    19,352       26,610  

Gold Fields Ltd.

    14,100       186,880  

Grupo Mexico SAB de CV, Series B

    84,600       344,576  

Harmony Gold Mining Co. Ltd.

    14,133       65,113  

Henan Shenhuo Coal & Power Co. Ltd., Class A

    5,500       12,378  

Hesteel Co. Ltd., Class A

    37,600       11,509  

Hindalco Industries Ltd.

    39,668       218,925  

Hindustan Copper Ltd.

    16,483       28,350  

Hsin Kuang Steel Co. Ltd.

    12,144       17,448  

Huaibei Mining Holdings Co. Ltd., Class A

    9,400       18,856  

Hunan Valin Steel Co. Ltd., Class A

    23,500       18,721  

Hyundai Steel Co.

    2,023       49,057  

Impala Platinum Holdings Ltd.

    24,182       100,201  

Industrias CH SAB de CV, Class B, Series B*

    1,147       12,262  

Industrias Penoles SAB de CV* (a)

    2,585       28,820  

Inner Mongolia BaoTou Steel Union Co. Ltd., Class A*

    70,500       15,607  

Inner Mongolia ERDOS Resources Co. Ltd., Class A

    6,272       8,013  

Inner Mongolia ERDOS Resources Co. Ltd., Class B

    10,388       9,412  

Jiangxi Copper Co. Ltd., Class A

    9,400       23,570  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     255  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Metals & Mining – (continued)  

Jiangxi Copper Co. Ltd., Class H

    31,000     $ 43,897  

Jinchuan Group International Resources Co. Ltd.(a)

    752,000       45,651  

Jindal Stainless Ltd.

    134,420       714,490  

Jindal Steel & Power Ltd.

    10,058       76,566  

JSW Steel Ltd.

    14,382       127,196  

Kardemir Karabuk Demir Celik Sanayi ve Ticaret A/S, Class A

    4,508       3,394  

Kardemir Karabuk Demir Celik Sanayi ve Ticaret A/S, Class D

    25,039       22,090  

KG DONGBUSTEEL

    11,609       60,428  

Korea Zinc Co. Ltd.

    188       65,286  

Koza Altin Isletmeleri A/S

    27,440       21,298  

Koza Anadolu Metal Madencilik Isletmeleri A/S*

    74,730       138,933  

Kumba Iron Ore Ltd.

    1,440       37,932  

Lloyds Metals & Energy Ltd.*

    4,704       29,122  

Maanshan Iron & Steel Co. Ltd., Class A

    21,200       7,996  

Maanshan Iron & Steel Co. Ltd., Class H

    22,000       3,627  

Magnitogorsk Iron & Steel Works PJSC* ‡

    45,174        

Merdeka Copper Gold Tbk. PT*

    221,062       31,034  

Metalurgica Gerdau SA (Preference)

    21,400       43,835  

Minsur SA*

    127,746       132,241  

MMC Norilsk Nickel PJSC* ‡

    2,090        

MMG Ltd.* (a)

    84,000       24,799  

National Aluminium Co. Ltd.

    360,255       399,160  

Nickel Asia Corp.

    1,442,900       138,594  

NMDC Ltd.

    31,067       57,538  

Northam Platinum Holdings Ltd.

    10,105       60,635  

Novolipetsk Steel PJSC* ‡

    51,150        

Pangang Group Vanadium Titanium & Resources Co. Ltd., Class A*

    14,100       6,724  

PMB Technology Bhd.*

    4,700       3,009  
Investments   Shares     Value  
Metals & Mining – (continued)  

Polyus PJSC* ‡

    1,155     $  

Poongsan Corp.

    784       20,869  

POSCO Holdings, Inc.

    2,021       615,780  

Posco M-Tech Co. Ltd.

    931       14,614  

Press Metal Aluminium Holdings Bhd.

    56,400       58,241  

Qatar Aluminum Manufacturing Co.

    42,858       14,572  

Raspadskaya OJSC* ‡

    4,240        

Ratnamani Metals & Tubes Ltd.

    1,265       42,037  

Sam-A Aluminum Co. Ltd.

    245       22,622  

Saudi Arabian Mining Co.*

    19,228       184,510  

SeAH Besteel Holdings Corp.

    5,499       88,559  

SeAH Steel Holdings Corp.

    663       98,182  

Severstal PAO* ‡

    5,995        

Shandong Gold Mining Co. Ltd., Class A

    5,100       16,649  

Shandong Gold Mining Co. Ltd., Class H(b)

    12,250       23,077  

Shandong Nanshan Aluminum Co. Ltd., Class A

    18,800       7,964  

Shanxi Meijin Energy Co. Ltd., Class A*

    9,400       9,004  

Shanxi Taigang Stainless Steel Co. Ltd., Class A

    15,900       8,495  

Shougang Fushan Resources Group Ltd.

    1,270,000       417,133  

Sibanye Stillwater Ltd.

    76,093       97,009  

Steel Authority of India Ltd.

    44,288       44,603  

TA Chen Stainless Pipe

    56,800       64,882  

Tata Steel Ltd.

    214,179       305,478  

TCC Steel

    735       28,300  

Tiangong International Co. Ltd.

    564,000       165,785  

Tianshan Aluminum Group Co. Ltd., Class A

    10,600       9,386  

Tongling Nonferrous Metals Group Co. Ltd., Class A

    29,400       12,494  

Tung Ho Steel Enterprise Corp.

    17,050       34,168  

United Co. RUSAL International PJSC* ‡

    75,100        

Usha Martin Ltd.

    6,762       24,170  

Usinas Siderurgicas de Minas Gerais SA Usiminas (Preference), Class A

    183,300       240,256  

 

See Accompanying Notes to the Financial Statements.

 

256    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Metals & Mining – (continued)  

Vale Indonesia Tbk. PT

    28,200     $ 8,788  

Vale SA

    98,700       1,350,447  

Vedanta Ltd.

    28,012       72,874  

VSMPO-AVISMA Corp. PJSC‡

    53        

Western Mining Co. Ltd., Class A

    4,800       8,238  

Western Superconducting Technologies Co. Ltd., Class A

    1,052       6,591  

Xiamen Tungsten Co. Ltd., Class A

    3,900       9,033  

YongXing Special Materials Technology Co. Ltd., Class A

    3,800       25,937  

Young Poong Corp.

    282       98,033  

Yunnan Aluminium Co. Ltd., Class A

    6,300       11,983  

Yunnan Copper Co. Ltd., Class A

    4,800       7,241  

Yunnan Tin Co. Ltd., Class A

    9,600       18,497  

Zhaojin Mining Industry Co. Ltd., Class H(a)

    24,500       30,623  

Zhejiang Huayou Cobalt Co. Ltd., Class A

    6,940       34,889  

Zijin Mining Group Co. Ltd., Class A

    46,200       78,535  

Zijin Mining Group Co. Ltd., Class H

    160,000       248,652  
              10,985,970  
Multi-Utilities – 0.1%  

Dubai Electricity & Water Authority PJSC

    132,493       85,851  

Power & Water Utility Co. for Jubail & Yanbu

    1,225       17,763  

Qatar Electricity & Water Co. QSC

    8,754       39,767  

YTL Corp. Bhd.

    83,300       25,526  

YTL Power International Bhd.

    78,431       34,734  
              203,641  
Office REITs – 0.0%(d)  

AREIT, Inc., REIT

    30,000       17,342  

Embassy Office Parks REIT, REIT

    8,680       32,492  
Investments   Shares     Value  
Office REITs – (continued)  

JR Global Reit, REIT

    7,119     $ 20,742  

RL Commercial REIT, Inc., REIT

    164,500       13,742  

Shinhan Alpha REIT Co. Ltd., REIT

    3,773       17,125  
              101,443  
Oil, Gas & Consumable Fuels – 5.4%  

3R Petroleum Oleo E Gas SA*

    82,732       532,188  

ABM Investama Tbk. PT

    206,800       49,731  

Adaro Energy Indonesia Tbk. PT

    366,700       59,097  

Aegis Logistics Ltd.

    4,841       17,001  

AKR Corporindo Tbk. PT

    140,000       13,132  

Aldrees Petroleum and Transport Services Co.

    1,690       52,976  

Bangchak Corp. PCL, NVDR

    14,000       16,067  

Banpu PCL, NVDR

    93,200       19,707  

Bashneft PJSC‡

    1,305        

Bashneft PJSC (Preference)‡

    1,163        

Bayan Resources Tbk. PT

    126,900       145,593  

Bharat Petroleum Corp. Ltd.

    27,252       114,315  

Bukit Asam Tbk. PT

    106,000       16,549  

Bumi Resources Tbk. PT*

    4,937,100       35,121  

China Coal Energy Co. Ltd., Class A

    16,100       18,920  

China Coal Energy Co. Ltd., Class H

    49,000       38,451  

China Merchants Energy Shipping Co. Ltd., Class A

    14,100       12,389  

China Petroleum & Chemical Corp., Class A

    122,200       91,173  

China Petroleum & Chemical Corp., Class H

    658,000       336,375  

China Shenhua Energy Co. Ltd., Class A

    18,800       77,891  

China Shenhua Energy Co. Ltd., Class H

    94,000       288,321  

China Suntien Green Energy Corp. Ltd., Class H(a)

    50,000       17,381  

Coal India Ltd.

    57,387       216,600  

Cosan SA

    32,900       102,751  

COSCO SHIPPING Energy Transportation Co. Ltd., Class A

    8,600       16,946  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     257  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

COSCO SHIPPING Energy Transportation Co. Ltd., Class H(a)

    16,000     $ 16,931  

Dana Gas PJSC

    2,170,037       478,554  

Ecopetrol SA

    140,483       82,282  

Empresas Copec SA

    10,011       66,060  

Esso Thailand PCL, NVDR

    460,600       122,382  

Exxaro Resources Ltd.

    5,875       58,591  

Formosa Petrochemical Corp.

    29,000       70,723  

Gazprom PJSC* ‡

    412,500        

Great Eastern Shipping Co. Ltd. (The)

    39,856       380,208  

Guanghui Energy Co. Ltd., Class A

    15,100       15,475  

Harum Energy Tbk. PT

    1,090,400       110,859  

HD Hyundai Co. Ltd.

    1,445       61,414  

Helleniq Energy Holdings SA

    1,316       9,640  

Hibiscus Petroleum Bhd.

    274,480       153,817  

Hindustan Petroleum Corp. Ltd.*

    17,484       52,016  

Indian Oil Corp. Ltd.

    103,353       111,349  

Indika Energy Tbk. PT

    615,200       70,292  

Indo Tambangraya Megah Tbk. PT

    9,400       15,696  

Inner Mongolia Dian Tou Energy Corp. Ltd., Class A

    5,300       9,850  

Inner Mongolia Yitai Coal Co. Ltd., Class B*

    30,300       41,572  

IRPC PCL, NVDR

    401,800       21,464  

Jinneng Holding Shanxi Coal Industry Co. Ltd., Class A

    4,900       7,888  

Jizhong Energy Resources Co. Ltd., Class A

    4,800       4,204  

LUKOIL PJSC‡

    12,265        

Mangalore Refinery & Petrochemicals Ltd.*

    72,804       90,678  

Medco Energi Internasional Tbk. PT

    178,600       14,335  

MOL Hungarian Oil & Gas plc

    13,865       110,077  

Motor Oil Hellas Corinth Refineries SA

    1,579       37,553  
Investments   Shares     Value  
Oil, Gas & Consumable Fuels – (continued)  

Nanjing Tanker Corp., Class A*

    9,800     $ 4,004  

Novatek PJSC‡

    20,020        

Oil & Natural Gas Corp. Ltd.

    107,912       241,270  

Oil India Ltd.

    12,119       43,500  

PetroChina Co. Ltd., Class H

    564,000       367,610  

Petroleo Brasileiro SA

    98,700       740,593  

Petroleo Brasileiro SA (Preference)

    126,900       874,183  

Petronas Dagangan Bhd.

    4,900       23,510  

Petronet LNG Ltd.

    19,599       46,986  

Petroreconcavo SA

    56,400       231,952  

Pingdingshan Tianan Coal Mining Co. Ltd., Class A

    9,800       13,391  

PRIO SA*

    21,100       199,578  

Productive Technologies Co. Ltd.*

    90,000       8,627  

PTT Exploration & Production PCL

    469       2,140  

PTT Exploration & Production PCL, NVDR

    37,531       171,248  

PTT PCL, NVDR

    220,900       204,352  

Qatar Fuel QSC

    8,416       34,325  

Qatar Gas Transport Co. Ltd.

    51,996       50,268  

Rabigh Refining & Petrochemical Co.*

    5,254       14,117  

Reliance Industries Ltd.

    53,533       1,471,054  

Rosneft Oil Co. PJSC‡

    72,122        

Rosneft Oil Co. PJSC, GDR* ‡ (b)

    1,920        

Saudi Arabian Oil Co.(c)

    67,116       595,736  

Semirara Mining & Power Corp., Class A

    42,200       21,569  

Shaanxi Coal Industry Co. Ltd., Class A

    23,500       57,866  

Shan Xi Hua Yang Group New Energy Co. Ltd., Class A

    7,050       7,765  

Shandong Xinchao Energy Corp. Ltd., Class A*

    4,900       1,714  

Shanxi Coking Coal Energy Group Co. Ltd., Class A

    9,400       11,098  

Shanxi Lu’an Environmental Energy Development Co. Ltd., Class A

    6,200       16,097  

 

See Accompanying Notes to the Financial Statements.

 

258    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

Siamgas & Petrochemicals PCL, NVDR

    217,300     $ 48,064  

Sinopec Kantons Holdings Ltd.

    376,000       148,005  

SK Discovery Co. Ltd.

    3,713       101,585  

SK Gas Ltd.

    1,034       113,311  

SK Innovation Co. Ltd.*

    1,466       132,646  

S-Oil Corp.

    1,308       64,308  

Star Petroleum Refining PCL, NVDR

    33,500       6,897  

Surgutneftegas PJSC‡

    319,000        

Surgutneftegas PJSC (Preference)‡

    225,500        

Tatneft PJSC‡

    26,900        

Tatneft PJSC (Preference)‡

    3,870        

Thai Oil PCL, NVDR

    28,802       37,663  

Thungela Resources Ltd.

    4,116       36,521  

Transneft PJSC (Preference)‡

    55        

Turkiye Petrol Rafinerileri A/S

    22,184       111,262  

Ultrapar Participacoes SA

    20,738       84,095  

United Tractors Tbk. PT

    37,600       59,471  

Vista Energy SAB de CV, ADR*

    27,818       757,206  

Yancoal Australia Ltd.(b)

    9,400       28,832  

Yankuang Energy Group Co. Ltd., Class A

    7,950       21,206  

Yankuang Energy Group Co. Ltd., Class H(a)

    69,000       119,929  
              11,828,139  
Paper & Forest Products – 0.5%  

Century Plyboards India Ltd.

    3,256       24,203  

Century Textiles & Industries Ltd.

    2,118       27,545  

Dexco SA*

    14,700       19,996  

Dongwha Enterprise Co. Ltd.*

    441       20,082  

Empresas CMPC SA

    24,310       43,319  

Indah Kiat Pulp & Paper Tbk. PT

    82,400       49,798  

JK Paper Ltd.

    30,691       140,500  

Lee & Man Paper Manufacturing Ltd.

    49,000       13,965  

Longchen Paper & Packaging Co. Ltd.

    282,967       120,829  

Nine Dragons Paper Holdings Ltd.

    55,000       31,280  
Investments   Shares     Value  
Paper & Forest Products – (continued)  

Pabrik Kertas Tjiwi Kimia Tbk. PT

    502,900     $ 242,190  

Sappi Ltd.

    16,314       34,122  

Shandong Sun Paper Industry JSC Ltd., Class A

    9,400       15,966  

Shihlin Paper Corp.*

    9,648       15,230  

Suzano SA

    18,800       192,250  

YFY, Inc.

    22,472       20,646  

Young Poong Paper Manufacturing Co. Ltd.

    931       5,632  
              1,017,553  
Passenger Airlines – 0.5%  

Aegean Airlines SA* (a)

    13,442       146,913  

Aeroflot PJSC* ‡

    74,029        

Air Arabia PJSC

    62,322       44,455  

Asiana Airlines, Inc.*

    15,181       125,333  

Azul SA (Preference)*

    11,500       29,371  

Bangkok Airways PCL, NVDR*

    39,100       14,795  

China Airlines Ltd.

    61,000       36,391  

China Eastern Airlines Corp. Ltd., Class A*

    14,300       8,520  

China Eastern Airlines Corp. Ltd., Class H*

    46,000       15,755  

China Southern Airlines Co. Ltd., Class A*

    14,100       11,907  

China Southern Airlines Co. Ltd., Class H*

    24,000       11,349  

Controladora Vuela Cia de Aviacion SAB de CV, Class A* (a)

    35,700       20,329  

Eva Airways Corp.

    73,592       62,168  

Hainan Airlines Holding Co. Ltd., Class A*

    67,200       13,407  

Hanjin Kal Corp.

    637       20,116  

InterGlobe Aviation Ltd.* (b)

    1,799       53,021  

Jazeera Airways Co. KSCP

    4,053       19,116  

Jeju Air Co. Ltd.*

    1,962       15,341  

Jin Air Co. Ltd.*

    9,541       79,123  

Korean Air Lines Co. Ltd.

    4,888       74,195  

Latam Airlines Group SA*

    3,059,341       23,851  

Pegasus Hava Tasimaciligi A/S*

    1,081       26,936  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     259  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Passenger Airlines – (continued)  

Spring Airlines Co. Ltd., Class A*

    2,400     $ 17,955  

Turk Hava Yollari AO*

    18,835       144,661  

Tway Air Co. Ltd.*

    29,375       47,307  
              1,062,315  
Personal Care Products – 0.6%  

Amorepacific Corp.

    519       48,574  

AMOREPACIFIC Group

    611       12,939  

Colgate-Palmolive India Ltd.

    1,824       46,308  

Cosmax, Inc.*

    3,196       320,890  

Dabur India Ltd.

    10,387       65,983  

EIS Eczacibasi Ilac ve Sinai ve Finansal Yatirimlar Sanayi ve Ticaret A/S

    5,880       9,119  

Emami Ltd.

    931       5,702  

Gillette India Ltd.

    392       28,834  

Godrej Consumer Products Ltd.*

    5,922       70,548  

Hengan International Group Co. Ltd.

    23,500       78,688  

Hindustan Unilever Ltd.

    13,724       409,451  

Hyundai Bioscience Co. Ltd.*

    1,504       41,649  

Kolmar BNH Co. Ltd.

    931       11,333  

Kolmar Korea Co. Ltd.

    735       29,170  

LG H&H Co. Ltd.

    141       32,939  

LG H&H Co. Ltd. (Preference)

    43       4,508  

Microbio Co. Ltd.

    1,580       2,499  

Natura & Co. Holding SA*

    10,958       27,705  

Procter & Gamble Hygiene & Health Care Ltd.

    196       41,293  

Sarantis SA

    1,666       13,824  

TCI Co. Ltd.

    4,688       25,005  
              1,326,961  
Pharmaceuticals – 1.6%  

Adcock Ingram Holdings Ltd.(a)

    31,114       89,855  

Ajanta Pharma Ltd.

    576       12,198  

Alembic Pharmaceuticals Ltd.

    3,400       29,118  

Alkem Laboratories Ltd.

    516       23,066  
Investments   Shares     Value  
Pharmaceuticals – (continued)  

Aspen Pharmacare Holdings Ltd.

    4,982     $ 44,989  

Asymchem Laboratories Tianjin Co. Ltd., Class A

    700       14,439  

Aurobindo Pharma Ltd.

    3,791       38,680  

Beijing Tong Ren Tang Chinese Medicine Co. Ltd.

    5,000       7,515  

Beijing Tongrentang Co. Ltd., Class A

    4,700       32,979  

Bora Pharmaceuticals Co. Ltd.

    1,008       20,169  

Boryung

    2,597       17,306  

Bukwang Pharmaceutical Co. Ltd.*

    1,431       6,018  

CanSino Biologics, Inc., Class A*

    318       3,450  

CanSino Biologics, Inc., Class H* (a) (b)

    800       2,530  

Caregen Co. Ltd.

    144       2,858  

Celltrion Pharm, Inc.*

    136       6,374  

Center Laboratories, Inc.

    11,446       16,109  

Changchun High & New Technology Industry Group, Inc., Class A

    600       12,759  

China Medical System Holdings Ltd.

    47,000       75,084  

China Resources Pharmaceutical Group Ltd.(b)

    51,000       31,677  

China Resources Sanjiu Medical & Pharmaceutical Co. Ltd., Class A

    4,000       23,580  

Chong Kun Dang Pharmaceutical Corp.

    107       7,519  

Cipla Ltd.

    8,601       123,965  

CSPC Pharmaceutical Group Ltd.

    142,080       124,020  

Daewoong Co. Ltd.

    9,447       104,224  

Daewoong Pharmaceutical Co. Ltd.

    49       3,625  

Dong-A Socio Holdings Co. Ltd.

    1,618       119,324  

DongKook Pharmaceutical Co. Ltd.

    2,205       26,302  

Dr Reddy’s Laboratories Ltd.

    2,055       132,482  

 

See Accompanying Notes to the Financial Statements.

 

260    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Pharmaceuticals – (continued)  

Eris Lifesciences Ltd.* (b)

    1,617     $ 16,693  

Genomma Lab Internacional SAB de CV, Class B

    296,100       221,751  

Gland Pharma Ltd.* (b)

    971       18,030  

GlaxoSmithKline Pharmaceuticals Ltd.

    376       6,428  

Glenmark Pharmaceuticals Ltd.

    5,922       53,186  

Grand Pharmaceutical Group Ltd.

    33,000       17,756  

Granules India Ltd.

    5,750       22,507  

Hanall Biopharma Co. Ltd.*

    1,666       36,082  

Hanmi Pharm Co. Ltd.

    100       20,880  

Hanmi Science Co. Ltd.

    671       15,725  

Hansoh Pharmaceutical Group Co. Ltd.(b)

    16,000       30,141  

HK inno N Corp.

    644       20,600  

Hua Han Health Industry Holdings Ltd.* ‡

    3,780,000        

Hubei Jumpcan Pharmaceutical Co. Ltd., Class A

    3,100       11,476  

Hypera SA

    6,900       41,444  

Il Dong Pharmaceutical Co. Ltd.*

    511       6,092  

Ipca Laboratories Ltd.

    1,519       17,948  

JB Chemicals & Pharmaceuticals Ltd.

    3,218       54,043  

Jiangsu Hengrui Pharmaceuticals Co. Ltd., Class A

    8,400       55,027  

Joincare Pharmaceutical Group Industry Co. Ltd., Class A

    4,700       7,617  

Kalbe Farma Tbk. PT

    351,000       37,343  

Komipharm International Co. Ltd.*

    1,568       6,002  

Laurus Labs Ltd.(b)

    3,969       17,245  

Livzon Pharmaceutical Group, Inc., Class H

    3,930       11,602  

Lotus Pharmaceutical Co. Ltd.

    2,000       15,539  

Lupin Ltd.

    3,167       42,913  

Luye Pharma Group Ltd.* (a) (b)

    73,500       35,601  

Natco Pharma Ltd.

    3,552       34,145  
Investments   Shares     Value  
Pharmaceuticals – (continued)  

Oneness Biotech Co. Ltd.

    4,197     $ 25,362  

Oscotec, Inc.*

    1,034       14,547  

Pfizer Ltd.

    341       16,114  

Pharmally International Holding Co. Ltd.* ‡

    2,564        

Piramal Pharma Ltd.*

    26,402       33,138  

Procter & Gamble Health Ltd.

    400       24,514  

Richter Gedeon Nyrt.

    3,846       89,978  

Sam Chun Dang Pharm Co. Ltd.*

    240       10,911  

Sanofi India Ltd.

    392       35,595  

Saudi Pharmaceutical Industries & Medical Appliances Corp.*

    1,470       11,637  

SciClone Pharmaceuticals Holdings Ltd.(b)

    94,000       123,738  

Shandong Sinobioway Biomedicine Co. Ltd., Class A*

    4,800       11,341  

Shanghai Fosun Pharmaceutical Group Co. Ltd., Class A

    3,800       14,768  

Shanghai Fosun Pharmaceutical Group Co. Ltd., Class H(a)

    8,000       18,444  

Shanghai Shyndec Pharmaceutical Co. Ltd., Class A

    14,400       20,268  

Shijiazhuang Yiling Pharmaceutical Co. Ltd., Class A

    4,700       14,271  

Shin Poong Pharmaceutical Co. Ltd.*

    1,824       15,680  

Sichuan Kelun Pharmaceutical Co. Ltd., Class A

    4,800       18,011  

Sihuan Pharmaceutical Holdings Group Ltd.

    125,000       10,544  

Sino Biopharmaceutical Ltd.

    169,999       66,048  

SK Biopharmaceuticals Co. Ltd.*

    330       18,424  

Sun Pharmaceutical Industries Ltd.

    17,321       226,470  

Suven Pharmaceuticals Ltd.*

    3,735       25,961  

Synmosa Biopharma Corp.

    16,272       18,838  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     261  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Pharmaceuticals – (continued)  

Tianjin Pharmaceutical Da Re Tang Group Corp. Ltd., Class S

    9,600     $ 16,896  

Torrent Pharmaceuticals Ltd.

    1,434       33,142  

TTY Biopharm Co. Ltd.

    11,464       29,654  

United Laboratories International Holdings Ltd. (The)

    376,000       383,948  

Yuhan Corp.

    1,034       43,946  

Yungjin Pharmaceutical Co. Ltd.*

    1,602       2,485  

Yunnan Baiyao Group Co. Ltd., Class A

    4,800       33,353  

Zhangzhou Pientzehuang Pharmaceutical Co. Ltd., Class A

    1,300       44,446  

Zhejiang NHU Co. Ltd., Class A

    4,800       10,613  

Zydus Lifesciences Ltd.

    4,744       32,680  
              3,521,795  
Professional Services – 0.1%  

BLS International Services Ltd.

    3,626       11,400  

Computer Age Management Services Ltd.

    1,007       27,176  

CTOS Digital Bhd.

    84,900       25,838  

eClerx Services Ltd.

    679       15,968  

Firstsource Solutions Ltd.

    6,900       12,933  

L&T Technology Services Ltd.(b)

    376       18,907  

My EG Services Bhd.

    88,989       14,568  

NICE Information Service Co. Ltd.

    686       4,470  

RITES Ltd.

    4,263       23,120  

Sporton International, Inc.

    3,150       20,783  
              175,163  
Real Estate Management & Development – 3.2%  

Agile Group Holdings Ltd.* (a)

    752,000       72,080  

Aldar Properties PJSC

    64,597       91,452  

A-Living Smart City Services Co. Ltd.* (b)

    329,000       155,153  

Allos SA

    14,100       64,027  

Amata Corp. PCL, NVDR

    29,300       19,402  
Investments   Shares     Value  
Real Estate Management & Development – (continued)  

Arabian Centres Co. Ltd.

    676     $ 3,615  

Arriyadh Development Co.

    2,145       11,435  

Ayala Land, Inc.

    81,600       40,052  

Barwa Real Estate Co.

    66,505       46,212  

Bumi Serpong Damai Tbk. PT*

    166,600       10,540  

C&D International Investment Group Ltd.

    17,845       40,048  

Cencosud Shopping SA

    11,750       16,999  

Central Pattana PCL, NVDR

    23,700       41,212  

China Dili Group* ‡

    100,000       4,601  

China Jinmao Holdings Group Ltd.

    99,553       12,214  

China Merchants Shekou Industrial Zone Holdings Co. Ltd., Class A

    19,600       29,568  

China Overseas Grand Oceans Group Ltd.(a)

    49,000       16,720  

China Overseas Land & Investment Ltd.

    94,000       177,558  

China Overseas Property Holdings Ltd.

    30,000       26,033  

China Resources Land Ltd.

    80,000       299,568  

China Resources Mixc Lifestyle Services Ltd.(b)

    9,600       37,420  

China Vanke Co. Ltd., Class A

    23,500       36,383  

China Vanke Co. Ltd., Class H

    56,400       52,763  

Chong Hong Construction Co. Ltd.

    78,872       175,568  

Ciputra Development Tbk. PT

    3,496,849       244,350  

Commercial Real Estate Co. KSC

    583,920       185,428  

Corp. Inmobiliaria Vesta SAB de CV

    9,600       30,061  

Cosmopolitan International Holdings Ltd.*

    9,400       4,205  

Country Garden Holdings Co. Ltd.* (a)

    282,000       25,228  

Country Garden Services Holdings Co. Ltd.

    47,000       41,086  

Dar Al Arkan Real Estate Development Co.*

    7,655       30,811  

DLF Ltd.

    10,810       73,163  

Eco World Development Group Bhd.

    512,300       108,600  

 

See Accompanying Notes to the Financial Statements.

 

262    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Real Estate Management & Development – (continued)  

Emaar Development PJSC

    24,854     $ 41,953  

Emaar Economic City*

    9,847       19,213  

Emaar Properties PJSC

    168,025       306,041  

Fortress Real Estate Investments Ltd., Class A*

    56,682       39,578  

Fortress Real Estate Investments Ltd., Class B*

    46,844       14,743  

Fu Hua Innovation Co. Ltd.

    108,592       86,211  

Gemdale Corp., Class A

    14,100       9,961  

Gemdale Properties & Investment Corp. Ltd.

    2,068,000       61,316  

Godrej Properties Ltd.*

    1,764       35,163  

Greenland Holdings Corp. Ltd., Class A*

    33,600       11,708  

Greentown China Holdings Ltd.

    25,000       24,250  

Hainan Airport Infrastructure Co. Ltd., Class A*

    9,800       5,102  

Hangzhou Binjiang Real Estate Group Co. Ltd., Class A

    4,300       4,924  

Hanson International Tbk. PT* ‡

    2,409,275        

Highwealth Construction Corp.

    39,330       49,352  

Hopson Development Holdings Ltd.*

    22,560       13,205  

Huang Hsiang Construction Corp.

    47,000       55,861  

Hung Sheng Construction Ltd.

    141,000       78,031  

Iguatemi SA

    4,900       19,501  

IOI Properties Group Bhd.

    52,800       20,502  

Jinke Smart Services Group Co. Ltd., Class H* (a) (b)

    61,100       60,986  

KE Holdings, Inc., ADR

    10,810       159,015  

Kindom Development Co. Ltd.

    141,400       148,877  

King’s Town Construction Co. Ltd.*

    2,000       1,884  

LAMDA Development SA*

    1,368       8,792  

Land & Houses PCL, NVDR

    83,200       17,477  

Longfor Group Holdings Ltd.(b)

    49,488       71,975  

LSR Group PJSC, Class A‡

    21,295        

LVGEM China Real Estate Investment Co. Ltd.*

    96,000       10,797  

Mabanee Co. KPSC

    14,139       37,683  
Investments   Shares     Value  
Real Estate Management & Development – (continued)  

Macrotech Developers Ltd.(b)

    3,983     $ 37,683  

MAS P.L.C.(a)

    169,717       137,607  

Matrix Concepts Holdings Bhd.

    253,800       82,034  

MBK PCL, NVDR

    30,344       13,508  

Megaworld Corp.

    4,230,000       147,610  

Midea Real Estate Holding Ltd.(a) (b)

    141,000       96,407  

Multiplan Empreendimentos Imobiliarios SA*

    5,000       24,529  

National Real Estate Co. KPSC*

    380,697       81,784  

Oberoi Realty Ltd.

    1,551       21,197  

Origin Property PCL, NVDR

    282,000       70,220  

OSK Holdings Bhd.

    390,100       96,614  

Pakuwon Jati Tbk. PT

    155,100       3,906  

Parque Arauco SA

    28,294       38,538  

Phoenix Mills Ltd. (The)

    1,600       34,886  

Poly Developments and Holdings Group Co. Ltd., Class A

    28,200       42,465  

Poly Property Services Co. Ltd., Class H(b)

    6,200       24,326  

Prestige Estates Projects Ltd.

    3,219       29,604  

Prince Housing & Development Corp.

    50,000       16,417  

Pruksa Holding PCL, NVDR

    249,100       86,631  

Quality Houses PCL, NVDR

    1,739,000       108,378  

Radiance Holdings Group Co. Ltd.* (a) (b)

    49,000       20,352  

Red Star Macalline Group Corp. Ltd., Class A

    14,700       8,557  

Redco Properties Group Ltd.* ‡ (b)

    294,000       46,771  

Robinsons Land Corp.

    625,100       153,576  

Ruentex Development Co. Ltd.

    43,560       43,513  

Salhia Real Estate Co. KSCP

    16,277       21,086  

Sansiri PCL, NVDR

    2,500,400       106,437  

Saudi Real Estate Co.*

    3,478       11,088  

SC Asset Corp. PCL, NVDR

    761,400       71,601  

Seazen Group Ltd.* (a)

    940,000       152,570  

Seazen Holdings Co. Ltd., Class A*

    4,700       7,643  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     263  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Real Estate Management & Development – (continued)  

Shanghai Jinqiao Export Processing Zone Development Co. Ltd., Class B

    103,400     $ 91,302  

Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., Class B

    4,900       1,950  

Shanghai Zhangjiang High-Tech Park Development Co. Ltd., Class A

    4,700       15,382  

Shenzhen Investment Ltd.

    940,000       138,154  

Shenzhen Overseas Chinese Town Co. Ltd., Class A*

    22,200       10,982  

Shoucheng Holdings Ltd.

    98,000       16,031  

Shui On Land Ltd.

    1,410,000       124,339  

Sichuan Languang Justbon Services Group Co. Ltd., Class H* ‡

    26,500        

Sime Darby Property Bhd.

    1,240,800       160,162  

Sinic Holdings Group Co. Ltd.* ‡

    318,000        

SK D&D Co. Ltd.

    2,632       53,496  

SM Prime Holdings, Inc.

    183,300       96,916  

SOHO China Ltd.*

    76,000       7,867  

SP Setia Bhd. Group

    770,800       135,895  

Summarecon Agung Tbk. PT

    227,900       7,676  

Supalai PCL, NVDR

    23,800       12,184  

Talaat Moustafa Group

    401,192       292,024  

United Development Co. QSC

    700,347       187,157  

UOA Development Bhd.

    26,500       9,400  

WHA Corp. PCL, NVDR

    117,490       16,344  

Youngor Group Co. Ltd., Class A

    14,400       13,282  

Yuexiu Property Co. Ltd.

    52,079       54,178  

Yungshin Construction & Development Co. Ltd.

    26,448       67,761  

Zhuhai Huafa Properties Co. Ltd., Class A

    4,900       5,624  
              6,993,300  
Investments   Shares     Value  
Residential REITs – 0.0%(d)  

Emlak Konut Gayrimenkul Yatirim Ortakligi A/S, REIT

    63,896     $ 14,815  
Retail REITs – 0.3%  

CPN Retail Growth Leasehold REIT, REIT

    44,100       11,656  

Hyprop Investments Ltd., REIT

    148,379       224,465  

IGB REIT, REIT

    53,900       19,232  

LOTTE Reit Co. Ltd., REIT

    1,828       3,891  

Pavilion REIT, REIT

    15,000       3,810  

Resilient REIT Ltd., REIT(a)

    120,278       238,350  

Sunway REIT, REIT

    53,900       16,856  

Vukile Property Fund Ltd., REIT(a)

    361,148       239,457  
              757,717  
Semiconductors & Semiconductor Equipment – 7.0%  

3peak, Inc., Class A

    245       5,393  

ADATA Technology Co. Ltd.

    102,198       306,893  

Advanced Wireless Semiconductor Co.*

    5,104       17,703  

Alchip Technologies Ltd.

    1,184       95,822  

Amlogic Shanghai Co. Ltd., Class A*

    2,377       19,544  

Andes Technology Corp.

    1,507       17,934  

Anji Microelectronics Technology Shanghai Co. Ltd., Class A

    127       3,366  

AP Memory Technology Corp.

    2,224       24,479  

Ardentec Corp.

    168,024       336,721  

ASE Technology Holding Co. Ltd.

    94,000       328,935  

ASMedia Technology, Inc.

    576       23,353  

ASPEED Technology, Inc.

    520       41,202  

Borosil Renewables Ltd.*

    1,880       9,205  

Cambricon Technologies Corp. Ltd., Class A*

    288       4,220  

China Resources Microelectronics Ltd., Class A

    1,350       9,805  

Chipbond Technology Corp.

    21,776       45,653  

D&O Green Technologies Bhd.

    15,300       10,533  

Dagang NeXchange Bhd.*

    1,113,900       101,699  

 

See Accompanying Notes to the Financial Statements.

 

264    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Semiconductors & Semiconductor Equipment – (continued)  

Daqo New Energy Corp., ADR*

    1,504     $ 38,292  

DB HiTek Co. Ltd.

    912       32,684  

Duk San Neolux Co. Ltd.*

    423       12,090  

Elan Microelectronics Corp.

    5,568       24,720  

Elite Semiconductor Microelectronics Technology, Inc.

    12,360       31,972  

eMemory Technology, Inc.

    1,000       62,124  

Ennostar, Inc.*

    7,000       8,892  

Eo Technics Co. Ltd.

    384       39,607  

Episil Technologies, Inc.

    6,292       13,269  

Eugene Technology Co. Ltd.

    686       19,327  

Everlight Electronics Co. Ltd.

    166,728       227,719  

Faraday Technology Corp.

    4,000       37,244  

Flat Glass Group Co. Ltd., Class A

    3,600       12,692  

Flat Glass Group Co. Ltd., Class H* (a)

    7,000       12,542  

FocalTech Systems Co. Ltd.

    9,176       22,802  

Formosa Sumco Technology Corp.

    1,000       4,794  

Foxsemicon Integrated Technology, Inc.

    34,672       195,087  

GCL System Integration Technology Co. Ltd., Class A*

    9,800       3,696  

GCL Technology Holdings Ltd.

    517,000       75,985  

GemVax & Kael Co. Ltd.*

    920       9,666  

GigaDevice Semiconductor, Inc., Class A

    1,440       21,055  

Global Mixed Mode Technology, Inc.

    27,544       211,028  

Global Unichip Corp.

    1,432       63,355  

Globalwafers Co. Ltd.

    5,000       73,146  

Gudeng Precision Industrial Co. Ltd.

    1,728       17,901  

HAESUNG DS Co. Ltd.

    4,136       135,361  

Hana Materials, Inc.

    318       11,149  

Hangzhou First Applied Material Co. Ltd., Class A

    3,724       13,012  
Investments   Shares     Value  
Semiconductors & Semiconductor Equipment – (continued)  

Hangzhou Silan Microelectronics Co. Ltd., Class A

    2,900     $ 9,614  

Hanmi Semiconductor Co. Ltd.

    931       36,191  

HD Hyundai Energy Solutions Co. Ltd.

    2,068       33,381  

HPSP Co. Ltd.

    768       17,714  

Hua Hong Semiconductor Ltd.* (a) (b)

    30,000       73,614  

Inari Amertron Bhd.

    39,200       23,448  

Innox Advanced Materials Co. Ltd.

    784       15,470  

ISC Co. Ltd.

    144       7,378  

JA Solar Technology Co. Ltd., Class A

    5,292       16,227  

JCET Group Co. Ltd., Class A

    4,800       20,202  

Jentech Precision Industrial Co. Ltd.

    1,287       22,816  

Jinko Solar Co. Ltd., Class A

    16,128       20,893  

Jusung Engineering Co. Ltd.

    13,066       237,511  

King Yuan Electronics Co. Ltd.

    32,352       76,105  

Kinsus Interconnect Technology Corp.

    4,000       11,691  

Koh Young Technology, Inc.

    1,692       13,781  

LEENO Industrial, Inc.

    94       9,570  

LONGi Green Energy Technology Co. Ltd., Class A

    10,448       34,450  

LX Semicon Co. Ltd.

    235       12,459  

M31 Technology Corp.

    912       24,519  

Macronix International Co. Ltd.

    31,104       25,892  

Marketech International Corp.

    34,824       142,259  

MediaTek, Inc.

    47,000       1,220,102  

Montage Technology Co. Ltd., Class A

    1,692       12,723  

MPI Corp.

    3,838       22,364  

Nanya Technology Corp.

    21,472       42,831  

NAURA Technology Group Co. Ltd., Class A

    900       31,484  

NEXTIN, Inc.

    265       10,478  

Novatek Microelectronics Corp.

    16,000       224,202  

Nuvoton Technology Corp.

    4,000       15,662  

Pan Jit International, Inc.

    8,000       14,700  

Parade Technologies Ltd.

    1,400       45,537  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     265  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Semiconductors & Semiconductor Equipment – (continued)  

Phison Electronics Corp.

    2,776     $ 39,841  

Pixart Imaging, Inc.

    7,248       28,715  

Powerchip Semiconductor Manufacturing Corp.

    47,000       38,472  

Powertech Technology, Inc.

    20,000       64,745  

Radiant Opto-Electronics Corp.

    14,330       54,784  

Raydium Semiconductor Corp.

    1,824       20,160  

Realtek Semiconductor Corp.

    8,134       100,688  

RFHIC Corp.

    282       2,890  

S&S Tech Corp.

    423       11,824  

Sanan Optoelectronics Co. Ltd., Class A

    4,800       9,760  

SDI Corp.

    8,000       24,788  

Seoul Semiconductor Co. Ltd.

    1,911       14,235  

SFA Semicon Co. Ltd.*

    3,381       11,804  

Shanghai Aiko Solar Energy Co. Ltd., Class A

    9,800       26,247  

Shanghai Fudan Microelectronics Group Co. Ltd., Class A

    1,050       6,944  

Shanghai Fudan Microelectronics Group Co. Ltd., Class H(a)

    4,000       7,545  

Shenzhen Xinyichang Technology Co. Ltd., Class A

    196       2,453  

Sigurd Microelectronics Corp.

    173,688       317,549  

Silergy Corp.

    5,000       44,165  

Silicon Integrated Systems Corp.

    223,136       342,598  

SIMMTECH Co. Ltd.

    8,554       208,379  

Sino-American Silicon Products, Inc.

    16,352       82,428  

Sitronix Technology Corp.

    2,160       18,980  

SK Hynix, Inc.

    14,664       1,262,762  

Sunplus Technology Co. Ltd.

    25,056       23,252  

Taiwan Mask Corp.

    7,000       14,676  

Taiwan Semiconductor Co. Ltd.

    9,000       21,588  

Taiwan Semiconductor Manufacturing Co. Ltd.

    381,496       6,222,025  

Taiwan-Asia Semiconductor Corp.

    13,000       17,956  
Investments   Shares     Value  
Semiconductors & Semiconductor Equipment – (continued)  

TCL Zhonghuan Renewable Energy Technology Co. Ltd., Class A

    5,875     $ 14,820  

Tokai Carbon Korea Co. Ltd.

    86       5,279  

Tongwei Co. Ltd., Class A

    9,400       35,066  

Topco Scientific Co. Ltd.

    2,704       14,089  

TSEC Corp.

    26,708       23,385  

Unigroup Guoxin Microelectronics Co. Ltd., Class A*

    1,679       17,276  

Unisem M Bhd.

    14,700       9,133  

United Microelectronics Corp.

    317,616       452,408  

UPI Semiconductor Corp.

    2,688       19,931  

Vanguard International Semiconductor Corp.

    6,000       12,967  

Verisilicon Microelectronics Shanghai Co. Ltd., Class A*

    528       3,849  

Via Technologies, Inc.

    5,424       19,900  

Visual Photonics Epitaxy Co. Ltd.

    7,672       34,771  

ViTrox Corp. Bhd.

    4,700       6,787  

Wafer Works Corp.

    11,511       15,473  

Will Semiconductor Co. Ltd. Shanghai, Class A

    2,025       30,524  

Win Semiconductors Corp.

    6,961       31,119  

Winbond Electronics Corp.

    52,232       40,178  

WONIK IPS Co. Ltd.

    329       7,308  

Wonik QnC Corp.

    6,345       110,640  

Xinjiang Daqo New Energy Co. Ltd., Class A

    5,488       26,772  

XinTec, Inc.

    3,000       10,683  

Xinyi Solar Holdings Ltd.

    80,000       47,031  
              15,390,581  
Software – 0.3%  

360 Security Technology, Inc., Class A*

    9,800       12,026  

Ahnlab, Inc.

    190       9,018  

AsiaInfo Technologies Ltd.(b)

    21,200       21,946  

Beijing Kingsoft Office Software, Inc., Class A

    611       23,970  

Beijing Shiji Information Technology Co. Ltd., Class A*

    6,370       9,157  

 

See Accompanying Notes to the Financial Statements.

 

266    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Software – (continued)  

Birlasoft Ltd.

    5,390     $ 35,454  

Cyient Ltd.

    3,290       62,768  

Dear U Co. Ltd.*

    423       9,976  

Douzone Bizon Co. Ltd.

    873       17,647  

EMRO, Inc.*

    294       12,016  

Hundsun Technologies, Inc., Class A

    4,550       19,349  

Iflytek Co. Ltd., Class A

    4,800       29,883  

Intellect Design Arena Ltd.

    4,663       38,045  

Kingdee International Software Group Co. Ltd.*

    47,000       62,350  

KPIT Technologies Ltd.

    2,397       35,053  

Ming Yuan Cloud Group Holdings Ltd.* (a)

    60,000       25,075  

NavInfo Co. Ltd., Class A*

    4,700       6,422  

Oracle Financial Services Software Ltd.

    282       13,134  

Qi An Xin Technology Group, Inc., Class A*

    539       3,393  

Route Mobile Ltd.

    954       17,797  

Shanghai Baosight Software Co. Ltd., Class A

    4,212       24,559  

Shanghai Baosight Software Co. Ltd., Class B

    8,291       17,046  

Tanla Platforms Ltd.

    1,963       22,457  

Tata Elxsi Ltd.

    611       55,958  

TOTVS SA

    4,900       24,592  

Weimob, Inc.* (a) (b)

    87,000       34,913  

Yonyou Network Technology Co. Ltd., Class A

    4,700       10,514  
              654,518  
Specialty Retail – 1.5%  

Abu Dhabi National Oil Co. for Distribution PJSC

    46,436       42,479  

Aditya Birla Fashion and Retail Ltd.*

    6,536       16,858  

Ali Alghanim Sons Automotive Co. KSCC

    51,183       177,748  

Aurora Design PCL, NVDR

    29,300       12,880  

Bermaz Auto Bhd.

    56,000       29,384  

China Tourism Group Duty Free Corp. Ltd., Class A

    2,500       32,317  
Investments   Shares     Value  
Specialty Retail – (continued)  

China Tourism Group Duty Free Corp. Ltd., Class H(a) (b)

    2,100     $ 23,712  

China Yongda Automobiles Services Holdings Ltd.

    540,500       207,231  

Chow Tai Fook Jewellery Group Ltd.

    41,000       57,848  

Com7 PCL, NVDR

    9,300       6,922  

Cuckoo Homesys Co. Ltd.

    3,196       48,157  

Detsky Mir PJSC* ‡ (b)

    258,500        

Dogan Sirketler Grubu Holding A/S

    39,249       18,978  

Dogus Otomotiv Servis ve Ticaret A/S

    893       7,843  

EEKA Fashion Holdings Ltd.

    94,000       171,071  

Foschini Group Ltd. (The)

    10,575       56,810  

FSN E-Commerce Ventures Ltd.*

    18,240       30,528  

Go Fashion India Ltd.*

    1,029       15,317  

HLA Group Corp. Ltd., Class A

    4,900       4,982  

Home Product Center PCL, NVDR

    78,600       26,023  

Hotai Motor Co. Ltd.

    6,120       113,777  

Hotel Shilla Co. Ltd.

    470       21,681  

Italtile Ltd.

    154,113       94,538  

Jarir Marketing Co.

    8,390       32,383  

JUMBO SA

    2,209       58,046  

K Car Co. Ltd.

    176       1,222  

Lojas Renner SA

    28,200       68,557  

M.Video PJSC* ‡

    31,680        

Map Aktif Adiperkasa PT

    2,632,000       123,440  

Metro Brands Ltd.

    1,128       16,088  

Motus Holdings Ltd.(a)

    54,990       271,388  

MR DIY Group M Bhd.(b)

    57,600       17,892  

Mr Price Group Ltd.

    3,185       22,887  

Padini Holdings Bhd.

    29,400       24,374  

Pan German Universal Motors Ltd.

    9,000       84,631  

Pepkor Holdings Ltd.(b)

    25,185       22,838  

Pop Mart International Group Ltd.(b)

    9,800       26,991  

PTG Energy PCL, NVDR

    39,100       8,866  

PTT Oil & Retail Business PCL, NVDR

    29,400       14,969  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     267  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Specialty Retail – (continued)  

Shanghai Yuyuan Tourist Mart Group Co. Ltd., Class A

    9,400     $ 8,349  

Shinsegae International, Inc.

    5,499       63,355  

Siam Global House PCL, NVDR

    40,566       17,832  

Super Group Ltd.

    140,389       237,989  

Topsports International Holdings Ltd.(b)

    95,000       79,889  

Truworths International Ltd.

    142,363       573,343  

United Electronics Co.

    1,619       34,567  

Vibra Energia SA

    28,200       110,664  

Wilcon Depot, Inc.

    34,300       11,969  

Zhongsheng Group Holdings Ltd.

    23,500       54,180  
              3,203,793  
Technology Hardware, Storage & Peripherals – 3.9%  

Acer, Inc.

    47,000       49,413  

Advantech Co. Ltd.

    8,734       89,265  

Asia Vital Components Co. Ltd.

    8,509       74,373  

ASROCK, Inc.

    2,736       15,184  

Asustek Computer, Inc.

    20,000       208,417  

AURAS Technology Co. Ltd.

    3,016       26,454  

Catcher Technology Co. Ltd.

    14,104       78,923  

Chicony Electronics Co. Ltd.

    15,992       61,384  

China Greatwall Technology Group Co. Ltd., Class A

    5,500       8,252  

Clevo Co.

    188,000       181,421  

Compal Electronics, Inc.

    94,000       81,292  

CosmoAM&T Co. Ltd.*

    297       30,656  

Darfon Electronics Corp.

    69,000       92,326  

Elitegroup Computer Systems Co. Ltd.

    115,120       90,861  

Ennoconn Corp.

    36,656       281,404  

Getac Holdings Corp.

    13,624       30,369  

Gigabyte Technology Co. Ltd.

    13,880       93,075  

HTC Corp.*

    11,432       15,543  

IEI Integration Corp.

    49,000       103,484  

Innodisk Corp.

    3,301       30,328  

Inventec Corp.

    84,056       104,179  

King Slide Works Co. Ltd.

    1,104       23,894  

Kinpo Electronics

    482,152       206,626  
Investments   Shares     Value  
Technology Hardware, Storage & Peripherals – (continued)  

Legend Holdings Corp., Class H(b)

    239,700     $ 213,520  

Lenovo Group Ltd.

    188,000       218,644  

Lite-On Technology Corp.

    61,392       189,277  

Micro-Star International Co. Ltd.

    21,000       106,829  

Mitac Holdings Corp.

    33,600       38,070  

Ninestar Corp., Class A

    2,900       9,733  

Pegatron Corp.

    62,744       145,858  

Qisda Corp.

    54,000       70,507  

Quanta Computer, Inc.

    76,232       444,207  

Quanta Storage, Inc.

    76,952       162,042  

Samsung Electronics Co. Ltd.

    80,229       3,974,174  

Samsung Electronics Co. Ltd. (Preference)

    12,460       494,507  

Shenzhen Transsion Holdings Co. Ltd., Class A

    1,316       24,126  

Wistron Corp.

    79,640       219,510  

Wiwynn Corp.

    3,000       140,589  
              8,428,716  
Textiles, Apparel & Luxury Goods – 1.3%  

361 Degrees International Ltd.

    376,000       183,084  

Aksa Akrilik Kimya Sanayii A/S

    2,021       6,329  

Alok Industries Ltd.*

    23,980       5,012  

Alpargatas SA (Preference)*

    5,500       8,998  

ANTA Sports Products Ltd.

    18,800       212,277  

Arezzo Industria e Comercio SA

    2,557       29,606  

Bata India Ltd.

    848       15,950  

Bosideng International Holdings Ltd.

    54,000       21,325  

Eclat Textile Co. Ltd.

    3,546       56,194  

F&F Co. Ltd.

    245       16,944  

Feng TAY Enterprise Co. Ltd.

    11,872       65,335  

FF Group* ‡

    3,536        

Fila Holdings Corp.

    1,167       30,891  

Fuguiniao Group Ltd.* ‡

    334,800        

Fulgent Sun International Holding Co. Ltd.

    51,320       203,318  

Golden Solar New Energy Technology Holdings Ltd.*

    42,000       33,763  

Grendene SA

    8,264       10,160  

Grupo de Moda Soma SA

    19,200       20,140  

Handsome Co. Ltd.

    3,713       51,329  

 

See Accompanying Notes to the Financial Statements.

 

268    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Textiles, Apparel & Luxury Goods – (continued)  

Hansae Co. Ltd.

    5,405     $ 91,447  

Kalyan Jewellers India Ltd.

    8,976       31,124  

KPR Mill Ltd.

    1,754       16,960  

Lao Feng Xiang Co. Ltd., Class B

    7,400       25,049  

Li Ning Co. Ltd.

    33,500       102,753  

Makalot Industrial Co. Ltd.

    4,334       48,304  

Mavi Giyim Sanayi ve Ticaret A/S, Class B(b)

    59,408       200,527  

Page Industries Ltd.

    114       51,779  

Pou Chen Corp.

    72,320       64,327  

Quang Viet Enterprise Co. Ltd.

    24,912       84,871  

Rajesh Exports Ltd.*

    2,600       14,010  

Raymond Ltd.

    1,316       27,826  

Relaxo Footwears Ltd.

    987       10,645  

Ruentex Industries Ltd.

    28,819       50,823  

Shenzhou International Group Holdings Ltd.

    14,100       138,304  

Shinkong Textile Co. Ltd.

    94,000       127,806  

Swan Energy Ltd.

    2,940       13,616  

Tainan Spinning Co. Ltd.

    49,000       21,452  

Taiwan Paiho Ltd.

    94,000       166,351  

Titan Co. Ltd.

    6,392       244,878  

Trident Ltd.

    22,165       9,291  

Vardhman Textiles Ltd.

    42,817       189,841  

VIP Industries Ltd.

    3,025       22,139  

Vivara Participacoes SA

    5,300       26,800  

Welspun India Ltd.

    7,370       13,313  

Xtep International Holdings Ltd.(a)

    27,500       24,953  

Youngone Corp.

    480       19,299  

Youngone Holdings Co. Ltd.

    2,021       117,021  
              2,926,164  
Tobacco – 0.3%  

British American Tobacco Malaysia Bhd.

    61,100       120,546  

Eastern Co. SAE

    27,721       23,575  

Godfrey Phillips India Ltd.

    490       13,324  

Gudang Garam Tbk. PT

    14,900       21,832  

ITC Ltd.

    44,697       229,984  

KT&G Corp.

    2,632       166,236  
Investments   Shares     Value  
Tobacco – (continued)  

RLX Technology, Inc., ADR* (a)

    15,484     $ 26,323  

Smoore International Holdings Ltd.(b)

    33,000       25,431  
              627,251  
Trading Companies & Distributors – 0.4%  

Adani Enterprises Ltd.

    5,687       156,736  

ALAFCO Aviation Lease & Finance Co. KSCP*

    3,260       1,748  

Armac Locacao Logistica E Servicos SA

    5,000       12,027  

Barloworld Ltd.

    54,896       229,547  

BOC Aviation Ltd.(a) (b)

    5,100       31,351  

Chin Hin Group Bhd.*

    9,400       7,517  

COSCO SHIPPING Development Co. Ltd., Class A

    37,600       11,817  

COSCO SHIPPING Development Co. Ltd., Class H

    240,000       24,538  

IndiaMart InterMesh Ltd.(b)

    1,013       32,237  

LX International Corp.

    800       14,720  

Posco International Corp.

    1,081       40,101  

Realord Group Holdings Ltd.* (a)

    14,000       10,324  

Shanxi Coal International Energy Group Co. Ltd., Class A

    4,900       10,901  

SK Networks Co. Ltd.

    44,556       183,760  

Xiamen C & D, Inc., Class A

    9,400       12,575  
              779,899  
Transportation Infrastructure – 0.8%  

Abu Dhabi Ports Co. PJSC*

    13,395       21,772  

Adani Ports & Special Economic Zone Ltd.

    10,716       101,003  

Airports of Thailand PCL*

    54,000       100,285  

Airports of Thailand PCL, NVDR*

    11,800       21,914  

Bangkok Expressway & Metro PCL, NVDR

    148,000       32,530  

Beijing Capital International Airport Co. Ltd., Class H*

    56,000       20,612  

CCR SA

    19,182       45,568  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     269  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Transportation Infrastructure – (continued)  

China Merchants Expressway Network & Technology Holdings Co. Ltd., Class A

    9,600     $ 12,239  

China Merchants Port Holdings Co. Ltd.

    40,521       51,528  

COSCO SHIPPING Ports Ltd.

    51,348       30,909  

EcoRodovias Infraestrutura e Logistica SA

    89,300       124,308  

Evergreen International Storage & Transport Corp.

    16,000       14,725  

GMR Airports Infrastructure Ltd.*

    48,418       31,752  

Grupo Aeroportuario del Centro Norte SAB de CV, Class B

    4,700       35,831  

Grupo Aeroportuario del Pacifico SAB de CV, Class B

    5,506       64,143  

Grupo Aeroportuario del Sureste SAB de CV, Class B

    3,280       70,595  

Guangdong Provincial Expressway Development Co. Ltd., Class B

    9,800       7,527  

International Container Terminal Services, Inc.

    15,510       54,998  

Jasa Marga Persero Tbk. PT

    39,723       10,653  

Jiangsu Expressway Co. Ltd., Class H

    32,000       29,118  

Malaysia Airports Holdings Bhd.

    16,908       26,225  

National Marine Dredging Co.*

    3,341       19,757  

Ningbo Zhoushan Port Co. Ltd., Class A

    23,500       11,079  

Novorossiysk Commercial Sea Port PJSC‡

    189,696        

Promotora y Operadora de Infraestructura SAB de CV

    2,160       17,658  

Qingdao Port International Co. Ltd., Class H(b)

    49,000       24,486  

Salik Co. PJSC

    24,346       21,144  

Santos Brasil Participacoes SA

    27,200       39,913  

Saudi Ground Services Co.*

    4,431       34,429  

Shanghai International Airport Co. Ltd., Class A*

    3,600       18,305  
Investments   Shares     Value  
Transportation Infrastructure – (continued)  

Shanghai International Port Group Co. Ltd., Class A

    55,600     $ 37,988  

Shenzhen International Holdings Ltd.

    24,500       16,125  

Sociedad Matriz SAAM SA

    1,554,996       171,450  

Taiwan High Speed Rail Corp.

    48,000       43,508  

TangShan Port Group Co. Ltd., Class A

    4,900       2,384  

TAV Havalimanlari Holding A/S*

    2,961       11,993  

Westports Holdings Bhd.

    17,500       12,341  

Wilson Sons SA

    14,400       38,463  

Zhejiang Expressway Co. Ltd., Class H(a)

    470,000       353,794  
              1,783,052  
Water Utilities - 0.7%  

Aguas Andinas SA, Class A

    1,092,562       317,584  

AlKhorayef Water & Power Technologies Co.

    294       10,721  

Athens Water Supply & Sewage Co. SA

    1,372       8,136  

Beijing Capital Eco-Environment Protection Group Co. Ltd., Class A

    24,000       9,052  

Beijing Enterprises Water Group Ltd.

    132,000       27,835  

China Water Affairs Group Ltd.

    350,000       221,417  

Cia de Saneamento Basico do Estado de Sao Paulo SABESP

    4,700       54,400  

Cia de Saneamento de Minas Gerais Copasa MG

    75,200       237,693  

Cia de Saneamento do Parana

    94,000       405,413  

Emirates Central Cooling Systems Corp.

    34,496       16,811  

Guangdong Investment Ltd.

    94,000       64,152  

Manila Water Co., Inc.

    441,800       131,746  

National Central Cooling Co. PJSC

    5,029       4,792  
              1,509,752  
Wireless Telecommunication Services - 0.8%  

Advanced Info Service PCL, NVDR

    14,100       86,304  

 

See Accompanying Notes to the Financial Statements.

 

270    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Wireless Telecommunication Services – (continued)  

Axiata Group Bhd.

    49,004     $ 22,422  

Bharti Airtel Ltd.

    39,339       432,046  

Celcomdigi Bhd.

    42,300       37,555  

Empresa Nacional de Telecomunicaciones SA

    55,272       185,619  

Etihad Etisalat Co.

    7,322       89,973  

Far EasTone Telecommunications Co. Ltd.

    27,032       63,257  

Globe Telecom, Inc.

    980       30,398  

Indosat Tbk. PT

    31,800       18,918  

Intouch Holdings PCL, NVDR

    18,800       37,137  

Kuwait Telecommunications Co.

    3,699       6,333  

Maxis Bhd.

    32,900       27,345  

Mobile Telecommunications Co. KSCP

    60,348       93,773  

Mobile Telecommunications Co. Saudi Arabia

    8,508       31,296  

Mobile TeleSystems PJSC‡

    31,356        

MTN Group Ltd.

    45,214       219,427  

PLDT, Inc.

    2,625       55,979  

Sistema PJSFC‡

    122,643        

SK Telecom Co. Ltd.

    2,679       97,496  

Smartfren Telecom Tbk. PT*

    4,635,400       15,174  

Taiwan Mobile Co. Ltd.

    28,904       85,371  

TIM SA

    14,100       42,415  

Turkcell Iletisim Hizmetleri A/S*

    27,401       46,487  

Vodacom Group Ltd.

    11,515       62,320  

Vodafone Idea Ltd.*

    219,456       31,234  

Vodafone Qatar QSC

    44,198       21,607  

XL Axiata Tbk. PT

    102,900       14,705  
              1,854,591  
Total Common Stocks
(Cost $212,305,889)

 

    218,902,084  
Investments   Principal
Amount
    Value  
CORPORATE BONDS – 0.0%(d)  
Independent Power and Renewable Electricity
Producers – 0.0%(d)
 

NTPC Ltd.
Series 54, 8.49%, 3/25/2025
(Cost $–)

    INR 39,301     $ 4,971  
    Number of
Rights
       
RIGHTS – 0.0%(d)  
Banks – 0.0%(d)  

Gulf Bank KSCP, expiring 11/12/2023, price 0.23 KWD*

    3,505       72  
Biotechnology – 0.0%  

Vaxcell-Bio Therapeutics Co. Ltd., expiring 11/1/2023, price 23,850.00 KRW* ‡

    95        
Ground Transportation – 0.0%(d)  

Localiza Rent a Car SA, expiring 11/10/2023, price 47.13 BRL*

    88       122  
Health Care Technology – 0.0%  

Lunit, Inc., expiring 11/1/2023, price 153,500.00 KRW* ‡

    50        
Machinery – 0.0%(d)  

Hanwha Ocean Co. Ltd., expiring 11/8/2023, price 21,850.00 KRW*

    232       301  
Semiconductors & Semiconductor Equipment – 0.0%(d)  

Gudeng Precision Industrial Co. Ltd., expiring 11/27/2023, price 300 TWD*

    84       93  

Winbond Electronics Corp., expiring 10/26/2023, price 22 TWD*

    2,139       195  
              288  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     271  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Investments   Number of
Rights
    Value  
RIGHTS – (continued)  
Technology Hardware, Storage & Peripherals – 0.0%(d)  

CosmoAM&T Co. Ltd., expiring 11/6/2023, price 122,800.00 KRW*

    15     $ 184  
Total Rights
(cost $–)

 

    967  
    Principal
Amount
       
SECURITIES LENDING REINVESTMENTS – 0.3%(e)  
REPURCHASE AGREEMENTS – 0.3%  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $677,414, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $685,017 (Cost $677,315)

  $ 677,315       677,315  

Total Investments – 100.4%

(Cost $212,983,204)

 

 

    219,585,337  

Liabilities in excess of other assets – (0.4%)

 

    (861,812
NET ASSETS – 100.0%

 

  $ 218,723,525  

 

*

Non-income producing security.

 

 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $5,168,593, collateralized in the form of cash with a value of $677,315 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $4,058,892 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 6.63%, and maturity dates ranging from November 7, 2023 – May 15, 2053 and $780,668 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 5.75%, and maturity dates ranging from November 13, 2023 – October 22, 2073; a total value of $5,516,875.

(b) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(d) 

Represents less than 0.05% of net assets.

 

(e) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $677,315.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

ADR – American Depositary Receipt

GDR – Global Depositary Receipt

NVDR – Non-Voting Depositary Receipt

OJSC – Open Joint Stock Company

PJSC – Public Joint Stock Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.

REIT – Real Estate Investment Trust

SCA – Limited partnership with share capital

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

   

Aggregate gross unrealized appreciation

  $ 42,941,915  

Aggregate gross unrealized depreciation

    (41,755,857

Net unrealized appreciation

  $ 1,186,058  

Federal income tax cost

  $ 218,353,325  

 

See Accompanying Notes to the Financial Statements.

 

272    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

Futures Contracts

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
   

Expiration

Date

   

Trading

Currency

    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

 

MSCI Emerging Markets E-Mini Index

    20       12/15/2023       USD     $ 919,200     $ (51,792

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Forward Foreign Currency Contracts

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive         Counterparty   In Exchange For     Maturity
Date
    Unrealized
Appreciation/
(Depreciation)
 

USD

    351,469       BNP Paribas SA  

HKD

    2,746,137       12/20/2023     $ 222  

USD

    106,238       Citibank NA  

INR*

    8,848,500       12/20/2023       100  

USD

    99,806       Citibank NA  

KRW*

    131,816,590       12/20/2023       1,931  

USD

    256,908         Morgan Stanley  

TWD*

    8,156,120       12/20/2023       3,918  

Total unrealized appreciation

 

          $ 6,171  

USD

    24,632         BNP Paribas SA  

ZAR

    470,000       12/20/2023     $ (333

Total unrealized depreciation

 

          $ (333

Net unrealized appreciation

 

          $ 5,838  

 

*

Non-deliverable forward. See Note 2 in the Notes to Financial Statements.

 

Abbreviations:

 

HKD – Hong Kong Dollar

INR – Indian Rupee

KRW – Korean Won

TWD – Taiwan Dollar

USD – US Dollar

ZAR – South African Rand

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     273  


Table of Contents

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (cont.)

 

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Brazil

    6.6

Chile

    1.1  

China

    23.5  

Colombia

    0.6  

Czech Republic

    0.4  

Egypt

    0.5  

Greece

    0.5  

Hungary

    0.3  

India

    14.4  

Indonesia

    2.4  

Kuwait

    0.7  

Malaysia

    2.6  

Mexico

    2.2  

Peru

    0.3  

Philippines

    0.9  

Qatar

    1.2  

Saudi Arabia

    2.7  

South Africa

    4.0  

South Korea

    11.9  

Taiwan

    15.9  

Thailand

    2.0  

Turkey

    2.1  

United Arab Emirates

    2.8  

United Kingdom

     0.0  

United States

    0.5  

Other1

    (0.1
      100.0

 

Amount represents less than 0.05%.

1

Includes any non-equity securities, securities lending reinvestments and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    100.1

Corporate Bonds

     0.0  

Rights

     0.0  

Securities Lending Reinvestments

    0.3  

Others(1)

    (0.4
      100.0

 

Amount represents less than 0.05%.

(1)

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

274    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® US Quality Large Cap Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 99.3%  
Aerospace & Defense – 0.7%  

Lockheed Martin Corp.

    2,268     $ 1,031,124  

Textron, Inc.

    504       38,304  
              1,069,428  
Air Freight & Logistics – 1.2%  

Expeditors International of Washington, Inc.

    6,678       729,572  

United Parcel Service, Inc., Class B

    7,686       1,085,647  
              1,815,219  
Automobiles – 1.1%  

Tesla, Inc.*

    8,064       1,619,574  
Banks – 3.5%  

Bank of America Corp.

    28,602       753,377  

Citigroup, Inc.

    34,146       1,348,425  

JPMorgan Chase & Co.

    17,766       2,470,540  

Wells Fargo & Co.

    12,726       506,113  
              5,078,455  
Beverages – 0.2%  

Molson Coors Beverage Co., Class B

    4,914       283,882  
Biotechnology – 2.2%  

AbbVie, Inc.

    2,268       320,196  

Amgen, Inc.

    8,064       2,061,965  

Biogen, Inc.*

    252       59,860  

Gilead Sciences, Inc.

    3,654       286,985  

Regeneron Pharmaceuticals, Inc.*

    186       145,060  

Vertex Pharmaceuticals, Inc.*

    1,008       365,007  
              3,239,073  
Broadline Retail – 2.8%  

Amazon.com, Inc.*

    22,050       2,934,635  

eBay, Inc.

    16,254       637,644  

Etsy, Inc.* (a)

    1,008       62,798  

MercadoLibre, Inc.*

    431       534,759  
              4,169,836  
Building Products – 0.5%  

A O Smith Corp.

    2,520       175,795  
Investments   Shares     Value  
Building Products – (continued)  

Builders FirstSource, Inc.*

    2,394     $ 259,797  

Masco Corp.

    6,300       328,167  
              763,759  
Capital Markets – 1.7%  

Ameriprise Financial, Inc.

    504       158,543  

Bank of New York Mellon Corp. (The)

    19,782       840,735  

Goldman Sachs Group, Inc. (The)

    882       267,784  

Morgan Stanley

    10,584       749,559  

Robinhood Markets, Inc., Class A* (a)

    14,364       131,287  

State Street Corp.

    5,670       366,452  
              2,514,360  
Chemicals – 0.9%  

CF Industries Holdings, Inc.

    3,654       291,516  

Dow, Inc.

    14,364       694,356  

LyondellBasell Industries NV, Class A

    2,772       250,145  

Mosaic Co. (The)

    1,638       53,202  
              1,289,219  
Communications Equipment – 1.6%  

Cisco Systems, Inc.

    45,738       2,384,322  
Consumer Finance – 1.2%  

Capital One Financial Corp.

    7,812       791,278  

Discover Financial Services

    5,418       444,709  

Synchrony Financial

    18,144       508,939  
              1,744,926  
Consumer Staples Distribution & Retail – 0.5%  

Kroger Co. (The)

    17,010       771,744  
Diversified Telecommunication Services – 0.7%  

AT&T, Inc.

    71,820       1,106,028  
Electric Utilities – 2.2%  

Constellation Energy Corp.

    2,898       327,242  

Evergy, Inc.(a)

    756       37,150  

Exelon Corp.

    20,286       789,937  

PPL Corp.

    28,224       693,464  

Southern Co. (The)

    19,782       1,331,328  
              3,179,121  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     275  


Table of Contents

 

 

FlexShares® US Quality Large Cap Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electrical Equipment – 0.3%  

Emerson Electric Co.

    1,512     $ 134,523  

Hubbell, Inc., Class B

    1,134       306,293  
              440,816  
Electronic Equipment, Instruments & Components – 0.4%  

Jabil, Inc.

    4,410       541,548  
Entertainment – 0.4%  

Atlanta Braves Holdings, Inc., Class C*

    1       24  

Electronic Arts, Inc.

    3,780       467,926  

Liberty Media Corp-Liberty Formula One, Class C*

    630       40,755  

Warner Bros Discovery, Inc.*

    2,646       26,301  
              535,006  
Financial Services – 4.2%  

Berkshire Hathaway, Inc., Class B*

    10,458       3,569,629  

Fidelity National Information Services, Inc.

    5,796       284,642  

Fiserv, Inc.*

    5,040       573,300  

PayPal Holdings, Inc.*

    4,032       208,858  

Toast, Inc., Class A* (a)

    2,394       38,280  

Visa, Inc., Class A(a)

    6,174       1,451,507  
              6,126,216  
Food Products – 1.0%  

Archer-Daniels-Midland Co.

    882       63,125  

Campbell Soup Co.

    7,182       290,225  

General Mills, Inc.

    11,214       731,601  

Hershey Co. (The)

    1,638       306,879  

Kraft Heinz Co. (The)

    2,394       75,315  
              1,467,145  
Ground Transportation – 0.1%  

Old Dominion Freight Line, Inc.

    252       94,918  
Health Care Equipment & Supplies – 0.8%  

Abbott Laboratories

    2,394       226,353  

Align Technology, Inc.*

    630       116,292  

Hologic, Inc.*

    5,544       366,846  

IDEXX Laboratories, Inc.*

    1,067       426,234  
              1,135,725  
Investments   Shares     Value  
Health Care Providers & Services – 4.8%  

Cardinal Health, Inc.

    7,308     $ 665,028  

Cencora, Inc.

    2,898       536,565  

Centene Corp.*

    1,386       95,606  

Cigna Group (The)

    2,898       896,062  

CVS Health Corp.

    9,450       652,144  

Elevance Health, Inc.

    630       283,557  

HCA Healthcare, Inc.

    1,134       256,443  

Laboratory Corp. of America Holdings

    2,898       578,817  

McKesson Corp.

    2,646       1,204,883  

Quest Diagnostics, Inc.

    1,890       245,889  

UnitedHealth Group, Inc.

    2,963       1,586,864  
              7,001,858  
Health Care REITs – 0.1%  

Healthpeak Properties, Inc., REIT

    7,182       111,680  
Hotel & Resort REITs – 0.5%  

Host Hotels & Resorts, Inc., REIT

    45,360       702,173  
Hotels, Restaurants & Leisure – 1.9%  

Airbnb, Inc., Class A* (a)

    3,402       402,423  

Booking Holdings, Inc.*

    278       775,498  

Caesars Entertainment, Inc.*

    3,276       130,680  

Carnival Corp.* (a)

    21,924       251,249  

DoorDash, Inc., Class A*

    3,024       226,649  

DraftKings, Inc., Class A* (a)

    9,954       274,929  

Expedia Group, Inc.*

    756       72,039  

Royal Caribbean Cruises Ltd.*

    3,276       277,575  

Yum! Brands, Inc.

    3,276       395,937  
              2,806,979  
Household Durables – 0.9%  

Lennar Corp., Class A

    6,174       658,642  

NVR, Inc.*

    134       725,291  
              1,383,933  
Household Products – 2.1%  

Colgate-Palmolive Co.

    7,308       548,977  

Kimberly-Clark Corp.

    1,386       165,821  

Procter & Gamble Co. (The)

    15,624       2,344,069  
              3,058,867  

 

See Accompanying Notes to the Financial Statements.

 

276    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® US Quality Large Cap Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Industrial Conglomerates – 0.8%  

3M Co.

    2,016     $ 183,355  

General Electric Co.

    9,324       1,012,866  
              1,196,221  
Insurance – 2.2%  

Aflac, Inc.

    12,348       964,503  

American International Group, Inc.

    15,246       934,732  

Arch Capital Group Ltd.*

    1,134       98,295  

MetLife, Inc.

    13,608       816,616  

Prudential Financial, Inc.

    4,536       414,772  
              3,228,918  
Interactive Media & Services – 7.6%  

Alphabet, Inc., Class A*

    35,910       4,455,713  

Alphabet, Inc., Class C*

    33,516       4,199,555  

Meta Platforms, Inc., Class A*

    8,316       2,505,361  
              11,160,629  
IT Services – 1.8%  

Accenture plc, Class A

    4,410       1,310,167  

Cognizant Technology Solutions Corp., Class A

    9,450       609,241  

Gartner, Inc.*

    2,016       669,393  
              2,588,801  
Life Sciences Tools & Services – 0.5%  

Danaher Corp.

    504       96,778  

Mettler-Toledo International, Inc.*

    548       539,890  

Waters Corp.*

    630       150,274  
              786,942  
Machinery – 2.0%  

Caterpillar, Inc.

    5,166       1,167,774  

Illinois Tool Works, Inc.

    5,922       1,327,238  

PACCAR, Inc.

    4,158       343,160  

Snap-on, Inc.

    504       130,002  
              2,968,174  
Media – 1.8%  

Comcast Corp., Class A

    24,696       1,019,698  

Fox Corp., Class A

    24,192       735,195  

Interpublic Group of Cos., Inc. (The)

    8,064       229,017  
Investments   Shares     Value  
Media – (continued)  

Omnicom Group, Inc.

    8,190     $ 613,513  
              2,597,423  
Metals & Mining – 1.8%  

Freeport-McMoRan, Inc.

    7,812       263,890  

Nucor Corp.

    5,544       819,348  

Reliance Steel & Aluminum Co.

    3,024       769,245  

Steel Dynamics, Inc.

    6,930       738,114  
              2,590,597  
Multi-Utilities – 1.7%  

Consolidated Edison, Inc.

    9,954       873,862  

DTE Energy Co.

    8,064       777,208  

Public Service Enterprise Group, Inc.

    14,616       901,076  
              2,552,146  
Oil, Gas & Consumable Fuels – 2.8%  

EQT Corp.(a)

    8,190       347,092  

Exxon Mobil Corp.

    7,434       786,889  

Marathon Oil Corp.

    8,946       244,315  

Marathon Petroleum Corp.

    7,812       1,181,565  

Occidental Petroleum Corp.(a)

    12,348       763,230  

Valero Energy Corp.(a)

    5,670       720,090  
              4,043,181  
Pharmaceuticals – 4.9%  

Bristol-Myers Squibb Co.

    18,144       934,960  

Eli Lilly & Co.

    4,842       2,682,129  

Johnson & Johnson

    20,034       2,971,844  

Merck & Co., Inc.

    3,654       375,266  

Pfizer, Inc.

    10,080       308,045  
              7,272,244  
Professional Services – 0.2%  

Automatic Data Processing, Inc.

    378       82,487  

Leidos Holdings, Inc.

    504       49,957  

Paychex, Inc.

    2,142       237,869  
              370,313  
Real Estate Management & Development – 0.5%  

CBRE Group, Inc., Class A*

    10,332       716,421  
Residential REITs – 0.7%  

AvalonBay Communities, Inc., REIT

    4,788       793,563  

Equity Residential, REIT

    3,150       174,289  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     277  


Table of Contents

 

 

FlexShares® US Quality Large Cap Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Residential REITs – (continued)  

Mid-America Apartment Communities, Inc., REIT(a)

    252     $ 29,774  
              997,626  
Retail REITs – 0.1%  

Regency Centers Corp., REIT

    504       30,371  

Simon Property Group, Inc., REIT

    882       96,923  
              127,294  
Semiconductors & Semiconductor Equipment – 7.3%  

Analog Devices, Inc.

    4,914       773,120  

Applied Materials, Inc.

    8,190       1,083,947  

Broadcom, Inc.

    2,421       2,036,957  

KLA Corp.

    2,142       1,006,097  

Lam Research Corp.

    2,142       1,259,967  

Microchip Technology, Inc.

    11,592       826,394  

NVIDIA Corp.

    7,938       3,237,116  

QUALCOMM, Inc.

    4,158       453,180  
              10,676,778  
Software – 10.7%  

Adobe, Inc.*

    3,402       1,810,068  

ANSYS, Inc.*

    630       175,304  

Autodesk, Inc.*

    126       24,901  

Bentley Systems, Inc., Class B(a)

    756       36,772  

Cadence Design Systems, Inc.*

    378       90,663  

Check Point Software Technologies Ltd.*

    5,922       795,028  

Fair Isaac Corp.*

    756       639,478  

Fortinet, Inc.*

    10,962       626,698  

Intuit, Inc.

    3,276       1,621,456  

Manhattan Associates, Inc.*

    882       171,972  

Microsoft Corp.

    23,562       7,966,548  

Oracle Corp.

    15,624       1,615,522  

Roper Technologies, Inc.

    126       61,560  

Salesforce, Inc.*

    126       25,305  

Zoom Video Communications, Inc., Class A* (a)

    1,386       83,132  
              15,744,407  
Specialized REITs – 1.1%  

Iron Mountain, Inc., REIT(a)

    1,260       74,428  

Public Storage, REIT

    3,024       721,859  
Investments   Shares     Value  
Specialized REITs – (continued)  

Weyerhaeuser Co., REIT

    26,460     $ 759,138  
              1,555,425  
Specialty Retail – 2.4%  

AutoZone, Inc.*

    378       936,355  

Best Buy Co., Inc.

    4,536       303,096  

Home Depot, Inc. (The)

    3,402       968,516  

Lowe’s Cos., Inc.

    4,662       888,437  

O’Reilly Automotive, Inc.*

    378       351,706  

Ulta Beauty, Inc.*

    378       144,135  
              3,592,245  
Technology Hardware, Storage & Peripherals – 8.6%  

Apple, Inc.

    72,576       12,393,803  

NetApp, Inc.

    1,260       91,703  

Super Micro Computer, Inc.*

    378       90,520  
              12,576,026  
Tobacco – 0.7%  

Altria Group, Inc.

    5,040       202,457  

Philip Morris International, Inc.

    9,702       865,030  
              1,067,487  
Trading Companies & Distributors – 0.6%  

WW Grainger, Inc.

    1,194       871,417  
Water Utilities – 0.0%(b)  

Veralto Corp.*

    166       11,454  
Total Common Stocks
(Cost $138,888,823)

 

    145,727,979  
                 
Total Investments – 99.3%
(Cost $138,888,823)

 

    145,727,979  

Other assets less liabilities – 0.7%

 

    1,077,913  
NET ASSETS – 100.0%

 

  $ 146,805,892  

 

*

Non-income producing security.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $4,023,270, collateralized in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 7, 2023 – August 15, 2053; a total value of $4,059,459.

 

(b) 

Represents less than 0.05% of net assets.

 

See Accompanying Notes to the Financial Statements.

 

278    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® US Quality Large Cap Index Fund (cont.)

 

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

REIT – Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

   

Aggregate gross unrealized appreciation

  $ 14,828,794  

Aggregate gross unrealized depreciation

    (8,030,809

Net unrealized appreciation

  $ 6,797,985  

Federal income tax cost

  $ 138,864,423  

 

Futures Contracts

FlexShares® US Quality Large Cap Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
UnrealizedDepreciation*
 

Long Contracts

 

 

S&P 500 E-Mini Index

    2       12/15/2023       USD     $ 421,225     $ (29,611

S&P 500 Micro E-Mini Index

    29       12/15/2023       USD       610,776       (35,960
                                    $ (65,571

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Abbreviations:

 

USD – US Dollar

 

Security Type   % of Net Assets  

Common Stocks

    99.3

Others(1)

    0.7  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     279  


Table of Contents

 

Schedule of Investments

FlexShares® STOXX® US ESG Select Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 98.8%  
Air Freight & Logistics – 0.3%  

Expeditors International of Washington, Inc.

    715     $ 78,114  

FedEx Corp.

    1,625       390,162  
              468,276  
Automobile Components – 0.1%  

Aptiv plc*

    1,495       130,364  

BorgWarner, Inc.(a)

    1,690       62,361  
              192,725  
Automobiles – 3.8%  

Ford Motor Co.

    13,390       130,552  

General Motors Co.

    14,235       401,427  

Rivian Automotive, Inc., Class A* (a)

    5,980       96,996  

Tesla, Inc.*

    28,795       5,783,188  
              6,412,163  
Banks – 4.4%  

Bank of America Corp.

    72,150       1,900,431  

Citigroup, Inc.

    19,955       788,023  

Huntington Bancshares, Inc.

    11,765       113,532  

JPMorgan Chase & Co.

    30,290       4,212,128  

KeyCorp(a)

    5,785       59,123  

Regions Financial Corp.

    6,110       88,778  

US Bancorp

    5,590       178,209  
              7,340,224  
Beverages – 2.4%  

Brown-Forman Corp., Class B

    1,170       65,707  

Coca-Cola Co. (The)

    40,885       2,309,594  

Coca-Cola Europacific Partners plc

    2,210       129,307  

Keurig Dr Pepper, Inc.

    10,335       313,461  

PepsiCo, Inc.

    7,150       1,167,452  
              3,985,521  
Biotechnology – 1.2%  

Amgen, Inc.

    1,885       481,995  

Gilead Sciences, Inc.

    8,645       678,978  

Vertex Pharmaceuticals, Inc.*

    2,210       800,263  
              1,961,236  
Investments   Shares     Value  
Broadline Retail – 5.2%  

Amazon.com, Inc.*

    63,700     $ 8,477,833  

eBay, Inc.

    4,550       178,497  
              8,656,330  
Building Products – 0.3%  

Lennox International, Inc.

    325       120,426  

Owens Corning(a)

    455       51,583  

Trane Technologies plc

    2,015       383,475  
              555,484  
Capital Markets – 2.9%  

Bank of New York Mellon Corp. (The)

    4,225       179,563  

BlackRock, Inc.

    1,495       915,359  

FactSet Research Systems, Inc.

    390       168,437  

Goldman Sachs Group, Inc. (The)

    3,445       1,045,936  

Moody’s Corp.

    845       260,260  

Morgan Stanley

    8,970       635,255  

MSCI, Inc., Class A

    585       275,857  

Nasdaq, Inc.

    3,120       154,752  

Northern Trust Corp.(b)

    1,170       77,115  

S&P Global, Inc.

    2,730       953,616  

State Street Corp.

    2,275       147,033  
              4,813,183  
Chemicals – 0.6%  

Corteva, Inc.

    4,810       231,553  

DuPont de Nemours, Inc.

    3,250       236,860  

Ecolab, Inc.

    2,015       337,996  

Sherwin-Williams Co. (The)

    845       201,288  
              1,007,697  
Commercial Services & Supplies – 0.3%  

Cintas Corp.

    910       461,479  
Communications Equipment – 1.1%  

Cisco Systems, Inc.

    35,295       1,839,928  

F5, Inc.*

    325       49,267  
              1,889,195  
Consumer Finance – 0.1%  

Capital One Financial Corp.

    1,235       125,093  

 

See Accompanying Notes to the Financial Statements.

 

280    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® US ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Consumer Staples Distribution & Retail – 2.6%  

Costco Wholesale Corp.

    1,560     $ 861,807  

Dollar Tree, Inc.*

    1,170       129,975  

Kroger Co. (The)

    6,760       306,701  

Target Corp.

    3,965       439,282  

Walgreens Boots Alliance, Inc.

    7,540       158,943  

Walmart, Inc.

    15,080       2,464,223  
              4,360,931  
Containers & Packaging – 0.2%  

Amcor plc

    14,105       125,393  

Ball Corp.(a)

    2,860       137,709  
              263,102  
Diversified Telecommunication Services – 0.6%  

Verizon Communications, Inc.

    29,380       1,032,119  
Electric Utilities – 0.0%(c)  

Entergy Corp.

    780       74,560  
Electrical Equipment – 0.2%  

Emerson Electric Co.

    1,950       173,491  

Rockwell Automation, Inc.

    390       102,496  
              275,987  
Electronic Equipment, Instruments & Components – 0.4%  

CDW Corp.

    1,170       234,468  

Corning, Inc.

    3,965       106,103  

Flex Ltd.*

    1,235       31,765  

Jabil, Inc.

    650       79,820  

Keysight Technologies, Inc.*

    585       71,399  

Trimble, Inc.*

    1,170       55,142  

Zebra Technologies Corp., Class A*

    195       40,839  
              619,536  
Energy Equipment & Services – 0.6%  

Baker Hughes Co., Class A

    5,395       185,696  

Schlumberger NV(a)

    14,885       828,499  
              1,014,195  
Entertainment – 0.8%  

Walt Disney Co. (The)*

    15,860       1,294,017  
Investments   Shares     Value  
Financial Services – 6.0%  

Apollo Global Management, Inc.(a)

    4,680     $ 362,419  

Berkshire Hathaway, Inc., Class B*

    13,650       4,659,154  

Block, Inc., Class A*

    1,755       70,639  

Fidelity National Information Services, Inc.

    2,925       143,647  

Mastercard, Inc., Class A

    2,925       1,100,824  

PayPal Holdings, Inc.*

    7,605       393,939  

Visa, Inc., Class A

    13,910       3,270,241  
              10,000,863  
Food Products – 1.1%  

Archer-Daniels-Midland Co.

    1,950       139,561  

Conagra Brands, Inc.

    3,055       83,585  

Darling Ingredients, Inc.*

    1,235       54,698  

General Mills, Inc.

    6,045       394,376  

Hershey Co. (The)

    1,560       292,266  

Hormel Foods Corp.

    1,755       57,125  

J M Smucker Co. (The)

    715       81,396  

Kellogg Co.

    3,445       173,869  

McCormick & Co., Inc. (Non-Voting)

    2,080       132,912  

Mondelez International, Inc., Class A

    4,810       318,470  

Tyson Foods, Inc., Class A

    1,105       51,217  
              1,779,475  
Ground Transportation – 0.7%  

Uber Technologies, Inc.*

    10,660       461,365  

Union Pacific Corp.

    3,185       661,238  
              1,122,603  
Health Care Equipment & Supplies – 1.9%  

Baxter International, Inc.

    1,950       63,238  

Becton Dickinson & Co.

    2,015       509,352  

Boston Scientific Corp.*

    7,475       382,645  

Cooper Cos., Inc. (The)

    325       101,319  

Edwards Lifesciences Corp.*

    5,330       339,628  

Hologic, Inc.*

    2,015       133,333  

IDEXX Laboratories, Inc.*

    455       181,759  

Medtronic plc

    6,955       490,745  

Penumbra, Inc.*

    390       74,548  

Stryker Corp.

    2,925       790,393  

Zimmer Biomet Holdings, Inc.

    1,105       115,373  
              3,182,333  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     281  


Table of Contents

 

 

FlexShares® STOXX® US ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Health Care Providers & Services – 3.5%  

Cardinal Health, Inc.

    1,820     $ 165,620  

Cencora, Inc.

    910       168,486  

Centene Corp.*

    1,755       121,060  

Cigna Group (The)

    2,080       643,136  

CVS Health Corp.

    13,455       928,530  

Elevance Health, Inc.

    2,080       936,187  

Humana, Inc.

    455       238,279  

Quest Diagnostics, Inc.

    325       42,282  

UnitedHealth Group, Inc.

    4,810       2,576,044  
              5,819,624  
Health Care REITs – 0.4%  

Healthpeak Properties, Inc., REIT

    5,330       82,882  

Ventas, Inc., REIT

    3,640       154,554  

Welltower, Inc., REIT(a)

    5,395       451,076  
              688,512  
Hotels, Restaurants & Leisure – 2.1%  

Booking Holdings, Inc.*

    260       725,286  

Caesars Entertainment, Inc.*

    1,235       49,264  

Carnival Corp.* (a)

    4,030       46,184  

Chipotle Mexican Grill, Inc., Class A*

    130       252,486  

Darden Restaurants, Inc.

    845       122,973  

Domino’s Pizza, Inc.

    260       88,137  

Hilton Worldwide Holdings, Inc.

    2,275       344,731  

Las Vegas Sands Corp.

    1,560       74,038  

Marriott International, Inc., Class A

    1,365       257,384  

McDonald’s Corp.

    3,770       988,381  

MGM Resorts International

    2,600       90,792  

Yum China Holdings, Inc.

    2,275       119,574  

Yum! Brands, Inc.

    2,405       290,668  
              3,449,898  
Household Products – 2.3%  

Church & Dwight Co., Inc.(a)

    1,365       124,133  

Clorox Co. (The)

    1,300       153,010  

Colgate-Palmolive Co.

    7,085       532,225  

Procter & Gamble Co. (The)

    20,475       3,071,865  
              3,881,233  
Investments   Shares     Value  
Independent Power and Renewable Electricity
Producers – 0.0%(c)
 

AES Corp. (The)

    4,160     $ 61,984  
Industrial REITs – 0.2%  

Prologis, Inc., REIT

    3,185       320,889  
Insurance – 2.1%  

Aflac, Inc.

    4,745       370,632  

Allstate Corp. (The)(a)

    1,365       174,897  

American International Group, Inc.

    2,535       155,421  

Aon plc, Class A

    1,040       321,776  

Arch Capital Group Ltd.*

    1,365       118,318  

Arthur J Gallagher & Co.

    1,495       352,058  

Chubb Ltd.

    1,430       306,907  

Everest Group Ltd.

    325       128,576  

Hartford Financial Services Group, Inc. (The)

    2,535       186,196  

Marsh & McLennan Cos., Inc.

    3,445       653,344  

Progressive Corp. (The)

    3,055       482,965  

Willis Towers Watson plc

    910       214,660  
              3,465,750  
Interactive Media & Services – 5.8%  

Alphabet, Inc., Class C*

    20,150       2,524,795  

Meta Platforms, Inc., Class A*

    23,140       6,971,388  

Snap, Inc., Class A* (a)

    11,830       118,418  
              9,614,601  
IT Services – 2.5%  

Accenture plc, Class A

    6,890       2,046,950  

Akamai Technologies, Inc.*

    1,365       141,045  

Amdocs Ltd.

    1,170       93,787  

Cognizant Technology Solutions Corp., Class A

    4,485       289,148  

Gartner, Inc.* (a)

    650       215,826  

International Business Machines Corp.

    9,490       1,372,634  
              4,159,390  
Life Sciences Tools & Services – 0.9%  

Agilent Technologies, Inc.

    1,495       154,538  

Avantor, Inc.* (a)

    2,730       47,584  

Danaher Corp.

    3,640       698,953  

Illumina, Inc.*

    1,105       120,909  

 

See Accompanying Notes to the Financial Statements.

 

282    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® US ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Life Sciences Tools & Services – (continued)  

IQVIA Holdings, Inc.*

    1,625     $ 293,849  

Mettler-Toledo International, Inc.*

    65       64,038  

Revvity, Inc.(a)

    455       37,697  

West Pharmaceutical Services, Inc.

    390       124,133  
              1,541,701  
Machinery – 1.5%  

Caterpillar, Inc.

    2,665       602,423  

Cummins, Inc.

    975       210,893  

Deere & Co.

    1,040       379,974  

Dover Corp.

    780       101,361  

Fortive Corp.

    2,990       195,187  

IDEX Corp.

    390       74,650  

Illinois Tool Works, Inc.

    1,040       233,085  

Ingersoll Rand, Inc.

    1,495       90,717  

Nordson Corp.

    390       82,910  

Otis Worldwide Corp.

    3,510       271,007  

Stanley Black & Decker, Inc.

    1,365       116,093  

Toro Co. (The)

    780       63,055  

Xylem, Inc.

    1,170       109,442  
              2,530,797  
Media – 0.7%  

Comcast Corp., Class A

    21,385       882,987  

Interpublic Group of Cos., Inc. (The)

    3,055       86,762  

Omnicom Group, Inc.

    1,820       136,336  
              1,106,085  
Metals & Mining – 0.5%  

Freeport-McMoRan, Inc.

    9,880       333,746  

Newmont Corp.(a)

    10,010       375,075  

Nucor Corp.

    1,300       192,127  
              900,948  
Multi-Utilities – 0.2%  

CMS Energy Corp.(a)

    1,105       60,046  

Consolidated Edison, Inc.

    1,235       108,421  

Public Service Enterprise Group, Inc.

    1,625       100,181  
              268,648  
Investments   Shares     Value  
Office REITs – 0.0%(c)  

Alexandria Real Estate Equities, Inc., REIT

    585     $ 54,481  
Oil, Gas & Consumable Fuels – 4.7%  

APA Corp.

    975       38,727  

Chevron Corp.

    18,135       2,642,814  

Coterra Energy, Inc.

    5,525       151,937  

Exxon Mobil Corp.

    41,730       4,417,120  

Marathon Oil Corp.

    3,900       106,509  

Phillips 66(a)

    4,680       533,848  
              7,890,955  
Passenger Airlines – 0.0%(c)  

American Airlines Group, Inc.* (a)

    3,965       44,210  

United Airlines Holdings, Inc.*

    975       34,135  
              78,345  
Personal Care Products – 0.1%  

Estee Lauder Cos., Inc. (The), Class A

    2,015       259,673  
Pharmaceuticals – 7.6%  

Bristol-Myers Squibb Co.

    21,710       1,118,716  

Eli Lilly & Co.

    5,915       3,276,496  

Johnson & Johnson

    25,090       3,721,851  

Merck & Co., Inc.

    26,390       2,710,253  

Pfizer, Inc.

    39,260       1,199,785  

Royalty Pharma plc, Class A

    3,900       104,793  

Zoetis, Inc., Class A

    4,030       632,710  
              12,764,604  
Professional Services – 0.7%  

Automatic Data Processing, Inc.

    3,640       794,321  

Broadridge Financial Solutions, Inc.

    650       110,916  

Verisk Analytics, Inc., Class A

    1,495       339,903  
              1,245,140  
Real Estate Management & Development – 0.1%  

CBRE Group, Inc., Class A*

    3,120       216,341  
Residential REITs – 0.2%  

Camden Property Trust, REIT(a)

    455       38,620  

Equity Residential, REIT

    1,690       93,508  

Essex Property Trust, Inc., REIT(a)

    455       97,334  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     283  


Table of Contents

 

 

FlexShares® STOXX® US ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Residential REITs – (continued)  

Mid-America Apartment Communities, Inc., REIT

    455     $ 53,758  
              283,220  
Retail REITs – 0.1%  

Simon Property Group, Inc., REIT

    1,170       128,571  
Semiconductors & Semiconductor Equipment – 5.9%  

Advanced Micro Devices, Inc.*

    5,590       550,615  

Applied Materials, Inc.

    7,280       963,508  

First Solar, Inc.*

    520       74,074  

Intel Corp.

    36,335       1,326,227  

KLA Corp.

    715       335,835  

Lam Research Corp.

    910       535,280  

Microchip Technology, Inc.(a)

    1,950       139,015  

Micron Technology, Inc.

    11,440       764,993  

NVIDIA Corp.

    8,580       3,498,924  

Qorvo, Inc.*

    390       34,094  

QUALCOMM, Inc.

    5,850       637,592  

Skyworks Solutions, Inc.(a)

    585       50,743  

Teradyne, Inc.

    585       48,713  

Texas Instruments, Inc.

    6,370       904,604  
              9,864,217  
Software – 9.7%  

Adobe, Inc.*

    3,965       2,109,618  

Autodesk, Inc.*

    2,210       436,762  

Crowdstrike Holdings, Inc., Class A* (a)

    1,560       275,761  

DocuSign, Inc., Class A*

    1,235       48,017  

Fortinet, Inc.*

    2,340       133,778  

Gen Digital, Inc.

    5,720       95,295  

HubSpot, Inc.*

    455       192,815  

Intuit, Inc.

    1,950       965,152  

Microsoft Corp.

    26,650       9,010,632  

Oracle Corp.

    5,395       557,843  

Palo Alto Networks, Inc.*

    2,145       521,278  

Salesforce, Inc.*

    5,070       1,018,208  

Splunk, Inc.*

    780       114,785  

Synopsys, Inc.*

    1,040       488,218  

Workday, Inc., Class A*

    715       151,373  
              16,119,535  
Investments   Shares     Value  
Specialized REITs – 0.6%  

American Tower Corp., REIT

    2,405     $ 428,547  

Digital Realty Trust, Inc., REIT(a)

    1,040       129,334  

Iron Mountain, Inc., REIT

    2,535       149,743  

Weyerhaeuser Co., REIT

    7,865       225,647  
              933,271  
Specialty Retail – 1.7%  

AutoZone, Inc.*

    65       161,013  

Best Buy Co., Inc.

    2,080       138,986  

Burlington Stores, Inc.*

    390       47,202  

Lowe’s Cos., Inc.

    5,070       966,190  

Ross Stores, Inc.

    2,990       346,750  

TJX Cos., Inc. (The)

    10,010       881,581  

Tractor Supply Co.

    910       175,230  

Ulta Beauty, Inc.*

    195       74,355  

Williams-Sonoma, Inc.(a)

    650       97,656  
              2,888,963  
Technology Hardware, Storage & Peripherals – 5.5%  

Apple, Inc.

    49,465       8,447,138  

Hewlett Packard Enterprise Co.

    10,725       164,950  

HP, Inc.

    9,295       244,737  

NetApp, Inc.

    1,560       113,537  

Super Micro Computer, Inc.*

    325       77,828  

Western Digital Corp.*

    3,185       127,878  
              9,176,068  
Textiles, Apparel & Luxury Goods – 0.9%  

Deckers Outdoor Corp.*

    195       116,427  

Lululemon Athletica, Inc.* (a)

    1,300       511,524  

NIKE, Inc., Class B

    8,580       881,766  
              1,509,717  
Trading Companies & Distributors – 0.4%  

Ferguson plc

    2,145       322,179  

United Rentals, Inc.

    260       105,630  

WW Grainger, Inc.

    325       237,195  
              665,004  
Water Utilities – 0.1%  

American Water Works Co., Inc.

    1,300       152,945  
Total Common Stocks
(Cost $153,457,687)

 

    164,929,437  

 

See Accompanying Notes to the Financial Statements.

 

284    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® US ESG Select Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – 0.1%(d)  
REPURCHASE AGREEMENTS – 0.1%  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $97,173, collateralized by various U.S. Treasury Securities, ranging from 1.50% –3.88%, maturing 2/15/2025 –1/31/2027; total market value $98,264
(Cost $97,159)

    97,159     $ 97,159  
Total Investments – 98.9%
(Cost $153,554,846)

 

    165,026,596  

Other assets less liabilities – 1.1%

 

    1,898,152  
NET ASSETS – 100.0%

 

  $ 166,924,748  

 

*

Non-income producing security.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $4,105,867, collateralized in the form of cash with a value of $97,159 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $4,083,890 of collateral in the form of U.S. Government Treasury

  Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 7, 2023 – August 15, 2053 and $5,212 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 4.25%, and maturity dates ranging from November 13, 2023 – October 22, 2071; a total value of $4,186,261.

 

(b) 

Investment in affiliated company. Northern Trust Investments, Inc., the Investment Adviser of the Fund, is a subsidiary of Northern Trust Corporation.

 

(c) 

Represents less than 0.05% of net assets.

 

(d) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $97,159.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

REIT – Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 22,280,225  

Aggregate gross unrealized depreciation

    (10,820,223

Net unrealized appreciation

  $ 11,460,002  

Federal income tax cost

  $ 153,450,476  

 

Investment in a company which was affiliated for the period ended October 31, 2023, was as follows:

 

Security   Value
October 31,
2022
    Purchases
at Cost
    Sales
Proceeds
    Shares
October 31,
2023
    Value
October 31,
2023
    Change in
Unrealized
Appreciation
(Depreciation)
    Dividend
Income
    Realized
Loss
 

Northern Trust Corp.

  $     $ 183,321     $ 81,522       1,170     $ 77,115     $ (17,217   $ 2,449     $ (7,467

 

Futures Contracts

FlexShares® STOXX® US ESG Select Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

 

S&P 500 E-Mini Index

    9       12/15/2023       USD     $ 1,895,513     $ (116,118

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Abbreviations:

 

USD – US Dollar

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     285  


Table of Contents

 

 

FlexShares® STOXX® US ESG Select Index Fund (cont.)

 

 

Security Type   % of Net Assets  

Common Stocks

    98.8

Securities Lending Reinvestments

    0.1  

Others(1)

    1.1  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

286    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® STOXX® Global ESG Select Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 98.8%  
Air Freight & Logistics – 0.2%  

Deutsche Post AG

    3,220     $ 125,114  

DSV A/S

    1,150       171,327  

International Distributions Services plc*

    8,441       25,873  
              322,314  
Automobile Components – 0.4%  

Aisin Corp.

    1,200       41,219  

BorgWarner, Inc.(a)

    782       28,856  

Bridgestone Corp.

    4,600       172,130  

Cie Generale des Etablissements Michelin SCA

    4,462       132,152  

Continental AG

    552       35,848  

Denso Corp.

    11,600       168,472  

Forvia SE*

    1,127       18,869  

Niterra Co. Ltd.

    2,300       50,876  

Sumitomo Electric Industries Ltd.

    2,300       23,828  

Valeo SE

    414       5,444  
              677,694  
Automobiles – 2.0%  

Bayerische Motoren Werke AG

    1,748       161,908  

Ferrari NV

    506       152,697  

General Motors Co.

    10,258       289,276  

Honda Motor Co. Ltd.

    33,300       331,252  

Mazda Motor Corp.

    2,300       21,626  

Mercedes-Benz Group AG

    5,060       296,463  

Mitsubishi Motors Corp.

    6,900       21,988  

Nissan Motor Co. Ltd.

    18,400       68,937  

Renault SA

    1,058       36,960  

Rivian Automotive, Inc., Class A* (a)

    4,278       69,389  

Stellantis NV

    12,236       227,629  

Subaru Corp.

    2,300       38,871  

Suzuki Motor Corp.

    2,300       87,842  

Toyota Motor Corp.

    64,400       1,101,363  

Volkswagen AG (Preference)

    874       92,225  

Volvo Car AB, Class B* (a)

    2,116       7,256  

Yamaha Motor Co. Ltd.(a)

    2,300       55,235  
              3,060,917  
Investments   Shares     Value  
Banks – 8.6%  

ABN AMRO Bank NV, CVA(b)

    2,254     $ 30,222  

AIB Group plc

    8,786       38,020  

ANZ Group Holdings Ltd.

    19,182       300,105  

Banco Bilbao Vizcaya Argentaria SA(a)

    31,924       250,446  

Banco BPM SpA

    9,729       49,598  

Banco Santander SA(a)

    87,308       319,858  

Bank of America Corp.

    23,230       611,878  

Bank of Ireland Group plc(a)

    7,222       64,504  

Bank of Montreal

    4,416       333,335  

Bank of Queensland Ltd.(a)

    3,404       10,992  

Bank Polska Kasa Opieki SA

    1,932       58,547  

Bankinter SA(a)

    3,726       23,481  

Banque Cantonale Vaudoise (Registered)

    138       15,558  

Barclays plc

    76,590       122,307  

BAWAG Group AG(b)

    506       22,431  

BNP Paribas SA

    7,038       403,872  

Canadian Imperial Bank of Commerce

    5,246       184,824  

Citigroup, Inc.

    14,904       588,559  

Commerzbank AG

    3,289       35,286  

Commonwealth Bank of Australia

    12,926       790,256  

Danske Bank A/S

    3,634       85,043  

DBS Group Holdings Ltd.

    6,900       165,443  

Erste Group Bank AG

    966       34,461  

FinecoBank Banca Fineco SpA

    3,496       41,073  

Hang Seng Bank Ltd.

    4,600       52,704  

HSBC Holdings plc

    100,464       722,061  

ING Groep NV

    8,878       112,871  

Intesa Sanpaolo SpA(a)

    98,900       256,796  

Japan Post Bank Co. Ltd.

    4,600       42,509  

JPMorgan Chase & Co.

    28,244       3,927,611  

KBC Group NV

    1,012       55,517  

Lloyds Banking Group plc

    374,900       181,696  

Mediobanca Banca di Credito Finanziario SpA(a)

    2,254       26,851  

Mitsubishi UFJ Financial Group, Inc.

    85,100       706,334  

NatWest Group plc

    27,278       58,985  

Nordea Bank Abp

    22,862       240,177  

Oversea-Chinese Banking Corp. Ltd.

    16,100       149,008  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     287  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Banks – (continued)  

Royal Bank of Canada

    6,440     $ 513,808  

Santander Bank Polska SA*

    46       4,982  

Skandinaviska Enskilda Banken AB, Class A

    10,580       117,707  

Societe Generale SA

    4,140       92,530  

Standard Chartered plc

    12,788       97,761  

Svenska Handelsbanken AB, Class A

    10,534       89,570  

Swedbank AB, Class A

    5,106       83,518  

Toronto-Dominion Bank (The)

    9,200       513,331  

UniCredit SpA

    7,958       198,724  

Virgin Money UK plc

    6,946       12,554  

Westpac Banking Corp.

    21,896       285,587  
              13,123,291  
Beverages – 1.7%  

Anheuser-Busch InBev SA/NV

    3,450       195,570  

Asahi Group Holdings Ltd.

    2,300       82,557  

Britvic plc

    2,231       22,686  

Budweiser Brewing Co. APAC Ltd.(b)

    9,200       17,496  

Carlsberg A/S, Class B

    552       65,664  

Coca-Cola Co. (The)

    18,676       1,055,007  

Coca-Cola Europacific Partners plc(a)

    1,150       67,286  

Coca-Cola HBC AG

    1,150       29,751  

Davide Campari-Milano NV(a)

    3,036       33,470  

Diageo plc

    10,074       379,809  

Heineken Holding NV

    460       34,911  

Heineken NV

    1,380       123,607  

Keurig Dr Pepper, Inc.

    5,014       152,075  

Kirin Holdings Co. Ltd.

    4,600       64,378  

Pernod Ricard SA

    1,196       211,749  

Remy Cointreau SA

    230       26,049  

Royal Unibrew A/S

    46       3,321  

Treasury Wine Estates Ltd.

    5,796       44,404  
              2,609,790  
Biotechnology – 0.9%  

CSL Ltd.

    2,438       358,660  

Gilead Sciences, Inc.(a)

    6,072       476,895  

Grifols SA*

    782       8,749  
Investments   Shares     Value  
Biotechnology – (continued)  

Swedish Orphan Biovitrum AB*

    603     $ 12,381  

Vertex Pharmaceuticals, Inc.*

    1,334       483,055  
              1,339,740  
Broadline Retail – 5.5%  

Allegro.eu SA* (b)

    1,012       7,240  

Amazon.com, Inc.*

    57,546       7,658,797  

eBay, Inc.

    2,116       83,011  

Isetan Mitsukoshi Holdings Ltd.

    4,600       51,454  

J Front Retailing Co. Ltd.(a)

    2,300       21,725  

Next plc

    690       57,638  

Prosus NV*

    6,716       187,622  

Rakuten Group, Inc.

    9,200       33,824  

Wesfarmers Ltd.

    8,234       263,379  
              8,364,690  
Building Products – 0.4%  

Assa Abloy AB, Class B

    6,072       129,074  

Belimo Holding AG (Registered)

    46       19,258  

Cie de Saint-Gobain SA

    3,036       164,945  

Fletcher Building Ltd.(a)

    2,898       7,282  

Lennox International, Inc.

    138       51,135  

Lixil Corp.

    4,600       50,148  

Nibe Industrier AB, Class B(a)

    2,898       16,647  

Reliance Worldwide Corp. Ltd.(a)

    2,576       5,692  

ROCKWOOL A/S, Class B

    92       20,429  

Trane Technologies plc

    782       148,822  
              613,432  
Capital Markets – 1.9%  

abrdn plc

    9,660       18,362  

Allfunds Group plc

    2,438       12,416  

ASX Ltd.

    1,702       60,487  

BlackRock, Inc.

    1,380       844,946  

Daiwa Securities Group, Inc.

    9,200       52,486  

Euronext NV(b)

    414       28,794  

FactSet Research Systems, Inc.

    184       79,468  

Goldman Sachs Group, Inc. (The)

    1,656       502,778  

Hargreaves Lansdown plc

    1,357       11,635  

Hong Kong Exchanges & Clearing Ltd.

    6,900       242,504  

IG Group Holdings plc

    1,288       9,972  

Julius Baer Group Ltd.

    1,104       65,023  

 

See Accompanying Notes to the Financial Statements.

 

288    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Capital Markets – (continued)  

London Stock Exchange Group plc

    2,300     $ 231,090  

Macquarie Group Ltd.

    2,576       262,558  

Man Group plc

    2,576       6,861  

Nasdaq, Inc.

    1,196       59,322  

S&P Global, Inc.

    1,012       353,502  

Schroders plc

    3,772       16,903  
              2,859,107  
Chemicals – 0.9%  

Air Liquide SA

    1,702       290,865  

Akzo Nobel NV

    1,012       67,668  

Arkema SA

    276       25,783  

BASF SE

    5,290       243,427  

Chr Hansen Holding A/S

    368       25,041  

Covestro AG* (b)

    736       37,108  

Croda International plc

    966       51,319  

DuPont de Nemours, Inc.

    1,564       113,984  

Ecolab, Inc.

    920       154,321  

Hexpol AB

    2,691       23,773  

Incitec Pivot Ltd.

    17,066       29,607  

Kansai Paint Co. Ltd.

    2,300       33,396  

LANXESS AG

    92       2,100  

Mitsubishi Chemical Group Corp.

    4,600       25,760  

Novozymes A/S, Class B(a)

    1,380       61,873  

OCI NV(a)

    598       13,912  

Orica Ltd.

    2,346       21,776  

Solvay SA

    460       48,496  

Wacker Chemie AG

    92       11,232  

Yara International ASA

    920       30,058  
              1,311,499  
Commercial Services & Supplies – 0.3%  

Brambles Ltd.

    7,958       66,056  

Cintas Corp.

    552       279,930  

Elis SA

    1,656       27,079  

ISS A/S

    598       8,638  

Rentokil Initial plc

    11,914       60,257  

SPIE SA

    759       19,928  

TOPPAN Holdings, Inc.

    2,300       52,426  
              514,314  
Investments   Shares     Value  
Communications Equipment – 0.1%  

F5, Inc.*

    230     $ 34,866  

Nokia OYJ

    12,466       41,374  
              76,240  
Construction & Engineering – 0.4%  

Balfour Beatty plc

    2,990       11,218  

Bouygues SA

    736       25,836  

Eiffage SA

    529       47,919  

Ferrovial SE

    2,576       77,437  

HOCHTIEF AG

    46       4,746  

Obayashi Corp.

    6,900       58,683  

Shimizu Corp.

    6,900       48,796  

Skanska AB, Class B

    2,116       31,695  

Sweco AB, Class B

    1,334       12,238  

Vinci SA

    3,082       340,362  

Worley Ltd.

    2,024       21,004  
              679,934  
Construction Materials – 0.1%  

Buzzi SpA

    368       9,724  

Heidelberg Materials AG

    184       13,319  

Holcim AG

    2,622       161,576  

Wienerberger AG

    437       10,596  
              195,215  
Consumer Finance – 0.0%(c)  

Cembra Money Bank AG

    46       3,156  

Marui Group Co. Ltd.(a)

    2,300       35,986  
              39,142  
Consumer Staples Distribution & Retail – 2.1%  

Aeon Co. Ltd.

    4,600       96,195  

Axfood AB

    598       13,199  

Carrefour SA

    3,450       60,461  

Coles Group Ltd.

    4,876       47,142  

Endeavour Group Ltd.

    9,430       29,495  

HelloFresh SE*

    690       14,995  

J Sainsbury plc

    9,108       28,437  

Jeronimo Martins SGPS SA

    1,334       30,711  

Kesko OYJ, Class B

    1,472       24,840  

Koninklijke Ahold Delhaize NV

    5,382       159,286  

Kroger Co. (The)

    3,220       146,091  

Marks & Spencer Group plc*

    10,166       26,744  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     289  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Consumer Staples Distribution & Retail – (continued)  

Ocado Group plc*

    2,530     $ 14,285  

Target Corp.

    2,254       249,721  

Walgreens Boots Alliance, Inc.

    5,060       106,665  

Walmart, Inc.

    11,730       1,916,799  

Woolworths Group Ltd.

    8,970       200,027  
              3,165,093  
Containers & Packaging – 0.2%  

Amcor plc

    6,808       60,523  

Ball Corp.(a)

    1,196       57,587  

Billerud Aktiebolag

    2,438       22,585  

DS Smith plc

    8,165       28,257  

Huhtamaki OYJ

    230       7,879  

Orora Ltd.

    5,198       8,096  

Smurfit Kappa Group plc(a)

    1,426       46,334  

Verallia SA(b)

    184       5,979  
              237,240  
Distributors – 0.0%(c)  

D’ieteren Group

    92       13,624  

Inchcape plc

    1,656       13,383  
              27,007  
Diversified Consumer Services – 0.0%(c)  

Pearson plc

    3,864       44,618  
Diversified REITs – 0.1%  

British Land Co. plc (The), REIT

    6,348       22,917  

Charter Hall Group, REIT

    1,196       6,565  

GPT Group (The), REIT

    12,006       27,518  

Mirvac Group, REIT

    31,602       36,416  

Stockland, REIT

    22,448       50,314  

Suntec REIT, REIT

    18,400       14,773  
              158,503  
Diversified Telecommunication Services – 0.8%  

BT Group plc(a)

    35,328       48,335  

Cellnex Telecom SA(b)

    2,438       71,434  

Chorus Ltd.

    2,070       8,639  

Deutsche Telekom AG (Registered)

    19,090       413,147  

Elisa OYJ

    322       13,641  

Infrastrutture Wireless Italiane SpA(b)

    1,403       15,304  
Investments   Shares     Value  
Diversified Telecommunication Services – (continued)  

Koninklijke KPN NV

    20,378     $ 68,388  

Singapore Telecommunications Ltd.

    36,800       63,928  

Spark New Zealand Ltd.

    14,306       41,356  

Swisscom AG (Registered)

    138       82,492  

Telenor ASA

    2,967       30,316  

Telia Co. AB

    13,846       29,259  

Telstra Group Ltd.

    67,482       162,787  

TELUS Corp.

    5,750       92,613  
              1,141,639  
Electric Utilities – 0.8%  

Chugoku Electric Power Co., Inc. (The)

    4,600       28,591  

Contact Energy Ltd.

    782       3,543  

EDP – Energias de Portugal SA

    17,802       74,702  

Elia Group SA/NV

    92       8,718  

Endesa SA(a)

    1,748       32,823  

Enel SpA

    23,460       148,486  

Entergy Corp.

    736       70,354  

Fortum OYJ(a)

    2,438       28,862  

Iberdrola SA

    37,674       418,125  

Kansai Electric Power Co., Inc. (The)

    4,600       58,516  

Kyushu Electric Power Co., Inc.*

    4,600       29,274  

Origin Energy Ltd.

    8,878       51,321  

Orsted A/S

    690       33,204  

Redeia Corp. SA

    1,196       18,590  

SSE plc

    6,670       132,170  

Terna – Rete Elettrica Nazionale

    3,312       25,297  

Verbund AG

    506       43,857  
              1,206,433  
Electrical Equipment – 0.7%  

ABB Ltd. (Registered)

    6,808       227,719  

Fujikura Ltd.

    2,300       16,265  

Legrand SA

    1,656       142,622  

NEL ASA*

    6,256       4,099  

Nexans SA

    253       17,837  

Nidec Corp.

    2,300       82,329  

Prysmian SpA

    1,610       60,056  

Schneider Electric SE

    2,346       359,510  

Siemens Energy AG*

    3,036       26,860  

Signify NV(b)

    138       3,568  

 

See Accompanying Notes to the Financial Statements.

 

290    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electrical Equipment – (continued)  

Vestas Wind Systems A/S*

    4,968     $ 107,122  
              1,047,987  
Electronic Equipment, Instruments & Components – 0.8%  

Alps Alpine Co. Ltd.

    4,600       37,330  

CDW Corp.

    920       184,368  

Corning, Inc.

    2,346       62,779  

Flex Ltd.*

    1,150       29,578  

Halma plc

    1,564       35,015  

Hexagon AB, Class B

    8,602       69,831  

Ibiden Co. Ltd.

    1,500       62,805  

Jabil, Inc.

    322       39,542  

Keyence Corp.

    700       268,777  

Kyocera Corp.

    800       38,953  

Murata Manufacturing Co. Ltd.

    13,800       225,755  

Omron Corp.

    1,200       42,368  

TDK Corp.

    2,300       84,409  

Venture Corp. Ltd.

    2,300       19,642  

Yokogawa Electric Corp.

    2,300       41,195  
              1,242,347  
Energy Equipment & Services – 0.4%  

Baker Hughes Co., Class A(a)

    3,082       106,083  

Schlumberger NV(a)

    9,246       514,632  

Technip Energies NV

    138       3,012  

Tenaris SA

    1,265       19,843  
              643,570  
Entertainment – 0.5%  

Bollore SE

    4,117       22,411  

Walt Disney Co. (The)*

    8,970       731,862  
              754,273  
Financial Services – 3.2%  

AMP Ltd.(a)

    26,105       17,272  

Apollo Global Management, Inc.(a)

    2,254       174,550  

Berkshire Hathaway, Inc., Class B*

    8,464       2,889,017  

Edenred SE

    1,564       83,054  

EXOR NV

    598       51,161  

Kinnevik AB, Class B*

    690       5,866  

M&G plc

    14,398       34,628  
Investments   Shares     Value  
Financial Services – (continued)  

Nexi SpA* (b)

    4,232     $ 24,495  

ORIX Corp.

    6,900       123,698  

PayPal Holdings, Inc.*

    3,680       190,624  

Visa, Inc., Class A

    5,198       1,222,050  

Wendel SE

    230       17,164  

Worldline SA* (b)

    1,380       17,475  
              4,851,054  
Food Products – 1.1%  

AAK AB

    1,610       30,550  

Ajinomoto Co., Inc.

    4,600       166,450  

Associated British Foods plc

    1,886       46,366  

Bakkafrost P/F

    46       2,073  

Danone SA

    2,024       120,125  

Darling Ingredients, Inc.* (a)

    552       24,448  

General Mills, Inc.

    2,530       165,057  

Hershey Co. (The)(a)

    736       137,890  

JDE Peet’s NV

    92       2,552  

Kellogg Co.

    1,978       99,830  

Kerry Group plc, Class A

    1,012       77,958  

McCormick & Co., Inc. (Non-Voting)

    690       44,091  

MEIJI Holdings Co. Ltd.

    2,300       56,465  

Mowi ASA

    2,852       46,284  

Nestle SA (Registered)

    5,704       614,619  

Orkla ASA

    3,726       25,661  

Salmar ASA

    368       17,419  

Viscofan SA

    46       2,655  
              1,680,493  
Gas Utilities –0.1%  

APA Group

    5,382       28,079  

Enagas SA(a)

    322       5,376  

Naturgy Energy Group SA(a)

    805       22,719  

Rubis SCA

    276       5,992  

Snam SpA

    10,810       49,475  

Tokyo Gas Co. Ltd.

    2,300       51,317  
              162,958  
Ground Transportation – 0.5%  

Aurizon Holdings Ltd.

    6,900       14,941  

Canadian National Railway Co.

    2,944       311,164  

Canadian Pacific Kansas City Ltd.

    4,738       336,037  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     291  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Ground Transportation – (continued)  

ComfortDelGro Corp. Ltd.

    13,800     $ 13,296  

Hankyu Hanshin Holdings, Inc.

    1,300       40,577  

MTR Corp. Ltd.

    11,500       42,989  
              759,004  
Health Care Equipment & Supplies –2.0%  

Alcon, Inc.

    2,622       186,757  

Ansell Ltd.

    322       4,326  

Becton Dickinson & Co.

    966       244,186  

BioMerieux

    230       22,001  

Boston Scientific Corp.*

    4,646       237,829  

Carl Zeiss Meditec AG

    46       3,974  

Cochlear Ltd.

    460       70,144  

Coloplast A/S, Class B

    391       40,698  

ConvaTec Group plc(b)

    9,660       23,936  

Demant A/S*

    552       21,005  

Edwards Lifesciences Corp.*

    3,082       196,385  

Elekta AB, Class B

    4,002       27,187  

EssilorLuxottica SA

    920       165,937  

Fisher & Paykel Healthcare Corp. Ltd.(a)

    4,416       53,452  

Getinge AB, Class B

    1,058       18,977  

Hologic, Inc.*

    1,334       88,271  

Hoya Corp.

    2,300       217,706  

IDEXX Laboratories, Inc.*

    276       110,254  

Koninklijke Philips NV*

    5,198       98,337  

Medtronic plc

    4,370       308,347  

Olympus Corp.

    6,900       91,077  

Smith & Nephew plc

    1,150       12,849  

Straumann Holding AG (Registered)

    736       86,496  

Stryker Corp.

    2,208       596,646  

Terumo Corp.

    2,300       62,145  

Zimmer Biomet Holdings, Inc.

    690       72,043  
              3,060,965  
Health Care Providers & Services – 2.1%  

Cardinal Health, Inc.

    1,196       108,836  

Cigna Group (The)

    874       270,241  

CVS Health Corp.

    6,302       434,901  

Elevance Health, Inc.

    1,518       683,237  
Investments   Shares     Value  
Health Care Providers & Services – (continued)  

Fresenius Medical Care AG & Co. KGaA

    1,058     $ 35,025  

Fresenius SE & Co. KGaA

    2,070       53,037  

Galenica AG(b)

    184       13,860  

Sonic Healthcare Ltd.

    736       13,397  

UnitedHealth Group, Inc.

    2,990       1,601,324  
              3,213,858  
Health Care REITs – 0.3%  

Cofinimmo SA, REIT

    322       19,979  

Healthpeak Properties, Inc., REIT

    4,968       77,252  

Ventas, Inc., REIT

    1,978       83,986  

Welltower, Inc., REIT

    3,358       280,762  
              461,979  
Hotels, Restaurants & Leisure – 1.5%  

Accor SA

    1,357       43,131  

Amadeus IT Group SA

    2,944       167,477  

Booking Holdings, Inc.*

    115       320,799  

Caesars Entertainment, Inc.*

    828       33,029  

Compass Group plc

    10,442       262,667  

Darden Restaurants, Inc.

    414       60,249  

Domino’s Pizza Enterprises Ltd.

    644       20,714  

Domino’s Pizza, Inc.

    138       46,781  

Entain plc

    3,956       44,663  

Greggs plc

    851       24,474  

Hilton Worldwide Holdings, Inc.

    1,242       188,200  

InterContinental Hotels Group plc

    1,058       74,591  

Just Eat Takeaway.com NV* (a) (b)

    1,564       18,938  

Kindred Group plc, SDR

    552       4,509  

La Francaise des Jeux SAEM(b)

    276       8,874  

Las Vegas Sands Corp.

    874       41,480  

Marriott International, Inc., Class A

    828       156,128  

MGM Resorts International(a)

    1,564       54,615  

Oriental Land Co. Ltd.

    9,200       295,054  

Sodexo SA

    529       55,848  

SSP Group plc*

    1,150       2,512  

TUI AG*

    2,300       11,566  

Whitbread plc

    736       29,722  

Yum China Holdings, Inc.

    1,518       79,786  

Yum! Brands, Inc.

    1,840       222,382  
              2,268,189  

 

See Accompanying Notes to the Financial Statements.

 

292    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Household Durables – 0.9%  

Barratt Developments plc

    6,302     $ 31,652  

Electrolux AB, Class B*

    46       385  

GN Store Nord A/S*

    506       8,405  

Nikon Corp.

    2,300       21,505  

Panasonic Holdings Corp.

    11,500       99,399  

Persimmon plc

    644       7,940  

SEB SA

    184       18,117  

Sekisui House Ltd.

    4,600       89,269  

Sony Group Corp.

    13,100       1,074,763  

Taylor Wimpey plc

    22,448       30,181  

Vistry Group plc

    920       7,893  
              1,389,509  
Household Products – 1.2%  

Clorox Co. (The)

    644       75,799  

Colgate-Palmolive Co.

    2,760       207,331  

Essity AB, Class B

    2,438       55,491  

Henkel AG & Co. KGaA (Preference)

    1,104       79,445  

Procter & Gamble Co. (The)

    7,682       1,152,531  

Reckitt Benckiser Group plc

    3,634       242,620  

Unicharm Corp.

    1,200       40,577  
              1,853,794  
Independent Power and Renewable Electricity
Producers – 0.1%
 

AES Corp. (The)(a)

    3,726       55,518  

Drax Group plc

    2,438       12,502  

EDP Renovaveis SA

    598       9,601  

Meridian Energy Ltd.

    8,142       22,874  
              100,495  
Industrial Conglomerates – 0.4%  

DCC plc

    299       16,563  

Hitachi Ltd.

    4,600       287,855  

Investment AB Latour, Class B(a)

    322       5,555  

Keppel Corp. Ltd.

    4,600       20,850  

Lifco AB, Class B

    552       10,069  

Siemens AG (Registered)

    1,610       212,653  
              553,545  
Investments   Shares     Value  
Industrial REITs – 0.2%  

CapitaLand Ascendas REIT, REIT

    13,800     $ 26,189  

Goodman Group, REIT

    11,040       144,972  

Segro plc, REIT

    7,222       62,466  

Warehouses De Pauw CVA, REIT

    506       12,473  
              246,100  
Insurance – 1.9%  

Admiral Group plc

    828       24,546  

Aegon Ltd.

    5,221       25,297  

Aflac, Inc.

    1,794       140,129  

Ageas SA/NV

    1,012       38,787  

Allianz SE (Registered)

    736       171,850  

ASR Nederland NV

    506       18,826  

Assicurazioni Generali SpA

    5,934       117,573  

Aviva plc

    12,282       59,257  

AXA SA

    11,592       342,525  

Beazley plc

    3,772       23,549  

Direct Line Insurance Group plc*

    3,680       6,756  

Hannover Rueck SE

    322       70,896  

Hiscox Ltd.

    460       5,236  

Insurance Australia Group Ltd.

    13,340       47,890  

Japan Post Holdings Co. Ltd.

    9,200       81,038  

Medibank Pvt Ltd.

    14,122       30,669  

Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Registered)

    736       294,455  

nib holdings Ltd.(a)

    3,082       14,128  

NN Group NV

    1,703       54,470  

Phoenix Group Holdings plc

    4,554       25,077  

Poste Italiane SpA(b)

    2,622       25,885  

Power Corp. of Canada

    2,714       65,316  

Prudential plc

    5,336       55,542  

QBE Insurance Group Ltd.

    5,612       55,431  

Sampo OYJ, Class A

    2,300       90,218  

Storebrand ASA

    2,760       23,011  

Sun Life Financial, Inc.

    3,680       167,903  

Suncorp Group Ltd.

    6,072       51,439  

Swiss Life Holding AG (Registered)

    138       88,224  

Swiss Re AG

    1,242       135,275  

Tokio Marine Holdings, Inc.

    7,200       158,933  

Topdanmark A/S

    24       1,074  

Tryg A/S(a)

    2,622       51,112  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     293  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Insurance – (continued)  

Zurich Insurance Group AG

    644     $ 304,716  
              2,867,033  
Interactive Media & Services – 4.6%  

Alphabet, Inc., Class C*

    18,860       2,363,158  

Auto Trader Group plc(b)

    5,980       45,077  

carsales.com Ltd.

    2,795       48,896  

LY Corp.

    23,000       58,060  

Meta Platforms, Inc., Class A*

    14,398       4,337,685  

REA Group Ltd.

    506       46,041  

Rightmove plc(a)

    3,266       18,746  

Snap, Inc., Class A* (a)

    6,532       65,385  
              6,983,048  
IT Services – 2.7%  

Accenture plc, Class A

    6,486       1,926,926  

Akamai Technologies, Inc.*

    1,104       114,076  

Alten SA

    92       10,823  

Amdocs Ltd.

    552       44,248  

Capgemini SE

    1,058       186,198  

CGI, Inc.*

    2,070       199,627  

Cognizant Technology Solutions Corp., Class A

    3,312       213,525  

Computacenter plc

    575       17,904  

Fujitsu Ltd.

    1,600       205,117  

Gartner, Inc.* (a)

    506       168,012  

International Business Machines Corp.

    5,888       851,640  

NEC Corp.

    2,300       109,423  

Nomura Research Institute Ltd.

    2,300       59,898  

Reply SpA

    230       21,600  

Softcat plc

    644       9,886  

Sopra Steria Group SACA

    92       16,463  
              4,155,366  
Leisure Products – 0.1%  

Bandai Namco Holdings, Inc.

    2,900       59,419  

Thule Group AB(b)

    690       15,643  

Yamaha Corp.

    900       23,646  
              98,708  
Investments   Shares     Value  
Life Sciences Tools & Services – 0.7%  

Danaher Corp.

    2,254     $ 432,813  

Eurofins Scientific SE(a)

    966       48,837  

Gerresheimer AG

    92       8,548  

Illumina, Inc.*

    322       35,233  

IQVIA Holdings, Inc.*

    1,242       224,591  

Lonza Group AG (Registered)

    230       80,066  

QIAGEN NV*

    736       27,322  

Sartorius AG (Preference)

    184       45,938  

Siegfried Holding AG (Registered)

    23       18,184  

Tecan Group AG (Registered)

    46       13,162  

Wuxi Biologics Cayman, Inc.* (b)

    11,500       71,429  
              1,006,123  
Machinery – 1.3%  

Aalberts NV

    230       7,152  

Alfa Laval AB

    1,357       43,798  

Alstom SA(a)

    1,649       22,223  

ANDRITZ AG

    299       13,716  

Atlas Copco AB, Class A

    9,844       127,052  

Bucher Industries AG (Registered)

    46       16,347  

CNH Industrial NV

    5,106       56,480  

Cummins, Inc.

    414       89,548  

Daimler Truck Holding AG

    1,564       48,966  

Ebara Corp.

    300       13,074  

Epiroc AB, Class A

    4,646       76,306  

FANUC Corp.

    4,600       110,956  

Fortive Corp.

    1,472       96,092  

GEA Group AG

    690       23,506  

Georg Fischer AG (Registered)

    506       26,088  

Husqvarna AB, Class B(a)

    4,278       27,607  

IMI plc

    667       11,857  

Indutrade AB

    690       12,176  

Interpump Group SpA

    322       13,410  

KION Group AG

    322       9,816  

Knorr-Bremse AG

    506       28,101  

Komatsu Ltd.

    2,300       52,593  

Kone OYJ, Class B

    2,346       101,396  

Kubota Corp.

    4,600       61,173  

Metso OYJ

    3,864       33,924  

MINEBEA MITSUMI, Inc.

    2,300       35,378  

Nordson Corp.

    253       53,785  

Otis Worldwide Corp.

    1,104       85,240  

Rotork plc

    7,199       25,578  

 

See Accompanying Notes to the Financial Statements.

 

294    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Machinery – (continued)  

Sandvik AB

    2,898     $ 49,179  

Schindler Holding AG

    184       37,041  

Seatrium Ltd.*

    138,000       11,281  

SFS Group AG

    23       2,285  

SKF AB, Class B

    782       12,606  

Spirax-Sarco Engineering plc

    414       41,154  

Stanley Black & Decker, Inc.

    736       62,597  

Techtronic Industries Co. Ltd.

    6,500       59,230  

Toro Co. (The)

    322       26,030  

Trelleborg AB, Class B

    1,978       49,854  

Valmet OYJ(a)

    552       12,346  

Volvo AB, Class B

    8,970       177,350  

Wartsila OYJ Abp(a)

    3,427       40,715  

Weir Group plc (The)

    1,035       21,439  
              1,926,445  
Marine Transportation – 0.1%  

AP Moller – Maersk A/S, Class B

    23       38,190  

Mitsui OSK Lines Ltd.

    2,300       58,971  

Nippon Yusen KK

    2,300       55,843  
              153,004  
Media – 0.2%  

Dentsu Group, Inc.

    1,200       34,468  

Informa plc

    7,958       68,717  

Interpublic Group of Cos., Inc. (The)

    1,656       47,030  

ITV plc

    19,343       14,989  

Publicis Groupe SA

    1,380       104,615  

SES SA, Class A, ADR

    3,036       17,666  

Vivendi SE

    4,554       40,703  

WPP plc

    4,738       40,625  
              368,813  
Metals & Mining – 1.6%  

Anglo American plc

    4,876       124,045  

Antofagasta plc

    1,679       27,403  

ArcelorMittal SA

    2,346       51,777  

Aurubis AG

    184       15,104  

BHP Group Ltd.

    32,660       920,201  

BlueScope Steel Ltd.

    3,082       36,686  

Boliden AB

    1,518       38,824  
Investments   Shares     Value  
Metals & Mining – (continued)  

Fortescue Metals Group Ltd.

    12,374     $ 174,712  

Freeport-McMoRan, Inc.

    4,692       158,496  

IGO Ltd.

    1,311       7,894  

Iluka Resources Ltd.

    2,162       9,911  

KGHM Polska Miedz SA

    506       13,479  

Lynas Rare Earths Ltd.*

    7,912       35,317  

Mineral Resources Ltd.(a)

    1,242       45,421  

Newcrest Mining Ltd.(a)

    5,198       76,847  

Newmont Corp.

    3,910       146,482  

Norsk Hydro ASA

    7,728       44,050  

Northern Star Resources Ltd.

    7,291       53,964  

Rio Tinto Ltd.

    2,024       150,678  

Rio Tinto plc

    4,048       258,128  

Sims Ltd.

    138       1,090  

South32 Ltd.

    29,992       63,045  

SSAB AB, Class B

    3,358       19,452  

thyssenkrupp AG

    1,426       9,885  

voestalpine AG

    782       19,474  
              2,502,365  
Multi-Utilities – 0.6%  

A2A SpA

    10,971       20,537  

AGL Energy Ltd.

    3,956       26,926  

Centrica plc

    14,122       26,956  

CMS Energy Corp.(a)

    1,104       59,991  

Consolidated Edison, Inc.

    1,104       96,920  

Engie SA

    11,362       180,193  

Hera SpA

    8,119       22,776  

National Grid plc

    21,712       257,826  

Public Service Enterprise Group, Inc.

    2,438       150,303  

Veolia Environnement SA

    2,392       65,307  
              907,735  
Office REITs – 0.1%  

Alexandria Real Estate Equities, Inc., REIT

    598       55,692  

Covivio SA, REIT

    322       13,750  

Dexus, REIT

    1,610       6,605  

Gecina SA, REIT

    184       18,010  

Keppel REIT, REIT

    920       534  
              94,591  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     295  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Oil, Gas & Consumable Fuels – 6.4%  

Aker BP ASA

    920     $ 26,443  

Ampol Ltd.

    1,564       31,549  

BP plc

    65,642       400,337  

Cameco Corp.

    1,472       60,152  

Chevron Corp.

    16,928       2,466,917  

Coterra Energy, Inc.

    3,956       108,790  

Enbridge, Inc.

    5,704       182,594  

Eni SpA

    14,628       238,545  

Equinor ASA

    5,750       192,727  

Exxon Mobil Corp.

    32,568       3,447,323  

Galp Energia SGPS SA

    1,150       17,273  

Gaztransport Et Technigaz SA

    184       23,475  

Marathon Oil Corp.

    2,576       70,351  

Neste OYJ

    782       26,211  

OMV AG

    276       12,066  

Phillips 66

    2,990       341,069  

Shell plc(a)

    38,502       1,254,880  

Suncor Energy, Inc.

    4,554       147,322  

TotalEnergies SE

    7,866       525,468  

Woodside Energy Group Ltd.

    5,152       111,756  
              9,685,248  
Paper & Forest Products – 0.1%  

Holmen AB, Class B

    460       17,321  

Mondi plc

    2,530       40,801  

Oji Holdings Corp.

    4,600       19,542  

Stora Enso OYJ, Class R

    3,910       46,805  

Svenska Cellulosa AB SCA, Class B(a)

    552       7,557  
              132,026  
Passenger Airlines – 0.1%  

Air France-KLM*

    506       5,698  

ANA Holdings, Inc.*

    2,300       44,832  

International Consolidated Airlines Group SA*

    16,330       28,564  

Qantas Airways Ltd.*

    11,914       37,038  

Singapore Airlines Ltd.

    6,900       30,772  
              146,904  
Personal Care Products – 1.2%  

Beiersdorf AG

    437       57,300  
Investments   Shares     Value  
Personal Care Products – (continued)  

Estee Lauder Cos., Inc. (The), Class A

    1,150     $ 148,201  

Haleon plc

    27,232       108,882  

Kao Corp.

    2,800       101,576  

L’Oreal SA

    1,518       635,633  

Shiseido Co. Ltd.

    3,400       106,909  

Unilever plc

    14,490       683,791  
              1,842,292  
Pharmaceuticals – 7.5%  

Astellas Pharma, Inc.

    13,800       173,132  

AstraZeneca plc

    9,062       1,127,119  

Bristol-Myers Squibb Co.

    13,386       689,781  

Chugai Pharmaceutical Co. Ltd.

    2,300       67,734  

Daiichi Sankyo Co. Ltd.

    6,900       175,775  

Dechra Pharmaceuticals plc

    621       28,695  

Eisai Co. Ltd.

    1,300       68,337  

Eli Lilly & Co.

    2,714       1,503,366  

GSK plc

    18,584       328,655  

Hikma Pharmaceuticals plc

    828       19,105  

Ipsen SA

    115       13,553  

Merck & Co., Inc.

    16,468       1,691,264  

Merck KGaA

    736       110,741  

Novartis AG (Registered)

    11,086       1,029,845  

Novo Nordisk A/S, Class B

    13,938       1,336,292  

Ono Pharmaceutical Co. Ltd.

    2,300       39,509  

Orion OYJ, Class B

    782       31,030  

Pfizer, Inc.

    27,554       842,050  

Roche Holding AG

    3,036       780,142  

Sanofi SA

    7,038       637,537  

Santen Pharmaceutical Co. Ltd.

    2,300       19,857  

Shionogi & Co. Ltd.

    3,400       156,861  

Takeda Pharmaceutical Co. Ltd.

    6,300       169,018  

UCB SA

    414       30,220  

Zoetis, Inc., Class A

    2,300       361,100  
              11,430,718  
Professional Services – 0.8%  

Adecco Group AG (Registered)

    1,012       38,076  

ALS Ltd.

    2,392       16,251  

Arcadis NV

    506       21,351  

Automatic Data Processing, Inc.

    1,334       291,105  

Bureau Veritas SA

    1,380       31,347  

 

See Accompanying Notes to the Financial Statements.

 

296    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Professional Services – (continued)  

Computershare Ltd.

    3,772     $ 59,205  

DKSH Holding AG

    138       8,446  

Experian plc

    1,518       45,885  

Intertek Group plc

    1,012       46,947  

Randstad NV

    552       28,496  

RELX plc

    10,994       382,610  

SGS SA (Registered)

    1,012       82,268  

Teleperformance SE

    322       36,809  

Verisk Analytics, Inc., Class A

    690       156,878  
              1,245,674  
Real Estate Management & Development – 0.5%  

Castellum AB

    736       7,019  

CBRE Group, Inc., Class A* (a)

    2,392       165,861  

City Developments Ltd.

    4,600       21,220  

CK Asset Holdings Ltd.

    11,500       57,466  

Daiwa House Industry Co. Ltd.

    4,600       125,354  

Fabege AB

    2,300       17,099  

Hongkong Land Holdings Ltd.

    9,200       29,164  

Kojamo OYJ

    1,012       8,622  

Mitsubishi Estate Co. Ltd.

    4,600       58,136  

Mitsui Fudosan Co. Ltd.

    2,300       49,312  

Sagax AB, Class B(a)

    552       9,955  

Sun Hung Kai Properties Ltd.

    6,000       61,613  

Swiss Prime Site AG (Registered)

    690       63,992  

Tokyu Fudosan Holdings Corp.

    4,600       26,480  

Vonovia SE

    4,600       105,510  

Wihlborgs Fastigheter AB

    2,346       15,150  
              821,953  
Residential REITs – 0.1%  

Camden Property Trust, REIT(a)

    460       39,045  

Equity Residential, REIT

    1,196       66,175  

Essex Property Trust, Inc., REIT(a)

    322       68,882  
              174,102  
Retail REITs – 0.2%  

CapitaLand Integrated Commercial Trust, REIT

    27,600       35,456  

Klepierre SA, REIT

    644       15,588  

Link REIT, REIT

    9,200       42,210  

Region RE Ltd., REIT

    12,512       15,567  
Investments   Shares     Value  
Retail REITs – (continued)  

Simon Property Group, Inc., REIT

    1,012     $ 111,209  

Unibail – Rodamco-Westfield, REIT*

    322       15,881  

Vicinity Ltd., REIT

    36,662       39,461  
              275,372  
Semiconductors & Semiconductor Equipment – 4.4%  

Advanced Micro Devices, Inc.*

    5,152       507,472  

Advantest Corp.

    2,400       60,457  

AIXTRON SE

    253       7,076  

ams-OSRAM AG* (a)

    1,794       6,365  

Applied Materials, Inc.

    5,428       718,396  

ASM International NV

    276       113,338  

ASML Holding NV

    1,702       1,016,983  

BE Semiconductor Industries NV

    529       54,405  

Infineon Technologies AG

    5,474       158,971  

Intel Corp.

    27,140       990,610  

KLA Corp.

    460       216,062  

Lam Research Corp.

    644       378,814  

Microchip Technology, Inc.(a)

    1,794       127,894  

Micron Technology, Inc.

    8,832       590,596  

Nordic Semiconductor ASA*

    736       5,940  

QUALCOMM, Inc.

    3,680       401,083  

Renesas Electronics Corp.*

    11,500       148,491  

Rohm Co. Ltd.

    2,400       37,812  

SOITEC*

    161       23,910  

STMicroelectronics NV(a)

    3,680       139,915  

SUMCO Corp.

    2,300       29,387  

Texas Instruments, Inc.

    4,508       640,181  

Tokyo Electron Ltd.

    2,300       300,020  
              6,674,178  
Software – 9.5%  

Adobe, Inc.*

    2,944       1,566,385  

Autodesk, Inc.*

    1,748       345,457  

Crowdstrike Holdings, Inc., Class A* (a)

    1,472       260,205  

Dassault Systemes SE

    2,944       120,785  

DocuSign, Inc., Class A*

    1,104       42,924  

Gen Digital, Inc.

    4,922       82,001  

HubSpot, Inc.*

    322       136,454  

Intuit, Inc.

    1,380       683,031  

Microsoft Corp.

    24,058       8,134,250  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     297  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Software – (continued)  

Oracle Corp.

    5,060     $ 523,204  

Palo Alto Networks, Inc.*

    1,518       368,904  

Sage Group plc (The)

    6,026       70,973  

Salesforce, Inc.*

    3,128       628,196  

SAP SE

    5,382       720,995  

Splunk, Inc.*

    736       108,310  

Synopsys, Inc.*

    736       345,508  

Temenos AG (Registered)

    230       16,463  

WiseTech Global Ltd.

    1,242       45,735  

Workday, Inc., Class A*

    690       146,080  
              14,345,860  
Specialized REITs – 0.5%  

American Tower Corp., REIT(a)

    2,346       418,034  

Big Yellow Group plc, REIT

    874       10,128  

Digital Realty Trust, Inc., REIT

    966       120,132  

Iron Mountain, Inc., REIT(a)

    1,426       84,234  

Keppel DC REIT, REIT

    2,300       2,837  

Safestore Holdings plc, REIT

    230       1,908  

Weyerhaeuser Co., REIT

    4,692       134,613  
              771,886  
Specialty Retail – 1.2%  

Best Buy Co., Inc.

    1,196       79,917  

Burlington Stores, Inc.*

    230       27,837  

H & M Hennes & Mauritz AB, Class B

    2,668       35,652  

JB Hi-Fi Ltd.

    874       24,996  

Kingfisher plc

    11,270       28,691  

Lowe’s Cos., Inc.

    2,852       543,506  

Nitori Holdings Co. Ltd.

    600       65,014  

Ross Stores, Inc.

    2,254       261,396  

TJX Cos., Inc. (The)

    5,842       514,505  

Tractor Supply Co.

    552       106,293  

Watches of Switzerland Group plc* (d)

    1,472       8,949  

Williams-Sonoma, Inc.(a)

    644       96,754  

Zalando SE* (b)

    414       9,623  
              1,803,133  
Technology Hardware, Storage & Peripherals – 5.6%  

Apple, Inc.

    44,666       7,627,613  

Brother Industries Ltd.

    2,300       35,522  
Investments   Shares     Value  
Technology Hardware, Storage & Peripherals – (continued)  

FUJIFILM Holdings Corp.

    3,600     $ 194,994  

Hewlett Packard Enterprise Co.

    8,004       123,101  

HP, Inc.

    5,796       152,609  

Konica Minolta, Inc.*

    4,600       12,745  

Logitech International SA (Registered)

    644       50,357  

NetApp, Inc.

    1,058       77,001  

Ricoh Co. Ltd.

    2,300       18,414  

Seiko Epson Corp.

    2,300       31,536  

Western Digital Corp.*

    2,622       105,273  
              8,429,165  
Textiles, Apparel & Luxury Goods – 2.0%  

adidas AG

    368       65,037  

Asics Corp.

    2,300       71,819  

Burberry Group plc

    2,162       44,389  

Christian Dior SE

    23       15,851  

Deckers Outdoor Corp.*

    138       82,394  

Hermes International SCA

    138       256,666  

HUGO BOSS AG

    391       22,772  

Kering SA

    414       167,688  

Lululemon Athletica, Inc.* (a)

    966       380,102  

LVMH Moet Hennessy Louis Vuitton SE

    1,564       1,115,048  

Moncler SpA

    1,242       64,248  

NIKE, Inc., Class B

    6,026       619,292  

Pandora A/S

    506       57,197  

Puma SE

    598       33,690  

Shenzhou International Group Holdings Ltd.

    4,600       45,121  

Swatch Group AG (The)

    207       52,816  
              3,094,130  
Trading Companies & Distributors – 1.0%  

Ashtead Group plc

    2,622       149,665  

Beijer Ref AB, Class B(a)

    1,656       15,667  

Bunzl plc

    736       26,186  

Diploma plc

    805       27,761  

Ferguson plc

    1,978       297,096  

Grafton Group plc

    1,150       10,760  

IMCD NV

    184       22,074  

ITOCHU Corp.(a)

    6,900       244,800  

Mitsui & Co. Ltd.

    9,200       329,073  

 

See Accompanying Notes to the Financial Statements.

 

298    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Trading Companies & Distributors – (continued)  

Rexel SA

    1,219     $ 24,784  

RS GROUP plc

    2,070       17,010  

Sojitz Corp.

    1,599       32,794  

Sumitomo Corp.

    6,900       133,881  

Toyota Tsusho Corp.

    1,800       93,967  

Travis Perkins plc

    2,070       18,578  
              1,444,096  
Transportation Infrastructure – 0.2%  

Aena SME SA(b)

    276       39,894  

Aeroports de Paris SA

    92       10,288  

Auckland International Airport Ltd.

    5,553       23,707  

Flughafen Zurich AG (Registered)

    46       8,553  

Getlink SE

    2,047       32,964  

Qube Holdings Ltd.(a)

    10,166       17,121  

SATS Ltd.*

    4,600       8,260  

Transurban Group

    13,294       99,490  
              240,277  
Water Utilities – 0.1%  

American Water Works Co., Inc.

    1,012       119,062  

Pennon Group plc

    3,128       27,575  

Severn Trent plc

    1,702       54,854  

United Utilities Group plc

    1,794       23,141  
              224,632  
Wireless Telecommunication Services – 0.1%  

Millicom International Cellular SA, SDR*

    414       6,485  

Tele2 AB, Class B

    1,978       14,011  

Vodafone Group plc

    135,838       124,778  
              145,274  
Total Common Stocks
(Cost $125,624,190)

 

    150,048,123  
Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – 0.6%(e)  
REPURCHASE AGREEMENTS – 0.6%  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $857,630, collateralized by various U.S. Treasury Securities, ranging from 1.50% –3.88%, maturing 2/15/2025 –1/31/2027; total market value $867,255
(Cost $857,504)

  $ 857,504     $ 857,504  
Total Investments – 99.4%
(Cost $126,481,694)

 

    150,905,627  

Other assets less liabilities – 0.6%

 

    909,993  
NET ASSETS – 100.0%

 

    151,815,620  

 

*

Non-income producing security.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $6,708,462, collateralized in the form of cash with a value of $857,504 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $4,674,253 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 7, 2023 – August 15, 2053 and $1,463,495 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 5.75%, and maturity dates ranging from November 13, 2023 – October 22, 2071; a total value of $6,995,252.

 

(b) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(c) 

Represents less than 0.05% of net assets.

 

(d) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(e) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $857,504.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

ADR – American Depositary Receipt

 

CVA – Dutch Certification

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     299  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

OYJ – Public Limited Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.

 

REIT – Real Estate Investment Trust

 

SCA – Limited partnership with share capital

 

SDR – Swedish Depositary Receipt

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 30,165,476  

Aggregate gross unrealized depreciation

    (5,984,946

Net unrealized appreciation

  $ 24,180,530  

Federal income tax cost

  $ 126,642,744  

 

Futures Contracts

FlexShares® STOXX® Global ESG Select Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

MSCI EAFE E-Mini Index

    7       12/15/2023       USD     $ 690,935     $ (31,638

S&P 500 E-Mini Index

    5       12/15/2023       USD       1,053,063       (58,471
                                    $ (90,109

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Forward Foreign Currency Contracts

FlexShares® STOXX® Global ESG Select Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive         Counterparty   In Exchange For     Maturity
Date
    Unrealized
Appreciation/
(Depreciation)
 

USD

    144,141       UBS AG     CHF       127,546       12/20/2023     $ 3,196  

USD

    62,260       Toronto-Dominion Bank (The)     GBP       50,000       12/20/2023       1,563  

USD

    169,462         Citibank NA     JPY       25,000,000       12/20/2023       2,997  

Net unrealized appreciation

 

          $ 7,756  

 

Abbreviations:

 

CHF – Swiss Franc

GBP – British Pound

JPY – Japanese Yen

USD – US Dollar

 

See Accompanying Notes to the Financial Statements.

 

300    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® Global ESG Select Index Fund (cont.)

 

 

FlexShares® STOXX® Global ESG Select Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    3.9

Austria

    0.1  

Belgium

    0.3  

Canada

    2.0  

Denmark

    1.4  

Finland

    0.5  

France

    5.1  

Germany

    2.6  

Hong Kong

    0.5  

Ireland

    0.1  

Italy

    1.4  

Japan

    7.8  

Luxembourg

     0.0  

Netherlands

    2.4  

New Zealand

    0.1  

Norway

    0.3  

Poland

     0.0  

Portugal

    0.1  

Singapore

    0.4  

Spain

    1.0  

Sweden

    1.1  

Switzerland

    2.8  

United Kingdom

    5.7  

United States

    59.2  

Other1

    1.2  
      100.0

 

 

Amount represents less than 0.05%.

1 

Includes any non-equity securities, securities lending reinvestments and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    98.8

Securities Lending Reinvestments

    0.6  

Others(1)

    0.6  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     301  


Table of Contents

 

Schedule of Investments

FlexShares® ESG & Climate US Large Cap Core Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 99.2%  
Aerospace & Defense – 0.2%  

Axon Enterprise, Inc.*

    341     $ 69,731  
Air Freight & Logistics – 0.1%  

United Parcel Service, Inc., Class B

    341       48,166  
Automobiles – 2.2%  

Tesla, Inc.*

    3,968       796,933  
Banks – 3.2%  

Bank of America Corp.

    14,043       369,893  

Citigroup, Inc.

    7,006       276,667  

Fifth Third Bancorp

    806       19,110  

JPMorgan Chase & Co.

    3,751       521,614  
              1,187,284  
Beverages – 1.3%  

Coca-Cola Co. (The)

    775       43,780  

PepsiCo, Inc.

    2,759       450,489  
              494,269  
Biotechnology – 3.0%  

AbbVie, Inc.

    2,542       358,880  

Amgen, Inc.

    1,488       380,482  

Biogen, Inc.*

    713       169,366  

Regeneron Pharmaceuticals, Inc.*

    217       169,236  

Vertex Pharmaceuticals, Inc.*

    31       11,225  
              1,089,189  
Broadline Retail – 3.8%  

Amazon.com, Inc.*

    9,579       1,274,869  

eBay, Inc.

    2,604       102,155  

Etsy, Inc.*

    620       38,626  
              1,415,650  
Building Products – 1.1%  

Johnson Controls International plc

    3,162       155,001  

Owens Corning

    465       52,717  

Trane Technologies plc

    1,116       212,386  
              420,104  
Capital Markets – 3.4%  

BlackRock, Inc.

    31       18,981  
Investments   Shares     Value  
Capital Markets – (continued)  

Goldman Sachs Group, Inc. (The)

    465     $ 141,179  

Moody’s Corp.

    806       248,248  

Morgan Stanley

    3,751       265,646  

MSCI, Inc., Class A

    403       190,034  

Nasdaq, Inc.

    186       9,225  

S&P Global, Inc.

    1,054       368,173  
              1,241,486  
Chemicals – 1.3%  

Ecolab, Inc.

    1,271       213,198  

International Flavors & Fragrances, Inc.

    1,209       82,635  

PPG Industries, Inc.

    1,178       144,623  

Sherwin-Williams Co. (The)

    93       22,153  
              462,609  
Commercial Services & Supplies – 1.4%  

Cintas Corp.

    434       220,090  

Waste Management, Inc.

    1,767       290,371  
              510,461  
Communications Equipment – 0.8%  

Cisco Systems, Inc.

    5,394       281,189  
Construction & Engineering – 0.1%  

AECOM

    651       49,834  
Consumer Finance – 0.1%  

American Express Co.

    248       36,215  
Consumer Staples Distribution & Retail – 1.9%  

Kroger Co. (The)

    3,348       151,899  

Sysco Corp.

    2,542       169,017  

Target Corp.

    1,116       123,642  

Walgreens Boots Alliance, Inc.

    3,472       73,190  

Walmart, Inc.

    1,116       182,365  
              700,113  
Containers & Packaging – 0.2%  

Avery Dennison Corp.

    403       70,150  

Ball Corp.

    279       13,434  
              83,584  

 

See Accompanying Notes to the Financial Statements.

 

302    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate US Large Cap Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Diversified Telecommunication Services – 1.5%  

AT&T, Inc.

    19,716     $ 303,626  

Verizon Communications, Inc.

    6,820       239,587  
              543,213  
Electric Utilities – 1.1%  

Constellation Energy Corp.

    217       24,504  

Edison International

    837       52,781  

Eversource Energy

    1,674       90,044  

Exelon Corp.

    4,898       190,728  

NextEra Energy, Inc.

    682       39,761  
              397,818  
Electrical Equipment – 0.2%  

Rockwell Automation, Inc.

    248       65,177  
Energy Equipment & Services – 0.8%  

Baker Hughes Co., Class A

    2,852       98,166  

Schlumberger NV

    3,534       196,702  
              294,868  
Entertainment – 0.9%  

Spotify Technology SA*

    403       66,398  

Walt Disney Co. (The)*

    3,069       250,400  
              316,798  
Financial Services – 4.2%  

Berkshire Hathaway, Inc., Class B*

    744       253,950  

Mastercard, Inc., Class A

    1,550       583,342  

PayPal Holdings, Inc.*

    1,798       93,136  

Visa, Inc., Class A

    2,666       626,777  
              1,557,205  
Food Products – 0.3%  

General Mills, Inc.

    527       34,382  

Mondelez International, Inc., Class A

    1,054       69,785  
              104,167  
Ground Transportation – 1.7%  

CSX Corp.

    9,889       295,187  

Norfolk Southern Corp.

    1,116       212,922  

Union Pacific Corp.

    558       115,846  
              623,955  
Investments   Shares     Value  
Health Care Equipment & Supplies – 1.7%  

Abbott Laboratories

    2,511     $ 237,415  

Boston Scientific Corp.*

    2,604       133,299  

Edwards Lifesciences Corp.*

    713       45,433  

Medtronic plc

    3,131       220,923  
              637,070  
Health Care Providers & Services – 3.3%  

Cencora, Inc.

    496       91,834  

Cigna Group (The)

    1,333       412,164  

CVS Health Corp.

    3,689       254,578  

Elevance Health, Inc.

    868       390,678  

UnitedHealth Group, Inc.

    155       83,012  
              1,232,266  
Hotel & Resort REITs – 0.1%  

Host Hotels & Resorts, Inc., REIT

    3,441       53,267  
Hotels, Restaurants & Leisure – 1.4%  

Airbnb, Inc., Class A*

    186       22,002  

Booking Holdings, Inc.*

    45       125,530  

Caesars Entertainment, Inc.*

    1,023       40,807  

Las Vegas Sands Corp.

    1,674       79,448  

McDonald’s Corp.

    744       195,055  

MGM Resorts International

    1,426       49,796  
              512,638  
Household Products – 2.0%  

Church & Dwight Co., Inc.

    124       11,277  

Clorox Co. (The)

    620       72,974  

Colgate-Palmolive Co.

    2,728       204,927  

Kimberly-Clark Corp.

    1,147       137,227  

Procter & Gamble Co. (The)

    2,046       306,961  
              733,366  
Industrial Conglomerates – 0.2%  

3M Co.

    682       62,028  
Industrial REITs – 0.9%  

Prologis, Inc., REIT

    3,224       324,818  
Insurance – 1.7%  

Chubb Ltd.

    992       212,903  

Hartford Financial Services Group, Inc. (The)

    1,519       111,571  

Marsh & McLennan Cos., Inc.

    217       41,154  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     303  


Table of Contents

 

 

FlexShares® ESG & Climate US Large Cap Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Insurance – (continued)  

MetLife, Inc.

    3,224     $ 193,472  

Principal Financial Group, Inc.

    155       10,490  

Travelers Cos., Inc. (The)

    248       41,525  
              611,115  
Interactive Media & Services – 6.3%  

Alphabet, Inc., Class A*

    7,502       930,848  

Alphabet, Inc., Class C*

    7,254       908,926  

Meta Platforms, Inc., Class A*

    1,550       466,969  
              2,306,743  
IT Services – 1.8%  

Accenture plc, Class A

    558       165,776  

Akamai Technologies, Inc.*

    744       76,878  

International Business Machines Corp.

    2,945       425,965  
              668,619  
Life Sciences Tools & Services – 0.7%  

Agilent Technologies, Inc.

    186       19,227  

Charles River Laboratories International, Inc.*

    248       41,753  

Illumina, Inc.*

    775       84,800  

Mettler-Toledo International, Inc.*

    93       91,624  

Thermo Fisher Scientific, Inc.

    62       27,576  
              264,980  
Machinery – 1.7%  

CNH Industrial NV

    4,712       51,738  

Cummins, Inc.

    682       147,517  

Deere & Co.

    558       203,871  

Stanley Black & Decker, Inc.

    744       63,277  

Westinghouse Air Brake Technologies Corp.

    868       92,025  

Xylem, Inc.

    899       84,092  
              642,520  
Media – 0.6%  

Comcast Corp., Class A

    3,596       148,479  

Interpublic Group of Cos., Inc. (The)

    1,922       54,585  
              203,064  
Metals & Mining – 0.8%  

Newmont Corp.

    5,615       210,394  
Investments   Shares     Value  
Metals & Mining – (continued)  

Nucor Corp.

    93     $ 13,745  

Steel Dynamics, Inc.

    806       85,847  
              309,986  
Multi-Utilities – 1.0%  

Consolidated Edison, Inc.

    1,705       149,682  

Sempra

    3,038       212,751  
              362,433  
Office REITs – 0.1%  

Boston Properties, Inc., REIT

    713       38,195  
Oil, Gas & Consumable Fuels – 3.4%  

Cheniere Energy, Inc.

    992       165,089  

EQT Corp.

    1,798       76,199  

Exxon Mobil Corp.

    434       45,939  

Hess Corp.

    806       116,386  

Marathon Petroleum Corp.

    1,984       300,080  

ONEOK, Inc.

    124       8,085  

Pioneer Natural Resources Co.

    496       118,544  

Valero Energy Corp.

    1,674       212,598  

Williams Cos., Inc. (The)

    6,014       206,882  
              1,249,802  
Personal Care Products – 0.4%  

Estee Lauder Cos., Inc. (The), Class A

    1,147       147,814  

Kenvue, Inc.

    961       17,875  
              165,689  
Pharmaceuticals – 4.4%  

Bristol-Myers Squibb Co.

    2,914       150,158  

Eli Lilly & Co.

    124       68,687  

Johnson & Johnson

    4,216       625,402  

Merck & Co., Inc.

    5,146       528,494  

Pfizer, Inc.

    8,649       264,314  
              1,637,055  
Professional Services – 1.4%  

Automatic Data Processing, Inc.

    1,550       338,241  

Paychex, Inc.

    1,581       175,570  
              513,811  
Semiconductors & Semiconductor Equipment – 6.2%  

Advanced Micro Devices, Inc.*

    62       6,107  

Applied Materials, Inc.

    2,077       274,891  

 

See Accompanying Notes to the Financial Statements.

 

304    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate US Large Cap Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Semiconductors & Semiconductor Equipment – (continued)  

Enphase Energy, Inc.*

    651     $ 51,807  

First Solar, Inc.*

    496       70,655  

Intel Corp.

    12,958       472,967  

NVIDIA Corp.

    3,100       1,264,180  

QUALCOMM, Inc.

    620       67,574  

SolarEdge Technologies, Inc.*

    279       21,190  

Texas Instruments, Inc.

    527       74,839  
              2,304,210  
Software – 11.5%  

Adobe, Inc.*

    1,023       544,297  

Autodesk, Inc.*

    558       110,278  

Cadence Design Systems, Inc.*

    93       22,306  

Microsoft Corp.

    7,750       2,620,353  

Salesforce, Inc.*

    2,356       473,155  

ServiceNow, Inc.*

    155       90,187  

VMware, Inc., Class A*

    1,110       161,672  

Workday, Inc., Class A*

    1,023       216,579  
              4,238,827  
Specialized REITs – 1.2%  

Equinix, Inc., REIT

    465       339,282  

Weyerhaeuser Co., REIT

    3,565       102,280  
              441,562  
Specialty Retail – 2.2%  

Best Buy Co., Inc.

    217       14,500  

Home Depot, Inc. (The)

    651       185,333  

Lowe’s Cos., Inc.

    682       129,969  

TJX Cos., Inc. (The)

    4,402       387,684  

Tractor Supply Co.

    558       107,449  
              824,935  
Technology Hardware, Storage & Peripherals – 8.2%  

Apple, Inc.

    15,903       2,715,755  

Dell Technologies, Inc., Class C

    1,271       85,043  

Hewlett Packard Enterprise Co.

    6,417       98,694  

HP, Inc.

    4,371       115,088  

NetApp, Inc.

    248       18,049  
              3,032,629  
Textiles, Apparel & Luxury Goods – 1.1%  

NIKE, Inc., Class B

    3,937       404,605  
Investments   Shares     Value  
Trading Companies & Distributors – 0.1%  

WW Grainger, Inc.

    31     $ 22,625  
Total Common Stocks
(Cost $36,507,265)

 

    36,588,876  
    Principal
Amount
       
SHORT-TERM INVESTMENTS – 0.0%(a) (b) (c)  
U.S. TREASURY OBLIGATIONS – 0.0%  

U.S. Treasury Bills 5.42%, 4/11/2024
(Cost $24,404)

  $ 25,000       24,403  
Total Investments – 99.2%
(Cost $36,531,669)

 

    36,613,279  

Other assets less liabilities – 0.8%

 

    282,607  
NET ASSETS – 100.0%

 

  $ 36,895,886  

 

*

Non-income producing security.

 

(a) 

Represents less than 0.05% of net assets.

 

(b) 

The rate shown was the current yield as of October 31, 2023.

 

(c) 

All or a portion of the security pledged as collateral for Futures Contracts.

 

Percentages shown are based on Net Assets.

 

Abbreviations:

 

REIT – Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 2,728,395  

Aggregate gross unrealized depreciation

    (2,648,444

Net unrealized appreciation

  $ 79,951  

Federal income tax cost

  $ 36,515,607  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     305  


Table of Contents

 

 

FlexShares® ESG & Climate US Large Cap Core Index Fund (cont.)

 

 

Futures Contracts

FlexShares® ESG & Climate US Large Cap Core Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

S&P 500 Micro E-Mini Index

    18       12/15/2023       USD     $ 379,103     $ (17,721

 

Abbreviations:

 

USD – US Dollar

 

Security Type   % of Net Assets  

Common Stocks

    99.2

Short-Term Investments

     0.0  

Others(1)

    0.8  
      100.0

 

 

Amount represents less than 0.05%.

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

306    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 98.3%  
Air Freight & Logistics – 0.9%  

Deutsche Post AG

    8,838     $ 343,403  
Automobile Components – 0.4%  

Bridgestone Corp.

    3,600       134,710  

Sumitomo Electric Industries Ltd.

    1,800       18,649  
              153,359  
Automobiles – 2.4%  

Bayerische Motoren Werke AG

    396       36,679  

Honda Motor Co. Ltd.

    2,400       23,874  

Mercedes-Benz Group AG

    2,520       147,646  

Porsche Automobil Holding SE (Preference)

    1,638       72,977  

Toyota Motor Corp.

    30,600       523,319  

Yamaha Motor Co. Ltd.

    3,600       86,455  
              890,950  
Banks – 11.5%  

ABN AMRO Bank NV, CVA(a)

    4,914       65,887  

AIB Group plc

    17,586       75,703  

ANZ Group Holdings Ltd.

    10,098       157,984  

Banco Santander SA

    40,122       146,989  

Bank of Montreal

    558       42,120  

Bank of Nova Scotia (The)

    5,418       219,140  

Barclays plc

    36,576       58,408  

BNP Paribas SA

    6,894       395,609  

Commonwealth Bank of Australia

    6,138       375,259  

Credit Agricole SA

    3,852       46,326  

Danske Bank A/S

    1,440       33,699  

DBS Group Holdings Ltd.

    1,800       43,159  

HSBC Holdings plc

    52,398       376,598  

ING Groep NV

    16,488       209,622  

Mitsubishi UFJ Financial Group, Inc.

    43,200       358,562  

Mizuho Financial Group, Inc.

    3,600       60,509  

National Australia Bank Ltd.

    10,332       183,495  

NatWest Group plc

    22,284       48,186  

Nordea Bank Abp

    4,716       49,513  

Resona Holdings, Inc.

    3,600       19,100  

Royal Bank of Canada

    5,652       450,939  

Societe Generale SA

    4,608       102,990  

Standard Chartered plc

    4,770       36,465  
Investments   Shares     Value  
Banks – (continued)  

Toronto-Dominion Bank (The)

    9,108     $ 508,198  

Westpac Banking Corp.

    19,530       254,728  
              4,319,188  
Beverages – 2.4%  

Anheuser-Busch InBev SA/NV

    1,872       106,118  

Asahi Group Holdings Ltd.

    1,800       64,610  

Coca-Cola HBC AG

    2,682       69,385  

Diageo plc

    12,780       481,830  

Kirin Holdings Co. Ltd.

    5,400       75,574  

Pernod Ricard SA

    522       92,419  
              889,936  
Biotechnology – 0.7%  

CSL Ltd.

    1,548       227,730  

Grifols SA*

    3,654       40,882  
              268,612  
Broadline Retail – 0.7%  

Canadian Tire Corp. Ltd., Class A

    630       60,701  

Next plc

    1,530       127,807  

Rakuten Group, Inc.

    18,000       66,179  
              254,687  
Building Products – 1.2%  

Cie de Saint-Gobain SA

    3,024       164,293  

Daikin Industries Ltd.

    200       28,565  

Geberit AG (Registered)

    252       116,800  

Kingspan Group plc

    1,818       121,985  
              431,643  
Capital Markets – 2.5%  

Daiwa Securities Group, Inc.

    10,800       61,614  

Deutsche Boerse AG

    216       35,434  

EQT AB

    4,212       76,492  

Hong Kong Exchanges & Clearing Ltd.

    2,600       91,379  

London Stock Exchange Group plc

    180       18,085  

Macquarie Group Ltd.

    1,170       119,252  

Nomura Holdings, Inc.

    32,400       124,063  

Schroders plc

    7,506       33,636  

St James’s Place plc

    5,328       41,352  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     307  


Table of Contents

 

 

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Capital Markets – (continued)  

UBS Group AG (Registered)

    14,382     $ 335,351  
              936,658  
Chemicals – 3.3%  

Akzo Nobel NV

    1,908       127,580  

Arkema SA

    558       52,127  

Chr Hansen Holding A/S

    1,296       88,188  

Clariant AG (Registered)

    3,042       43,020  

Covestro AG* (a)

    2,322       117,073  

Croda International plc

    1,530       81,281  

Givaudan SA (Registered)

    45       149,332  

Mitsui Chemicals, Inc.

    1,800       44,725  

Nissan Chemical Corp.

    1,000       40,246  

Nitto Denko Corp.

    1,800       115,087  

Novozymes A/S, Class B

    1,350       60,528  

Nutrien Ltd.

    270       14,486  

Sika AG (Registered)

    936       223,085  

Sumitomo Chemical Co. Ltd.

    10,800       27,242  

Symrise AG, Class A

    270       27,454  

Umicore SA

    162       3,844  

Wacker Chemie AG

    162       19,778  
              1,235,076  
Commercial Services & Supplies – 0.3%  

Brambles Ltd.

    2,808       23,308  

Dai Nippon Printing Co. Ltd.

    2,500       64,528  

Secom Co. Ltd.

    400       27,601  
              115,437  
Communications Equipment – 0.2%  

Nokia OYJ

    18,810       62,430  
Construction & Engineering – 0.5%  

Taisei Corp.

    1,800       60,604  

WSP Global, Inc.

    828       108,247  
              168,851  
Consumer Staples Distribution & Retail – 2.3%  

Aeon Co. Ltd.

    3,600       75,283  

Carrefour SA

    6,048       105,992  

Jeronimo Martins SGPS SA

    3,690       84,949  

Loblaw Cos. Ltd.

    720       58,824  

Tesco plc

    83,646       273,746  
Investments   Shares     Value  
Consumer Staples Distribution & Retail – (continued)  

Woolworths Group Ltd.

    12,492     $ 278,566  
              877,360  
Containers & Packaging – 0.6%  

DS Smith plc

    5,256       18,190  

SIG Group AG

    3,834       84,217  

Smurfit Kappa Group plc

    3,114       101,420  
              203,827  
Diversified Consumer Services – 0.3%  

Pearson plc

    8,370       96,650  
Diversified REITs – 0.2%  

GPT Group (The), REIT

    24,012       55,036  

Land Securities Group plc, REIT

    4,374       30,200  
              85,236  
Diversified Telecommunication Services – 2.2%  

BCE, Inc.

    2,736       101,588  

Deutsche Telekom AG (Registered)

    13,608       294,505  

Nippon Telegraph & Telephone Corp.

    75,600       88,257  

Swisscom AG (Registered)

    306       182,917  

Telefonica Deutschland Holding AG

    4,194       7,108  

Telefonica SA

    7,254       27,956  

Telia Co. AB

    738       1,560  

TELUS Corp.

    6,318       101,762  
              805,653  
Electric Utilities – 1.8%  

Acciona SA

    324       40,754  

EDP – Energias de Portugal SA

    37,314       156,580  

Hydro One Ltd.(a)

    486       12,589  

Iberdrola SA

    15,408       171,006  

Orsted A/S

    2,340       112,604  

Terna – Rete Elettrica Nazionale

    15,516       118,509  

Verbund AG

    864       74,886  
              686,928  
Electrical Equipment – 2.1%  

Mitsubishi Electric Corp.

    7,200       79,752  

Schneider Electric SE

    2,934       449,618  

Vestas Wind Systems A/S*

    11,664       251,504  
              780,874  

 

See Accompanying Notes to the Financial Statements.

 

308    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electronic Equipment, Instruments & Components – 0.4%  

Murata Manufacturing Co. Ltd.

    5,400     $ 88,339  

Omron Corp.

    2,000       70,613  
              158,952  
Energy Equipment & Services – 0.0%(b)  

Tenaris SA

    720       11,294  
Entertainment – 0.1%  

Nintendo Co. Ltd.

    800       32,862  
Financial Services – 0.2%  

M&G plc

    22,158       53,291  

Worldline SA* (a)

    2,538       32,139  
              85,430  
Food Products – 2.1%  

Ajinomoto Co., Inc.

    1,100       39,803  

Nestle SA (Registered)

    7,020       756,422  
              796,225  
Gas Utilities – 0.4%  

AltaGas Ltd.

    1,818       33,734  

APA Group

    2,790       14,556  

Hong Kong & China Gas Co. Ltd.

    144,000       100,299  
              148,589  
Ground Transportation – 2.1%  

Canadian National Railway Co.

    3,114       329,132  

Canadian Pacific Kansas City Ltd.

    2,160       153,196  

Central Japan Railway Co.

    2,500       56,060  

East Japan Railway Co.

    3,600       187,125  

MTR Corp. Ltd.

    11,000       41,120  

West Japan Railway Co.

    300       11,382  
              778,015  
Health Care Equipment & Supplies – 2.2%  

BioMerieux

    558       53,377  

Koninklijke Philips NV*

    10,944       207,041  

Olympus Corp.

    9,000       118,796  

Siemens Healthineers AG(a)

    3,600       176,257  

Sonova Holding AG (Registered)

    594       140,007  

Sysmex Corp.

    1,800       85,017  

Terumo Corp.

    1,800       48,635  
              829,130  
Investments   Shares     Value  
Hotels, Restaurants & Leisure – 1.5%  

Amadeus IT Group SA

    5,418     $ 308,218  

Genting Singapore Ltd.

    55,800       35,026  

Oriental Land Co. Ltd.

    1,800       57,728  

Sands China Ltd.*

    28,800       77,295  

Whitbread plc

    2,268       91,590  
              569,857  
Household Durables – 1.3%  

Barratt Developments plc

    4,608       23,144  

Berkeley Group Holdings plc

    936       45,840  

Sekisui House Ltd.

    3,600       69,863  

Sony Group Corp.

    4,300       352,785  
              491,632  
Household Products – 0.5%  

Henkel AG & Co. KGaA (Preference)

    1,890       136,005  

Reckitt Benckiser Group plc

    756       50,474  
              186,479  
Independent Power and Renewable Electricity
Producers – 0.2%
 

Corp. ACCIONA Energias Renovables SA

    1,062       28,714  

EDP Renovaveis SA

    2,502       40,172  
              68,886  
Industrial Conglomerates – 2.0%  

Hitachi Ltd.

    7,200       450,556  

Siemens AG (Registered)

    2,358       311,451  
              762,007  
Industrial REITs – 0.5%  

Nippon Prologis REIT, Inc., REIT

    18       31,948  

Segro plc, REIT

    15,876       137,319  
              169,267  
Insurance – 6.3%  

AIA Group Ltd.

    28,800       249,736  

Allianz SE (Registered)

    1,818       424,487  

ASR Nederland NV

    1,224       45,541  

Aviva plc

    26,316       126,966  

AXA SA

    11,826       349,440  

Dai-ichi Life Holdings, Inc.

    100       2,097  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     309  


Table of Contents

 

 

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Insurance – (continued)  

Legal & General Group plc

    75,168     $ 192,824  

MS&AD Insurance Group Holdings, Inc.

    5,400       195,861  

Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Registered)

    306       122,423  

NN Group NV

    2,287       73,149  

QBE Insurance Group Ltd.

    4,662       46,047  

Sun Life Financial, Inc.

    4,050       184,784  

Swiss Re AG

    828       90,183  

Zurich Insurance Group AG

    576       272,541  
              2,376,079  
Interactive Media & Services – 0.2%  

LY Corp.

    32,400       81,789  
IT Services – 2.1%  

Capgemini SE

    1,584       278,769  

CGI, Inc.*

    774       74,643  

Fujitsu Ltd.

    2,200       282,037  

Nomura Research Institute Ltd.

    5,400       140,629  
              776,078  
Leisure Products – 0.1%  

Yamaha Corp.

    1,800       47,292  
Machinery – 1.8%  

Alstom SA

    3,536       47,654  

Atlas Copco AB, Class A

    7,776       100,361  

Epiroc AB, Class A

    4,086       67,109  

GEA Group AG

    1,566       53,349  

Hitachi Construction Machinery Co. Ltd.

    1,800       45,783  

KION Group AG

    882       26,887  

Komatsu Ltd.

    5,400       123,478  

Kone OYJ, Class B

    18       778  

MINEBEA MITSUMI, Inc.

    1,800       27,687  

SKF AB, Class B

    4,446       71,668  

Volvo AB, Class B

    1,368       27,047  

Weir Group plc (The)

    702       14,541  

Yaskawa Electric Corp.

    1,800       57,966  
              664,308  
Investments   Shares     Value  
Media – 1.0%  

Dentsu Group, Inc.

    2,100     $ 60,319  

Informa plc

    4,428       38,236  

Publicis Groupe SA

    2,160       163,745  

WPP plc

    12,852       110,196  
              372,496  
Metals & Mining – 2.6%  

Anglo American plc

    1,278       32,512  

Barrick Gold Corp.

    1,530       24,412  

BlueScope Steel Ltd.

    2,934       34,924  

Fortescue Metals Group Ltd.

    5,346       75,481  

Kinross Gold Corp.

    14,526       75,756  

Mineral Resources Ltd.

    2,070       75,701  

Norsk Hydro ASA

    2,772       15,801  

Northern Star Resources Ltd.

    6,048       44,764  

Rio Tinto Ltd.

    1,962       146,063  

Rio Tinto plc

    2,304       146,919  

Teck Resources Ltd., Class B

    2,430       85,770  

Wheaton Precious Metals Corp.

    5,436       229,344  
              987,447  
Multi-Utilities – 0.4%  

Algonquin Power & Utilities Corp.

    6,894       34,662  

National Grid plc

    7,902       93,835  
              128,497  
Office REITs – 0.4%  

Dexus, REIT

    9,270       38,033  

Gecina SA, REIT

    612       59,901  

Japan Real Estate Investment Corp., REIT

    18       66,678  
              164,612  
Oil, Gas & Consumable Fuels – 6.2%  

Ampol Ltd.

    3,294       66,447  

BP plc

    2,628       16,028  

Cameco Corp.

    5,058       206,692  

Enbridge, Inc.

    13,032       417,174  

ENEOS Holdings, Inc.

    19,800       72,914  

Eni SpA

    6,984       113,891  

Neste OYJ

    4,788       160,482  

Pembina Pipeline Corp.

    2,970       91,309  

Repsol SA

    8,010       117,050  

Shell plc

    21,348       685,569  

 

See Accompanying Notes to the Financial Statements.

 

310    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund (cont.)

 

 

Investments   Investments     Shares  
COMMON STOCKS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

TC Energy Corp.

    378     $ 13,004  

TotalEnergies SE

    5,202       347,506  

Tourmaline Oil Corp.

    594       31,376  

Woodside Energy Group Ltd.

    1       20  
              2,339,462  
Paper & Forest Products – 0.4%  

Mondi plc

    5,148       83,020  

West Fraser Timber Co. Ltd.

    738       49,753  
              132,773  
Personal Care Products – 2.0%  

Kao Corp.

    5,400       195,897  

L’Oreal SA

    1,278       535,137  
              731,034  
Pharmaceuticals – 9.4%  

AstraZeneca plc

    4,338       539,555  

Daiichi Sankyo Co. Ltd.

    7,200       183,417  

GSK plc

    13,446       237,790  

Novartis AG (Registered)

    4,518       419,704  

Novo Nordisk A/S, Class B

    10,404       997,473  

Ono Pharmaceutical Co. Ltd.

    3,700       63,558  

Roche Holding AG

    1,818       467,160  

Sanofi SA

    3,708       335,889  

Takeda Pharmaceutical Co. Ltd.

    9,000       241,454  

UCB SA

    504       36,790  
              3,522,790  
Professional Services – 2.4%  

Experian plc

    972       29,381  

Randstad NV

    1,350       69,692  

Recruit Holdings Co. Ltd.

    3,900       111,583  

RELX plc

    13,536       471,076  

Wolters Kluwer NV

    1,710       218,885  
              900,617  
Real Estate Management & Development – 0.6%  

Daiwa House Industry Co. Ltd.

    7,200       196,206  

ESR Group Ltd.(a)

    28,800       36,954  
              233,160  
Investments   Shares     Value  
Retail REITs – 0.3%  

CapitaLand Integrated Commercial Trust, REIT

    50,400     $ 64,745  

Vicinity Ltd., REIT

    48,978       52,718  
              117,463  
Semiconductors & Semiconductor Equipment – 2.2%  

Advantest Corp.

    4,800       120,915  

ASML Holding NV

    1,062       634,569  

Renesas Electronics Corp.*

    1,800       23,242  

Tokyo Electron Ltd.

    400       52,177  
              830,903  
Software – 2.2%  

Open Text Corp.

    2,970       99,053  

SAP SE

    4,770       639,009  

Xero Ltd.*

    1,494       100,921  
              838,983  
Specialty Retail – 1.4%  

Fast Retailing Co. Ltd.

    200       43,607  

H & M Hennes & Mauritz AB, Class B

    3,186       42,574  

Industria de Diseno Textil SA

    10,908       375,294  

Zalando SE* (a)

    2,322       53,971  
              515,446  
Technology Hardware, Storage & Peripherals – 0.9%  

Canon, Inc.

    10,200       239,164  

Ricoh Co. Ltd.

    7,200       57,645  

Seiko Epson Corp.

    3,600       49,360  
              346,169  
Textiles, Apparel & Luxury Goods – 2.2%  

adidas AG

    468       82,710  

Burberry Group plc

    4,626       94,979  

Cie Financiere Richemont SA (Registered)

    162       19,030  

Kering SA

    738       298,921  

LVMH Moet Hennessy Louis Vuitton SE

    468       333,659  
              829,299  
Trading Companies & Distributors – 1.3%  

Bunzl plc

    3,168       112,712  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     311  


Table of Contents

 

 

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Trading Companies & Distributors – (continued)  

Ferguson plc

    72     $ 10,773  

ITOCHU Corp.

    9,000       319,304  

Rexel SA

    2,412       49,039  
              491,828  
Transportation Infrastructure – 0.9%  

Getlink SE

    3,618       58,262  

Transurban Group

    38,268       286,391  
              344,653  
Water Utilities – 0.1%  

Severn Trent plc

    882       28,426  
Wireless Telecommunication Services – 0.9%  

Rogers Communications, Inc., Class B

    126       4,663  

SoftBank Corp.

    18,000       202,648  

Vodafone Group plc

    143,172       131,515  
              338,826  
Total Common Stocks
(Cost $38,644,229)

 

    36,835,813  
                 
Total Investments – 98.3%
(Cost $38,644,229)
            36,835,813  

Other assets less liabilities – 1.7%

            648,393  
NET ASSETS – 100.0%

 

  $ 37,484,206  
*

Non-income producing security.

 

(a) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(b) 

Represents less than 0.05% of net assets.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

CVA – Dutch Certification

OYJ – Public Limited Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference. REIT

Real Estate – Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 1,824,498  

Aggregate gross unrealized depreciation

    (3,684,607

Net unrealized depreciation

  $ (1,860,109

Federal income tax cost

  $ 38,677,626  

 

Futures Contracts

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

MSCI EAFE E-Mini Index

    6       12/15/2023       USD     $ 592,230     $ (20,226

TOPIX Mini Index

    2       12/07/2023       JPY       29,767       (1,268
                                    $ (21,494

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

See Accompanying Notes to the Financial Statements.

 

312    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund (cont.)

 

 

Forward Foreign Currency Contracts

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive   Counterparty   In Exchange For     Maturity Date     Unrealized
Appreciation/
(Depreciation)
 

USD

    87,496       Citibank NA  

AUD

    135,070       12/20/2023     $ 1,835  

USD

    13,827       Citibank NA  

CAD

    18,709       12/20/2023       339  

USD

    25,831       UBS AG  

CHF

    22,857       12/20/2023       573  

USD

    32,509       UBS AG  

DKK

    225,761       12/20/2023       449  

USD

    68,164       Toronto-Dominion Bank (The)  

EUR

    63,606       12/20/2023       778  

USD

    28,653       Toronto-Dominion Bank (The)  

GBP

    23,011       12/20/2023       719  

USD

    20,097       BNP Paribas SA  

HKD

    157,028       12/20/2023       13  

USD

    2,257       Citibank NA  

ILS

    8,590       12/20/2023       128  

USD

    45,240       Citibank NA  

JPY

    6,674,000       12/20/2023       800  

USD

    21,373       Citibank NA  

NZD

    36,099       12/20/2023       373  

USD

    35,127       Citibank NA  

SEK

    390,201       12/20/2023       117  

USD

    39,364         BNP Paribas SA  

SGD

    53,311       12/20/2023       368  

Total unrealized appreciation

 

  $ 6,492  

AUD

    66,000       Toronto-Dominion Bank (The)  

USD

    42,631       12/20/2023     $ (775

JPY

    6,795,910       Toronto-Dominion Bank (The)  

USD

    46,742       12/20/2023       (1,491

NOK

    161,527       Goldman Sachs & Co.  

USD

    15,065       12/20/2023       (585

SGD

    60,000       JPMorgan Chase Bank NA  

USD

    44,207       12/20/2023       (317

USD

    41,867         Toronto-Dominion Bank (The)  

CHF

    38,000       12/20/2023       (126

Total unrealized depreciation

 

  $ (3,294

Net unrealized appreciation

 

  $ 3,198  

 

Abbreviations:

 

AUD – Australian Dollar

CAD – Canadian Dollar

CHF – Swiss Franc

DKK – Danish Krone

EUR – Euro

GBP – British Pound

HKD – Hong Kong Dollar

ILS – Israeli Shekel

JPY – Japanese Yen

NOK – Norwegian Krone

NZD – New Zealand Dollar

SEK – Swedish Krona

SGD – Singapore Dollar

USD – US Dollar

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     313  


Table of Contents

 

 

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund (cont.)

 

 

FlexShares® ESG & Climate Developed Markets ex-US Core Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    6.8

Austria

    0.2  

Belgium

    0.4  

Canada

    10.2  

Denmark

    4.1  

Finland

    0.6  

France

    11.6  

Germany

    8.3  

Hong Kong

    1.6  

Ireland

    0.5  

Italy

    0.6  

Japan

    19.4  

Netherlands

    4.4  

New Zealand

    0.3  

Norway

     0.0  

Portugal

    0.8  

Singapore

    0.4  

Spain

    3.4  

Sweden

    1.2  

Switzerland

    8.8  

United Kingdom

    14.7  

Other1

    1.7  
      100.0

 

 

Amount represents less than 0.05%.

 

1 

Includes any non-equity securities and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    98.3

Others(1)

    1.7  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

314    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® ESG & Climate Emerging Markets Core Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 98.9%  
Air Freight & Logistics – 0.2%  

Hyundai Glovis Co. Ltd.

    62     $ 7,855  

JD Logistics, Inc.* (a)

    1,600       1,893  
              9,748  
Automobile Components – 0.7%  

Hyundai Mobis Co. Ltd.

    202       31,185  
Automobiles – 1.9%  

Eicher Motors Ltd.

    150       5,937  

Ford Otomotiv Sanayi A/S

    128       3,557  

Li Auto, Inc., ADR*

    1,406       47,537  

XPeng, Inc., Class A*

    3,100       22,900  
              79,931  
Banks – 17.5%  

Abu Dhabi Commercial Bank PJSC

    3,816       8,343  

Agricultural Bank of China Ltd., Class H

    50,000       18,467  

Akbank TAS

    10,766       11,210  

Alinma Bank

    1,608       14,102  

AU Small Finance Bank Ltd.(a)

    570       4,581  

Axis Bank Ltd.

    304       3,585  

Banco Bradesco SA

    5,300       12,916  

Banco Bradesco SA (Preference)

    10,000       27,741  

Banco do Brasil SA

    2,900       27,804  

Bancolombia SA

    802       5,690  

Bancolombia SA (Preference)

    1,470       9,381  

Bank AlBilad

    538       5,335  

Bank Rakyat Indonesia Persero Tbk. PT

    89,400       27,915  

Banque Saudi Fransi

    46       440  

China Construction Bank Corp., Class H

    82,000       46,530  

CIMB Group Holdings Bhd.

    16,800       20,134  

Commercial International Bank Egypt SAE

    8,800       17,173  

E.Sun Financial Holding Co. Ltd.

    47,585       34,990  

Eurobank Ergasias Services and Holdings SA*

    8,970       14,620  

First Abu Dhabi Bank PJSC

    9,450       32,623  

First Financial Holding Co. Ltd.

    23,710       18,933  

Grupo Financiero Banorte SAB de CV, Class O

    1,304       10,569  

Hana Financial Group, Inc.

    996       28,909  
Investments   Shares     Value  
Banks – (continued)  

Hong Leong Bank Bhd.

    1,800     $ 7,329  

Industrial & Commercial Bank of China Ltd., Class H

    72,000       34,599  

ING Bank Slaski SA*

    114       5,911  

Itau Unibanco Holding SA (Preference)

    1,788       9,509  

KB Financial Group, Inc.

    1,098       41,870  

Malayan Banking Bhd.

    18,400       34,834  

Mega Financial Holding Co. Ltd.

    37,000       41,865  

Nedbank Group Ltd.

    1,454       15,556  

OTP Bank Nyrt.

    770       28,589  

Powszechna Kasa Oszczednosci Bank Polski SA*

    254       2,623  

Santander Bank Polska SA*

    118       12,780  

Shinhan Financial Group Co. Ltd.

    1,430       36,794  

SinoPac Financial Holdings Co. Ltd.

    6,334       3,486  

Standard Bank Group Ltd.

    3,724       36,330  

Taishin Financial Holding Co. Ltd.

    14,086       7,491  

Yapi ve Kredi Bankasi A/S

    9,664       5,889  

Yes Bank Ltd.*

    39,544       7,576  
              735,022  
Beverages – 0.8%  

Ambev SA

    5,400       13,770  

Coca-Cola Femsa SAB de CV

    1,800       13,639  

Nongfu Spring Co. Ltd., Class H(b)

    200       1,139  

United Spirits Ltd.*

    286       3,545  

Varun Beverages Ltd.

    228       2,489  
              34,582  
Biotechnology – 0.1%  

BeiGene Ltd.*

    400       5,792  
Broadline Retail – 6.4%  

Alibaba Group Holding Ltd., ADR*

    2,152       177,626  

JD.com, Inc., ADR

    70       1,779  

Naspers Ltd., Class N*

    96       14,898  

PDD Holdings, Inc., ADR*

    188       19,067  

Prosus NV*

    989       27,629  

Vipshop Holdings Ltd., ADR*

    1,180       16,827  

Woolworths Holdings Ltd.

    3,136       11,608  
              269,434  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     315  


Table of Contents

 

 

FlexShares® ESG & Climate Emerging Markets Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Capital Markets – 0.4%  

B3 SA – Brasil Bolsa Balcao

    2,000     $ 4,402  

Mirae Asset Securities Co. Ltd.

    944       4,613  

NH Investment & Securities Co. Ltd.

    516       3,698  

Saudi Tadawul Group Holding Co.

    128       5,671  
              18,384  
Chemicals – 2.6%  

Asian Paints Ltd.

    1,104       39,723  

Hanwha Solutions Corp.*

    354       7,510  

Indorama Ventures PCL, NVDR

    5,800       3,824  

LG Chem Ltd.

    40       13,032  

Orbia Advance Corp. SAB de CV

    3,450       5,582  

PI Industries Ltd.

    118       4,820  

PTT Global Chemical PCL, NVDR

    4,600       4,415  

Sahara International Petrochemical Co.

    400       3,439  

SK IE Technology Co. Ltd.* (a)

    88       3,864  

UPL Ltd.

    1,686       10,945  

Yanbu National Petrochemical Co.

    974       9,827  
              106,981  
Communications Equipment – 0.1%  

ZTE Corp., Class H

    2,400       5,331  
Construction & Engineering – 0.4%  

Hyundai Engineering & Construction Co. Ltd.

    276       6,825  

Samsung Engineering Co. Ltd.*

    454       7,984  
              14,809  
Construction Materials – 0.9%  

ACC Ltd.

    168       3,810  

Ambuja Cements Ltd.

    1,776       9,054  

Siam Cement PCL (The), NVDR

    2,600       20,834  

UltraTech Cement Ltd.

    52       5,260  
              38,958  
Consumer Staples Distribution & Retail – 2.2%  

Alibaba Health Information Technology Ltd.*

    16,000       9,427  

CP ALL PCL, NVDR

    16,200       24,902  

Nahdi Medical Co.

    20       756  

Raia Drogasil SA

    408       2,087  

Shoprite Holdings Ltd.

    1,076       13,708  
Investments   Shares     Value  
Consumer Staples Distribution & Retail – (continued)  

Wal-Mart de Mexico SAB de CV

    11,700     $ 41,822  
              92,702  
Containers & Packaging – 0.5%  

Klabin SA

    2,400       10,185  

Klabin SA (Preference)

    6,996       5,951  

SCG Packaging PCL, NVDR

    4,200       4,207  
              20,343  
Diversified Consumer Services – 0.2%  

East Buy Holding Ltd.* (a)

    500       2,038  

New Oriental Education & Technology Group, Inc., ADR*

    124       8,121  
              10,159  
Diversified Telecommunication Services – 2.2%  

Chunghwa Telecom Co. Ltd.

    10,722       38,346  

Emirates Telecommunications Group Co. PJSC

    518       2,603  

Hellenic Telecommunications Organization SA

    622       8,698  

Indus Towers Ltd.*

    2,388       4,945  

LG Uplus Corp.

    764       5,719  

PT Tower Bersama Infrastructure Tbk.

    13,000       1,694  

Saudi Telecom Co.

    1,866       19,100  

Telefonica Brasil SA

    1,400       12,559  
              93,664  
Electric Utilities – 1.0%  

Centrais Eletricas Brasileiras SA

    2,000       13,817  

Centrais Eletricas Brasileiras SA (Preference), Class B

    800       6,100  

CEZ A/S

    76       3,247  

Cia Energetica de Minas Gerais

    800       2,443  

Cia Energetica de Minas Gerais (Preference)

    4,600       10,709  

Cia Paranaense de Energia (Preference)

    4,400       7,320  
              43,636  
Electrical Equipment – 1.3%  

ABB India Ltd.

    182       8,983  

CG Power & Industrial Solutions Ltd.

    2,020       9,464  

Doosan Enerbility Co. Ltd.*

    120       1,192  

 

See Accompanying Notes to the Financial Statements.

 

316    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Emerging Markets Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electrical Equipment – (continued)  

Havells India Ltd.

    834     $ 12,483  

Polycab India Ltd.

    140       8,277  

Sociedad Quimica y Minera de Chile SA (Preference), Class B

    304       14,660  
              55,059  
Electronic Equipment, Instruments & Components – 1.8%  

AUO Corp.

    21,406       10,295  

Delta Electronics Thailand PCL, NVDR

    4,400       9,671  

Delta Electronics, Inc.

    2,560       22,928  

Hon Hai Precision Industry Co. Ltd.

    3,000       8,926  

Samsung Electro-Mechanics Co. Ltd.

    192       17,671  

Samsung SDI Co. Ltd.

    18       5,671  
              75,162  
Energy Equipment & Services – 0.1%  

Dialog Group Bhd.

    10,600       4,783  
Entertainment – 2.3%  

Kingsoft Corp. Ltd.

    3,200       11,165  

NCSoft Corp.

    20       3,443  

NetEase, Inc., ADR

    758       81,045  
              95,653  
Financial Services – 1.2%  

FirstRand Ltd.

    7,192       23,571  

Yuanta Financial Holding Co. Ltd.

    34,130       25,570  
              49,141  
Food Products – 1.0%  

Almarai Co. JSC

    90       1,341  

Britannia Industries Ltd.

    174       9,251  

Charoen Pokphand Foods PCL, NVDR

    6,200       3,226  

CJ CheilJedang Corp.

    28       5,857  

IOI Corp. Bhd.

    8,600       7,093  

Marico Ltd.

    1,716       11,058  

Nestle Malaysia Bhd.

    200       5,197  
              43,023  
Gas Utilities – 0.6%  

China Resources Gas Group Ltd.

    1,800       5,325  

ENN Energy Holdings Ltd.

    2,700       20,618  
              25,943  
Investments   Shares     Value  
Ground Transportation – 0.8%  

BTS Group Holdings PCL, NVDR

    25,000     $ 5,182  

Full Truck Alliance Co. Ltd., ADR*

    1,042       6,846  

Rumo SA

    4,400       19,465  
              31,493  
Health Care Equipment & Supplies – 0.0%(c)  

Microport Scientific Corp.*

    600       943  
Health Care Providers & Services – 0.4%  

Dr Sulaiman Al Habib Medical Services Group Co.

    64       4,299  

Sinopharm Group Co. Ltd., Class H

    4,400       10,516  
              14,815  
Hotels, Restaurants & Leisure – 3.1%  

Meituan, Class B* (a)

    5,400       76,328  

Trip.com Group Ltd.*

    500       17,177  

Yum China Holdings, Inc.

    728       38,264  
              131,769  
Household Durables – 0.7%  

Arcelik A/S

    292       1,402  

LG Electronics, Inc.

    364       26,871  
              28,273  
Household Products – 0.2%  

Unilever Indonesia Tbk. PT

    26,800       6,107  
Independent Power and Renewable Electricity
Producers – 0.8%
 

Adani Green Energy Ltd.*

    1,098       12,023  

China Longyuan Power Group Corp. Ltd., Class H

    12,000       10,168  

Energy Absolute PCL, NVDR

    6,000       7,011  

Engie Brasil Energia SA

    400       3,117  
              32,319  
Industrial Conglomerates – 2.7%  

Alpha Dhabi Holding PJSC*

    1,600       8,224  

Astra International Tbk. PT

    12,200       4,435  

Far Eastern New Century Corp.

    3,152       2,867  

International Holding Co. PJSC*

    406       44,170  

Multiply Group PJSC*

    10,216       9,457  

Mytilineos SA

    112       4,141  

Samsung C&T Corp.

    222       17,539  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     317  


Table of Contents

 

 

FlexShares® ESG & Climate Emerging Markets Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Industrial Conglomerates – (continued)  

Siemens Ltd.

    306     $ 12,242  

SK Square Co. Ltd.*

    118       3,718  

Turkiye Sise ve Cam Fabrikalari A/S

    4,658       7,794  
              114,587  
Insurance – 3.4%  

Bupa Arabia for Cooperative Insurance Co.

    100       5,678  

Cathay Financial Holding Co. Ltd.

    26,000       35,190  

Fubon Financial Holding Co. Ltd.

    23,100       42,803  

ICICI Prudential Life Insurance Co. Ltd.(a)

    500       3,154  

Ping An Insurance Group Co. of China Ltd., Class H

    9,000       46,124  

Powszechny Zaklad Ubezpieczen SA

    502       5,672  

Samsung Life Insurance Co. Ltd.

    42       2,248  
              140,869  
Interactive Media & Services – 3.2%  

Autohome, Inc., ADR

    260       6,955  

Info Edge India Ltd.

    248       12,166  

Kakao Corp.

    1,018       28,492  

Kanzhun Ltd., ADR*

    624       9,235  

Kuaishou Technology* (a)

    5,600       36,035  

NAVER Corp.

    294       40,795  
              133,678  
IT Services – 2.9%  

Arabian Internet & Communications Services Co.

    80       6,670  

Elm Co.

    14       2,617  

Infosys Ltd.

    4,116       67,649  

Tech Mahindra Ltd.

    1,812       24,661  

Wipro Ltd.

    4,342       19,911  
              121,508  
Life Sciences Tools & Services – 1.6%  

Divi’s Laboratories Ltd.

    348       14,163  

WuXi AppTec Co. Ltd., Class H(a)

    1,200       14,416  

Wuxi Biologics Cayman, Inc.* (a)

    6,000       37,267  
              65,846  
Investments   Shares     Value  
Machinery – 0.6%  

Cummins India Ltd.

    476     $ 9,585  

Haitian International Holdings Ltd.

    2,000       4,764  

Weichai Power Co. Ltd., Class H

    2,000       2,991  

Zhuzhou CRRC Times Electric Co. Ltd., Class H

    1,800       5,809  
              23,149  
Marine Transportation – 0.2%  

MISC Bhd.

    4,600       7,000  
Media – 0.1%  

Elang Mahkota Teknologi Tbk. PT

    53,600       1,687  

Grupo Televisa SAB, Series CPO

    9,400       4,306  
              5,993  
Metals & Mining – 2.6%  

Anglo American Platinum Ltd.

    96       3,196  

Gold Fields Ltd.

    2,734       36,236  

Grupo Mexico SAB de CV, Series B

    4,000       16,292  

Hindalco Industries Ltd.

    4,114       22,705  

JSW Steel Ltd.

    1,956       17,299  

Kumba Iron Ore Ltd.

    214       5,637  

Sibanye Stillwater Ltd.

    5,220       6,655  
              108,020  
Multi-Utilities – 0.1%  

Dubai Electricity & Water Authority PJSC

    4,258       2,759  
Oil, Gas & Consumable Fuels – 4.0%  

Bharat Petroleum Corp. Ltd.

    2,348       9,849  

Cosan SA

    4,000       12,493  

COSCO SHIPPING Energy Transportation Co. Ltd., Class H

    4,000       4,233  

Empresas Copec SA

    1,368       9,027  

ORLEN SA

    1,780       28,090  

Petroleo Brasileiro SA (Preference)

    400       2,755  

Petronas Dagangan Bhd.

    1,000       4,798  

PTT Exploration & Production PCL, NVDR

    3,600       16,426  

PTT PCL, NVDR

    23,000       21,277  

Reliance Industries Ltd.

    1,006       27,644  

SK Innovation Co. Ltd.*

    184       16,649  

Thai Oil PCL, NVDR

    3,600       4,708  

 

See Accompanying Notes to the Financial Statements.

 

318    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Emerging Markets Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

Ultrapar Participacoes SA

    2,400     $ 9,732  
              167,681  
Paper & Forest Products – 0.5%  

Empresas CMPC SA

    3,974       7,081  

Suzano SA

    1,300       13,294  
              20,375  
Passenger Airlines – 0.1%  

Korean Air Lines Co. Ltd.

    400       6,072  
Personal Care Products – 1.5%  

Colgate-Palmolive India Ltd.

    270       6,855  

Giant Biogene Holding Co. Ltd.* (a)

    400       1,605  

Godrej Consumer Products Ltd.*

    588       7,005  

Hindustan Unilever Ltd.

    1,610       48,034  
              63,499  
Pharmaceuticals – 2.0%  

Aspen Pharmacare Holdings Ltd.

    656       5,924  

China Medical System Holdings Ltd.

    5,000       7,988  

Cipla Ltd.

    502       7,235  

CSPC Pharmaceutical Group Ltd.

    30,000       26,187  

Dr Reddy’s Laboratories Ltd.

    374       24,111  

Richter Gedeon Nyrt.

    288       6,738  

Sun Pharmaceutical Industries Ltd.

    512       6,694  
              84,877  
Real Estate Management & Development – 1.4%  

Central Pattana PCL, NVDR

    6,400       11,129  

DLF Ltd.

    2,130       14,416  

KE Holdings, Inc., ADR

    1,114       16,387  

Longfor Group Holdings Ltd.(a)

    3,703       5,386  

Macrotech Developers Ltd.(a)

    108       1,022  

NEPI Rockcastle NV

    1,558       8,365  
              56,705  
Semiconductors & Semiconductor Equipment – 9.3%  

Daqo New Energy Corp., ADR*

    200       5,092  

Flat Glass Group Co. Ltd., Class H*

    2,000       3,584  

GCL Technology Holdings Ltd.

    68,000       9,994  

Hua Hong Semiconductor Ltd.* (a)

    1,000       2,454  

SK Hynix, Inc.

    402       34,617  
Investments   Shares     Value  
Semiconductors & Semiconductor Equipment – (continued)  

Taiwan Semiconductor Manufacturing Co. Ltd.

    18,580     $ 303,031  

United Microelectronics Corp.

    17,000       24,215  

Xinyi Solar Holdings Ltd.

    16,000       9,406  
              392,393  
Specialty Retail – 0.4%  

Chow Tai Fook Jewellery Group Ltd.

    6,800       9,594  

Lojas Renner SA

    3,400       8,266  
              17,860  
Technology Hardware, Storage & Peripherals – 5.0%  

Asustek Computer, Inc.

    2,422       25,239  

Compal Electronics, Inc.

    14,652       12,671  

Lenovo Group Ltd.

    24,000       27,912  

Micro-Star International Co. Ltd.

    798       4,060  

Samsung Electronics Co. Ltd.

    2,380       117,894  

Wistron Corp.

    7,546       20,799  
              208,575  
Textiles, Apparel & Luxury Goods – 1.0%  

Feng TAY Enterprise Co. Ltd.

    1,702       9,367  

Li Ning Co. Ltd.

    3,500       10,735  

LPP SA

    4       12,871  

Page Industries Ltd.

    20       9,084  
              42,057  
Transportation Infrastructure – 1.3%  

Abu Dhabi Ports Co. PJSC*

    3,350       5,445  

Adani Ports & Special Economic Zone Ltd.

    1,866       17,588  

CCR SA

    3,400       8,077  

Grupo Aeroportuario del Pacifico SAB de CV, Class B

    230       2,679  

International Container Terminal Services, Inc.

    3,280       11,631  

Salik Co. PJSC

    5,562       4,830  

Taiwan High Speed Rail Corp.

    5,090       4,614  
              54,864  
Wireless Telecommunication Services – 2.6%  

Advanced Info Service PCL, NVDR

    1,400       8,569  

Bharti Airtel Ltd.

    4,862       53,398  

Etihad Etisalat Co.

    1,296       15,925  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     319  


Table of Contents

 

 

FlexShares® ESG & Climate Emerging Markets Core Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Wireless Telecommunication Services – (continued)  

Mobile Telecommunications Co. KSCP

    6,340     $ 9,851  

Taiwan Mobile Co. Ltd.

    4,448       13,138  

TIM SA

    2,000       6,016  

Vodacom Group Ltd.

    388       2,100  
              108,997  
Total Common Stocks
(Cost $4,738,015)

 

    4,152,508  
                 
Total Investments – 98.9%
(Cost $4,738,015)

 

    4,152,508  

Other assets less liabilities – 1.1%

 

    47,529  
NET ASSETS – 100.0%

 

  $ 4,200,037  

 

*

Non-income producing security.

 

(a) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(c) 

Represents less than 0.05% of net assets.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

ADR – American Depositary Receipt

NVDR – Non-Voting Depositary Receipt

PJSC – Public Joint Stock Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 193,052  

Aggregate gross unrealized depreciation

    (802,558

Net unrealized depreciation

  $ (609,506

Federal income tax cost

  $ 4,758,505  

 

Futures Contracts

FlexShares® ESG & Climate Emerging Markets Core Index Fund had the following open futures contract as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

         

MSCI Emerging Markets E-Mini Index

    1       12/15/2023       USD     $ 45,960     $ (3,512

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Forward Foreign Currency Contracts

FlexShares® ESG & Climate Emerging Markets Core Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive   Counterparty   In Exchange For     Maturity Date     Unrealized
Appreciation/
(Depreciation)
 

USD

    4,758         Toronto-Dominion Bank (The)   HKD     37,178       12/20/2023     $ 3  

Net unrealized appreciation

 

          $ 3  

 

Abbreviations:

 

HKD – Hong Kong Dollar

USD – US Dollar

 

See Accompanying Notes to the Financial Statements.

 

320    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Emerging Markets Core Index Fund (cont.)

 

 

FlexShares® ESG & Climate Emerging Markets Core Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Brazil

    6.0

Chile

    0.7  

China

    23.8  

Colombia

    0.4  

Czech Republic

    0.1  

Egypt

    0.4  

Greece

    0.7  

Hungary

    0.8  

India

    14.6  

Indonesia

    1.0  

Kuwait

    0.2  

Malaysia

    2.2  

Mexico

    2.3  

Philippines

    0.3  

Poland

    1.6  

Saudi Arabia

    2.3  

South Africa

    5.0  

South Korea

    12.6  

Taiwan

    16.9  

Thailand

    3.5  

Turkey

    0.7  

United Arab Emirates

    2.8  

Other1

    1.1  
      100.0

 

1 

Includes any non-equity securities and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    98.9

Others(1)

    1.1  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     321  


Table of Contents

 

Schedule of Investments

FlexShares® Morningstar Global Upstream Natural Resources Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 99.6%  
Building Products – 0.5%  

Simpson Manufacturing Co., Inc.

    132,904     $ 17,700,155  

UFP Industries, Inc.

    190,376       18,118,084  
              35,818,239  
Chemicals – 16.0%  

CF Industries Holdings, Inc.

    1,293,120       103,165,114  

Corteva, Inc.

    4,949,776       238,282,217  

FMC Corp.

    915,960       48,729,072  

ICL Group Ltd.

    8,211,312       39,782,407  

K+S AG (Registered)

    2,140,832       35,911,579  

Mosaic Co. (The)

    2,356,352       76,534,313  

Nutrien Ltd.(a)

    5,635,848       302,364,818  

PhosAgro PJSC‡

    308,581        

PI Industries Ltd.

    926,736       37,858,613  

Qinghai Salt Lake Industry Co. Ltd., Class A*

    5,028,800       11,633,837  

SABIC Agri-Nutrients Co.

    2,607,792       93,006,336  

Scotts Miracle-Gro Co.
(The)(a)

    305,320       13,568,421  

UPL Ltd.

    5,840,592       37,916,014  

Yara International ASA

    1,785,224       58,326,554  

Yunnan Yuntianhua Co. Ltd., Class A

    1,796,000       4,086,225  

Zangge Mining Co. Ltd., Class A

    1,436,800       4,395,943  
              1,105,561,463  
Electric Utilities – 0.2%  

Origin Energy Ltd.

    2,410,232       13,932,730  
Food Products – 12.7%  

Archer-Daniels-Midland Co.

    3,879,360       277,645,795  

Bakkafrost P/F

    581,904       26,225,970  

Bunge Ltd.

    1,081,192       114,584,728  

Cal-Maine Foods, Inc.(a)

    272,992       12,369,268  

Charoen Pokphand Foods PCL, NVDR

    38,434,400       19,996,474  

Charoen Pokphand Indonesia Tbk. PT*

    84,052,800       30,689,722  

Kuala Lumpur Kepong Bhd.

    6,465,600       29,827,660  
Investments   Shares     Value  
Food Products – (continued)  

Mowi ASA

    5,283,832     $ 85,748,699  

Muyuan Foods Co. Ltd., Class A

    5,028,808       25,947,690  

New Hope Liuhe Co. Ltd., Class A*

    3,951,200       5,485,603  

PPB Group Bhd.

    8,261,600       26,321,983  

Salmar ASA

    757,912       35,874,922  

Tyson Foods, Inc., Class A

    2,058,216       95,398,312  

Wilmar International Ltd.

    36,638,400       95,202,879  
              881,319,705  
Metals & Mining – 29.0%  

Agnico Eagle Mines Ltd.(a)

    1,623,584       76,065,481  

Anglo American plc(a)

    4,335,544       110,296,150  

Anglogold Ashanti plc

    1,372,144       25,215,028  

Barrick Gold Corp.(a)

    5,700,504       90,953,476  

BHP Group Ltd.

    12,518,120       352,700,223  

Boliden AB

    862,080       22,048,427  

First Quantum Minerals Ltd.(a)

    1,849,880       21,413,702  

Fortescue Metals Group Ltd.(a)

    5,743,608       81,095,409  

Franco-Nevada Corp.

    621,416       75,514,410  

Freeport-McMoRan, Inc.(a)

    3,516,568       118,789,667  

Glencore plc

    31,850,264       168,179,831  

Gold Fields Ltd.

    2,963,400       39,276,680  

Grupo Mexico SAB de CV, Series B

    10,057,600       40,964,678  

Hindalco Industries Ltd.

    4,443,304       24,522,326  

Impala Platinum Holdings Ltd.

    3,150,184       13,053,160  

Mineral Resources Ltd.(a)

    545,984       19,967,041  

MMC Norilsk Nickel PJSC* ‡

    1,277,631        

Newmont Corp.(a)

    2,022,296       75,775,431  

Norsk Hydro ASA

    4,141,576       23,607,469  

Northern Star Resources Ltd.

    4,001,488       29,617,108  

Rio Tinto plc

    3,354,928       213,933,015  

Royal Gold, Inc.(a)

    168,824       17,613,408  

Saudi Arabian Mining Co.*

    4,069,736       39,052,803  

South32 Ltd.

    14,414,696       30,300,527  

Sumitomo Metal Mining Co. Ltd.

    843,700       23,487,333  

 

See Accompanying Notes to the Financial Statements.

 

322    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Global Upstream Natural Resources Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Metals & Mining – (continued)  

Teck Resources Ltd., Class B(a)

    1,436,800     $ 50,713,632  

Vale SA

    11,135,200       152,355,503  

Wheaton Precious Metals Corp.(a)

    1,494,272       63,043,048  

Zijin Mining Group Co. Ltd., Class A

    5,028,800       8,548,431  
              2,008,103,397  
Oil, Gas & Consumable Fuels – 31.3%  

APA Corp.

    262,216       10,415,220  

BP plc

    23,484,496       143,227,238  

Cameco Corp.(a)

    1,375,736       56,218,623  

Canadian Natural Resources Ltd.(a)

    1,451,168       92,051,038  

Cenovus Energy, Inc.(a)

    1,792,408       34,111,593  

Chevron Corp.

    1,451,168       211,478,713  

China Petroleum & Chemical Corp., Class H

    32,668,000       16,700,151  

ConocoPhillips

    987,800       117,350,640  

Coterra Energy, Inc.

    650,152       17,879,180  

Devon Energy Corp.

    520,840       24,255,519  

Diamondback Energy, Inc.(a)

    147,272       23,610,647  

Eni SpA

    3,265,128       53,245,736  

EOG Resources, Inc.

    477,736       60,314,170  

EQT Corp.

    316,096       13,396,149  

Equinor ASA

    1,368,552       45,870,753  

Exxon Mobil Corp.(a)

    3,211,248       339,910,601  

Gazprom PJSC* ‡

    15,937,700        

Hess Corp.

    229,888       33,195,827  

Inpex Corp.

    1,351,700       19,479,582  

LUKOIL PJSC‡

    483,340        

Marathon Oil Corp.

    517,248       14,126,043  

Novatek PJSC‡

    1,237,715        

Occidental Petroleum
Corp.(a)

    585,496       36,189,508  

Petroleo Brasileiro SA (Preference)

    5,747,200       39,591,062  

Pioneer Natural Resources Co.

    193,968       46,358,352  

Repsol SA

    1,745,712       25,510,133  

Rosneft Oil Co. PJSC‡

    2,926,433        
Investments   Shares     Value  
Oil, Gas & Consumable Fuels – (continued)  

Santos Ltd.

    4,278,072     $ 20,775,432  

Saudi Arabian Oil Co.(b)

    3,308,232       29,364,571  

Shell plc

    9,389,488       301,533,590  

Suncor Energy, Inc.(a)

    1,720,568       55,660,514  

Tatneft PJSC‡

    2,021,036        

TotalEnergies SE

    3,114,264       208,040,310  

Tourmaline Oil Corp.(a)

    420,264       22,199,142  

Woodside Energy Group Ltd.

    2,496,441       54,152,089  
              2,166,212,126  
Paper & Forest Products – 3.3%  

Canfor Corp.* (a)

    280,176       2,861,801  

Dexco SA*

    1,436,800       1,954,481  

Dongwha Enterprise Co. Ltd.*

    21,552       981,414  

Interfor Corp.* (a)

    237,072       2,921,881  

Mondi plc(a)

    2,198,304       35,451,500  

Stella-Jones, Inc.(a)

    233,480       12,216,811  

Stora Enso OYJ, Class R

    2,747,880       32,893,566  

Svenska Cellulosa AB SCA, Class B(a)

    2,676,040       36,634,131  

UPM-Kymmene OYJ(a)

    2,449,744       82,264,584  

West Fraser Timber Co. Ltd.(a)

    272,992       18,403,977  
              226,584,146  
Semiconductors & Semiconductor Equipment – 0.2%  

Tongwei Co. Ltd., Class A

    3,951,206       14,739,881  
Specialized REITs – 1.2%  

PotlatchDeltic Corp., REIT

    244,256       10,466,370  

Rayonier, Inc., REIT(a)

    449,000       11,332,760  

Weyerhaeuser Co., REIT

    2,234,224       64,099,886  
              85,899,016  
Water Utilities – 5.2%  

American States Water Co.

    154,456       12,055,291  

American Water Works Co., Inc.

    818,976       96,352,526  

Beijing Enterprises Water Group Ltd.

    28,736,000       6,059,658  

California Water Service Group(a)

    244,256       11,890,382  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     323  


Table of Contents

 

 

FlexShares® Morningstar Global Upstream Natural Resources Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Water Utilities – (continued)  

China Water Affairs Group Ltd.

    7,184,000     $ 4,544,744  

Cia de Saneamento Basico do Estado de Sao Paulo SABESP

    2,291,733       26,525,571  

Cia de Saneamento de Minas Gerais Copasa MG

    1,436,800       4,541,462  

Cia de Saneamento do Parana

    1,796,000       7,745,985  

Essential Utilities, Inc.

    1,038,088       34,734,424  

Grandblue Environment Co. Ltd., Class A

    359,200       873,200  

Guangdong Investment Ltd.

    18,867,941       12,876,672  

Pennon Group plc

    1,846,288       16,276,348  

Severn Trent plc(a)

    1,745,712       56,262,957  

SJW Group(a)

    118,536       7,406,129  

United Utilities Group plc

    4,734,256       61,067,043  
              359,212,392  
Total Common Stocks
(Cost $6,639,775,626)

 

    6,897,383,095  
    Principal
Amount
       
SECURITIES LENDING REINVESTMENTS – 4.4%(c)  
CERTIFICATES OF DEPOSIT – 0.9%  

Barclays Bank plc, New York

   

(SOFR + 0.32%), 5.48%, 11/24/2023(d)

  $ 4,000,000       4,000,373  

Citibank NA, New York

   

(SOFR + 0.40%), 5.62%, 12/15/2023(d)

    5,000,000       5,000,540  

Credit Industriel et Commercial, London

   

5.69%, 1/16/2024

    4,000,000       3,952,360  

Mizuho Bank Ltd., New York

   

(SOFR + 0.40%), 5.71%, 3/12/2024(d)

    4,000,000       4,001,152  

MUFG Bank Ltd., London Branch

   

5.63%, 11/27/2023

    5,000,000       5,000,000  
Investments   Principal
Amount
    Value  
CERTIFICATES OF DEPOSIT – (continued)  

National Westminster Bank PLC

   

5.88%, 5/2/2024

  $ 4,000,000     $ 4,002,680  

Nordea Bank Abp, New York Branch

   

(SOFR + 0.47%), 5.78%, 4/26/2024(d)

    4,000,000       4,003,104  

Oversea-Chinese Banking Corp. Ltd., New York

   

(SOFR + 0.37%), 5.68%, 11/16/2023(d)

    3,000,000       3,000,000  

Royal Bank of Canada, New York

   

(SOFR + 0.53%), 5.84%, 5/23/2024(d)

    4,000,000       4,003,616  

Sumitomo Mitsui Trust Bank Ltd., New York

   

(SOFR + 0.23%), 5.54%, 11/22/2023(d)

    5,000,000       5,000,000  

Svenska Handelsbanken, New York

   

5.80%, 4/4/2024

    3,000,000       2,999,646  

(SOFR + 0.33%), 5.64%, 4/4/2024(d)

    3,000,000       2,999,610  

The Sumitomo Bank Ltd., New York

   

(SOFR + 0.47%), 5.60%, 1/9/2024(d)

    3,000,000       3,001,839  

Toronto-Dominion Bank, New York

   

5.64%, 2/28/2024

    2,000,000       2,000,000  

(US Federal Funds Effective Rate (continuous series) + 0.61%), 5.94%, 7/26/2024(d)

    4,000,000       4,001,992  

Wells Fargo Bank (San Francisco) NA

   

(SOFR + 0.37%), 5.62%, 12/12/2023(d)

    4,000,000       4,000,290  
Total Certificates of Deposit
(Cost $60,955,805)

 

    60,967,202  
   

 

See Accompanying Notes to the Financial Statements.

 

324    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Global Upstream Natural Resources Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – (continued)  
COMMERCIAL PAPER – 0.0%(d) (e)  

Bank of Montreal, Montreal

   

(SOFR + 0.35%), 5.66%, 11/9/2023 (Cost $2,000,000)

  $ 2,000,000     $ 2,000,000  
INVESTMENT COMPANIES – 1.1%  

BlackRock Liquidity FedFund, Institutional Shares

   

5.35%, 11/1/2023

    12,000,000       12,000,000  

Dreyfus Treasury Obligations Cash Management Fund

   

5.38%, 11/1/2023

    5,000,000       5,000,000  

Goldman Sachs Financial Square Government Fund, Institutional Class

   

5.36%, 11/1/2023

    12,000,000       12,000,000  

Invesco Government & Agency Portfolio, Institutional Shares

   

5.36%, 11/1/2023

    12,000,000       12,000,000  

Morgan Stanley Institutional Liquidity Fund – Government Portfolio

   

5.35%, 11/1/2023

    12,000,000       12,000,000  

RBC BlueBay U.S. Government Money Market Fund

   

5.40%, 11/1/2023

    10,000,000       10,000,000  

State Street Institutional U.S. Government Money Market Fund

   

5.36%, 11/1/2023

    15,000,000       15,000,000  
Total Investment Companies
(Cost $78,000,000)

 

    78,000,000  
   
Investments   Principal
Amount
    Value  
REPURCHASE AGREEMENTS – 2.4%  

BofA Securities, Inc., 5.77%, dated 10/31/2023, due 1/31/2024, repurchase price $8,117,964, collateralized by various U.S. Treasury Securities, ranging from 0.13% – 6.13%, maturing 7/15/2024 – 11/15/2044; total market value $8,056,513

  $ 8,000,000     $ 8,000,000  

CF Secured LLC, 5.30%, dated 10/31/2023, due 11/1/2023, repurchase price $14,002,061, collateralized by various U.S. Treasury Securities, ranging from 0.00% – 7.63%, maturing 11/15/2023 – 5/15/2051; total market value $14,117,590

    14,000,000       14,000,000  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $63,805,340, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $64,521,419

    63,795,983       63,795,983  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     325  


Table of Contents

 

 

FlexShares® Morningstar Global Upstream Natural Resources Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – (continued)  
REPURCHASE AGREEMENTS – (continued)  

MetLife, Inc., 5.32%, dated 10/31/2023, due 11/1/2023, repurchase price $57,008,423, collateralized by various U.S. Treasury Securities, 0.00%, maturing 8/15/2041 – 11/15/2050; total market value $57,411,277

  $ 57,000,000     $ 57,000,000  

TD Prime Services LLC, 5.42%, dated 10/31/2023, due 11/1/2023, repurchase price $20,003,011, collateralized by various Common Stocks; total market value $22,150,189

    20,000,000       20,000,000  
Total Repurchase Agreements
(Cost $162,795,983)

 

    162,795,983  
Total Securities Lending Reinvestments
(Cost $303,751,788)

 

    303,763,185  
Total Investments – 104.0%
(Cost $6,943,527,414)

 

    7,201,146,280  

Liabilities in excess of other assets – (4.0%)

 

    (275,860,232
NET ASSETS – 100.0%

 

  $ 6,925,286,048  

 

*

Non-income producing security.

 

 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $491,197,028, collateralized in the form of cash with a value of $303,760,945 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $142,895,385 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 15, 2023 – August 15, 2053 and $71,411,383 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 5.75%, and maturity dates ranging from November 13, 2023 – October 22, 2071; a total value of $518,067,713.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(c) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $303,763,185.

 

(d) 

Variable or floating rate security, linked to the referenced benchmark. The interest rate shown is the rate in effect as of October 31, 2023.

 

(e) 

Represents less than 0.05% of net assets.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

NVDR – Non-Voting Depositary Receipt

OYJ – Public Limited Company

PJSC – Public Joint Stock Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.

REIT – Real Estate Investment Trust

SCA – Limited partnership with share capital

SOFR – Secured Overnight Financing Rate

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 957,259,179  

Aggregate gross unrealized depreciation

    (741,008,669

Net unrealized appreciation

  $ 216,250,510  

Federal income tax cost

  $ 6,983,135,662  

 

See Accompanying Notes to the Financial Statements.

 

326    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Morningstar Global Upstream Natural Resources Index Fund (cont.)

 

 

Futures Contracts

FlexShares® Morningstar Global Upstream Natural Resources Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

 

FTSE 100 Index

    68       12/15/2023       GBP     $ 6,046,670     $ (224,041

Hang Seng Index

    4       11/29/2023       HKD       438,208       (7,045

Russell 2000 E-Mini Index

    30       12/15/2023       USD       2,502,600       (278,542

S&P Midcap 400 E-Mini Index

    10       12/15/2023       USD       2,375,100       (201,564

S&P/TSX 60 Index

    100       12/14/2023       CAD       16,351,522       (1,009,428

SPI 200 Index

    4       12/21/2023       AUD       429,465       (17,488
                                    $ (1,738,108

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Forward Foreign Currency Contracts

FlexShares® Morningstar Global Upstream Natural Resources Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive   Counterparty   In Exchange For     Maturity Date     Unrealized
Appreciation/
(Depreciation)
 

USD

    1,614,828       Toronto-Dominion Bank (The)   AUD     2,500,000       12/20/2023     $ 29,337  

USD

    5,289,826       JPMorgan Chase Bank NA   BRL*     26,260,760       12/20/2023       111,945  

USD

    1,308,293       Morgan Stanley   CAD     1,764,000       12/20/2023       36,539  

USD

    19,040,673       Toronto-Dominion Bank (The)   CAD     25,714,000       12/20/2023       502,192  

USD

    1,741,742       Bank of Montreal   EUR     1,630,000       12/20/2023       14,861  

USD

    616,190       JPMorgan Chase Bank NA   EUR     575,000       12/20/2023       7,015  

USD

    4,584,575       JPMorgan Chase Bank NA   GBP     3,700,000       12/20/2023       93,051  

USD

    2,409,267       BNP Paribas SA   HKD     18,824,345       12/20/2023       1,519  

USD

    265,044       Citibank NA   KRW*     350,052,156       12/20/2023       5,128  

USD

    145,914       Citibank NA   SEK     1,620,827       12/20/2023       487  

ZAR

    5,390,000         BNP Paribas SA   USD     282,476       12/20/2023       3,815  

Total unrealized appreciation

 

          $ 805,889  

AUD

    2,531,480       Citibank NA   USD     1,639,847       12/20/2023     $ (34,392

CAD

    8,965,539       Citibank NA   USD     6,626,059       12/20/2023       (162,363

CAD

    20,500,000       JPMorgan Chase Bank NA   USD     15,185,061       12/20/2023       (405,608

EUR

    724,602       Toronto-Dominion Bank (The)   USD     776,532       12/20/2023       (8,862

GBP

    8,174,860       Toronto-Dominion Bank (The)   USD     10,089,741       12/20/2023       (166,070

HKD

    7,000,000       Goldman Sachs & Co.   USD     896,488       12/20/2023       (1,145

INR*

    56,105,711       Citibank NA   USD     673,622       12/20/2023       (635

JPY

    9,759,416       Toronto-Dominion Bank (The)   USD     67,125       12/20/2023       (2,141

NOK

    11,741,048       Goldman Sachs & Co.   USD     1,095,008       12/20/2023       (42,519

USD

    870,571         Toronto-Dominion Bank (The)   NOK     9,758,000       12/20/2023       (4,154

Total unrealized depreciation

 

          $ (827,889

Net unrealized depreciation

 

          $ (22,000

 

*

Non-deliverable forward. See Note 2 in the Notes to Financial Statements.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     327  


Table of Contents

 

 

FlexShares® Morningstar Global Upstream Natural Resources Index Fund (cont.)

 

 

Abbreviations:

 

AUD – Australian Dollar

BRL – Brazilian Real

CAD – Canadian Dollar

EUR – Euro

GBP – British Pound

HKD – Hong Kong Dollar

INR – Indian Rupee

JPY – Japanese Yen

KRW – Korean Won

NOK – Norwegian Krone

SEK – Swedish Krona

USD – US Dollar

ZAR – South African Rand

 

FlexShares® Morningstar Global Upstream Natural Resources Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    8.7

Brazil

    3.4  

Canada

    14.1  

China

    1.7  

Finland

    1.7  

France

    3.0  

Germany

    0.5  

India

    1.4  

Indonesia

    0.4  

Israel

    0.6  

Italy

    0.8  

Japan

    0.6  

Malaysia

    0.8  

Mexico

    0.6  

Norway

    4.0  

Saudi Arabia

    2.3  

Singapore

    1.4  

South Africa

    1.1  

South Korea

     0.0  

Spain

    0.4  

Sweden

    0.8  

Thailand

    0.3  

United Kingdom

    16.0  

United States

    35.0  

Other1

    0.4  
      100.0

 

 

Amount represents less than 0.05%.

 

1 

Includes any non-equity securities, securities lending reinvestments and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    99.6

Securities Lending Reinvestments

    4.4  

Others(1)

    (4.0
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

328    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® STOXX® Global Broad Infrastructure Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 99.1%  
Air Freight & Logistics – 2.6%  

bpost SA(a)

    152,640     $ 826,063  

CTT-Correios de Portugal SA(a)

    119,568       455,612  

Deutsche Post AG

    1,213,488       47,150,465  

International Distributions Services plc*

    870,048       2,666,849  

Oesterreichische Post AG(a)

    39,856       1,270,153  

PostNL NV(a)

    423,153       786,529  
              53,155,671  
Commercial Services & Supplies – 4.7%  

Ambipar Participacoes e Empreendimentos SA

    84,800       229,530  

Befesa SA(a) (b)

    44,096       1,283,625  

Better World Green PCL, NVDR*

    3,823,600       55,318  

Casella Waste Systems, Inc., Class A* (a)

    22,048       1,663,522  

China Everbright Environment Group Ltd.

    4,240,000       1,446,822  

Clean Harbors, Inc.* (a)

    19,504       2,997,180  

Cleanaway Co. Ltd.

    112,000       597,379  

Cleanaway Waste Management Ltd.(a)

    2,724,624       3,864,214  

CoreCivic, Inc.* (a)

    50,032       635,406  

Daiseki Co. Ltd.(a)

    63,460       1,732,689  

GEO Group, Inc. (The)*(a)

    47,488       415,045  

Insun ENT Co. Ltd.*

    29,138       154,261  

Midac Holdings Co. Ltd.(a)

    21,400       247,002  

Renewi plc*

    102,608       730,872  

Republic Services, Inc., Class A

    81,408       12,088,274  

Shanghai Youngsun Investment Co. Ltd., Class B* ‡

    57,800        

Stericycle, Inc.* (a)

    38,160       1,573,718  

Sunny Friend Environmental Technology Co. Ltd.

    120,315       383,925  

TRE Holdings Corp.(a)

    84,800       654,009  

Waste Connections, Inc.(a)

    317,152       41,021,295  

Waste Management, Inc.

    145,008       23,829,165  
              95,603,251  
Investments   Shares     Value  
Diversified Telecommunication Services – 14.7%  

AT&T, Inc.

    2,816,208     $ 43,369,603  

BCE, Inc.(a)

    711,472       26,383,273  

BT Group plc(a)

    4,924,336       6,737,304  

Cellnex Telecom SA(b)

    375,664       11,006,970  

China Tower Corp. Ltd., Class H(b)

    33,920,000       3,164,584  

Deutsche Telekom AG (Registered)

    2,696,640       58,360,885  

Frontier Communications Parent, Inc.* (a)

    96,672       1,732,362  

HKT Trust & HKT Ltd.

    2,986,000       3,091,097  

Infrastrutture Wireless Italiane SpA(b)

    281,536       3,071,062  

Iridium Communications, Inc.

    44,096       1,633,757  

KINX, Inc.

    2,595       163,322  

Koninklijke KPN NV

    2,636,432       8,847,800  

Liberty Global plc, Class C* (a)

    95,824       1,625,175  

Nippon Telegraph & Telephone Corp.

    42,060,800       49,102,641  

Quebecor, Inc., Class B(a)

    128,896       2,656,376  

Sarana Menara Nusantara Tbk. PT

    16,196,800       907,470  

Spark New Zealand Ltd.

    1,436,512       4,152,670  

Swisscom AG (Registered)

    19,504       11,658,894  

Telecom Italia SpA* (a)

    7,898,272       2,037,862  

Verizon Communications, Inc.

    1,654,448       58,120,758  
              297,823,865  
Electric Utilities – 14.1%  

American Electric Power Co., Inc.

    202,672       15,309,843  

Constellation Energy Corp.

    126,352       14,267,668  

Duke Energy Corp.

    303,584       26,985,582  

Edison International

    150,944       9,518,529  

Enel SpA

    6,286,224       39,787,498  

Eversource Energy

    134,832       7,252,613  

Exelon Corp.

    391,776       15,255,757  

Iberdrola SA

    4,692,832       52,083,396  

NextEra Energy, Inc.

    796,272       46,422,658  

PG&E Corp.* (a)

    1,010,816       16,476,301  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     329  


Table of Contents

 

 

FlexShares® STOXX® Global Broad Infrastructure Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electric Utilities – (continued)  

Southern Co. (The)

    429,088     $ 28,877,622  

Xcel Energy, Inc.(a)

    217,088       12,866,806  
              285,104,273  
Energy Equipment & Services – 0.1%  

Secure Energy Services, Inc.

    232,352       1,288,752  
Gas Utilities – 1.1%  

AltaGas Ltd.(a)

    228,112       4,232,786  

APA Group

    859,872       4,486,086  

Enagas SA(a)

    190,800       3,185,466  

Keppel Infrastructure Trust

    4,748,800       1,525,106  

Petronas Gas Bhd.

    424,000       1,530,654  

Snam SpA

    1,662,928       7,610,906  
              22,571,004  
Ground Transportation – 17.8%  

Aurizon Holdings Ltd.(a)

    2,266,704       4,908,260  

Canadian National Railway Co.(a)

    739,456       78,156,225  

Canadian Pacific Kansas City Ltd.(a)

    1,146,496       81,318,686  

Central Japan Railway Co.

    1,272,000       28,523,305  

CSX Corp.

    788,640       23,540,904  

East Japan Railway Co.

    463,300       24,081,994  

GMexico Transportes SAB de CV(a) (b)

    1,017,600       2,095,738  

Keio Corp.(a)

    169,600       5,005,857  

Keisei Electric Railway Co. Ltd.

    213,500       7,974,971  

MTR Corp. Ltd.

    1,914,500       7,156,803  

Norfolk Southern Corp.

    89,040       16,987,942  

Odakyu Electric Railway Co. Ltd.(a)

    424,000       5,994,150  

Rumo SA

    1,611,200       7,127,875  

Tobu Railway Co. Ltd.(a)

    254,400       6,087,659  

Union Pacific Corp.

    239,984       49,823,078  

West Japan Railway Co.

    301,800       11,450,644  
              360,234,091  
Health Care Providers & Services – 3.5%  

Acadia Healthcare Co., Inc.*

    36,464       2,680,469  

Apollo Hospitals Enterprise Ltd.

    143,312       8,296,419  
Investments   Shares     Value  
Health Care Providers & Services – (continued)  

Bangkok Dusit Medical Services PCL, NVDR

    14,840,000     $ 10,941,365  

Bumrungrad Hospital PCL, NVDR

    848,000       6,134,242  

Encompass Health Corp.

    39,008       2,440,340  

HCA Healthcare, Inc.

    79,712       18,026,072  

IHH Healthcare Bhd.

    3,307,200       4,164,802  

Life Healthcare Group Holdings Ltd.

    1,385,632       1,372,557  

Ramsay Health Care Ltd.(a)

    230,090       7,091,775  

Rede D’Or Sao Luiz SA(b)

    1,102,400       4,726,133  

Select Medical Holdings Corp.

    44,944       1,021,577  

Tenet Healthcare Corp.* (a)

    39,856       2,140,267  

Universal Health Services, Inc., Class B

    22,048       2,775,623  
              71,811,641  
Independent Power and Renewable Electricity
Producers – 1.0%
 

RWE AG

    547,808       20,920,464  
IT Services – 0.2%              

Fastly, Inc., Class A* (a)

    47,488       696,649  

NEXTDC Ltd.* (a)

    399,408       2,971,401  
              3,668,050  
Media – 4.4%  

Charter Communications, Inc., Class A* (a)

    40,704       16,395,572  

Comcast Corp., Class A

    1,619,680       66,876,587  

Liberty Broadband Corp., Class C*

    49,184       4,097,519  

Sirius XM Holdings, Inc.(a)

    385,840       1,651,395  
              89,021,073  
Multi-Utilities – 7.2%  

Consolidated Edison, Inc.

    135,680       11,911,347  

Dominion Energy, Inc.(a)

    329,024       13,266,248  

Engie SA

    1,505,200       23,871,310  

National Grid plc

    2,985,808       35,455,938  

Public Service Enterprise Group, Inc.(a)

    195,888       12,076,495  

Sempra

    247,616       17,340,548  

 

See Accompanying Notes to the Financial Statements.

 

330    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® Global Broad Infrastructure Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Multi-Utilities – (continued)  

Veolia Environnement SA

    829,344     $ 22,643,007  

WEC Energy Group, Inc.

    124,656       10,145,752  
              146,710,645  
Oil, Gas & Consumable Fuels – 7.7%  

Antero Midstream Corp.(a)

    142,464       1,758,006  

DT Midstream, Inc.(a)

    38,160       2,059,495  

Enbridge, Inc.

    1,637,488       52,418,488  

Equitrans Midstream Corp.(a)

    163,664       1,451,700  

Keyera Corp.(a)

    185,712       4,314,217  

Kinder Morgan, Inc.

    776,768       12,583,641  

Koninklijke Vopak NV

    51,728       1,739,259  

New Fortress Energy, Inc.(a)

    44,096       1,336,109  

ONEOK, Inc.

    175,536       11,444,947  

Pembina Pipeline Corp.

    443,504       13,634,973  

Plains GP Holdings LP, Class A

    84,800       1,329,664  

Targa Resources Corp.

    87,344       7,302,832  

TC Energy Corp.(a)

    832,736       28,648,638  

Transneft PJSC (Preference)‡

    1,473        

Williams Cos., Inc. (The)

    478,272       16,452,557  
              156,474,526  
Specialized REITs – 5.0%  

American Tower Corp., REIT(a)

    183,168       32,638,706  

Crown Castle, Inc., REIT(a)

    170,448       15,848,255  

Digital Realty Trust, Inc., REIT(a)

    118,720       14,764,019  

Equinix, Inc., REIT

    36,781       26,836,889  

Keppel DC REIT, REIT

    1,017,600       1,255,242  

SBA Communications Corp., Class A, REIT(a)

    42,400       8,845,912  
              100,189,023  
Specialty Retail – 0.0%  

GNC Holdings, Inc.* ‡

    36,294        
Transportation Infrastructure – 6.4%  

Adani Ports & Special Economic Zone Ltd.

    979,440       9,231,649  

Aena SME SA(b)

    90,736       13,115,412  
Investments   Shares     Value  
Transportation Infrastructure – (continued)  

Aeroports de Paris SA

    27,984     $ 3,129,468  

Airports of Thailand PCL, NVDR*

    5,257,600       9,764,062  

Atlas Arteria Ltd.

    1,784,192       5,998,501  

Auckland International Airport Ltd.

    1,488,979       6,356,914  

Bangkok Expressway & Metro PCL, NVDR

    10,176,000       2,236,639  

CCR SA

    1,356,800       3,223,173  

China Merchants Port Holdings Co. Ltd.

    1,696,000       2,156,685  

COSCO SHIPPING Ports Ltd.

    1,696,000       1,020,903  

Flughafen Zurich AG (Registered)

    23,744       4,414,576  

Gemadept Corp.

    339,200       814,605  

Getlink SE

    399,408       6,431,825  

Grupo Aeroportuario del Pacifico SAB de CV, Class B

    504,560       5,877,916  

Grupo Aeroportuario del Sureste SAB de CV, Class B(a)

    224,720       4,836,590  

International Container Terminal Services, Inc.

    2,170,880       7,697,939  

Japan Airport Terminal Co. Ltd.

    118,900       5,205,236  

Jiangsu Expressway Co. Ltd., Class H

    1,696,000       1,543,276  

Promotora y Operadora de Infraestructura SAB de CV

    233,200       1,906,368  

Qube Holdings Ltd.(a)

    2,237,872       3,768,977  

Santos Brasil Participacoes SA

    593,600       871,037  

Shenzhen International Holdings Ltd.

    1,272,000       837,206  

Transurban Group

    3,792,256       28,380,611  

Westshore Terminals Investment Corp.(a)

    41,552       700,091  
              129,519,659  
Water Utilities – 2.5%  

Aguas Andinas SA, Class A

    3,533,616       1,027,145  

American States Water Co.

    14,416       1,125,169  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     331  


Table of Contents

 

 

FlexShares® STOXX® Global Broad Infrastructure Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Water Utilities – (continued)  

American Water Works Co., Inc.

    76,320     $ 8,979,048  

Beijing Enterprises Water Group Ltd.

    5,088,000       1,072,924  

California Water Service Group

    22,896       1,114,577  

Cia de Saneamento Basico do Estado de Sao Paulo SABESP

    424,000       4,907,571  

Cia de Saneamento de Minas Gerais Copasa MG

    254,400       804,112  

Cia de Saneamento do Parana (Preference)

    1,102,400       953,096  

Essential Utilities, Inc.(a)

    95,824       3,206,271  

Guangdong Investment Ltd.

    3,392,000       2,314,914  

Middlesex Water Co.

    7,632       484,861  

Pennon Group plc

    320,544       2,825,825  

Severn Trent plc

    313,760       10,112,244  

SJW Group(a)

    11,872       741,763  

United Utilities Group plc

    831,040       10,719,563  
              50,389,083  
Wireless Telecommunication Services – 6.1%  

KDDI Corp.

    1,187,200       35,174,264  

SoftBank Corp.

    2,204,800       24,822,107  

SoftBank Group Corp.(a)

    808,700       32,701,501  

T-Mobile US, Inc.*

    206,912       29,766,360  
              122,464,232  
Total Common Stocks
(Cost $2,132,513,770)

 

    2,006,949,303  
    Principal
Amount
       
SECURITIES LENDING REINVESTMENTS – 2.0%(c)  
INVESTMENT COMPANIES – 0.6%  

BlackRock Liquidity FedFund, Institutional Shares 5.35%, 11/1/2023

  $ 3,000,000       3,000,000  

Dreyfus Treasury Obligations Cash Management Fund 5.38%, 11/1/2023

    2,000,000       2,000,000  
Investments   Principal
Amount
    Value  
INVESTMENT COMPANIES – (continued)  

Goldman Sachs Financial Square Government Fund, Institutional Class 5.36%, 11/1/2023

  $ 3,000,000     $ 3,000,000  

Invesco Government & Agency Portfolio, Institutional Shares 5.36%, 11/1/2023

    3,000,000       3,000,000  
Total Investment Companies
(Cost $11,000,000)

 

    11,000,000  
   
REPURCHASE AGREEMENTS – 1.4%  

BofA Securities, Inc., 5.77%, dated 10/31/2023, due 1/31/2024, repurchase price $2,029,491, collateralized by various U.S. Treasury Securities, ranging from 0.13% – 6.13%, maturing 7/15/2024 – 11/15/2044; total market value $2,014,128

    2,000,000       2,000,000  

CF Secured LLC, 5.30%, dated 10/31/2023, due 11/1/2023, repurchase price $1,000,147, collateralized by various U.S. Treasury Securities, ranging from 0.00% – 7.63%, maturing 11/15/2023 – 5/15/2051; total market value $1,008,399

    1,000,000       1,000,000  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $21,147,464, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $21,384,800

    21,144,363       21,144,363  

 

See Accompanying Notes to the Financial Statements.

 

332    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® Global Broad Infrastructure Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – (continued)  
REPURCHASE AGREEMENTS – (continued)  

TD Prime Services LLC, 5.42%, dated 10/31/2023, due 11/1/2023, repurchase price $5,000,753, collateralized by various Common Stocks; total market value $5,537,547

  $ 5,000,000     $ 5,000,000  
Total Repurchase Agreements
(Cost $29,144,363)

 

    29,144,363  
Total Securities Lending Reinvestments
(Cost $40,144,363)

 

    40,144,363  
Total Investments – 101.1%
(Cost $2,172,658,133)

 

    2,047,093,666  

Liabilities in excess of other
assets – (1.1%)

 

    (21,912,203
NET ASSETS – 100.0%           $ 2,025,181,463  

 

*

Non-income producing security.

 

 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $185,056,097, collateralized in the form of cash with a value of $40,144,363 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $137,958,979 of collateral in the form of U.S. Government

  Treasury Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 15, 2023 – August 15, 2053 and $17,789,760 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 5.75%, and maturity dates ranging from November 13, 2023 – October 22, 2073; a total value of $195,893,102.

 

(b) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(c) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $40,144,363.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

NVDR – Non-Voting Depositary Receipt

PJSC – Public Joint Stock Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.

REIT – Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

   

Aggregate gross unrealized appreciation

  $ 123,493,504  

Aggregate gross unrealized depreciation

    (260,266,307

Net unrealized depreciation

  $ (136,772,803

Federal income tax cost

  $ 2,183,010,473  

 

Futures Contracts

FlexShares® STOXX® Global Broad Infrastructure Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

FTSE 100 Index

    41       12/15/2023       GBP     $ 3,645,786     $ (131,863

S&P 500 E-Mini Index

    25       12/15/2023       USD       5,265,312       (298,717

S&P/TSX 60 Index

    35       12/14/2023       CAD       5,723,033       (305,972

SPI 200 Index

    16       12/21/2023       AUD       1,717,863       (112,441

TOPIX Index

    13       12/07/2023       JPY       1,934,828       (71,029
                                    $ (920,022

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     333  


Table of Contents

 

 

FlexShares® STOXX® Global Broad Infrastructure Index Fund (cont.)

 

 

Forward Foreign Currency Contracts

FlexShares® STOXX® Global Broad Infrastructure Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive         Counterparty   In Exchange For     Maturity Date     Unrealized
Appreciation/
(Depreciation)
 

USD

    2,863,950       Toronto-Dominion Bank (The)     GBP       2,300,000       12/20/2023     $ 71,922  

USD

    606,200         Bank of Montreal     JPY       90,000,000       12/20/2023       6,925  

Total unrealized appreciation

                              $ 78,847  

GBP

    2,300,000         JPMorgan Chase Bank NA     USD       2,806,849       12/20/2023     $ (14,821

Total unrealized depreciation

                              $ (14,821

Net unrealized appreciation

                              $ 64,026  

 

Abbreviations:

 

AUD – Australian Dollar

CAD – Canadian Dollar

GBP – British Pound

JPY – Japanese Yen

USD – US Dollar

 

See Accompanying Notes to the Financial Statements.

 

334    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® STOXX® Global Broad Infrastructure Index Fund (cont.)

 

 

FlexShares® STOXX® Global Broad Infrastructure Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    3.0

Austria

    0.1  

Belgium

     0.0  

Brazil

    1.1  

Canada

    16.5  

Chile

    0.1  

China

    0.6  

France

    2.8  

Germany

    6.3  

Hong Kong

    0.6  

India

    0.9  

Indonesia

    0.1  

Italy

    2.6  

Japan

    11.8  

Malaysia

    0.3  

Mexico

    0.7  

Netherlands

    0.6  

New Zealand

    0.5  

Philippines

    0.4  

Portugal

     0.0  

Singapore

    0.1  

South Africa

    0.1  

South Korea

     0.0  

Spain

    3.9  

Switzerland

    0.8  

Taiwan

    0.1  

Thailand

    1.4  

United Kingdom

    3.4  

United States

    40.3  

Vietnam

     0.0  

Other1

    0.9  
      100.0

 

 

Amount represents less than 0.05%.

 

1 

Includes any non-equity securities, securities lending reinvestments and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    99.1

Securities Lending Reinvestments

    2.0  

Others(1)

    (1.1
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     335  


Table of Contents

 

Schedule of Investments

FlexShares® Global Quality Real Estate Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 98.6%  
Diversified REITs – 5.1%  

Broadstone Net Lease, Inc., REIT(a)

    80,496     $ 1,139,018  

Empire State Realty Trust, Inc., Class A, REIT

    79,976       647,006  

Essential Properties Realty Trust, Inc., REIT(a)

    61,880       1,358,266  

GPT Group (The), REIT

    802,568       1,839,488  

H&R REIT, REIT(a)

    84,760       520,802  

Land Securities Group plc, REIT

    296,504       2,047,221  

Merlin Properties Socimi SA, REIT

    136,760       1,136,205  

Mori Trust Reit, Inc., REIT

    1,352       657,944  

NIPPON REIT Investment Corp., REIT

    22       50,699  

OUE Commercial REIT, REIT

    426,400       73,139  

Stockland, REIT

    1,011,920       2,268,068  

Tokyu REIT, Inc., REIT

    520       619,420  
              12,357,276  
Health Care REITs – 2.1%  

Healthpeak Properties, Inc., REIT

    227,136       3,531,965  

National Health Investors, Inc., REIT

    17,992       900,320  

Welltower, Inc., REIT

    8,632       721,721  
              5,154,006  
Hotel & Resort REITs – 4.7%  

Apple Hospitality REIT, Inc., REIT(a)

    90,688       1,421,988  

CDL Hospitality Trusts, REIT

    821,600       581,696  

Covivio Hotels SACA, REIT

    6,240       106,520  

DiamondRock Hospitality Co., REIT

    91,728       709,057  

Far East Hospitality Trust, REIT

    176,800       76,137  

Host Hotels & Resorts, Inc., REIT

    299,624       4,638,179  

Park Hotels & Resorts, Inc., REIT(a)

    92,872       1,070,814  

Pebblebrook Hotel Trust, REIT(a)

    54,392       648,897  

RLJ Lodging Trust, REIT

    74,984       704,850  

Service Properties Trust, REIT

    84,760       614,510  

Sunstone Hotel Investors, Inc., REIT

    85,176       792,137  
              11,364,785  
Investments   Shares     Value  
Household Durables – 0.4%  

Iida Group Holdings Co. Ltd.

    62,400     $ 959,620  
Industrial REITs – 8.2%  

AIMS APAC REIT, REIT

    676,000       592,095  

Dream Industrial REIT, REIT(a)

    72,860       614,580  

First Industrial Realty Trust, Inc., REIT

    55,640       2,353,572  

Frasers Logistics & Commercial Trust, REIT(b)

    1,237,600       939,458  

Goodman Group, REIT(a)

    26,728       350,979  

Granite REIT, REIT(a)

    13,000       591,356  

LXP Industrial Trust, REIT

    118,456       936,987  

Mapletree Logistics Trust, REIT

    1,453,769       1,559,827  

Montea NV, REIT

    9,048       637,901  

Prologis, Inc., REIT

    88,400       8,906,300  

STAG Industrial, Inc., REIT

    76,544       2,542,792  
              20,025,847  
Office REITs – 3.1%  

COPT Defense Properties, REIT(a)

    48,360       1,102,608  

Covivio SA, REIT

    19,864       848,248  

Dexus, REIT(a)

    377,208       1,547,614  

Equity Commonwealth, REIT

    45,344       858,815  

Gecina SA, REIT

    19,552       1,913,715  

Inmobiliaria Colonial Socimi SA, REIT(a)

    129,584       724,573  

Keppel REIT, REIT

    1,144,000       663,830  

SL Green Realty Corp., REIT

    1       28  
              7,659,431  
Real Estate Management & Development – 17.6%  

Aeon Mall Co. Ltd.

    52,000       588,174  

Atrium Ljungberg AB, Class B(a)

    39,520       606,278  

Bukit Sembawang Estates Ltd.

    31,200       82,438  

Capitaland India Trust

    780,000       546,549  

City Developments Ltd.

    208,000       959,498  

CTP NV(b)

    57,791       840,531  

Daito Trust Construction Co. Ltd.

    26,200       2,793,952  

Fabege AB(a)

    109,408       813,364  

Fastighets AB Balder, Class B* (a)

    280,488       1,184,699  

Grainger plc

    305,448       842,849  

 

See Accompanying Notes to the Financial Statements.

 

336    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Global Quality Real Estate Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Real Estate Management & Development – (continued)  

Grand City Properties SA*

    52,208     $ 465,476  

Heiwa Real Estate Co. Ltd.(a)

    24,900       632,180  

Howard Hughes Holdings, Inc.* (a)

    5,304       351,814  

Hulic Co. Ltd.

    166,400       1,512,977  

Intershop Holding AG

    936       620,194  

Isras Investment Co. Ltd.(a)

    3,120       527,204  

Kerry Properties Ltd.

    312,000       524,745  

LEG Immobilien SE*

    31,096       1,933,981  

Lifestyle Communities Ltd.(a)

    63,856       629,502  

Mitsubishi Estate Co. Ltd.

    93,600       1,182,940  

Mitsui Fudosan Co. Ltd.

    135,200       2,898,705  

Mobimo Holding AG (Registered)

    2,704       745,788  

Nexity SA(a)

    24,752       344,826  

Nomura Real Estate Holdings, Inc.

    47,100       1,090,069  

Platzer Fastigheter Holding AB, Class B

    5,304       27,772  

PSP Swiss Property AG (Registered)

    19,240       2,361,527  

Shurgard Self Storage Ltd., REIT

    16,640       621,049  

Sirius Real Estate Ltd.

    701,064       678,863  

St Joe Co. (The)

    15,080       703,331  

Sumitomo Realty & Development Co. Ltd.(a)

    121,600       3,014,206  

Sun Hung Kai Properties Ltd.

    616,500       6,330,774  

Swire Properties Ltd.

    499,200       965,914  

TAG Immobilien AG*

    73,216       795,949  

Tokyo Tatemono Co. Ltd.

    83,200       1,092,706  

Tokyu Fudosan Holdings Corp.

    260,000       1,496,702  

Tricon Residential, Inc.(a)

    111,800       740,099  

UOL Group Ltd.

    197,600       850,947  

Wihlborgs Fastigheter AB

    114,296       738,093  
              43,136,665  
Residential REITs – 17.3%  

American Homes 4 Rent, Class A, REIT

    138,112       4,521,787  

Apartment Investment and Management Co., Class A, REIT*

    82,368       482,676  
Investments   Shares     Value  
Residential REITs – (continued)  

AvalonBay Communities, Inc., REIT

    60,112     $ 9,962,963  

Boardwalk REIT, REIT(a)

    14,144       659,799  

Canadian Apartment Properties REIT, REIT(a)

    34,112       1,003,027  

Centerspace, REIT(a)

    11,128       540,598  

Equity Residential, REIT

    152,048       8,412,816  

Essex Property Trust, Inc., REIT

    27,144       5,806,644  

InterRent REIT, REIT(a)

    60,840       515,381  

Killam Apartment REIT, REIT

    46,488       524,738  

Mid-America Apartment Communities, Inc., REIT

    48,880       5,775,172  

UDR, Inc., REIT

    132,912       4,227,931  
              42,433,532  
Retail REITs – 19.2%  

Acadia Realty Trust, REIT

    51,376       735,704  

Brixmor Property Group, Inc., REIT

    126,256       2,624,862  

Carmila SA, REIT*

    44,096       616,177  

Crombie REIT, REIT(a)

    52,624       461,704  

CT REIT, REIT(a)

    58,136       529,746  

Eurocommercial Properties NV, REIT

    29,120       622,984  

Federal Realty Investment Trust, REIT

    12,168       1,109,600  

Fortune REIT, REIT

    208,000       116,433  

Fukuoka REIT Corp., REIT

    520       558,988  

HMC Capital Ltd., REIT(a)

    192,400       517,727  

InvenTrust Properties Corp., REIT(a)

    32,760       822,276  

Kimco Realty Corp., REIT

    261,248       4,686,789  

Kite Realty Group Trust, REIT(a)

    93,704       1,997,769  

Klepierre SA, REIT

    91,832       2,222,821  

Mapletree Pan Asia Commercial Trust, REIT

    988,000       959,118  

NNN REIT, Inc., REIT

    76,128       2,765,730  

PARAGON REIT, REIT

    915,200       531,064  

Phillips Edison & Co., Inc., REIT(a)

    50,232       1,773,692  

Realty Income Corp., REIT

    2,184       103,478  

Regency Centers Corp., REIT

    64,792       3,904,366  

Retail Estates NV, REIT

    1,248       75,850  

RioCan REIT, REIT(a)

    60,840       738,451  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     337  


Table of Contents

 

 

FlexShares® Global Quality Real Estate Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Retail REITs – (continued)  

RPT Realty, REIT

    69,472     $ 749,603  

Simon Property Group, Inc., REIT

    115,128       12,651,416  

SITE Centers Corp., REIT

    78,104       910,693  

SmartCentres REIT, REIT(a)

    38,272       592,448  

Spirit Realty Capital, Inc., REIT

    59,280       2,133,487  

Tanger Factory Outlet Centers, Inc., REIT(a)

    45,344       1,022,507  

Waypoint REIT Ltd., REIT

    388,440       521,395  
              47,056,878  
Specialized REITs – 20.9%  

American Tower Corp., REIT

    35,984       6,411,989  

Crown Castle, Inc., REIT

    8,632       802,603  

CubeSmart, REIT

    94,640       3,226,278  

EPR Properties, REIT(a)

    31,408       1,341,122  

Equinix, Inc., REIT(a)

    6,240       4,552,954  

Iron Mountain, Inc., REIT(a)

    123,656       7,304,360  

Keppel DC REIT, REIT

    592,800       731,237  

Lamar Advertising Co., Class A, REIT

    35,672       2,934,735  

National Storage REIT, REIT(a)

    561,496       711,022  

PotlatchDeltic Corp., REIT

    33,384       1,430,504  

Public Storage, REIT

    50,648       12,090,184  

Safestore Holdings plc, REIT

    90,272       748,710  

Weyerhaeuser Co., REIT

    308,568       8,852,816  
              51,138,514  
Total Common Stocks
(Cost $283,496,998)
            241,286,554  
Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – 1.1%(c)  
REPURCHASE AGREEMENTS – 1.1%  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $2,704,617, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $2,734,970
(Cost $2,704,220)

  $ 2,704,220     $ 2,704,220  
Total Investments – 99.7%
(Cost $286,201,218)
            243,990,774  

Other assets less liabilities – 0.3%

 

    682,557  
NET ASSETS – 100.0%           $ 244,673,331  

 

*

Non-income producing security.

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $27,759,368, collateralized in the form of cash with a value of $2,704,220 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $24,122,125 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 7, 2023 – August 15, 2053 and $1,989,955 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 5.75%, and maturity dates ranging from November 13, 2023 – October 22, 2073; a total value of $28,816,300.

 

(b) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(c) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $2,704,220.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

REIT – Real Estate Investment Trust

 

See Accompanying Notes to the Financial Statements.

 

338    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Global Quality Real Estate Index Fund (cont.)

 

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 5,436,752  

Aggregate gross unrealized depreciation

    (48,702,673

Net unrealized depreciation

  $ (43,265,921

Federal income tax cost

  $ 287,014,870  

 

Futures Contracts

FlexShares® Global Quality Real Estate Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

         

EURO STOXX 50 Index

    9       12/15/2023       EUR     $ 387,179     $ (20,416

S&P Midcap 400 E-Mini Index

    9       12/15/2023       USD       2,137,590       (166,959

SPI 200 Index

    8       12/21/2023       AUD       858,931       (51,556

TOPIX Mini Index

    1       12/07/2023       JPY       14,884       (96
                                    $ (239,027

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Forward Foreign Currency Contracts

FlexShares® Global Quality Real Estate Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive         Counterparty   In Exchange For     Maturity Date     Unrealized
Appreciation/
(Depreciation)
 

USD

    22,257       Citibank NA     AUD       34,359       12/20/2023     $ 467  

USD

    516,801       Citibank NA     CAD       699,270       12/20/2023       12,663  

USD

    215,786       Toronto-Dominion Bank (The)     EUR       201,355       12/20/2023       2,463  

USD

    29,391       Citibank NA     ILS       111,846       12/20/2023       1,667  

USD

    46,440         BNP Paribas SA     SGD       62,894       12/20/2023       434  

Total unrealized appreciation

                              $ 17,694  

CAD

    909,000         UBS AG     USD       675,834       12/20/2023     $ (20,492

Total unrealized depreciation

                              $ (20,492

Net unrealized depreciation

                              $ (2,798

 

Abbreviations:

 

AUD – Australian Dollar

CAD – Canadian Dollar

EUR – Euro

ILS – Israeli Shekel

JPY – Japanese Yen

SGD – Singapore Dollar

USD – US Dollar

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     339  


Table of Contents

 

 

FlexShares® Global Quality Real Estate Index Fund (cont.)

 

 

FlexShares® Global Quality Real Estate Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    3.4

Belgium

    0.5  

Canada

    3.1  

France

    2.5  

Germany

    1.3  

Hong Kong

    3.2  

Israel

    0.2  

Japan

    7.8  

Netherlands

    0.6  

Singapore

    3.7  

Spain

    0.8  

Sweden

    1.4  

Switzerland

    1.5  

United Kingdom

    1.8  

United States

    66.8  

Other1

    1.4  
      100.0

 

1 

Includes any non-equity securities, securities lending reinvestments and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    98.6

Securities Lending Reinvestments

    1.1  

Others(1)

    0.3  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

340    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® Real Assets Allocation Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
EXCHANGE TRADED FUNDS – 100.0%(a)  

FlexShares® Global Quality Real Estate Index Fund

    58,800     $ 2,773,255  

FlexShares® Morningstar Global Upstream Natural Resources Index Fund

    140,568       5,421,708  

FlexShares® STOXX® Global Broad Infrastructure Index Fund

    174,984       8,376,484  
Total Exchange Traded Funds
(Cost $20,377,865)
            16,571,447  
                 
Total Investments – 100.0%
(Cost $20,377,865)
            16,571,447  

Other assets less liabilities – 0.0%(b)

            1,104  
NET ASSETS – 100.0%           $ 16,572,551  
(a) 

Investment in affiliated Fund. Northern Trust Investments, Inc. is the Investment Adviser to both the Fund and the affiliated Funds.

 

(b) 

Represents less than 0.05% of net assets.

 

Percentages shown are based on Net Assets.

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $  

Aggregate gross unrealized depreciation

    (3,832,291

Net unrealized depreciation

  $ (3,832,291

Federal income tax cost

  $ 20,403,738  

 

The underlying index of the FlexShares® Real Assets Allocation Index Fund is comprised of securities of affiliated FlexShares® Funds. The Schedules of Investments of the affiliated FlexShares® Funds are located elsewhere in this Report.

 

Investment in a company which was affiliated for the period ended October 31, 2023, was as follows:

 

Security   Value
October 31,
2022
    Purchases at
Cost
    Sales
Proceeds
    Shares
October 31,
2023
    Value
October 31,
2023
    Change in
Unrealized
Appreciation
(Depreciation)
    Dividend
Income
    Realized
Loss
 

FlexShares® Global Quality Real Estate Index Fund

  $ 6,766,701     $ 269,315     $ 4,098,037       58,800     $ 2,773,255     $ 933,648     $ 109,473     $ (1,098,372

FlexShares® Morningstar Global Upstream Natural Resources Index Fund

    7,230,364       2,196,074       3,632,629       140,568       5,421,708       (494,141     177,825       122,040  

FlexShares® STOXX® Global Broad Infrastructure Index Fund

    14,861,299       652,994       7,443,537       174,984       8,376,484       1,097,035       245,547       (791,307
    $ 28,858,364     $ 3,118,383     $ 15,174,203       374,352     $ 16,571,447     $ 1,536,542     $ 532,845     $ (1,767,639

 

Security Type   % of Net Assets  

Exchange Traded Funds

    100.0

Others(1)

     0.0  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

Amount represents less than 0.05%.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     341  


Table of Contents

 

Schedule of Investments

FlexShares® Quality Dividend Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 99.8%  
Aerospace & Defense – 0.7%  

Lockheed Martin Corp.

    22,620     $ 10,283,957  
Banks – 2.4%  

Commerce Bancshares, Inc.(a)

    160,728       7,049,530  

Cullen/Frost Bankers, Inc.

    57,558       5,237,203  

JPMorgan Chase & Co.

    56,472       7,852,996  

Popular, Inc.

    120,546       7,840,312  

Zions Bancorp NA(a)

    231,318       7,136,160  
              35,116,201  
Beverages – 1.7%  

Coca-Cola Co. (The)

    411,594       23,250,945  

PepsiCo, Inc.

    7,602       1,241,255  
              24,492,200  
Biotechnology – 5.1%  

AbbVie, Inc.

    229,146       32,350,832  

Amgen, Inc.

    97,740       24,992,118  

Gilead Sciences, Inc.

    232,404       18,253,010  
              75,595,960  
Broadline Retail – 0.5%  

Dillard’s, Inc., Class A(a)

    7,602       2,360,041  

eBay, Inc.

    109,686       4,302,982  
              6,663,023  
Building Products – 0.9%  

Advanced Drainage Systems,
Inc.(a)

    65,160       6,961,043  

Fortune Brands Innovations,
Inc.(a)

    122,718       6,847,664  
              13,808,707  
Capital Markets – 3.4%  

Bank of New York Mellon Corp. (The)

    201,996       8,584,830  

BlackRock, Inc.(a)

    27,995       17,140,779  

Jefferies Financial Group, Inc.

    200,910       6,465,284  

Lazard Ltd., Class A

    105,342       2,925,347  

Moelis & Co., Class A(a)

    179,190       7,461,471  
Investments   Shares     Value  
Capital Markets – (continued)  

State Street Corp.

    124,890     $ 8,071,641  
              50,649,352  
Chemicals – 1.1%  

CF Industries Holdings, Inc.

    19,548       1,559,540  

LyondellBasell Industries NV, Class A

    83,622       7,546,049  

Mosaic Co. (The)

    78,192       2,539,676  

Olin Corp.

    122,718       5,242,513  
              16,887,778  
Commercial Services & Supplies – 0.3%  

Cintas Corp.(a)

    8,688       4,405,859  
Communications Equipment – 2.7%  

Cisco Systems, Inc.

    755,856       39,402,773  
Construction Materials – 0.1%  

Eagle Materials, Inc.

    5,430       835,731  
Consumer Finance – 0.7%  

Ally Financial, Inc.(a)

    201,996       4,886,283  

OneMain Holdings, Inc.

    145,524       5,228,677  
              10,114,960  
Consumer Staples Distribution & Retail – 0.2%  

Costco Wholesale Corp.

    2,172       1,199,900  

Walmart, Inc.

    6,516       1,064,779  
              2,264,679  
Containers & Packaging – 0.6%  

Packaging Corp. of America(a)

    56,472       8,643,040  
Distributors – 0.5%  

Pool Corp.(a)

    22,806       7,201,451  
Diversified Telecommunication Services – 0.4%  

Iridium Communications, Inc.

    165,072       6,115,918  
Electric Utilities – 1.4%  

Evergy, Inc.

    130,320       6,403,925  

Hawaiian Electric Industries, Inc.

    604,902       7,851,628  

 

See Accompanying Notes to the Financial Statements.

 

342    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Quality Dividend Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Electric Utilities – (continued)  

OGE Energy Corp.(a)

    204,168     $ 6,982,545  
              21,238,098  
Entertainment – 1.2%  

Electronic Arts, Inc.

    76,020       9,410,516  

Warner Music Group Corp., Class A

    245,436       7,682,147  
              17,092,663  
Financial Services – 2.3%  

Fidelity National Information Services, Inc.

    161,814       7,946,685  

Mastercard, Inc., Class A

    10,988       4,135,334  

Radian Group, Inc.(a)

    301,908       7,650,349  

Visa, Inc., Class A(a)

    27,150       6,382,965  

Western Union Co. (The)

    683,094       7,712,131  
              33,827,464  
Gas Utilities – 0.5%  

UGI Corp.

    336,660       7,002,528  
Ground Transportation – 2.0%  

Old Dominion Freight Line, Inc.

    22,806       8,590,108  

Union Pacific Corp.

    104,256       21,644,588  
              30,234,696  
Health Care Equipment & Supplies – 1.4%  

Abbott Laboratories

    219,372       20,741,623  
Health Care Providers & Services – 1.1%  

Cigna Group (The)

    5,430       1,678,956  

McKesson Corp.

    10,860       4,945,209  

UnitedHealth Group, Inc.

    18,678       10,003,190  
              16,627,355  
Health Care REITs – 0.4%  

Healthpeak Properties, Inc., REIT

    413,766       6,434,061  
Hotel & Resort REITs – 1.0%  

Apple Hospitality REIT, Inc., REIT(a)

    444,174       6,964,648  
Investments   Shares     Value  
Hotel & Resort REITs – (continued)  

Host Hotels & Resorts, Inc., REIT(a)

    458,292     $ 7,094,360  
              14,059,008  
Hotels, Restaurants & Leisure – 1.1%  

Boyd Gaming Corp.

    18,462       1,020,026  

Domino’s Pizza, Inc.

    4,344       1,472,573  

Marriott International, Inc., Class A

    3,258       614,328  

Starbucks Corp.

    144,438       13,322,961  
              16,429,888  
Household Products – 3.6%  

Colgate-Palmolive Co.

    31,494       2,365,829  

Procter & Gamble Co. (The)

    343,176       51,486,696  
              53,852,525  
Industrial Conglomerates – 0.3%  

Honeywell International, Inc.

    26,064       4,776,489  
Insurance – 4.6%  

Aflac, Inc.

    123,804       9,670,330  

Allstate Corp. (The)

    64,074       8,209,802  

First American Financial Corp.

    135,750       6,982,980  

Lincoln National Corp.

    223,716       4,870,297  

MetLife, Inc.

    131,406       7,885,674  

Old Republic International Corp.

    296,478       8,117,568  

Principal Financial Group, Inc.(a)

    90,138       6,100,540  

Prudential Financial, Inc.

    86,880       7,944,307  

Willis Towers Watson plc

    35,838       8,453,826  
              68,235,324  
IT Services – 2.7%  

Accenture plc, Class A

    106,428       31,618,695  

Cognizant Technology Solutions Corp., Class A

    132,492       8,541,759  
              40,160,454  
Machinery – 1.5%  

Caterpillar, Inc.

    10,860       2,454,903  

Illinois Tool Works, Inc.

    55,386       12,413,110  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     343  


Table of Contents

 

 

FlexShares® Quality Dividend Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Machinery – (continued)  

Snap-on, Inc.

    30,408     $ 7,843,440  
              22,711,453  
Media – 3.0%  

Comcast Corp., Class A

    318,198       13,138,395  

Fox Corp., Class A

    21,720       660,071  

New York Times Co. (The), Class A

    188,964       7,617,139  

Nexstar Media Group, Inc., Class A(a)

    49,956       6,997,836  

Omnicom Group, Inc.

    103,170       7,728,465  

Sirius XM Holdings, Inc.(a)

    435,486       1,863,880  

TEGNA, Inc.(a)

    484,356       7,028,006  
              45,033,792  
Metals & Mining – 1.8%  

Nucor Corp.

    55,386       8,185,497  

Reliance Steel & Aluminum Co.

    30,408       7,735,187  

Southern Copper Corp.(a)

    102,084       7,237,755  

Steel Dynamics, Inc.(a)

    26,064       2,776,077  
              25,934,516  
Mortgage Real Estate Investment Trusts (REITs) – 1.4%  

AGNC Investment Corp.(a)

    842,736       6,219,392  

Rithm Capital Corp.(a)

    829,704       7,741,138  

Starwood Property Trust, Inc.(a)

    403,992       7,170,858  
              21,131,388  
Multi-Utilities – 0.6%  

Public Service Enterprise Group, Inc.(a)

    137,922       8,502,891  
Oil, Gas & Consumable Fuels – 3.3%  

Chevron Corp.

    35,838       5,222,672  

ConocoPhillips

    7,602       903,118  

Exxon Mobil Corp.(a)

    94,482       10,000,920  

Marathon Petroleum Corp.

    74,934       11,333,767  

Peabody Energy Corp.(a)

    352,950       8,326,090  

Pioneer Natural Resources Co.

    10,860       2,595,540  

Range Resources Corp.(a)

    249,780       8,952,115  
Investments   Shares     Value  
Oil, Gas & Consumable Fuels – (continued)  

Valero Energy Corp.(a)

    5,430     $ 689,610  
              48,023,832  
Pharmaceuticals – 3.5%  

Bristol-Myers Squibb Co.

    388,788       20,034,246  

Eli Lilly & Co.

    15,507       8,589,793  

Johnson & Johnson

    49,956       7,410,473  

Merck & Co., Inc.

    23,892       2,453,708  

Pfizer, Inc.

    7,602       232,316  

Zoetis, Inc., Class A

    85,794       13,469,658  
              52,190,194  
Professional Services – 2.7%  

Automatic Data Processing, Inc.

    77,106       16,826,071  

Paychex, Inc.

    77,106       8,562,621  

Paycom Software, Inc.

    28,236       6,916,973  

Robert Half, Inc.

    107,514       8,038,822  
              40,344,487  
Residential REITs – 2.4%  

AvalonBay Communities, Inc., REIT

    48,870       8,099,714  

Camden Property Trust, REIT

    66,246       5,622,960  

Equity Residential, REIT

    137,922       7,631,224  

Mid-America Apartment Communities, Inc., REIT

    57,558       6,800,478  

UDR, Inc., REIT

    217,200       6,909,132  
              35,063,508  
Retail REITs – 0.2%  

Brixmor Property Group, Inc., REIT(a)

    111,858       2,325,528  
Semiconductors & Semiconductor Equipment – 9.0%  

Broadcom, Inc.

    76,020       63,960,948  

KLA Corp.(a)

    24,978       11,732,167  

Lam Research Corp.

    10,860       6,388,069  

Microchip Technology, Inc.(a)

    108,600       7,742,094  

NVIDIA Corp.

    74,934       30,558,085  

Skyworks Solutions, Inc.

    78,192       6,782,374  

Teradyne, Inc.(a)

    76,020       6,330,185  
              133,493,922  

 

See Accompanying Notes to the Financial Statements.

 

344    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Quality Dividend Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Software – 7.4%  

Bentley Systems, Inc., Class B(a)

    175,932     $ 8,557,333  

Dolby Laboratories, Inc., Class A

    19,548       1,582,215  

Intuit, Inc.

    14,981       7,414,846  

Microsoft Corp.

    272,586       92,164,052  
              109,718,446  
Specialized REITs – 1.4%  

CubeSmart, REIT

    150,954       5,146,022  

Public Storage, REIT(a)

    33,666       8,036,411  

Weyerhaeuser Co., REIT

    267,156       7,664,705  
              20,847,138  
Specialty Retail – 3.9%  

Best Buy Co., Inc.(a)

    106,428       7,111,519  

Home Depot, Inc. (The)

    84,708       24,115,520  

Lowe’s Cos., Inc.

    92,310       17,591,517  

Williams-Sonoma, Inc.(a)

    62,988       9,463,317  
              58,281,873  
Technology Hardware, Storage & Peripherals – 9.3%  

Apple, Inc.

    802,554       137,052,147  
Textiles, Apparel & Luxury Goods – 2.0%  

NIKE, Inc., Class B

    228,060       23,437,726  

Tapestry, Inc.

    231,318       6,375,124  
              29,812,850  
Tobacco – 0.9%  

Altria Group, Inc.(a)

    332,316       13,349,134  
Trading Companies & Distributors – 0.6%  

Fastenal Co.

    153,126       8,933,371  
Total Common Stocks
(Cost $1,330,163,281)

 

    1,475,944,235  
Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – 8.8%(b)  
CERTIFICATES OF DEPOSIT – 2.3%  

Barclays Bank plc, New York (SOFR + 0.32%), 5.48%, 11/24/2023(c)

  $ 2,000,000     $ 2,000,186  

Citibank NA, New York (SOFR + 0.40%), 5.62%, 12/15/2023(c)

    3,000,000       3,000,324  

Credit Industriel et Commercial, London 5.69%, 1/16/2024

    2,000,000       1,976,180  

Mizuho Bank Ltd., New York (SOFR + 0.40%), 5.71%, 3/12/2024(c)

    2,000,000       2,000,576  

MUFG Bank Ltd., London Branch 5.63%, 11/27/2023

    2,000,000       2,000,000  

National Westminster Bank PLC 5.88%, 5/2/2024

    2,000,000       2,001,340  

Nordea Bank Abp, New York Branch (SOFR + 0.47%), 5.78%, 4/26/2024(c)

    2,000,000       2,001,552  

Oversea-Chinese Banking Corp. Ltd., New York (SOFR + 0.37%), 5.68%, 11/16/2023(c)

    2,000,000       2,000,000  

Royal Bank of Canada, New York (SOFR + 0.53%), 5.84%, 5/23/2024(c)

    2,000,000       2,001,808  

Sumitomo Mitsui Trust Bank Ltd., New York (SOFR + 0.23%), 5.54%, 11/22/2023(c)

    3,000,000       3,000,000  

Svenska Handelsbanken, New York 5.80%, 4/4/2024

    1,000,000       999,882  

(SOFR + 0.33%), 5.64%, 4/4/2024(c)

    1,000,000       999,870  

The Sumitomo Bank Ltd., New York (SOFR + 0.47%), 5.60%, 1/9/2024(c)

    2,000,000       2,001,226  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     345  


Table of Contents

 

 

FlexShares® Quality Dividend Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – (continued)  
CERTIFICATES OF DEPOSIT – (continued)  

Toronto-Dominion Bank, New York 5.64%, 2/28/2024

  $ 1,000,000     $ 1,000,000  

(US Federal Funds Effective Rate (continuous series) + 0.61%), 5.94%, 7/26/2024(c)

    2,000,000       2,000,996  

Wells Fargo Bank (San Francisco) NA (SOFR + 0.37%), 5.62%, 12/12/2023(c)

    3,000,000       3,000,218  
Total Certificates of Deposit
(Cost $31,978,200)

 

    31,984,158  
   
COMMERCIAL PAPER – 0.1%(c)  

Bank of Montreal, Montreal (SOFR + 0.35%), 5.66%, 11/9/2023 (Cost $2,000,000)

    2,000,000       2,000,000  
INVESTMENT COMPANIES – 1.2%  

Dreyfus Treasury Obligations Cash Management Fund 5.38%, 11/1/2023

    7,000,000       7,000,000  

Goldman Sachs Financial Square Government Fund, Institutional Class 5.36%, 11/1/2023

    3,000,000       3,000,000  

Invesco Government & Agency Portfolio, Institutional Shares 5.36%, 11/1/2023

    4,000,000       4,000,000  

Morgan Stanley Institutional Liquidity Fund – Government Portfolio 5.35%, 11/1/2023

    4,000,000       4,000,000  
Total Investment Companies
(Cost $18,000,000)

 

    18,000,000  
   
Investments   Principal
Amount
    Value  
REPURCHASE AGREEMENTS – 5.2%  

BofA Securities, Inc., 5.77%, dated 10/31/2023, due 1/31/2024, repurchase price $8,117,964, collateralized by various U.S. Treasury Securities, ranging from 0.13% – 6.13%, maturing 7/15/2024 – 11/15/2044; total market value $8,056,513

  $ 8,000,000     $ 8,000,000  

CF Secured LLC, 5.30%, dated 10/31/2023, due 11/1/2023, repurchase price $10,001,472, collateralized by various U.S. Treasury Securities, ranging from 0.00% – 7.63%, maturing 11/15/2023 – 5/15/2051; total market value $10,083,993

    10,000,000       10,000,000  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $9,467,085, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $9,573,333

    9,465,697       9,465,697  

 

See Accompanying Notes to the Financial Statements.

 

346    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Quality Dividend Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – (continued)  
REPURCHASE AGREEMENTS – (continued)  

MetLife, Inc., 5.32%, dated 10/31/2023, due 11/1/2023, repurchase price $40,005,911, collateralized by various U.S. Treasury Securities, 0.00%, maturing 8/15/2041 – 11/15/2050; total market value $40,288,616

  $ 40,000,000     $ 40,000,000  

TD Prime Services LLC, 5.42%, dated 10/31/2023, due 11/1/2023, repurchase price $10,001,506, collateralized by various Common Stocks; total market value $11,075,095

    10,000,000       10,000,000  
Total Repurchase Agreements
(Cost $77,465,697)

 

    77,465,697  
Total Securities Lending Reinvestments
(Cost $129,443,897)

 

    129,449,855  
Total Investments – 108.6%
(Cost $1,459,607,178)

 

    1,605,394,090  

Liabilities in excess of other
assets – (8.6%)

 

    (127,121,274
NET ASSETS – 100.0%           $ 1,478,272,816  
(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $149,621,313, collateralized in the form of cash with a value of $129,448,662 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $19,196,387 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 7, 2023 – August 15, 2053 and $2,514,864 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 4.25%, and maturity dates ranging from November 13, 2023 – October 22, 2071; a total value of $151,159,913.

 

(b) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $129,449,855.

 

(c) 

Variable or floating rate security, linked to the referenced benchmark. The interest rate shown is the rate in effect as of October 31, 2023.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

REIT – Real Estate Investment Trust

 

SOFR – Secured Overnight Financing Rate

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 236,307,150  

Aggregate gross unrealized depreciation

    (91,217,525

Net unrealized appreciation

  $ 145,089,625  

Federal income tax cost

  $ 1,460,249,358  

 

Futures Contracts

FlexShares® Quality Dividend Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 
Long Contracts          

S&P 500 E-Mini Index

    9       12/15/2023       USD     $ 1,895,513     $ (37,517

S&P Midcap 400 E-Mini Index

    2       12/15/2023       USD       475,020       (17,590
                                    $ (55,107

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     347  


Table of Contents

 

 

FlexShares® Quality Dividend Index Fund (cont.)

 

 

Abbreviations:

 

USD – US Dollar

 

Security Type   % of Net Assets  

Common Stocks

    99.8

Securities Lending Reinvestments

    8.8  

Others(1)

    (8.6
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

348    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® Quality Dividend Defensive Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 99.5%  
Aerospace & Defense – 1.3%  

Lockheed Martin Corp.

    8,695     $ 3,953,095  
Air Freight & Logistics – 1.0%  

CH Robinson Worldwide, Inc.(a)

    18,095       1,480,714  

Expeditors International of Washington, Inc.

    14,805       1,617,446  
              3,098,160  
Banks – 4.6%  

Columbia Banking System, Inc.

    85,305       1,677,949  

Commerce Bancshares, Inc.(a)

    33,370       1,463,608  

Cullen/Frost Bankers, Inc.

    17,625       1,603,699  

Glacier Bancorp, Inc.(a)

    54,520       1,645,959  

JPMorgan Chase & Co.

    11,985       1,666,634  

Popular, Inc.

    25,145       1,635,431  

UMB Financial Corp.

    25,380       1,591,834  

United Bankshares, Inc.(a)

    54,990       1,563,915  

Zions Bancorp NA(a)

    48,175       1,486,199  
              14,335,228  
Beverages – 2.9%  

Coca-Cola Co. (The)

    152,280       8,602,297  

PepsiCo, Inc.

    2,585       422,079  
              9,024,376  
Biotechnology – 5.4%  

AbbVie, Inc.

    57,105       8,062,084  

Amgen, Inc.

    19,505       4,987,429  

Gilead Sciences, Inc.

    48,645       3,820,578  
              16,870,091  
Broadline Retail – 0.5%  

Dillard’s, Inc., Class A(a)

    2,585       802,513  

eBay, Inc.

    23,735       931,124  
              1,733,637  
Building Products – 0.3%  

Masco Corp.

    18,800       979,292  
Capital Markets – 1.1%  

Bank of New York Mellon Corp. (The)

    43,240       1,837,700  
Investments   Shares     Value  
Capital Markets – (continued)  

Moelis & Co., Class A(a)

    37,130     $ 1,546,093  
              3,383,793  
Chemicals – 0.8%  

LyondellBasell Industries NV, Class A

    15,980       1,442,035  

Olin Corp.

    25,145       1,074,195  
              2,516,230  
Commercial Services & Supplies – 0.5%  

Rollins, Inc.

    39,480       1,484,843  
Communications Equipment – 2.6%  

Cisco Systems, Inc.

    158,625       8,269,121  
Consumer Staples Distribution & Retail – 0.1%  

Costco Wholesale Corp.

    470       259,647  

Walmart, Inc.

    1,410       230,408  
              490,055  
Containers & Packaging – 0.6%  

Packaging Corp. of America

    11,985       1,834,304  
Diversified Consumer Services – 0.5%  

H&R Block, Inc.(a)

    42,065       1,726,768  
Diversified Telecommunication Services – 0.4%  

Iridium Communications, Inc.

    32,195       1,192,825  
Electric Utilities – 3.2%  

Constellation Energy Corp.

    17,860       2,016,751  

Evergy, Inc.

    27,260       1,339,556  

Exelon Corp.

    44,415       1,729,520  

Hawaiian Electric Industries, Inc.

    125,960       1,634,961  

OGE Energy Corp.(a)

    49,820       1,703,844  

PPL Corp.

    70,500       1,732,185  
              10,156,817  
Entertainment – 1.1%  

Electronic Arts, Inc.

    15,745       1,949,074  

Warner Music Group Corp., Class A(a)

    47,235       1,478,455  
              3,427,529  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     349  


Table of Contents

 

 

FlexShares® Quality Dividend Defensive Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Financial Services – 2.2%  

Fidelity National Information Services, Inc.

    33,840     $ 1,661,882  

Mastercard, Inc., Class A

    2,350       884,423  

Radian Group, Inc.(a)

    62,745       1,589,958  

Visa, Inc., Class A(a)

    5,640       1,325,964  

Western Union Co. (The)

    140,295       1,583,931  
              7,046,158  
Food Products – 0.9%  

General Mills, Inc.

    23,030       1,502,477  

Kellogg Co.(a)

    28,670       1,446,975  
              2,949,452  
Gas Utilities – 0.4%  

ONE Gas, Inc.(a)

    18,565       1,121,326  
Ground Transportation – 0.6%  

Old Dominion Freight Line, Inc.

    4,700       1,770,302  
Health Care Equipment & Supplies – 2.0%  

Abbott Laboratories

    67,445       6,376,925  
Health Care Providers & Services – 4.4%  

Cardinal Health, Inc.

    20,210       1,839,110  

Cencora, Inc.(a)

    10,340       1,914,451  

Chemed Corp.(a)

    3,290       1,851,119  

Cigna Group (The)

    11,515       3,560,438  

McKesson Corp.

    5,170       2,354,211  

UnitedHealth Group, Inc.

    3,995       2,139,562  
              13,658,891  
Health Care REITs – 0.4%  

Healthpeak Properties, Inc., REIT

    85,070       1,322,838  
Hotels, Restaurants & Leisure – 3.6%  

Domino’s Pizza, Inc.

    4,465       1,513,590  

McDonald’s Corp.

    21,855       5,729,726  

Starbucks Corp.

    44,650       4,118,516  
              11,361,832  
Household Products – 4.2%  

Clorox Co. (The)

    11,750       1,382,975  

Kimberly-Clark Corp.

    7,520       899,693  

Procter & Gamble Co. (The)

    71,910       10,788,657  
              13,071,325  
Investments   Shares     Value  
Independent Power and Renewable Electricity
Producers – 0.5%
 

Clearway Energy, Inc., Class C

    68,855     $ 1,494,842  
Industrial Conglomerates – 0.8%  

Honeywell International, Inc.

    13,630       2,497,834  
Insurance – 4.0%  

Aflac, Inc.

    26,320       2,055,855  

Allstate Corp. (The)

    13,395       1,716,301  

American Financial Group, Inc.

    14,805       1,619,075  

Loews Corp.

    27,965       1,790,040  

MetLife, Inc.

    27,025       1,621,770  

Old Republic International Corp.

    62,040       1,698,655  

Willis Towers Watson plc

    8,930       2,106,498  
              12,608,194  
IT Services – 1.1%  

Amdocs Ltd.

    19,740       1,582,358  

Cognizant Technology Solutions Corp., Class A

    27,730       1,787,753  
              3,370,111  
Machinery – 1.4%  

Illinois Tool Works, Inc.

    11,750       2,633,410  

Otis Worldwide Corp.

    21,855       1,687,425  
              4,320,835  
Media – 3.1%  

Comcast Corp., Class A

    67,680       2,794,507  

Fox Corp., Class A

    10,575       321,374  

New York Times Co. (The), Class A

    39,715       1,600,912  

Nexstar Media Group, Inc., Class A(a)

    10,340       1,448,427  

Omnicom Group, Inc.

    21,855       1,637,158  

Sirius XM Holdings, Inc.(a)

    91,885       393,268  

TEGNA, Inc.(a)

    99,875       1,449,186  
              9,644,832  
Metals & Mining – 1.0%  

Reliance Steel & Aluminum Co.

    6,345       1,614,041  

Southern Copper Corp.

    21,385       1,516,197  
              3,130,238  

 

See Accompanying Notes to the Financial Statements.

 

350    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Quality Dividend Defensive Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Mortgage Real Estate Investment Trusts (REITs) – 0.8%  

AGNC Investment Corp.(a)

    172,960     $ 1,276,445  

Starwood Property Trust, Inc.(a)

    70,500       1,251,375  
              2,527,820  
Multi-Utilities – 1.4%  

Consolidated Edison, Inc.

    21,150       1,856,758  

Dominion Energy, Inc.

    13,630       549,562  

Public Service Enterprise Group, Inc.

    30,785       1,897,895  
              4,304,215  
Oil, Gas & Consumable Fuels – 1.4%  

Chevron Corp.(a)

    7,285       1,061,643  

Coterra Energy, Inc.

    10,105       277,887  

CVR Energy, Inc.(a)

    7,285       238,584  

Exxon Mobil Corp.

    22,560       2,387,976  

Pioneer Natural Resources Co.

    1,410       336,990  
              4,303,080  
Pharmaceuticals – 3.9%  

Bristol-Myers Squibb Co.

    81,075       4,177,795  

Eli Lilly & Co.

    7,990       4,425,901  

Johnson & Johnson

    16,685       2,475,053  

Merck & Co., Inc.

    6,110       627,497  

Pfizer, Inc.

    1,410       43,089  

Zoetis, Inc., Class A

    2,585       405,845  
              12,155,180  
Professional Services – 2.3%  

Automatic Data Processing, Inc.

    15,980       3,487,156  

Paychex, Inc.

    15,980       1,774,579  

Verisk Analytics, Inc., Class A

    8,225       1,870,036  
              7,131,771  
Residential REITs – 3.1%  

American Homes 4 Rent, Class A, REIT

    49,820       1,631,107  

AvalonBay Communities, Inc., REIT

    4,935       817,927  

Camden Property Trust, REIT

    13,630       1,156,914  

Equity Residential, REIT

    28,435       1,573,309  

Essex Property Trust, Inc., REIT

    7,520       1,608,678  
Investments   Shares     Value  
Residential REITs – (continued)  

Mid-America Apartment Communities, Inc., REIT

    12,220     $ 1,443,793  

UDR, Inc., REIT(a)

    45,120       1,435,267  
              9,666,995  
Semiconductors & Semiconductor Equipment – 6.3%  

Broadcom, Inc.

    15,980       13,445,093  

NVIDIA Corp.

    15,745       6,420,811  
              19,865,904  
Software – 7.4%  

Bentley Systems, Inc., Class B(a)

    37,130       1,806,003  

Dolby Laboratories, Inc., Class A

    4,465       361,397  

Intuit, Inc.

    3,525       1,744,699  

Microsoft Corp.

    56,635       19,148,860  
              23,060,959  
Specialized REITs – 0.9%  

CubeSmart, REIT

    35,720       1,217,695  

Public Storage, REIT

    7,285       1,739,002  
              2,956,697  
Specialty Retail – 4.7%  

Best Buy Co., Inc.

    19,035       1,271,919  

Home Depot, Inc. (The)

    32,195       9,165,594  

Lowe’s Cos., Inc.

    7,520       1,433,086  

Murphy USA, Inc.

    4,465       1,619,411  

Williams-Sonoma, Inc.(a)

    8,695       1,306,337  
              14,796,347  
Technology Hardware, Storage & Peripherals – 7.8%  

Apple, Inc.

    142,880       24,399,618  
Tobacco – 0.9%  

Altria Group, Inc.

    69,090       2,775,345  
Trading Companies & Distributors – 1.1%  

Fastenal Co.

    33,135       1,933,096  

MSC Industrial Direct Co., Inc., Class A(a)

    16,685       1,580,904  
              3,514,000  
Total Common Stocks
(Cost $287,654,026)

 

    311,680,030  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     351  


Table of Contents

 

 

FlexShares® Quality Dividend Defensive Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
SECURITIES LENDING REINVESTMENTS – 6.0%(b)  
INVESTMENT COMPANIES – 0.3%  

Dreyfus Treasury Obligations Cash Management Fund 5.38%, 11/1/2023
(Cost $1,000,000)

  $ 1,000,000     $ 1,000,000  
REPURCHASE AGREEMENTS – 5.7%  

BofA Securities, Inc., 5.77%, dated 10/31/2023, due 1/31/2024, repurchase price $1,014,746, collateralized by various U.S. Treasury Securities, ranging from 0.13% – 6.13%, maturing 7/15/2024 – 11/15/2044; total market value $1,007,064

    1,000,000       1,000,000  

CF Secured LLC, 5.30%, dated 10/31/2023, due 11/1/2023, repurchase price $5,000,736, collateralized by various U.S. Treasury Securities, ranging from 0.00% – 7.63%, maturing 11/15/2023 – 5/15/2051; total market value $5,041,997

    5,000,000       5,000,000  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $7,784,824, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $7,872,192

    7,783,683       7,783,683  
Investments   Principal
Amount
    Value  
REPURCHASE AGREEMENTS – (continued)  

TD Prime Services LLC, 5.42%, dated 10/31/2023, due 11/1/2023, repurchase price $4,000,602, collateralized by various Common Stocks; total market value $4,430,038

  $ 4,000,000     $ 4,000,000  
Total Repurchase Agreements
(Cost $17,783,683)

 

    17,783,683  
Total Securities Lending Reinvestments
(Cost $18,783,683)

 

    18,783,683  
Total Investments – 105.5%
(Cost $306,437,709)

 

    330,463,713  

Liabilities in excess of other assets – (5.5%)

 

    (17,232,615
NET ASSETS – 100.0%

 

  $ 313,231,098  

 

(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $26,472,637, collateralized in the form of cash with a value of $18,783,683 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $6,786,441 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 7.63%, and maturity dates ranging from November 7, 2023 – August 15, 2053 and $1,595,285 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 4.50%, and maturity dates ranging from November 13, 2023 – October 22, 2071; a total value of $27,165,409.

 

(b) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $18,783,683.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

REIT – Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 42,388,210  

Aggregate gross unrealized depreciation

    (18,364,097

Net unrealized appreciation

  $ 24,024,113  

Federal income tax cost

  $ 306,369,017  

 

See Accompanying Notes to the Financial Statements.

 

352    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Quality Dividend Defensive Index Fund (cont.)

 

 

Futures Contracts

FlexShares® Quality Dividend Defensive Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

S&P 500 E-Mini Index

    7       12/15/2023       USD     $ 1,474,288     $ (70,583

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Abbreviations:

 

USD – US Dollar

 

Security Type   % of Net Assets  

Common Stocks

    99.5

Securities Lending Reinvestments

    6.0  

Others(1)

    (5.5
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     353  


Table of Contents

 

Schedule of Investments

FlexShares® International Quality Dividend Index Fund

 

October 31, 2023

 

 

Investments    Shares      Value  
COMMON STOCKS – 98.2%  
Air Freight & Logistics – 0.1%  

SG Holdings Co. Ltd.

     39,700      $ 558,885  
Automobile Components – 0.2%  

Fuyao Glass Industry Group Co. Ltd., Class H(a)

     243,600        1,109,877  
Automobiles – 2.7%  

Dr Ing hc F Porsche AG (Preference)(b)

     36,873        3,216,977  

Isuzu Motors Ltd.

     337,400        3,699,381  

Mercedes-Benz Group AG

     87,483        5,125,586  

Subaru Corp.

     31,700        535,747  

Yadea Group Holdings Ltd.(a)

     482,000        880,888  
                13,458,579  
Banks – 12.0%  

Akbank TAS

     256,906        267,505  

Banco del Bajio SA(a)

     1,253,200        3,830,476  

Bank of Montreal

     27,474        2,073,834  

Barclays plc

     1,985,117        3,170,034  

BOC Hong Kong Holdings Ltd.

     964,000        2,550,265  

China Construction Bank Corp., Class H

     4,820,000        2,735,066  

China Merchants Bank Co. Ltd., Class H

     677,000        2,578,355  

FinecoBank Banca Fineco SpA

     230,878        2,712,483  

First Abu Dhabi Bank PJSC

     586,353        2,024,219  

HSBC Holdings plc

     102,666        737,888  

Industrial & Commercial Bank of China Ltd., Class H

     4,097,000        1,968,755  

Japan Post Bank Co. Ltd.

     168,700        1,558,953  

KBC Group NV

     62,419        3,424,200  

Mitsubishi UFJ Financial Group, Inc.

     289,200        2,400,372  

Nordea Bank Abp

     309,685        3,251,337  

Royal Bank of Canada

     152,071        12,132,817  

Sberbank of Russia PJSC‡

     1,227,390         

Skandinaviska Enskilda Banken AB, Class A

     349,209        3,885,084  
Investments    Shares      Value  
Banks – (continued)  

Sumitomo Mitsui Financial Group, Inc.

     58,100      $ 2,769,864  

Swedbank AB, Class A

     216,177        3,535,987  

Toronto-Dominion Bank (The)

     5,302        295,835  

Yapi ve Kredi Bankasi A/S

     2,895,374        1,764,277  
                59,667,606  
Beverages – 0.8%  

Arca Continental SAB de CV

     385,600        3,453,163  

Nongfu Spring Co. Ltd., Class H(b)(c)

     76,600        436,128  
                3,889,291  
Broadline Retail – 0.2%  

B&M European Value Retail SA

     49,405        317,018  

Next plc

     8,676        724,740  
                1,041,758  
Building Products – 0.4%  

Geberit AG (Registered)

     4,338        2,010,624  
Capital Markets – 4.9%  

3i Group plc

     147,251        3,456,598  

Brookfield Asset Management Ltd., Class A

     42,175        1,207,604  

China Galaxy Securities Co. Ltd., Class H

     6,748,000        3,449,633  

Hong Kong Exchanges & Clearing Ltd.

     2,700        94,893  

Japan Exchange Group, Inc.

     106,900        2,092,542  

Julius Baer Group Ltd.

     42,175        2,484,017  

Macquarie Korea Infrastructure Fund

     392,348        3,491,928  

Moscow Exchange MICEX-RTS PJSC‡

     775,590         

Partners Group Holding AG

     4,097        4,307,466  

Samsung Securities Co. Ltd.

     140,985        3,684,996  
                24,269,677  
Chemicals – 2.9%  

Fertiglobe plc

     3,852,144        3,366,562  

Nissan Chemical Corp.

     10,400        418,555  

 

See Accompanying Notes to the Financial Statements.

 

354    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® International Quality Dividend Index Fund (cont.)

 

 

Investments    Shares      Value  
COMMON STOCKS – (continued)  
Chemicals – (continued)  

Nitto Denko Corp.(c)

     17,300      $ 1,106,117  

Sahara International Petrochemical Co.

     170,146        1,462,632  

Shin-Etsu Chemical Co. Ltd.

     120,500        3,555,046  

Wacker Chemie AG

     6,989        853,242  

Yara International ASA

     107,727        3,519,639  
                14,281,793  
Consumer Staples Distribution & Retail – 0.4%  

Coles Group Ltd.

     217,382        2,101,693  

Kesko OYJ, Class B

     1,928        32,535  
                2,134,228  
Diversified REITs – 0.5%  

Stockland, REIT

     1,183,551        2,652,753  
Diversified Telecommunication Services – 1.8%  

Elisa OYJ

     6,748        285,876  

Koninklijke KPN NV

     698,418        2,343,873  

Spark New Zealand Ltd.

     67,962        196,465  

Swisscom AG (Registered)

     3,856        2,304,999  

Telstra Group Ltd.

     1,609,398        3,882,353  
                9,013,566  
Electric Utilities – 1.3%  

Fortum OYJ(c)

     238,590        2,824,524  

Origin Energy Ltd.

     548,275        3,169,391  

Power Grid Corp. of India Ltd.

     256,748        623,377  
                6,617,292  
Electrical Equipment – 0.0%(d)  

Voltronic Power Technology Corp.

     4,839        193,202  
Electronic Equipment, Instruments & Components – 0.1%  

Largan Precision Co. Ltd.

     4,000        255,280  

Shimadzu Corp.

     13,200        308,983  
                564,263  
Entertainment – 1.0%  

Capcom Co. Ltd.(c)

     10,400        332,303  

Nintendo Co. Ltd.

     115,300        4,736,249  
                5,068,552  
Investments    Shares      Value  
Financial Services – 3.0%  

Banca Mediolanum SpA

     434,764      $ 3,541,258  

FirstRand Ltd.

     60,250        197,460  

ORIX Corp.

     187,000        3,352,405  

Power Finance Corp. Ltd.

     1,136,618        3,366,493  

REC Ltd.

     1,368,880        4,728,511  
                15,186,127  
Food Products – 3.2%  

China Feihe Ltd.(a)

     3,374,000        2,095,652  

Nestle SA (Registered)

     89,893        9,686,179  

Uni-President China Holdings Ltd.

     4,338,000        2,954,981  

Want Want China Holdings Ltd.

     1,928,000        1,197,516  
                15,934,328  
Gas Utilities – 0.9%  

Kunlun Energy Co. Ltd.

     682,000        568,290  

Naturgy Energy Group SA(c)

     132,068        3,727,210  
                4,295,500  
Ground Transportation – 0.0%(d)  

Canadian National Railway Co.

     1,446        152,834  
Health Care Equipment & Supplies – 0.3%  

Hoya Corp.

     13,400        1,268,375  
Health Care Providers & Services – 0.0%(d)  

Sonic Healthcare Ltd.

     11,327        206,186  
Hotels, Restaurants & Leisure – 1.1%  

InterContinental Hotels Group plc

     25,546        1,801,030  

OPAP SA

     227,263        3,843,472  
                5,644,502  
Household Durables – 0.6%  

Nien Made Enterprise Co. Ltd.

     326,000        2,874,549  
Household Products – 0.4%  

Unilever Indonesia Tbk. PT

     9,712,300        2,213,316  
Independent Power and Renewable Electricity
Producers – 0.0%
 

Unipro PJSC*‡

     125,500,000         

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     355  


Table of Contents

 

 

FlexShares® International Quality Dividend Index Fund (cont.)

 

 

Investments    Shares      Value  
COMMON STOCKS – (continued)  
Industrial Conglomerates – 0.7%  

Hitachi Ltd.

     29,700      $ 1,858,542  

Industries Qatar QSC

     441,512        1,481,812  

Siemens AG (Registered)

     1,687        222,823  
                3,563,177  
Insurance – 2.0%  

Admiral Group plc

     58,804        1,743,220  

BB Seguridade Participacoes SA

     650,700        3,968,973  

Caixa Seguridade Participacoes SA

     433,800        930,739  

Manulife Financial Corp.

     150,384        2,614,997  

Sampo OYJ, Class A

     12,532        491,571  
                9,749,500  
Interactive Media & Services – 1.0%  

Rightmove plc(c)

     274,258        1,574,136  

Tencent Holdings Ltd.

     96,400        3,562,979  
                5,137,115  
IT Services – 1.3%  

HCL Technologies Ltd.

     173,520        2,659,318  

Infosys Ltd.

     64,106        1,053,615  

Nomura Research Institute Ltd.

     72,300        1,882,870  

Obic Co. Ltd.

     5,200        763,802  
                6,359,605  
Leisure Products – 0.0%(d)  

Shimano, Inc.

     600        85,397  
Machinery – 1.1%  

GEA Group AG

     13,255        451,560  

Kone OYJ, Class B

     64,347        2,781,124  

MISUMI Group, Inc.

     66,300        989,170  

VAT Group AG(a)

     3,133        1,104,064  
                5,325,918  
Marine Transportation – 3.1%  

AP Moller – Maersk A/S, Class A

     1,446        2,354,932  

AP Moller – Maersk A/S, Class B

     1,446        2,401,007  

Evergreen Marine Corp. Taiwan Ltd.

     1,205,000        3,993,757  
Investments    Shares      Value  
Marine Transportation – (continued)  

Hapag-Lloyd AG(a)

     482      $ 69,339  

Nippon Yusen KK(c)

     63,600        1,544,172  

Orient Overseas International Ltd.(c)

     209,500        2,641,308  

SITC International Holdings Co. Ltd.(c)

     624,000        960,172  

Yang Ming Marine Transport Corp.

     964,000        1,251,253  
                15,215,940  
Metals & Mining – 6.7%  

BHP Group Ltd.

     555,746        15,658,241  

Glencore plc

     89,652        473,392  

Grupo Mexico SAB de CV, Series B

     578,400        2,355,827  

Kumba Iron Ore Ltd.

     132,791        3,497,904  

MMC Norilsk Nickel PJSC*‡

     16,315         

Norsk Hydro ASA

     14,942        85,171  

Rio Tinto plc

     124,838        7,960,520  

Severstal PAO*‡

     58,985         

Vedanta Ltd.

     1,352,010        3,517,292  
                33,548,347  
Multi-Utilities – 0.0%(d)  

Canadian Utilities Ltd., Class A

     7,471        157,896  
Oil, Gas & Consumable Fuels – 8.8%  

Adaro Energy Indonesia Tbk. PT

     17,448,400        2,811,955  

Canadian Natural Resources Ltd.(c)

     120,500        7,643,602  

China Shenhua Energy Co. Ltd., Class H

     1,205,000        3,696,036  

Coal India Ltd.

     1,332,971        5,031,137  

Equinor ASA

     112,788        3,780,397  

Exxaro Resources Ltd.

     456,695        4,554,550  

Petroleo Brasileiro SA (Preference)

     698,900        4,814,552  

Shell plc

     61,455        1,973,563  

TotalEnergies SE

     13,737        917,665  

Var Energi ASA

     1,319,475        4,444,430  

Yankuang Energy Group Co. Ltd., Class H(c)

     2,410,000        4,188,840  
                43,856,727  

 

See Accompanying Notes to the Financial Statements.

 

356    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® International Quality Dividend Index Fund (cont.)

 

 

Investments    Shares      Value  
COMMON STOCKS – (continued)  
Passenger Airlines – 0.7%  

Singapore Airlines Ltd.

     723,000      $ 3,224,357  
Personal Care Products – 2.4%  

Hengan International Group Co. Ltd.

     120,500        403,484  

L’Oreal SA

     26,751        11,201,461  

Unilever plc

     8,917        420,803  
                12,025,748  
Pharmaceuticals – 9.1%  

Astellas Pharma, Inc.

     24,100        302,354  

AstraZeneca plc

     16,388        2,038,317  

China Medical System Holdings Ltd.

     964,000        1,540,015  

GSK plc

     403,916        7,143,182  

Novartis AG (Registered)

     108,932        10,119,346  

Novo Nordisk A/S, Class B

     154,722        14,833,820  

Orion OYJ, Class B

     3,856        153,005  

Roche Holding AG

     723        196,391  

Roche Holding AG – BR

     34,945        8,979,603  

Sanofi SA

     2,169        196,479  
                45,502,512  
Professional Services – 2.5%  

Bureau Veritas SA

     146,528        3,328,373  

Randstad NV

     66,516        3,433,814  

Recruit Holdings Co. Ltd.

     48,200        1,379,053  

RELX plc

     64,588        2,247,775  

SGS SA (Registered)

     27,715        2,253,014  
                12,642,029  
Real Estate Management & Development – 2.2%  

China Vanke Co. Ltd., Class H

     2,626,900        2,457,494  

CK Asset Holdings Ltd.

     120,500        602,146  

Daito Trust Construction Co. Ltd.

     34,700        3,700,386  

Land & Houses PCL, NVDR

     5,302,000        1,113,726  

Sun Hung Kai Properties Ltd.

     309,500        3,178,223  
                11,051,975  
Retail REITs – 0.8%  

Link REIT, REIT

     843,500        3,870,057  
Investments    Shares      Value  
Semiconductors & Semiconductor Equipment – 6.1%  

Advantest Corp.

     91,700      $ 2,309,984  

ASML Holding NV

     12,291        7,344,144  

MediaTek, Inc.

     213,946        5,553,955  

Novatek Microelectronics Corp.

     331,901        4,650,810  

Realtek Semiconductor Corp.

     85,000        1,052,181  

Taiwan Semiconductor Manufacturing Co. Ltd.

     399,222        6,511,128  

Tokyo Electron Ltd.

     18,600        2,426,247  

Vanguard International Semiconductor Corp.

     302,000        652,696  
                30,501,145  
Software – 0.4%  

SAP SE

     5,061        677,993  

Temenos AG (Registered)

     17,593        1,259,280  
                1,937,273  
Specialty Retail – 1.4%  

Fast Retailing Co. Ltd.

     600        130,819  

H & M Hennes & Mauritz AB, Class B(c)

     117,849        1,574,815  

Industria de Diseno Textil SA(c)

     125,802        4,328,262  

Topsports International Holdings Ltd.(a)

     964,000        810,664  
                6,844,560  
Technology Hardware, Storage & Peripherals – 1.1%  

Catcher Technology Co. Ltd.

     214,000        1,197,503  

Lite-On Technology Corp.

     482,000        1,486,049  

Samsung Electronics Co. Ltd.

     53,743        2,662,179  
                5,345,731  
Textiles, Apparel & Luxury Goods – 3.1%  

ANTA Sports Products Ltd.

     144,600        1,632,724  

Bosideng International Holdings Ltd.

     6,106,000        2,411,310  

Burberry Group plc

     48,923        1,004,466  

Feng TAY Enterprise Co. Ltd.

     21,284        117,133  

Hermes International SCA

     3,248        6,040,946  

LVMH Moet Hennessy Louis Vuitton SE

     3,374        2,405,482  

Pandora A/S

     5,302        599,327  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     357  


Table of Contents

 

 

FlexShares® International Quality Dividend Index Fund (cont.)

 

 

Investments    Shares      Value  
COMMON STOCKS – (continued)  
Textiles, Apparel & Luxury Goods – (continued)  

Shenzhou International Group Holdings Ltd.

     120,500      $ 1,181,961  
                15,393,349  
Tobacco – 1.7%  

Imperial Brands plc

     185,329        3,937,780  

Japan Tobacco, Inc.

     201,900        4,694,046  
                8,631,826  
Trading Companies & Distributors – 2.3%  

Howden Joinery Group plc

     369,694        2,860,307  

ITOCHU Corp.(c)

     120,500        4,275,126  

Marubeni Corp.

     72,300        1,039,780  

Mitsubishi Corp.

     45,600        2,094,146  

Mitsui & Co. Ltd.

     30,500        1,090,947  
                11,360,306  
Wireless Telecommunication Services – 0.9%  

Intouch Holdings PCL, NVDR

     216,900        428,459  

KDDI Corp.

     24,100        714,033  

Tele2 AB, Class B

     449,706        3,185,434  
                4,327,926  
TOTAL COMMON STOCKS
(COST $509,465,426)

 

     489,966,079  
     
SECURITIES LENDING REINVESTMENTS – 0.4%(e)  
INVESTMENT COMPANIES – 0.4%  

Dreyfus Treasury Obligations Cash Management Fund 5.38%, 11/1/2023 (Cost $2,000,000)

     2,000,000        2,000,000  
Investments    Shares      Value  
REPURCHASE AGREEMENTS – 0.0%(d)  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $149,596, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $151,275 (Cost $149,574)

     149,574      $ 149,574  
TOTAL SECURITIES LENDING REINVESTMENTS
(COST $2,149,574)

 

     2,149,574  
Total Investments – 98.6%
(Cost $511,615,000)

 

     492,115,653  

Other assets less liabilities – 1.4%

 

     6,760,261  
NET ASSETS – 100.0%             $ 498,875,914  

 

*

Non-income producing security.

 

 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(a) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(c) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $24,751,395, collateralized in the form of cash with a value of $2,149,574 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $21,621,538 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 6.13%, and maturity dates ranging from November 16, 2023 – May 15, 2053 and $3,237,808 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 5.50%, and maturity dates ranging from November 13, 2023 – October 22, 2073; a total value of $27,008,920.

 

(d) 

Represents less than 0.05% of net assets.

 

See Accompanying Notes to the Financial Statements.

 

358    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® International Quality Dividend Index Fund (cont.)

 

 

(e) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $2,149,574.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

NVDR – Non-Voting Depositary Receipt

OYJ – Public Limited Company

PJSC – Public Joint Stock Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.

REIT – Real Estate Investment Trust

SCA – Limited partnership with share capital

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 51,541,851  

Aggregate gross unrealized depreciation

    (78,682,152

Net unrealized depreciation

  $ (27,140,301

Federal income tax cost

  $ 518,827,773  

 

Futures Contracts

FlexShares® International Quality Dividend Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

MSCI EAFE E-Mini Index

    63       12/15/2023       USD     $ 6,218,415     $ (320,258

MSCI Emerging Markets E-Mini Index

    64       12/15/2023       USD       2,941,440       (184,913
                                    $ (505,171

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Forward Foreign Currency Contracts

FlexShares® International Quality Dividend Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive   Counterparty   In Exchange For     Maturity
Date
    Unrealized
Appreciation/
(Depreciation)
 

USD

    870,416       Bank of Montreal   AUD     1,352,000       12/20/2023     $ 12,982  

USD

    534,437       JPMorgan Chase Bank NA   BRL*     2,653,155       12/20/2023       11,310  

USD

    562,075       Toronto-Dominion Bank (The)   CAD     757,000       12/20/2023       16,317  

USD

    616,884       Morgan Stanley   CHF     552,000       12/20/2023       6,894  

USD

    831,793       Toronto-Dominion Bank (The)   CHF     739,000       12/20/2023       15,159  

USD

    2,046,686       BNP Paribas SA   EUR     1,912,000       12/20/2023       21,044  

USD

    776,396       Toronto-Dominion Bank (The)   EUR     725,000       12/20/2023       8,305  

USD

    1,075,030       JPMorgan Chase Bank NA   GBP     874,000       12/20/2023       14,059  

USD

    642,057       UBS AG   HKD     5,013,000       12/20/2023       863  

USD

    935,242       Citibank NA   JPY     137,972,000       12/20/2023       16,540  

USD

    1,481,538       Morgan Stanley   JPY     215,437,000       12/20/2023       47,027  

USD

    986,505       Toronto-Dominion Bank (The)   JPY     143,755,000       12/20/2023       29,296  

USD

    359,390       Citibank NA   KRW*     474,657,039       12/20/2023       6,954  

USD

    137,498         Morgan Stanley   MXN     2,396,034       12/20/2023       5,845  

Total unrealized appreciation

 

  $ 212,595  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     359  


Table of Contents

 

 

FlexShares® International Quality Dividend Index Fund (cont.)

 

 

Forward Foreign Currency Contracts (cont.)

 

Contracts to Receive   Counterparty   In Exchange For     Maturity
Date
    Unrealized
Appreciation/
(Depreciation)
 

AUD

    609,004       Citibank NA   USD     394,502       12/20/2023     $ (8,274

CAD

    1,191,313       Citibank NA   USD     880,450       12/20/2023       (21,574

CHF

    806,636       UBS AG   USD     911,586       12/20/2023       (20,210

DKK

    633,221       UBS AG   USD     91,182       12/20/2023       (1,259

EUR

    791,188       Toronto-Dominion Bank (The)   USD     847,889       12/20/2023       (9,676

GBP

    323,045       Toronto-Dominion Bank (The)   USD     402,255       12/20/2023       (10,102

HKD

    3,104,392       BNP Paribas SA   USD     397,321       12/20/2023       (251

JPY

    274,264,285       Toronto-Dominion Bank (The)   USD     1,886,384       12/20/2023       (60,165

SEK

    2,423,745       Citibank NA   USD     218,196       12/20/2023       (729

USD

    475,957       Toronto-Dominion Bank (The)   CHF     432,000       12/20/2023       (1,426

USD

    143,556         BNP Paribas SA   ZAR     2,739,232       12/20/2023       (1,939

Total unrealized depreciation

 

  $ (135,605

Net unrealized appreciation

 

  $ 76,990  

 

*

Non-deliverable forward. See Note 2 in the Notes to Financial Statements.

 

Abbreviations:

 

AUD – Australian Dollar

BRL – Brazilian Real

CAD – Canadian Dollar

CHF – Swiss Franc

DKK – Danish Krone

EUR – Euro

GBP – British Pound

HKD – Hong Kong Dollar

JPY – Japanese Yen

KRW – Korean Won

MXN – Mexican Peso

SEK – Swedish Krona

USD – US Dollar

ZAR – South African Rand

 

See Accompanying Notes to the Financial Statements.

 

360    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® International Quality Dividend Index Fund (cont.)

 

 

FlexShares® International Quality Dividend Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    5.5

Belgium

    0.7  

Brazil

    2.0  

Canada

    5.3  

China

    8.9  

Denmark

    4.0  

Finland

    1.3  

France

    4.8  

Germany

    2.1  

Greece

    0.8  

Hong Kong

    2.3  

India

    4.2  

Indonesia

    1.0  

Italy

    1.3  

Japan

    12.0  

Mexico

    1.9  

Netherlands

    2.6  

New Zealand

     0.0  

Norway

    2.4  

Qatar

    0.3  

Saudi Arabia

    0.3  

Singapore

    0.6  

South Africa

    1.7  

South Korea

    2.0  

Spain

    1.6  

Sweden

    3.1  

Switzerland

    9.0  

Taiwan

    6.0  

Thailand

    0.3  

Turkey

    0.4  

United Arab Emirates

    1.1  

United Kingdom

    8.7  

Other1

    1.8  
      100.0

 

Amount represents less than 0.05%.

 

1 

Includes any non-equity securities, securities lending reinvestments and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    98.2

Securities Lending Reinvestments

    0.4  

Others(1)

    1.4  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     361  


Table of Contents

 

Schedule of Investments

FlexShares® International Quality Dividend Defensive Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 95.6%  
Aerospace & Defense – 0.8%  

Thales SA

    1,498     $ 220,328  
Air Freight & Logistics – 0.4%  

Deutsche Post AG

    1,218       47,326  

SG Holdings Co. Ltd.

    3,200       45,049  
              92,375  
Automobile Components – 1.2%  

Bridgestone Corp.

    2,000       74,839  

Fuyao Glass Industry Group Co. Ltd., Class H(a)

    44,800       204,115  

Sona Blw Precision Forgings Ltd.(a)

    7,812       50,808  
              329,762  
Automobiles – 2.0%  

Bayerische Motoren Werke AG

    210       19,451  

Bayerische Motoren Werke AG (Preference)

    56       4,744  

Hero MotoCorp Ltd.

    5,348       198,376  

Subaru Corp.

    11,600       196,046  

Yadea Group Holdings Ltd.(a)

    64,000       116,965  
              535,582  
Banks – 10.7%  

Arab National Bank

    8,204       51,958  

Banco de Chile

    568,260       58,193  

Bank Leumi Le-Israel BM

    17,752       114,045  

Bank of China Ltd., Class H

    238,000       83,342  

Bank of Communications Co. Ltd., Class H

    84,000       49,705  

Bankinter SA(b)

    8,596       54,171  

Barclays plc

    114,716       183,190  

BOC Hong Kong Holdings Ltd.

    21,000       55,556  

Commonwealth Bank of Australia

    4,914       300,427  

Credicorp Ltd.

    420       52,483  

Credit Agricole SA

    4,508       54,216  

Hang Seng Bank Ltd.

    1,400       16,040  

HSBC Holdings plc

    5,376       38,639  

Japan Post Bank Co. Ltd.

    22,400       206,998  

KBC Group NV

    2,016       110,594  
Investments   Shares     Value  
Banks – (continued)  

National Bank of Canada

    1,064     $ 66,082  

Nordea Bank Abp

    9,338       98,038  

Royal Bank of Canada

    5,166       412,164  

Sberbank of Russia PJSC‡

    79,800        

Sumitomo Mitsui Financial Group, Inc.

    7,400       352,788  

Swedbank AB, Class A

    11,326       185,258  

Toronto-Dominion Bank (The)

    98       5,468  

Turkiye Is Bankasi A/S, Class C

    103,600       76,823  

Yapi ve Kredi Bankasi A/S

    348,334       212,255  
              2,838,433  
Broadline Retail – 0.6%  

B&M European Value Retail SA

    10,598       68,005  

Dollarama, Inc.(b)

    1,204       82,131  
              150,136  
Building Products – 0.2%  

Xinyi Glass Holdings Ltd.

    43,886       50,422  
Capital Markets – 2.4%  

Deutsche Boerse AG

    812       133,206  

Macquarie Korea Infrastructure Fund

    21,345       189,972  

Moscow Exchange MICEX-RTS PJSC‡

    227,100        

NH Investment & Securities Co. Ltd.

    6,216       44,553  

Samsung Securities Co. Ltd.

    5,278       137,954  

Singapore Exchange Ltd.

    19,600       135,478  
              641,163  
Chemicals – 1.8%  

Croda International plc

    658       34,956  

Evonik Industries AG

    1,386       25,432  

Fertiglobe plc

    200,676       175,380  

Nutrien Ltd.

    1,876       100,648  

Wacker Chemie AG

    56       6,837  

Yara International ASA

    4,424       144,540  
              487,793  
Commercial Services & Supplies – 0.9%  

Brambles Ltd.

    3,724       30,911  

 

See Accompanying Notes to the Financial Statements.

 

362    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® International Quality Dividend Defensive Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Commercial Services & Supplies – (continued)  

RB Global, Inc.

    826     $ 53,996  

Secom Co. Ltd.

    2,300       158,705  
              243,612  
Communications Equipment – 0.8%  

Accton Technology Corp.

    14,000       215,169  
Construction & Engineering – 0.5%  

Taisei Corp.

    1,700       57,237  

WSP Global, Inc.

    504       65,890  
              123,127  
Consumer Staples Distribution & Retail – 0.4%  

Kesko OYJ, Class B

    588       9,923  

Loblaw Cos. Ltd.

    770       62,909  

Metro, Inc., Class A

    560       28,414  
              101,246  
Containers & Packaging – 0.2%  

Smurfit Kappa Group plc

    1,638       53,348  
Diversified Telecommunication Services – 2.5%  

BT Group plc(b)

    33,712       46,124  

Elisa OYJ

    3,668       155,393  

Hellenic Telecommunications Organization SA(b)

    5,992       83,793  

Koninklijke KPN NV

    59,150       198,506  

Nippon Telegraph & Telephone Corp.

    80,200       93,627  

Spark New Zealand Ltd.

    3,780       10,927  

Telefonica Deutschland Holding AG

    15,218       25,793  

Telenor ASA

    5,488       56,075  
              670,238  
Electric Utilities – 2.9%  

CPFL Energia SA

    15,400       102,117  

EDP – Energias de Portugal SA

    12,474       52,344  

Enel SpA

    23,688       149,929  

Fortum OYJ

    4,200       49,721  

Hydro One Ltd.(a)(b)

    2,170       56,210  

Iberdrola SA

    4,740       52,607  

Power Grid Corp. of India Ltd.

    72,613       176,302  
Investments   Shares     Value  
Electric Utilities – (continued)  

Redeia Corp. SA

    3,234     $ 50,267  

SSE plc

    3,836       76,013  
              765,510  
Electrical Equipment – 0.8%  

CG Power & Industrial Solutions Ltd.

    39,312       184,192  

Mitsubishi Electric Corp.

    1,900       21,046  
              205,238  
Electronic Equipment, Instruments & Components – 0.7%  

Largan Precision Co. Ltd.

    3,000       191,460  
Entertainment – 0.8%  

Capcom Co. Ltd.

    600       19,171  

Nexon Co. Ltd.

    10,700       193,977  
              213,148  
Financial Services – 1.6%  

Power Finance Corp. Ltd.

    62,282       184,470  

REC Ltd.

    69,440       239,866  
              424,336  
Food Products – 3.5%  

JBS SA

    15,400       61,166  

Nestle SA (Registered)

    8,036       865,898  
              927,064  
Gas Utilities – 1.9%  

Adani Total Gas Ltd.

    6,090       41,276  

Naturgy Energy Group SA(b)

    7,084       199,924  

Petronas Gas Bhd.

    53,200       192,054  

Snam SpA

    13,790       63,114  
              496,368  
Ground Transportation – 0.5%  

Canadian National Railway Co.(b)

    1,190       125,776  
Health Care Equipment & Supplies – 0.7%  

Cochlear Ltd.

    1,232       187,865  
Hotels, Restaurants & Leisure – 1.7%  

Genting Singapore Ltd.

    57,400       36,031  

OPAP SA

    11,885       200,999  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     363  


Table of Contents

 

 

FlexShares® International Quality Dividend Defensive Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Hotels, Restaurants & Leisure – (continued)  

Sodexo SA

    1,960     $ 206,923  
              443,953  
Household Durables – 0.5%  

Sekisui Chemical Co. Ltd.

    4,200       56,963  

Sekisui House Ltd.

    3,200       62,101  
              119,064  
Industrial Conglomerates – 0.5%  

Alfa SAB de CV, Class A

    43,400       27,021  

Jardine Matheson Holdings Ltd.

    1,100       44,495  

Quinenco SA

    16,632       44,871  

Siemens AG (Registered)

    70       9,246  
              125,633  
Industrial REITs – 0.7%  

Goodman Group, REIT(b)

    15,092       198,181  
Insurance – 4.2%  

Admiral Group plc

    6,874       203,777  

Allianz SE (Registered)

    910       212,477  

BB Seguridade Participacoes SA

    32,200       196,405  

Medibank Pvt Ltd.

    25,032       54,362  

Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Registered)

    406       162,430  

Sampo OYJ, Class A

    1,946       76,333  

Zurich Insurance Group AG

    448       211,976  
              1,117,760  
Interactive Media & Services – 0.5%  

Tencent Holdings Ltd.

    3,900       144,145  
IT Services – 2.3%  

Arabian Internet & Communications Services Co.

    658       54,863  

Capgemini SE

    42       7,392  

Elm Co.

    322       60,184  

HCL Technologies Ltd.

    15,050       230,652  

SCSK Corp.

    700       11,872  

Tata Consultancy Services Ltd.

    5,740       232,247  
              597,210  
Investments   Shares     Value  
Leisure Products – 0.8%  

Shimano, Inc.

    1,400     $ 199,260  
Machinery – 0.5%  

Kone OYJ, Class B

    3,080       133,120  
Marine Transportation – 3.1%  

AP Moller – Maersk A/S, Class A(b)

    42       68,400  

Cia Sud Americana de Vapores SA

    1,402,660       77,639  

COSCO SHIPPING Holdings Co. Ltd., Class H

    175,000       177,805  

Evergreen Marine Corp. Taiwan Ltd.

    56,574       187,504  

HMM Co. Ltd.

    10,724       115,693  

Yang Ming Marine Transport Corp.

    146,884       190,653  
              817,694  
Metals & Mining – 6.4%  

BHP Group Ltd.

    29,092       819,672  

China Hongqiao Group Ltd.(b)

    56,000       52,389  

Fortescue Metals Group Ltd.(b)

    4,956       69,975  

Jindal Steel & Power Ltd.

    7,812       59,468  

Kumba Iron Ore Ltd.

    4,116       108,421  

Magnitogorsk Iron & Steel Works PJSC*‡

    172,884        

Novolipetsk Steel PJSC*‡

    47,108        

Rio Tinto Ltd.

    112       8,338  

Rio Tinto plc

    6,524       416,015  

Severstal PAO*‡

    6,900        

Vedanta Ltd.

    65,366       170,051  
              1,704,329  
Multi-Utilities – 0.1%  

Canadian Utilities Ltd., Class A

    238       5,030  

Engie SA

    2,100       33,304  
              38,334  
Oil, Gas & Consumable Fuels – 8.0%  

Adaro Energy Indonesia Tbk. PT

    1,160,600       187,040  

BP plc

    32,200       196,381  

Cenovus Energy, Inc.(b)

    4,676       88,990  

Equinor ASA

    7,518       251,986  

Exxaro Resources Ltd.

    2,002       19,966  

 

See Accompanying Notes to the Financial Statements.

 

364    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® International Quality Dividend Defensive Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

LUKOIL PJSC‡

    240     $  

Pembina Pipeline Corp.

    1,750       53,802  

Petroleo Brasileiro SA (Preference)

    37,800       260,395  

Shell plc

    3,794       121,840  

Suncor Energy, Inc.

    6,874       222,374  

Surgutneftegas PJSC (Preference)‡

    276,000        

TotalEnergies SE

    3,864       258,125  

Turkiye Petrol Rafinerileri A/S

    38,570       193,445  

United Tractors Tbk. PT

    61,400       97,115  

Yankuang Energy Group Co. Ltd., Class H(b)

    89,999       156,428  
              2,107,887  
Paper & Forest Products – 0.2%  

Stora Enso OYJ, Class R

    5,180       62,007  
Personal Care Products – 1.8%  

L’Oreal SA

    1,092       457,254  

Unilever plc

    504       23,784  
              481,038  
Pharmaceuticals – 8.8%  

Astellas Pharma, Inc.

    14,800       185,678  

AstraZeneca plc

    784       97,513  

China Medical System Holdings Ltd.

    126,000       201,288  

GSK plc

    23,352       412,976  

Novartis AG (Registered)

    3,682       342,043  

Novo Nordisk A/S, Class B

    2,296       220,127  

Orion OYJ, Class B

    182       7,222  

Roche Holding AG

    28       7,606  

Roche Holding AG – BR

    3,122       802,241  

Sanofi SA

    532       48,191  
              2,324,885  
Professional Services – 1.1%  

Bureau Veritas SA

    7,518       170,771  

Computershare Ltd.

    2,422       38,015  

Randstad NV

    574       29,632  

RELX plc

    378       13,155  

Teleperformance SE

    238       27,207  
              278,780  
Investments   Shares     Value  
Real Estate Management & Development – 1.8%  

CapitaLand Investment Ltd.

    26,600     $ 57,081  

CK Asset Holdings Ltd.

    37,000       184,891  

Daito Trust Construction Co. Ltd.

    1,800       191,951  

Land & Houses PCL, NVDR

    245,000       51,464  
              485,387  
Semiconductors & Semiconductor Equipment – 2.8%  

ASML Holding NV

    266       158,941  

Novatek Microelectronics Corp.

    8,000       112,101  

Taiwan Semiconductor Manufacturing Co. Ltd.

    21,000       342,500  

Vanguard International Semiconductor Corp.

    61,824       133,617  
              747,159  
Software – 0.1%  

SAP SE

    238       31,883  
Specialty Retail – 2.1%  

Abu Dhabi National Oil Co. for Distribution PJSC

    38,276       35,014  

Industria de Diseno Textil SA(b)

    6,734       231,686  

Jarir Marketing Co.

    42,770       165,079  

Topsports International Holdings Ltd.(a)

    14,000       11,773  

Zhongsheng Group Holdings Ltd.

    21,000       48,416  

ZOZO, Inc.(b)

    3,400       64,130  
              556,098  
Technology Hardware, Storage & Peripherals – 2.0%  

Catcher Technology Co. Ltd.

    26,000       145,491  

Inventec Corp.

    88,000       109,067  

Lite-On Technology Corp.

    28,000       86,326  

Ricoh Co. Ltd.(b)

    6,600       52,841  

Samsung Electronics Co. Ltd.

    2,842       140,780  
              534,505  
Textiles, Apparel & Luxury Goods – 0.7%  

Kering SA

    84       34,024  

LVMH Moet Hennessy Louis Vuitton SE

    168       119,775  

Pandora A/S

    322       36,398  
              190,197  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     365  


Table of Contents

 

 

FlexShares® International Quality Dividend Defensive Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Tobacco – 1.6%  

Imperial Brands plc

    9,142     $ 194,245  

Japan Tobacco, Inc.

    10,400       241,793  
              436,038  
Trading Companies & Distributors – 2.0%  

Ferguson plc

    588       87,976  

ITOCHU Corp.(b)

    4,900       173,843  

Mitsubishi Corp.

    3,900       179,105  

Sumitomo Corp.

    4,200       81,493  
              522,417  
Wireless Telecommunication Services – 2.5%  

Intouch Holdings PCL, NVDR

    95,200       188,056  

KDDI Corp.

    5,600       165,916  

SoftBank Corp.

    7,100       79,933  

Tele2 AB, Class B

    21,364       151,329  

Vodafone Group plc

    76,916       70,654  
              655,888  
TOTAL COMMON STOCKS
(COST $26,583,706)

 

    25,342,351  
    Principal
Amount
       
SECURITIES LENDING REINVESTMENTS – 0.5%(c)  
REPURCHASE AGREEMENTS – 0.5%  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $125,910, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $127,323
(Cost $125,891)

  $ 125,891       125,891  
Total Investments – 96.1%
(Cost $26,709,597)

 

    25,468,242  

Other assets less liabilities – 3.9%

 

    1,035,130  
NET ASSETS – 100.0%

 

  $ 26,503,372  
*

Non-income producing security.

 

 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(a) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(b) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $1,119,564, collateralized in the form of cash with a value of $125,891 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $834,620 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 6.63%, and maturity dates ranging from November 16, 2023 – August 15, 2053 and $288,411 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 5.50%, and maturity dates ranging from November 13, 2023 – October 22, 2071; a total value of $1,248,922.

 

(c) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $125,891.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

NVDR – Non-Voting Depositary Receipt

OYJ – Public Limited Company

PJSC – Public Joint Stock Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.

REIT – Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 2,192,922  

Aggregate gross unrealized depreciation

    (3,839,821

Net unrealized depreciation

  $ (1,646,899

Federal income tax cost

  $ 27,040,655  

 

See Accompanying Notes to the Financial Statements.

 

366    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® International Quality Dividend Defensive Index Fund (cont.)

 

 

Futures Contracts

FlexShares® International Quality Dividend Defensive Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

         

MSCI EAFE E-Mini Index

    8       12/15/2023       USD     $ 789,640     $ (52,602

MSCI Emerging Markets E-Mini Index

    7       12/15/2023       USD       321,720       (21,884
                                    $ (74,486

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Abbreviations:

 

USD – US Dollar

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     367  


Table of Contents

 

 

FlexShares® International Quality Dividend Defensive Index Fund (cont.)

 

 

FlexShares® International Quality Dividend Defensive Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    6.4

Belgium

    0.4  

Brazil

    2.3  

Canada

    5.4  

Chile

    0.7  

China

    4.7  

Denmark

    1.2  

Finland

    1.9  

France

    6.2  

Germany

    2.6  

Greece

    1.1  

Hong Kong

    1.2  

India

    6.7  

Indonesia

    1.1  

Israel

    0.4  

Italy

    0.8  

Japan

    11.9  

Malaysia

    0.7  

Mexico

    0.1  

Netherlands

    1.5  

New Zealand

     0.0  

Norway

    1.7  

Peru

    0.2  

Portugal

    0.2  

Saudi Arabia

    1.3  

Singapore

    1.0  

South Africa

    0.5  

South Korea

    2.4  

Spain

    2.2  

Sweden

    1.6  

Switzerland

    8.4  

Taiwan

    6.5  

Thailand

    0.9  

Turkey

    1.8  

United Arab Emirates

    0.8  

United Kingdom

    8.8  

Other1

    4.4  
      100.0

 

 

Amount represents less than 0.05%.

 

1 

Includes any non-equity securities, securities lending reinvestments and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    95.6

Securities Lending Reinvestments

    0.5  

Others(1)

    3.9  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

368    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® International Quality Dividend Dynamic Index Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
COMMON STOCKS – 98.5%  
Air Freight & Logistics – 1.2%  

Deutsche Post AG

    7,290     $ 283,255  

DSV A/S

    3,186       474,651  
              757,906  
Automobile Components – 0.4%  

Fuyao Glass Industry Group Co. Ltd., Class H(a)

    32,400       147,619  

Magna International, Inc.(b)

    2,673       128,312  
              275,931  
Automobiles – 2.5%  

Dr Ing hc F Porsche AG (Preference)(c)

    1,269       110,713  

Ford Otomotiv Sanayi A/S

    4,347       120,810  

Geely Automobile Holdings Ltd.

    235,000       266,397  

Mercedes-Benz Group AG

    11,718       686,552  

Yadea Group Holdings Ltd.(a)

    256,000       467,858  
              1,652,330  
Banks – 12.4%  

ANZ Group Holdings Ltd.

    41,121       643,344  

Banco Bilbao Vizcaya Argentaria SA(b)

    42,147       330,646  

Banco del Bajio SA(a)

    167,400       511,667  

Bank of Montreal

    10,125       764,271  

Bank Polska Kasa Opieki SA

    7,506       227,460  

Barclays plc

    323,379       516,404  

BNP Paribas SA

    8,127       466,364  

Canara Bank

    128,520       593,291  

China Construction Bank Corp., Class H

    810,000       459,627  

China Merchants Bank Co. Ltd., Class H

    108,000       411,318  

FinecoBank Banca Fineco SpA

    37,854       444,730  

Industrial & Commercial Bank of China Ltd., Class H

    1,107,000       531,953  

KBC Group NV

    8,208       450,277  

Nordea Bank Abp

    23,733       249,169  

Royal Bank of Canada

    11,475       915,520  

Sberbank of Russia PJSC (Preference)‡

    31,920        
Investments   Shares     Value  
Banks – (continued)  

Skandinaviska Enskilda Banken AB, Class A

    46,629     $ 518,766  

Standard Bank Group Ltd.

    12,609       123,010  
              8,157,817  
Beverages – 0.4%  

Diageo plc

    6,885       259,577  
Broadline Retail – 0.3%  

B&M European Value Retail SA

    11,313       72,592  

momo.com, Inc.

    8,200       134,750  
              207,342  
Building Products – 0.8%  

Geberit AG (Registered)

    1,107       513,085  
Capital Markets – 4.7%  

3i Group plc

    24,165       567,254  

Brookfield Asset Management Ltd., Class A

    16,227       464,631  

Hong Kong Exchanges & Clearing Ltd.

    6,500       228,446  

Julius Baer Group Ltd.

    8,127       478,663  

Partners Group Holding AG

    540       567,740  

Samsung Securities Co. Ltd.

    8,505       222,299  

UBS Group AG (Registered)

    24,354       567,872  
              3,096,905  
Chemicals – 2.9%  

BASF SE

    4,914       226,125  

Fertiglobe plc

    377,595       329,997  

Nissan Chemical Corp.

    9,500       382,334  

Shin-Etsu Chemical Co. Ltd.

    24,300       716,910  

Sika AG (Registered)

    432       102,962  

Wacker Chemie AG

    945       115,369  

Yara International ASA

    378       12,350  
              1,886,047  
Construction Materials – 0.1%  

CRH plc

    837       44,902  
Consumer Staples Distribution & Retail – 0.6%  

Alimentation Couche-Tard, Inc.

    5,292       287,767  

Jeronimo Martins SGPS SA

    3,807       87,643  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     369  


Table of Contents

 

 

FlexShares® International Quality Dividend Dynamic Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Consumer Staples Distribution & Retail – (continued)  

Kesko OYJ, Class B

    999     $ 16,858  
              392,268  
Diversified REITs – 0.7%  

Stockland, REIT

    199,125       446,309  
Electric Utilities – 0.9%  

Enel SpA

    36,180       228,995  

Fortum OYJ

    20,898       247,399  

SSE plc

    5,265       104,329  
              580,723  
Electrical Equipment – 1.1%  

Sociedad Quimica y Minera de Chile SA (Preference), Class B

    8,127       391,913  

Voltronic Power Technology Corp.

    8,000       319,408  
              711,321  
Electronic Equipment, Instruments & Components – 1.0%  

Nan Ya Printed Circuit Board Corp.

    71,000       516,602  

Unimicron Technology Corp.

    34,000       149,900  
              666,502  
Entertainment – 0.6%  

Universal Music Group NV

    16,200       395,551  
Financial Services – 3.2%  

Banca Mediolanum SpA

    10,611       86,429  

FirstRand Ltd.

    86,994       285,109  

GMO Payment Gateway, Inc.

    8,100       320,160  

Piramal Enterprises Ltd.

    16,956       198,634  

Power Finance Corp. Ltd.

    200,745       594,577  

REC Ltd.

    180,900       624,881  
              2,109,790  
Food Products – 1.5%  

JBS SA

    37,800       150,136  

Nestle SA (Registered)

    4,320       465,490  

Uni-President China Holdings Ltd.

    540,000       367,840  
              983,466  
Investments   Shares     Value  
Gas Utilities – 0.3%  

Kunlun Energy Co. Ltd.

    186,000     $ 154,988  

Naturgy Energy Group SA(b)

    2,106       59,435  
              214,423  
Ground Transportation – 0.1%  

TFI International, Inc.

    459       50,723  
Health Care Equipment & Supplies – 2.4%  

Hoya Corp.

    5,700       539,533  

Sonova Holding AG (Registered)

    2,052       483,659  

Straumann Holding AG (Registered)

    3,699       434,710  

Sysmex Corp.

    3,200       151,141  
              1,609,043  
Health Care Providers & Services – 0.2%  

Amplifon SpA

    4,536       127,727  
Hotels, Restaurants & Leisure – 1.2%  

Evolution AB(a)

    1,593       141,425  

Haidilao International Holding Ltd.(a)

    54,000       134,990  

OPAP SA

    30,896       522,513  
              798,928  
Household Durables – 1.2%  

Haier Smart Home Co. Ltd., Class H

    54,000       154,589  

Nien Made Enterprise Co. Ltd.

    54,000       476,152  

Taylor Wimpey plc

    109,377       147,058  
              777,799  
Industrial Conglomerates – 2.2%  

Hitachi Ltd.

    13,500       844,792  

Industries Qatar QSC

    144,234       484,081  

Quinenco SA

    38,826       104,747  
              1,433,620  
Industrial REITs – 0.2%  

Goodman Group, REIT(b)

    12,474       163,803  
Insurance – 2.2%  

AXA SA

    13,689       404,489  

BB Seguridade Participacoes SA

    29,700       181,156  

Legal & General Group plc

    53,028       136,029  

 

See Accompanying Notes to the Financial Statements.

 

370    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® International Quality Dividend Dynamic Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Insurance – (continued)  

Manulife Financial Corp.

    31,725     $ 551,660  

Powszechny Zaklad Ubezpieczen SA

    16,794       189,739  
              1,463,073  
Interactive Media & Services – 2.3%  

Autohome, Inc., ADR

    3,834       102,559  

REA Group Ltd.(b)

    5,130       466,779  

Rightmove plc

    75,681       434,380  

SEEK Ltd.

    1,053       13,741  

Tencent Holdings Ltd.

    13,500       498,965  
              1,516,424  
IT Services – 0.2%  

Infosys Ltd.

    7,371       121,146  
Leisure Products – 0.6%  

Shimano, Inc.

    3,000       426,987  
Machinery – 1.9%  

Atlas Copco AB, Class A

    20,412       263,448  

Atlas Copco AB, Class B

    3,645       40,797  

Daifuku Co. Ltd.

    8,100       131,920  

MISUMI Group, Inc.

    21,600       322,264  

VAT Group AG(a)

    1,377       485,252  
              1,243,681  
Marine Transportation – 3.3%  

AP Moller – Maersk A/S, Class A(b)

    174       283,373  

COSCO SHIPPING Holdings Co. Ltd., Class H

    553,500       562,371  

Evergreen Marine Corp. Taiwan Ltd.

    162,000       536,920  

Hapag-Lloyd AG(a)

    108       15,537  

Orient Overseas International Ltd.(b)

    27,000       340,407  

Yang Ming Marine Transport Corp.

    338,000       438,717  
              2,177,325  
Media – 0.5%  

Publicis Groupe SA

    2,484       188,307  

WPP plc

    15,903       136,356  
              324,663  
Investments   Shares     Value  
Metals & Mining – 6.9%  

BHP Group Ltd.

    74,223     $ 2,091,246  

Fortescue Metals Group Ltd.(b)

    14,364       202,809  

Gerdau SA (Preference)

    21,265       91,798  

Kumba Iron Ore Ltd.

    22,707       598,135  

MMC Norilsk Nickel PJSC*‡

    2,128        

Norsk Hydro ASA

    85,482       487,257  

Rio Tinto plc

    9,396       599,153  

Severstal PAO*‡

    7,952        

Vedanta Ltd.

    181,305       471,670  
              4,542,068  
Oil, Gas & Consumable Fuels – 8.7%  

Adaro Energy Indonesia Tbk. PT

    1,309,500       211,037  

Canadian Natural Resources Ltd.

    16,227       1,029,317  

Coal India Ltd.

    180,360       680,747  

Equinor ASA

    14,013       469,684  

Exxaro Resources Ltd.

    65,448       652,703  

OMV AG

    2,808       122,759  

Ovintiv, Inc.

    3,537       169,776  

Petroleo Brasileiro SA (Preference)

    94,500       650,987  

Shell plc

    3,078       98,847  

United Tractors Tbk. PT

    294,300       465,489  

Var Energi ASA

    173,880       585,686  

Woodside Energy Group Ltd.

    7,318       158,738  

Yankuang Energy Group Co. Ltd., Class H(b)

    242,000       420,622  
              5,716,392  
Personal Care Products – 2.3%  

L’Oreal SA

    3,537       1,481,050  
Pharmaceuticals – 5.4%  

Astellas Pharma, Inc.

    16,200       203,242  

AstraZeneca plc

    1,053       130,971  

China Medical System Holdings Ltd.

    366,000       584,694  

Chugai Pharmaceutical Co. Ltd.

    6,800       200,258  

CSPC Pharmaceutical Group Ltd.

    408,000       356,138  

GSK plc

    27,756       490,860  

Hansoh Pharmaceutical Group Co. Ltd.(a)

    324,000       610,352  

Novartis AG (Registered)

    1,323       122,901  

Novo Nordisk A/S, Class B

    7,128       683,390  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     371  


Table of Contents

 

 

FlexShares® International Quality Dividend Dynamic Index Fund (cont.)

 

 

Investments   Shares     Value  
COMMON STOCKS – (continued)  
Pharmaceuticals – (continued)  

Orion OYJ, Class B

    432     $ 17,142  

Roche Holding AG

    594       152,637  
              3,552,585  
Professional Services – 1.7%  

Randstad NV

    9,180       473,907  

Recruit Holdings Co. Ltd.

    21,600       617,999  
              1,091,906  
Real Estate Management & Development – 0.5%  

Daiwa House Industry Co. Ltd.

    3,700       100,828  

Land & Houses PCL, NVDR

    772,200       162,207  

Longfor Group Holdings Ltd.(a)

    67,500       98,171  
              361,206  
Semiconductors & Semiconductor Equipment – 7.6%  

ASM International NV

    81       33,262  

ASML Holding NV

    4,509       2,694,227  

Globalwafers Co. Ltd.

    8,000       117,034  

MediaTek, Inc.

    12,000       311,516  

Novatek Microelectronics Corp.

    42,000       588,531  

Taiwan Semiconductor Manufacturing Co. Ltd.

    43,000       701,310  

Tokyo Electron Ltd.

    4,300       560,907  
              5,006,787  
Software – 0.7%  

Temenos AG (Registered)

    6,696       479,289  
Specialty Retail – 2.0%  

Fast Retailing Co. Ltd.

    2,700       588,689  

Industria de Diseno Textil SA(b)

    16,875       580,590  

ZOZO, Inc.(b)

    8,100       152,779  
              1,322,058  
Technology Hardware, Storage & Peripherals – 0.3%  

Samsung Electronics Co. Ltd.

    3,915       193,931  
Textiles, Apparel & Luxury Goods – 5.0%  

Burberry Group plc

    19,494       400,243  

Cie Financiere Richemont SA (Registered)

    7,668       900,730  

Hermes International SCA

    297       552,389  
Investments   Shares     Value  
Textiles, Apparel & Luxury Goods – (continued)  

LVMH Moet Hennessy Louis Vuitton SE

    270     $ 192,496  

Moncler SpA

    1,296       67,042  

Pandora A/S

    5,184       585,988  

Shenzhou International Group Holdings Ltd.

    56,700       556,159  
              3,255,047  
Tobacco – 1.6%  

Imperial Brands plc

    21,492       456,651  

Japan Tobacco, Inc.

    27,000       627,733  
              1,084,384  
Trading Companies & Distributors – 1.6%  

Howden Joinery Group plc

    57,132       442,028  

ITOCHU Corp.(b)

    3,100       109,982  

Marubeni Corp.

    36,000       517,733  
              1,069,743  
Wireless Telecommunication Services – 0.1%  

Vodafone Group plc

    41,229       37,872  
TOTAL COMMON STOCKS
(COST $70,125,114)

 

    64,781,455  
    Principal
Amount
       
SECURITIES LENDING REINVESTMENTS – 1.1%(d)  
REPURCHASE AGREEMENTS – 1.1%  

Citigroup Global Markets, Inc., 5.28%, dated 10/31/2023, due 11/1/2023, repurchase price $695,982, collateralized by various U.S. Treasury Securities, ranging from 1.50% – 3.88%, maturing 2/15/2025 – 1/31/2027; total market value $703,793
(Cost $695,880)

  $ 695,880       695,880  
Total Investments – 99.6%
(Cost $70,820,994)

 

    65,477,335  

Other assets less liabilities – 0.4%

 

    236,373  
NET ASSETS – 100.0%

 

  $ 65,713,708  

 

See Accompanying Notes to the Financial Statements.

 

372    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® International Quality Dividend Dynamic Index Fund (cont.)

 

 

*

Non-income producing security.

 

 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

(a) 

Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States and as such may have restrictions on resale.

 

(b) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $2,403,416, collateralized in the form of cash with a value of $695,880 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $1,560,967 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% – 6.13%, and maturity dates ranging from November 16, 2023 – August 15, 2053 and $384,728 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% – 5.00%, and maturity dates ranging from November 13, 2023 – October 22, 2073; a total value of $2,641,575.

 

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(d) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $695,880.

Percentages shown are based on Net Assets.

 

Abbreviations

 

ADR – American Depositary Receipt

NVDR – Non-Voting Depositary Receipt

OYJ – Public Limited Company

PJSC – Public Joint Stock Company

Preference – A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.

REIT – Real Estate Investment Trust

SCA– Limited partnership with share capital

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 3,655,732  

Aggregate gross unrealized depreciation

    (10,203,061

Net unrealized depreciation

  $ (6,547,329

Federal income tax cost

  $ 71,965,876  

 

Futures Contracts

FlexShares® International Quality Dividend Dynamic Index Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

         

MSCI EAFE E-Mini Index

    7       12/15/2023       USD     $ 690,935     $ (40,656

MSCI Emerging Markets E-Mini Index

    8       12/15/2023       USD       367,680       (22,089
                                    $ (62,745

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     373  


Table of Contents

 

 

FlexShares® International Quality Dividend Dynamic Index Fund (cont.)

 

 

Forward Foreign Currency Contracts

FlexShares® International Quality Dividend Dynamic Index Fund had the following outstanding contracts as of October 31, 2023:

 

Contracts to Receive   Counterparty   In Exchange For     Maturity Date     Unrealized
Appreciation/
(Depreciation)
 

USD

    222,140       Toronto-Dominion Bank (The)  

EUR

    207,284       12/20/2023     $ 2,535  

USD

    44,725       Toronto-Dominion Bank (The)  

GBP

    35,918       12/20/2023       1,123  

USD

    57,941         Toronto-Dominion Bank (The)  

JPY

    8,424,060       12/20/2023       1,848  

Total unrealized appreciation

 

          $ 5,506  

CAD

    85,542         Citibank NA  

USD

    63,220       12/20/2023     $ (1,549

Total unrealized depreciation

 

          $ (1,549

Net unrealized appreciation

 

          $ 3,957  

 

Abbreviations:

 

CAD – Canadian Dollar

EUR – Euro

GBP – British Pound

JPY – Japanese Yen

USD – US Dollar

 

See Accompanying Notes to the Financial Statements.

 

374    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® International Quality Dividend Dynamic Index Fund (cont.)

 

 

FlexShares® International Quality Dividend Dynamic Index invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    6.4

Austria

    0.2  

Belgium

    0.7  

Brazil

    1.6  

Canada

    6.6  

Chile

    0.8  

China

    11.0  

Denmark

    3.1  

Finland

    0.4  

France

    5.0  

Germany

    2.2  

Greece

    0.8  

Hong Kong

    0.3  

India

    5.0  

Indonesia

    1.0  

Ireland

    0.1  

Italy

    1.5  

Japan

    11.4  

Mexico

    0.8  

Netherlands

    5.5  

Norway

    2.4  

Poland

    0.6  

Portugal

    0.1  

Qatar

    0.7  

South Africa

    2.5  

South Korea

    0.6  

Spain

    1.5  

Sweden

    1.8  

Switzerland

    8.8  

Taiwan

    6.5  

Thailand

    0.2  

Turkey

    0.2  

United Arab Emirates

    0.5  

United Kingdom

    7.7  

Other1

    1.5  
      100.0

 

1 

Includes any non-equity securities, securities lending reinvestments and net other assets (liabilities).

 

Security Type   % of Net Assets  

Common Stocks

    98.5

Securities Lending Reinvestments

    1.1  

Others(1)

    0.4  
      100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     375  


Table of Contents

 

Schedule of Investments

FlexShares® iBoxx 3-Year Target Duration TIPS Index Fund

 

October 31, 2023

 

 

Investments   Principal
Amount
    Value  
U.S. TREASURY OBLIGATIONS – 99.8%  

U.S. Treasury Inflation Linked Bonds

   

2.38%, 1/15/2025

  $ 65,116,566     $ 64,291,587  

2.00%, 1/15/2026

    44,175,109       43,287,005  

2.38%, 1/15/2027

    88,826,406       87,914,721  

1.75%, 1/15/2028

    33,304,397       32,189,480  

3.63%, 4/15/2028

    46,376,634       48,397,158  

2.50%, 1/15/2029

    29,414,287       29,375,509  

3.88%, 4/15/2029

    53,535,614       57,092,804  

U.S. Treasury Inflation Linked Notes

   

0.25%, 1/15/2025

    75,903,090       73,077,479  

0.13%, 4/15/2025

    60,391,232       57,658,686  

0.38%, 7/15/2025

    75,804,809       72,609,754  

0.13%, 10/15/2025

    57,971,254       55,000,227  

0.63%, 1/15/2026

    78,284,302       74,467,942  

0.13%, 4/15/2026

    66,699,399       62,373,708  

0.13%, 7/15/2026(a)

    67,389,132       63,016,078  

0.13%, 10/15/2026

    152,365,313       141,662,046  

0.38%, 1/15/2027

    173,121,821       160,856,208  

0.13%, 4/15/2027

    151,567,555       138,821,967  

0.38%, 7/15/2027

    164,024,102       151,688,656  

1.63%, 10/15/2027

    59,691,228       57,693,554  

0.50%, 1/15/2028

    69,003,679       63,322,331  

1.25%, 4/15/2028

    58,852,331       55,634,419  

0.75%, 7/15/2028

    64,055,318       59,255,548  

2.38%, 10/15/2028

    32,161,683       32,057,828  

0.88%, 1/15/2029

    62,779,682       57,802,676  

0.25%, 7/15/2029

    68,230,485       60,383,313  

0.13%, 1/15/2030

    69,972,684       60,408,839  

0.13%, 7/15/2030

    73,364,225       62,847,492  
Total U.S. Treasury Obligations
(Cost $2,015,549,742)

 

    1,923,187,015  
                 
Total Investments – 99.8%
(Cost $2,015,549,742)

 

    1,923,187,015  

Other assets less liabilities – 0.2%

 

    4,736,222  
NET ASSETS – 100.0%

 

  $ 1,927,923,237  
(a) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $1,197,583, collateralized in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% — 6.00%, and maturity dates ranging from January 31, 2024 — August 15, 2053; a total value of $1,224,345.

 

Percentages shown are based on Net Assets.

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $  

Aggregate gross unrealized depreciation

    (108,003,462

Net unrealized depreciation

  $ (108,003,462

Federal income tax cost

  $ 2,031,190,477  

 

Security Type    % of Net Assets   

U.S. Treasury Obligations

     99.8

Others(1)

     0.2  
       100.0

 

(1)

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

376    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® iBoxx 5-Year Target Duration TIPS Index Fund

 

October 31, 2023

 

 

Investments   Principal
Amount
    Value  
U.S. TREASURY OBLIGATIONS – 99.7%         

U.S. Treasury Inflation Linked Bonds

   

2.38%, 1/15/2027

  $ 20,227,404     $ 20,019,796  

1.75%, 1/15/2028

    18,471,666       17,853,298  

3.63%, 4/15/2028

    26,169,550       27,309,698  

2.50%, 1/15/2029

    24,758,109       24,725,469  

3.88%, 4/15/2029

    45,056,574       48,050,372  

3.38%, 4/15/2032

    7,133,365       7,556,816  

2.13%, 2/15/2040

    17,375,556       16,233,023  

U.S. Treasury Inflation Linked Notes

   

0.38%, 1/15/2027

    39,443,564       36,649,002  

0.13%, 4/15/2027

    34,551,365       31,645,879  

0.38%, 7/15/2027

    37,367,433       34,557,212  

1.63%, 10/15/2027

    33,705,354       32,577,344  

0.50%, 1/15/2028

    38,966,578       35,758,305  

1.25%, 4/15/2028

    33,230,849       31,413,862  

0.75%, 7/15/2028

    36,166,731       33,456,698  

2.38%, 10/15/2028

    18,245,503       18,186,585  

0.88%, 1/15/2029

    53,781,800       49,518,122  

0.25%, 7/15/2029

    58,451,722       51,729,203  

0.13%, 1/15/2030

    59,939,082       51,746,626  

0.13%, 7/15/2030

    41,428,364       35,489,624  

0.13%, 1/15/2031

    41,219,899       34,768,824  

0.13%, 7/15/2031

    43,274,687       36,217,194  

0.13%, 1/15/2032

    45,645,999       37,625,855  

0.63%, 7/15/2032

    41,442,053       35,477,068  

1.13%, 1/15/2033

    41,402,992       36,677,228  

1.38%, 7/15/2033

    26,677,168       24,131,635  
Total U.S. Treasury Obligations
(Cost $871,004,354)

 

    809,374,738  
                 
Total Investments – 99.7%
(Cost $871,004,354)

 

    809,374,738  

Other assets less liabilities – 0.3%

 

    2,175,664  
NET ASSETS – 100.0%

 

  $ 811,550,402  

Percentages shown are based on Net Assets.

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $  

Aggregate gross unrealized depreciation

    (76,349,655

Net unrealized depreciation

  $ (76,349,655

Federal income tax cost

  $ 885,724,393  

 

Security Type    % of Net Assets   

U.S. Treasury Obligations

     99.7

Others(1)

     0.3  
       100.0

 

(1)

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     377  


Table of Contents

 

Schedule of Investments

FlexShares® Disciplined Duration MBS Index Fund

 

October 31, 2023

 

 

Investments   Principal
Amount
    Value  
MORTGAGE-BACKED SECURITIES – 99.1%  

FHLMC

   

2.50%, 1/1/2028

  $ 116,974     $ 111,268  

2.50%, 4/1/2028

    351,349       334,191  

2.50%, 7/1/2028

    185,258       175,305  

2.50%, 1/1/2029

    25,819       24,510  

2.50%, 1/1/2030

    296,003       281,517  

3.00%, 1/1/2032

    1,057,338       987,706  

2.50%, 2/1/2032

    1,298,455       1,194,728  

5.00%, 5/1/2034

    41,400       40,274  

5.00%, 7/1/2035

    94,783       92,106  

5.00%, 8/1/2035

    77,454       75,219  

5.00%, 10/1/2035

    13,848       13,413  

5.00%, 12/1/2035

    81,027       78,673  

6.00%, 1/1/2037

    52,030       52,262  

6.00%, 4/1/2037

    27,226       27,347  

6.00%, 5/1/2037

    47,251       47,461  

5.00%, 2/1/2038

    40,611       39,468  

5.00%, 7/1/2038

    40,882       39,402  

5.00%, 10/1/2038

    37,116       35,755  

5.00%, 2/1/2039

    95,200       92,394  

5.00%, 5/1/2039

    53,202       51,193  

5.00%, 6/1/2039

    18,811       18,169  

5.00%, 7/1/2039

    40,715       39,036  

5.00%, 9/1/2039

    4,330       4,171  

6.00%, 11/1/2039

    29,276       29,406  

5.00%, 1/1/2040

    12,765       12,257  

5.00%, 3/1/2040

    34,937       33,502  

5.00%, 4/1/2040

    15,450       14,816  

6.00%, 4/1/2040

    33,193       33,289  

5.00%, 5/1/2040

    13,795       13,220  

6.00%, 5/1/2040

    80,108       80,340  

5.00%, 7/1/2040

    76,905       73,559  

6.00%, 7/1/2040

    125,719       126,248  

4.00%, 1/1/2041

    10,598       9,476  

5.00%, 5/1/2041

    108,741       104,302  

3.50%, 11/1/2041

    55,001       48,370  

3.00%, 3/1/2042

    9,320       7,880  

3.00%, 4/1/2042

    70,612       59,680  

3.00%, 6/1/2042

    58,975       49,832  

3.50%, 7/1/2042

    570,746       501,942  

3.00%, 8/1/2042

    33,492       28,300  

3.00%, 12/1/2042

    72,672       61,378  

3.00%, 1/1/2043

    37,510       31,643  

3.00%, 2/1/2043

    19,654       16,683  
Investments   Principal
Amount
    Value  

3.00%, 4/1/2043

  $ 24,492     $ 20,631  

3.00%, 6/1/2043

    15,182       12,814  

3.50%, 8/1/2043

    637,674       555,213  

3.00%, 10/1/2043

    47,967       40,406  

4.00%, 8/1/2044

    10,728       9,413  

5.00%, 8/1/2044

    30,302       29,284  

4.00%, 1/1/2045

    32,604       28,934  

4.00%, 2/1/2045

    72,152       64,088  

4.50%, 2/1/2045

    358,793       327,172  

4.00%, 8/1/2045

    80,908       71,953  

4.00%, 9/1/2045

    13,610       12,064  

4.00%, 10/1/2045

    135,936       120,404  

4.00%, 11/1/2045

    28,001       24,890  

4.00%, 12/1/2045

    11,441       10,138  

4.00%, 1/1/2046

    36,024       31,959  

2.50%, 9/1/2046

    21,545       16,888  

3.00%, 11/1/2046

    23,272       19,254  

FHLMC UMBS

   

3.00%, 8/1/2026

    38,866       37,649  

3.00%, 1/1/2027

    63,190       60,983  

3.00%, 2/1/2027

    36,524       35,198  

3.00%, 4/1/2027

    225,151       217,127  

2.50%, 6/1/2027

    21,804       20,793  

2.50%, 3/1/2028

    766,102       727,069  

3.00%, 8/1/2029

    105,118       98,880  

2.50%, 8/1/2030

    851,807       786,853  

2.50%, 11/1/2030

    34,306       32,393  

3.00%, 5/1/2031

    62,559       60,011  

2.00%, 8/1/2031

    27,118       24,327  

4.00%, 8/1/2031

    66,741       63,296  

4.00%, 9/1/2031

    60,704       57,531  

2.00%, 11/1/2031

    43,724       39,134  

2.50%, 12/1/2031

    586,655       539,647  

2.00%, 1/1/2032

    87,554       78,534  

4.00%, 1/1/2032

    80,979       76,670  

2.00%, 2/1/2032

    94,171       81,683  

3.50%, 2/1/2032

    150,071       139,641  

4.00%, 2/1/2032

    125,056       118,441  

3.50%, 3/1/2032

    126,230       117,456  

3.50%, 7/1/2032

    97,512       90,607  

2.00%, 12/1/2032

    719,222       645,113  

3.00%, 4/1/2033

    1,322,763       1,251,914  

3.50%, 5/1/2033

    30,409       28,179  

3.00%, 10/1/2033

    1,388,085       1,303,438  

2.00%, 10/1/2035

    1,077,813       924,061  

 

See Accompanying Notes to the Financial Statements.

 

378    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Disciplined Duration MBS Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
MORTGAGE-BACKED SECURITIES – (continued)  

1.50%, 2/1/2036

  $ 1,147,948     $ 950,983  

2.00%, 3/1/2036

    410,219       351,333  

1.50%, 4/1/2036

    304,001       251,720  

4.00%, 5/1/2036

    23,675       22,453  

5.00%, 3/1/2038

    47,274       45,743  

5.00%, 7/1/2039

    63,980       61,248  

3.00%, 9/1/2039

    100,616       86,004  

3.00%, 10/1/2039

    28,415       24,265  

5.00%, 10/1/2039

    23,524       22,602  

3.00%, 11/1/2039

    113,060       96,500  

5.00%, 1/1/2040

    24,294       23,417  

5.00%, 3/1/2040

    36,722       35,206  

5.00%, 5/1/2040

    51,010       48,841  

2.00%, 7/1/2040

    102,924       81,573  

1.50%, 10/1/2040

    535,347       403,232  

3.50%, 12/1/2040

    40,000       35,125  

2.00%, 1/1/2041

    164,501       130,984  

2.00%, 2/1/2041

    960,772       761,437  

1.50%, 3/1/2041

    696,120       521,670  

2.00%, 3/1/2041

    596,553       472,782  

4.50%, 3/1/2041

    68,990       63,655  

4.50%, 4/1/2041

    15,321       14,146  

1.50%, 5/1/2041

    574,531       429,835  

2.50%, 6/1/2041

    461,626       374,071  

2.00%, 10/1/2041

    506,265       398,284  

4.00%, 1/1/2042

    53,228       47,599  

5.00%, 2/1/2042

    43,289       41,289  

3.50%, 11/1/2042

    70,001       61,035  

3.50%, 1/1/2043

    35,854       31,484  

3.50%, 2/1/2043

    24,350       21,381  

2.50%, 6/1/2043

    371,604       294,654  

4.00%, 12/1/2043

    10,706       9,499  

4.50%, 3/1/2044

    49,981       46,039  

4.00%, 6/1/2044

    3,867       3,389  

4.50%, 7/1/2044

    18,383       16,865  

4.00%, 8/1/2044

    11,592       10,156  

4.50%, 12/1/2044

    12,424       11,392  

4.00%, 2/1/2045

    14,430       12,798  

4.50%, 9/1/2045

    14,537       13,314  

4.00%, 10/1/2045

    37,280       33,068  

4.00%, 12/1/2045

    18,726       16,611  

4.50%, 12/1/2045

    591,780       542,664  

3.00%, 1/1/2046

    39,384       32,764  

4.00%, 1/1/2046

    32,526       28,835  

4.00%, 2/1/2046

    232,167       207,411  

4.50%, 4/1/2046

    30,386       27,941  
Investments   Principal
Amount
    Value  

4.00%, 11/1/2046

  $ 169,382     $ 148,202  

4.50%, 3/1/2047

    431,550       395,449  

4.50%, 8/1/2048

    407,951       371,520  

6.00%, 6/1/2053

    837,919       817,102  

6.50%, 10/1/2053

    594,486       591,383  

FNMA UMBS

   

3.50%, 12/1/2025

    412,385       403,444  

4.00%, 5/1/2026

    239,622       233,168  

3.00%, 11/1/2026

    560,673       541,396  

3.00%, 12/1/2026

    166,563       160,806  

3.50%, 12/1/2026

    236,864       230,973  

3.00%, 1/1/2027

    54,435       52,534  

3.00%, 2/1/2027

    64,687       62,384  

3.00%, 6/1/2027

    218,841       210,478  

3.00%, 8/1/2027

    235,889       226,588  

3.00%, 10/1/2027

    68,360       65,583  

3.00%, 11/1/2027

    82,755       79,397  

2.50%, 12/1/2027

    164,999       156,750  

2.50%, 1/1/2028

    904,633       859,557  

2.50%, 4/1/2028

    54,526       51,794  

2.50%, 9/1/2028

    43,023       40,900  

3.50%, 12/1/2028

    83,527       79,309  

3.00%, 2/1/2029

    109,383       104,406  

2.50%, 3/1/2029

    204,796       194,072  

2.50%, 6/1/2029

    75,856       72,107  

3.50%, 12/1/2029

    661,225       633,279  

2.50%, 7/1/2030

    190,404       180,470  

3.00%, 7/1/2030

    738,979       705,721  

2.50%, 8/1/2030

    848,087       784,452  

3.00%, 9/1/2030

    1,051,550       1,004,678  

3.50%, 10/1/2030

    47,505       44,210  

3.50%, 11/1/2030

    8,075       7,515  

3.00%, 12/1/2030

    1,308,078       1,228,399  

3.50%, 2/1/2031

    715,346       679,224  

2.50%, 3/1/2031

    397,522       375,352  

4.00%, 8/1/2031

    163,401       154,962  

2.00%, 9/1/2031

    22,387       20,082  

2.00%, 11/1/2031

    53,323       47,834  

4.00%, 12/1/2031

    56,895       53,903  

4.00%, 3/1/2032

    40,382       38,221  

3.50%, 7/1/2032

    215,176       200,213  

3.50%, 10/1/2032

    238,507       231,996  

6.00%, 12/1/2032

    9,446       9,382  

6.00%, 4/1/2033

    6,427       6,398  

4.00%, 10/1/2033

    33,068       31,362  

4.00%, 3/1/2034

    445,446       433,224  

6.00%, 8/1/2034

    31,528       31,622  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     379  


Table of Contents

 

 

FlexShares® Disciplined Duration MBS Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
MORTGAGE-BACKED SECURITIES – (continued)  

6.50%, 9/1/2034

  $ 90,193     $ 91,704  

6.00%, 12/1/2034

    144,093       144,347  

3.00%, 2/1/2035

    697,635       655,199  

3.00%, 7/1/2035

    984,880       921,524  

5.00%, 8/1/2035

    19,522       18,930  

1.50%, 10/1/2035

    153,511       127,184  

6.00%, 11/1/2035

    28,083       28,077  

5.00%, 12/1/2035

    43,163       41,845  

6.00%, 6/1/2036

    39,237       39,355  

2.00%, 7/1/2036

    914,065       779,015  

2.50%, 7/1/2036

    714,102       623,580  

5.00%, 7/1/2036

    19,048       18,466  

6.50%, 8/1/2036

    14,466       14,855  

2.50%, 11/1/2036

    334,483       289,098  

6.00%, 11/1/2036

    37,246       37,358  

1.50%, 2/1/2037

    853,796       702,407  

2.50%, 4/1/2037

    791,186       682,241  

1.50%, 8/1/2037

    295,482       243,381  

6.00%, 8/1/2037

    130,800       131,009  

6.00%, 9/1/2037

    18,699       18,756  

6.50%, 10/1/2037

    29,506       29,918  

5.00%, 3/1/2038

    47,444       45,658  

5.00%, 5/1/2038

    36,882       35,772  

6.00%, 5/1/2038

    12,966       13,001  

6.00%, 9/1/2038

    24,012       24,060  

5.00%, 6/1/2039

    42,328       40,887  

3.50%, 8/1/2039

    465,308       425,127  

5.00%, 10/1/2039

    40,583       38,975  

3.00%, 1/1/2040

    36,155       30,834  

5.00%, 2/1/2040

    36,266       35,178  

5.00%, 6/1/2040

    13,639       13,062  

6.00%, 6/1/2040

    99,764       99,923  

3.50%, 1/1/2041

    33,863       29,737  

1.50%, 2/1/2041

    771,665       579,370  

3.50%, 2/1/2041

    21,926       19,255  

1.50%, 4/1/2041

    417,407       312,356  

2.00%, 5/1/2041

    478,150       378,269  

4.50%, 5/1/2041

    36,523       33,696  

5.00%, 5/1/2041

    30,756       29,309  

6.00%, 5/1/2041

    22,324       22,383  

4.50%, 6/1/2041

    12,097       11,150  

2.50%, 7/1/2041

    581,023       469,486  

5.00%, 7/1/2041

    406,148       386,803  

6.00%, 7/1/2041

    25,538       25,614  

4.50%, 8/1/2041

    107,399       99,156  

5.00%, 8/1/2041

    57,294       54,872  
Investments   Principal
Amount
    Value  

4.00%, 9/1/2041

  $ 178,241     $ 159,388  

4.50%, 9/1/2041

    68,576       63,210  

3.50%, 10/1/2041

    123,077       108,075  

4.00%, 10/1/2041

    45,425       40,445  

5.00%, 10/1/2041

    59,935       57,070  

4.00%, 11/1/2041

    66,464       59,433  

4.00%, 12/1/2041

    16,713       14,945  

4.00%, 1/1/2042

    154,223       136,157  

4.50%, 1/1/2042

    16,893       15,596  

6.00%, 1/1/2042

    63,361       63,552  

3.00%, 3/1/2042

    25,318       21,361  

4.00%, 3/1/2042

    77,289       69,503  

3.00%, 4/1/2042

    46,922       39,593  

4.50%, 4/1/2042

    85,870       79,279  

3.50%, 5/1/2042

    22,296       19,579  

4.50%, 5/1/2042

    62,984       58,149  

3.50%, 6/1/2042

    41,370       36,328  

3.50%, 7/1/2042

    125,830       110,495  

4.00%, 7/1/2042

    104,367       93,328  

3.50%, 8/1/2042

    38,711       33,993  

3.00%, 9/1/2042

    67,495       56,915  

3.50%, 9/1/2042

    12,378       10,870  

4.00%, 9/1/2042

    65,381       58,357  

3.00%, 10/1/2042

    137,144       115,699  

3.50%, 10/1/2042

    23,774       20,877  

2.50%, 12/1/2042

    223,488       177,210  

3.00%, 12/1/2042

    130,451       110,000  

2.50%, 1/1/2043

    7,713       6,116  

3.00%, 1/1/2043

    126,664       106,640  

3.50%, 1/1/2043

    35,644       31,123  

4.00%, 1/1/2043

    68,408       61,172  

4.50%, 1/1/2043

    169,653       156,636  

2.50%, 2/1/2043

    292,267       231,390  

3.00%, 2/1/2043

    174,435       146,954  

3.50%, 2/1/2043

    67,342       59,129  

3.50%, 3/1/2043

    79,723       70,003  

2.50%, 5/1/2043

    11,826       9,283  

2.50%, 6/1/2043

    6,304       4,988  

4.00%, 8/1/2043

    37,277       33,101  

4.00%, 9/1/2043

    87,836       78,174  

4.50%, 9/1/2043

    25,082       23,015  

4.00%, 10/1/2043

    107,858       95,714  

4.00%, 11/1/2043

    226,639       201,103  

4.50%, 11/1/2043

    83,664       76,719  

4.50%, 12/1/2043

    61,041       56,072  

4.00%, 1/1/2044

    87,071       77,266  

4.50%, 2/1/2044

    16,390       15,029  

4.50%, 3/1/2044

    103,206       96,314  

 

See Accompanying Notes to the Financial Statements.

 

380    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Disciplined Duration MBS Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
MORTGAGE-BACKED SECURITIES – (continued)  

5.00%, 3/1/2044

  $ 17,045     $ 16,120  

4.00%, 4/1/2044

    840,185       742,772  

4.50%, 4/1/2044

    179,611       164,703  

5.00%, 6/1/2044

    29,908       28,391  

4.00%, 10/1/2044

    34,254       30,422  

4.50%, 10/1/2044

    7,772       7,127  

4.50%, 12/1/2044

    31,693       29,077  

4.00%, 2/1/2045

    24,931       22,091  

4.50%, 2/1/2045

    108,072       99,106  

4.00%, 4/1/2045

    22,670       20,073  

4.00%, 8/1/2045

    10,768       9,533  

4.00%, 11/1/2045

    62,102       54,942  

4.50%, 11/1/2045

    73,019       66,959  

4.00%, 12/1/2045

    144,226       128,380  

4.00%, 2/1/2046

    7,138       6,366  

4.50%, 3/1/2046

    117,134       107,363  

4.00%, 4/1/2046

    10,703       9,488  

2.50%, 6/1/2046

    71,052       56,344  

4.50%, 6/1/2046

    76,511       70,162  

4.50%, 7/1/2046

    16,052       14,714  

4.50%, 8/1/2046

    13,515       12,394  

2.50%, 10/1/2046

    57,674       45,144  

4.50%, 10/1/2046

    27,931       25,589  

2.50%, 12/1/2046

    19,456       15,209  

4.50%, 1/1/2047

    25,073       22,976  

4.00%, 2/1/2047

    27,888       24,679  

4.50%, 2/1/2047

    31,008       28,525  

4.50%, 5/1/2047

    479,084       435,566  

4.50%, 7/1/2047

    69,658       63,875  

5.00%, 7/1/2047

    27,584       26,503  

5.50%, 2/1/2049

    1,711,107       1,679,909  

6.00%, 2/1/2049

    78,442       79,786  

4.50%, 7/1/2049

    461,406       418,845  

4.50%, 11/1/2049

    460,795       422,489  

4.50%, 5/1/2050

    739,925       670,265  

5.00%, 6/1/2050

    1,062,207       996,917  

3.50%, 7/1/2050

    468,469       404,427  

4.00%, 7/1/2050

    1,285,484       1,124,606  

4.50%, 10/1/2050

    1,202,357       1,094,565  

5.00%, 10/1/2050

    978,631       917,264  

6.50%, 11/1/2053

    1,000,000       994,429  

GNMA

   

5.50%, 8/20/2033

    25,044       24,826  

5.50%, 11/20/2033

    23,622       23,416  

5.50%, 3/20/2034

    29,053       28,800  

5.50%, 7/20/2034

    18,226       18,068  
Investments   Principal
Amount
    Value  

5.50%, 9/20/2034

  $ 8,077     $ 7,791  

5.50%, 3/20/2036

    60,062       59,541  

5.50%, 9/20/2038

    36,426       36,108  

5.50%, 2/20/2039

    59,919       59,398  

4.50%, 5/15/2039

    1,506,962       1,427,208  

5.00%, 11/15/2039

    479,704       460,047  

4.00%, 6/15/2040

    293,465       269,012  

4.00%, 8/15/2040

    289,615       265,417  

4.00%, 11/15/2040

    223,255       204,137  

5.50%, 12/20/2040

    17,216       17,049  

5.50%, 1/20/2041

    18,443       18,282  

4.00%, 9/15/2041

    833,688       756,369  

5.50%, 12/20/2041

    44,220       43,049  

5.50%, 2/20/2042

    12,110       12,005  

3.00%, 4/15/2042

    999,025       858,216  

3.50%, 6/15/2042

    432,931       383,733  

2.50%, 3/20/2043

    38,240       31,056  

2.50%, 5/20/2043

    55,731       45,269  

5.50%, 3/20/2044

    51,183       50,737  

4.50%, 10/20/2044

    112,926       105,022  

2.50%, 11/20/2044

    33,713       27,377  

5.00%, 6/20/2045

    142,118       136,445  

4.00%, 8/15/2045

    1,060,139       964,078  

4.50%, 12/20/2045

    236,839       219,385  

4.50%, 4/20/2046

    274,508       255,386  

5.00%, 5/20/2046

    338,136       325,447  

3.50%, 6/15/2046

    1,803,668       1,595,211  

3.50%, 10/20/2047

    1,010,017       872,594  

4.00%, 2/20/2048

    900,831       805,154  

5.00%, 5/20/2048

    125,614       118,803  

5.50%, 1/20/2049

    290,194       281,458  

5.50%, 7/20/2049

    8,264       8,060  

4.00%, 12/20/2051

    404,141       358,358  

5.50%, 12/20/2052

    572,146       547,937  

6.50%, 6/20/2053

    1,776,889       1,774,649  

7.00%, 8/20/2053

    996,642       1,010,393  

7.00%, 9/20/2053

    1,198,206       1,214,611  
Total Mortgage-Backed Securities
(Cost $81,464,885)

 

    73,778,449  
                 
Total Investments – 99.1%
(Cost $81,464,885)

 

    73,778,449  

Other assets less liabilities – 0.9%

 

    645,590  
NET ASSETS – 100.0%

 

  $ 74,424,039  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     381  


Table of Contents

 

 

FlexShares® Disciplined Duration MBS Index Fund (cont.)

 

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

FHLMC Federal Home Loan Mortgage Corp.

FNMA Federal National Mortgage Association

GNMA Government National Mortgage Association

UMBS Uniform Mortgage-Backed Securities

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 69,697  

Aggregate gross unrealized depreciation

    (7,921,123

Net unrealized depreciation

  $ (7,851,426

Federal income tax cost

  $ 81,629,875  

 

Security Type    % of Net Assets   

Mortgage-Backed Securities

     99.1

Others(1)

     0.9  
       100.0

 

(1)

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

382    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® Credit-Scored US Corporate Bond Index Fund

 

October 31, 2023

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – 96.7%  
Aerospace & Defense – 1.2%  

General Dynamics Corp.

   

1.15%, 6/1/2026

  $ 250,000     $ 224,223  

3.50%, 4/1/2027

    50,000       46,879  

HEICO Corp.

   

5.25%, 8/1/2028

    200,000       192,928  

5.35%, 8/1/2033

    100,000       91,785  

Hexcel Corp.

   

4.20%, 2/15/2027(a)

    50,000       45,909  

Howmet Aerospace, Inc.

   

6.88%, 5/1/2025

    300,000       301,045  

3.00%, 1/15/2029

    250,000       211,017  

Huntington Ingalls Industries, Inc.

   

3.84%, 5/1/2025

    150,000       145,175  

4.20%, 5/1/2030

    200,000       177,083  

L3Harris Technologies, Inc.

   

4.40%, 6/15/2028

    400,000       373,565  

Leidos, Inc.

   

4.38%, 5/15/2030

    252,000       221,567  

2.30%, 2/15/2031

    150,000       112,814  

5.75%, 3/15/2033

    130,000       120,826  

Lockheed Martin Corp.

   

3.55%, 1/15/2026

    152,000       146,133  

3.90%, 6/15/2032

    140,000       122,544  

5.25%, 1/15/2033

    100,000       96,352  

Textron, Inc.

   

3.88%, 3/1/2025

    250,000       242,966  

3.90%, 9/17/2029

    200,000       177,755  

3.00%, 6/1/2030

    200,000       164,884  
              3,215,450  
Air Freight & Logistics – 0.1%  

CH Robinson Worldwide, Inc.

   

4.20%, 4/15/2028

    212,000       195,771  
Automobile Components – 0.2%  

Lear Corp.

   

4.25%, 5/15/2029

    150,000       134,110  

Magna International, Inc.

   

4.15%, 10/1/2025

    250,000       242,815  

2.45%, 6/15/2030

    200,000       161,416  

5.50%, 3/21/2033

    100,000       95,388  
              633,729  
Investments   Principal
Amount
    Value  
Banks – 25.4%  

Banco Bilbao Vizcaya Argentaria SA

   

5.86%, 9/14/2026(b)

  $ 200,000     $ 197,028  

6.14%, 9/14/2028(b)

    200,000       195,266  

Banco Santander SA

   

3.50%, 3/24/2025

    110,000       105,793  

5.18%, 11/19/2025

    81,000       78,192  

1.85%, 3/25/2026

    110,000       98,273  

1.72%, 9/14/2027(b)

    202,000       175,090  

2.75%, 12/3/2030

    200,000       145,875  

6.92%, 8/8/2033

    200,000       185,756  

Bank of America Corp.

   

Series L,
3.95%, 4/21/2025

    480,000       463,927  

4.45%, 3/3/2026

    300,000       287,274  

3.38%, 4/2/2026(b)

    250,000       239,538  

1.32%, 6/19/2026(b)

    250,000       229,755  

4.83%, 7/22/2026(b)

    250,000       243,616  

4.25%, 10/22/2026

    350,000       330,294  

5.08%, 1/20/2027(b)

    150,000       146,020  

Series N,
1.66%, 3/11/2027(b)

    50,000       44,737  

3.56%, 4/23/2027(b)

    361,000       337,185  

1.73%, 7/22/2027(b)

    724,000       638,937  

5.93%, 9/15/2027(b)

    250,000       247,446  

Series L,
4.18%, 11/25/2027

    300,000       275,948  

3.82%, 1/20/2028(b)

    200,000       184,574  

3.59%, 7/21/2028(b)

    201,000       181,895  

4.95%, 7/22/2028(b)

    129,000       122,594  

3.42%, 12/20/2028(b)

    300,000       267,039  

3.97%, 3/5/2029(b)

    135,000       122,153  

5.20%, 4/25/2029(b)

    230,000       218,676  

2.09%, 6/14/2029(b)

    230,000       189,899  

4.27%, 7/23/2029(b)

    250,000       227,504  

5.82%, 9/15/2029(b)

    100,000       97,373  

3.97%, 2/7/2030(b)

    900,000       795,938  

2.59%, 4/29/2031(b)

    100,000       78,836  

1.90%, 7/23/2031(b)

    100,000       74,397  

Series N,
2.65%, 3/11/2032(b)

    110,000       84,301  

2.69%, 4/22/2032(b)

    184,000       141,082  

2.30%, 7/21/2032(b)

    194,000       143,126  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     383  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Banks – (continued)  

2.57%, 10/20/2032(b)

  $ 100,000     $ 74,894  

2.97%, 2/4/2033(b)

    111,000       85,074  

4.57%, 4/27/2033(b)

    221,000       190,592  

5.02%, 7/22/2033(b)

    222,000       198,485  

5.29%, 4/25/2034(b)

    331,000       298,956  

2.48%, 9/21/2036(b)

    250,000       178,174  

3.85%, 3/8/2037(b)

    312,000       246,133  

Bank of America NA

   

5.53%, 8/18/2026

    250,000       248,067  

Bank of Montreal

   

1.85%, 5/1/2025

    250,000       234,953  

5.30%, 6/5/2026

    400,000       393,544  

1.25%, 9/15/2026

    250,000       219,120  

3.80%, 12/15/2032(b)

    495,000       428,994  

3.09%, 1/10/2037(b)

    350,000       252,811  

Bank of Nova Scotia (The)

   

1.45%, 1/10/2025

    300,000       284,356  

4.50%, 12/16/2025

    300,000       289,315  

4.59%, 5/4/2037(b)

    300,000       242,601  

Series 2,
3.63%, 10/27/2081(b)

    200,000       140,358  

8.63%, 10/27/2082(b)

    250,000       244,561  

Bank OZK

   

2.75%, 10/1/2031(b)

    101,000       74,246  

BankUnited, Inc.

   

4.88%, 11/17/2025

    100,000       93,312  

5.13%, 6/11/2030

    80,000       63,293  

Barclays plc

   

3.65%, 3/16/2025

    101,000       97,127  

5.20%, 5/12/2026

    172,000       164,270  

5.30%, 8/9/2026(b)

    213,000       207,835  

4.84%, 5/9/2028

    273,000       245,342  

4.97%, 5/16/2029(b)

    200,000       184,109  

5.09%, 6/20/2030(b)

    200,000       173,311  

7.44%, 11/2/2033(b)

    300,000       299,333  

7.12%, 6/27/2034(b)

    250,000       232,171  

3.56%, 9/23/2035(b)

    200,000       150,613  

Cadence Bank

   

4.13%, 11/20/2029(b)

    100,000       90,761  

Capital One NA

   

2.28%, 1/28/2026(b)

    250,000       235,895  

Citigroup, Inc.

   

3.88%, 3/26/2025

    200,000       192,910  
Investments   Principal
Amount
    Value  
Banks – (continued)  

4.40%, 6/10/2025

  $ 350,000     $ 338,733  

5.50%, 9/13/2025

    100,000       98,595  

4.60%, 3/9/2026

    484,000       463,885  

3.11%, 4/8/2026(b)

    574,000       547,814  

3.20%, 10/21/2026

    403,000       371,511  

4.30%, 11/20/2026

    250,000       234,926  

1.46%, 6/9/2027(b)

    400,000       352,081  

4.45%, 9/29/2027

    1,010,000       932,979  

3.89%, 1/10/2028(b)

    150,000       139,062  

3.67%, 7/24/2028(b)

    352,000       318,885  

4.13%, 7/25/2028

    454,000       407,527  

4.08%, 4/23/2029(b)

    252,000       229,201  

3.98%, 3/20/2030(b)

    757,000       669,733  

4.41%, 3/31/2031(b)

    600,000       530,823  

2.57%, 6/3/2031(b)

    252,000       197,330  

2.56%, 5/1/2032(b)

    200,000       151,761  

6.63%, 6/15/2032

    250,000       247,629  

3.06%, 1/25/2033(b)

    302,000       232,512  

5.88%, 2/22/2033

    100,000       93,948  

3.79%, 3/17/2033(b)

    50,000       40,591  

4.91%, 5/24/2033(b)

    50,000       44,312  

6.27%, 11/17/2033(b)

    253,000       245,652  

6.17%, 5/25/2034(b)

    950,000       883,058  

Citizens Bank NA

   

2.25%, 4/28/2025

    695,000       643,651  

6.06%, 10/24/2025(b)

    250,000       239,068  

4.58%, 8/9/2028(b)

    500,000       443,446  

Citizens Financial Group, Inc.

   

2.85%, 7/27/2026

    60,000       53,312  

3.25%, 4/30/2030

    202,000       155,802  

5.64%, 5/21/2037(b)

    250,000       199,414  

Comerica Bank

   

5.33%, 8/25/2033(b)

    250,000       193,597  

Comerica, Inc.

   

4.00%, 2/1/2029

    183,000       149,719  

Cooperatieve Rabobank UA

   

5.00%, 1/13/2025

    250,000       247,698  

3.38%, 5/21/2025

    250,000       240,713  

3.75%, 7/21/2026

    252,000       234,127  

Discover Bank

   

4.25%, 3/13/2026

    250,000       235,956  

3.45%, 7/27/2026

    252,000       228,083  

4.65%, 9/13/2028

    327,000       287,388  

2.70%, 2/6/2030

    303,000       228,417  

 

See Accompanying Notes to the Financial Statements.

 

384    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Banks – (continued)  

Fifth Third Bancorp

   

2.55%, 5/5/2027

  $ 202,000     $ 174,466  

1.71%, 11/1/2027(b)

    50,000       42,616  

6.36%, 10/27/2028(b)

    505,000       491,512  

6.34%, 7/27/2029(b)

    100,000       96,860  

4.77%, 7/28/2030(b)

    178,000       157,747  

Fifth Third Bank NA

   

3.85%, 3/15/2026

    243,000       223,878  

First Citizens BancShares, Inc.

   

3.38%, 3/15/2030(b)

    200,000       186,463  

First Horizon Bank

   

5.75%, 5/1/2030

    250,000       211,589  

HSBC Holdings plc

   

4.25%, 8/18/2025

    300,000       287,387  

4.30%, 3/8/2026

    200,000       191,665  

3.90%, 5/25/2026

    200,000       188,710  

2.10%, 6/4/2026(b)

    742,000       691,403  

4.29%, 9/12/2026(b)

    150,000       143,928  

4.38%, 11/23/2026

    640,000       603,866  

1.59%, 5/24/2027(b)

    250,000       220,204  

5.89%, 8/14/2027(b)

    250,000       245,605  

2.25%, 11/22/2027(b)

    232,000       203,408  

4.04%, 3/13/2028(b)

    414,000       380,248  

4.76%, 6/9/2028(b)

    280,000       262,157  

5.21%, 8/11/2028(b)

    250,000       238,453  

7.39%, 11/3/2028(b)

    283,000       290,301  

4.58%, 6/19/2029(b)

    620,000       564,970  

2.21%, 8/17/2029(b)

    250,000       203,405  

3.97%, 5/22/2030(b)

    928,000       801,775  

2.36%, 8/18/2031(b)

    50,000       37,686  

7.63%, 5/17/2032

    100,000       101,966  

2.80%, 5/24/2032(b)

    202,000       152,080  

2.87%, 11/22/2032(b)

    450,000       335,481  

4.76%, 3/29/2033(b)

    202,000       167,120  

5.40%, 8/11/2033(b)

    202,000       181,633  

8.11%, 11/3/2033(b)

    200,000       206,967  

6.25%, 3/9/2034(b)

    300,000       284,753  

6.55%, 6/20/2034(b)

    600,000       557,608  

Huntington Bancshares, Inc.

   

4.00%, 5/15/2025

    151,000       144,680  

4.44%, 8/4/2028(b)

    131,000       119,650  

2.55%, 2/4/2030

    132,000       101,588  

2.49%, 8/15/2036(b)

    100,000       67,309  
Investments   Principal
Amount
    Value  
Banks – (continued)  

Huntington National Bank (The)

   

5.70%, 11/18/2025(b)

  $ 502,000     $ 487,400  

4.55%, 5/17/2028(b)

    250,000       229,780  

5.65%, 1/10/2030

    344,000       315,160  

ING Groep NV

   

1.73%, 4/1/2027(b)

    112,000       100,039  

6.11%, 9/11/2034(b)

    100,000       93,705  

JPMorgan Chase & Co.

   

2.01%, 3/13/2026(b)

    410,000       386,899  

2.08%, 4/22/2026(b)

    900,000       845,843  

1.05%, 11/19/2026(b)

    40,000       35,975  

4.13%, 12/15/2026

    250,000       236,198  

3.96%, 1/29/2027(b)

    360,000       343,153  

1.58%, 4/22/2027(b)

    932,000       831,469  

1.47%, 9/22/2027(b)

    250,000       217,784  

6.07%, 10/22/2027(b)

    250,000       249,472  

3.78%, 2/1/2028(b)

    250,000       231,950  

4.32%, 4/26/2028(b)

    250,000       234,835  

3.54%, 5/1/2028(b)

    531,000       486,044  

2.18%, 6/1/2028(b)

    121,000       105,185  

3.51%, 1/23/2029(b)

    120,000       107,668  

4.01%, 4/23/2029(b)

    352,000       320,577  

2.07%, 6/1/2029(b)

    50,000       41,561  

4.20%, 7/23/2029(b)

    253,000       232,027  

4.45%, 12/5/2029(b)

    253,000       232,709  

3.70%, 5/6/2030(b)

    290,000       254,432  

4.57%, 6/14/2030(b)

    250,000       229,442  

8.75%, 9/1/2030

    60,000       67,715  

4.49%, 3/24/2031(b)

    171,000       154,260  

2.52%, 4/22/2031(b)

    200,000       159,067  

2.96%, 5/13/2031(b)

    600,000       483,829  

1.95%, 2/4/2032(b)

    307,000       228,069  

2.58%, 4/22/2032(b)

    60,000       46,340  

2.96%, 1/25/2033(b)

    350,000       272,683  

4.59%, 4/26/2033(b)

    163,000       143,264  

4.91%, 7/25/2033(b)

    350,000       314,380  

5.72%, 9/14/2033(b)

    400,000       374,581  

KeyBank NA

   

4.15%, 8/8/2025

    303,000       281,793  

4.70%, 1/26/2026

    250,000       232,187  

3.40%, 5/20/2026

    505,000       444,455  

5.85%, 11/15/2027

    255,000       236,157  

KeyCorp

   

4.15%, 10/29/2025

    50,000       46,565  

2.25%, 4/6/2027

    303,000       251,475  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     385  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Banks – (continued)  

4.10%, 4/30/2028

  $ 352,000     $ 301,118  

2.55%, 10/1/2029

    151,000       112,810  

Lloyds Banking Group plc

   

4.58%, 12/10/2025

    402,000       382,329  

3.51%, 3/18/2026(b)

    202,000       193,647  

4.65%, 3/24/2026

    303,000       286,956  

4.72%, 8/11/2026(b)

    250,000       242,323  

3.57%, 11/7/2028(b)

    200,000       177,575  

7.95%, 11/15/2033(b)

    200,000       202,800  

M&T Bank Corp.

   

4.55%, 8/16/2028(b)

    121,000       110,198  

5.05%, 1/27/2034(b)

    250,000       209,271  

Manufacturers & Traders Trust Co.

   

2.90%, 2/6/2025

    300,000       284,460  

4.65%, 1/27/2026

    505,000       476,961  

3.40%, 8/17/2027

    303,000       257,736  

4.70%, 1/27/2028

    252,000       228,357  

Mitsubishi UFJ Financial Group, Inc.

   

2.19%, 2/25/2025

    200,000       190,046  

3.85%, 3/1/2026

    252,000       240,112  

2.34%, 1/19/2028(b)

    200,000       176,752  

3.20%, 7/18/2029

    214,000       182,345  

2.31%, 7/20/2032(b)

    200,000       149,153  

5.44%, 2/22/2034(b)

    200,000       186,397  

Mizuho Financial Group, Inc.

   

1.55%, 7/9/2027(b)

    260,000       229,696  

4.02%, 3/5/2028

    83,000       76,681  

2.56%, 9/13/2031

    250,000       183,702  

2.26%, 7/9/2032(b)

    200,000       147,102  

National Australia Bank Ltd.

   

5.13%, 11/22/2024

    132,000       131,276  

4.97%, 1/12/2026

    130,000       128,464  

NatWest Group plc

   

4.80%, 4/5/2026

    82,000       79,008  

7.47%, 11/10/2026(b)

    250,000       254,396  

5.08%, 1/27/2030(b)

    443,000       406,617  

4.45%, 5/8/2030(b)

    635,000       562,871  

6.02%, 3/2/2034(b)

    200,000       186,224  

PNC Bank NA

   

4.05%, 7/26/2028

    462,000       411,440  
Investments   Principal
Amount
    Value  
Banks – (continued)  

PNC Financial Services Group, Inc. (The)

   

1.15%, 8/13/2026

  $ 200,000     $ 175,631  

5.07%, 1/24/2034(b)

    150,000       131,992  

Regions Financial Corp.

   

2.25%, 5/18/2025

    242,000       222,206  

1.80%, 8/12/2028

    160,000       125,026  

Royal Bank of Canada

   

4.65%, 1/27/2026

    493,000       477,959  

5.00%, 2/1/2033

    500,000       452,057  

5.00%, 5/2/2033

    270,000       243,119  

Santander Holdings USA, Inc.

   

3.45%, 6/2/2025

    40,000       37,843  

4.50%, 7/17/2025

    72,000       69,156  

2.49%, 1/6/2028(b)

    150,000       129,138  

Santander UK Group Holdings plc

   

3.82%, 11/3/2028(b)

    152,000       133,747  

Sumitomo Mitsui Financial Group, Inc.

   

1.40%, 9/17/2026

    172,000       150,970  

3.04%, 7/16/2029

    140,000       118,034  

2.72%, 9/27/2029

    42,000       34,571  

Synovus Bank

   

5.63%, 2/15/2028

    250,000       222,034  

Toronto-Dominion Bank (The)

   

5.53%, 7/17/2026

    440,000       435,446  

4.11%, 6/8/2027

    200,000       187,507  

4.69%, 9/15/2027

    50,000       47,618  

3.63%, 9/15/2031(b)

    505,000       464,125  

2.45%, 1/12/2032

    100,000       75,251  

3.20%, 3/10/2032

    100,000       79,481  

4.46%, 6/8/2032

    121,000       105,511  

8.13%, 10/31/2082(b)

    505,000       495,436  

Truist Bank

   

3.63%, 9/16/2025

    202,000       190,571  

3.30%, 5/15/2026

    230,000       210,609  

3.80%, 10/30/2026

    360,000       329,755  

Truist Financial Corp.

   

3.88%, 3/19/2029

    273,000       233,325  

US Bancorp

   

3.10%, 4/27/2026

    200,000       184,358  

5.78%, 6/12/2029(b)

    100,000       96,156  

4.97%, 7/22/2033(b)

    101,000       84,523  

2.49%, 11/3/2036(b)

    100,000       68,330  

 

See Accompanying Notes to the Financial Statements.

 

386    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Banks – (continued)  

US Bank NA

   

2.05%, 1/21/2025

  $ 2,000     $ 1,904  

Wachovia Corp.

   

7.57%, 8/1/2026(a)

    200,000       206,899  

Webster Financial Corp.

   

4.10%, 3/25/2029

    100,000       82,990  

Wells Fargo & Co.

   

3.00%, 4/22/2026

    230,000       213,700  

3.91%, 4/25/2026(b)

    250,000       241,051  

2.19%, 4/30/2026(b)

    900,000       846,629  

4.10%, 6/3/2026

    812,000       766,812  

3.00%, 10/23/2026

    400,000       366,424  

3.20%, 6/17/2027(b)

    922,000       852,305  

3.53%, 3/24/2028(b)

    500,000       455,887  

3.58%, 5/22/2028(b)

    116,000       105,588  

2.39%, 6/2/2028(b)

    505,000       440,192  

4.81%, 7/25/2028(b)

    353,000       333,934  

5.57%, 7/25/2029(b)

    250,000       241,071  

6.30%, 10/23/2029(b)

    250,000       247,932  

Series B,
7.95%, 11/15/2029

    250,000       263,690  

2.57%, 2/11/2031(b)

    100,000       79,181  

4.48%, 4/4/2031(b)

    300,000       266,554  

3.35%, 3/2/2033(b)

    101,000       79,524  

4.90%, 7/25/2033(b)

    303,000       266,323  

5.39%, 4/24/2034(b)

    1,151,000       1,041,949  

5.56%, 7/25/2034(b)

    250,000       228,848  

Westpac Banking Corp.

   

1.15%, 6/3/2026

    250,000       223,396  

5.46%, 11/18/2027

    200,000       198,492  

2.89%, 2/4/2030(b)

    400,000       378,570  

4.32%, 11/23/2031(b)

    454,000       419,040  

5.41%, 8/10/2033(b)

    300,000       263,616  

4.11%, 7/24/2034(b)

    404,000       342,933  

2.67%, 11/15/2035(b)

    300,000       218,031  

3.02%, 11/18/2036(b)

    350,000       251,754  

Wintrust Financial Corp.

   

4.85%, 6/6/2029

    100,000       86,207  

Zions Bancorp NA

   

3.25%, 10/29/2029

    252,000       187,671  
              69,650,461  
Investments   Principal
Amount
    Value  
Beverages – 0.9%  

Brown-Forman Corp.

   

4.75%, 4/15/2033

  $ 130,000     $ 120,549  

Coca-Cola Co. (The)

   

3.45%, 3/25/2030

    303,000       269,903  

1.65%, 6/1/2030

    200,000       157,963  

1.38%, 3/15/2031

    250,000       187,581  

Constellation Brands, Inc.

   

4.75%, 11/15/2024

    250,000       246,959  

3.60%, 2/15/2028

    200,000       182,925  

4.65%, 11/15/2028

    252,000       238,474  

2.88%, 5/1/2030

    200,000       164,693  

2.25%, 8/1/2031

    100,000       75,991  

Diageo Capital plc

   

2.38%, 10/24/2029

    244,000       203,545  

PepsiCo, Inc.

   

7.00%, 3/1/2029

    100,000       106,695  

2.75%, 3/19/2030

    353,000       300,653  

3.90%, 7/18/2032

    150,000       132,944  
              2,388,875  
Biotechnology – 1.7%  

AbbVie, Inc.

   

2.60%, 11/21/2024

    600,000       579,756  

3.80%, 3/15/2025

    853,000       830,344  

3.60%, 5/14/2025

    750,000       725,557  

3.20%, 5/14/2026

    252,000       237,640  

2.95%, 11/21/2026

    526,000       487,162  

4.25%, 11/14/2028

    222,000       208,996  

3.20%, 11/21/2029

    667,000       581,269  

Biogen, Inc.

   

4.05%, 9/15/2025

    352,000       339,691  

2.25%, 5/1/2030

    250,000       196,343  

Gilead Sciences, Inc.

   

3.50%, 2/1/2025

    382,000       371,200  

Regeneron Pharmaceuticals, Inc.

   

1.75%, 9/15/2030

    250,000       188,405  
              4,746,363  
Building Products – 0.7%  

Allegion plc

   

3.50%, 10/1/2029

    152,000       130,433  

Carlisle Cos., Inc.

   

3.75%, 12/1/2027

    91,000       83,500  

2.75%, 3/1/2030

    183,000       147,904  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     387  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Building Products – (continued)  

Carrier Global Corp.

   

2.24%, 2/15/2025

  $ 50,000     $ 47,606  

2.49%, 2/15/2027

    100,000       89,486  

Lennox International, Inc.

   

1.35%, 8/1/2025

    201,000       185,805  

Masco Corp.

   

3.50%, 11/15/2027

    50,000       45,200  

1.50%, 2/15/2028

    101,000       83,928  

Owens Corning

   

3.40%, 8/15/2026

    250,000       232,566  

3.95%, 8/15/2029

    143,000       126,797  

Trane Technologies Financing Ltd.

   

3.50%, 3/21/2026

    202,000       191,880  

3.80%, 3/21/2029

    202,000       184,352  

5.25%, 3/3/2033

    130,000       121,694  

Trane Technologies Global Holding Co. Ltd.

   

3.75%, 8/21/2028

    151,000       138,812  
              1,809,963  
Capital Markets – 4.6%  

Ameriprise Financial, Inc.

   

3.00%, 4/2/2025

    250,000       240,082  

5.15%, 5/15/2033

    150,000       138,450  

Ares Capital Corp.

   

3.88%, 1/15/2026

    150,000       140,280  

2.15%, 7/15/2026

    50,000       43,915  

Bain Capital Specialty Finance, Inc.

   

2.55%, 10/13/2026

    227,000       195,056  

Bank of New York Mellon Corp. (The)

   

2.45%, 8/17/2026

    173,000       158,816  

3.85%, 4/28/2028

    250,000       231,726  

5.83%, 10/25/2033(b)

    50,000       47,891  

4.71%, 2/1/2034(b)

    100,000       87,817  

BlackRock, Inc.

   

3.20%, 3/15/2027

    101,000       94,006  

3.25%, 4/30/2029

    200,000       178,541  

Blackstone Private Credit Fund

   

2.70%, 1/15/2025

    200,000       189,799  

2.63%, 12/15/2026

    352,000       301,352  
Investments   Principal
Amount
    Value  
Capital Markets – (continued)  

3.25%, 3/15/2027

  $ 400,000     $ 345,038  

4.00%, 1/15/2029

    175,000       146,407  

Blackstone Secured Lending Fund

   

3.63%, 1/15/2026

    260,000       240,175  

2.75%, 9/16/2026

    252,000       221,131  

2.13%, 2/15/2027

    252,000       212,809  

2.85%, 9/30/2028

    200,000       162,092  

Blue Owl Credit Income Corp.

   

5.50%, 3/21/2025

    250,000       241,886  

7.95%, 6/13/2028(c)

    250,000       244,402  

Blue Owl Technology Finance Corp.

   

2.50%, 1/15/2027

    100,000       82,907  

Brookfield Finance, Inc.

   

4.85%, 3/29/2029

    100,000       93,045  

Cboe Global Markets, Inc.

   

3.65%, 1/12/2027

    151,000       142,285  

1.63%, 12/15/2030

    151,000       113,879  

Charles Schwab Corp. (The)

   

4.00%, 2/1/2029

    100,000       89,818  

4.63%, 3/22/2030

    30,000       27,375  

1.65%, 3/11/2031

    100,000       71,231  

CI Financial Corp.

   

3.20%, 12/17/2030

    100,000       73,172  

CME Group, Inc.

   

3.00%, 3/15/2025

    227,000       219,744  

3.75%, 6/15/2028

    1,000       934  

2.65%, 3/15/2032

    150,000       119,738  

Credit Suisse AG

   

1.25%, 8/7/2026

    154,000       134,345  

Deutsche Bank AG

   

4.50%, 4/1/2025

    303,000       289,665  

3.96%, 11/26/2025(b)

    101,000       97,396  

2.13%, 11/24/2026(b)

    100,000       90,296  

5.88%, 7/8/2031(b)

    200,000       171,318  

3.55%, 9/18/2031(b)

    200,000       157,079  

3.73%, 1/14/2032(b)

    350,000       253,413  

4.88%, 12/1/2032(b)

    303,000       255,134  

3.74%, 1/7/2033(b)

    250,000       174,840  

7.08%, 2/10/2034(b)

    400,000       352,366  

FactSet Research Systems, Inc.

   

2.90%, 3/1/2027

    50,000       45,163  

3.45%, 3/1/2032

    100,000       80,877  

 

See Accompanying Notes to the Financial Statements.

 

388    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Capital Markets – (continued)  

Goldman Sachs Group, Inc. (The)

   

3.50%, 4/1/2025

  $ 183,000     $ 176,126  

3.50%, 11/16/2026

    50,000       46,371  

1.43%, 3/9/2027(b)

    151,000       134,107  

3.62%, 3/15/2028(b)

    150,000       137,338  

2.62%, 4/22/2032(b)

    303,000       230,855  

2.38%, 7/21/2032(b)

    101,000       74,967  

3.10%, 2/24/2033(b)

    150,000       116,609  

Jefferies Financial Group, Inc.

   

2.63%, 10/15/2031

    100,000       73,726  

Moody's Corp.

   

3.75%, 3/24/2025

    100,000       97,080  

3.25%, 1/15/2028

    140,000       127,193  

4.25%, 2/1/2029

    252,000       234,679  

Morgan Stanley

   

4.00%, 7/23/2025

    50,000       48,390  

3.88%, 1/27/2026

    252,000       240,366  

3.13%, 7/27/2026

    251,000       232,212  

0.99%, 12/10/2026(b)

    160,000       142,392  

5.05%, 1/28/2027(b)

    160,000       156,259  

1.59%, 5/4/2027(b)

    312,000       277,236  

1.51%, 7/20/2027(b)

    123,000       107,974  

3.77%, 1/24/2029(b)

    100,000       90,193  

5.12%, 2/1/2029(b)

    160,000       152,335  

5.16%, 4/20/2029(b)

    160,000       152,228  

4.43%, 1/23/2030(b)

    113,000       102,889  

2.70%, 1/22/2031(b)

    250,000       200,869  

2.24%, 7/21/2032(b)

    100,000       73,755  

2.94%, 1/21/2033(b)

    200,000       153,480  

6.34%, 10/18/2033(b)

    153,000       149,998  

5.25%, 4/21/2034(b)

    120,000       108,121  

5.42%, 7/21/2034(b)

    100,000       91,268  

Nasdaq, Inc.

   

1.65%, 1/15/2031

    101,000       74,596  

Nomura Holdings, Inc.

   

1.85%, 7/16/2025

    303,000       280,682  

2.68%, 7/16/2030

    200,000       154,664  

S&P Global, Inc.

   

2.70%, 3/1/2029

    252,000       218,524  

4.25%, 5/1/2029

    200,000       186,155  

2.50%, 12/1/2029

    250,000       209,167  

1.25%, 8/15/2030

    100,000       74,353  

2.90%, 3/1/2032

    200,000       160,472  
Investments   Principal
Amount
    Value  
Capital Markets – (continued)  

State Street Corp.

   

5.16%, 5/18/2034(b)

  $ 200,000     $ 180,869  

Stifel Financial Corp.

   

4.00%, 5/15/2030

    101,000       84,550  
              12,550,739  
Chemicals – 0.7%  

Celanese US Holdings LLC

   

6.33%, 7/15/2029

    150,000       144,591  

Dow Chemical Co. (The)

   

7.38%, 11/1/2029

    202,000       213,540  

DuPont de Nemours, Inc.

   

4.49%, 11/15/2025

    500,000       487,246  

EIDP, Inc.

   

4.50%, 5/15/2026

    300,000       291,286  

4.80%, 5/15/2033

    250,000       227,295  

FMC Corp.

   

3.20%, 10/1/2026

    151,000       137,675  

Huntsman International LLC

   

4.50%, 5/1/2029

    100,000       89,443  

NewMarket Corp.

   

2.70%, 3/18/2031

    100,000       76,776  

RPM International, Inc.

   

4.55%, 3/1/2029

    100,000       92,051  

Sherwin-Williams Co. (The)

   

2.95%, 8/15/2029

    101,000       86,073  
              1,845,976  
Commercial Services & Supplies – 1.0%  

Cintas Corp. No. 2

   

3.45%, 5/1/2025

    250,000       241,947  

3.70%, 4/1/2027

    200,000       188,512  

4.00%, 5/1/2032

    140,000       122,252  

RELX Capital, Inc.

   

4.00%, 3/18/2029

    252,000       232,025  

3.00%, 5/22/2030

    202,000       169,018  

4.75%, 5/20/2032

    100,000       91,623  

Republic Services, Inc.

   

2.90%, 7/1/2026

    250,000       233,653  

3.38%, 11/15/2027

    200,000       184,074  

3.95%, 5/15/2028

    151,000       140,824  

4.88%, 4/1/2029

    100,000       95,912  

2.30%, 3/1/2030

    200,000       162,242  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     389  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Commercial Services & Supplies – (continued)  

Waste Management, Inc.

   

0.75%, 11/15/2025

  $ 152,000     $ 138,481  

1.15%, 3/15/2028

    162,000       135,197  

4.88%, 2/15/2029

    150,000       144,561  

4.63%, 2/15/2030

    151,000       141,908  

4.15%, 4/15/2032

    250,000       221,248  

4.63%, 2/15/2033

    150,000       136,039  
              2,779,516  
Communications Equipment – 0.5%  

Cisco Systems, Inc.

   

2.50%, 9/20/2026

    200,000       185,713  

Juniper Networks, Inc.

   

1.20%, 12/10/2025

    50,000       45,157  

3.75%, 8/15/2029

    151,000       132,546  

Motorola Solutions, Inc.

   

4.60%, 2/23/2028

    201,000       190,142  

4.60%, 5/23/2029

    303,000       282,341  

2.30%, 11/15/2030

    252,000       192,611  

2.75%, 5/24/2031

    200,000       155,043  

5.60%, 6/1/2032

    150,000       140,555  

Nokia OYJ

   

4.38%, 6/12/2027

    50,000       46,260  
              1,370,368  
Construction Materials – 0.1%  

Eagle Materials, Inc.

   

2.50%, 7/1/2031

    250,000       190,607  

Vulcan Materials Co.

   

3.50%, 6/1/2030

    200,000       170,660  
              361,267  
Consumer Finance – 1.1%  

AerCap Ireland Capital DAC

   

2.45%, 10/29/2026

    200,000       177,906  

3.00%, 10/29/2028

    200,000       168,449  

American Express Co.

   

2.25%, 3/4/2025

    252,000       239,670  

4.99%, 5/1/2026(b)

    250,000       245,204  

2.55%, 3/4/2027

    100,000       89,535  

3.30%, 5/3/2027

    200,000       183,043  

4.99%, 5/26/2033(b)

    76,000       67,731  

4.42%, 8/3/2033(b)

    100,000       87,300  

5.63%, 7/28/2034(b)

    100,000       91,139  
Investments   Principal
Amount
    Value  
Consumer Finance – (continued)  

Capital One Financial Corp.

   

5.82%, 2/1/2034(b)

  $ 50,000     $ 43,729  

Caterpillar Financial Services Corp.

   

3.40%, 5/13/2025

    200,000       193,736  

Discover Financial Services

   

3.95%, 11/6/2024

    250,000       243,171  

Synchrony Financial

   

4.88%, 6/13/2025

    181,000       171,658  

4.50%, 7/23/2025

    373,000       350,402  

3.70%, 8/4/2026

    170,000       150,792  

3.95%, 12/1/2027

    202,000       172,912  

5.15%, 3/19/2029

    202,000       174,472  

2.88%, 10/28/2031

    150,000       101,648  
              2,952,497  
Consumer Staples Distribution & Retail – 0.7%  

Costco Wholesale Corp.

   

1.38%, 6/20/2027

    250,000       217,587  

1.60%, 4/20/2030

    400,000       316,211  

1.75%, 4/20/2032

    320,000       239,497  

Kroger Co. (The)

   

7.50%, 4/1/2031

    150,000       160,882  

Sysco Corp.

   

3.75%, 10/1/2025

    250,000       239,540  

3.30%, 7/15/2026

    250,000       233,708  

2.40%, 2/15/2030

    250,000       201,305  

5.95%, 4/1/2030

    250,000       248,186  

Walmart, Inc.

   

4.10%, 4/15/2033

    200,000       179,031  
              2,035,947  
Containers & Packaging – 0.4%  

Amcor Finance USA, Inc.

   

3.63%, 4/28/2026

    250,000       235,521  

4.50%, 5/15/2028

    112,000       104,828  

Amcor Flexibles North America, Inc.

   

2.63%, 6/19/2030

    100,000       78,931  

2.69%, 5/25/2031

    100,000       77,339  

AptarGroup, Inc.

   

3.60%, 3/15/2032

    100,000       81,522  

Avery Dennison Corp.

   

4.88%, 12/6/2028

    151,000       143,855  

5.75%, 3/15/2033

    100,000       95,377  

 

See Accompanying Notes to the Financial Statements.

 

390    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Containers & Packaging – (continued)  

Packaging Corp. of America

   

3.00%, 12/15/2029

  $ 278,000     $ 234,591  
              1,051,964  
Distributors – 0.2%  

Genuine Parts Co.

   

1.75%, 2/1/2025

    251,000       237,253  

2.75%, 2/1/2032

    200,000       150,822  

LKQ Corp.

   

6.25%, 6/15/2033

    150,000       140,075  
              528,150  
Diversified REITs – 1.2%  

Broadstone Net Lease LLC

   

REIT, 2.60%, 9/15/2031

    50,000       34,677  

GLP Capital LP

   

REIT, 5.25%, 6/1/2025

    200,000       195,079  

REIT, 5.38%, 4/15/2026

    403,000       386,236  

REIT, 5.75%, 6/1/2028

    300,000       281,263  

REIT, 5.30%, 1/15/2029

    150,000       137,012  

REIT, 4.00%, 1/15/2030

    200,000       166,909  

REIT, 4.00%, 1/15/2031

    150,000       121,994  

REIT, 3.25%, 1/15/2032

    250,000       189,089  

Rayonier LP

   

REIT, 2.75%, 5/17/2031

    100,000       76,392  

STORE Capital Corp.

   

REIT, 4.50%, 3/15/2028

    100,000       86,279  

REIT, 4.63%, 3/15/2029

    141,000       118,463  

VICI Properties LP

   

REIT, 4.38%, 5/15/2025

    50,000       48,378  

REIT, 4.75%, 2/15/2028

    505,000       465,055  

REIT, 4.95%, 2/15/2030

    303,000       270,118  

REIT, 5.13%, 5/15/2032

    450,000       388,871  

Vornado Realty LP

   

REIT, 2.15%, 6/1/2026

    200,000       168,502  

WP Carey, Inc.

   

REIT, 4.00%, 2/1/2025

    151,000       146,994  

REIT, 3.85%, 7/15/2029

    50,000       43,649  

REIT, 2.40%, 2/1/2031

    100,000       75,840  
              3,400,800  
Investments   Principal
Amount
    Value  
Diversified Telecommunication Services – 0.1%  

Koninklijke KPN NV

   

8.38%, 10/1/2030

  $ 151,000     $ 165,241  

Sprint Capital Corp.

   

8.75%, 3/15/2032

    92,000       103,560  
              268,801  
Electric Utilities – 1.2%  

American Electric Power Co., Inc.

   

3.88%, 2/15/2062(b)

    101,000       79,318  

Arizona Public Service Co.

   

5.55%, 8/1/2033

    100,000       93,944  

Avangrid, Inc.

   

3.15%, 12/1/2024

    50,000       48,312  

3.20%, 4/15/2025

    251,000       240,219  

3.80%, 6/1/2029

    150,000       131,843  

Duke Energy Corp.

   

3.25%, 1/15/2082(b)

    101,000       72,560  

Georgia Power Co.

   

4.95%, 5/17/2033

    200,000       182,552  

Interstate Power and Light Co.

   

3.60%, 4/1/2029

    102,000       91,515  

MidAmerican Energy Co.

   

3.65%, 4/15/2029

    303,000       273,186  

Nevada Power Co.

   

Series CC,
3.70%, 5/1/2029

    252,000       224,950  

NextEra Energy Capital Holdings, Inc.

   

4.80%, 12/1/2077(b)

    61,000       51,118  

5.65%, 5/1/2079(b)

    97,000       85,719  

3.80%, 3/15/2082(b)

    110,000       87,999  

Oklahoma Gas and Electric Co.

   

3.25%, 4/1/2030

    200,000       168,865  

Oncor Electric Delivery Co. LLC

   

4.55%, 9/15/2032

    100,000       89,237  

PacifiCorp

   

3.50%, 6/15/2029

    250,000       218,830  

PPL Capital Funding, Inc.

   

4.13%, 4/15/2030

    113,000       99,932  

PPL Electric Utilities Corp.

   

5.00%, 5/15/2033

    200,000       185,491  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     391  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Electric Utilities – (continued)  

Sierra Pacific Power Co.

   

2.60%, 5/1/2026

  $ 20,000     $ 18,582  

Southern Co. (The)

   

Series B,
4.00%, 1/15/2051(b)

    142,000       129,559  

Series 21-A,
3.75%, 9/15/2051(b)

    300,000       256,527  

Wisconsin Electric Power Co.

   

5.63%, 5/15/2033

    200,000       195,821  

Wisconsin Power and Light Co.

   

1.95%, 9/16/2031

    50,000       37,092  

4.95%, 4/1/2033

    150,000       137,340  

Xcel Energy, Inc.

   

1.75%, 3/15/2027

    50,000       43,581  

3.40%, 6/1/2030

    50,000       42,346  

2.35%, 11/15/2031

    100,000       74,396  
              3,360,834  
Electrical Equipment – 0.2%  

Acuity Brands Lighting, Inc.

   

2.15%, 12/15/2030

    50,000       37,827  

Emerson Electric Co.

   

2.00%, 12/21/2028

    101,000       85,580  

Hubbell, Inc.

   

3.35%, 3/1/2026

    151,000       143,059  

3.50%, 2/15/2028

    200,000       183,759  

Regal Rexnord Corp.

   

6.30%, 2/15/2030(c)

    50,000       47,049  
              497,274  
Electronic Equipment, Instruments & Components – 1.9%  

Amphenol Corp.

   

4.75%, 3/30/2026

    250,000       244,241  

4.35%, 6/1/2029

    243,000       226,885  

2.80%, 2/15/2030

    211,000       175,474  

2.20%, 9/15/2031

    250,000       190,865  

Avnet, Inc.

   

4.63%, 4/15/2026

    176,000       168,692  

CDW LLC

   

5.50%, 12/1/2024

    270,000       267,208  

4.13%, 5/1/2025

    250,000       241,213  

2.67%, 12/1/2026

    404,000       361,374  

4.25%, 4/1/2028

    202,000       183,622  
Investments   Principal
Amount
    Value  
Electronic Equipment, Instruments & Components –
(continued)
 

3.28%, 12/1/2028

  $ 202,000     $ 172,577  

3.25%, 2/15/2029

    200,000       168,852  

3.57%, 12/1/2031

    200,000       160,372  

Flex Ltd.

   

3.75%, 2/1/2026

    250,000       236,695  

6.00%, 1/15/2028

    130,000       128,685  

4.88%, 6/15/2029

    100,000       91,443  

4.88%, 5/12/2030

    62,000       56,268  

Jabil, Inc.

   

1.70%, 4/15/2026

    150,000       135,200  

4.25%, 5/15/2027

    100,000       93,841  

3.60%, 1/15/2030

    200,000       169,872  

Keysight Technologies, Inc.

   

4.60%, 4/6/2027

    350,000       333,805  

TD SYNNEX Corp.

   

2.38%, 8/9/2028

    202,000       165,804  

2.65%, 8/9/2031

    100,000       72,949  

Teledyne Technologies, Inc.

   

2.25%, 4/1/2028

    157,000       134,040  

2.75%, 4/1/2031

    200,000       157,755  

Trimble, Inc.

   

4.90%, 6/15/2028

    200,000       189,313  

6.10%, 3/15/2033

    50,000       47,727  

Tyco Electronics Group SA

   

4.50%, 2/13/2026

    100,000       97,622  

3.70%, 2/15/2026

    81,000       77,506  

2.50%, 2/4/2032

    250,000       195,821  

Vontier Corp.

   

2.40%, 4/1/2028

    252,000       207,660  

2.95%, 4/1/2031

    100,000       75,286  
              5,228,667  
Energy Equipment & Services – 0.1%  

Baker Hughes Holdings LLC

   

3.14%, 11/7/2029

    152,000       129,855  

Helmerich & Payne, Inc.

   

2.90%, 9/29/2031

    100,000       76,810  

Schlumberger Investment SA

   

4.85%, 5/15/2033

    100,000       92,032  
              298,697  

 

See Accompanying Notes to the Financial Statements.

 

392    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Entertainment – 0.5%  

Activision Blizzard, Inc.

   

3.40%, 9/15/2026

  $ 50,000     $ 47,284  

3.40%, 6/15/2027

    152,000       141,520  

1.35%, 9/15/2030

    200,000       153,375  

Electronic Arts, Inc.

   

4.80%, 3/1/2026

    50,000       49,064  

1.85%, 2/15/2031

    250,000       190,257  

Netflix, Inc.

   

4.88%, 4/15/2028

    250,000       240,859  

5.88%, 11/15/2028

    300,000       300,112  

6.38%, 5/15/2029

    250,000       256,773  
              1,379,244  
Financial Services – 3.0%  

Block Financial LLC

   

2.50%, 7/15/2028

    353,000       297,734  

3.88%, 8/15/2030

    150,000       127,404  

Corebridge Financial, Inc.

   

3.50%, 4/4/2025

    140,000       134,603  

3.65%, 4/5/2027

    150,000       137,372  

3.90%, 4/5/2032

    100,000       81,802  

6.88%, 12/15/2052(b)

    250,000       230,966  

Fidelity National Information Services, Inc.

   

1.65%, 3/1/2028

    200,000       167,441  

Fiserv, Inc.

   

3.85%, 6/1/2025

    350,000       339,202  

3.20%, 7/1/2026

    650,000       607,272  

2.25%, 6/1/2027

    250,000       220,911  

4.20%, 10/1/2028

    301,000       277,824  

3.50%, 7/1/2029

    1,111,000       974,579  

2.65%, 6/1/2030

    200,000       161,171  

5.60%, 3/2/2033

    250,000       235,246  

5.63%, 8/21/2033

    300,000       281,397  

Global Payments, Inc.

   

5.30%, 8/15/2029

    100,000       93,928  

Mastercard, Inc.

   

2.00%, 3/3/2025

    101,000       96,529  

2.95%, 11/21/2026

    50,000       46,630  

3.30%, 3/26/2027

    353,000       329,634  

2.95%, 6/1/2029

    401,000       351,791  

3.35%, 3/26/2030

    353,000       310,150  

1.90%, 3/15/2031

    250,000       194,065  
Investments   Principal
Amount
    Value  
Financial Services – (continued)  

2.00%, 11/18/2031

  $ 100,000     $ 76,303  

4.85%, 3/9/2033

    200,000       188,142  

Radian Group, Inc.

   

6.63%, 3/15/2025

    101,000       99,990  

4.88%, 3/15/2027

    143,000       132,713  

Synchrony Bank

   

5.40%, 8/22/2025

    312,000       297,959  

5.63%, 8/23/2027

    404,000       369,154  

Visa, Inc.

   

3.15%, 12/14/2025

    432,000       412,209  

1.90%, 4/15/2027

    217,000       193,231  

2.75%, 9/15/2027

    120,000       108,988  

2.05%, 4/15/2030

    200,000       161,792  

1.10%, 2/15/2031

    250,000       185,193  

Voya Financial, Inc.

   

4.70%, 1/23/2048(b)

    101,000       79,234  

Western Union Co. (The)

   

2.85%, 1/10/2025

    243,000       233,094  

2.75%, 3/15/2031

    150,000       113,979  
              8,349,632  
Food Products – 1.7%  

Campbell Soup Co.

   

4.15%, 3/15/2028

    131,000       122,040  

Conagra Brands, Inc.

   

4.85%, 11/1/2028

    100,000       93,960  

Flowers Foods, Inc.

   

3.50%, 10/1/2026

    100,000       93,324  

General Mills, Inc.

   

4.00%, 4/17/2025

    250,000       243,294  

4.20%, 4/17/2028

    142,000       133,078  

2.88%, 4/15/2030

    152,000       125,650  

4.95%, 3/29/2033

    150,000       136,228  

Hershey Co. (The)

   

0.90%, 6/1/2025

    266,000       247,456  

4.25%, 5/4/2028

    200,000       191,955  

Hormel Foods Corp.

   

1.70%, 6/3/2028

    291,000       246,804  

Ingredion, Inc.

   

2.90%, 6/1/2030

    200,000       164,216  

J M Smucker Co. (The)

   

3.50%, 3/15/2025

    230,000       222,621  

2.38%, 3/15/2030

    250,000       199,870  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     393  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Food Products – (continued)  

Kellogg Co.

   

4.30%, 5/15/2028

  $ 250,000     $ 233,539  

Series B,
7.45%, 4/1/2031

    122,000       129,365  

Mead Johnson Nutrition Co.

   

4.13%, 11/15/2025

    250,000       242,373  

Mondelez International, Inc.

   

1.50%, 5/4/2025

    250,000       234,122  

2.63%, 3/17/2027

    202,000       182,794  

2.75%, 4/13/2030

    93,000       76,586  

1.50%, 2/4/2031

    100,000       73,391  

Unilever Capital Corp.

   

3.10%, 7/30/2025

    250,000       240,292  

2.90%, 5/5/2027

    151,000       138,806  

3.50%, 3/22/2028

    152,000       140,406  

4.88%, 9/8/2028

    200,000       195,358  

2.13%, 9/6/2029

    225,000       187,377  

5.90%, 11/15/2032

    250,000       253,183  
              4,548,088  
Gas Utilities – 0.4%  

Atmos Energy Corp.

   

2.63%, 9/15/2029

    200,000       170,727  

CenterPoint Energy Resources Corp.

   

5.40%, 3/1/2033

    150,000       140,060  

Eastern Energy Gas Holdings LLC

   

Series A,
2.50%, 11/15/2024

    50,000       48,205  

3.60%, 12/15/2024

    55,000       53,486  

National Fuel Gas Co.

   

5.20%, 7/15/2025

    91,000       89,418  

5.50%, 1/15/2026

    233,000       228,526  

4.75%, 9/1/2028

    251,000       232,045  

2.95%, 3/1/2031

    100,000       76,016  

Southern California Gas Co.

   

Series XX,
2.55%, 2/1/2030

    30,000       24,413  

5.20%, 6/1/2033

    100,000       92,389  
              1,155,285  
Investments   Principal
Amount
    Value  
Ground Transportation – 0.4%  

Burlington Northern Santa Fe LLC

   

3.65%, 9/1/2025

  $ 250,000     $ 242,115  

Canadian National Railway Co.

   

2.75%, 3/1/2026

    251,000       235,713  

3.85%, 8/5/2032

    200,000       173,123  

CSX Corp.

   

3.25%, 6/1/2027

    80,000       73,651  

3.80%, 3/1/2028

    161,000       149,531  

4.25%, 3/15/2029

    172,000       160,505  

Triton Container International Ltd.

   

3.25%, 3/15/2032

    100,000       72,334  
              1,106,972  
Health Care Equipment & Supplies – 0.7%  

Boston Scientific Corp.

   

1.90%, 6/1/2025

    250,000       235,177  

2.65%, 6/1/2030

    250,000       205,627  

DH Europe Finance II Sarl

   

2.20%, 11/15/2024

    252,000       242,871  

2.60%, 11/15/2029

    152,000       128,647  

Edwards Lifesciences Corp.

   

4.30%, 6/15/2028

    150,000       140,545  

Smith & Nephew plc

   

2.03%, 10/14/2030

    250,000       188,073  

Stryker Corp.

   

1.15%, 6/15/2025

    402,000       373,693  

3.38%, 11/1/2025

    200,000       191,501  

1.95%, 6/15/2030

    50,000       39,103  

Zimmer Biomet Holdings, Inc.

   

3.55%, 4/1/2025

    300,000       289,822  
              2,035,059  
Health Care Providers & Services – 2.3%  

Cardinal Health, Inc.

   

3.75%, 9/15/2025

    250,000       239,868  

3.41%, 6/15/2027

    304,000       278,521  

Cencora, Inc.

   

3.25%, 3/1/2025

    250,000       241,964  

3.45%, 12/15/2027

    111,000       102,255  

2.80%, 5/15/2030

    300,000       246,626  

2.70%, 3/15/2031

    200,000       158,482  

 

See Accompanying Notes to the Financial Statements.

 

394    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Health Care Providers & Services – (continued)  

Centene Corp.

   

4.63%, 12/15/2029

  $ 252,000     $ 225,102  

2.50%, 3/1/2031

    100,000       75,649  

Elevance Health, Inc.

   

2.38%, 1/15/2025

    150,000       143,926  

2.88%, 9/15/2029

    200,000       169,912  

HCA, Inc.

   

5.38%, 2/1/2025

    200,000       197,878  

4.13%, 6/15/2029

    150,000       133,136  

Humana, Inc.

   

1.35%, 2/3/2027

    200,000       173,381  

5.75%, 3/1/2028

    50,000       49,807  

3.70%, 3/23/2029

    202,000       182,696  

4.88%, 4/1/2030

    50,000       46,581  

Laboratory Corp. of America Holdings

   

2.30%, 12/1/2024

    150,000       144,116  

3.60%, 2/1/2025

    50,000       48,553  

1.55%, 6/1/2026

    252,000       225,634  

2.95%, 12/1/2029

    200,000       168,786  

McKesson Corp.

   

5.25%, 2/15/2026

    250,000       247,184  

1.30%, 8/15/2026

    252,000       223,686  

5.10%, 7/15/2033

    300,000       278,919  

Quest Diagnostics, Inc.

   

3.50%, 3/30/2025

    200,000       192,965  

4.20%, 6/30/2029

    200,000       183,970  

2.95%, 6/30/2030

    102,000       83,755  

UnitedHealth Group, Inc.

   

2.95%, 10/15/2027

    342,000       311,224  

4.25%, 1/15/2029

    160,000       150,420  

4.00%, 5/15/2029

    110,000       101,780  

2.88%, 8/15/2029

    112,000       97,151  

5.30%, 2/15/2030

    110,000       107,980  

2.00%, 5/15/2030

    250,000       198,654  

2.30%, 5/15/2031

    250,000       196,714  

4.20%, 5/15/2032

    200,000       177,324  

5.35%, 2/15/2033

    231,000       222,031  

4.50%, 4/15/2033

    200,000       180,081  
              6,206,711  
Health Care REITs – 0.5%  

National Health Investors, Inc.

   

REIT, 3.00%, 2/1/2031

    100,000       72,102  
Investments   Principal
Amount
    Value  
Health Care REITs – (continued)  

Omega Healthcare Investors, Inc.

   

REIT, 5.25%, 1/15/2026

  $ 250,000     $ 241,565  

REIT, 4.50%, 4/1/2027

    101,000       93,017  

REIT, 4.75%, 1/15/2028

    301,000       274,535  

REIT, 3.63%, 10/1/2029

    151,000       123,016  

REIT, 3.38%, 2/1/2031

    150,000       115,319  

REIT, 3.25%, 4/15/2033

    150,000       106,910  

Physicians Realty LP

   

REIT, 4.30%, 3/15/2027

    151,000       140,205  

Sabra Health Care LP

   

REIT, 5.13%, 8/15/2026

    202,000       191,540  

REIT, 3.90%, 10/15/2029

    151,000       124,329  
              1,482,538  
Health Care Technology – 0.1%  

IQVIA, Inc.

   

5.70%, 5/15/2028(c)

    200,000       192,000  
Hotel & Resort REITs – 0.2%  

Host Hotels & Resorts LP

   

Series E,
REIT, 4.00%, 6/15/2025

    100,000       95,977  

Series H,
REIT, 3.38%, 12/15/2029

    303,000       249,677  

Series I,
REIT, 3.50%, 9/15/2030

    150,000       121,252  

Series J,
REIT, 2.90%, 12/15/2031

    150,000       111,970  
              578,876  
Hotels, Restaurants & Leisure – 1.9%  

Choice Hotels International, Inc.

   

3.70%, 12/1/2029

    100,000       81,899  

3.70%, 1/15/2031

    100,000       78,652  

Marriott International, Inc.

   

Series EE,
5.75%, 5/1/2025

    282,000       281,123  

Series R,
3.13%, 6/15/2026

    390,000       363,979  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     395  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Hotels, Restaurants & Leisure – (continued)  

5.00%, 10/15/2027

  $ 303,000     $ 292,693  

Series X,
4.00%, 4/15/2028

    352,000       323,454  

5.55%, 10/15/2028

    200,000       194,899  

4.90%, 4/15/2029

    252,000       236,355  

Series FF,
4.63%, 6/15/2030

    302,000       272,476  

Series HH,
2.85%, 4/15/2031

    300,000       235,752  

Series GG,
3.50%, 10/15/2032

    200,000       158,780  

McDonald's Corp.

   

3.30%, 7/1/2025

    250,000       240,696  

3.70%, 1/30/2026

    700,000       672,885  

3.50%, 3/1/2027

    160,000       149,522  

3.50%, 7/1/2027

    334,000       310,323  

3.80%, 4/1/2028

    281,000       260,705  

2.63%, 9/1/2029

    340,000       289,534  

2.13%, 3/1/2030

    201,000       161,561  

3.60%, 7/1/2030

    400,000       350,330  

4.60%, 9/9/2032

    130,000       119,296  

4.95%, 8/14/2033

    250,000       231,931  
              5,306,845  
Household Durables – 0.6%  

DR Horton, Inc.

   

2.60%, 10/15/2025

    30,000       28,135  

1.30%, 10/15/2026

    300,000       263,091  

Lennar Corp.

   

4.75%, 5/30/2025

    50,000       48,952  

5.25%, 6/1/2026

    200,000       196,515  

4.75%, 11/29/2027

    250,000       237,856  

NVR, Inc.

   

3.00%, 5/15/2030

    327,000       268,385  

PulteGroup, Inc.

   

5.50%, 3/1/2026

    216,000       213,345  

5.00%, 1/15/2027

    101,000       98,152  

6.38%, 5/15/2033

    150,000       145,864  

Toll Brothers Finance Corp.

   

4.88%, 3/15/2027

    303,000       288,660  
              1,788,955  
Investments   Principal
Amount
    Value  
Household Products – 0.6%  

Church & Dwight Co., Inc.

   

2.30%, 12/15/2031

  $ 100,000     $ 77,454  

5.60%, 11/15/2032

    100,000       97,847  

Clorox Co. (The)

   

3.90%, 5/15/2028

    200,000       183,984  

1.80%, 5/15/2030

    200,000       153,853  

Kimberly-Clark Corp.

   

3.20%, 4/25/2029

    250,000       223,809  

3.10%, 3/26/2030

    252,000       217,330  

Procter & Gamble Co. (The)

   

0.55%, 10/29/2025

    250,000       228,074  

2.45%, 11/3/2026

    162,000       150,023  

2.80%, 3/25/2027

    66,000       60,918  

3.00%, 3/25/2030

    264,000       229,755  
              1,623,047  
Independent Power and Renewable Electricity
Producers – 0.2%
 

Constellation Energy Generation LLC

   

3.25%, 6/1/2025

    250,000       239,229  

5.60%, 3/1/2028

    100,000       98,171  

5.80%, 3/1/2033

    100,000       94,840  
              432,240  
Industrial Conglomerates – 0.6%  

GE Capital International Funding Co. Unlimited Co.

   

3.37%, 11/15/2025

    200,000       190,261  

Honeywell International, Inc.

   

1.35%, 6/1/2025

    200,000       187,864  

2.50%, 11/1/2026

    252,000       233,059  

1.10%, 3/1/2027

    50,000       43,645  

4.25%, 1/15/2029

    101,000       95,261  

2.70%, 8/15/2029

    300,000       257,873  

1.75%, 9/1/2031

    250,000       187,169  

5.00%, 2/15/2033

    260,000       245,632  

Pentair Finance Sarl

   

4.50%, 7/1/2029

    100,000       90,471  
              1,531,235  
Insurance – 4.1%  

Aflac, Inc.

   

1.13%, 3/15/2026

    250,000       224,472  

3.60%, 4/1/2030

    302,000       263,072  

 

See Accompanying Notes to the Financial Statements.

 

396    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Insurance – (continued)  

Allied World Assurance Co. Holdings Ltd.

   

4.35%, 10/29/2025

  $ 300,000     $ 287,800  

American International Group, Inc.

   

Series A-9,
5.75%, 4/1/2048(b)

    202,000       183,810  

Aon Corp.

   

8.21%, 1/1/2027

    80,000       83,903  

2.85%, 5/28/2027

    363,000       328,277  

4.50%, 12/15/2028

    120,000       112,346  

3.75%, 5/2/2029

    310,000       277,159  

2.80%, 5/15/2030

    237,000       193,394  

2.05%, 8/23/2031

    50,000       37,014  

2.60%, 12/2/2031

    160,000       122,551  

5.35%, 2/28/2033

    350,000       326,197  

Aon Global Ltd.

   

3.88%, 12/15/2025

    101,000       96,745  

Arthur J Gallagher & Co.

   

5.50%, 3/2/2033

    200,000       186,298  

Assurant, Inc.

   

3.70%, 2/22/2030

    101,000       83,706  

2.65%, 1/15/2032

    100,000       72,051  

Athene Holding Ltd.

   

4.13%, 1/12/2028

    500,000       452,331  

3.50%, 1/15/2031

    100,000       79,862  

6.65%, 2/1/2033

    100,000       96,368  

AXIS Specialty Finance LLC

   

4.90%, 1/15/2040(b)

    202,000       158,912  

Berkshire Hathaway Finance Corp.

   

2.88%, 3/15/2032

    100,000       81,518  

Brown & Brown, Inc.

   

4.50%, 3/15/2029

    200,000       182,876  

2.38%, 3/15/2031

    252,000       189,012  

4.20%, 3/17/2032

    100,000       83,822  

Chubb INA Holdings, Inc.

   

3.15%, 3/15/2025

    50,000       48,250  

3.35%, 5/3/2026

    200,000       189,407  

CNA Financial Corp.

   

4.50%, 3/1/2026

    100,000       96,714  

3.90%, 5/1/2029

    150,000       134,190  

5.50%, 6/15/2033

    100,000       91,749  
Investments   Principal
Amount
    Value  
Insurance – (continued)  

CNO Financial Group, Inc.

   

5.25%, 5/30/2029

  $ 100,000     $ 92,275  

Enstar Finance LLC

   

5.75%, 9/1/2040(b)

    100,000       87,983  

5.50%, 1/15/2042(b)

    100,000       79,709  

Enstar Group Ltd.

   

4.95%, 6/1/2029

    202,000       184,265  

3.10%, 9/1/2031

    100,000       73,926  

Fairfax Financial Holdings Ltd.

   

4.85%, 4/17/2028

    252,000       237,805  

4.63%, 4/29/2030

    200,000       177,533  

5.63%, 8/16/2032

    150,000       138,590  

Fidelity National Financial, Inc.

   

3.40%, 6/15/2030

    150,000       123,485  

First American Financial Corp.

   

4.60%, 11/15/2024

    202,000       199,100  

4.00%, 5/15/2030

    100,000       83,404  

2.40%, 8/15/2031

    100,000       72,231  

Globe Life, Inc.

   

4.55%, 9/15/2028

    101,000       94,633  

2.15%, 8/15/2030

    250,000       190,824  

4.80%, 6/15/2032

    100,000       89,681  

Hanover Insurance Group, Inc. (The)

   

2.50%, 9/1/2030

    100,000       75,108  

Hartford Financial Services Group, Inc. (The)

   

2.80%, 8/19/2029

    202,000       170,898  

Manulife Financial Corp.

   

4.15%, 3/4/2026

    202,000       194,333  

2.48%, 5/19/2027

    2,000       1,784  

4.06%, 2/24/2032(b)

    251,000       226,518  

Markel Group, Inc.

   

3.35%, 9/17/2029

    200,000       173,940  

Marsh & McLennan Cos., Inc.

   

3.50%, 3/10/2025

    76,000       73,669  

4.38%, 3/15/2029

    505,000       472,429  

2.25%, 11/15/2030

    116,000       91,244  

5.75%, 11/1/2032

    250,000       243,748  

5.40%, 9/15/2033

    150,000       142,573  

Old Republic International Corp.

   

3.88%, 8/26/2026

    101,000       95,098  

Primerica, Inc.

   

2.80%, 11/19/2031

    150,000       115,659  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     397  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Insurance – (continued)  

Principal Financial Group, Inc.

   

3.70%, 5/15/2029

  $ 200,000     $ 177,697  

5.38%, 3/15/2033

    100,000       93,446  

Progressive Corp. (The)

   

3.20%, 3/26/2030

    101,000       86,060  

4.95%, 6/15/2033

    100,000       92,218  

Prudential Financial, Inc.

   

5.38%, 5/15/2045(b)

    172,000       163,494  

4.50%, 9/15/2047(b)

    200,000       175,283  

3.70%, 10/1/2050(b)

    71,000       55,938  

6.00%, 9/1/2052(b)

    70,000       62,619  

Reinsurance Group of America, Inc.

   

3.90%, 5/15/2029

    202,000       178,218  

RenaissanceRe Holdings Ltd.

   

3.60%, 4/15/2029

    200,000       174,376  

Trinity Acquisition plc

   

4.40%, 3/15/2026

    151,000       144,841  

Unum Group

   

3.88%, 11/5/2025

    200,000       190,635  

Willis North America, Inc.

   

4.65%, 6/15/2027

    231,000       219,855  

4.50%, 9/15/2028

    110,000       102,252  

2.95%, 9/15/2029

    354,000       296,804  

5.35%, 5/15/2033

    240,000       218,725  
              11,198,712  
Interactive Media & Services – 0.3%  

Meta Platforms, Inc.

   

4.60%, 5/15/2028

    100,000       96,934  

3.85%, 8/15/2032

    281,000       244,225  

4.95%, 5/15/2033

    300,000       281,230  

Weibo Corp.

   

3.38%, 7/8/2030

    200,000       154,978  
              777,367  
IT Services – 0.8%  

Amdocs Ltd.

   

2.54%, 6/15/2030

    250,000       196,742  

Booz Allen Hamilton, Inc.

   

5.95%, 8/4/2033

    100,000       95,043  

CGI, Inc.

   

1.45%, 9/14/2026

    101,000       89,072  

2.30%, 9/14/2031

    100,000       73,543  
Investments   Principal
Amount
    Value  
IT Services – (continued)  

Genpact Luxembourg Sarl

   

3.38%, 12/1/2024

  $ 192,000     $ 185,139  

International Business Machines Corp.

   

3.30%, 5/15/2026

    250,000       236,442  

4.15%, 7/27/2027

    192,000       181,948  

3.50%, 5/15/2029

    505,000       450,045  

1.95%, 5/15/2030

    100,000       78,872  

VeriSign, Inc.

   

5.25%, 4/1/2025

    250,000       247,033  

4.75%, 7/15/2027

    100,000       95,316  

2.70%, 6/15/2031

    200,000       154,452  
              2,083,647  
Life Sciences Tools & Services – 0.2%  

Agilent Technologies, Inc.

   

2.75%, 9/15/2029

    332,000       280,073  

2.30%, 3/12/2031

    201,000       155,722  
              435,795  
Machinery – 1.2%  

Dover Corp.

   

3.15%, 11/15/2025

    151,000       143,368  

Fortive Corp.

   

3.15%, 6/15/2026

    251,000       233,922  

IDEX Corp.

   

3.00%, 5/1/2030

    150,000       124,025  

2.63%, 6/15/2031

    200,000       156,073  

Ingersoll Rand, Inc.

   

5.70%, 8/14/2033

    250,000       236,218  

Nordson Corp.

   

5.80%, 9/15/2033

    100,000       95,191  

nVent Finance Sarl

   

4.55%, 4/15/2028

    100,000       92,764  

5.65%, 5/15/2033

    100,000       90,785  

Oshkosh Corp.

   

4.60%, 5/15/2028

    200,000       189,523  

Otis Worldwide Corp.

   

2.06%, 4/5/2025

    498,000       471,930  

2.29%, 4/5/2027

    200,000       178,192  

2.57%, 2/15/2030

    453,000       368,577  

Stanley Black & Decker, Inc.

   

4.00%, 3/15/2060(b)

    200,000       164,171  

 

See Accompanying Notes to the Financial Statements.

 

398    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Machinery – (continued)  

Westinghouse Air Brake Technologies Corp.

   

3.45%, 11/15/2026

  $ 240,000     $ 222,632  

4.70%, 9/15/2028(a)

    364,000       339,392  

Xylem, Inc.

   

3.25%, 11/1/2026

    200,000       186,088  
              3,292,851  
Media – 0.4%  

Fox Corp.

   

4.71%, 1/25/2029

    400,000       373,811  

3.50%, 4/8/2030

    102,000       86,497  

6.50%, 10/13/2033

    100,000       97,666  

Interpublic Group of Cos., Inc. (The)

   

4.75%, 3/30/2030

    202,000       184,211  

Omnicom Group, Inc.

   

3.60%, 4/15/2026

    200,000       189,438  

4.20%, 6/1/2030

    200,000       176,153  
              1,107,776  
Metals & Mining – 1.0%  

AngloGold Ashanti Holdings plc

   

3.38%, 11/1/2028

    52,000       43,063  

ArcelorMittal SA

   

6.55%, 11/29/2027

    182,000       182,858  

4.25%, 7/16/2029

    82,000       73,848  

6.80%, 11/29/2032

    250,000       239,455  

BHP Billiton Finance USA Ltd.

   

4.88%, 2/27/2026

    300,000       295,320  

4.75%, 2/28/2028

    160,000       154,469  

5.25%, 9/8/2033

    200,000       187,982  

Freeport-McMoRan, Inc.

   

4.63%, 8/1/2030

    250,000       220,271  

Reliance Steel & Aluminum Co.

   

1.30%, 8/15/2025

    252,000       231,592  

2.15%, 8/15/2030

    150,000       114,825  

Rio Tinto Alcan, Inc.

   

7.25%, 3/15/2031

    50,000       53,420  

Rio Tinto Finance USA Ltd.

   

7.13%, 7/15/2028

    172,000       182,259  
Investments   Principal
Amount
    Value  
Metals & Mining – (continued)  

Steel Dynamics, Inc.

   

2.80%, 12/15/2024

  $ 201,000     $ 193,617  

3.45%, 4/15/2030

    100,000       84,588  

Vale Canada Ltd.

   

7.20%, 9/15/2032

    100,000       100,712  

Vale Overseas Ltd.

   

3.75%, 7/8/2030

    305,000       257,664  

6.13%, 6/12/2033

    150,000       141,054  
              2,756,997  
Multi-Utilities – 1.5%  

Ameren Corp.

   

3.65%, 2/15/2026

    100,000       95,129  

1.75%, 3/15/2028

    152,000       127,337  

Ameren Illinois Co.

   

4.95%, 6/1/2033

    200,000       184,203  

Berkshire Hathaway Energy Co.

   

3.50%, 2/1/2025

    250,000       243,033  

4.05%, 4/15/2025

    800,000       781,380  

3.25%, 4/15/2028

    200,000       179,341  

3.70%, 7/15/2030

    353,000       307,104  

1.65%, 5/15/2031

    300,000       218,831  

CenterPoint Energy, Inc.

   

2.95%, 3/1/2030

    152,000       124,823  

CMS Energy Corp.

   

4.75%, 6/1/2050(b)

    50,000       41,463  

3.75%, 12/1/2050(b)

    100,000       71,989  

DTE Energy Co.

   

Series C, 3.40%, 6/15/2029

    102,000       88,494  

Public Service Enterprise Group, Inc.

   

0.80%, 8/15/2025

    152,000       139,031  

5.85%, 11/15/2027

    200,000       198,939  

2.45%, 11/15/2031

    150,000       113,369  

Puget Energy, Inc.

   

4.10%, 6/15/2030

    50,000       42,708  

Sempra

   

3.30%, 4/1/2025

    200,000       192,330  

3.25%, 6/15/2027

    30,000       27,180  

3.40%, 2/1/2028

    300,000       270,342  

3.70%, 4/1/2029

    200,000       177,268  

5.50%, 8/1/2033

    150,000       139,497  

4.13%, 4/1/2052(b)

    100,000       77,028  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     399  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Multi-Utilities – (continued)  

WEC Energy Group, Inc.

   

4.75%, 1/15/2028

  $ 200,000     $ 191,224  

2.20%, 12/15/2028

    100,000       83,329  
              4,115,372  
Office REITs – 0.3%  

Alexandria Real Estate Equities, Inc.

   

REIT, 3.38%, 8/15/2031

    200,000       162,286  

Boston Properties LP

   

REIT, 2.90%, 3/15/2030

    100,000       76,692  

REIT, 3.25%, 1/30/2031

    100,000       75,853  

Corporate Office Properties LP

   

REIT, 2.25%, 3/15/2026

    50,000       45,214  

REIT, 2.00%, 1/15/2029

    150,000       113,968  

REIT, 2.75%, 4/15/2031

    100,000       73,294  

Highwoods Realty LP

   

REIT, 4.13%, 3/15/2028

    100,000       86,215  

REIT, 4.20%, 4/15/2029

    50,000       41,995  

Hudson Pacific Properties LP

   

REIT, 5.95%, 2/15/2028

    50,000       39,357  

Kilroy Realty LP

   

REIT, 4.38%, 10/1/2025

    101,000       96,483  

REIT, 4.25%, 8/15/2029

    50,000       41,595  

REIT, 3.05%, 2/15/2030

    150,000       115,236  
              968,188  
Oil, Gas & Consumable Fuels – 11.3%  

Boardwalk Pipelines LP

   

4.95%, 12/15/2024

    250,000       246,077  

5.95%, 6/1/2026

    150,000       148,588  

4.80%, 5/3/2029

    302,000       277,979  

3.40%, 2/15/2031

    200,000       163,215  

3.60%, 9/1/2032

    100,000       79,265  

Burlington Resources LLC

   

7.40%, 12/1/2031

    200,000       218,068  

Canadian Natural Resources Ltd.

   

3.90%, 2/1/2025

    250,000       243,022  

2.05%, 7/15/2025

    250,000       233,467  

3.85%, 6/1/2027

    390,000       361,538  

2.95%, 7/15/2030

    70,000       57,081  

7.20%, 1/15/2032

    100,000       103,102  

6.45%, 6/30/2033

    150,000       146,175  
Investments   Principal
Amount
    Value  
Oil, Gas & Consumable Fuels – (continued)  

Cenovus Energy, Inc.

   

2.65%, 1/15/2032

  $ 150,000     $ 113,366  

Cheniere Corpus Christi Holdings LLC

   

5.13%, 6/30/2027

    50,000       48,242  

3.70%, 11/15/2029

    150,000       130,697  

Cheniere Energy Partners LP

   

4.50%, 10/1/2029

    300,000       268,604  

4.00%, 3/1/2031

    300,000       251,210  

5.95%, 6/30/2033(c)

    200,000       187,036  

Cheniere Energy, Inc.

   

4.63%, 10/15/2028

    327,000       298,778  

Chevron Corp.

   

1.55%, 5/11/2025

    303,000       285,857  

2.00%, 5/11/2027

    260,000       232,210  

Chevron USA, Inc.

   

0.69%, 8/12/2025

    252,000       232,274  

3.85%, 1/15/2028

    291,000       275,473  

3.25%, 10/15/2029

    30,000       26,654  

ConocoPhillips

   

5.90%, 10/15/2032

    200,000       201,390  

ConocoPhillips Co.

   

6.95%, 4/15/2029

    101,000       107,754  

5.05%, 9/15/2033

    200,000       186,358  

Continental Resources, Inc.

   

4.38%, 1/15/2028

    293,000       269,951  

Coterra Energy, Inc.

   

3.90%, 5/15/2027

    202,000       188,341  

4.38%, 3/15/2029

    150,000       137,230  

DCP Midstream Operating LP

   

5.63%, 7/15/2027

    142,000       139,401  

5.13%, 5/15/2029

    30,000       28,326  

Devon Energy Corp.

   

4.50%, 1/15/2030

    101,000       89,818  

7.95%, 4/15/2032

    150,000       162,165  

Diamondback Energy, Inc.

   

3.50%, 12/1/2029

    303,000       265,067  

6.25%, 3/15/2033

    250,000       246,757  

Eastern Gas Transmission & Storage, Inc.

   

3.00%, 11/15/2029

    202,000       169,512  

Enbridge, Inc.

   

Series 16-A,
6.00%, 1/15/2077(b)

    150,000       130,528  

 

See Accompanying Notes to the Financial Statements.

 

400    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

5.50%, 7/15/2077(b)

  $ 100,000     $ 85,080  

6.25%, 3/1/2078(b)

    202,000       176,921  

Series 20-A,
5.75%, 7/15/2080(b)

    202,000       168,378  

7.38%, 1/15/2083(b)

    200,000       185,021  

Energy Transfer LP

   

4.05%, 3/15/2025

    250,000       243,015  

2.90%, 5/15/2025

    250,000       238,149  

4.75%, 1/15/2026

    200,000       194,071  

4.40%, 3/15/2027

    250,000       235,469  

4.20%, 4/15/2027

    250,000       234,126  

5.50%, 6/1/2027

    182,000       177,510  

4.00%, 10/1/2027

    100,000       92,071  

4.95%, 5/15/2028

    422,000       399,036  

4.95%, 6/15/2028

    250,000       236,292  

5.25%, 4/15/2029

    300,000       284,721  

4.15%, 9/15/2029

    182,000       161,838  

3.75%, 5/15/2030

    220,000       188,029  

6.40%, 12/1/2030

    150,000       148,377  

5.75%, 2/15/2033

    250,000       234,362  

Enterprise Products Operating LLC

   

3.75%, 2/15/2025

    193,000       187,891  

5.05%, 1/10/2026

    400,000       395,258  

3.70%, 2/15/2026

    170,000       162,553  

3.95%, 2/15/2027

    303,000       286,704  

4.15%, 10/16/2028

    281,000       261,164  

3.13%, 7/31/2029

    252,000       218,756  

2.80%, 1/31/2030

    457,000       381,740  

5.35%, 1/31/2033

    502,000       478,483  

Series E,
5.25%, 8/16/2077(b)

    202,000       173,361  

5.38%, 2/15/2078(b)

    351,000       298,076  

EOG Resources, Inc.

   

3.15%, 4/1/2025

    250,000       241,046  

4.38%, 4/15/2030

    202,000       187,051  

EQT Corp.

   

6.13%, 2/1/2025(a)

    111,000       110,659  

7.00%, 2/1/2030(a)

    100,000       101,322  

Exxon Mobil Corp.

   

2.71%, 3/6/2025

    111,000       107,068  

2.99%, 3/19/2025

    480,000       464,303  

3.04%, 3/1/2026

    250,000       237,564  

2.44%, 8/16/2029

    100,000       85,400  
Investments   Principal
Amount
    Value  
Oil, Gas & Consumable Fuels – (continued)  

3.48%, 3/19/2030

  $ 400,000     $ 354,539  

2.61%, 10/15/2030

    201,000       166,825  

Hess Corp.

   

7.88%, 10/1/2029

    178,000       195,512  

HF Sinclair Corp.

   

5.88%, 4/1/2026

    190,000       187,363  

4.50%, 10/1/2030

    100,000       85,017  

Kinder Morgan Energy Partners LP

   

7.40%, 3/15/2031

    250,000       258,407  

Kinder Morgan, Inc.

   

4.30%, 6/1/2025

    100,000       97,332  

4.30%, 3/1/2028

    350,000       326,409  

7.80%, 8/1/2031

    252,000       266,520  

4.80%, 2/1/2033

    250,000       218,614  

5.20%, 6/1/2033

    250,000       225,303  

Magellan Midstream Partners LP

   

5.00%, 3/1/2026

    202,000       197,075  

3.25%, 6/1/2030

    200,000       166,027  

Marathon Oil Corp.

   

4.40%, 7/15/2027

    201,000       188,351  

Marathon Petroleum Corp.

   

4.70%, 5/1/2025

    252,000       246,749  

3.80%, 4/1/2028

    202,000       184,296  

MPLX LP

   

4.88%, 12/1/2024

    81,000       79,907  

4.00%, 2/15/2025

    250,000       243,453  

4.88%, 6/1/2025

    414,000       405,852  

1.75%, 3/1/2026

    302,000       274,005  

4.13%, 3/1/2027

    352,000       330,575  

4.25%, 12/1/2027

    200,000       186,043  

4.00%, 3/15/2028

    351,000       321,556  

4.80%, 2/15/2029

    100,000       93,538  

2.65%, 8/15/2030

    300,000       236,999  

4.95%, 9/1/2032

    300,000       266,327  

5.00%, 3/1/2033

    300,000       265,660  

Occidental Petroleum Corp.

   

5.88%, 9/1/2025

    250,000       249,133  

8.50%, 7/15/2027

    260,000       277,022  

8.88%, 7/15/2030

    262,000       290,941  

6.63%, 9/1/2030

    303,000       303,926  

6.13%, 1/1/2031

    200,000       195,592  

7.50%, 5/1/2031

    150,000       157,288  

7.88%, 9/15/2031

    122,000       130,619  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     401  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

ONEOK Partners LP

   

4.90%, 3/15/2025

  $ 300,000     $ 294,664  

ONEOK, Inc.

   

5.85%, 1/15/2026

    250,000       249,752  

4.00%, 7/13/2027

    190,000       176,623  

4.55%, 7/15/2028

    110,000       102,551  

4.35%, 3/15/2029

    292,000       265,330  

3.40%, 9/1/2029

    400,000       342,266  

3.10%, 3/15/2030

    229,000       188,916  

6.35%, 1/15/2031

    50,000       49,320  

6.10%, 11/15/2032

    400,000       385,458  

6.05%, 9/1/2033

    250,000       239,589  

Phillips 66 Co.

   

3.61%, 2/15/2025

    100,000       97,095  

3.55%, 10/1/2026

    100,000       93,970  

5.30%, 6/30/2033

    100,000       93,197  

Pioneer Natural Resources Co.

   

1.13%, 1/15/2026

    100,000       90,741  

5.10%, 3/29/2026

    150,000       148,345  

1.90%, 8/15/2030

    100,000       78,133  

2.15%, 1/15/2031

    200,000       157,073  

Plains All American Pipeline LP

   

4.65%, 10/15/2025

    250,000       242,158  

4.50%, 12/15/2026

    250,000       238,253  

3.55%, 12/15/2029

    252,000       214,173  

3.80%, 9/15/2030

    101,000       85,112  

Sabine Pass Liquefaction LLC

   

5.00%, 3/15/2027

    322,000       310,106  

4.50%, 5/15/2030

    200,000       179,396  

Suncor Energy, Inc.

   

7.88%, 6/15/2026

    150,000       156,424  

7.15%, 2/1/2032

    150,000       154,773  

Targa Resources Corp.

   

4.20%, 2/1/2033

    150,000       124,329  

Targa Resources Partners LP

   

5.50%, 3/1/2030

    250,000       230,380  

4.88%, 2/1/2031

    200,000       176,307  

Tennessee Gas Pipeline Co. LLC

   

7.00%, 10/15/2028

    100,000       102,468  

Texas Eastern Transmission LP

   

7.00%, 7/15/2032

    100,000       104,221  
Investments   Principal
Amount
    Value  
Oil, Gas & Consumable Fuels – (continued)  

Tosco Corp.

   

8.13%, 2/15/2030

  $ 152,000     $ 167,771  

TotalEnergies Capital International SA

   

2.43%, 1/10/2025

    50,000       48,195  

2.83%, 1/10/2030

    252,000       214,888  

Transcanada Trust

   

Series 16-A,
5.88%, 8/15/2076(b)

    150,000       134,358  

5.50%, 9/15/2079(b)

    200,000       158,461  

5.60%, 3/7/2082(b)

    25,000       19,295  

Transcontinental Gas Pipe Line Co. LLC

   

4.00%, 3/15/2028

    62,000       57,047  

Valero Energy Corp.

   

2.85%, 4/15/2025

    100,000       95,601  

4.35%, 6/1/2028

    200,000       187,226  

2.80%, 12/1/2031

    200,000       154,798  

7.50%, 4/15/2032

    100,000       106,110  

Valero Energy Partners LP

   

4.50%, 3/15/2028

    200,000       188,271  

Western Midstream Operating LP

   

3.10%, 2/1/2025(a)

    200,000       192,150  

4.65%, 7/1/2026

    252,000       240,938  

4.05%, 2/1/2030(a)

    620,000       537,506  

6.15%, 4/1/2033

    100,000       94,578  

Williams Cos., Inc. (The)

   

7.75%, 6/15/2031

    100,000       104,290  

8.75%, 3/15/2032(a)

    200,000       222,249  
              30,979,071  
Paper & Forest Products – 0.1%  

Suzano Austria GmbH

   

6.00%, 1/15/2029

    252,000       242,499  
Personal Care Products – 0.0%(d)  

Conopco, Inc.

   

6.63%, 4/15/2028

    90,000       94,403  
Pharmaceuticals – 0.8%  

Eli Lilly & Co.

   

3.38%, 3/15/2029

    183,000       166,546  

4.70%, 2/27/2033

    260,000       244,163  

 

See Accompanying Notes to the Financial Statements.

 

402    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Pharmaceuticals – (continued)  

Merck & Co., Inc.

   

3.40%, 3/7/2029

  $ 300,000     $ 271,232  

1.45%, 6/24/2030

    250,000       192,215  

2.15%, 12/10/2031

    200,000       154,161  

4.50%, 5/17/2033

    100,000       90,908  

Royalty Pharma plc

   

1.20%, 9/2/2025

    232,000       211,550  

Zoetis, Inc.

   

5.40%, 11/14/2025

    250,000       248,197  

3.00%, 9/12/2027

    96,000       87,232  

3.90%, 8/20/2028

    252,000       234,261  

2.00%, 5/15/2030

    200,000       157,520  

5.60%, 11/16/2032

    200,000       193,880  
              2,251,865  
Professional Services – 0.8%  

Automatic Data Processing, Inc.

   

3.38%, 9/15/2025

    50,000       48,225  

1.70%, 5/15/2028

    200,000       171,681  

1.25%, 9/1/2030

    151,000       114,820  

Broadridge Financial Solutions, Inc.

   

3.40%, 6/27/2026

    200,000       187,095  

2.90%, 12/1/2029

    252,000       209,581  

2.60%, 5/1/2031

    200,000       155,149  

Equifax, Inc.

   

3.25%, 6/1/2026

    250,000       231,717  

3.10%, 5/15/2030

    202,000       165,831  

2.35%, 9/15/2031

    300,000       223,145  

Jacobs Engineering Group, Inc.

   

6.35%, 8/18/2028

    100,000       99,444  

5.90%, 3/1/2033

    150,000       138,927  

Verisk Analytics, Inc.

   

4.00%, 6/15/2025

    250,000       242,182  

4.13%, 3/15/2029

    252,000       230,662  

5.75%, 4/1/2033

    100,000       95,835  
              2,314,294  
Real Estate Management & Development – 0.1%  

CBRE Services, Inc.

   

4.88%, 3/1/2026

    200,000       193,433  

2.50%, 4/1/2031

    101,000       76,034  
              269,467  
Investments   Principal
Amount
    Value  
Residential REITs – 1.1%  

American Homes 4 Rent LP

   

REIT, 4.90%, 2/15/2029

  $ 162,000     $ 150,745  

AvalonBay Communities, Inc.

   

REIT, 3.45%, 6/1/2025

    151,000       145,600  

REIT, 3.50%, 11/15/2025

    50,000       47,728  

REIT, 2.30%, 3/1/2030

    200,000       160,606  

ERP Operating LP

   

REIT, 3.25%, 8/1/2027

    45,000       40,922  

REIT, 3.00%, 7/1/2029

    303,000       260,166  

Essential Properties LP

   

REIT, 2.95%, 7/15/2031

    100,000       71,539  

Essex Portfolio LP

   

REIT, 3.63%, 5/1/2027

    200,000       183,552  

REIT, 4.00%, 3/1/2029

    151,000       135,334  

REIT, 3.00%, 1/15/2030

    252,000       205,662  

REIT, 1.65%, 1/15/2031

    100,000       72,111  

REIT, 2.65%, 3/15/2032

    150,000       113,090  

Invitation Homes Operating Partnership LP

   

REIT, 2.30%, 11/15/2028

    300,000       248,208  

REIT, 2.00%, 8/15/2031

    100,000       72,003  

Mid-America Apartments LP

   

REIT, 3.95%, 3/15/2029

    303,000       275,694  

REIT, 2.75%, 3/15/2030

    151,000       124,072  

Spirit Realty LP

   

REIT, 2.10%, 3/15/2028

    100,000       83,352  

REIT, 4.00%, 7/15/2029

    100,000       87,177  

REIT, 3.40%, 1/15/2030

    202,000       166,290  

REIT, 3.20%, 2/15/2031

    100,000       78,732  

Tanger Properties LP

   

REIT, 3.13%, 9/1/2026

    200,000       180,743  

REIT, 3.88%, 7/15/2027

    100,000       87,692  

REIT, 2.75%, 9/1/2031

    100,000       70,742  
              3,061,760  
Retail REITs – 1.0%  

Agree LP

   

REIT, 2.00%, 6/15/2028

    202,000       165,639  

REIT, 2.90%, 10/1/2030

    150,000       119,464  

REIT, 4.80%, 10/1/2032

    150,000       130,221  

Brixmor Operating Partnership LP

   

REIT, 3.85%, 2/1/2025

    250,000       240,792  

REIT, 4.13%, 6/15/2026

    252,000       237,139  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     403  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Retail REITs – (continued)  

REIT, 4.13%, 5/15/2029

  $ 252,000     $ 220,662  

REIT, 4.05%, 7/1/2030

    151,000       128,917  

NNN REIT, Inc.

   

REIT, 4.00%, 11/15/2025

    50,000       47,948  

REIT, 3.60%, 12/15/2026

    200,000       185,322  

REIT, 3.50%, 10/15/2027

    151,000       136,945  

REIT, 4.30%, 10/15/2028

    91,000       83,054  

REIT, 2.50%, 4/15/2030

    100,000       79,570  

REIT, 5.60%, 10/15/2033

    100,000       92,173  

Phillips Edison Grocery Center Operating Partnership I LP

   

REIT, 2.63%, 11/15/2031

    100,000       71,826  

Realty Income Corp.

   

REIT, 4.63%, 11/1/2025

    202,000       196,929  

REIT, 4.90%, 7/15/2033

    50,000       44,443  

Regency Centers LP

   

REIT, 2.95%, 9/15/2029

    150,000       125,320  

REIT, 3.70%, 6/15/2030

    252,000       213,986  

SITE Centers Corp.

   

REIT, 4.70%, 6/1/2027

    200,000       184,169  
              2,704,519  
Semiconductors & Semiconductor Equipment – 3.6%  

Broadcom Corp.

   

3.88%, 1/15/2027

    494,000       461,723  

3.50%, 1/15/2028

    553,000       498,185  

Broadcom, Inc.

   

3.15%, 11/15/2025

    350,000       331,544  

3.46%, 9/15/2026

    351,000       329,312  

1.95%, 2/15/2028(c)

    250,000       210,976  

4.11%, 9/15/2028

    405,000       371,478  

4.00%, 4/15/2029(c)

    404,000       360,872  

4.75%, 4/15/2029

    505,000       469,604  

5.00%, 4/15/2030

    150,000       140,181  

4.15%, 11/15/2030

    500,000       435,222  

2.45%, 2/15/2031(c)

    600,000       460,450  

4.15%, 4/15/2032(c)

    250,000       211,528  

4.30%, 11/15/2032

    600,000       510,599  

2.60%, 2/15/2033(c)

    550,000       399,049  

3.42%, 4/15/2033(c)

    640,000       497,615  

Lam Research Corp.

   

3.75%, 3/15/2026

    300,000       287,943  

4.00%, 3/15/2029

    150,000       139,236  
Investments   Principal
Amount
    Value  
Semiconductors & Semiconductor Equipment – (continued)  

Microchip Technology, Inc.

   

4.25%, 9/1/2025

  $ 250,000     $ 241,086  

Micron Technology, Inc.

   

4.66%, 2/15/2030

    350,000       313,643  

NXP BV

   

2.70%, 5/1/2025

    250,000       237,596  

3.88%, 6/18/2026

    50,000       47,290  

3.15%, 5/1/2027

    200,000       181,050  

4.30%, 6/18/2029

    250,000       225,582  

3.40%, 5/1/2030

    252,000       211,393  

5.00%, 1/15/2033

    200,000       178,317  

Qorvo, Inc.

   

4.38%, 10/15/2029

    202,000       175,391  

Skyworks Solutions, Inc.

   

1.80%, 6/1/2026

    201,000       179,388  

3.00%, 6/1/2031

    100,000       76,580  

Texas Instruments, Inc.

   

1.38%, 3/12/2025

    202,000       191,253  

2.90%, 11/3/2027

    252,000       229,486  

3.65%, 8/16/2032

    150,000       128,483  

4.90%, 3/14/2033

    200,000       188,175  

TSMC Arizona Corp.

   

1.75%, 10/25/2026

    500,000       448,853  

3.88%, 4/22/2027

    252,000       238,870  

2.50%, 10/25/2031

    200,000       158,166  
              9,766,119  
Software – 1.6%  

Adobe, Inc.

   

3.25%, 2/1/2025

    200,000       194,775  

2.15%, 2/1/2027

    162,000       146,467  

2.30%, 2/1/2030

    223,000       185,369  

Autodesk, Inc.

   

3.50%, 6/15/2027

    210,000       194,179  

2.85%, 1/15/2030

    30,000       25,031  

2.40%, 12/15/2031

    300,000       230,467  

Fortinet, Inc.

   

1.00%, 3/15/2026

    50,000       44,574  

2.20%, 3/15/2031

    150,000       114,375  

Intuit, Inc.

   

1.35%, 7/15/2027

    200,000       172,637  

Oracle Corp.

   

2.50%, 4/1/2025

    100,000       95,394  

4.65%, 5/6/2030

    101,000       92,593  

6.25%, 11/9/2032

    150,000       148,594  

 

See Accompanying Notes to the Financial Statements.

 

404    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Software – (continued)  

Roper Technologies, Inc.

   

1.00%, 9/15/2025

  $ 300,000     $ 274,789  

3.80%, 12/15/2026

    50,000       47,234  

1.40%, 9/15/2027

    480,000       406,221  

4.20%, 9/15/2028

    301,000       279,686  

2.95%, 9/15/2029

    200,000       170,379  

1.75%, 2/15/2031

    252,000       186,183  

ServiceNow, Inc.

   

1.40%, 9/1/2030

    250,000       188,449  

VMware, Inc.

   

4.50%, 5/15/2025

    150,000       146,498  

1.40%, 8/15/2026

    353,000       310,947  

4.65%, 5/15/2027

    40,000       38,315  

3.90%, 8/21/2027

    200,000       185,312  

1.80%, 8/15/2028

    124,000       102,350  

4.70%, 5/15/2030

    192,000       173,896  

2.20%, 8/15/2031

    200,000       147,853  
              4,302,567  
Specialized REITs – 1.4%  

American Tower Corp.

   

REIT, 2.40%, 3/15/2025

    163,000       154,790  

Crown Castle, Inc.

   

REIT, 1.05%, 7/15/2026

    250,000       218,566  

REIT, 3.10%, 11/15/2029

    50,000       41,574  

REIT, 2.25%, 1/15/2031

    110,000       82,899  

CubeSmart LP

   

REIT, 4.00%, 11/15/2025

    101,000       96,656  

REIT, 2.25%, 12/15/2028

    150,000       123,914  

REIT, 4.38%, 2/15/2029

    150,000       136,766  

REIT, 3.00%, 2/15/2030

    200,000       163,621  

REIT, 2.00%, 2/15/2031

    100,000       73,977  

REIT, 2.50%, 2/15/2032

    150,000       111,207  

EPR Properties

   

REIT, 4.50%, 6/1/2027

    153,000       135,037  

REIT, 4.95%, 4/15/2028

    353,000       307,599  

REIT, 3.75%, 8/15/2029

    100,000       78,896  

REIT, 3.60%, 11/15/2031

    100,000       71,981  

Equinix, Inc.

   

REIT, 1.45%, 5/15/2026

    200,000       178,630  

REIT, 3.20%, 11/18/2029

    252,000       212,936  

Extra Space Storage LP

   

REIT, 3.90%, 4/1/2029

    100,000       88,689  
Investments   Principal
Amount
    Value  
Specialized REITs – (continued)  

Public Storage Operating Co.

   

REIT, 0.88%, 2/15/2026

  $ 300,000     $ 269,115  

REIT, 3.09%, 9/15/2027

    102,000       93,388  

REIT, 1.85%, 5/1/2028

    100,000       84,683  

REIT, 1.95%, 11/9/2028

    81,000       67,853  

Weyerhaeuser Co.

   

REIT, 4.75%, 5/15/2026

    250,000       243,450  

REIT, 4.00%, 11/15/2029

    101,000       89,532  

REIT, 4.00%, 4/15/2030

    504,000       440,717  

REIT, 7.38%, 3/15/2032

    150,000       158,238  

REIT, 3.38%, 3/9/2033

    150,000       119,035  
              3,843,749  
Specialty Retail – 2.6%  

AutoNation, Inc.

   

1.95%, 8/1/2028

    50,000       40,193  

AutoZone, Inc.

   

3.25%, 4/15/2025

    242,000       233,129  

3.13%, 4/21/2026

    25,000       23,426  

3.75%, 6/1/2027

    100,000       93,452  

4.50%, 2/1/2028

    200,000       189,103  

3.75%, 4/18/2029

    250,000       223,325  

4.00%, 4/15/2030

    150,000       132,124  

1.65%, 1/15/2031

    150,000       109,929  

4.75%, 8/1/2032

    140,000       124,315  

4.75%, 2/1/2033

    150,000       132,316  

Best Buy Co., Inc.

   

4.45%, 10/1/2028

    51,000       47,680  

Home Depot, Inc. (The)

   

3.35%, 9/15/2025

    300,000       288,974  

2.13%, 9/15/2026

    500,000       457,763  

2.80%, 9/14/2027

    353,000       320,969  

3.90%, 12/6/2028

    100,000       93,096  

2.95%, 6/15/2029

    151,000       132,488  

2.70%, 4/15/2030

    500,000       418,650  

1.88%, 9/15/2031

    200,000       150,961  

3.25%, 4/15/2032

    328,000       273,083  

4.50%, 9/15/2032

    350,000       321,071  

Lowe's Cos., Inc.

   

3.65%, 4/5/2029

    252,000       226,057  

4.50%, 4/15/2030

    202,000       184,774  

3.75%, 4/1/2032

    202,000       169,456  

O'Reilly Automotive, Inc.

   

3.55%, 3/15/2026

    252,000       239,487  

3.60%, 9/1/2027

    501,000       464,714  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     405  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Specialty Retail – (continued)  

4.35%, 6/1/2028

  $ 200,000     $ 188,866  

4.20%, 4/1/2030

    50,000       44,771  

1.75%, 3/15/2031

    100,000       74,102  

4.70%, 6/15/2032

    250,000       223,908  

Ross Stores, Inc.

   

0.88%, 4/15/2026

    500,000       442,692  

1.88%, 4/15/2031

    150,000       111,333  

TJX Cos., Inc. (The)

   

2.25%, 9/15/2026

    340,000       312,159  

3.88%, 4/15/2030

    281,000       252,831  

Tractor Supply Co.

   

1.75%, 11/1/2030

    250,000       185,204  

5.25%, 5/15/2033

    150,000       137,311  
              7,063,712  
Technology Hardware, Storage & Peripherals – 2.0%  

Apple, Inc.

   

2.75%, 1/13/2025

    101,000       97,932  

2.50%, 2/9/2025

    101,000       97,500  

1.13%, 5/11/2025

    454,000       426,021  

3.20%, 5/13/2025

    252,000       244,112  

0.55%, 8/20/2025

    50,000       46,020  

3.25%, 2/23/2026

    723,000       691,963  

2.45%, 8/4/2026

    352,000       326,895  

2.05%, 9/11/2026

    282,000       258,545  

3.35%, 2/9/2027

    212,000       199,863  

3.20%, 5/11/2027

    200,000       187,012  

2.90%, 9/12/2027

    182,000       167,337  

3.00%, 11/13/2027

    222,000       204,109  

1.20%, 2/8/2028

    414,000       351,500  

1.40%, 8/5/2028

    404,000       340,063  

3.25%, 8/8/2029

    182,000       164,346  

2.20%, 9/11/2029

    92,000       77,871  

4.15%, 5/10/2030

    50,000       47,058  

1.65%, 2/8/2031

    252,000       196,084  

HP, Inc.

   

3.00%, 6/17/2027

    200,000       180,137  

4.75%, 1/15/2028

    250,000       238,133  

4.00%, 4/15/2029

    202,000       182,603  

3.40%, 6/17/2030

    100,000       83,495  

5.50%, 1/15/2033

    150,000       137,708  

NetApp, Inc.

   

1.88%, 6/22/2025

    151,000       141,323  
Investments   Principal
Amount
    Value  
Technology Hardware, Storage & Peripherals – (continued)  

2.38%, 6/22/2027

  $ 200,000     $ 177,533  

2.70%, 6/22/2030

    150,000       120,402  

Teledyne FLIR LLC

   

2.50%, 8/1/2030

    250,000       196,676  
              5,582,241  
Textiles, Apparel & Luxury Goods – 0.0%(d)  

Tapestry, Inc.

   

4.13%, 7/15/2027

    8,000       7,246  

3.05%, 3/15/2032

    50,000       35,874  
              43,120  
Tobacco – 2.3%  

Altria Group, Inc.

   

2.35%, 5/6/2025

    312,000       295,690  

4.40%, 2/14/2026

    301,000       291,117  

2.63%, 9/16/2026

    151,000       138,616  

4.80%, 2/14/2029

    654,000       612,529  

3.40%, 5/6/2030

    303,000       253,407  

2.45%, 2/4/2032

    500,000       364,873  

BAT Capital Corp.

   

3.22%, 9/6/2026

    310,000       287,098  

4.70%, 4/2/2027

    163,000       155,229  

3.56%, 8/15/2027

    98,000       88,842  

2.26%, 3/25/2028

    181,000       151,896  

4.91%, 4/2/2030

    312,000       281,311  

2.73%, 3/25/2031

    127,000       95,709  

Philip Morris International, Inc.

   

1.50%, 5/1/2025

    155,000       145,609  

4.88%, 2/13/2026

    251,000       246,538  

2.75%, 2/25/2026

    70,000       65,568  

0.88%, 5/1/2026

    111,000       98,796  

5.13%, 11/17/2027

    273,000       266,110  

4.88%, 2/15/2028

    493,000       473,759  

3.38%, 8/15/2029

    273,000       237,609  

5.63%, 11/17/2029

    300,000       293,580  

5.13%, 2/15/2030

    720,000       678,284  

2.10%, 5/1/2030

    250,000       196,214  

5.75%, 11/17/2032

    250,000       238,850  

5.38%, 2/15/2033

    300,000       277,169  

5.63%, 9/7/2033

    250,000       234,701  
              6,469,104  

 

See Accompanying Notes to the Financial Statements.

 

406    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Trading Companies & Distributors – 0.2%  

Air Lease Corp.

   

3.63%, 12/1/2027

  $ 202,000     $ 180,982  

3.13%, 12/1/2030

    100,000       79,612  

Aircastle Ltd.

   

4.25%, 6/15/2026

    252,000       236,310  
              496,904  
Water Utilities – 0.1%  

American Water Capital Corp.

   

3.45%, 6/1/2029

    202,000       179,077  

2.80%, 5/1/2030

    100,000       83,131  

Essential Utilities, Inc.

   

2.70%, 4/15/2030

    200,000       161,519  
              423,727  
Wireless Telecommunication Services – 0.0%(d)  

T-Mobile USA, Inc.

   

3.88%, 4/15/2030

    100,000       87,070  
Total Corporate Bonds
(Cost $280,469,072)

 

    265,621,732  
                 
Total Investments – 96.7%
(Cost $280,469,072)

 

    265,621,732  

Other assets less liabilities – 3.3%

 

    8,928,007  
NET ASSETS – 100.0%

 

  $ 274,549,739  

 

(a)

Step bond. Interest rate is a fixed rate for an initial period that either resets at a specific date or may reset in the future at a contingent upon predetermined trigger. The interest rate shown was the current rate as of October 31, 2023.

 

(b)

Security issued at a fixed coupon rate, which converts to a variable rate at a future date. Rate shown is the rate in effect as of period end.

 

(c)

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(d)

Represents less than 0.05% of net assets.

Percentages shown are based on Net Assets.

 

Abbreviations

 

OYJ Public Limited Company

REIT Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 37,046  

Aggregate gross unrealized depreciation

    (15,614,672

Net unrealized depreciation

  $ (15,577,626

Federal income tax cost

  $ 281,199,358  

 

Security Type    % of Net Assets   

Corporate Bonds

     96.7

Others(1)

     3.3  
       100.0

 

(1)

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     407  


Table of Contents

 

Schedule of Investments

FlexShares® Credit-Scored US Long Corporate Bond Index Fund

 

October 31, 2023

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – 97.2%  
Aerospace & Defense – 1.7%  

Boeing Co. (The)

   

5.93%, 5/1/2060

  $ 50,000     $ 42,065  

Howmet Aerospace, Inc.

   

5.95%, 2/1/2037

    50,000       45,675  

Lockheed Martin Corp.

   

4.50%, 5/15/2036

    50,000       43,785  

4.09%, 9/15/2052

    125,000       92,183  

4.15%, 6/15/2053

    60,000       44,626  

5.70%, 11/15/2054

    50,000       46,823  

5.20%, 2/15/2055

    10,000       8,719  

4.30%, 6/15/2062

    10,000       7,312  

5.90%, 11/15/2063

    90,000       86,022  

Precision Castparts Corp.

   

4.20%, 6/15/2035

    25,000       20,960  

3.90%, 1/15/2043

    50,000       37,126  

RTX Corp.

   

4.20%, 12/15/2044

    10,000       6,969  
              482,265  
Air Freight & Logistics – 0.2%  

FedEx Corp.

   

4.50%, 2/1/2065

    25,000       16,679  

United Parcel Service, Inc.

   

5.05%, 3/3/2053

    50,000       42,926  
              59,605  
Automobile Components – 0.1%  

Aptiv plc

   

4.15%, 5/1/2052

    25,000       16,463  

Lear Corp.

   

5.25%, 5/15/2049

    25,000       19,231  
              35,694  
Banks – 6.3%  

Bank of America Corp.

   

7.75%, 5/14/2038

    40,000       42,864  

4.08%, 4/23/2040(a)

    25,000       18,846  

2.68%, 6/19/2041(a)

    20,000       12,194  

3.31%, 4/22/2042(a)

    15,000       9,960  

3.95%, 1/23/2049(a)

    10,000       6,966  

4.33%, 3/15/2050(a)

    20,000       14,683  
Investments   Principal
Amount
    Value  
Banks – (continued)  

4.08%, 3/20/2051(a)

  $ 50,000     $ 35,055  

2.83%, 10/24/2051(a)

    10,000       5,525  

Citigroup, Inc.

   

5.32%, 3/26/2041(a)

    15,000       12,950  

6.68%, 9/13/2043

    75,000       71,705  

5.30%, 5/6/2044

    75,000       61,128  

4.75%, 5/18/2046

    200,000       149,346  

Cooperatieve Rabobank UA

   

5.25%, 5/24/2041

    30,000       27,434  

Fifth Third Bancorp

   

8.25%, 3/1/2038

    20,000       20,347  

HSBC Holdings plc

   

6.50%, 9/15/2037

    100,000       90,952  

6.80%, 6/1/2038

    120,000       113,861  

6.33%, 3/9/2044(a)

    70,000       64,898  

JPMorgan Chase & Co.

   

6.40%, 5/15/2038

    35,000       35,352  

3.16%, 4/22/2042(a)

    50,000       32,938  

4.95%, 6/1/2045

    75,000       61,411  

Lloyds Banking Group plc

   

4.34%, 1/9/2048

    200,000       130,499  

Mitsubishi UFJ Financial Group, Inc.

   

3.75%, 7/18/2039

    10,000       7,522  

Regions Financial Corp.

   

7.38%, 12/10/2037

    50,000       47,825  

Sumitomo Mitsui Financial Group, Inc.

   

2.93%, 9/17/2041

    10,000       6,229  

6.18%, 7/13/2043

    10,000       9,356  

Wells Fargo & Co.

   

5.95%, 12/15/2036

    15,000       13,745  

3.07%, 4/30/2041(a)

    40,000       25,560  

5.38%, 11/2/2043

    100,000       82,035  

5.61%, 1/15/2044

    100,000       84,280  

4.90%, 11/17/2045

    150,000       114,085  

4.40%, 6/14/2046

    125,000       87,435  

4.75%, 12/7/2046

    125,000       92,060  

5.01%, 4/4/2051(a)

    40,000       31,722  

4.61%, 4/25/2053(a)

    50,000       36,865  

Westpac Banking Corp.

   

3.13%, 11/18/2041

    250,000       146,029  
              1,803,662  

 

See Accompanying Notes to the Financial Statements.

 

408    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Beverages – 0.7%  

Brown-Forman Corp.

   

4.00%, 4/15/2038

  $ 50,000     $ 39,869  

Coca-Cola Co. (The)

   

2.50%, 6/1/2040

    10,000       6,457  

2.50%, 3/15/2051

    10,000       5,516  

2.75%, 6/1/2060

    10,000       5,611  

Constellation Brands, Inc.

   

5.25%, 11/15/2048

    30,000       25,075  

Diageo Investment Corp.

   

4.25%, 5/11/2042

    25,000       19,545  

Keurig Dr Pepper, Inc.

   

4.50%, 4/15/2052

    40,000       29,602  

PepsiCo, Inc.

   

4.25%, 10/22/2044

    25,000       19,422  

4.65%, 2/15/2053

    50,000       41,948  

3.88%, 3/19/2060

    20,000       14,025  
              207,070  
Biotechnology – 2.7%  

AbbVie, Inc.

   

4.55%, 3/15/2035

    50,000       43,958  

4.05%, 11/21/2039

    25,000       19,533  

4.40%, 11/6/2042

    50,000       39,707  

4.85%, 6/15/2044

    100,000       83,634  

4.75%, 3/15/2045

    10,000       8,196  

4.70%, 5/14/2045

    100,000       81,298  

4.88%, 11/14/2048

    100,000       82,799  

4.25%, 11/21/2049

    150,000       112,573  

Amgen, Inc.

   

5.65%, 3/2/2053

    30,000       26,385  

4.40%, 2/22/2062

    60,000       41,509  

5.75%, 3/2/2063

    30,000       25,984  

Biogen, Inc.

   

5.20%, 9/15/2045

    100,000       83,216  

3.15%, 5/1/2050

    100,000       57,589  

3.25%, 2/15/2051

    50,000       29,242  

Regeneron Pharmaceuticals, Inc.

   

2.80%, 9/15/2050

    50,000       26,923  
              762,546  
Broadline Retail – 0.4%  

Alibaba Group Holding Ltd.

   

3.15%, 2/9/2051

    200,000       108,291  
Investments   Principal
Amount
    Value  
Building Products – 0.7%  

Johnson Controls International plc

   

4.50%, 2/15/2047

  $ 30,000     $ 22,716  

Masco Corp.

   

4.50%, 5/15/2047

    50,000       35,616  

Owens Corning

   

4.30%, 7/15/2047

    40,000       28,507  

4.40%, 1/30/2048

    40,000       28,754  

Trane Technologies Financing Ltd.

   

4.50%, 3/21/2049

    70,000       53,045  

Trane Technologies Global Holding Co. Ltd.

   

5.75%, 6/15/2043

    30,000       27,563  
              196,201  
Capital Markets – 2.1%  

Brookfield Finance LLC

   

3.45%, 4/15/2050

    25,000       14,430  

CI Financial Corp.

   

4.10%, 6/15/2051

    20,000       10,639  

Goldman Sachs Group, Inc. (The)

   

6.75%, 10/1/2037

    50,000       48,843  

4.02%, 10/31/2038(a)

    30,000       22,713  

3.21%, 4/22/2042(a)

    10,000       6,490  

2.91%, 7/21/2042(a)

    15,000       9,241  

3.44%, 2/24/2043(a)

    10,000       6,606  

4.75%, 10/21/2045

    50,000       39,925  

Moody's Corp.

   

2.75%, 8/19/2041

    30,000       18,512  

5.25%, 7/15/2044

    25,000       21,486  

4.88%, 12/17/2048

    10,000       8,048  

3.25%, 5/20/2050

    10,000       6,027  

2.55%, 8/18/2060

    10,000       4,575  

3.10%, 11/29/2061

    70,000       37,926  

Morgan Stanley

   

3.22%, 4/22/2042(a)

    25,000       16,521  

6.38%, 7/24/2042

    20,000       19,824  

4.30%, 1/27/2045

    30,000       22,548  

5.60%, 3/24/2051(a)

    25,000       22,324  

Nasdaq, Inc.

   

2.50%, 12/21/2040

    10,000       5,840  

3.25%, 4/28/2050

    50,000       29,307  

3.95%, 3/7/2052

    30,000       19,820  

5.95%, 8/15/2053

    25,000       22,304  

6.10%, 6/28/2063

    60,000       53,047  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     409  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Capital Markets – (continued)  

S&P Global, Inc.

   

6.55%, 11/15/2037

  $ 20,000     $ 19,790  

4.50%, 5/15/2048

    20,000       15,155  

3.25%, 12/1/2049

    50,000       31,154  

3.70%, 3/1/2052

    75,000       50,675  

3.90%, 3/1/2062

    30,000       20,180  
              603,950  
Chemicals – 2.2%  

Albemarle Corp.

   

5.65%, 6/1/2052

    25,000       19,360  

CF Industries, Inc.

   

5.15%, 3/15/2034

    20,000       17,723  

5.38%, 3/15/2044

    50,000       40,660  

Dow Chemical Co. (The)

   

9.40%, 5/15/2039

    10,000       12,208  

5.55%, 11/30/2048

    50,000       42,203  

4.80%, 5/15/2049

    10,000       7,594  

6.90%, 5/15/2053

    20,000       19,993  

DuPont de Nemours, Inc.

   

5.42%, 11/15/2048

    25,000       21,683  

FMC Corp.

   

4.50%, 10/1/2049

    25,000       16,509  

Linde, Inc.

   

3.55%, 11/7/2042

    50,000       35,721  

LYB International Finance BV

   

5.25%, 7/15/2043

    50,000       40,237  

4.88%, 3/15/2044

    50,000       38,121  

LYB International Finance III LLC

   

4.20%, 10/15/2049

    80,000       53,044  

4.20%, 5/1/2050

    80,000       52,925  

3.63%, 4/1/2051

    110,000       66,291  

3.80%, 10/1/2060

    10,000       5,775  

LyondellBasell Industries NV

   

4.63%, 2/26/2055

    50,000       34,885  

Mosaic Co. (The)

   

5.63%, 11/15/2043

    20,000       16,777  

RPM International, Inc.

   

5.25%, 6/1/2045

    20,000       15,821  

4.25%, 1/15/2048

    20,000       13,674  

Sherwin-Williams Co. (The)

   

3.30%, 5/15/2050

    30,000       18,004  

2.90%, 3/15/2052

    50,000       27,082  
              616,290  
Investments   Principal
Amount
    Value  
Commercial Services & Supplies – 0.4%  

Republic Services, Inc.

   

5.00%, 4/1/2034

  $ 50,000     $ 45,863  

5.70%, 5/15/2041

    25,000       23,351  

Waste Management, Inc.

   

4.88%, 2/15/2034

    10,000       9,158  

2.95%, 6/1/2041

    60,000       39,217  
              117,589  
Communications Equipment – 1.3%  

Cisco Systems, Inc.

   

5.90%, 2/15/2039

    200,000       198,899  

5.50%, 1/15/2040

    100,000       94,898  

Juniper Networks, Inc.

   

5.95%, 3/15/2041

    30,000       26,071  

Motorola Solutions, Inc.

   

5.50%, 9/1/2044

    30,000       25,172  

Nokia OYJ

   

6.63%, 5/15/2039

    25,000       21,707  
              366,747  
Construction & Engineering – 0.1%  

Quanta Services, Inc.

   

3.05%, 10/1/2041

    20,000       11,989  

Valmont Industries, Inc.

   

5.00%, 10/1/2044

    25,000       19,234  
              31,223  
Construction Materials – 0.2%  

Lafarge SA

   

7.13%, 7/15/2036

    25,000       25,704  

Vulcan Materials Co.

   

4.50%, 6/15/2047

    50,000       38,153  
              63,857  
Consumer Staples Distribution & Retail – 1.3%  

Kroger Co. (The)

   

6.90%, 4/15/2038

    25,000       25,440  

Sysco Corp.

   

6.60%, 4/1/2040

    35,000       34,488  

4.85%, 10/1/2045

    50,000       38,680  

4.45%, 3/15/2048

    50,000       37,019  

6.60%, 4/1/2050

    120,000       118,387  

3.15%, 12/14/2051

    20,000       11,565  

 

See Accompanying Notes to the Financial Statements.

 

410    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Consumer Staples Distribution & Retail – (continued)  

Walmart, Inc.

   

6.50%, 8/15/2037

  $ 50,000     $ 53,751  

6.20%, 4/15/2038

    25,000       26,110  

4.50%, 9/9/2052

    50,000       40,567  
              386,007  
Containers & Packaging – 0.1%  

Packaging Corp. of America

   

3.05%, 10/1/2051

    75,000       42,284  
Diversified REITs – 0.1%  

VICI Properties LP

   

REIT, 5.63%, 5/15/2052

    50,000       39,138  
Diversified Telecommunication Services – 0.6%  

Bell Canada (The)

   

4.46%, 4/1/2048

    50,000       36,928  

4.30%, 7/29/2049

    15,000       10,720  

3.65%, 8/15/2052

    60,000       37,997  

Telefonica Emisiones SA

   

5.21%, 3/8/2047

    20,000       15,215  

TELUS Corp.

   

4.30%, 6/15/2049

    50,000       35,024  

Verizon Communications, Inc.

   

3.55%, 3/22/2051

    50,000       31,416  
              167,300  
Electric Utilities – 3.0%  

AEP Texas, Inc.

   

5.25%, 5/15/2052

    20,000       16,184  

Arizona Public Service Co.

   

4.70%, 1/15/2044

    25,000       18,260  

CenterPoint Energy Houston Electric LLC

   

Series AH,
3.60%, 3/1/2052

    30,000       19,699  

Cleco Corporate Holdings LLC

   

4.97%, 5/1/2046(b)

    10,000       7,241  

Duke Energy Indiana LLC

   

4.20%, 3/15/2042

    25,000       18,656  

Series YYY,
3.25%, 10/1/2049

    25,000       14,948  

5.40%, 4/1/2053

    35,000       30,013  
Investments   Principal
Amount
    Value  
Electric Utilities – (continued)  

Emera US Finance LP

   

4.75%, 6/15/2046

  $ 30,000     $ 20,968  

Georgia Power Co.

   

4.30%, 3/15/2042

    50,000       38,257  

Idaho Power Co.

   

3.65%, 3/1/2045

    25,000       16,116  

5.50%, 3/15/2053

    50,000       43,708  

Interstate Power and Light Co.

   

6.25%, 7/15/2039

    25,000       23,538  

4.70%, 10/15/2043

    25,000       18,832  

Kentucky Utilities Co.

   

5.13%, 11/1/2040

    50,000       42,240  

MidAmerican Energy Co.

   

4.25%, 7/15/2049

    50,000       36,926  

Oklahoma Gas and Electric Co.

   

5.25%, 5/15/2041

    25,000       20,162  

3.85%, 8/15/2047

    45,000       30,253  

5.60%, 4/1/2053

    30,000       26,388  

Pacific Gas and Electric Co.

   

4.95%, 7/1/2050

    40,000       27,921  

5.25%, 3/1/2052

    50,000       36,200  

6.70%, 4/1/2053

    15,000       13,286  

PacifiCorp

   

6.25%, 10/15/2037

    100,000       94,919  

2.90%, 6/15/2052

    50,000       26,062  

5.35%, 12/1/2053

    25,000       19,885  

Public Service Co. of Colorado

   

4.75%, 8/15/2041

    25,000       19,506  

Public Service Electric and Gas Co.

   

5.38%, 11/1/2039

    25,000       21,853  

Southern Co. (The)

   

4.40%, 7/1/2046

    25,000       18,441  

Tucson Electric Power Co.

   

4.00%, 6/15/2050

    60,000       40,040  

Union Electric Co.

   

2.63%, 3/15/2051

    50,000       26,517  

Wisconsin Public Service Corp.

   

4.75%, 11/1/2044

    25,000       19,995  

3.30%, 9/1/2049

    40,000       24,427  

2.85%, 12/1/2051

    50,000       27,604  
              859,045  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     411  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Electrical Equipment – 0.5%  

ABB Finance USA, Inc.

   

4.38%, 5/8/2042

  $ 50,000     $ 40,604  

Eaton Corp.

   

4.70%, 8/23/2052

    30,000       24,350  

Emerson Electric Co.

   

2.75%, 10/15/2050

    25,000       14,024  

2.80%, 12/21/2051

    100,000       56,632  
              135,610  
Electronic Equipment, Instruments & Components – 0.7%  

Corning, Inc.

   

5.35%, 11/15/2048

    50,000       42,570  

4.38%, 11/15/2057

    25,000       17,765  

5.85%, 11/15/2068

    25,000       21,169  

5.45%, 11/15/2079

    80,000       63,096  

Tyco Electronics Group SA

   

7.13%, 10/1/2037

    40,000       42,677  
              187,277  
Entertainment – 0.3%  

Activision Blizzard, Inc.

   

2.50%, 9/15/2050

    100,000       55,902  

Electronic Arts, Inc.

   

2.95%, 2/15/2051

    50,000       28,718  
              84,620  
Financial Services – 2.4%  

Fidelity National Information Services, Inc.

   

5.63%, 7/15/2052

    15,000       12,717  

Fiserv, Inc.

   

4.40%, 7/1/2049

    140,000       101,575  

Global Payments, Inc.

   

4.15%, 8/15/2049

    10,000       6,484  

Mastercard, Inc.

   

3.95%, 2/26/2048

    30,000       22,652  

3.65%, 6/1/2049

    70,000       49,506  

3.85%, 3/26/2050

    100,000       73,066  

2.95%, 3/15/2051

    70,000       42,714  

Shell International Finance BV

   

6.38%, 12/15/2038

    20,000       20,444  

Visa, Inc.

   

2.70%, 4/15/2040

    80,000       53,517  
Investments   Principal
Amount
    Value  
Financial Services – (continued)  

4.30%, 12/14/2045

  $ 300,000     $ 239,510  

Voya Financial, Inc.

   

4.80%, 6/15/2046

    25,000       17,975  

Western Union Co. (The)

   

6.20%, 6/21/2040

    50,000       44,938  
              685,098  
Food Products – 1.4%  

Campbell Soup Co.

   

4.80%, 3/15/2048

    30,000       22,767  

Conagra Brands, Inc.

   

5.40%, 11/1/2048

    30,000       24,011  

General Mills, Inc.

   

5.40%, 6/15/2040

    50,000       43,834  

4.15%, 2/15/2043

    25,000       18,397  

Hershey Co. (The)

   

3.13%, 11/15/2049

    10,000       6,187  

2.65%, 6/1/2050

    60,000       33,842  

Hormel Foods Corp.

   

3.05%, 6/3/2051

    20,000       11,882  

Ingredion, Inc.

   

3.90%, 6/1/2050

    35,000       22,098  

J M Smucker Co. (The)

   

4.25%, 3/15/2035

    15,000       12,228  

2.75%, 9/15/2041

    50,000       29,757  

6.50%, 11/15/2053

    90,000       84,859  

JM Smucker Co. (The)

   

3.55%, 3/15/2050

    30,000       18,168  

Kraft Heinz Foods Co.

   

6.88%, 1/26/2039

    25,000       25,263  

Mead Johnson Nutrition Co.

   

5.90%, 11/1/2039

    25,000       23,462  

4.60%, 6/1/2044

    25,000       19,872  
              396,627  
Gas Utilities – 0.8%  

Atmos Energy Corp.

   

4.13%, 10/15/2044

    55,000       41,002  

2.85%, 2/15/2052

    50,000       28,148  

5.75%, 10/15/2052

    40,000       36,700  

6.20%, 11/15/2053

    75,000       72,790  

Southern California Gas Co.

   

6.35%, 11/15/2052

    40,000       38,616  
              217,256  

 

See Accompanying Notes to the Financial Statements.

 

412    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Ground Transportation – 3.3%  

Burlington Northern Santa Fe LLC

   

6.15%, 5/1/2037

  $ 25,000     $ 25,146  

5.75%, 5/1/2040

    40,000       38,129  

4.40%, 3/15/2042

    75,000       59,459  

4.45%, 3/15/2043

    100,000       79,171  

4.55%, 9/1/2044

    25,000       19,898  

4.15%, 12/15/2048

    50,000       36,687  

3.05%, 2/15/2051

    110,000       64,823  

3.30%, 9/15/2051

    110,000       68,565  

2.88%, 6/15/2052

    90,000       51,361  

4.45%, 1/15/2053

    70,000       54,191  

5.20%, 4/15/2054

    80,000       69,078  

Canadian National Railway Co.

   

6.20%, 6/1/2036

    50,000       50,516  

4.45%, 1/20/2049

    10,000       7,745  

4.40%, 8/5/2052

    45,000       34,768  

Canadian Pacific Railway Co.

   

6.13%, 9/15/2115

    10,000       9,000  

CSX Corp.

   

6.15%, 5/1/2037

    50,000       49,861  

4.50%, 11/15/2052

    45,000       34,330  

4.50%, 8/1/2054

    40,000       30,240  

4.65%, 3/1/2068

    25,000       18,530  

Norfolk Southern Corp.

   

5.10%, 8/1/2118

    40,000       29,364  

4.10%, 5/15/2121

    15,000       9,047  

Union Pacific Corp.

   

3.84%, 3/20/2060

    100,000       65,863  

3.75%, 2/5/2070

    80,000       49,643  
              955,415  
Health Care Equipment & Supplies – 0.4%  

Abbott Laboratories

   

5.30%, 5/27/2040

    25,000       23,427  

Boston Scientific Corp.

   

4.55%, 3/1/2039

    50,000       41,391  

4.70%, 3/1/2049

    10,000       7,970  

Stryker Corp.

   

4.10%, 4/1/2043

    25,000       18,763  

Zimmer Biomet Holdings, Inc.

   

4.25%, 8/15/2035

    25,000       19,692  
              111,243  
Investments   Principal
Amount
    Value  
Health Care Providers & Services – 3.2%  

Cardinal Health, Inc.

   

4.60%, 3/15/2043

  $ 30,000     $ 22,725  

4.37%, 6/15/2047

    110,000       79,159  

Cencora, Inc.

   

4.30%, 12/15/2047

    75,000       54,904  

Elevance Health, Inc.

   

4.85%, 8/15/2054

    25,000       18,509  

HCA, Inc.

   

5.25%, 6/15/2049

    30,000       23,060  

Humana, Inc.

   

4.95%, 10/1/2044

    50,000       39,974  

5.50%, 3/15/2053

    25,000       21,533  

Laboratory Corp. of America Holdings

   

4.70%, 2/1/2045

    50,000       38,797  

OhioHealth Corp.

   

2.83%, 11/15/2041

    10,000       6,304  

Series 2020,
3.04%, 11/15/2050

    20,000       12,419  

Quest Diagnostics, Inc.

   

4.70%, 3/30/2045

    25,000       19,607  

UnitedHealth Group, Inc.

   

4.63%, 7/15/2035

    25,000       22,225  

6.63%, 11/15/2037

    100,000       104,319  

4.75%, 5/15/2052

    30,000       24,015  

5.88%, 2/15/2053

    75,000       70,927  

3.88%, 8/15/2059

    100,000       66,117  

3.13%, 5/15/2060

    50,000       28,453  

4.95%, 5/15/2062

    75,000       60,888  

6.05%, 2/15/2063

    110,000       104,826  

5.20%, 4/15/2063

    100,000       83,548  
              902,309  
Hotels, Restaurants & Leisure – 2.1%  

Darden Restaurants, Inc.

   

4.55%, 2/15/2048

    20,000       14,565  

Marriott International, Inc.

   

Series II,
2.75%, 10/15/2033

    25,000       18,308  

McDonald's Corp.

   

4.70%, 12/9/2035

    50,000       43,871  

6.30%, 10/15/2037

    50,000       50,531  

5.70%, 2/1/2039

    75,000       70,598  

3.70%, 2/15/2042

    100,000       71,244  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     413  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Hotels, Restaurants & Leisure – (continued)  

4.88%, 12/9/2045

  $ 65,000     $ 53,506  

4.45%, 3/1/2047

    65,000       49,872  

4.45%, 9/1/2048

    70,000       53,474  

3.63%, 9/1/2049

    120,000       79,534  

4.20%, 4/1/2050

    50,000       36,401  

5.15%, 9/9/2052

    65,000       54,795  
              596,699  
Household Durables – 0.1%  

MDC Holdings, Inc.

   

6.00%, 1/15/2043

    20,000       15,711  

PulteGroup, Inc.

   

6.00%, 2/15/2035

    25,000       23,262  
              38,973  
Household Products – 0.6%  

Church & Dwight Co., Inc.

   

5.00%, 6/15/2052

    50,000       42,017  

Kimberly-Clark Corp.

   

6.63%, 8/1/2037

    100,000       106,913  

3.90%, 5/4/2047

    25,000       18,135  
              167,065  
Independent Power and Renewable Electricity
Producers – 0.7%
 

Constellation Energy Generation LLC

   

6.25%, 10/1/2039

    50,000       46,347  

6.50%, 10/1/2053

    100,000       93,924  

Southern Power Co.

   

5.15%, 9/15/2041

    25,000       20,538  

5.25%, 7/15/2043

    25,000       20,161  

Series F,
4.95%, 12/15/2046

    25,000       19,106  
              200,076  
Industrial Conglomerates – 0.2%  

Honeywell International, Inc.

   

5.70%, 3/15/2036

    50,000       48,801  
Insurance – 6.0%  

Aflac, Inc.

   

6.45%, 8/15/2040

    20,000       19,017  
Investments   Principal
Amount
    Value  
Insurance – (continued)  

4.00%, 10/15/2046

  $ 25,000     $ 17,296  

4.75%, 1/15/2049

    50,000       39,883  

Alleghany Corp.

   

4.90%, 9/15/2044

    50,000       41,471  

3.25%, 8/15/2051

    25,000       15,308  

Allstate Corp. (The)

   

3.85%, 8/10/2049

    20,000       13,189  

American Financial Group, Inc.

   

4.50%, 6/15/2047

    35,000       25,080  

Aon Corp.

   

3.90%, 2/28/2052

    50,000       33,618  

Aon Global Ltd.

   

4.45%, 5/24/2043

    50,000       36,186  

4.60%, 6/14/2044

    55,000       42,878  

4.75%, 5/15/2045

    80,000       63,676  

Arch Capital Group Ltd.

   

7.35%, 5/1/2034

    20,000       21,033  

3.64%, 6/30/2050

    165,000       104,834  

Arthur J Gallagher & Co.

   

3.50%, 5/20/2051

    70,000       42,206  

3.05%, 3/9/2052

    75,000       40,685  

5.75%, 3/2/2053

    10,000       8,714  

Assurant, Inc.

   

6.75%, 2/15/2034

    25,000       24,551  

Athene Holding Ltd.

   

3.95%, 5/25/2051

    50,000       31,300  

3.45%, 5/15/2052

    10,000       5,647  

Berkshire Hathaway Finance Corp.

   

2.85%, 10/15/2050

    10,000       5,745  

3.85%, 3/15/2052

    190,000       132,458  

Brown & Brown, Inc.

   

4.95%, 3/17/2052

    50,000       37,097  

Chubb INA Holdings, Inc.

   

3.05%, 12/15/2061

    20,000       11,253  

Cincinnati Financial Corp.

   

6.13%, 11/1/2034

    25,000       23,688  

Everest Reinsurance Holdings, Inc.

   

3.50%, 10/15/2050

    10,000       6,049  

3.13%, 10/15/2052

    10,000       5,619  

Fidelity National Financial, Inc.

   

3.20%, 9/17/2051

    20,000       10,421  

Hartford Financial Services Group, Inc. (The)

   

6.63%, 3/30/2040

    75,000       73,246  

 

See Accompanying Notes to the Financial Statements.

 

414    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Insurance – (continued)  

4.40%, 3/15/2048

  $ 10,000     $ 7,428  

2.90%, 9/15/2051

    25,000       13,768  

Markel Group, Inc.

   

5.00%, 5/20/2049

    25,000       19,752  

4.15%, 9/17/2050

    125,000       84,626  

3.45%, 5/7/2052

    50,000       30,171  

Marsh & McLennan Cos., Inc.

   

4.75%, 3/15/2039

    25,000       21,270  

4.90%, 3/15/2049

    110,000       90,423  

2.90%, 12/15/2051

    10,000       5,588  

6.25%, 11/1/2052

    20,000       19,568  

5.45%, 3/15/2053

    50,000       44,051  

5.70%, 9/15/2053

    75,000       68,853  

MetLife, Inc.

   

10.75%, 8/1/2039

    20,000       25,243  

Old Republic International Corp.

   

3.85%, 6/11/2051

    50,000       30,958  

Principal Financial Group, Inc.

   

6.05%, 10/15/2036

    35,000       33,548  

5.50%, 3/15/2053

    20,000       16,688  

Prudential Financial, Inc.

   

4.35%, 2/25/2050

    50,000       36,622  

Selective Insurance Group, Inc.

   

5.38%, 3/1/2049

    25,000       20,357  

Travelers Cos., Inc. (The)

   

2.55%, 4/27/2050

    10,000       5,444  

5.45%, 5/25/2053

    10,000       8,984  

Trinity Acquisition plc

   

6.13%, 8/15/2043

    25,000       21,641  

Unum Group

   

5.75%, 8/15/2042

    25,000       20,725  

4.13%, 6/15/2051

    45,000       28,039  

W R Berkley Corp.

   

4.75%, 8/1/2044

    25,000       19,141  

4.00%, 5/12/2050

    20,000       13,402  

3.55%, 3/30/2052

    70,000       42,096  

3.15%, 9/30/2061

    20,000       10,379  

Willis North America, Inc.

   

5.05%, 9/15/2048

    50,000       38,412  
              1,709,325  
Investments   Principal
Amount
    Value  
Interactive Media & Services – 1.9%  

Alphabet, Inc.

   

2.25%, 8/15/2060

  $ 45,000     $ 22,755  

Meta Platforms, Inc.

   

4.45%, 8/15/2052

    230,000       173,893  

5.60%, 5/15/2053

    110,000       99,486  

4.65%, 8/15/2062

    155,000       116,880  

5.75%, 5/15/2063

    135,000       121,115  
              534,129  
IT Services – 1.9%  

International Business Machines Corp.

   

4.15%, 5/15/2039

    90,000       70,654  

5.60%, 11/30/2039

    50,000       46,124  

4.00%, 6/20/2042

    105,000       78,075  

4.25%, 5/15/2049

    270,000       197,342  

2.95%, 5/15/2050

    10,000       5,675  

3.43%, 2/9/2052

    10,000       6,181  

4.90%, 7/27/2052

    130,000       104,442  

5.10%, 2/6/2053

    20,000       16,617  

7.13%, 12/1/2096

    25,000       26,270  
              551,380  
Leisure Products – 0.0%(c)  

Brunswick Corp.

   

5.10%, 4/1/2052

    15,000       9,808  
Machinery – 0.8%  

Dover Corp.

   

5.38%, 10/15/2035

    25,000       23,397  

5.38%, 3/1/2041

    50,000       44,110  

Fortive Corp.

   

4.30%, 6/15/2046

    50,000       36,288  

Otis Worldwide Corp.

   

3.11%, 2/15/2040

    50,000       34,000  

3.36%, 2/15/2050

    50,000       31,468  

Snap-on, Inc.

   

4.10%, 3/1/2048

    25,000       18,297  

3.10%, 5/1/2050

    25,000       15,303  

Xylem, Inc.

   

4.38%, 11/1/2046

    25,000       17,945  
              220,808  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     415  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Media – 3.0%  

Charter Communications Operating LLC

   

6.48%, 10/23/2045

  $ 110,000     $ 92,474  

5.38%, 5/1/2047

    110,000       79,557  

5.75%, 4/1/2048

    100,000       75,873  

4.80%, 3/1/2050

    80,000       52,735  

4.40%, 12/1/2061

    75,000       43,668  

5.50%, 4/1/2063

    25,000       17,577  

Comcast Corp.

   

4.60%, 10/15/2038

    40,000       33,230  

3.75%, 4/1/2040

    50,000       36,745  

5.35%, 5/15/2053

    40,000       34,413  

2.94%, 11/1/2056

    60,000       31,788  

2.99%, 11/1/2063

    65,000       33,370  

Fox Corp.

   

5.48%, 1/25/2039

    100,000       82,746  

5.58%, 1/25/2049

    100,000       78,786  

Interpublic Group of Cos., Inc. (The)

   

3.38%, 3/1/2041

    20,000       12,675  

5.40%, 10/1/2048

    30,000       24,167  

Time Warner Cable LLC

   

7.30%, 7/1/2038

    40,000       37,276  

6.75%, 6/15/2039

    60,000       52,325  

5.88%, 11/15/2040

    65,000       51,278  
              870,683  
Metals & Mining – 0.6%  

ArcelorMittal SA

   

6.75%, 3/1/2041(b)

    35,000       31,821  

Freeport-McMoRan, Inc.

   

5.45%, 3/15/2043

    20,000       16,450  

Reliance Steel & Aluminum Co.

   

6.85%, 11/15/2036

    25,000       24,540  

Rio Tinto Alcan, Inc.

   

5.75%, 6/1/2035

    50,000       47,450  

Steel Dynamics, Inc.

   

3.25%, 10/15/2050

    20,000       11,367  

Vale Overseas Ltd.

   

6.88%, 11/21/2036

    50,000       49,365  
              180,993  
Investments   Principal
Amount
    Value  
Multi-Utilities – 2.5%  

Ameren Illinois Co.

   

4.80%, 12/15/2043

  $ 25,000     $ 19,773  

Berkshire Hathaway Energy Co.

   

6.13%, 4/1/2036

    160,000       155,676  

4.45%, 1/15/2049

    100,000       73,250  

4.25%, 10/15/2050

    150,000       105,000  

2.85%, 5/15/2051

    50,000       27,541  

4.60%, 5/1/2053

    20,000       14,818  

Consolidated Edison Co. of New York, Inc.

   

Series 09-C,
5.50%, 12/1/2039

    20,000       17,688  

4.63%, 12/1/2054

    20,000       14,856  

Series C,
4.30%, 12/1/2056

    25,000       17,375  

4.50%, 5/15/2058

    20,000       14,312  

3.60%, 6/15/2061

    20,000       12,186  

Puget Sound Energy, Inc.

   

5.80%, 3/15/2040

    25,000       22,725  

San Diego Gas & Electric Co.

   

4.30%, 4/1/2042

    20,000       15,004  

2.95%, 8/15/2051

    40,000       22,738  

5.35%, 4/1/2053

    40,000       34,215  

Sempra

   

3.80%, 2/1/2038

    90,000       67,111  

6.00%, 10/15/2039

    20,000       18,293  

4.00%, 2/1/2048

    30,000       20,482  

Southern Co. Gas Capital Corp.

   

4.40%, 6/1/2043

    25,000       18,031  

4.40%, 5/30/2047

    20,000       14,406  
              705,480  
Office REITs – 0.1%  

Alexandria Real Estate Equities, Inc.

   

REIT, 4.75%, 4/15/2035

    20,000       16,917  

Corporate Office Properties LP

   

REIT, 2.90%, 12/1/2033

    30,000       20,379  
              37,296  
Oil, Gas & Consumable Fuels – 17.2%  

Canadian Natural Resources Ltd.

   

6.50%, 2/15/2037

    80,000       75,986  

6.25%, 3/15/2038

    50,000       46,720  

6.75%, 2/1/2039

    50,000       48,146  

4.95%, 6/1/2047

    35,000       27,461  

 

See Accompanying Notes to the Financial Statements.

 

416    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

Cenovus Energy, Inc.

   

5.25%, 6/15/2037

  $ 50,000     $ 42,750  

6.75%, 11/15/2039

    15,000       14,498  

5.40%, 6/15/2047

    12,000       9,857  

3.75%, 2/15/2052

    20,000       12,504  

ConocoPhillips Co.

   

3.80%, 3/15/2052

    100,000       68,119  

5.30%, 5/15/2053

    50,000       43,166  

5.55%, 3/15/2054

    25,000       22,347  

4.03%, 3/15/2062

    130,000       87,653  

5.70%, 9/15/2063

    20,000       17,847  

Continental Resources, Inc.

   

4.90%, 6/1/2044

    50,000       35,305  

Devon Energy Corp.

   

5.60%, 7/15/2041

    50,000       42,444  

5.00%, 6/15/2045

    40,000       30,821  

Diamondback Energy, Inc.

   

4.40%, 3/24/2051

    45,000       31,931  

4.25%, 3/15/2052

    30,000       20,619  

6.25%, 3/15/2053

    40,000       36,910  

Eastern Gas Transmission & Storage, Inc.

   

4.60%, 12/15/2044

    50,000       36,930  

Energy Transfer LP

   

5.80%, 6/15/2038

    50,000       43,667  

7.50%, 7/1/2038

    25,000       25,554  

6.05%, 6/1/2041

    40,000       34,713  

6.50%, 2/1/2042

    130,000       120,174  

5.00%, 5/15/2044(b)

    40,000       29,948  

6.13%, 12/15/2045

    90,000       77,763  

5.40%, 10/1/2047

    50,000       39,268  

6.00%, 6/15/2048

    25,000       21,256  

6.25%, 4/15/2049

    100,000       87,997  

5.00%, 5/15/2050

    120,000       89,974  

Enterprise Products Operating LLC

   

7.55%, 4/15/2038

    75,000       81,783  

6.45%, 9/1/2040

    25,000       24,882  

5.95%, 2/1/2041

    130,000       123,261  

4.85%, 8/15/2042

    25,000       20,900  

4.45%, 2/15/2043

    100,000       78,956  

4.85%, 3/15/2044

    100,000       82,817  

4.25%, 2/15/2048

    85,000       63,604  

3.70%, 1/31/2051

    75,000       50,162  

3.95%, 1/31/2060

    75,000       50,224  
Investments   Principal
Amount
    Value  
Oil, Gas & Consumable Fuels – (continued)  

Exxon Mobil Corp.

   

4.33%, 3/19/2050

  $ 10,000     $ 7,744  

3.45%, 4/15/2051

    70,000       45,997  

Kinder Morgan Energy Partners LP

   

6.95%, 1/15/2038

    100,000       99,134  

6.50%, 9/1/2039

    50,000       46,375  

6.55%, 9/15/2040

    50,000       46,352  

6.38%, 3/1/2041

    50,000       45,557  

5.00%, 8/15/2042

    50,000       39,065  

5.50%, 3/1/2044

    50,000       40,730  

Kinder Morgan, Inc.

   

5.30%, 12/1/2034

    50,000       44,245  

5.55%, 6/1/2045

    75,000       61,734  

5.05%, 2/15/2046

    50,000       38,135  

5.20%, 3/1/2048

    50,000       38,900  

3.25%, 8/1/2050

    25,000       14,146  

3.60%, 2/15/2051

    50,000       30,102  

5.45%, 8/1/2052

    40,000       32,331  

Magellan Midstream Partners LP

   

5.15%, 10/15/2043

    40,000       31,747  

4.20%, 10/3/2047

    85,000       56,213  

4.85%, 2/1/2049

    90,000       66,597  

3.95%, 3/1/2050

    40,000       25,241  

Marathon Oil Corp.

   

5.20%, 6/1/2045

    15,000       11,580  

Marathon Petroleum Corp.

   

6.50%, 3/1/2041

    50,000       47,454  

5.85%, 12/15/2045

    35,000       29,230  

4.50%, 4/1/2048

    65,000       46,159  

MPLX LP

   

4.50%, 4/15/2038

    50,000       38,953  

5.20%, 3/1/2047

    25,000       19,334  

4.70%, 4/15/2048

    75,000       54,217  

5.50%, 2/15/2049

    80,000       64,573  

4.95%, 3/14/2052

    150,000       111,166  

5.65%, 3/1/2053

    100,000       82,255  

4.90%, 4/15/2058

    50,000       35,196  

Occidental Petroleum Corp.

   

6.45%, 9/15/2036

    40,000       38,851  

7.95%, 6/15/2039

    30,000       32,070  

6.20%, 3/15/2040

    30,000       27,816  

6.60%, 3/15/2046

    60,000       57,774  

4.20%, 3/15/2048

    10,000       6,741  

4.40%, 8/15/2049

    25,000       16,347  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     417  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

ONEOK Partners LP

   

6.65%, 10/1/2036

  $ 50,000     $ 48,174  

6.85%, 10/15/2037

    50,000       48,823  

6.13%, 2/1/2041

    40,000       36,146  

ONEOK, Inc.

   

4.95%, 7/13/2047

    100,000       74,640  

5.20%, 7/15/2048

    120,000       92,845  

4.45%, 9/1/2049

    20,000       13,696  

6.63%, 9/1/2053

    125,000       116,819  

Ovintiv, Inc.

   

7.10%, 7/15/2053

    15,000       14,276  

Phillips 66

   

3.30%, 3/15/2052

    25,000       14,651  

Plains All American Pipeline LP

   

6.65%, 1/15/2037

    25,000       23,636  

5.15%, 6/1/2042

    100,000       75,835  

4.70%, 6/15/2044

    50,000       35,007  

Suncor Energy, Inc.

   

5.95%, 12/1/2034

    25,000       23,435  

6.80%, 5/15/2038

    50,000       49,164  

6.50%, 6/15/2038

    30,000       28,842  

6.85%, 6/1/2039

    40,000       38,916  

4.00%, 11/15/2047

    50,000       33,498  

3.75%, 3/4/2051

    70,000       44,475  

Targa Resources Corp.

   

4.95%, 4/15/2052

    20,000       14,594  

6.25%, 7/1/2052

    35,000       30,591  

6.50%, 2/15/2053

    20,000       18,235  

TotalEnergies Capital International SA

   

3.39%, 6/29/2060

    50,000       30,161  

Transcontinental Gas Pipe Line Co. LLC

   

4.60%, 3/15/2048

    50,000       37,624  

Valero Energy Corp.

   

4.90%, 3/15/2045

    75,000       58,890  

3.65%, 12/1/2051

    25,000       15,172  

4.00%, 6/1/2052

    30,000       19,497  

Western Midstream Operating LP

   

5.45%, 4/1/2044

    25,000       19,241  

5.30%, 3/1/2048

    60,000       44,823  

5.25%, 2/1/2050(b)(d)

    100,000       73,896  
Investments   Principal
Amount
    Value  
Oil, Gas & Consumable Fuels – (continued)  

Williams Cos., Inc. (The)

   

6.30%, 4/15/2040

  $ 40,000     $ 37,766  

5.75%, 6/24/2044

    50,000       43,590  

4.90%, 1/15/2045

    25,000       19,175  

5.10%, 9/15/2045

    90,000       72,343  

4.85%, 3/1/2048

    100,000       76,566  

3.50%, 10/15/2051

    50,000       30,219  

5.30%, 8/15/2052

    50,000       40,651  
              4,924,890  
Pharmaceuticals – 2.1%  

Bristol-Myers Squibb Co.

   

5.88%, 11/15/2036

    25,000       24,505  

4.13%, 6/15/2039

    25,000       19,854  

4.25%, 10/26/2049

    10,000       7,437  

3.70%, 3/15/2052

    10,000       6,713  

3.90%, 3/15/2062

    100,000       65,377  

Eli Lilly & Co.

   

5.95%, 11/15/2037

    25,000       25,075  

4.88%, 2/27/2053

    70,000       60,667  

4.15%, 3/15/2059

    60,000       44,402  

2.50%, 9/15/2060

    30,000       15,245  

4.95%, 2/27/2063

    50,000       42,585  

GlaxoSmithKline Capital, Inc.

   

6.38%, 5/15/2038

    20,000       20,817  

Johnson & Johnson

   

2.45%, 9/1/2060

    50,000       25,661  

Merck & Co., Inc.

   

2.75%, 12/10/2051

    55,000       31,058  

5.00%, 5/17/2053

    50,000       42,698  

2.90%, 12/10/2061

    25,000       13,443  

5.15%, 5/17/2063

    50,000       42,605  

Zoetis, Inc.

   

4.70%, 2/1/2043

    75,000       61,583  

3.95%, 9/12/2047

    25,000       17,881  

4.45%, 8/20/2048

    50,000       38,471  
              606,077  
Professional Services – 0.2%  

Verisk Analytics, Inc.

   

5.50%, 6/15/2045

    25,000       21,152  

3.63%, 5/15/2050

    50,000       31,948  
              53,100  

 

See Accompanying Notes to the Financial Statements.

 

418    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Real Estate Management & Development – 0.2%  

CBRE Services, Inc.

   

5.95%, 8/15/2034

  $ 55,000     $ 50,005  
Residential REITs – 0.1%  

ERP Operating LP

   

REIT, 4.50%, 6/1/2045

    25,000       18,168  

Essex Portfolio LP

   

REIT, 4.50%, 3/15/2048

    20,000       14,436  

REIT, 2.65%, 9/1/2050

    20,000       9,797  
              42,401  
Retail REITs – 0.3%  

NNN REIT, Inc.

   

REIT, 3.50%, 4/15/2051

    54,000       32,300  

REIT, 3.00%, 4/15/2052

    40,000       21,345  

Regency Centers LP

   

REIT, 4.40%, 2/1/2047

    60,000       41,963  
              95,608  
Semiconductors & Semiconductor Equipment – 5.1%  

Advanced Micro Devices, Inc.

   

4.39%, 6/1/2052

    25,000       19,258  

Analog Devices, Inc.

   

2.80%, 10/1/2041

    40,000       25,370  

2.95%, 10/1/2051

    50,000       29,294  

Applied Materials, Inc.

   

5.10%, 10/1/2035

    50,000       47,381  

Broadcom, Inc.

   

3.47%, 4/15/2034(e)

    160,000       121,910  

3.14%, 11/15/2035(e)

    210,000       148,134  

3.19%, 11/15/2036(e)

    120,000       83,107  

3.50%, 2/15/2041(e)

    185,000       123,040  

3.75%, 2/15/2051(e)

    130,000       82,892  

KLA Corp.

   

5.65%, 11/1/2034

    25,000       24,101  

5.00%, 3/15/2049

    20,000       16,611  

4.95%, 7/15/2052

    75,000       62,838  

5.25%, 7/15/2062

    80,000       67,795  

Lam Research Corp.

   

4.88%, 3/15/2049

    30,000       24,745  

3.13%, 6/15/2060

    70,000       38,891  

Micron Technology, Inc.

   

3.37%, 11/1/2041

    50,000       31,510  
Investments   Principal
Amount
    Value  
Semiconductors & Semiconductor Equipment – (continued)  

NVIDIA Corp.

   

3.50%, 4/1/2040

  $ 10,000     $ 7,486  

3.70%, 4/1/2060

    20,000       13,452  

NXP BV

   

3.25%, 5/11/2041

    70,000       44,923  

3.13%, 2/15/2042

    50,000       30,985  

3.25%, 11/30/2051

    20,000       11,322  

QUALCOMM, Inc.

   

4.50%, 5/20/2052

    50,000       38,435  

6.00%, 5/20/2053

    110,000       105,860  

Texas Instruments, Inc.

   

3.88%, 3/15/2039

    40,000       31,794  

4.15%, 5/15/2048

    75,000       56,771  

2.70%, 9/15/2051

    20,000       11,283  

4.10%, 8/16/2052

    10,000       7,362  

5.00%, 3/14/2053

    70,000       59,608  

5.05%, 5/18/2063

    100,000       83,269  

TSMC Arizona Corp.

   

4.50%, 4/22/2052

    10,000       8,200  
              1,457,627  
Software – 3.2%  

Intuit, Inc.

   

5.50%, 9/15/2053

    100,000       90,970  

Microsoft Corp.

   

2.53%, 6/1/2050

    20,000       11,448  

2.92%, 3/17/2052

    100,000       61,731  

4.50%, 2/6/2057

    30,000       24,764  

2.68%, 6/1/2060

    40,000       22,118  

3.04%, 3/17/2062

    210,000       124,698  

Oracle Corp.

   

3.80%, 11/15/2037

    25,000       18,397  

6.13%, 7/8/2039

    105,000       98,116  

3.65%, 3/25/2041

    140,000       95,335  

4.13%, 5/15/2045

    200,000       138,541  

3.60%, 4/1/2050

    200,000       122,554  

4.38%, 5/15/2055

    39,000       26,387  

3.85%, 4/1/2060

    95,000       57,019  

Salesforce, Inc.

   

3.05%, 7/15/2061

    25,000       13,924  
              906,002  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     419  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Specialized REITs – 0.1%  

Weyerhaeuser Co.

   

REIT, 6.88%, 12/15/2033

  $ 25,000     $ 25,360  

REIT, 4.00%, 3/9/2052

    15,000       10,233  
              35,593  
Specialty Retail – 3.6%  

Dick's Sporting Goods, Inc.

   

4.10%, 1/15/2052

    25,000       14,625  

Home Depot, Inc. (The)

   

5.88%, 12/16/2036

    40,000       39,613  

3.30%, 4/15/2040

    130,000       91,913  

5.95%, 4/1/2041

    50,000       48,484  

4.50%, 12/6/2048

    20,000       15,762  

3.13%, 12/15/2049

    20,000       12,168  

3.35%, 4/15/2050

    100,000       63,372  

2.38%, 3/15/2051

    10,000       5,107  

2.75%, 9/15/2051

    60,000       33,428  

3.63%, 4/15/2052

    175,000       116,543  

4.95%, 9/15/2052

    150,000       126,256  

Lowe's Cos., Inc.

   

2.80%, 9/15/2041

    25,000       15,185  

4.05%, 5/3/2047

    50,000       34,501  

4.55%, 4/5/2049

    25,000       18,412  

5.13%, 4/15/2050

    40,000       32,329  

3.00%, 10/15/2050

    90,000       49,466  

4.25%, 4/1/2052

    50,000       34,653  

5.63%, 4/15/2053

    90,000       77,772  

5.75%, 7/1/2053

    75,000       65,810  

4.45%, 4/1/2062

    75,000       51,208  

5.80%, 9/15/2062

    50,000       42,366  

5.85%, 4/1/2063

    40,000       34,127  

TJX Cos., Inc. (The)

   

4.50%, 4/15/2050

    25,000       19,748  
              1,042,848  
Technology Hardware, Storage & Peripherals – 2.7%  

Apple, Inc.

   

4.38%, 5/13/2045

    50,000       40,995  

4.65%, 2/23/2046

    190,000       162,099  

2.70%, 8/5/2051

    200,000       115,663  

3.95%, 8/8/2052

    100,000       74,139  

2.55%, 8/20/2060

    50,000       27,386  

2.80%, 2/8/2061

    100,000       55,221  
Investments   Principal
Amount
    Value  
Technology Hardware, Storage & Peripherals – (continued)  

2.85%, 8/5/2061

  $ 100,000     $ 55,590  

4.10%, 8/8/2062

    70,000       51,331  

Dell International LLC

   

8.10%, 7/15/2036

    70,000       75,918  

3.38%, 12/15/2041

    10,000       6,442  

8.35%, 7/15/2046

    20,000       22,343  

HP, Inc.

   

6.00%, 9/15/2041

    80,000       72,447  
              759,574  
Tobacco – 3.9%  

Altria Group, Inc.

   

5.80%, 2/14/2039

    100,000       88,887  

3.40%, 2/4/2041

    40,000       24,512  

4.25%, 8/9/2042

    120,000       82,134  

4.50%, 5/2/2043

    65,000       45,884  

5.38%, 1/31/2044

    125,000       107,253  

5.95%, 2/14/2049

    245,000       207,839  

3.70%, 2/4/2051

    10,000       5,826  

BAT Capital Corp.

   

4.39%, 8/15/2037

    50,000       36,340  

4.54%, 8/15/2047

    50,000       32,348  

4.76%, 9/6/2049

    25,000       16,620  

5.28%, 4/2/2050

    50,000       35,559  

5.65%, 3/16/2052

    50,000       37,603  

7.08%, 8/2/2053

    50,000       44,626  

Philip Morris International, Inc.

   

6.38%, 5/16/2038

    75,000       74,239  

4.38%, 11/15/2041

    50,000       37,593  

4.50%, 3/20/2042

    50,000       38,247  

4.13%, 3/4/2043

    80,000       57,331  

4.88%, 11/15/2043

    40,000       31,875  

4.25%, 11/10/2044

    50,000       36,060  

Reynolds American, Inc.

   

5.70%, 8/15/2035

    25,000       21,420  

5.85%, 8/15/2045

    50,000       39,086  
              1,101,282  
Trading Companies & Distributors – 0.3%  

WW Grainger, Inc.

   

4.60%, 6/15/2045

    50,000       40,497  

4.20%, 5/15/2047

    50,000       38,815  
              79,312  

 

See Accompanying Notes to the Financial Statements.

 

420    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Water Utilities – 0.3%  

American Water Capital Corp.

   

3.45%, 5/1/2050

  $ 30,000     $ 19,172  

3.25%, 6/1/2051

    30,000       18,491  

Essential Utilities, Inc.

   

5.30%, 5/1/2052

    50,000       40,371  
              78,034  
Wireless Telecommunication Services – 0.2%  

Rogers Communications, Inc.

   

7.50%, 8/15/2038

    10,000       9,918  

T-Mobile USA, Inc.

   

4.50%, 4/15/2050

    20,000       14,591  

5.75%, 1/15/2054

    20,000       17,557  

5.80%, 9/15/2062

    20,000       17,235  
        59,301  
Total Corporate Bonds
(Cost $34,128,436)

 

    27,787,389  
                 
Total Investments – 97.2%
(Cost $34,128,436)

 

    27,787,389  

Other assets less liabilities – 2.8%

 

    788,075  
NET ASSETS – 100.0%

 

  $ 28,575,464  

 

(a)

Security issued at a fixed coupon rate, which converts to a variable rate at a future date. Rate shown is the rate in effect as of period end.

 

(b) 

Step bond. Interest rate is a fixed rate for an initial period that either resets at a specific date or may reset in the future at a contingent upon predetermined trigger. The interest rate shown was the current rate as of October 31, 2023.

 

(c)

Represents less than 0.05% of net assets.

 

(d)

Variable or floating rate security, linked to the referenced benchmark. The interest rate shown is the rate in effect as of October 31, 2023.

 

(e)

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

Percentages shown are based on Net Assets.

 

Abbreviations

 

OYJ Public Limited Company

REIT Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $  

Aggregate gross unrealized depreciation

    (6,495,514

Net unrealized depreciation

  $ (6,495,514

Federal income tax cost

  $ 34,282,903  

 

Security Type    % of Net Assets   

Corporate Bonds

     97.2

Others(1)

     2.8  
       100.0

 

(1) 

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     421  


Table of Contents

 

Schedule of Investments

FlexShares® High Yield Value-Scored Bond Index Fund

 

October 31, 2023

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – 98.1%  
Aerospace & Defense – 2.6%  

Bombardier, Inc.

   

7.13%, 6/15/2026(a)

  $ 2,675,000     $ 2,573,848  

7.88%, 4/15/2027(a)

    1,750,000       1,683,453  

6.00%, 2/15/2028(a)

    500,000       442,439  

7.50%, 2/1/2029(a)

    450,000       416,818  

BWX Technologies, Inc.

   

4.13%, 6/30/2028(a)

    790,000       695,188  

4.13%, 4/15/2029(a)

    859,000       734,445  

F-Brasile SpA

   

Series NR,
7.38%, 8/15/2026(a)

    1,650,000       1,532,860  

Spirit AeroSystems, Inc.

   

4.60%, 6/15/2028

    500,000       395,578  

TransDigm, Inc.

   

6.25%, 3/15/2026(a)

    4,305,000       4,203,659  

5.50%, 11/15/2027

    5,580,000       5,194,726  

6.75%, 8/15/2028(a)

    4,425,000       4,296,601  

4.63%, 1/15/2029

    3,665,000       3,160,110  

4.88%, 5/1/2029

    2,401,000       2,080,186  

6.88%, 12/15/2030(a)

    300,000       289,668  

Triumph Group, Inc.

   

7.75%, 8/15/2025

    2,300,000       2,185,000  

9.00%, 3/15/2028(a)

    2,270,000       2,204,711  
              32,089,290  
Air Freight & Logistics – 0.7%  

Forward Air Corp.

   

9.50%, 10/15/2031(a)

    4,000,000       3,900,000  

Rand Parent LLC

   

8.50%, 2/15/2030(a)

    4,480,000       4,091,119  
              7,991,119  
Automobile Components – 2.8%  

Adient Global Holdings Ltd.

   

8.25%, 4/15/2031(a)

    350,000       340,646  

Allison Transmission, Inc.

   

3.75%, 1/30/2031(a)

    803,000       636,472  

American Axle & Manufacturing, Inc.

   

6.50%, 4/1/2027

    1,230,000       1,159,415  

6.88%, 7/1/2028

    950,000       846,726  

5.00%, 10/1/2029

    180,000       142,185  
Investments   Principal
Amount
    Value  
Automobile Components – (continued)  

Clarios Global LP

   

8.50%, 5/15/2027(a)

  $ 500,000     $ 492,287  

Dana, Inc.

   

4.25%, 9/1/2030

    150,000       118,722  

Icahn Enterprises LP

   

6.38%, 12/15/2025

    2,160,000       2,032,017  

6.25%, 5/15/2026

    6,350,000       5,804,355  

5.25%, 5/15/2027

    7,390,000       6,327,688  

4.38%, 2/1/2029

    1,585,000       1,220,494  

IHO Verwaltungs GmbH

   

4.75%, 9/15/2026(a)(b)

    735,000       683,057  

6.00%, 5/15/2027(a)(b)

    565,000       525,738  

6.37%, 5/15/2029(a)(b)

    2,385,000       2,076,391  

JB Poindexter & Co., Inc.

   

7.13%, 4/15/2026(a)

    1,190,000       1,134,679  

Patrick Industries, Inc.

   

7.50%, 10/15/2027(a)

    1,535,000       1,462,088  

4.75%, 5/1/2029(a)

    1,170,000       949,437  

Tenneco, Inc.

   

8.00%, 11/17/2028(a)

    9,750,000       7,824,375  

ZF North America Capital, Inc.

   

6.88%, 4/14/2028(a)

    515,000       499,060  

7.13%, 4/14/2030(a)

    240,000       232,815  
              34,508,647  
Automobiles – 1.8%  

Aston Martin Capital Holdings Ltd.

   

10.50%, 11/30/2025(a)

    5,000,000       4,945,363  

Ford Motor Co.

   

6.38%, 2/1/2029

    305,000       290,322  

9.63%, 4/22/2030

    130,000       144,957  

3.25%, 2/12/2032

    2,335,000       1,762,339  

6.10%, 8/19/2032

    1,495,000       1,382,799  

4.75%, 1/15/2043

    3,101,000       2,154,053  

7.40%, 11/1/2046

    985,000       924,272  

5.29%, 12/8/2046

    2,500,000       1,816,260  

Jaguar Land Rover Automotive plc

   

7.75%, 10/15/2025(a)

    390,000       390,262  

4.50%, 10/1/2027(a)

    2,535,000       2,186,160  

5.88%, 1/15/2028(a)

    2,926,000       2,633,520  

5.50%, 7/15/2029(a)

    2,307,000       1,988,591  

 

See Accompanying Notes to the Financial Statements.

 

422    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Automobiles – (continued)  

Mclaren Finance plc

   

7.50%, 8/1/2026(a)

  $ 1,190,000     $ 1,017,450  

Thor Industries, Inc.

   

4.00%, 10/15/2029(a)

    1,050,000       846,352  
              22,482,700  
Banks – 0.5%  

Intesa Sanpaolo SpA

   

5.71%, 1/15/2026(a)

    1,200,000       1,138,427  

4.20%, 6/1/2032(a)(c)

    590,000       419,368  

4.95%, 6/1/2042(a)(c)

    170,000       99,705  

Texas Capital Bancshares, Inc.

   

4.00%, 5/6/2031(c)

    2,080,000       1,716,224  

UniCredit SpA

   

7.30%, 4/2/2034(a)(c)

    2,560,000       2,375,561  

5.46%, 6/30/2035(a)(c)

    285,000       233,806  
              5,983,091  
Beverages – 0.0%(d)  

Primo Water Holdings, Inc.

   

4.38%, 4/30/2029(a)

    475,000       400,762  
Broadline Retail – 0.9%  

ANGI Group LLC

   

3.88%, 8/15/2028(a)

    2,815,000       2,111,231  

Go Daddy Operating Co. LLC

   

3.50%, 3/1/2029(a)

    500,000       419,725  

Kohl's Corp.

   

5.55%, 7/17/2045

    1,250,000       725,000  

Macy's Retail Holdings LLC

   

5.88%, 3/15/2030(a)

    100,000       84,599  

6.13%, 3/15/2032(a)

    140,000       115,620  

6.70%, 7/15/2034(a)

    1,000,000       763,750  

4.50%, 12/15/2034

    1,446,000       968,820  

5.13%, 1/15/2042

    1,000,000       615,900  

Millennium Escrow Corp.

   

6.63%, 8/1/2026(a)

    4,235,000       3,143,984  

QVC, Inc.

   

4.45%, 2/15/2025

    1,875,000       1,615,002  
              10,563,631  
Investments   Principal
Amount
    Value  
Building Products – 1.2%  

ACProducts Holdings, Inc.

   

6.38%, 5/15/2029(a)

  $ 1,800,000     $ 1,098,000  

Camelot Return Merger Sub, Inc.

   

8.75%, 8/1/2028(a)

    1,425,000       1,330,565  

Cornerstone Building Brands, Inc.

   

6.13%, 1/15/2029(a)

    635,000       464,249  

CP Atlas Buyer, Inc.

   

7.00%, 12/1/2028(a)

    1,130,000       861,263  

Eco Material Technologies, Inc.

   

7.88%, 1/31/2027(a)

    1,160,000       1,098,501  

Emerald Debt Merger Sub LLC

   

6.63%, 12/15/2030(a)

    1,870,000       1,778,838  

Griffon Corp.

   

5.75%, 3/1/2028

    2,040,000       1,842,257  

JELD-WEN, Inc.

   

4.88%, 12/15/2027(a)

    716,000       606,913  

Masonite International Corp.

   

3.50%, 2/15/2030(a)

    135,000       106,896  

MIWD Holdco II LLC

   

5.50%, 2/1/2030(a)

    1,345,000       1,067,594  

Smyrna Ready Mix Concrete LLC

   

6.00%, 11/1/2028(a)

    1,427,000       1,319,385  

Standard Industries, Inc.

   

5.00%, 2/15/2027(a)

    1,125,000       1,039,811  

4.75%, 1/15/2028(a)

    620,000       554,838  

4.38%, 7/15/2030(a)

    1,340,000       1,094,811  

3.38%, 1/15/2031(a)

    595,000       450,246  
              14,714,167  
Capital Markets – 0.2%  

Brightsphere Investment Group, Inc.

   

4.80%, 7/27/2026

    225,000       203,625  

Compass Group Diversified Holdings LLC

   

5.25%, 4/15/2029(a)

    730,000       623,378  

Jane Street Group

   

4.50%, 11/15/2029(a)

    500,000       426,070  

Nomura Holdings, Inc.

   

2.65%, 1/16/2025

    1,250,000       1,193,813  
              2,446,886  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     423  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Chemicals – 5.2%  

Ashland, Inc.

   

3.38%, 9/1/2031(a)

  $ 2,290,000     $ 1,755,458  

6.88%, 5/15/2043

    1,105,000       1,037,174  

ASP Unifrax Holdings, Inc.

   

5.25%, 9/30/2028(a)

    4,306,000       2,908,474  

7.50%, 9/30/2029(a)

    2,414,000       1,291,490  

Cerdia Finanz GmbH

   

10.50%, 2/15/2027(a)

    1,015,000       997,816  

Chemours Co. (The)

   

5.38%, 5/15/2027

    1,095,000       989,240  

5.75%, 11/15/2028(a)

    1,540,000       1,302,455  

4.63%, 11/15/2029(a)

    2,095,000       1,618,133  

Cornerstone Chemical Co.

   

10.25%, 9/1/2027(a)

    2,300,000       1,948,343  

CVR Partners LP

   

6.13%, 6/15/2028(a)

    2,800,000       2,471,000  

Element Solutions, Inc.

   

3.88%, 9/1/2028(a)

    605,000       514,766  

FXI Holdings, Inc.

   

12.25%, 11/15/2026(a)

    4,216,000       3,493,255  

Gates Global LLC

   

6.25%, 1/15/2026(a)

    500,000       489,700  

GPD Cos., Inc.

   

10.13%, 4/1/2026(a)

    2,700,000       2,431,709  

HB Fuller Co.

   

4.25%, 10/15/2028

    795,000       688,724  

Herens Holdco Sarl

   

4.75%, 5/15/2028(a)

    1,910,000       1,479,434  

INEOS Finance plc

   

6.75%, 5/15/2028(a)

    2,210,000       2,063,555  

INEOS Quattro Finance 2 plc

   

3.38%, 1/15/2026(a)

    260,000       248,300  

Ingevity Corp.

   

3.88%, 11/1/2028(a)

    1,765,000       1,432,888  

LSB Industries, Inc.

   

6.25%, 10/15/2028(a)

    1,240,000       1,100,019  

Minerals Technologies, Inc.

   

5.00%, 7/1/2028(a)

    755,000       660,081  

NOVA Chemicals Corp.

   

5.00%, 5/1/2025(a)

    2,777,000       2,622,771  

5.25%, 6/1/2027(a)

    5,665,000       4,785,026  

4.25%, 5/15/2029(a)

    2,995,000       2,215,059  
Investments   Principal
Amount
    Value  
Chemicals – (continued)  

Olympus Water US Holding Corp.

   

7.13%, 10/1/2027(a)

  $ 870,000     $ 801,025  

4.25%, 10/1/2028(a)

    1,550,000       1,236,807  

9.75%, 11/15/2028(a)

    1,725,000       1,684,809  

Polar US Borrower LLC

   

6.75%, 5/15/2026(a)

    1,680,000       739,200  

Rain Carbon, Inc.

   

12.25%, 9/1/2029(a)

    2,400,000       2,442,000  

SCIH Salt Holdings, Inc.

   

4.88%, 5/1/2028(a)

    1,683,000       1,453,064  

SCIL IV LLC

   

5.38%, 11/1/2026(a)

    1,380,000       1,224,096  

SK Invictus Intermediate II Sarl

   

5.00%, 10/30/2029(a)

    3,587,000       2,708,483  

TPC Group, Inc.

   

13.00%, 12/16/2027(a)

    2,000,000       1,995,760  

Tronox, Inc.

   

4.63%, 3/15/2029(a)

    5,850,000       4,608,236  

Vibrantz Technologies, Inc.

   

9.00%, 2/15/2030(a)

    1,665,000       1,325,163  

WR Grace Holdings LLC

   

5.63%, 8/15/2029(a)

    3,195,000       2,476,125  
              63,239,638  
Commercial Services & Supplies – 4.1%  

ADT Security Corp. (The)

   

4.13%, 8/1/2029(a)

    755,000       647,526  

4.88%, 7/15/2032(a)

    331,000       276,885  

Allied Universal Holdco LLC

   

6.63%, 7/15/2026(a)

    2,915,000       2,729,897  

9.75%, 7/15/2027(a)

    3,075,000       2,671,025  

4.63%, 6/1/2028(a)

    4,145,000       3,384,767  

6.00%, 6/1/2029(a)

    1,800,000       1,300,500  

Aptim Corp.

   

7.75%, 6/15/2025(a)

    500,000       456,410  

APX Group, Inc.

   

6.75%, 2/15/2027(a)

    1,000,000       965,410  

5.75%, 7/15/2029(a)

    4,365,000       3,628,903  

Cimpress plc

   

7.00%, 6/15/2026

    1,330,000       1,230,809  

CoreCivic, Inc.

   

4.75%, 10/15/2027

    490,000       425,687  

 

See Accompanying Notes to the Financial Statements.

 

424    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Commercial Services & Supplies – (continued)  

Covanta Holding Corp.

   

4.88%, 12/1/2029(a)

  $ 720,000     $ 561,600  

5.00%, 9/1/2030

    460,000       355,815  

Deluxe Corp.

   

8.00%, 6/1/2029(a)

    2,825,000       2,235,281  

Garda World Security Corp.

   

4.63%, 2/15/2027(a)

    910,000       811,625  

9.50%, 11/1/2027(a)

    1,120,000       1,017,741  

7.75%, 2/15/2028(a)

    460,000       442,373  

GFL Environmental, Inc.

   

4.00%, 8/1/2028(a)

    1,370,000       1,179,007  

4.75%, 6/15/2029(a)

    325,000       284,506  

4.38%, 8/15/2029(a)

    50,000       42,640  

Interface, Inc.

   

5.50%, 12/1/2028(a)

    1,405,000       1,181,198  

Neptune Bidco US, Inc.

   

9.29%, 4/15/2029(a)

    13,535,000       11,945,296  

Pitney Bowes, Inc.

   

6.88%, 3/15/2027(a)

    1,925,000       1,593,457  

Prime Security Services Borrower LLC

   

5.75%, 4/15/2026(a)

    2,745,000       2,662,946  

3.38%, 8/31/2027(a)

    2,060,000       1,811,175  

6.25%, 1/15/2028(a)

    4,340,000       4,024,494  

Stericycle, Inc.

   

3.88%, 1/15/2029(a)

    185,000       157,186  

WASH Multifamily Acquisition, Inc.

   

5.75%, 4/15/2026(a)

    1,415,000       1,308,875  

West Technology Group LLC

   

8.50%, 4/10/2027(a)

    750,000       645,000  

Williams Scotsman, Inc.

   

4.63%, 8/15/2028(a)

    100,000       88,837  
              50,066,871  
Communications Equipment – 0.1%  

CommScope Technologies LLC

   

6.00%, 6/15/2025(a)

    170,000       102,000  

CommScope, Inc.

   

6.00%, 3/1/2026(a)

    380,000       319,192  

8.25%, 3/1/2027(a)

    850,000       352,750  
Investments   Principal
Amount
    Value  
Communications Equipment – (continued)  

Viavi Solutions, Inc.

   

3.75%, 10/1/2029(a)

  $ 75,000     $ 58,379  
              832,321  
Construction & Engineering – 1.0%  

AECOM

   

5.13%, 3/15/2027

    1,940,000       1,831,556  

Arcosa, Inc.

   

4.38%, 4/15/2029(a)

    710,000       619,475  

Artera Services LLC

   

9.03%, 12/4/2025(a)

    2,944,000       2,649,600  

Brand Industrial Services, Inc.

   

10.38%, 8/1/2030(a)

    980,000       972,650  

Brundage-Bone Concrete Pumping Holdings, Inc.

   

6.00%, 2/1/2026(a)

    1,995,000       1,886,392  

Global Infrastructure Solutions, Inc.

   

5.63%, 6/1/2029(a)

    1,053,000       842,400  

7.50%, 4/15/2032(a)

    1,741,000       1,423,868  

HTA Group Ltd.

   

7.00%, 12/18/2025(a)

    715,000       690,504  

Railworks Holdings LP

   

8.25%, 11/15/2028(a)

    525,000       499,291  

VM Consolidated, Inc.

   

5.50%, 4/15/2029(a)

    794,000       703,143  

Weekley Homes LLC

   

4.88%, 9/15/2028(a)

    570,000       489,487  
              12,608,366  
Construction Materials – 0.0%(d)  

Knife River Corp.

   

7.75%, 5/1/2031(a)

    120,000       119,553  
Consumer Finance – 2.4%  

Cobra Acquisition Co. LLC

   

6.38%, 11/1/2029(a)

    880,000       627,000  

Credit Acceptance Corp.

   

6.63%, 3/15/2026

    865,000       821,319  

Enova International, Inc.

   

8.50%, 9/15/2025(a)

    170,000       159,909  

FirstCash, Inc.

   

4.63%, 9/1/2028(a)

    230,000       201,734  

5.63%, 1/1/2030(a)

    2,690,000       2,394,569  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     425  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Consumer Finance – (continued)  

Ford Holdings LLC

   

9.30%, 3/1/2030

  $ 640,000     $ 685,747  

Ford Motor Credit Co. LLC

   

4.06%, 11/1/2024

    500,000       486,750  

4.69%, 6/9/2025

    1,000,000       965,976  

5.13%, 6/16/2025

    500,000       486,507  

4.13%, 8/4/2025

    250,000       238,284  

3.38%, 11/13/2025

    660,000       615,914  

6.95%, 3/6/2026

    2,470,000       2,474,264  

4.54%, 8/1/2026

    710,000       667,742  

2.70%, 8/10/2026

    3,235,000       2,899,646  

4.27%, 1/9/2027

    1,035,000       957,596  

4.95%, 5/28/2027

    1,705,000       1,599,284  

4.13%, 8/17/2027

    1,285,000       1,166,662  

3.82%, 11/2/2027

    740,000       659,713  

7.35%, 11/4/2027

    1,640,000       1,659,964  

2.90%, 2/16/2028

    935,000       795,371  

6.80%, 5/12/2028

    465,000       463,671  

5.11%, 5/3/2029

    1,537,000       1,398,911  

7.35%, 3/6/2030

    1,370,000       1,375,852  

4.00%, 11/13/2030

    195,000       160,619  

goeasy Ltd.

   

4.38%, 5/1/2026(a)

    525,000       474,337  

LFS Topco LLC

   

5.88%, 10/15/2026(a)

    900,000       758,873  

Macquarie Airfinance Holdings Ltd.

   

8.38%, 5/1/2028(a)

    905,000       902,059  

OneMain Finance Corp.

   

7.13%, 3/15/2026

    330,000       320,495  

3.88%, 9/15/2028

    300,000       237,195  

PRA Group, Inc.

   

7.38%, 9/1/2025(a)

    115,000       107,525  

SLM Corp.

   

3.13%, 11/2/2026

    200,000       173,868  

Synchrony Financial

   

7.25%, 2/2/2033

    700,000       593,607  

World Acceptance Corp.

   

7.00%, 11/1/2026(a)

    1,680,000       1,360,800  
              28,891,763  
Investments   Principal
Amount
    Value  
Consumer Staples Distribution & Retail – 1.0%  

Albertsons Cos., Inc.

   

3.25%, 3/15/2026(a)

  $ 500,000     $ 461,845  

4.63%, 1/15/2027(a)

    1,200,000       1,124,654  

5.88%, 2/15/2028(a)

    500,000       478,949  

6.50%, 2/15/2028(a)

    500,000       490,896  

3.50%, 3/15/2029(a)

    1,000,000       852,601  

4.88%, 2/15/2030(a)

    1,000,000       892,816  

C&S Group Enterprises LLC

   

5.00%, 12/15/2028(a)

    800,000       619,000  

Ingles Markets, Inc.

   

4.00%, 6/15/2031(a)

    1,875,000       1,490,625  

Performance Food Group, Inc.

   

5.50%, 10/15/2027(a)

    890,000       832,216  

4.25%, 8/1/2029(a)

    5,290,000       4,463,572  

US Foods, Inc.

   

4.75%, 2/15/2029(a)

    660,000       582,224  

4.63%, 6/1/2030(a)

    140,000       119,547  
              12,408,945  
Containers & Packaging – 1.8%  

Ardagh Metal Packaging Finance USA LLC

   

6.00%, 6/15/2027(a)

    500,000       472,509  

3.25%, 9/1/2028(a)

    220,000       179,173  

4.00%, 9/1/2029(a)

    815,000       611,307  

Cascades, Inc.

   

5.13%, 1/15/2026(a)

    190,000       180,334  

Clydesdale Acquisition Holdings, Inc.

   

6.63%, 4/15/2029(a)

    1,450,000       1,317,176  

8.75%, 4/15/2030(a)

    5,659,000       4,510,674  

Graham Packaging Co., Inc.

   

7.13%, 8/15/2028(a)

    2,500,000       1,915,337  

Intelligent Packaging Ltd. Finco, Inc.

   

6.00%, 9/15/2028(a)

    2,055,000       1,684,155  

Iris Holding, Inc.

   

10.00%, 12/15/2028(a)

    1,300,000       943,429  

LABL, Inc.

   

10.50%, 7/15/2027(a)

    1,555,000       1,346,158  

Mauser Packaging Solutions Holding Co.

   

7.88%, 8/15/2026(a)

    4,220,000       3,952,532  

9.25%, 4/15/2027(a)

    2,872,000       2,391,828  

 

See Accompanying Notes to the Financial Statements.

 

426    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Containers & Packaging – (continued)  

Pactiv LLC

   

7.95%, 12/15/2025

  $ 195,000     $ 192,322  

Sealed Air Corp.

   

6.88%, 7/15/2033(a)

    150,000       140,625  

Trivium Packaging Finance BV

   

5.50%, 8/15/2026(a)(e)

    750,000       679,863  

8.50%, 8/15/2027(a)(e)

    1,510,000       1,259,962  
              21,777,384  
Distributors – 0.4%  

American Builders & Contractors Supply Co., Inc.

   

4.00%, 1/15/2028(a)

    400,000       359,063  

Resideo Funding, Inc.

   

4.00%, 9/1/2029(a)

    750,000       601,875  

Windsor Holdings III LLC

   

8.50%, 6/15/2030(a)

    4,000,000       3,893,866  
              4,854,804  
Diversified Consumer Services – 0.9%  

Adtalem Global Education, Inc.

   

5.50%, 3/1/2028(a)

    805,000       733,033  

Grand Canyon University

   

4.13%, 10/1/2024

    1,212,000       1,152,854  

4.38%, 10/1/2026

    500,000       478,750  

5.13%, 10/1/2028

    2,220,000       1,964,256  

Signal Parent, Inc.

   

6.13%, 4/1/2029(a)

    1,735,000       988,950  

Sotheby's

   

7.38%, 10/15/2027(a)

    4,000,000       3,572,341  

StoneMor, Inc.

   

8.50%, 5/15/2029(a)

    1,910,000       1,525,613  
              10,415,797  
Diversified REITs – 1.1%  

Global Net Lease, Inc.

   

REIT,
3.75%, 12/15/2027(a)

    2,810,000       2,127,433  

Iron Mountain Information Management Services, Inc.

   

REIT,
5.00%, 7/15/2032(a)

    350,000       286,390  
Investments   Principal
Amount
    Value  
Diversified REITs – (continued)  

Necessity Retail REIT, Inc. (The)

   

REIT,
4.50%, 9/30/2028(a)

  $ 2,620,000     $ 1,961,725  

Uniti Group LP

   

REIT,
10.50%, 2/15/2028(a)

    5,155,000       4,964,028  

REIT,
6.50%, 2/15/2029(a)

    5,750,000       3,734,094  
              13,073,670  
Diversified Telecommunication Services – 5.5%  

Altice France Holding SA

   

10.50%, 5/15/2027(a)

    8,280,000       4,505,151  

6.00%, 2/15/2028(a)

    5,928,000       2,599,758  

Altice France SA

   

8.13%, 2/1/2027(a)

    3,585,000       3,022,030  

5.50%, 1/15/2028(a)

    3,050,000       2,266,233  

5.13%, 1/15/2029(a)

    935,000       645,294  

5.13%, 7/15/2029(a)

    5,185,000       3,549,969  

5.50%, 10/15/2029(a)

    4,000,000       2,751,603  

CCO Holdings LLC

   

5.13%, 5/1/2027(a)

    2,201,000       2,026,453  

5.00%, 2/1/2028(a)

    1,210,000       1,086,504  

5.38%, 6/1/2029(a)

    180,000       157,550  

6.38%, 9/1/2029(a)

    515,000       471,327  

4.75%, 3/1/2030(a)

    1,905,000       1,571,478  

4.50%, 8/15/2030(a)

    1,385,000       1,110,542  

4.25%, 2/1/2031(a)

    1,570,000       1,221,771  

4.75%, 2/1/2032(a)

    680,000       530,781  

4.50%, 5/1/2032

    1,587,000       1,214,843  

4.50%, 6/1/2033(a)

    1,760,000       1,312,899  

4.25%, 1/15/2034(a)

    1,750,000       1,264,030  

Embarq Corp.

   

8.00%, 6/1/2036

    2,600,000       1,417,000  

Frontier California, Inc.

   

Series F,
6.75%, 5/15/2027

    215,000       197,262  

Frontier Communications Holdings LLC

   

6.75%, 5/1/2029(a)

    700,000       553,912  

8.75%, 5/15/2030(a)

    80,000       76,220  

Iliad Holding SASU

   

7.00%, 10/15/2028(a)

    1,325,000       1,199,062  

Intelsat Jackson Holdings SA

   

6.50%, 3/15/2030(a)

    3,075,000       2,699,945  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     427  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Diversified Telecommunication Services – (continued)  

Level 3 Financing, Inc.

   

4.63%, 9/15/2027(a)

  $ 2,035,000     $ 1,353,275  

4.25%, 7/1/2028(a)

    6,470,000       3,658,610  

3.63%, 1/15/2029(a)

    4,600,000       2,349,197  

3.75%, 7/15/2029(a)

    500,000       254,208  

Lumen Technologies, Inc.

   

5.63%, 4/1/2025

    740,000       583,962  

5.13%, 12/15/2026(a)

    1,810,000       888,899  

4.00%, 2/15/2027(a)

    4,110,000       2,774,250  

Telesat Canada

   

5.63%, 12/6/2026(a)

    1,585,000       1,011,690  

4.88%, 6/1/2027(a)

    1,110,000       657,675  

Virgin Media Finance plc

   

5.00%, 7/15/2030(a)

    4,735,000       3,722,579  

Virgin Media Secured Finance plc

   

4.50%, 8/15/2030(a)

    805,000       663,771  

Windstream Escrow LLC

   

7.75%, 8/15/2028(a)

    7,481,000       5,932,334  

Zayo Group Holdings, Inc.

   

4.00%, 3/1/2027(a)

    4,680,000       3,522,368  

6.13%, 3/1/2028(a)

    3,230,000       2,139,708  
              66,964,143  
Electric Utilities – 1.5%  

Edison International

   

8.13%, 6/15/2053(c)

    1,165,000       1,123,347  

Emera, Inc.

   

Series 16-A,
6.75%, 6/15/2076(c)

    6,450,000       6,065,819  

Leeward Renewable Energy Operations LLC

   

4.25%, 7/1/2029(a)

    195,000       159,251  

NextEra Energy Operating Partners LP

   

3.88%, 10/15/2026(a)

    2,510,000       2,282,140  

4.50%, 9/15/2027(a)

    2,720,000       2,435,474  

NRG Energy, Inc.

   

3.38%, 2/15/2029(a)

    129,000       104,993  

5.25%, 6/15/2029(a)

    1,380,000       1,217,519  

3.63%, 2/15/2031(a)

    935,000       705,585  

3.88%, 2/15/2032(a)

    1,000,000       743,165  
Investments   Principal
Amount
    Value  
Electric Utilities – (continued)  

Pattern Energy Operations LP

   

4.50%, 8/15/2028(a)

  $ 500,000     $ 435,839  

PG&E Corp.

   

5.00%, 7/1/2028

    1,000,000       905,945  

5.25%, 7/1/2030

    925,000       810,209  

Vistra Operations Co. LLC

   

5.63%, 2/15/2027(a)

    1,810,000       1,703,234  
              18,692,520  
Electronic Equipment, Instruments & Components – 0.1%  

Crane NXT Co.

   

4.20%, 3/15/2048

    920,000       556,960  

Likewize Corp.

   

9.75%, 10/15/2025(a)

    1,096,000       1,088,589  
              1,645,549  
Energy Equipment & Services – 2.4%  

Archrock Partners LP

   

6.88%, 4/1/2027(a)

    810,000       778,699  

6.25%, 4/1/2028(a)

    1,655,000       1,537,081  

CGG SA

   

8.75%, 4/1/2027(a)

    2,780,000       2,453,656  

Nabors Industries Ltd.

   

7.25%, 1/15/2026(a)

    215,000       201,986  

Nine Energy Service, Inc.

   

13.00%, 2/1/2028

    1,000,000       885,000  

Noble Finance II LLC

   

8.00%, 4/15/2030(a)

    3,160,000       3,158,069  

Oceaneering International, Inc.

   

6.00%, 2/1/2028

    430,000       394,525  

Precision Drilling Corp.

   

6.88%, 1/15/2029(a)

    900,000       833,313  

Seadrill Finance Ltd.

   

8.38%, 8/1/2030(a)

    3,000,000       3,000,960  

USA Compression Partners LP

   

6.88%, 4/1/2026

    3,780,000       3,670,773  

6.88%, 9/1/2027

    3,813,000       3,653,264  

Valaris Ltd.

   

8.38%, 4/30/2030(a)

    5,885,000       5,774,656  

Weatherford International Ltd.

   

8.63%, 4/30/2030(a)

    3,265,000       3,299,214  
              29,641,196  

 

See Accompanying Notes to the Financial Statements.

 

428    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Entertainment – 0.4%  

Allen Media LLC

   

10.50%, 2/15/2028(a)

  $ 2,145,000     $ 1,117,127  

Cinemark USA, Inc.

   

5.88%, 3/15/2026(a)

    725,000       688,408  

5.25%, 7/15/2028(a)

    1,740,000       1,502,799  

Live Nation Entertainment, Inc.

   

4.75%, 10/15/2027(a)

    1,825,000       1,667,703  
              4,976,037  
Financial Services – 2.2%  

Freedom Mortgage Corp.

   

7.63%, 5/1/2026(a)

    250,000       230,072  

6.63%, 1/15/2027(a)

    2,750,000       2,380,100  

12.00%, 10/1/2028(a)

    500,000       501,599  

12.25%, 10/1/2030(a)

    500,000       500,164  

GTCR W-2 Merger Sub LLC

   

7.50%, 1/15/2031(a)

    1,000,000       987,350  

Jefferies Finance LLC

   

5.00%, 8/15/2028(a)

    3,650,000       2,913,014  

Jefferson Capital Holdings LLC

   

6.00%, 8/15/2026(a)

    1,581,000       1,380,643  

MGIC Investment Corp.

   

5.25%, 8/15/2028

    1,355,000       1,245,483  

Midcap Financial Issuer Trust

   

6.50%, 5/1/2028(a)

    5,420,000       4,592,960  

5.63%, 1/15/2030(a)

    2,030,000       1,562,026  

Mobius Merger Sub, Inc.

   

9.00%, 6/1/2030(a)

    250,000       224,084  

Nationstar Mortgage Holdings, Inc.

   

5.00%, 2/1/2026(a)

    730,000       678,533  

6.00%, 1/15/2027(a)

    1,200,000       1,115,424  

5.50%, 8/15/2028(a)

    1,901,000       1,679,914  

5.13%, 12/15/2030(a)

    275,000       222,526  

5.75%, 11/15/2031(a)

    220,000       183,227  

NMI Holdings, Inc.

   

7.38%, 6/1/2025(a)

    335,000       335,347  

Oxford Finance LLC

   

6.38%, 2/1/2027(a)

    585,000       533,081  

PennyMac Financial Services, Inc.

   

4.25%, 2/15/2029(a)

    75,000       61,263  

5.75%, 9/15/2031(a)

    5,000       4,077  
Investments   Principal
Amount
    Value  
Financial Services – (continued)  

PHH Mortgage Corp.

   

7.88%, 3/15/2026(a)

  $ 1,915,000     $ 1,651,687  

Rocket Mortgage LLC

   

2.88%, 10/15/2026(a)

    800,000       696,456  

3.63%, 3/1/2029(a)

    694,000       564,009  

United Wholesale Mortgage LLC

   

5.50%, 11/15/2025(a)

    445,000       422,965  

5.75%, 6/15/2027(a)

    815,000       741,593  

5.50%, 4/15/2029(a)

    1,390,000       1,164,125  
              26,571,722  
Food Products – 1.1%  

B&G Foods, Inc.

   

5.25%, 9/15/2027

    1,100,000       905,311  

Lamb Weston Holdings, Inc.

   

4.88%, 5/15/2028(a)

    250,000       230,846  

4.13%, 1/31/2030(a)

    4,900,000       4,156,781  

4.38%, 1/31/2032(a)

    3,803,000       3,146,479  

Post Holdings, Inc.

   

5.63%, 1/15/2028(a)

    1,680,000       1,561,342  

5.50%, 12/15/2029(a)

    1,000,000       891,814  

4.63%, 4/15/2030(a)

    1,379,000       1,154,759  

4.50%, 9/15/2031(a)

    1,040,000       841,500  

Sigma Holdco BV

   

7.88%, 5/15/2026(a)

    515,000       430,916  

Simmons Foods, Inc.

   

4.63%, 3/1/2029(a)

    625,000       507,700  

TreeHouse Foods, Inc.

   

4.00%, 9/1/2028

    50,000       40,675  
              13,868,123  
Gas Utilities – 0.9%  

AmeriGas Partners LP

   

5.50%, 5/20/2025

    1,365,000       1,308,376  

5.88%, 8/20/2026

    1,405,000       1,317,117  

5.75%, 5/20/2027

    500,000       459,518  

9.38%, 6/1/2028(a)

    2,500,000       2,470,616  

Ferrellgas LP

   

5.38%, 4/1/2026(a)

    1,445,000       1,352,492  

Suburban Propane Partners LP

   

5.88%, 3/1/2027

    585,000       554,287  

5.00%, 6/1/2031(a)

    3,420,000       2,832,799  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     429  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Gas Utilities – (continued)  

Superior Plus LP

   

4.50%, 3/15/2029(a)

  $ 500,000     $ 426,465  
              10,721,670  
Ground Transportation – 1.5%  

Albion Financing 1 Sarl

   

6.13%, 10/15/2026(a)

    2,370,000       2,192,250  

Albion Financing 2 Sarl

   

8.75%, 4/15/2027(a)

    2,785,000       2,544,069  

Carriage Purchaser, Inc.

   

7.88%, 10/15/2029(a)

    905,000       665,785  

EquipmentShare.com, Inc.

   

9.00%, 5/15/2028(a)

    5,430,000       5,104,200  

First Student Bidco, Inc.

   

4.00%, 7/31/2029(a)

    505,000       406,525  

Hertz Corp. (The)

   

4.63%, 12/1/2026(a)

    615,000       515,139  

5.00%, 12/1/2029(a)

    5,060,000       3,632,595  

NESCO Holdings II, Inc.

   

5.50%, 4/15/2029(a)

    1,800,000       1,543,500  

PECF USS Intermediate Holding III Corp.

   

8.00%, 11/15/2029(a)

    3,115,000       1,477,694  

Uber Technologies, Inc.

   

4.50%, 8/15/2029(a)

    250,000       220,484  
              18,302,241  
Health Care Equipment & Supplies – 0.4%  

Avantor Funding, Inc.

   

4.63%, 7/15/2028(a)

    300,000       267,033  

Embecta Corp.

   

5.00%, 2/15/2030(a)

    190,000       150,873  

Garden Spinco Corp.

   

8.63%, 7/20/2030(a)

    180,000       185,719  

Hologic, Inc.

   

4.63%, 2/1/2028(a)

    800,000       727,521  

3.25%, 2/15/2029(a)

    500,000       419,760  

Medline Borrower LP

   

5.25%, 10/1/2029(a)

    2,315,000       1,970,578  

Teleflex, Inc.

   

4.63%, 11/15/2027

    1,050,000       960,750  

4.25%, 6/1/2028(a)

    500,000       441,251  
Investments   Principal
Amount
    Value  
Health Care Equipment & Supplies – (continued)  

Varex Imaging Corp.

   

7.88%, 10/15/2027(a)

  $ 9,000     $ 8,821  
              5,132,306  
Health Care Providers & Services – 3.0%  

180 Medical, Inc.

   

3.88%, 10/15/2029(a)

    200,000       166,155  

Acadia Healthcare Co., Inc.

   

5.50%, 7/1/2028(a)

    1,130,000       1,043,207  

5.00%, 4/15/2029(a)

    150,000       133,742  

AdaptHealth LLC

   

6.13%, 8/1/2028(a)

    815,000       669,143  

AHP Health Partners, Inc.

   

5.75%, 7/15/2029(a)

    1,547,000       1,268,540  

Community Health Systems, Inc.

   

8.00%, 3/15/2026(a)

    1,050,000       959,758  

DaVita, Inc.

   

4.63%, 6/1/2030(a)

    1,223,000       958,478  

Encompass Health Corp.

   

4.75%, 2/1/2030

    485,000       419,124  

4.63%, 4/1/2031

    250,000       208,109  

Global Medical Response, Inc.

   

6.50%, 10/1/2025(a)

    3,180,000       2,019,300  

HealthEquity, Inc.

   

4.50%, 10/1/2029(a)

    320,000       274,112  

Heartland Dental LLC

   

8.50%, 5/1/2026(a)

    600,000       546,107  

10.50%, 4/30/2028(a)

    1,225,000       1,177,384  

Kedrion SpA

   

6.50%, 9/1/2029(a)

    515,000       428,738  

Legacy LifePoint Health LLC

   

4.38%, 2/15/2027(a)

    1,745,000       1,442,958  

LifePoint Health, Inc.

   

5.38%, 1/15/2029(a)

    1,595,000       966,328  

9.88%, 8/15/2030(a)

    2,830,000       2,557,613  

Molina Healthcare, Inc.

   

4.38%, 6/15/2028(a)

    1,505,000       1,339,475  

3.88%, 11/15/2030(a)

    3,400,000       2,773,107  

3.88%, 5/15/2032(a)

    3,900,000       3,064,462  

Option Care Health, Inc.

   

4.38%, 10/31/2029(a)

    240,000       200,581  

Prime Healthcare Services, Inc.

   

7.25%, 11/1/2025(a)

    1,500,000       1,365,000  

 

See Accompanying Notes to the Financial Statements.

 

430    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Health Care Providers & Services – (continued)  

Radiology Partners, Inc.

   

9.25%, 2/1/2028(a)

  $ 2,885,000     $ 1,085,002  

RegionalCare Hospital Partners Holdings, Inc.

   

9.75%, 12/1/2026(a)

    2,430,000       2,272,015  

RP Escrow Issuer LLC

   

5.25%, 12/15/2025(a)

    2,455,000       1,749,187  

Team Health Holdings, Inc.

   

6.38%, 2/1/2025(a)

    825,000       653,812  

Tenet Healthcare Corp.

   

6.25%, 2/1/2027

    500,000       479,473  

5.13%, 11/1/2027

    400,000       369,247  

6.13%, 10/1/2028

    1,050,000       973,875  

6.88%, 11/15/2031

    215,000       198,213  

Toledo Hospital (The)

   

Series B,
5.33%, 11/15/2028

    1,795,000       1,373,175  

US Acute Care Solutions LLC

   

6.38%, 3/1/2026(a)

    3,963,000       3,371,579  
              36,506,999  
Health Care REITs – 0.2%  

CTR Partnership LP

   

REIT, 3.88%, 6/30/2028(a)

    1,300,000       1,092,176  

MPT Operating Partnership LP

   

REIT, 4.63%, 8/1/2029

    2,670,000       1,848,525  
              2,940,701  
Hotel & Resort REITs – 0.4%  

Park Intermediate Holdings LLC

   

REIT, 4.88%, 5/15/2029(a)

    1,525,000       1,272,757  

RHP Hotel Properties LP

   

REIT, 4.50%, 2/15/2029(a)

    240,000       204,286  

Service Properties Trust

   

REIT, 5.25%, 2/15/2026

    630,000       563,441  

REIT, 4.75%, 10/1/2026

    1,020,000       867,289  

REIT, 4.95%, 2/15/2027

    985,000       820,166  

REIT, 3.95%, 1/15/2028

    705,000       527,119  

XHR LP

   

REIT, 4.88%, 6/1/2029(a)

    240,000       203,056  
              4,458,114  
Investments   Principal
Amount
    Value  
Hotels, Restaurants & Leisure – 6.5%  

1011778 BC ULC

   

3.88%, 1/15/2028(a)

  $ 200,000     $ 178,559  

Affinity Interactive

   

6.88%, 12/15/2027(a)

    3,055,000       2,490,088  

Boyd Gaming Corp.

   

4.75%, 6/15/2031(a)

    3,280,000       2,722,068  

Caesars Entertainment, Inc.

   

8.13%, 7/1/2027(a)

    489,000       484,537  

Carnival Corp.

   

7.63%, 3/1/2026(a)

    1,140,000       1,108,528  

5.75%, 3/1/2027(a)

    3,000,000       2,678,586  

Carnival Holdings Bermuda Ltd.

   

10.38%, 5/1/2028(a)

    1,161,000       1,237,875  

CDI Escrow Issuer, Inc.

   

5.75%, 4/1/2030(a)

    760,000       678,988  

CEC Entertainment LLC

   

6.75%, 5/1/2026(a)

    844,000       788,238  

Cedar Fair LP

   

5.38%, 4/15/2027

    1,610,000       1,490,784  

6.50%, 10/1/2028

    995,000       920,952  

5.25%, 7/15/2029

    806,000       694,157  

Churchill Downs, Inc.

   

5.50%, 4/1/2027(a)

    1,350,000       1,266,230  

4.75%, 1/15/2028(a)

    1,255,000       1,123,884  

6.75%, 5/1/2031(a)

    250,000       230,625  

Everi Holdings, Inc.

   

5.00%, 7/15/2029(a)

    810,000       680,627  

Fertitta Entertainment LLC

   

4.63%, 1/15/2029(a)

    960,000       806,717  

Genting New York LLC

   

3.30%, 2/15/2026(a)

    2,700,000       2,409,454  

GPS Hospitality Holding Co. LLC

   

7.00%, 8/15/2028(a)

    1,100,000       747,620  

Hilton Domestic Operating Co., Inc.

   

5.38%, 5/1/2025(a)

    500,000       491,526  

3.75%, 5/1/2029(a)

    750,000       645,597  

4.88%, 1/15/2030

    750,000       673,294  

4.00%, 5/1/2031(a)

    1,000,000       828,166  

3.63%, 2/15/2032(a)

    3,140,000       2,482,086  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     431  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Hotels, Restaurants & Leisure – (continued)  

Hilton Grand Vacations Borrower Escrow LLC

   

5.00%, 6/1/2029(a)

  $ 1,725,000     $ 1,444,684  

4.88%, 7/1/2031(a)

    2,755,000       2,181,638  

Jacobs Entertainment, Inc.

   

6.75%, 2/15/2029(a)

    1,500,000       1,275,000  

KFC Holding Co.

   

4.75%, 6/1/2027(a)

    500,000       472,525  

Las Vegas Sands Corp.

   

3.90%, 8/8/2029

    365,000       315,139  

Life Time, Inc.

   

8.00%, 4/15/2026(a)

    1,065,000       1,038,375  

Light & Wonder International, Inc.

   

7.00%, 5/15/2028(a)

    450,000       438,655  

Marriott Ownership Resorts, Inc.

   

4.75%, 1/15/2028

    1,236,000       1,062,742  

4.50%, 6/15/2029(a)

    1,305,000       1,072,370  

Midwest Gaming Borrower LLC

   

4.88%, 5/1/2029(a)

    4,150,000       3,454,875  

Mohegan Tribal Gaming Authority

   

8.00%, 2/1/2026(a)

    6,120,000       5,622,750  

Papa John's International, Inc.

   

3.88%, 9/15/2029(a)

    1,300,000       1,066,594  

Penn Entertainment, Inc.

   

5.63%, 1/15/2027(a)

    1,030,000       939,635  

4.13%, 7/1/2029(a)

    100,000       77,696  

Raptor Acquisition Corp.

   

4.88%, 11/1/2026(a)

    385,000       358,242  

Resorts World Las Vegas LLC

   

4.63%, 4/16/2029(a)

    5,250,000       4,032,262  

8.45%, 7/27/2030(a)

    2,500,000       2,299,334  

4.63%, 4/6/2031(a)

    1,655,000       1,166,775  

Royal Caribbean Cruises Ltd.

   

4.25%, 7/1/2026(a)

    1,220,000       1,121,913  

5.50%, 8/31/2026(a)

    2,205,000       2,080,814  

5.38%, 7/15/2027(a)

    1,000,000       921,576  

11.63%, 8/15/2027(a)

    2,710,000       2,939,171  

5.50%, 4/1/2028(a)

    1,100,000       1,003,037  
Investments   Principal
Amount
    Value  
Hotels, Restaurants & Leisure – (continued)  

SeaWorld Parks & Entertainment, Inc.

   

5.25%, 8/15/2029(a)

  $ 1,335,000     $ 1,162,825  

Six Flags Entertainment Corp.

   

5.50%, 4/15/2027(a)

    1,610,000       1,465,696  

7.25%, 5/15/2031(a)

    800,000       736,000  

Sizzling Platter LLC

   

8.50%, 11/28/2025(a)

    330,000       328,061  

Station Casinos LLC

   

4.50%, 2/15/2028(a)

    500,000       431,813  

TKC Holdings, Inc.

   

6.88%, 5/15/2028(a)

    1,270,000       1,098,550  

10.50%, 5/15/2029(a)

    2,225,000       1,779,452  

Travel + Leisure Co.

   

6.63%, 7/31/2026(a)

    1,425,000       1,390,429  

6.00%, 4/1/2027(e)

    795,000       742,526  

4.50%, 12/1/2029(a)

    360,000       296,707  

4.63%, 3/1/2030(a)

    35,000       28,653  

Wynn Resorts Finance LLC

   

5.13%, 10/1/2029(a)

    380,000       324,066  

7.13%, 2/15/2031(a)

    500,000       465,611  

Yum! Brands, Inc.

   

4.75%, 1/15/2030(a)

    2,300,000       2,047,483  

3.63%, 3/15/2031

    930,000       755,181  

4.63%, 1/31/2032

    855,000       728,526  

5.38%, 4/1/2032

    590,000       530,356  

6.88%, 11/15/2037

    820,000       809,511  
              79,366,434  
Household Durables – 1.2%  

Ashton Woods USA LLC

   

6.63%, 1/15/2028(a)

    465,000       425,475  

4.63%, 4/1/2030(a)

    745,000       576,856  

Brookfield Residential Properties, Inc.

   

6.25%, 9/15/2027(a)

    2,040,000       1,774,839  

CD&R Smokey Buyer, Inc.

   

6.75%, 7/15/2025(a)

    1,250,000       1,194,750  

Empire Communities Corp.

   

7.00%, 12/15/2025(a)

    505,000       469,352  

Installed Building Products, Inc.

   

5.75%, 2/1/2028(a)

    285,000       257,124  

KB Home

   

4.00%, 6/15/2031

    90,000       70,273  

 

See Accompanying Notes to the Financial Statements.

 

432    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Household Durables – (continued)  

LGI Homes, Inc.

   

4.00%, 7/15/2029(a)

  $ 1,115,000     $ 853,212  

M/I Homes, Inc.

   

3.95%, 2/15/2030

    5,000       3,977  

Mattamy Group Corp.

   

5.25%, 12/15/2027(a)

    870,000       781,660  

4.63%, 3/1/2030(a)

    1,725,000       1,408,391  

Shea Homes LP

   

4.75%, 2/15/2028

    810,000       711,895  

4.75%, 4/1/2029

    495,000       417,863  

SWF Escrow Issuer Corp.

   

6.50%, 10/1/2029(a)

    1,965,000       1,164,015  

Taylor Morrison Communities, Inc.

   

5.75%, 1/15/2028(a)

    1,060,000       962,110  

5.13%, 8/1/2030(a)

    360,000       302,545  

Tempur Sealy International, Inc.

   

4.00%, 4/15/2029(a)

    540,000       443,013  

3.88%, 10/15/2031(a)

    3,670,000       2,748,384  

TopBuild Corp.

   

4.13%, 2/15/2032(a)

    175,000       138,442  

Tri Pointe Homes, Inc.

   

5.70%, 6/15/2028

    580,000       516,403  
              15,220,579  
Household Products – 0.2%  

Central Garden & Pet Co.

   

4.13%, 10/15/2030

    250,000       203,901  

4.13%, 4/30/2031(a)

    100,000       79,552  

Energizer Holdings, Inc.

   

6.50%, 12/31/2027(a)

    490,000       456,765  

4.75%, 6/15/2028(a)

    1,290,000       1,101,840  

4.38%, 3/31/2029(a)

    425,000       346,937  

Kronos Acquisition Holdings, Inc.

   

5.00%, 12/31/2026(a)

    220,000       199,001  
              2,387,996  
Investments   Principal
Amount
    Value  
Independent Power and Renewable Electricity
Producers – 0.1%
 

Clearway Energy Operating LLC

   

3.75%, 2/15/2031(a)

  $ 795,000     $ 619,900  

Talen Energy Supply LLC

   

8.63%, 6/1/2030(a)

    1,000,000       1,016,109  

TransAlta Corp.

   

6.50%, 3/15/2040

    230,000       202,700  
              1,838,709  
Insurance – 0.5%  

Assurant, Inc.

   

7.00%, 3/27/2048(c)

    665,000       636,928  

Constellation Insurance, Inc.

   

6.80%, 1/24/2030(a)(e)

    220,000       188,220  

6.63%, 5/1/2031(a)

    1,000,000       866,063  

Global Atlantic Fin Co.

   

4.70%, 10/15/2051(a)(c)

    3,715,000       2,584,776  

Liberty Mutual Group, Inc.

   

7.80%, 3/15/2037(a)

    75,000       72,103  

4.13%, 12/15/2051(a)(c)

    1,625,000       1,290,104  
              5,638,194  
Interactive Media & Services – 0.6%  

Cars.com, Inc.

   

6.38%, 11/1/2028(a)

    936,000       833,040  

Rackspace Technology Global, Inc.

   

3.50%, 2/15/2028(a)

    3,045,000       1,334,736  

5.38%, 12/1/2028(a)

    1,810,000       529,281  

Ziff Davis, Inc.

   

4.63%, 10/15/2030(a)

    2,450,000       2,051,185  

ZipRecruiter, Inc.

   

5.00%, 1/15/2030(a)

    2,820,000       2,202,505  
              6,950,747  
IT Services – 0.5%  

Acuris Finance US, Inc.

   

5.00%, 5/1/2028(a)

    1,129,000       889,088  

Cogent Communications Group, Inc.

   

3.50%, 5/1/2026(a)

    950,000       859,984  

7.00%, 6/15/2027(a)

    825,000       779,625  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     433  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
IT Services – (continued)  

Conduent Business Services LLC

   

6.00%, 11/1/2029(a)

  $ 1,500,000     $ 1,236,497  

Gartner, Inc.

   

4.50%, 7/1/2028(a)

    1,615,000       1,453,045  

3.63%, 6/15/2029(a)

    250,000       211,114  

3.75%, 10/1/2030(a)

    545,000       451,091  

ION Trading Technologies Sarl

   

5.75%, 5/15/2028(a)

    740,000       614,200  
              6,494,644  
Machinery – 1.1%  

Amsted Industries, Inc.

   

4.63%, 5/15/2030(a)

    200,000       161,347  

Calderys Financing LLC

   

11.25%, 6/1/2028(a)

    880,000       887,700  

GrafTech Finance, Inc.

   

4.63%, 12/15/2028(a)

    2,495,000       1,828,935  

GrafTech Global Enterprises, Inc.

   

9.88%, 12/15/2028(a)

    2,400,000       2,149,171  

Hillenbrand, Inc.

   

5.00%, 9/15/2026(e)

    660,000       632,980  

Husky III Holding Ltd.

   

13.00%, 2/15/2025(a)(b)

    800,000       770,000  

Interpipe Holdings plc

   

8.38%, 5/13/2026(a)

    1,500,000       1,095,000  

Manitowoc Co., Inc. (The)

   

9.00%, 4/1/2026(a)

    200,000       196,041  

OT Merger Corp.

   

7.88%, 10/15/2029(a)

    1,580,000       940,100  

Terex Corp.

   

5.00%, 5/15/2029(a)

    1,175,000       1,028,532  

Titan International, Inc.

   

7.00%, 4/30/2028

    926,000       846,150  

TK Elevator US Newco, Inc.

   

5.25%, 7/15/2027(a)

    2,235,000       2,034,850  

Wabash National Corp.

   

4.50%, 10/15/2028(a)

    1,365,000       1,129,538  
              13,700,344  
Investments   Principal
Amount
    Value  
Media – 8.8%  

Advantage Sales & Marketing, Inc.

   

6.50%, 11/15/2028(a)

  $ 1,575,000     $ 1,283,625  

Altice Financing SA

   

5.00%, 1/15/2028(a)

    1,695,000       1,378,487  

5.75%, 8/15/2029(a)

    4,000,000       3,093,231  

AMC Networks, Inc.

   

4.25%, 2/15/2029

    3,030,000       1,861,601  

Belo Corp.

   

7.75%, 6/1/2027

    625,000       611,854  

7.25%, 9/15/2027

    645,000       614,679  

Cable One, Inc.

   

4.00%, 11/15/2030(a)

    250,000       186,250  

CMG Media Corp.

   

8.88%, 12/15/2027(a)

    2,890,000       2,232,525  

CSC Holdings LLC

   

7.50%, 4/1/2028(a)

    5,500,000       3,525,104  

5.75%, 1/15/2030(a)

    2,000,000       1,046,339  

Directv Financing LLC

   

5.88%, 8/15/2027(a)

    3,675,000       3,220,164  

DISH DBS Corp.

   

5.88%, 11/15/2024

    4,425,000       4,060,007  

7.75%, 7/1/2026

    10,592,000       7,097,391  

5.25%, 12/1/2026(a)

    1,630,000       1,314,841  

7.38%, 7/1/2028

    5,454,000       3,080,080  

5.75%, 12/1/2028(a)

    1,005,000       729,881  

5.13%, 6/1/2029

    8,069,000       4,155,535  

DISH Network Corp.

   

11.75%, 11/15/2027(a)

    2,915,000       2,887,482  

Gannett Holdings LLC

   

6.00%, 11/1/2026(a)

    355,000       298,200  

GCI LLC

   

4.75%, 10/15/2028(a)

    1,985,000       1,703,329  

Gray Escrow II, Inc.

   

5.38%, 11/15/2031(a)

    7,050,000       4,443,272  

Gray Television, Inc.

   

7.00%, 5/15/2027(a)

    1,560,000       1,322,755  

4.75%, 10/15/2030(a)

    695,000       445,591  

Lamar Media Corp.

   

4.00%, 2/15/2030

    250,000       211,525  

3.63%, 1/15/2031

    500,000       404,155  

News Corp.

   

5.13%, 2/15/2032(a)

    300,000       259,065  

 

See Accompanying Notes to the Financial Statements.

 

434    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Media – (continued)  

Nexstar Media, Inc.

   

5.63%, 7/15/2027(a)

  $ 3,520,000     $ 3,167,861  

4.75%, 11/1/2028(a)

    530,000       445,141  

Paramount Global

   

6.25%, 2/28/2057(c)

    1,160,000       832,300  

6.38%, 3/30/2062(c)

    2,170,000       1,596,990  

Radiate Holdco LLC

   

4.50%, 9/15/2026(a)

    1,940,000       1,483,400  

6.50%, 9/15/2028(a)

    4,750,000       2,351,250  

Scripps Escrow II, Inc.

   

5.38%, 1/15/2031(a)

    100,000       62,092  

Scripps Escrow, Inc.

   

5.88%, 7/15/2027(a)

    1,337,000       999,408  

Sinclair Television Group, Inc.

   

5.13%, 2/15/2027(a)

    871,000       683,735  

5.50%, 3/1/2030(a)

    2,786,000       1,512,519  

4.13%, 12/1/2030(a)

    2,250,000       1,421,753  

Sirius XM Radio, Inc.

   

3.13%, 9/1/2026(a)

    1,695,000       1,520,025  

5.00%, 8/1/2027(a)

    3,120,000       2,860,728  

4.00%, 7/15/2028(a)

    1,695,000       1,441,483  

5.50%, 7/1/2029(a)

    2,385,000       2,113,286  

4.13%, 7/1/2030(a)

    7,895,000       6,268,748  

3.88%, 9/1/2031(a)

    7,795,000       5,871,095  

Summer BC Bidco B LLC

   

5.50%, 10/31/2026(a)

    2,260,000       1,968,121  

TEGNA, Inc.

   

4.75%, 3/15/2026(a)

    535,000       499,226  

4.63%, 3/15/2028

    1,967,000       1,696,537  

5.00%, 9/15/2029

    850,000       711,875  

Townsquare Media, Inc.

   

6.88%, 2/1/2026(a)

    870,000       804,279  

Univision Communications, Inc.

   

6.63%, 6/1/2027(a)

    250,000       228,349  

7.38%, 6/30/2030(a)

    645,000       567,928  

UPC Broadband Finco BV

   

4.88%, 7/15/2031(a)

    1,000,000       798,420  

UPC Holding BV

   

5.50%, 1/15/2028(a)

    934,000       814,915  

Urban One, Inc.

   

7.38%, 2/1/2028(a)

    511,000       420,155  

Videotron Ltd.

   

3.63%, 6/15/2029(a)

    300,000       252,840  
Investments   Principal
Amount
    Value  
Media – (continued)  

Virgin Media Vendor Financing Notes IV DAC

   

5.00%, 7/15/2028(a)

  $ 1,225,000     $ 1,040,105  

VZ Secured Financing BV

   

5.00%, 1/15/2032(a)

    8,010,000       6,077,387  

Ziggo Bond Co. BV

   

5.13%, 2/28/2030(a)

    1,848,000       1,346,442  

Ziggo BV

   

4.88%, 1/15/2030(a)

    5,120,000       4,087,800  
              107,413,161  
Metals & Mining – 2.1%  

Allegheny Ludlum LLC

   

6.95%, 12/15/2025

    195,000       194,020  

Arsenal AIC Parent LLC

   

8.00%, 10/1/2030(a)

    600,000       592,500  

ATI, Inc.

   

5.88%, 12/1/2027

    800,000       742,216  

5.13%, 10/1/2031

    280,000       231,000  

Baffinland Iron Mines Corp.

   

8.75%, 7/15/2026(a)

    1,960,000       1,884,003  

Cleveland-Cliffs, Inc.

   

6.75%, 4/15/2030(a)

    585,000       542,406  

Compass Minerals International, Inc.

   

6.75%, 12/1/2027(a)

    1,025,000       965,499  

FMG Resources August 2006 Pty. Ltd.

   

4.50%, 9/15/2027(a)

    250,000       225,102  

5.88%, 4/15/2030(a)

    3,625,000       3,253,068  

4.38%, 4/1/2031(a)

    2,990,000       2,409,700  

6.13%, 4/15/2032(a)

    4,115,000       3,632,019  

Hecla Mining Co.

   

7.25%, 2/15/2028

    1,025,000       978,620  

Hudbay Minerals, Inc.

   

4.50%, 4/1/2026(a)

    1,280,000       1,191,314  

Kaiser Aluminum Corp.

   

4.63%, 3/1/2028(a)

    840,000       699,945  

Mineral Resources Ltd.

   

8.13%, 5/1/2027(a)

    1,260,000       1,225,792  

8.00%, 11/1/2027(a)

    1,210,000       1,169,211  

9.25%, 10/1/2028(a)

    1,000,000       1,000,000  

8.50%, 5/1/2030(a)

    743,000       711,356  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     435  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Metals & Mining – (continued)  

Novelis Corp.

   

3.25%, 11/15/2026(a)

  $ 500,000     $ 445,071  

3.88%, 8/15/2031(a)

    600,000       468,600  

SunCoke Energy, Inc.

   

4.88%, 6/30/2029(a)

    1,720,000       1,439,640  

TMS International Corp.

   

6.25%, 4/15/2029(a)

    1,945,000       1,534,513  

Warrior Met Coal, Inc.

   

7.88%, 12/1/2028(a)

    56,000       54,617  
              25,590,212  
Mortgage Real Estate Investment Trusts (REITs) – 0.7%  

Apollo Commercial Real Estate Finance, Inc.

   

4.63%, 6/15/2029(a)

    160,000       122,473  

Blackstone Mortgage Trust, Inc.

   

3.75%, 1/15/2027(a)

    1,245,000       1,035,261  

Ladder Capital Finance Holdings LLLP

   

5.25%, 10/1/2025(a)

    654,000       621,675  

4.25%, 2/1/2027(a)

    1,580,000       1,380,265  

4.75%, 6/15/2029(a)

    3,125,000       2,512,506  

Rithm Capital Corp.

   

6.25%, 10/15/2025(a)

    1,175,000       1,112,118  

Starwood Property Trust, Inc.

   

3.63%, 7/15/2026(a)

    825,000       728,533  

4.38%, 1/15/2027(a)

    1,755,000       1,505,632  
              9,018,463  
Multi-Utilities – 0.3%  

Algonquin Power & Utilities Corp.

   

4.75%, 1/18/2082(c)

    4,000,000       3,157,760  
Office REITs – 0.4%  

Office Properties Income Trust

   

REIT, 4.50%, 2/1/2025

    3,650,000       3,120,750  

REIT, 2.65%, 6/15/2026

    1,600,000       1,051,960  

REIT, 3.45%, 10/15/2031

    2,250,000       1,102,500  
              5,275,210  
Investments   Principal
Amount
    Value  
Oil, Gas & Consumable Fuels – 11.6%  

Aethon United BR LP

   

8.25%, 2/15/2026(a)

  $ 930,000     $ 923,806  

Antero Midstream Partners LP

   

5.75%, 3/1/2027(a)

    1,464,000       1,399,251  

5.75%, 1/15/2028(a)

    1,145,000       1,073,428  

5.38%, 6/15/2029(a)

    1,515,000       1,375,693  

Ascent Resources Utica Holdings LLC

   

7.00%, 11/1/2026(a)

    855,000       825,664  

Athabasca Oil Corp.

   

9.75%, 11/1/2026(a)

    174,000       179,335  

Baytex Energy Corp.

   

8.75%, 4/1/2027(a)

    780,000       786,140  

8.50%, 4/30/2030(a)

    1,750,000       1,733,282  

Berry Petroleum Co. LLC

   

7.00%, 2/15/2026(a)

    330,000       316,800  

Buckeye Partners LP

   

4.13%, 3/1/2025(a)

    240,000       228,552  

3.95%, 12/1/2026

    805,000       733,693  

4.13%, 12/1/2027

    1,650,000       1,433,520  

4.50%, 3/1/2028(a)

    465,000       404,550  

5.85%, 11/15/2043

    100,000       70,668  

Chesapeake Energy Corp.

   

5.88%, 2/1/2029(a)

    960,000       903,851  

Chord Energy Corp.

   

6.38%, 6/1/2026(a)

    500,000       490,870  

Civitas Resources, Inc.

   

5.00%, 10/15/2026(a)

    665,000       622,218  

8.38%, 7/1/2028(a)

    1,025,000       1,031,315  

8.75%, 7/1/2031(a)

    2,890,000       2,916,780  

CNX Midstream Partners LP

   

4.75%, 4/15/2030(a)

    1,260,000       1,038,086  

CNX Resources Corp.

   

7.25%, 3/14/2027(a)

    600,000       590,474  

6.00%, 1/15/2029(a)

    995,000       912,372  

7.38%, 1/15/2031(a)

    1,070,000       1,022,359  

Conuma Resources Ltd.

   

13.13%, 5/1/2028(a)

    750,000       693,461  

CQP Holdco LP

   

5.50%, 6/15/2031(a)

    1,365,000       1,187,210  

Crescent Energy Finance LLC

   

7.25%, 5/1/2026(a)

    2,160,000       2,091,096  

9.25%, 2/15/2028(a)

    1,995,000       2,009,286  

 

See Accompanying Notes to the Financial Statements.

 

436    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

CVR Energy, Inc.

   

5.75%, 2/15/2028(a)

  $ 800,000     $ 718,768  

Delek Logistics Partners LP

   

7.13%, 6/1/2028(a)

    2,120,000       1,929,200  

DT Midstream, Inc.

   

4.13%, 6/15/2029(a)

    845,000       726,539  

4.38%, 6/15/2031(a)

    545,000       452,600  

Encino Acquisition Partners Holdings LLC

   

8.50%, 5/1/2028(a)

    2,270,000       2,213,250  

Energean plc

   

6.50%, 4/30/2027(a)

    2,200,000       1,830,180  

EnQuest plc

   

11.63%, 11/1/2027(a)

    1,550,000       1,457,303  

Genesis Energy LP

   

6.25%, 5/15/2026

    815,000       776,728  

8.00%, 1/15/2027

    2,540,000       2,439,040  

7.75%, 2/1/2028

    1,480,000       1,393,589  

8.88%, 4/15/2030

    515,000       497,854  

Global Partners LP

   

7.00%, 8/1/2027

    1,060,000       999,113  

6.88%, 1/15/2029

    2,070,000       1,826,883  

Gran Tierra Energy, Inc.

   

9.50%, 10/15/2029(a)

    1,682,000       1,444,687  

Gulfport Energy Corp.

   

8.00%, 5/17/2026(a)

    249,000       248,572  

Harbour Energy plc

   

5.50%, 10/15/2026(a)

    610,000       565,050  

Harvest Midstream I LP

   

7.50%, 9/1/2028(a)

    4,010,000       3,799,687  

Hilcorp Energy I LP

   

6.25%, 11/1/2028(a)

    825,000       771,328  

5.75%, 2/1/2029(a)

    3,040,000       2,736,851  

6.00%, 4/15/2030(a)

    1,600,000       1,420,448  

6.00%, 2/1/2031(a)

    1,285,000       1,125,626  

6.25%, 4/15/2032(a)

    250,000       218,325  

Holly Energy Partners LP

   

6.38%, 4/15/2027(a)

    1,060,000       1,026,173  

5.00%, 2/1/2028(a)

    1,190,000       1,101,565  

Howard Midstream Energy Partners LLC

   

6.75%, 1/15/2027(a)

    515,000       486,726  
Investments   Principal
Amount
    Value  
Oil, Gas & Consumable Fuels – (continued)  

Ithaca Energy North Sea plc

   

9.00%, 7/15/2026(a)

  $ 3,368,000     $ 3,233,381  

ITT Holdings LLC

   

6.50%, 8/1/2029(a)

    6,287,000       5,257,504  

Magnolia Oil & Gas Operating LLC

   

6.00%, 8/1/2026(a)

    230,000       220,800  

Martin Midstream Partners LP

   

11.50%, 2/15/2028(a)

    2,100,000       2,047,564  

Matador Resources Co.

   

5.88%, 9/15/2026

    1,250,000       1,204,492  

Moss Creek Resources Holdings, Inc.

   

7.50%, 1/15/2026(a)

    3,545,000       3,386,205  

10.50%, 5/15/2027(a)

    1,945,000       1,923,013  

Murphy Oil Corp.

   

7.05%, 5/1/2029

    420,000       411,823  

5.87%, 12/1/2042(e)

    285,000       218,966  

New Fortress Energy, Inc.

   

6.75%, 9/15/2025(a)

    3,935,000       3,650,634  

NGL Energy Partners LP

   

7.50%, 4/15/2026

    859,000       815,476  

Northern Oil and Gas, Inc.

   

8.13%, 3/1/2028(a)

    1,580,000       1,560,297  

8.75%, 6/15/2031(a)

    200,000       198,990  

Northriver Midstream Finance LP

   

5.63%, 2/15/2026(a)

    2,966,000       2,802,870  

NuStar Logistics LP

   

5.75%, 10/1/2025

    1,040,000       1,006,498  

6.00%, 6/1/2026

    795,000       767,064  

6.38%, 10/1/2030

    190,000       175,750  

Parkland Corp.

   

5.88%, 7/15/2027(a)

    1,055,000       1,010,114  

4.50%, 10/1/2029(a)

    1,510,000       1,298,751  

4.63%, 5/1/2030(a)

    500,000       426,250  

PBF Holding Co. LLC

   

6.00%, 2/15/2028

    1,415,000       1,300,813  

7.88%, 9/15/2030(a)

    300,000       289,502  

Rockies Express Pipeline LLC

   

3.60%, 5/15/2025(a)

    160,000       151,405  

4.95%, 7/15/2029(a)

    145,000       127,793  

4.80%, 5/15/2030(a)

    70,000       58,846  

7.50%, 7/15/2038(a)

    770,000       711,749  

6.88%, 4/15/2040(a)

    130,000       108,201  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     437  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Oil, Gas & Consumable Fuels – (continued)  

SM Energy Co.

   

6.75%, 9/15/2026

  $ 755,000     $ 741,568  

6.63%, 1/15/2027

    720,000       699,648  

Strathcona Resources Ltd.

   

6.88%, 8/1/2026(a)

    2,525,000       2,329,313  

Sunoco LP

   

5.88%, 3/15/2028

    985,000       931,802  

7.00%, 9/15/2028(a)

    500,000       486,610  

4.50%, 5/15/2029

    2,305,000       1,996,665  

4.50%, 4/30/2030

    2,375,000       2,028,545  

Tallgrass Energy Partners LP

   

7.50%, 10/1/2025(a)

    275,000       270,917  

6.00%, 3/1/2027(a)

    2,376,000       2,173,792  

5.50%, 1/15/2028(a)

    4,090,000       3,583,046  

6.00%, 12/31/2030(a)

    3,635,000       3,060,064  

6.00%, 9/1/2031(a)

    2,500,000       2,103,675  

Teine Energy Ltd.

   

6.88%, 4/15/2029(a)

    905,000       838,256  

TerraForm Power Operating LLC

   

5.00%, 1/31/2028(a)

    1,212,000       1,110,337  

Topaz Solar Farms LLC

   

4.88%, 9/30/2039(a)

    500,000       447,500  

5.75%, 9/30/2039(a)

    1,847,991       1,675,444  

Venture Global Calcasieu Pass LLC

   

3.88%, 8/15/2029(a)

    825,000       686,547  

6.25%, 1/15/2030(a)

    845,000       797,138  

3.88%, 11/1/2033(a)

    920,000       695,196  

Venture Global LNG, Inc.

   

8.13%, 6/1/2028(a)

    11,590,000       11,251,816  

8.38%, 6/1/2031(a)

    5,415,000       5,167,291  

Vermilion Energy, Inc.

   

6.88%, 5/1/2030(a)

    1,025,000       956,202  

Vital Energy, Inc.

   

10.13%, 1/15/2028

    1,000,000       1,002,636  

7.75%, 7/31/2029(a)

    1,515,000       1,371,766  

W&T Offshore, Inc.

   

11.75%, 2/1/2026(a)

    1,395,000       1,436,306  
              141,406,676  
Investments   Principal
Amount
    Value  
Paper & Forest Products – 0.3%  

Clearwater Paper Corp.

   

4.75%, 8/15/2028(a)

  $ 445,000     $ 392,726  

Domtar Corp.

   

6.75%, 10/1/2028(a)

    3,610,000       2,937,682  

Louisiana-Pacific Corp.

   

3.63%, 3/15/2029(a)

    910,000       749,544  
              4,079,952  
Passenger Airlines – 1.3%  

Air Canada

   

3.88%, 8/15/2026(a)

    2,390,000       2,174,570  

Allegiant Travel Co.

   

7.25%, 8/15/2027(a)

    1,100,000       995,500  

American Airlines Group, Inc.

   

3.75%, 3/1/2025(a)

    500,000       466,506  

American Airlines, Inc.

   

11.75%, 7/15/2025(a)

    1,030,000       1,091,284  

5.50%, 4/20/2026(a)

    2,208,333       2,147,490  

7.25%, 2/15/2028(a)

    1,560,000       1,450,523  

5.75%, 4/20/2029(a)

    2,000,000       1,804,110  

Spirit Loyalty Cayman Ltd.

   

8.00%, 9/20/2025(a)

    3,935,000       2,902,063  

United Airlines, Inc.

   

4.38%, 4/15/2026(a)

    1,830,000       1,697,534  

4.63%, 4/15/2029(a)

    945,000       798,245  
              15,527,825  
Personal Care Products – 1.0%  

BellRing Brands, Inc.

   

7.00%, 3/15/2030(a)

    4,250,000       4,127,813  

Coty, Inc.

   

4.75%, 1/15/2029(a)

    250,000       221,307  

Edgewell Personal Care Co.

   

5.50%, 6/1/2028(a)

    1,400,000       1,277,731  

4.13%, 4/1/2029(a)

    240,000       200,700  

Herbalife Nutrition Ltd.

   

7.88%, 9/1/2025(a)

    3,017,000       2,839,193  

Oriflame Investment Holding plc

   

5.13%, 5/4/2026(a)

    2,895,000       885,870  

Prestige Brands, Inc.

   

5.13%, 1/15/2028(a)

    770,000       709,917  

3.75%, 4/1/2031(a)

    2,235,000       1,775,149  
              12,037,680  

 

See Accompanying Notes to the Financial Statements.

 

438    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Pharmaceuticals – 1.9%  

Bausch Health Americas, Inc.

   

9.25%, 4/1/2026(a)

  $ 1,369,000     $ 1,199,752  

8.50%, 1/31/2027(a)

    3,500,000       1,566,250  

Bausch Health Cos., Inc.

   

9.00%, 12/15/2025(a)

    1,798,000       1,559,590  

6.13%, 2/1/2027(a)

    5,065,000       2,825,459  

5.75%, 8/15/2027(a)

    1,265,000       657,800  

7.00%, 1/15/2028(a)

    1,000,000       410,045  

5.00%, 1/30/2028(a)

    1,835,000       673,342  

4.88%, 6/1/2028(a)

    1,361,000       678,853  

11.00%, 9/30/2028(a)

    3,860,000       2,354,600  

5.00%, 2/15/2029(a)

    2,000,000       701,080  

6.25%, 2/15/2029(a)

    3,000,000       1,095,990  

7.25%, 5/30/2029(a)

    2,000,000       750,000  

5.25%, 1/30/2030(a)

    3,000,000       1,038,750  

14.00%, 10/15/2030(a)

    2,000,000       1,077,115  

Cheplapharm Arzneimittel GmbH

   

5.50%, 1/15/2028(a)

    640,000       567,672  

HLF Financing Sarl LLC

   

4.88%, 6/1/2029(a)

    3,255,000       2,221,538  

Jazz Securities DAC

   

4.38%, 1/15/2029(a)

    85,000       73,922  

Organon & Co.

   

4.13%, 4/30/2028(a)

    1,000,000       863,760  

5.13%, 4/30/2031(a)

    1,707,000       1,333,025  

P&L Development LLC

   

7.75%, 11/15/2025(a)

    1,900,000       1,276,230  
              22,924,773  
Professional Services – 0.6%  

AMN Healthcare, Inc.

   

4.63%, 10/1/2027(a)

    1,220,000       1,094,877  

4.00%, 4/15/2029(a)

    30,000       24,845  

ASGN, Inc.

   

4.63%, 5/15/2028(a)

    880,000       779,227  

CoreLogic, Inc.

   

4.50%, 5/1/2028(a)

    2,000,000       1,585,000  

KBR, Inc.

   

4.75%, 9/30/2028(a)

    1,170,000       1,019,246  

Science Applications International Corp.

   

4.88%, 4/1/2028(a)

    2,165,000       1,931,768  
Investments   Principal
Amount
    Value  
Professional Services – (continued)  

TriNet Group, Inc.

   

3.50%, 3/1/2029(a)

  $ 1,006,000     $ 830,699  
              7,265,662  
Real Estate Management & Development – 1.0%  

Five Point Operating Co. LP

   

7.88%, 11/15/2025(a)

    445,000       417,941  

Forestar Group, Inc.

   

3.85%, 5/15/2026(a)

    581,000       517,135  

5.00%, 3/1/2028(a)

    1,715,000       1,505,064  

Howard Hughes Corp. (The)

   

5.38%, 8/1/2028(a)

    570,000       501,093  

4.13%, 2/1/2029(a)

    150,000       120,375  

4.38%, 2/1/2031(a)

    340,000       258,806  

Hunt Cos., Inc.

   

5.25%, 4/15/2029(a)

    2,035,000       1,604,502  

Kennedy-Wilson, Inc.

   

4.75%, 3/1/2029

    3,040,000       2,287,600  

4.75%, 2/1/2030

    3,295,000       2,405,350  

5.00%, 3/1/2031

    3,385,000       2,428,738  

Realogy Group LLC

   

5.75%, 1/15/2029(a)

    840,000       529,362  

WeWork Cos. LLC

   

12.00%, 8/15/2027(a)(b)

    3,371,664       66,309  
              12,642,275  
Retail REITs – 0.5%  

Brookfield Property REIT, Inc.

   

REIT, 5.75%, 5/15/2026(a)

    2,820,000       2,582,137  

REIT, 4.50%, 4/1/2027(a)

    4,110,000       3,428,562  
              6,010,699  
Software – 2.6%  

Alteryx, Inc.

   

8.75%, 3/15/2028(a)

    900,000       888,747  

Camelot Finance SA

   

4.50%, 11/1/2026(a)

    340,000       314,292  

Cloud Software Group, Inc.

   

6.50%, 3/31/2029(a)

    6,235,000       5,474,004  

9.00%, 9/30/2029(a)

    2,750,000       2,341,859  

Consensus Cloud Solutions, Inc.

   

6.00%, 10/15/2026(a)

    895,000       828,961  

6.50%, 10/15/2028(a)

    1,710,000       1,417,162  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     439  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Software – (continued)  

Crowdstrike Holdings, Inc.

   

3.00%, 2/15/2029

  $ 500,000     $ 417,934  

CWT Travel Group, Inc.

   

8.50%, 11/19/2026(a)

    7,371,000       2,137,590  

Elastic NV

   

4.13%, 7/15/2029(a)

    250,000       210,691  

Gen Digital, Inc.

   

7.13%, 9/30/2030(a)

    410,000       398,869  

GoTo Group, Inc.

   

5.50%, 9/1/2027(a)

    5,316,000       2,772,137  

Helios Software Holdings, Inc.

   

4.63%, 5/1/2028(a)

    480,000       402,965  

McAfee Corp.

   

7.38%, 2/15/2030(a)

    500,000       399,988  

MicroStrategy, Inc.

   

6.13%, 6/15/2028(a)

    480,000       434,400  

Open Text Corp.

   

3.88%, 12/1/2029(a)

    750,000       613,335  

Open Text Holdings, Inc.

   

4.13%, 2/15/2030(a)

    820,000       679,451  

4.13%, 12/1/2031(a)

    350,000       274,932  

PTC, Inc.

   

3.63%, 2/15/2025(a)

    180,000       173,514  

4.00%, 2/15/2028(a)

    2,700,000       2,394,030  

SS&C Technologies, Inc.

   

5.50%, 9/30/2027(a)

    1,935,000       1,815,557  

Veritas US, Inc.

   

7.50%, 9/1/2025(a)

    9,110,000       7,457,652  
              31,848,070  
Specialized REITs – 0.4%  

Iron Mountain, Inc.

   

REIT,
5.25%, 3/15/2028(a)

    500,000       457,321  

REIT,
5.00%, 7/15/2028(a)

    500,000       447,439  

REIT,
7.00%, 2/15/2029(a)

    1,000,000       968,751  

REIT,
4.88%, 9/15/2029(a)

    1,000,000       871,061  

REIT,
5.25%, 7/15/2030(a)

    955,000       829,010  

REIT,
4.50%, 2/15/2031(a)

    800,000       654,387  
Investments   Principal
Amount
    Value  
Specialized REITs – (continued)  

REIT,
5.63%, 7/15/2032(a)

  $ 474,000     $ 404,926  

SBA Communications Corp.

   

REIT, 3.88%, 2/15/2027

    200,000       182,139  
              4,815,034  
Specialty Retail – 3.3%  

99 Escrow Issuer, Inc.

   

7.50%, 1/15/2026(a)

    630,000       220,500  

Arko Corp.

   

5.13%, 11/15/2029(a)

    2,285,000       1,852,678  

Asbury Automotive Group, Inc.

   

5.00%, 2/15/2032(a)

    500,000       405,530  

At Home Group, Inc.

   

4.88%, 7/15/2028(a)

    1,760,000       598,400  

Bath & Body Works, Inc.

   

6.95%, 3/1/2033

    230,000       198,891  

6.75%, 7/1/2036

    400,000       345,029  

BCPE Ulysses Intermediate, Inc.

   

7.75%, 4/1/2027(a)(b)

    1,100,000       933,020  

eG Global Finance plc

   

8.50%, 10/30/2025(a)

    1,200,000       1,180,500  

Evergreen Acqco 1 LP

   

9.75%, 4/26/2028(a)

    1,350,000       1,362,353  

Foot Locker, Inc.

   

4.00%, 10/1/2029(a)

    300,000       220,509  

Gap, Inc. (The)

   

3.63%, 10/1/2029(a)

    2,290,000       1,749,620  

3.88%, 10/1/2031(a)

    1,433,000       1,029,092  

GYP Holdings III Corp.

   

4.63%, 5/1/2029(a)

    510,000       418,200  

Ken Garff Automotive LLC

   

4.88%, 9/15/2028(a)

    125,000       105,713  

LCM Investments Holdings II LLC

   

4.88%, 5/1/2029(a)

    911,000       763,398  

LSF9 Atlantis Holdings LLC

   

7.75%, 2/15/2026(a)

    1,075,000       970,271  

Michaels Cos., Inc. (The)

   

5.25%, 5/1/2028(a)

    4,595,000       3,329,353  

7.88%, 5/1/2029(a)

    6,470,000       3,607,025  

 

See Accompanying Notes to the Financial Statements.

 

440    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Specialty Retail – (continued)  

Murphy Oil USA, Inc.

   

5.63%, 5/1/2027

  $ 45,000     $ 43,496  

4.75%, 9/15/2029

    200,000       177,074  

3.75%, 2/15/2031(a)

    2,750,000       2,209,272  

PetSmart, Inc.

   

4.75%, 2/15/2028(a)

    750,000       663,659  

7.75%, 2/15/2029(a)

    860,000       791,752  

Sonic Automotive, Inc.

   

4.63%, 11/15/2029(a)

    255,000       212,276  

4.88%, 11/15/2031(a)

    1,620,000       1,290,050  

Specialty Building Products Holdings LLC

   

6.38%, 9/30/2026(a)

    1,265,000       1,176,869  

Staples, Inc.

   

7.50%, 4/15/2026(a)

    10,665,000       8,699,371  

10.75%, 4/15/2027(a)

    5,058,000       2,786,194  

Upbound Group, Inc.

   

6.38%, 2/15/2029(a)

    1,150,000       989,000  

Valvoline, Inc.

   

3.63%, 6/15/2031(a)

    2,780,000       2,112,800  

Victoria's Secret & Co.

   

4.63%, 7/15/2029(a)

    275,000       202,165  
              40,644,060  
Technology Hardware, Storage & Peripherals – 0.4%  

NCR Atleos Escrow Corp.

   

9.50%, 4/1/2029(a)

    1,000,000       980,230  

Seagate HDD Cayman

   

9.63%, 12/1/2032(a)

    310,000       330,465  

5.75%, 12/1/2034

    325,000       275,063  

Xerox Corp.

   

4.80%, 3/1/2035

    1,085,000       658,201  

6.75%, 12/15/2039

    1,905,000       1,240,075  

Xerox Holdings Corp.

   

5.50%, 8/15/2028(a)

    1,715,000       1,324,570  
              4,808,604  
Textiles, Apparel & Luxury Goods – 0.1%  

Eagle Intermediate Global Holding BV

   

7.50%, 5/1/2025(a)

    816,000       542,640  

William Carter Co. (The)

   

5.63%, 3/15/2027(a)

    250,000       236,880  
Investments   Principal
Amount
    Value  
Textiles, Apparel & Luxury Goods – (continued)  

Wolverine World Wide, Inc.

   

4.00%, 8/15/2029(a)

  $ 500,000     $ 372,799  
              1,152,319  
Tobacco – 0.4%  

Turning Point Brands, Inc.

   

5.63%, 2/15/2026(a)

    270,000       247,725  

Vector Group Ltd.

   

10.50%, 11/1/2026(a)

    1,124,000       1,124,832  

5.75%, 2/1/2029(a)

    4,675,000       3,961,675  
              5,334,232  
Trading Companies & Distributors – 0.4%  

Alta Equipment Group, Inc.

   

5.63%, 4/15/2026(a)

    1,670,000       1,493,922  

Beacon Roofing Supply, Inc.

   

4.50%, 11/15/2026(a)

    825,000       768,801  

4.13%, 5/15/2029(a)

    895,000       751,348  

BlueLinx Holdings, Inc.

   

6.00%, 11/15/2029(a)

    530,000       446,029  

Boise Cascade Co.

   

4.88%, 7/1/2030(a)

    220,000       189,251  

Imola Merger Corp.

   

4.75%, 5/15/2029(a)

    1,970,000       1,717,432  
              5,366,783  
Transportation Infrastructure – 0.1%  

Port of Newcastle Investments Financing Pty. Ltd.

   

5.90%, 11/24/2031(a)

    1,500,000       1,254,367  
Wireless Telecommunication Services – 0.9%  

C&W Senior Financing DAC

   

6.88%, 9/15/2027(a)

    1,190,000       1,023,162  

Connect Finco Sarl

   

6.75%, 10/1/2026(a)

    2,150,000       2,004,952  

Hughes Satellite Systems Corp.

   

5.25%, 8/1/2026

    1,270,000       1,142,073  

6.63%, 8/1/2026

    2,340,000       1,983,098  

Rogers Communications, Inc.

   

5.25%, 3/15/2082(a)(c)

    1,765,000       1,552,714  

Vmed O2 UK Financing I plc

   

4.25%, 1/31/2031(a)

    915,000       719,764  

4.75%, 7/15/2031(a)

    1,260,000       1,014,181  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     441  


Table of Contents

 

 

FlexShares® High Yield Value-Scored Bond Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Wireless Telecommunication Services – (continued)  

Vodafone Group plc

   

7.00%, 4/4/2079(c)

  $ 1,000,000     $ 966,922  
              10,406,866  
Total Corporate Bonds
(Cost $1,262,089,529)

 

    1,199,469,056  
Total Investments – 98.1%
(Cost $1,262,089,529)

 

    1,199,469,056  

Other assets less liabilities – 1.9%

 

    22,837,465  
NET ASSETS – 100.0%

 

  $ 1,222,306,521  

 

(a) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(b) 

Payment in-kind security.

 

(c) 

Security issued at a fixed coupon rate, which converts to a variable rate at a future date. Rate shown is the rate in effect as of period end.

 

(d) 

Represents less than 0.05% of net assets.

 

(e) 

Step bond. Interest rate is a fixed rate for an initial period that either resets at a specific date or may reset in the future at a contingent upon predetermined trigger. The interest rate shown was the current rate as of October 31, 2023.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

REIT Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

   

Aggregate gross unrealized appreciation

  $ 2,024,001  

Aggregate gross unrealized depreciation

    (92,705,555

Net unrealized depreciation

  $ (90,681,554

Federal income tax cost

  $ 1,290,150,610  
Security Type   % of Net Assets  

Corporate Bonds

    98.1

Others(1)

    1.9  
      100.0

 

(1)

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

442    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

Schedule of Investments

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund

 

October 31, 2023

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – 96.7%  
Air Freight & Logistics – 0.7%  

United Parcel Service, Inc.

   

4.45%, 4/1/2030

  $ 147,000     $ 137,889  

3.75%, 11/15/2047

    20,000       14,194  

5.05%, 3/3/2053

    20,000       17,170  
              169,253  
Automobile Components – 0.1%  

Aptiv plc

   

3.10%, 12/1/2051

    26,000       14,005  
Automobiles – 0.6%  

General Motors Co.

   

6.80%, 10/1/2027

    100,000       101,560  

5.15%, 4/1/2038

    40,000       32,174  

5.95%, 4/1/2049

    30,000       24,256  
              157,990  
Banks – 15.1%  

Banco Santander SA

   

5.15%, 8/18/2025

    200,000       194,826  

4.18%, 3/24/2028(a)

    200,000       183,135  

Bank of America Corp.

   

3.38%, 4/2/2026(a)

    201,000       192,588  

5.08%, 1/20/2027(a)

    67,000       65,222  

1.73%, 7/22/2027(a)

    100,000       88,251  

3.42%, 12/20/2028(a)

    133,000       118,387  

2.09%, 6/14/2029(a)

    127,000       104,857  

4.27%, 7/23/2029(a)

    100,000       91,002  

4.57%, 4/27/2033(a)

    67,000       57,781  

5.29%, 4/25/2034(a)

    135,000       121,931  

2.68%, 6/19/2041(a)

    44,000       26,827  

Barclays plc

   

5.83%, 5/9/2027(a)

    193,000       188,590  

3.81%, 3/10/2042(a)

    200,000       126,002  

Citigroup, Inc.

   

3.29%, 3/17/2026(a)

    33,000       31,602  

3.11%, 4/8/2026(a)

    100,000       95,438  

3.20%, 10/21/2026

    67,000       61,765  

4.45%, 9/29/2027

    67,000       61,891  

3.98%, 3/20/2030(a)

    67,000       59,276  

2.67%, 1/29/2031(a)

    107,000       85,252  

4.41%, 3/31/2031(a)

    100,000       88,470  
Investments   Principal
Amount
    Value  
Banks – (continued)  

2.57%, 6/3/2031(a)

  $ 73,000     $ 57,163  

3.06%, 1/25/2033(a)

    77,000       59,283  

8.13%, 7/15/2039

    30,000       33,826  

6.68%, 9/13/2043

    17,000       16,253  

HSBC Holdings plc

   

7.39%, 11/3/2028(a)

    210,000       215,418  

6.50%, 9/15/2037

    150,000       138,183  

ING Groep NV

   

4.02%, 3/28/2028(a)

    200,000       184,009  

JPMorgan Chase & Co.

   

1.58%, 4/22/2027(a)

    100,000       89,213  

3.78%, 2/1/2028(a)

    100,000       92,780  

4.45%, 12/5/2029(a)

    100,000       91,980  

4.57%, 6/14/2030(a)

    100,000       91,777  

2.74%, 10/15/2030(a)

    40,000       32,863  

2.58%, 4/22/2032(a)

    14,000       10,813  

4.91%, 7/25/2033(a)

    33,000       29,641  

5.60%, 7/15/2041

    50,000       45,999  

5.63%, 8/16/2043

    17,000       15,363  

4.95%, 6/1/2045

    33,000       27,021  

Mitsubishi UFJ Financial Group, Inc.

   

5.13%, 7/20/2033(a)

    200,000       182,760  

PNC Financial Services Group, Inc. (The)

   

4.63%, 6/6/2033(a)

    50,000       41,715  

Royal Bank of Canada

   

5.00%, 2/1/2033

    10,000       9,041  

Santander Holdings USA, Inc.

   

3.45%, 6/2/2025

    120,000       113,531  

Toronto-Dominion Bank (The)

   

4.11%, 6/8/2027

    17,000       15,938  

4.46%, 6/8/2032

    77,000       67,144  

Westpac Banking Corp.

   

4.42%, 7/24/2039

    40,000       29,237  
              3,734,044  
Beverages – 2.3%  

Anheuser-Busch Cos. LLC

   

4.70%, 2/1/2036

    71,000       62,483  

Anheuser-Busch InBev Worldwide, Inc.

   

5.45%, 1/23/2039

    12,000       11,071  

5.80%, 1/23/2059

    12,000       11,082  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     443  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Beverages – (continued)  

Coca-Cola Co. (The)

   

2.25%, 1/5/2032

  $ 250,000     $ 197,711  

Molson Coors Beverage Co.

   

4.20%, 7/15/2046

    14,000       9,928  

PepsiCo, Inc.

   

2.25%, 3/19/2025

    10,000       9,580  

4.45%, 5/15/2028

    67,000       65,300  

2.63%, 7/29/2029

    50,000       43,275  

1.95%, 10/21/2031

    80,000       61,440  

3.50%, 3/19/2040

    133,000       99,100  
              570,970  
Biotechnology – 1.4%  

Amgen, Inc.

   

1.90%, 2/21/2025

    17,000       16,212  

4.05%, 8/18/2029

    26,000       23,781  

2.80%, 8/15/2041

    26,000       16,083  

5.60%, 3/2/2043

    120,000       107,030  

4.66%, 6/15/2051

    114,000       86,757  

4.88%, 3/1/2053

    26,000       20,299  

2.77%, 9/1/2053

    14,000       7,314  

Biogen, Inc.

   

3.15%, 5/1/2050

    33,000       19,004  

Regeneron Pharmaceuticals, Inc.

   

1.75%, 9/15/2030

    54,000       40,696  
              337,176  
Broadline Retail – 0.9%  

Alibaba Group Holding Ltd.

   

2.70%, 2/9/2041

    200,000       115,735  

eBay, Inc.

   

5.90%, 11/22/2025

    67,000       67,059  

2.70%, 3/11/2030

    50,000       40,603  
              223,397  
Building Products – 0.4%  

Johnson Controls International plc

   

4.63%, 7/2/2044(b)

    33,000       25,460  

Owens Corning

   

4.30%, 7/15/2047

    26,000       18,529  

Trane Technologies Financing Ltd.

   

3.80%, 3/21/2029

    50,000       45,632  
Investments   Principal
Amount
    Value  
Building Products – (continued)  

Trane Technologies Global Holding Co. Ltd.

   

4.30%, 2/21/2048

  $ 7,000     $ 5,106  
              94,727  
Capital Markets – 7.0%  

Bain Capital Specialty Finance, Inc.

   

2.55%, 10/13/2026

    7,000       6,015  

Bank of New York Mellon Corp. (The)

   

3.40%, 1/29/2028

    67,000       60,876  

3.99%, 6/13/2028(a)

    47,000       43,793  

4.60%, 7/26/2030(a)

    33,000       30,425  

4.29%, 6/13/2033(a)

    20,000       17,213  

Barings BDC, Inc.

   

3.30%, 11/23/2026

    7,000       6,125  

BlackRock, Inc.

   

4.75%, 5/25/2033

    10,000       9,157  

Blackstone Private Credit Fund

   

2.63%, 12/15/2026

    33,000       28,252  

Blue Owl Capital Corp.

   

2.63%, 1/15/2027

    33,000       28,207  

Blue Owl Credit Income Corp.

   

5.50%, 3/21/2025

    33,000       31,929  

Eaton Vance Corp.

   

3.50%, 4/6/2027

    3,000       2,772  

FactSet Research Systems, Inc.

   

3.45%, 3/1/2032

    10,000       8,088  

Franklin BSP Lending Corp.

   

3.25%, 3/30/2026

    7,000       6,263  

Goldman Sachs Group, Inc. (The)

   

4.48%, 8/23/2028(a)

    301,000       281,812  

2.38%, 7/21/2032(a)

    17,000       12,618  

3.10%, 2/24/2033(a)

    70,000       54,418  

6.75%, 10/1/2037

    87,000       84,987  

Hercules Capital, Inc.

   

3.38%, 1/20/2027

    14,000       12,196  

Moody’s Corp.

   

2.75%, 8/19/2041

    33,000       20,363  

3.75%, 2/25/2052

    7,000       4,667  

Morgan Stanley

   

2.63%, 2/18/2026(a)

    20,000       19,042  

3.13%, 7/27/2026

    100,000       92,515  

0.99%, 12/10/2026(a)

    26,000       23,139  

 

See Accompanying Notes to the Financial Statements.

 

444    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Capital Markets – (continued)  

5.12%, 2/1/2029(a)

  $ 133,000     $ 126,628  

2.70%, 1/22/2031(a)

    133,000       106,862  

2.24%, 7/21/2032(a)

    30,000       22,126  

5.25%, 4/21/2034(a)

    135,000       121,636  

5.42%, 7/21/2034(a)

    14,000       12,778  

5.30%, 4/20/2037(a)

    33,000       28,620  

5.60%, 3/24/2051(a)

    63,000       56,256  

Nasdaq, Inc.

   

3.85%, 6/30/2026

    50,000       47,712  

5.55%, 2/15/2034

    40,000       37,104  

3.95%, 3/7/2052

    7,000       4,625  

Prospect Capital Corp.

   

3.71%, 1/22/2026

    33,000       29,618  

S&P Global, Inc.

   

1.25%, 8/15/2030

    50,000       37,177  

2.90%, 3/1/2032

    50,000       40,118  

4.50%, 5/15/2048

    14,000       10,608  

State Street Corp.

   

2.90%, 3/30/2026(a)

    50,000       47,651  

5.82%, 11/4/2028(a)

    50,000       49,422  

2.40%, 1/24/2030

    63,000       51,310  
              1,715,123  
Chemicals – 0.9%  

Air Products and Chemicals, Inc.

   

2.05%, 5/15/2030

    40,000       32,185  

Dow Chemical Co. (The)

   

6.90%, 5/15/2053

    54,000       53,980  

DuPont de Nemours, Inc.

   

5.32%, 11/15/2038

    7,000       6,256  

5.42%, 11/15/2048

    14,000       12,143  

Ecolab, Inc.

   

4.80%, 3/24/2030

    33,000       31,267  

1.30%, 1/30/2031

    63,000       46,360  

International Flavors & Fragrances, Inc.

   

5.00%, 9/26/2048

    17,000       12,231  

Nutrien Ltd.

   

5.25%, 1/15/2045

    47,000       38,477  
              232,899  
Investments   Principal
Amount
    Value  
Commercial Services & Supplies – 0.4%  

RELX Capital, Inc.

   

3.00%, 5/22/2030

  $ 33,000     $ 27,612  

Waste Management, Inc.

   

4.63%, 2/15/2030

    47,000       44,170  

2.95%, 6/1/2041

    33,000       21,570  
              93,352  
Communications Equipment – 0.1%  

Nokia OYJ

   

4.38%, 6/12/2027

    26,000       24,055  
Consumer Finance – 2.0%  

American Express Co.

   

3.13%, 5/20/2026

    50,000       46,915  

3.30%, 5/3/2027

    50,000       45,761  

4.42%, 8/3/2033(a)

    40,000       34,920  

4.05%, 12/3/2042

    14,000       10,554  

Capital One Financial Corp.

   

4.93%, 5/10/2028(a)

    23,000       21,277  

3.27%, 3/1/2030(a)

    30,000       24,600  

5.27%, 5/10/2033(a)

    57,000       48,753  

General Motors Financial Co., Inc.

   

6.00%, 1/9/2028

    33,000       32,408  

5.85%, 4/6/2030

    33,000       31,189  

3.10%, 1/12/2032

    67,000       50,949  

John Deere Capital Corp.

   

4.80%, 1/9/2026

    20,000       19,736  

4.35%, 9/15/2032

    67,000       60,511  

Series I,
5.15%, 9/8/2033

    40,000       38,040  

Synchrony Financial

   

2.88%, 10/28/2031

    44,000       29,817  
              495,430  
Consumer Staples Distribution & Retail – 1.0%  

Kroger Co. (The)

   

5.40%, 1/15/2049

    8,000       6,856  

3.95%, 1/15/2050

    54,000       36,568  

Target Corp.

   

2.25%, 4/15/2025

    50,000       47,738  

2.65%, 9/15/2030

    127,000       104,374  

Walgreens Boots Alliance, Inc.

   

3.45%, 6/1/2026

    50,000       45,570  

4.10%, 4/15/2050

    17,000       9,895  
              251,001  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     445  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Containers & Packaging – 0.3%  

Amcor Finance USA, Inc.

   

3.63%, 4/28/2026

  $ 20,000     $ 18,842  

5.63%, 5/26/2033

    20,000       18,627  

AptarGroup, Inc.

   

3.60%, 3/15/2032

    3,000       2,445  

Avery Dennison Corp.

   

5.75%, 3/15/2033

    14,000       13,353  

Berry Global, Inc.

   

1.57%, 1/15/2026

    26,000       23,490  
              76,757  
Diversified Consumer Services – 0.0%(c)  

Howard University

   

Series 22A,
5.21%, 10/1/2052

    3,000       2,336  
Diversified REITs – 0.5%  

Digital Realty Trust LP

   

REIT, 4.45%, 7/15/2028

    33,000       30,512  

Simon Property Group LP

   

REIT, 1.75%, 2/1/2028

    20,000       16,789  

REIT, 2.65%, 2/1/2032

    50,000       38,030  

REIT, 6.75%, 2/1/2040

    17,000       16,698  

REIT, 5.85%, 3/8/2053

    17,000       14,789  

Vornado Realty LP

   

REIT, 2.15%, 6/1/2026

    14,000       11,795  
              128,613  
Diversified Telecommunication Services – 3.5%  

AT&T, Inc.

   

5.40%, 2/15/2034

    33,000       30,321  

4.65%, 6/1/2044

    54,000       40,810  

Deutsche Telekom International Finance BV

   

8.75%, 6/15/2030(b)

    40,000       44,817  

Orange SA

   

9.00%, 3/1/2031(b)

    44,000       50,406  

Telefonica Emisiones SA

   

4.90%, 3/6/2048

    150,000       108,076  

TELUS Corp.

   

3.40%, 5/13/2032

    7,000       5,543  

Verizon Communications, Inc.

   

4.13%, 3/16/2027

    100,000       94,724  
Investments   Principal
Amount
    Value  
Diversified Telecommunication Services – (continued)  

4.33%, 9/21/2028

  $ 100,000     $ 93,108  

2.55%, 3/21/2031

    67,000       52,345  

2.36%, 3/15/2032

    67,000       50,099  

2.65%, 11/20/2040

    161,000       97,321  

3.40%, 3/22/2041

    84,000       56,684  

4.86%, 8/21/2046

    50,000       39,796  

3.88%, 3/1/2052

    154,000       102,723  

2.99%, 10/30/2056

    14,000       7,366  
              874,139  
Electric Utilities – 3.6%  

Avangrid, Inc.

   

3.80%, 6/1/2029

    14,000       12,305  

Commonwealth Edison Co.

   

3.00%, 3/1/2050

    33,000       19,057  

Connecticut Light and Power Co. (The)

   

Series A,
2.05%, 7/1/2031

    117,000       89,213  

4.00%, 4/1/2048

    7,000       4,998  

Edison International

   

4.13%, 3/15/2028

    150,000       136,445  

Enel Americas SA

   

4.00%, 10/25/2026

    7,000       6,535  

Enel Chile SA

   

4.88%, 6/12/2028

    10,000       9,328  

Eversource Energy

   

4.60%, 7/1/2027

    17,000       16,190  

Series R,
1.65%, 8/15/2030

    17,000       12,726  

3.45%, 1/15/2050

    30,000       18,264  

Exelon Corp.

   

2.75%, 3/15/2027

    167,000       151,083  

5.30%, 3/15/2033

    10,000       9,277  

4.95%, 6/15/2035

    50,000       43,324  

4.45%, 4/15/2046

    33,000       24,220  

5.60%, 3/15/2053

    23,000       19,731  

Pacific Gas and Electric Co.

   

3.95%, 12/1/2047

    200,000       119,331  

PECO Energy Co.

   

4.90%, 6/15/2033

    20,000       18,505  

Public Service Electric and Gas Co.

   

3.60%, 12/1/2047

    57,000       38,573  

 

See Accompanying Notes to the Financial Statements.

 

446    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Electric Utilities – (continued)  

Southern California Edison Co.

   

5.95%, 11/1/2032

  $ 67,000     $ 65,432  

Series C,
4.13%, 3/1/2048

    33,000       22,889  

Series E,
5.45%, 6/1/2052

    20,000       16,699  

Union Electric Co.

   

3.50%, 3/15/2029

    20,000       17,864  

4.00%, 4/1/2048

    40,000       27,655  
              899,644  
Electrical Equipment – 0.1%  

ABB Finance USA, Inc.

   

3.80%, 4/3/2028

    33,000       31,081  
Electronic Equipment, Instruments & Components – 0.1%  

Jabil, Inc.

   

3.00%, 1/15/2031

    20,000       15,844  
Energy Equipment & Services – 0.4%  

Baker Hughes Holdings LLC

   

4.08%, 12/15/2047

    30,000       21,392  

Halliburton Co.

   

2.92%, 3/1/2030

    10,000       8,391  

4.85%, 11/15/2035

    50,000       43,993  

Schlumberger Investment SA

   

4.85%, 5/15/2033

    20,000       18,406  
              92,182  
Entertainment – 0.7%  

Walt Disney Co. (The)

   

6.40%, 12/15/2035

    67,000       68,218  

7.75%, 12/1/2045

    14,000       16,160  

4.75%, 11/15/2046

    67,000       54,092  

3.80%, 5/13/2060

    50,000       32,604  
              171,074  
Financial Services – 3.2%  

Corebridge Financial, Inc.

   

6.88%, 12/15/2052(a)

    7,000       6,467  

Equitable Holdings, Inc.

   

5.59%, 1/11/2033

    34,000       31,307  
Investments   Principal
Amount
    Value  
Financial Services – (continued)  

Fidelity National Information Services, Inc.

   

4.50%, 7/15/2025

  $ 167,000     $ 163,086  

Mastercard, Inc.

   

3.30%, 3/26/2027

    100,000       93,380  

2.95%, 6/1/2029

    94,000       82,465  

2.00%, 11/18/2031

    33,000       25,180  

PayPal Holdings, Inc.

   

4.40%, 6/1/2032

    73,000       65,419  

Shell International Finance BV

   

3.88%, 11/13/2028

    50,000       46,564  

2.75%, 4/6/2030

    90,000       76,084  

6.38%, 12/15/2038

    20,000       20,444  

4.00%, 5/10/2046

    33,000       24,300  

3.25%, 4/6/2050

    3,000       1,891  

Visa, Inc.

   

3.15%, 12/14/2025

    20,000       19,084  

2.05%, 4/15/2030

    140,000       113,254  

Voya Financial, Inc.

   

4.70%, 1/23/2048(a)

    20,000       15,690  
              784,615  
Food Products – 0.9%  

Bunge Ltd. Finance Corp.

   

1.63%, 8/17/2025

    47,000       43,515  

Campbell Soup Co.

   

4.15%, 3/15/2028

    50,000       46,580  

2.38%, 4/24/2030

    17,000       13,476  

General Mills, Inc.

   

2.88%, 4/15/2030

    50,000       41,332  

4.95%, 3/29/2033

    14,000       12,715  

3.00%, 2/1/2051

    7,000       4,009  

Ingredion, Inc.

   

2.90%, 6/1/2030

    33,000       27,096  

Mondelez International, Inc.

   

2.63%, 9/4/2050

    50,000       27,234  

Tyson Foods, Inc.

   

5.10%, 9/28/2048

    23,000       17,775  
              233,732  
Gas Utilities – 0.4%  

Atmos Energy Corp.

   

5.75%, 10/15/2052

    17,000       15,598  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     447  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Gas Utilities – (continued)  

National Fuel Gas Co.

   

2.95%, 3/1/2031

  $ 14,000     $ 10,642  

Southern California Gas Co.

   

2.95%, 4/15/2027

    67,000       61,074  

Spire Missouri, Inc.

   

4.80%, 2/15/2033

    7,000       6,404  

Washington Gas Light Co.

   

3.65%, 9/15/2049

    7,000       4,384  
              98,102  
Ground Transportation – 2.0%  

Canadian National Railway Co.

   

3.65%, 2/3/2048

    14,000       9,678  

4.45%, 1/20/2049

    37,000       28,657  

4.40%, 8/5/2052

    7,000       5,409  

Canadian Pacific Railway Co.

   

1.35%, 12/2/2024

    50,000       47,614  

5.75%, 3/15/2033

    3,000       2,872  

4.30%, 5/15/2043

    10,000       7,544  

4.80%, 8/1/2045

    44,000       35,057  

4.20%, 11/15/2069

    17,000       11,493  

CSX Corp.

   

2.40%, 2/15/2030

    33,000       26,969  

5.20%, 11/15/2033

    10,000       9,385  

4.30%, 3/1/2048

    57,000       42,533  

3.80%, 4/15/2050

    33,000       22,319  

4.65%, 3/1/2068

    3,000       2,224  

JB Hunt Transport Services, Inc.

   

3.88%, 3/1/2026

    30,000       28,791  

Norfolk Southern Corp.

   

3.00%, 3/15/2032

    54,000       43,405  

4.45%, 3/1/2033

    10,000       8,872  

4.80%, 8/15/2043

    50,000       38,697  

5.35%, 8/1/2054

    14,000       11,948  

Union Pacific Corp.

   

4.50%, 1/20/2033

    80,000       72,427  

2.89%, 4/6/2036

    50,000       36,638  
              492,532  
Health Care Equipment & Supplies – 1.1%  

Abbott Laboratories

   

1.40%, 6/30/2030

    33,000       25,616  

4.90%, 11/30/2046

    63,000       54,341  
Investments   Principal
Amount
    Value  
Health Care Equipment & Supplies – (continued)  

Baxter International, Inc.

   

1.73%, 4/1/2031

  $ 50,000     $ 36,320  

3.13%, 12/1/2051

    33,000       18,134  

Becton Dickinson & Co.

   

3.79%, 5/20/2050

    50,000       33,665  

Boston Scientific Corp.

   

2.65%, 6/1/2030

    50,000       41,125  

Medtronic, Inc.

   

4.00%, 4/1/2043

    14,000       10,689  

4.63%, 3/15/2045

    20,000       16,507  

Zimmer Biomet Holdings, Inc.

   

2.60%, 11/24/2031

    50,000       38,325  
              274,722  
Health Care Providers & Services – 5.4%  

Aetna, Inc.

   

3.88%, 8/15/2047

    26,000       17,119  

Cardinal Health, Inc.

   

4.90%, 9/15/2045

    33,000       25,213  

Cencora, Inc.

   

2.70%, 3/15/2031

    50,000       39,621  

Cigna Group (The)

   

4.38%, 10/15/2028

    40,000       37,386  

6.13%, 11/15/2041

    33,000       31,529  

3.88%, 10/15/2047

    14,000       9,543  

4.90%, 12/15/2048

    67,000       53,579  

3.40%, 3/15/2051

    14,000       8,626  

CVS Health Corp.

   

3.88%, 7/20/2025

    50,000       48,368  

3.63%, 4/1/2027

    33,000       30,632  

4.30%, 3/25/2028

    100,000       93,689  

5.25%, 2/21/2033

    80,000       73,780  

4.78%, 3/25/2038

    40,000       33,084  

5.05%, 3/25/2048

    114,000       89,613  

Elevance Health, Inc.

   

2.38%, 1/15/2025

    100,000       95,950  

2.25%, 5/15/2030

    50,000       39,861  

4.10%, 5/15/2032

    54,000       46,856  

4.75%, 2/15/2033

    20,000       18,136  

3.60%, 3/15/2051

    52,000       33,376  

6.10%, 10/15/2052

    14,000       13,238  

5.13%, 2/15/2053

    20,000       16,595  

HCA, Inc.

   

3.63%, 3/15/2032

    133,000       106,835  

 

See Accompanying Notes to the Financial Statements.

 

448    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Health Care Providers & Services – (continued)  

7.50%, 11/6/2033

  $ 47,000     $ 48,022  

4.63%, 3/15/2052

    77,000       53,607  

Laboratory Corp. of America Holdings

   

1.55%, 6/1/2026

    50,000       44,768  

2.70%, 6/1/2031

    50,000       39,421  

Novant Health, Inc.

   

3.32%, 11/1/2061

    23,000       13,307  

Quest Diagnostics, Inc.

   

4.20%, 6/30/2029

    33,000       30,355  

UnitedHealth Group, Inc.

   

4.00%, 5/15/2029

    50,000       46,264  

4.50%, 4/15/2033

    10,000       9,004  

5.88%, 2/15/2053

    54,000       51,068  

5.20%, 4/15/2063

    30,000       25,064  
              1,323,509  
Health Care REITs – 0.4%  

Healthcare Realty Holdings LP

   

REIT, 2.05%, 3/15/2031

    7,000       4,975  

Ventas Realty LP

   

REIT, 4.00%, 3/1/2028

    33,000       30,042  

REIT, 3.00%, 1/15/2030

    33,000       26,953  

Welltower OP LLC

   

REIT, 3.85%, 6/15/2032

    54,000       44,812  
              106,782  
Hotel & Resort REITs – 0.2%  

Host Hotels & Resorts LP

   

Series F,
REIT, 4.50%, 2/1/2026

    50,000       47,830  
Hotels, Restaurants & Leisure – 1.5%  

Marriott International, Inc.

   

5.00%, 10/15/2027

    20,000       19,320  

Series HH,
2.85%, 4/15/2031

    33,000       25,932  

Series II,
2.75%, 10/15/2033

    3,000       2,197  

McDonald’s Corp.

   

3.50%, 7/1/2027

    50,000       46,456  

4.70%, 12/9/2035

    33,000       28,955  

4.88%, 12/9/2045

    33,000       27,164  

3.63%, 9/1/2049

    44,000       29,162  
Investments   Principal
Amount
    Value  
Hotels, Restaurants & Leisure – (continued)  

5.15%, 9/9/2052

  $ 7,000     $ 5,901  

Sands China Ltd.

   

4.30%, 1/8/2026(b)

    200,000       185,522  
              370,609  
Household Durables – 0.3%  

Leggett & Platt, Inc.

   

3.50%, 11/15/2051

    14,000       8,372  

Lennar Corp.

   

5.00%, 6/15/2027

    26,000       25,090  

Mohawk Industries, Inc.

   

5.85%, 9/18/2028

    12,000       11,790  

3.63%, 5/15/2030

    7,000       6,005  

NVR, Inc.

   

3.00%, 5/15/2030

    14,000       11,491  
              62,748  
Household Products – 0.0%(c)  

Clorox Co. (The)

   

4.60%, 5/1/2032

    14,000       12,637  
Independent Power and Renewable Electricity
Producers – 0.4%
 

Constellation Energy Generation LLC

   

3.25%, 6/1/2025

    50,000       47,846  

5.60%, 3/1/2028

    40,000       39,268  

6.13%, 1/15/2034

    10,000       9,666  
              96,780  
Industrial REITs – 0.3%  

Prologis LP

   

REIT, 4.63%, 1/15/2033

    47,000       42,110  

REIT, 5.13%, 1/15/2034

    14,000       12,820  

REIT, 3.00%, 4/15/2050

    23,000       13,247  
              68,177  
Insurance – 3.3%  

Aflac, Inc.

   

3.60%, 4/1/2030

    33,000       28,746  

Allstate Corp. (The)

   

5.25%, 3/30/2033

    10,000       9,235  

3.85%, 8/10/2049

    26,000       17,145  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     449  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Insurance – (continued)  

American International Group, Inc.

   

5.13%, 3/27/2033

  $ 17,000     $ 15,459  

4.75%, 4/1/2048

    50,000       39,159  

Arch Capital Finance LLC

   

5.03%, 12/15/2046

    10,000       7,994  

Assurant, Inc.

   

2.65%, 1/15/2032

    3,000       2,161  

AXIS Specialty Finance LLC

   

4.90%, 1/15/2040(a)

    17,000       13,374  

Chubb INA Holdings, Inc.

   

3.35%, 5/3/2026

    100,000       94,704  

4.35%, 11/3/2045

    14,000       10,926  

3.05%, 12/15/2061

    10,000       5,626  

Everest Reinsurance Holdings, Inc.

   

3.13%, 10/15/2052

    20,000       11,238  

Fidelity National Financial, Inc.

   

3.20%, 9/17/2051

    14,000       7,295  

Hartford Financial Services Group, Inc. (The)

   

3.60%, 8/19/2049

    23,000       14,894  

2.90%, 9/15/2051

    14,000       7,710  

Lincoln National Corp.

   

3.05%, 1/15/2030

    20,000       15,800  

4.35%, 3/1/2048

    3,000       1,955  

4.38%, 6/15/2050

    10,000       6,521  

Manulife Financial Corp.

   

4.06%, 2/24/2032(a)

    50,000       45,123  

3.70%, 3/16/2032

    7,000       5,967  

MetLife, Inc.

   

4.55%, 3/23/2030

    20,000       18,597  

5.38%, 7/15/2033

    10,000       9,351  

10.75%, 8/1/2039

    33,000       41,651  

4.60%, 5/13/2046

    26,000       20,323  

5.00%, 7/15/2052

    23,000       18,580  

5.25%, 1/15/2054

    14,000       11,707  

Principal Financial Group, Inc.

   

3.70%, 5/15/2029

    33,000       29,320  

2.13%, 6/15/2030

    33,000       25,631  

Prudential Financial, Inc.

   

1.50%, 3/10/2026

    100,000       90,379  

4.50%, 9/15/2047(a)

    50,000       43,821  

4.35%, 2/25/2050

    33,000       24,171  

3.70%, 3/13/2051

    14,000       9,118  
Investments   Principal
Amount
    Value  
Insurance – (continued)  

6.00%, 9/1/2052(a)

  $ 47,000     $ 42,044  

RenaissanceRe Holdings Ltd.

   

5.75%, 6/5/2033

    7,000       6,440  

Travelers Cos., Inc. (The)

   

4.00%, 5/30/2047

    40,000       29,068  

5.45%, 5/25/2053

    17,000       15,273  

Unum Group

   

4.13%, 6/15/2051

    14,000       8,723  
              805,229  
Interactive Media & Services – 1.2%  

Alphabet, Inc.

   

0.80%, 8/15/2027

    67,000       57,364  

1.10%, 8/15/2030

    10,000       7,665  

1.90%, 8/15/2040

    7,000       4,185  

2.05%, 8/15/2050

    50,000       25,847  

Meta Platforms, Inc.

   

4.60%, 5/15/2028

    180,000       174,481  

4.65%, 8/15/2062

    40,000       30,162  

5.75%, 5/15/2063

    8,000       7,177  
              306,881  
IT Services – 2.1%  

Amdocs Ltd.

   

2.54%, 6/15/2030

    10,000       7,870  

DXC Technology Co.

   

1.80%, 9/15/2026

    10,000       8,764  

International Business Machines Corp.

   

4.00%, 7/27/2025

    377,000       366,966  

1.95%, 5/15/2030

    100,000       78,872  

2.85%, 5/15/2040

    72,000       46,125  
              508,597  
Leisure Products – 0.2%  

Hasbro, Inc.

   

3.90%, 11/19/2029

    33,000       28,353  

6.35%, 3/15/2040

    10,000       9,117  
              37,470  
Machinery – 1.0%  

CNH Industrial Capital LLC

   

4.55%, 4/10/2028

    10,000       9,397  

 

See Accompanying Notes to the Financial Statements.

 

450    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Machinery – (continued)  

Cummins, Inc.

   

1.50%, 9/1/2030

  $ 37,000     $ 28,265  

Ingersoll Rand, Inc.

   

5.40%, 8/14/2028

    23,000       22,411  

Otis Worldwide Corp.

   

2.57%, 2/15/2030

    20,000       16,273  

Stanley Black & Decker, Inc.

   

3.40%, 3/1/2026

    67,000       63,160  

2.75%, 11/15/2050

    7,000       3,568  

4.00%, 3/15/2060(a)

    96,000       78,802  

Westinghouse Air Brake Technologies Corp.

   

4.70%, 9/15/2028(b)

    17,000       15,851  

Xylem, Inc.

   

2.25%, 1/30/2031

    17,000       13,139  
              250,866  
Marine Transportation – 0.1%  

Kirby Corp.

   

4.20%, 3/1/2028

    20,000       18,423  
Media – 2.0%  

Comcast Corp.

   

2.65%, 2/1/2030

    67,000       55,602  

4.65%, 2/15/2033

    67,000       60,632  

4.00%, 3/1/2048

    54,000       38,074  

2.89%, 11/1/2051

    327,000       180,591  

2.99%, 11/1/2063

    60,000       30,803  

5.50%, 5/15/2064

    3,000       2,558  

Fox Corp.

   

4.71%, 1/25/2029

    50,000       46,727  

5.58%, 1/25/2049

    20,000       15,757  

Interpublic Group of Cos., Inc. (The)

   

3.38%, 3/1/2041

    20,000       12,675  

Paramount Global

   

4.38%, 3/15/2043

    30,000       17,998  

4.95%, 5/19/2050

    40,000       25,368  
              486,785  
Metals & Mining – 0.4%  

Newmont Corp.

   

5.88%, 4/1/2035

    57,000       55,013  
Investments   Principal
Amount
    Value  
Metals & Mining – (continued)  

Nucor Corp.

   

3.13%, 4/1/2032

  $ 33,000     $ 26,660  

2.98%, 12/15/2055

    14,000       7,499  
              89,172  
Multi-Utilities – 1.9%  

Consolidated Edison Co. of New York, Inc.

   

Series 20A,
3.35%, 4/1/2030

    10,000       8,605  

2.40%, 6/15/2031

    50,000       39,297  

6.15%, 11/15/2052

    7,000       6,657  

4.50%, 5/15/2058

    67,000       47,946  

3.60%, 6/15/2061

    23,000       14,013  

NiSource, Inc.

   

0.95%, 8/15/2025

    167,000       152,582  

1.70%, 2/15/2031

    54,000       39,550  

Public Service Enterprise Group, Inc.

   

5.85%, 11/15/2027

    63,000       62,666  

1.60%, 8/15/2030

    10,000       7,504  

San Diego Gas & Electric Co.

   

Series VVV,
1.70%, 10/1/2030

    10,000       7,560  

2.95%, 8/15/2051

    57,000       32,401  

Sempra

   

3.80%, 2/1/2038

    26,000       19,388  

4.00%, 2/1/2048

    33,000       22,530  
              460,699  
Office REITs – 0.6%  

Boston Properties LP

   

REIT, 3.25%, 1/30/2031

    50,000       37,926  

REIT, 2.45%, 10/1/2033

    33,000       21,450  

Highwoods Realty LP

   

REIT, 3.05%, 2/15/2030

    20,000       14,992  

Hudson Pacific Properties LP

   

REIT, 5.95%, 2/15/2028

    20,000       15,743  

Kilroy Realty LP

   

REIT, 4.38%, 10/1/2025

    50,000       47,764  

Piedmont Operating Partnership LP

   

REIT, 2.75%, 4/1/2032

    7,000       4,475  
              142,350  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     451  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Oil, Gas & Consumable Fuels – 6.9%  

BP Capital Markets America, Inc.

   

3.38%, 2/8/2061

  $ 10,000     $ 5,918  

Canadian Natural Resources Ltd.

   

2.95%, 7/15/2030

    87,000       70,943  

Cheniere Corpus Christi Holdings LLC

   

3.70%, 11/15/2029

    17,000       14,812  

2.74%, 12/31/2039

    10,000       7,210  

Cheniere Energy Partners LP

   

5.95%, 6/30/2033(d)

    33,000       30,861  

Cheniere Energy, Inc.

   

4.63%, 10/15/2028

    14,000       12,792  

ConocoPhillips Co.

   

3.76%, 3/15/2042

    47,000       34,143  

5.95%, 3/15/2046

    23,000       21,532  

5.30%, 5/15/2053

    7,000       6,043  

Enbridge, Inc.

   

2.50%, 8/1/2033

    77,000       55,552  

5.50%, 12/1/2046

    14,000       11,681  

5.50%, 7/15/2077(a)

    50,000       42,540  

Enterprise Products Operating LLC

   

2.80%, 1/31/2030

    20,000       16,706  

4.25%, 2/15/2048

    133,000       99,523  

EQT Corp.

   

5.70%, 4/1/2028

    26,000       25,293  

Hess Corp.

   

6.00%, 1/15/2040

    17,000       16,424  

5.80%, 4/1/2047

    20,000       18,881  

Kinder Morgan Energy Partners LP

   

6.95%, 1/15/2038

    50,000       49,567  

5.40%, 9/1/2044

    20,000       16,103  

Kinder Morgan, Inc.

   

4.30%, 6/1/2025

    237,000       230,676  

2.00%, 2/15/2031

    14,000       10,462  

5.55%, 6/1/2045

    33,000       27,163  

3.60%, 2/15/2051

    10,000       6,020  

Magellan Midstream Partners LP

   

3.95%, 3/1/2050

    33,000       20,824  

Marathon Petroleum Corp.

   

4.50%, 4/1/2048

    33,000       23,435  

MPLX LP

   

1.75%, 3/1/2026

    50,000       45,365  

2.65%, 8/15/2030

    17,000       13,430  
Investments   Principal
Amount
    Value  
Oil, Gas & Consumable Fuels – (continued)  

4.50%, 4/15/2038

  $ 67,000     $ 52,197  

5.50%, 2/15/2049

    30,000       24,215  

Occidental Petroleum Corp.

   

6.45%, 9/15/2036

    40,000       38,851  

ONEOK, Inc.

   

5.65%, 11/1/2028

    40,000       39,032  

6.10%, 11/15/2032

    25,000       24,091  

4.50%, 3/15/2050

    60,000       41,427  

Pioneer Natural Resources Co.

   

2.15%, 1/15/2031

    26,000       20,419  

Plains All American Pipeline LP

   

4.50%, 12/15/2026

    80,000       76,241  

3.80%, 9/15/2030

    10,000       8,427  

Sabine Pass Liquefaction LLC

   

4.50%, 5/15/2030

    17,000       15,248  

5.90%, 9/15/2037

    20,000       19,167  

TotalEnergies Capital International SA

   

2.83%, 1/10/2030

    50,000       42,636  

3.13%, 5/29/2050

    44,000       26,892  

Transcanada Trust

   

5.60%, 3/7/2082(a)

    177,000       136,612  

Transcontinental Gas Pipe Line Co. LLC

   

3.25%, 5/15/2030

    33,000       27,636  

Valero Energy Corp.

   

2.80%, 12/1/2031

    50,000       38,699  

4.00%, 6/1/2052

    10,000       6,499  

Western Midstream Operating LP

   

5.30%, 3/1/2048

    23,000       17,182  

5.25%, 2/1/2050(b)

    7,000       5,173  

Williams Cos., Inc. (The)

   

5.65%, 3/15/2033

    33,000       31,134  

5.75%, 6/24/2044

    33,000       28,769  

5.10%, 9/15/2045

    37,000       29,741  

4.85%, 3/1/2048

    14,000       10,720  

5.30%, 8/15/2052

    14,000       11,382  
              1,706,289  
Paper & Forest Products – 0.2%  

Suzano Austria GmbH

   

Series DM3N,
3.13%, 1/15/2032

    50,000       37,682  

 

See Accompanying Notes to the Financial Statements.

 

452    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Personal Care Products – 1.3%  

Estee Lauder Cos., Inc. (The)

   

3.15%, 3/15/2027

  $ 50,000     $ 46,268  

4.38%, 5/15/2028

    20,000       19,097  

1.95%, 3/15/2031

    33,000       25,304  

Haleon US Capital LLC

   

3.38%, 3/24/2027

    250,000       230,543  
              321,212  
Pharmaceuticals – 5.2%  

AstraZeneca Finance LLC

   

4.88%, 3/3/2033

    33,000       31,030  

AstraZeneca plc

   

4.00%, 9/18/2042

    20,000       15,506  

4.38%, 11/16/2045

    50,000       39,745  

3.00%, 5/28/2051

    14,000       8,580  

Bristol-Myers Squibb Co.

   

5.00%, 8/15/2045

    33,000       28,094  

3.90%, 3/15/2062

    91,000       59,493  

GlaxoSmithKline Capital plc

   

3.38%, 6/1/2029

    33,000       29,739  

GlaxoSmithKline Capital, Inc.

   

6.38%, 5/15/2038

    17,000       17,694  

Johnson & Johnson

   

3.63%, 3/3/2037

    180,000       146,062  

2.10%, 9/1/2040

    10,000       6,074  

3.70%, 3/1/2046

    50,000       36,874  

2.25%, 9/1/2050

    20,000       10,751  

2.45%, 9/1/2060

    7,000       3,593  

Merck & Co., Inc.

   

4.05%, 5/17/2028

    133,000       126,600  

3.40%, 3/7/2029

    50,000       45,205  

2.35%, 6/24/2040

    133,000       82,514  

2.75%, 12/10/2051

    33,000       18,635  

Mylan, Inc.

   

5.20%, 4/15/2048

    37,000       25,439  

Novartis Capital Corp.

   

2.00%, 2/14/2027

    50,000       45,014  

2.75%, 8/14/2050

    50,000       29,715  

Pfizer Investment Enterprises Pte. Ltd.

   

4.45%, 5/19/2028

    124,000       118,520  

5.34%, 5/19/2063

    100,000       85,666  
Investments   Principal
Amount
    Value  
Pharmaceuticals – (continued)  

Pfizer, Inc.

   

0.80%, 5/28/2025

  $ 50,000     $ 46,486  

3.45%, 3/15/2029

    50,000       45,414  

1.75%, 8/18/2031

    33,000       24,898  

4.10%, 9/15/2038

    35,000       28,182  

7.20%, 3/15/2039

    57,000       62,825  

2.55%, 5/28/2040

    33,000       20,949  

2.70%, 5/28/2050

    33,000       19,146  

Viatris, Inc.

   

3.85%, 6/22/2040

    10,000       6,224  

4.00%, 6/22/2050

    23,000       13,232  
              1,277,899  
Professional Services – 0.3%  

Automatic Data Processing, Inc.

   

1.70%, 5/15/2028

    26,000       22,319  

Concentrix Corp.

   

6.60%, 8/2/2028

    10,000       9,600  

Equifax, Inc.

   

3.10%, 5/15/2030

    7,000       5,747  

Verisk Analytics, Inc.

   

4.13%, 3/15/2029

    40,000       36,613  
              74,279  
Real Estate Management & Development – 0.1%  

CBRE Services, Inc.

   

2.50%, 4/1/2031

    20,000       15,056  
Residential REITs – 0.7%  

AvalonBay Communities, Inc.

   

REIT, 2.95%, 5/11/2026

    100,000       93,449  

REIT, 5.00%, 2/15/2033

    14,000       13,008  

ERP Operating LP

   

REIT, 3.00%, 7/1/2029

    67,000       57,528  

UDR, Inc.

   

REIT, 4.40%, 1/26/2029

    7,000       6,381  
              170,366  
Retail REITs – 0.5%  

Brixmor Operating Partnership LP

   

REIT, 3.90%, 3/15/2027

    33,000       30,192  

REIT, 2.25%, 4/1/2028

    10,000       8,348  

REIT, 2.50%, 8/16/2031

    7,000       5,147  

Federal Realty OP LP

   

REIT, 1.25%, 2/15/2026

    67,000       60,187  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     453  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Retail REITs – (continued)  

Regency Centers LP

   

REIT, 3.70%, 6/15/2030

  $ 26,000     $ 22,078  
              125,952  
Semiconductors & Semiconductor Equipment – 2.8%  

Intel Corp.

   

3.75%, 3/25/2027

    100,000       94,359  

2.00%, 8/12/2031

    47,000       35,988  

5.63%, 2/10/2043

    54,000       49,445  

3.73%, 12/8/2047

    47,000       31,633  

4.75%, 3/25/2050

    127,000       99,730  

4.95%, 3/25/2060

    33,000       26,462  

Micron Technology, Inc.

   

5.88%, 9/15/2033

    54,000       49,854  

QUALCOMM, Inc.

   

3.45%, 5/20/2025

    50,000       48,456  

TSMC Arizona Corp.

   

3.88%, 4/22/2027

    280,000       265,411  
              701,338  
Software – 2.4%  

Adobe, Inc.

   

2.30%, 2/1/2030

    33,000       27,431  

Autodesk, Inc.

   

2.85%, 1/15/2030

    20,000       16,688  

Microsoft Corp.

   

2.40%, 8/8/2026

    60,000       55,800  

3.30%, 2/6/2027

    133,000       125,647  

3.45%, 8/8/2036

    33,000       26,910  

2.53%, 6/1/2050

    180,000       103,036  

2.92%, 3/17/2052

    40,000       24,692  

2.68%, 6/1/2060

    33,000       18,247  

3.04%, 3/17/2062

    20,000       11,876  

Salesforce, Inc.

   

1.50%, 7/15/2028

    50,000       42,101  

2.90%, 7/15/2051

    44,000       25,878  

ServiceNow, Inc.

   

1.40%, 9/1/2030

    14,000       10,553  

VMware, Inc.

   

1.40%, 8/15/2026

    100,000       88,087  

Workday, Inc.

   

3.70%, 4/1/2029

    30,000       26,786  
              603,732  
Investments   Principal
Amount
    Value  
Specialized REITs – 0.3%  

Equinix, Inc.

   

REIT, 3.20%, 11/18/2029

  $ 50,000     $ 42,249  

REIT, 3.40%, 2/15/2052

    26,000       15,421  

Weyerhaeuser Co.

   

REIT, 3.38%, 3/9/2033

    30,000       23,807  
              81,477  
Specialty Retail – 1.8%  

Dick’s Sporting Goods, Inc.

   

4.10%, 1/15/2052

    10,000       5,850  

Home Depot, Inc. (The)

   

3.30%, 4/15/2040

    100,000       70,702  

4.95%, 9/15/2052

    100,000       84,171  

Lowe’s Cos., Inc.

   

2.50%, 4/15/2026

    33,000       30,658  

3.65%, 4/5/2029

    50,000       44,853  

2.63%, 4/1/2031

    50,000       39,492  

5.00%, 4/15/2033

    77,000       70,051  

5.50%, 10/15/2035

    33,000       30,820  

2.80%, 9/15/2041

    33,000       20,044  

3.00%, 10/15/2050

    33,000       18,138  

4.45%, 4/1/2062

    26,000       17,752  

5.85%, 4/1/2063

    14,000       11,944  
              444,475  
Technology Hardware, Storage & Peripherals – 2.2%  

Apple, Inc.

   

3.25%, 2/23/2026

    84,000       80,394  

2.38%, 2/8/2041

    80,000       51,042  

4.45%, 5/6/2044

    114,000       96,137  

4.65%, 2/23/2046

    33,000       28,154  

4.85%, 5/10/2053

    100,000       86,864  

4.10%, 8/8/2062

    47,000       34,465  

Dell International LLC

   

8.10%, 7/15/2036

    50,000       54,227  

3.38%, 12/15/2041

    30,000       19,326  

Hewlett Packard Enterprise Co.

   

5.25%, 7/1/2028

    50,000       48,280  

6.20%, 10/15/2035(b)

    7,000       6,871  

HP, Inc.

   

2.65%, 6/17/2031

    19,000       14,500  

6.00%, 9/15/2041

    33,000       29,884  
              550,144  

 

See Accompanying Notes to the Financial Statements.

 

454    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Textiles, Apparel & Luxury Goods – 0.2%  

PVH Corp.

   

4.63%, 7/10/2025

  $ 20,000     $ 19,188  

Ralph Lauren Corp.

   

2.95%, 6/15/2030

    14,000       11,726  

VF Corp.

   

2.95%, 4/23/2030

    26,000       20,364  
              51,278  
Water Utilities – 0.5%  

American Water Capital Corp.

   

2.30%, 6/1/2031

    100,000       77,745  

Essential Utilities, Inc.

   

2.70%, 4/15/2030

    33,000       26,651  

5.30%, 5/1/2052

    7,000       5,652  

Veralto Corp.

   

5.50%, 9/18/2026(d)

    15,000       14,849  
              124,897  
Wireless Telecommunication Services – 0.3%  

T-Mobile USA, Inc.

   

3.88%, 4/15/2030

    3,000       2,612  

Vodafone Group plc

   

5.00%, 5/30/2038

    3,000       2,598  

5.63%, 2/10/2053

    96,000       80,743  
              85,953  
Total Corporate Bonds
(Cost $27,258,976)

 

    23,856,368  
                 
Total Investments – 96.7%
(Cost $27,258,976)

 

    23,856,368  

Other assets less liabilities – 3.3%

 

    815,779  
NET ASSETS – 100.0%

 

  $ 24,672,147  

 

(a) 

Security issued at a fixed coupon rate, which converts to a variable rate at a future date. Rate shown is the rate in effect as of period end.

 

(b) 

Step bond. Interest rate is a fixed rate for an initial period that either resets at a specific date or may reset in the future at a contingent upon predetermined trigger. The interest rate shown was the current rate as of October 31, 2023.

 

(c)

Represents less than 0.05% of net assets.

(d) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

OYJ Public Limited Company

REIT Real Estate Investment Trust

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

   

Aggregate gross unrealized appreciation

  $ 583  

Aggregate gross unrealized depreciation

    (3,498,532

Net unrealized depreciation

  $ (3,497,949

Federal income tax cost

  $ 27,354,317  

 

Security Type    % of Net Assets   

Corporate Bonds

     96.7

Others(1)

     3.3  
       100.0

 

(1)

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     455  


Table of Contents

 

Schedule of Investments

FlexShares® Ultra-Short Income Fund

 

October 31, 2023

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – 86.9%  
Aerospace & Defense – 2.0%  

Boeing Co. (The)

   

1.95%, 2/1/2024

  $ 900,000     $ 890,799  

1.43%, 2/4/2024

    3,000,000       2,961,958  

L3Harris Technologies, Inc.

   

3.95%, 5/28/2024

    4,065,000       4,019,740  

Northrop Grumman Corp.

   

2.93%, 1/15/2025

    5,673,000       5,479,281  

RTX Corp.

   

3.20%, 3/15/2024

    8,205,000       8,120,480  
              21,472,258  
Agricultural & Farm Machinery – 0.1%  

CNH Industrial Capital LLC

   

3.95%, 5/23/2025

    1,290,000       1,250,071  
Apparel Retail – 0.5%  

Ross Stores, Inc.

   

4.60%, 4/15/2025

    5,011,000       4,916,769  
Apparel, Accessories & Luxury Goods – 0.4%  

VF Corp.

   

2.40%, 4/23/2025

    5,000,000       4,708,104  
Application Software – 1.1%  

Autodesk, Inc.

   

4.38%, 6/15/2025

    2,000,000       1,954,881  

Intuit, Inc.

   

5.25%, 9/15/2026

    4,950,000       4,935,258  

Roper Technologies, Inc.

   

2.35%, 9/15/2024

    5,000,000       4,845,769  
              11,735,908  
Asset Management & Custody Banks – 1.9%  

Bank of New York Mellon Corp. (The)

   

Series 0012,
3.65%, 2/4/2024

    3,000,000       2,980,840  

2.10%, 10/24/2024

    3,000,000       2,892,049  

Series J, (SOFR + 0.20%), 5.51%, 10/25/2024(a)

    2,800,000       2,787,418  
Investments   Principal
Amount
    Value  
Asset Management & Custody Banks – (continued)  

Blackstone Private Credit Fund

   

2.70%, 1/15/2025

  $ 800,000     $ 759,198  

FS KKR Capital Corp.

   

1.65%, 10/12/2024

    980,000       934,485  

State Street Corp.

   

(United States SOFR Compounded Index + 0.85%), 6.23%, 8/3/2026(a)

    10,000,000       9,997,100  
              20,351,090  
Automobile Manufacturers – 2.2%  

BMW US Capital LLC

   

(United States SOFR Compounded Index + 0.53%),
5.86%, 4/1/2024(a)(b)

    900,000       900,519  

Hyundai Capital America

   

0.80%, 1/8/2024(b)

    1,700,000       1,683,077  

0.88%, 6/14/2024(b)

    1,000,000       967,727  

Kia Corp.

   

2.38%, 2/14/2025(b)

    730,000       697,204  

Mercedes-Benz Finance North America LLC

   

0.75%, 3/1/2024(b)

    2,350,000       2,310,087  

(SOFR + 0.93%), 6.26%, 3/30/2025(a)(b)

    5,000,000       5,032,280  

(SOFR + 0.57%), 5.95%, 8/1/2025(a)(b)

    7,000,000       7,010,266  

Nissan Motor Acceptance Co. LLC

   

1.13%, 9/16/2024(b)

    900,000       858,706  

Volkswagen Group of America Finance LLC

   

0.88%, 11/22/2023(b)

    2,000,000       1,994,469  

(SOFR + 0.95%), 6.30%, 6/7/2024(a)(b)

    2,690,000       2,695,075  
              24,149,410  
Automotive Retail – 0.7%  

AutoZone, Inc.

   

3.13%, 4/18/2024

    7,693,000       7,590,827  

 

See Accompanying Notes to the Financial Statements.

 

456    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Biotechnology – 1.5%  

AbbVie, Inc.

   

2.60%, 11/21/2024

  $ 7,638,000     $ 7,380,295  

Amgen, Inc.

   

3.63%, 5/22/2024

    8,000,000       7,900,030  

Gilead Sciences, Inc.

   

3.70%, 4/1/2024

    1,100,000       1,089,954  
              16,370,279  
Broadcasting – 0.5%  

Fox Corp.

   

4.03%, 1/25/2024

    5,559,000       5,531,133  
Broadline Retail – 0.7%  

eBay, Inc.

   

3.45%, 8/1/2024

    8,100,000       7,953,254  
Building Products – 0.6%  

Johnson Controls International plc

   

3.62%, 7/2/2024(c)

    6,769,000       6,668,002  
Cargo Ground Transportation – 0.6%  

Ryder System, Inc.

   

3.65%, 3/18/2024

    7,000,000       6,935,832  
Commodity Chemicals – 1.0%  

LyondellBasell Industries NV

   

5.75%, 4/15/2024

    10,000,000       9,978,321  

Westlake Corp.

   

0.88%, 8/15/2024

    300,000       287,752  
              10,266,073  
Construction Machinery & Heavy Transportation
Equipment – 0.2%
 

Daimler Truck Finance North America LLC

   

(SOFR + 0.60%), 5.95%, 12/14/2023(a)(b)

    2,000,000       2,000,247  
Consumer Finance – 6.0%  

AerCap Ireland Capital DAC

   

2.88%, 8/14/2024

    2,000,000       1,943,604  

1.65%, 10/29/2024

    4,750,000       4,529,346  
Investments   Principal
Amount
    Value  
Consumer Finance – (continued)  

American Express Co.

   

3.40%, 2/22/2024

  $ 2,500,000     $ 2,480,084  

(United States SOFR Compounded Index + 0.72%), 6.10%, 5/3/2024(a)

    3,000,000       3,002,403  

2.50%, 7/30/2024

    2,000,000       1,950,896  

(SOFR + 0.93%), 6.28%, 3/4/2025(a)

    1,914,000       1,917,800  

American Honda Finance Corp.

   

0.55%, 7/12/2024

    2,000,000       1,929,499  

0.75%, 8/9/2024

    2,000,000       1,923,181  

2.15%, 9/10/2024

    3,764,000       3,650,021  

(United States SOFR Compounded Index + 0.79%), 6.12%, 10/3/2025(a)

    2,100,000       2,102,232  

Capital One Financial Corp.

   

(SOFR + 0.69%), 6.04%, 12/6/2024(a)

    4,122,000       4,073,954  

(SOFR + 1.35%), 6.72%, 5/9/2025(a)

    2,000,000       1,988,280  

Caterpillar Financial Services Corp.

   

(SOFR + 0.52%), 5.87%, 6/13/2025(a)

    5,000,000       5,009,684  

Ford Motor Credit Co. LLC

   

4.06%, 11/1/2024

    2,019,000       1,965,497  

General Motors Financial Co., Inc.

   

(SOFR + 0.76%), 6.11%, 3/8/2024(a)

    800,000       799,304  

1.20%, 10/15/2024

    1,500,000       1,428,640  

3.50%, 11/7/2024

    2,600,000       2,529,147  

(United States SOFR Compounded Index + 1.30%), 6.63%, 4/7/2025(a)

    1,906,000       1,908,686  

John Deere Capital Corp.

   

(SOFR + 0.20%), 5.52%, 10/11/2024(a)

    2,500,000       2,500,121  

(SOFR + 0.56%), 5.90%, 3/7/2025(a)

    1,720,000       1,724,045  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     457  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Consumer Finance – (continued)  

(United States SOFR Compounded Index + 0.79%), 6.13%, 6/8/2026(a)

  $ 1,300,000     $ 1,308,883  

Synchrony Financial

   

4.88%, 6/13/2025

    1,493,000       1,415,945  

Toyota Motor Credit Corp.

   

(SOFR + 0.32%), 5.64%, 1/13/2025(a)

    7,000,000       6,981,495  

(SOFR + 0.65%), 6.00%, 9/11/2025(a)

    5,000,000       5,016,332  
              64,079,079  
Consumer Staples Merchandise Retail – 0.4%  

Dollar General Corp.

   

4.25%, 9/20/2024

    3,794,000       3,731,481  
Distillers & Vintners – 0.1%  

Constellation Brands, Inc.

   

3.60%, 5/9/2024

    1,590,000       1,569,297  
Diversified Banks – 24.2%  

Australia & New Zealand Banking Group Ltd.

   

5.38%, 7/3/2025

    4,290,000       4,270,095  

5.09%, 12/8/2025

    1,505,000       1,488,412  

Banco Santander SA

   

(SOFR + 1.24%), 6.59%, 5/24/2024(a)

    5,800,000       5,823,787  

5.15%, 8/18/2025

    1,400,000       1,363,781  

Bank of America Corp.

   

4.13%, 1/22/2024

    4,000,000       3,983,803  

Series 2025,
(SOFR + 0.66%), 6.04%, 2/4/2025(a)

    2,000,000       1,995,490  

(SOFR + 1.10%), 6.41%, 4/25/2025(a)

    2,000,000       2,002,813  

Bank of Montreal

   

2.50%, 6/28/2024

    1,500,000       1,466,664  

Series H,
4.25%, 9/14/2024

    4,500,000       4,427,110  

(United States SOFR Compounded Index + 0.95%), 6.29%, 9/25/2025(a)

    5,700,000       5,708,265  
Investments   Principal
Amount
    Value  
Diversified Banks – (continued)  

(United States SOFR Compounded Index + 0.62%), 5.97%, 9/15/2026(a)

  $ 3,300,000     $ 3,262,846  

Bank of New Zealand

   

(SOFR + 0.81%), 6.12%, 1/27/2027(a)(b)

    4,000,000       3,972,040  

Bank of Nova Scotia (The)

   

(SOFR + 0.46%), 5.79%, 1/10/2025(a)

    4,355,000       4,336,322  

(United States SOFR Compounded Index + 0.90%), 6.23%, 4/11/2025(a)

    2,286,000       2,285,451  

(United States SOFR Compounded Index + 0.55%), 5.90%, 3/2/2026(a)

    5,000,000       4,950,335  

Banque Federative du Credit Mutuel SA

   

0.65%, 2/27/2024(b)

    5,000,000       4,915,318  

BNP Paribas SA

   

4.25%, 10/15/2024

    1,000,000       975,496  

Canadian Imperial Bank of Commerce

   

3.10%, 4/2/2024

    3,225,000       3,184,694  

(SOFR + 0.94%), 6.27%, 4/7/2025(a)

    7,674,000       7,691,863  

Citibank NA

   

3.65%, 1/23/2024

    540,000       537,122  

Citigroup, Inc.

   

(SOFR + 0.69%), 6.00%, 10/30/2024(a)

    3,500,000       3,488,415  

(SOFR + 0.67%), 6.05%, 5/1/2025(a)

    900,000       896,884  

(SOFR + 1.37%), 6.74%, 5/24/2025(a)

    1,300,000       1,303,401  

(SOFR + 0.69%), 6.01%, 1/25/2026(a)

    2,400,000       2,378,780  

Commonwealth Bank of Australia

 

 

(SOFR + 0.74%), 6.09%, 3/14/2025(a)(b)

    5,000,000       5,014,550  

(SOFR + 0.40%), 5.73%, 7/7/2025(a)(b)

    1,800,000       1,794,249  

 

See Accompanying Notes to the Financial Statements.

 

458    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Diversified Banks – (continued)  

(SOFR + 0.52%),
5.87%, 6/15/2026(a)(b)

  $ 1,900,000     $ 1,893,426  

Cooperatieve Rabobank UA

   

(United States SOFR Compounded Index + 0.30%), 5.63%, 1/12/2024(a)

    7,000,000       6,999,510  

(United States SOFR Compounded Index + 0.38%), 5.71%, 1/10/2025(a)

    1,600,000       1,597,127  

(United States SOFR Compounded Index + 0.90%), 6.23%, 10/5/2026(a)

    5,000,000       4,990,748  

Credit Agricole SA

   

3.25%, 10/4/2024(b)

    3,000,000       2,923,702  

Danske Bank A/S

   

6.47%, 1/9/2026(b)(d)

    1,280,000       1,274,726  

Fifth Third Bank NA

   

5.85%, 10/27/2025(d)

    8,500,000       8,280,511  

HSBC Holdings plc

   

(SOFR + 0.58%), 5.95%, 11/22/2024(a)

    3,000,000       2,999,939  

(SOFR + 1.43%), 6.77%, 3/10/2026(a)

    7,000,000       7,017,780  

ING Groep NV

   

(United States SOFR Compounded Index + 1.01%), 6.33%, 4/1/2027(a)

    3,800,000       3,742,975  

JPMorgan Chase & Co.

   

4.02%, 12/5/2024(d)

    2,500,000       2,493,717  

0.77%, 8/9/2025(d)

    1,000,000       955,262  

(SOFR + 0.60%), 5.95%, 12/10/2025(a)

    1,000,000       995,031  

(SOFR + 0.92%), 6.28%, 2/24/2026(a)

    7,000,000       6,998,538  

(SOFR + 0.77%), 6.11%, 9/22/2027(a)

    2,500,000       2,462,493  

Lloyds Banking Group plc

   

3.90%, 3/12/2024

    1,000,000       991,754  

4.72%, 8/11/2026(d)

    2,300,000       2,229,370  
Investments   Principal
Amount
    Value  
Diversified Banks – (continued)  

Mitsubishi UFJ Financial Group, Inc.

   

4.79%, 7/18/2025(d)

  $ 2,000,000     $ 1,977,250  

(SOFR + 0.94%), 6.30%, 2/20/2026(a)

    5,000,000       5,001,855  

(SOFR + 1.44%), 6.75%, 4/17/2026(a)

    2,500,000       2,516,448  

Morgan Stanley Bank NA

   

5.48%, 7/16/2025

    3,000,000       2,986,850  

National Australia Bank Ltd.

   

(SOFR + 0.86%), 6.21%, 6/9/2025(a)(b)

    5,200,000       5,217,680  

(SOFR + 0.65%), 5.97%, 1/12/2027(a)(b)

    4,000,000       3,973,056  

National Bank of Canada

   

0.75%, 8/6/2024

    900,000       864,659  

NatWest Markets plc

   

(SOFR + 0.53%), 5.90%, 8/12/2024(a)(b)

    600,000       598,758  

Nordea Bank Abp

   

(SOFR + 0.96%), 6.31%, 6/6/2025(a)(b)

    2,000,000       2,007,863  

PNC Financial Services Group, Inc. (The)

   

3.50%, 1/23/2024

    6,500,000       6,462,849  

Royal Bank of Canada

   

3.97%, 7/26/2024

    5,000,000       4,933,173  

(United States SOFR Compounded Index + 0.44%), 5.76%, 1/21/2025(a)

    3,000,000       2,987,214  

4.95%, 4/25/2025

    3,000,000       2,955,205  

(United States SOFR Compounded Index + 0.53%), 5.84%, 1/20/2026(a)

    2,750,000       2,719,854  

(United States SOFR Compounded Index + 0.57%), 5.88%, 4/27/2026(a)

    2,000,000       1,980,986  

Skandinaviska Enskilda Banken AB

   

0.65%, 9/9/2024(b)

    500,000       477,585  

(SOFR + 0.96%), 6.31%, 6/9/2025(a)(b)

    1,000,000       1,002,230  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     459  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Diversified Banks – (continued)  

Societe Generale SA

   

3.88%, 3/28/2024(b)

  $ 1,665,000     $ 1,648,793  

2.63%, 10/16/2024(b)

    1,000,000       965,137  

Standard Chartered plc

   

6.17%, 1/9/2027(b)(d)

    2,100,000       2,085,106  

Sumitomo Mitsui Financial Group, Inc.

   

0.51%, 1/12/2024

    300,000       296,791  

2.70%, 7/16/2024

    7,000,000       6,840,325  

(SOFR + 0.88%), 6.19%, 1/14/2027(a)

    1,480,000       1,475,337  

Sumitomo Mitsui Trust Bank Ltd.

   

0.85%, 3/25/2024(b)

    400,000       391,929  

Svenska Handelsbanken AB

   

3.90%, 11/20/2023

    1,500,000       1,498,264  

(SOFR + 0.91%), 6.26%, 6/10/2025(a)(b)

    7,000,000       7,018,311  

Swedbank AB

   

(United States SOFR Compounded Index + 1.38%), 6.73%, 6/15/2026(a)(b)

    3,000,000       3,027,661  

Toronto-Dominion Bank (The)

   

2.65%, 6/12/2024

    2,000,000       1,958,508  

4.29%, 9/13/2024

    3,000,000       2,957,502  

(SOFR + 0.41%), 5.74%, 1/10/2025(a)

    2,777,000       2,762,072  

(SOFR + 1.02%), 6.37%, 6/6/2025(a)

    3,000,000       3,004,484  

(SOFR + 0.59%), 5.94%, 9/10/2026(a)

    2,000,000       1,971,872  

US Bancorp

   

3.70%, 1/30/2024

    3,000,000       2,983,772  

2.40%, 7/30/2024

    2,913,000       2,831,611  

Wells Fargo & Co.

   

(SOFR + 1.32%), 6.63%, 4/25/2026(a)

    5,600,000       5,628,017  

Wells Fargo Bank NA

   

5.55%, 8/1/2025

    1,250,000       1,245,542  

(SOFR + 0.80%), 6.18%, 8/1/2025(a)

    3,125,000       3,127,136  
Investments   Principal
Amount
    Value  
Diversified Banks – (continued)  

Westpac Banking Corp.

   

3.30%, 2/26/2024

  $ 2,200,000     $ 2,181,719  

5.35%, 10/18/2024

    3,000,000       2,988,425  

(SOFR + 0.30%), 5.66%, 11/18/2024(a)

    2,500,000       2,495,116  

(SOFR + 1.00%), 6.36%, 8/26/2025(a)

    5,000,000       5,034,700  

(SOFR + 0.52%), 5.87%, 6/3/2026(a)

    2,568,000       2,554,413  
              260,000,653  
Diversified Capital Markets – 2.0%  

Credit Suisse AG

   

3.63%, 9/9/2024

    1,500,000       1,461,930  

7.95%, 1/9/2025

    720,000       730,269  

Deutsche Bank AG

   

Series E,
0.96%, 11/8/2023

    5,400,000       5,394,531  

0.90%, 5/28/2024

    1,100,000       1,068,644  

Macquarie Group Ltd.

   

(SOFR + 0.71%), 6.03%, 10/14/2025(a)(b)

    5,000,000       4,968,099  

UBS AG

   

0.70%, 8/9/2024(b)

    200,000       191,917  

UBS Group AG

   

(SOFR + 1.58%), 6.95%, 5/12/2026(a)(b)

    6,000,000       6,036,120  

6.37%, 7/15/2026(b)(d)

    1,900,000       1,888,432  
              21,739,942  
Diversified Financial Services – 0.3%  

Corebridge Financial, Inc.

   

3.50%, 4/4/2025

    2,300,000       2,211,346  

Jackson Financial, Inc.

   

1.13%, 11/22/2023

    950,000       947,293  
              3,158,639  
Drug Retail – 0.2%  

Walgreens Boots Alliance, Inc.

   

0.95%, 11/17/2023

    1,770,000       1,765,908  
Electric Utilities – 1.2%  

Entergy Louisiana LLC

   

0.62%, 11/17/2023

    846,000       843,950  

 

See Accompanying Notes to the Financial Statements.

 

460    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Electric Utilities – (continued)  

Eversource Energy

   

Series N,
3.80%, 12/1/2023

  $ 3,000,000     $ 2,994,724  

Florida Power & Light Co.

   

(United States SOFR Compounded Index + 0.38%), 5.70%, 1/12/2024(a)

    4,400,000       4,400,056  

Mississippi Power Co.

   

Series A, (SOFR + 0.30%), 5.64%, 6/28/2024(a)

    950,000       947,265  

NextEra Energy Capital Holdings, Inc.

   

2.94%, 3/21/2024

    2,000,000       1,975,936  

Southern Co. (The)

   

Series 21-A,
0.60%, 2/26/2024

    1,840,000       1,809,229  
              12,971,160  
Electronic Components – 0.1%  

Tyco Electronics Group SA

   

3.45%, 8/1/2024

    1,347,000       1,324,568  
Environmental & Facilities Services – 0.6%  

Republic Services, Inc.

   

2.50%, 8/15/2024

    7,000,000       6,809,685  
Fertilizers & Agricultural Chemicals – 0.6%  

Nutrien Ltd.

   

5.90%, 11/7/2024

    6,965,000       6,950,011  
Financial Exchanges & Data – 0.2%  

Nasdaq, Inc.

   

5.65%, 6/28/2025

    2,500,000       2,490,921  
Food Retail – 1.0%  

7-Eleven, Inc.

   

0.80%, 2/10/2024(b)

    5,000,000       4,925,696  

Kroger Co. (The)

   

4.00%, 2/1/2024

    6,200,000       6,171,140  
              11,096,836  
Investments   Principal
Amount
    Value  
Health Care Distributors – 0.5%  

McKesson Corp.

   

3.80%, 3/15/2024

  $ 5,000,000     $ 4,959,042  
Health Care Equipment – 2.9%  

Baxter International, Inc.

   

0.87%, 12/1/2023

    6,800,000       6,771,893  

(United States SOFR Compounded Index + 0.44%), 5.80%, 11/29/2024(a)

    1,435,000       1,425,846  

Becton Dickinson & Co.

   

3.36%, 6/6/2024

    6,800,000       6,692,065  

Boston Scientific Corp.

   

3.45%, 3/1/2024

    6,127,000       6,072,964  

GE HealthCare Technologies, Inc.

   

5.55%, 11/15/2024

    3,000,000       2,985,615  

Stryker Corp.

   

0.60%, 12/1/2023

    6,910,000       6,878,993  

Zimmer Biomet Holdings, Inc.

   

1.45%, 11/22/2024

    650,000       618,966  
              31,446,342  
Health Care Facilities – 0.0%(e)  

HCA, Inc.

   

5.00%, 3/15/2024

    400,000       398,419  
Health Care Services – 1.1%  

Cigna Group (The)

   

0.61%, 3/15/2024

    2,400,000       2,352,630  

3.50%, 6/15/2024

    5,078,000       4,999,874  

Laboratory Corp. of America Holdings

   

3.25%, 9/1/2024

    5,000,000       4,887,880  
              12,240,384  
Homebuilding – 0.4%  

Lennar Corp.

   

4.88%, 12/15/2023

    3,940,000       3,936,643  
Household Products – 0.1%  

Colgate-Palmolive Co.

   

3.10%, 8/15/2025

    1,480,000       1,426,185  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     461  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Industrial Conglomerates – 0.6%  

3M Co.

   

3.25%, 2/14/2024

  $ 3,062,000     $ 3,037,961  

General Electric Co.

   

Series A, (CME Term SOFR 3 Month + 0.56%), 5.96%, 5/13/2024(a)

    3,000,000       2,990,594  
              6,028,555  
Industrial Machinery & Supplies & Components – 1.2%  

Illinois Tool Works, Inc.

   

3.50%, 3/1/2024

    4,330,000       4,297,467  

Parker-Hannifin Corp.

   

3.65%, 6/15/2024

    7,000,000       6,897,412  

Stanley Black & Decker, Inc.

   

6.27%, 3/6/2026

    2,020,000       2,021,168  
              13,216,047  
Integrated Oil & Gas – 1.0%  

ConocoPhillips Co.

   

2.13%, 3/8/2024

    5,000,000       4,935,499  

Saudi Arabian Oil Co.

   

1.25%, 11/24/2023(b)

    200,000       199,334  

TotalEnergies Capital International SA

   

3.75%, 4/10/2024

    5,600,000       5,553,409  
              10,688,242  
Integrated Telecommunication Services – 2.3%  

AT&T, Inc.

   

0.90%, 3/25/2024

    3,271,000       3,205,314  

(CME Term SOFR 3 Month + 1.44%), 6.85%, 6/12/2024(a)

    3,550,000       3,567,616  

Bell Canada (The)

   

Series US-3,
0.75%, 3/17/2024

    5,050,000       4,949,281  

British Telecommunications plc

   

4.50%, 12/4/2023

    5,500,000       5,491,191  

Verizon Communications, Inc.

   

0.75%, 3/22/2024

    5,112,000       5,011,311  
Investments   Principal
Amount
    Value  
Integrated Telecommunication Services – (continued)  

(United States SOFR Compounded Index + 0.79%), 6.13%, 3/20/2026(a)

  $ 2,790,000     $ 2,803,954  
              25,028,667  
Interactive Home Entertainment – 0.7%  

Take-Two Interactive Software, Inc.

   

3.30%, 3/28/2024

    6,939,000       6,864,687  

3.55%, 4/14/2025

    240,000       231,888  
              7,096,575  
Investment Banking & Brokerage – 2.8%  

Charles Schwab Corp. (The)

   

(United States SOFR Compounded Index + 0.50%), 5.84%, 3/18/2024(a)

    1,390,000       1,388,206  

(United States SOFR Compounded Index + 0.52%), 5.89%, 5/13/2026(a)

    1,000,000       979,033  

(United States SOFR Compounded Index + 1.05%), 6.40%, 3/3/2027(a)

    7,000,000       6,906,046  

Goldman Sachs Group, Inc. (The)

   

3.00%, 3/15/2024

    2,500,000       2,472,544  

(SOFR + 0.51%), 5.85%, 9/10/2024(a)

    2,600,000       2,593,245  

5.70%, 11/1/2024

    3,000,000       2,988,696  

3.50%, 4/1/2025

    1,500,000       1,443,652  

Morgan Stanley

   

(SOFR + 0.46%), 5.77%, 1/25/2024(a)

    2,200,000       2,199,978  

(SOFR + 1.17%), 6.49%, 4/17/2025(a)

    1,500,000       1,502,322  

1.16%, 10/21/2025(d)

    500,000       473,027  

(SOFR + 0.95%), 6.32%, 2/18/2026(a)

    7,000,000       6,987,371  
              29,934,120  

 

See Accompanying Notes to the Financial Statements.

 

462    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
IT Consulting & Other Services – 0.9%  

International Business Machines Corp.

   

3.63%, 2/12/2024

  $ 9,500,000     $ 9,442,468  

3.00%, 5/15/2024

    500,000       492,710  
              9,935,178  
Life & Health Insurance – 0.5%  

Athene Global Funding

   

(ICE LIBOR USD 3 Month + 0.73%), 6.40%, 1/8/2024(a)(b)

    1,000,000       999,062  

MetLife, Inc.

   

3.60%, 4/10/2024

    3,500,000       3,464,172  

Security Benefit Global Funding

   

1.25%, 5/17/2024(b)

    650,000       630,024  
              5,093,258  
Life Sciences Tools & Services – 0.7%  

Thermo Fisher Scientific, Inc.

   

1.22%, 10/18/2024

    8,090,000       7,732,805  
Managed Health Care – 1.1%  

Elevance Health, Inc.

   

3.50%, 8/15/2024

    5,100,000       5,000,041  

Humana, Inc.

   

3.85%, 10/1/2024

    5,000,000       4,902,379  

UnitedHealth Group, Inc.

   

0.55%, 5/15/2024

    1,580,000       1,538,314  
              11,440,734  
Movies & Entertainment – 0.5%  

Netflix, Inc.

   

3.63%, 6/15/2025(b)

    5,000,000       4,820,408  
Multi-line Insurance – 0.2%  

New York Life Global Funding

   

(United States SOFR Compounded Index + 0.33%), 5.65%, 1/14/2025(a)(b)

    2,000,000       1,994,269  
Investments   Principal
Amount
    Value  
Multi-Utilities – 0.6%  

Black Hills Corp.

   

1.04%, 8/23/2024

  $ 960,000     $ 920,240  

CenterPoint Energy, Inc.

   

(United States SOFR Compounded Index + 0.65%), 6.02%, 5/13/2024(a)

    760,000       759,737  

Consolidated Edison, Inc.

   

Series A,
0.65%, 12/1/2023

    3,600,000       3,585,219  

DTE Energy Co.

   

4.22%, 11/1/2024(c)

    1,700,000       1,666,833  
              6,932,029  
Office REITs – 0.1%  

Boston Properties LP

   

REIT, 3.80%, 2/1/2024

    1,000,000       992,842  
Oil & Gas Equipment & Services – 0.8%  

Baker Hughes Holdings LLC

   

1.23%, 12/15/2023

    4,255,000       4,231,909  

Schlumberger Investment SA

   

3.65%, 12/1/2023

    4,546,000       4,537,411  
              8,769,320  
Oil & Gas Refining & Marketing – 0.5%  

Phillips 66

   

0.90%, 2/15/2024

    5,000,000       4,922,481  
Oil & Gas Storage & Transportation – 1.9%  

Enbridge, Inc.

   

(United States SOFR Compounded Index + 0.63%), 6.00%, 2/16/2024(a)

    4,700,000       4,703,087  

Enterprise Products Operating LLC

   

5.05%, 1/10/2026

    720,000       711,465  

Kinder Morgan Energy Partners LP

   

4.25%, 9/1/2024

    6,870,000       6,758,845  

Kinder Morgan, Inc.

   

5.63%, 11/15/2023(b)

    1,150,000       1,149,591  

TransCanada PipeLines Ltd.

   

1.00%, 10/12/2024

    7,010,000       6,673,997  
              19,996,985  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     463  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Packaged Foods & Meats – 3.5%  

Danone SA

   

2.59%, 11/2/2023(b)

  $ 7,700,000     $ 7,700,000  

General Mills, Inc.

   

3.65%, 2/15/2024

    6,000,000       5,962,374  

Hormel Foods Corp.

   

0.65%, 6/3/2024

    2,780,000       2,696,151  

Kellogg Co.

   

2.65%, 12/1/2023

    2,000,000       1,994,809  

McCormick & Co., Inc.

   

3.15%, 8/15/2024

    5,000,000       4,889,987  

0.90%, 2/15/2026

    620,000       554,541  

Mondelez International, Inc.

   

2.13%, 3/17/2024

    5,400,000       5,322,416  

Tyson Foods, Inc.

   

3.95%, 8/15/2024

    8,250,000       8,116,868  
              37,237,146  
Paper & Plastic Packaging Products & Materials – 1.1%  

Avery Dennison Corp.

   

0.85%, 8/15/2024

    8,190,000       7,860,455  

Graphic Packaging International LLC

   

0.82%, 4/15/2024(b)

    4,000,000       3,898,842  
              11,759,297  
Paper Products – 0.2%  

Georgia-Pacific LLC

   

0.63%, 5/15/2024(b)

    2,200,000       2,138,007  
Personal Care Products – 0.2%  

Kenvue, Inc.

   

5.50%, 3/22/2025

    2,305,000       2,301,253  
Pharmaceuticals – 0.5%  

Bayer US Finance II LLC

   

3.88%, 12/15/2023(b)

    5,000,000       4,986,251  

Bristol-Myers Squibb Co.

   

0.54%, 11/13/2023

    700,000       698,900  
              5,685,151  
Rail Transportation – 1.5%  

Burlington Northern Santa Fe LLC

   

3.75%, 4/1/2024

    5,000,000       4,956,884  
Investments   Principal
Amount
    Value  
Rail Transportation – (continued)  

Canadian Pacific Railway Co.

   

1.35%, 12/2/2024

  $ 5,910,000     $ 5,627,914  

CSX Corp.

   

3.40%, 8/1/2024

    5,350,000       5,252,196  
              15,836,994  
Regional Banks – 1.0%  

ANZ New Zealand Int’l Ltd.

   

(SOFR + 0.60%), 5.97%, 2/18/2025(a)(b)

    1,450,000       1,448,898  

Bank of America NA

   

(SOFR + 0.78%), 6.15%, 8/18/2025(a)

    3,850,000       3,849,772  

KeyBank NA

   

(United States SOFR Compounded Index + 0.32%), 5.67%, 6/14/2024(a)

    2,000,000       1,955,651  

Truist Financial Corp.

   

(SOFR + 0.40%), 5.75%, 6/9/2025(a)

    3,750,000       3,669,858  
              10,924,179  
Restaurants – 0.2%  

Starbucks Corp.

   

(United States SOFR Compounded Index + 0.42%), 5.79%, 2/14/2024(a)

    2,370,000       2,370,032  
Self-Storage REITs – 0.6%  

Public Storage Operating Co.

   

REIT, (SOFR + 0.47%), 5.79%, 4/23/2024(a)

    4,000,000       3,999,316  

REIT, (United States SOFR Compounded Index + 0.60%), 5.91%, 7/25/2025(a)

    1,990,000       1,992,108  
              5,991,424  
Semiconductors – 0.6%  

Analog Devices, Inc.

   

(United States SOFR Compounded Index + 0.25%), 5.58%, 10/1/2024(a)

    610,000       609,744  

 

See Accompanying Notes to the Financial Statements.

 

464    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
CORPORATE BONDS – (continued)  
Semiconductors – (continued)  

Microchip Technology, Inc.

   

0.97%, 2/15/2024

  $ 5,307,000     $ 5,225,179  

0.98%, 9/1/2024

    870,000       833,619  
              6,668,542  
Soft Drinks & Non-alcoholic Beverages – 0.7%  

Keurig Dr Pepper, Inc.

   

3.13%, 12/15/2023

    4,000,000       3,985,654  

0.75%, 3/15/2024

    3,500,000       3,432,382  
              7,418,036  
Specialized Finance – 1.0%  

Element Fleet Management Corp.

   

1.60%, 4/6/2024(b)

    5,500,000       5,381,729  

6.27%, 6/26/2026(b)

    2,820,000       2,804,313  

NTT Finance Corp.

   

0.58%, 3/1/2024(b)

    2,650,000       2,603,090  
              10,789,132  
Specialty Chemicals – 0.9%  

Ecolab, Inc.

   

0.90%, 12/15/2023

    2,525,000       2,509,627  

Sherwin-Williams Co. (The)

   

4.05%, 8/8/2024

    7,400,000       7,289,872  
              9,799,499  
Systems Software – 0.7%  

Oracle Corp.

   

2.95%, 11/15/2024

    7,980,000       7,739,077  
Technology Hardware, Storage & Peripherals – 0.3%  

Hewlett Packard Enterprise Co.

   

5.90%, 10/1/2024

    3,200,000       3,194,228  
Trading Companies & Distributors – 0.6%  

Air Lease Corp.

   

4.25%, 2/1/2024

    1,000,000       994,745  

0.80%, 8/18/2024

    980,000       937,106  

4.25%, 9/15/2024

    5,000,000       4,913,298  
              6,845,149  
Investments   Principal
Amount
    Value  
Transaction & Payment Processing Services – 0.6%  

Fidelity National Information Services, Inc.

   

0.60%, 3/1/2024

  $ 4,110,000     $ 4,035,444  

Fiserv, Inc.

   

2.75%, 7/1/2024

    2,000,000       1,956,640  

Global Payments, Inc.

   

1.50%, 11/15/2024

    240,000       228,361  
              6,220,445  
Wireless Telecommunication Services – 0.4%  

Sprint LLC

   

7.13%, 6/15/2024

    4,000,000       4,020,264  
Total Corporate Bonds
(Cost $938,970,908)

 

    935,554,822  
   
ASSET-BACKED SECURITIES – 5.3%  

BMW Vehicle Lease Trust

   

Series 2021-2, Class A3, 0.33%, 12/26/2024

    324,803       323,661  

Series 2023-1, Class A2, 5.27%, 2/25/2025

    354,855       354,125  

Series 2022-1, Class A3, 1.10%, 3/25/2025

    148,839       147,418  

Capital One Multi-Asset Execution Trust

   

Series 2021-A3, Class A3, 1.04%, 11/15/2026

    2,900,000       2,759,853  

Series 2022-A3, Class A, 4.95%, 10/15/2027

    1,882,000       1,857,181  

Carmax Auto Owner Trust

   

Series 2022-3, Class A2A, 3.81%, 9/15/2025

    549,194       546,292  

Chase Issuance Trust

   

Series 2023-A1, Class A, 5.16%, 9/15/2028

    1,900,000       1,880,724  

Dell Equipment Finance Trust

   

Series 2023-1, Class A2,
5.65%, 9/22/2028(b)

    2,000,000       1,992,787  

Ford Credit Auto Lease Trust

   

Series 2022-A, Class A3,
3.23%, 5/15/2025

    823,595       817,786  

Ford Credit Auto Owner Trust

   

Series 2022-C, Class A2A, 4.52%, 4/15/2025

    1,339,623       1,335,726  

 

See Accompanying Notes to the Financial Statements.

 

   FLEXSHARES ANNUAL REPORT     465  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
ASSET-BACKED SECURITIES – (continued)  

Series 2022-D, Class A2A, 5.37%, 8/15/2025

  $ 614,720     $ 613,472  

Series 2023-A, Class A2A, 5.14%, 3/15/2026

    522,830       520,315  

Series 2023-B, Class A2A, 5.57%, 6/15/2026

    1,200,000       1,195,656  

GM Financial Automobile Leasing Trust

   

Series 2022-3, Class A2A, 4.01%, 10/21/2024

    596,846       595,399  

Series 2022-2, Class A3, 3.42%, 6/20/2025

    6,000,000       5,937,141  

GM Financial Consumer Automobile Receivables Trust

   

Series 2022-3, Class A2A, 3.50%, 9/16/2025

    769,067       764,425  

Series 2023-1, Class A2A, 5.19%, 3/16/2026

    634,095       631,476  

Series 2021-2, Class A3, 0.51%, 4/16/2026

    731,719       709,701  

Series 2021-3, Class A3, 0.48%, 6/16/2026

    955,357       922,884  

Series 2023-3, Class A2A, 5.74%, 9/16/2026

    400,000       399,408  

Series 2022-1, Class A3, 1.26%, 11/16/2026

    2,060,582       1,983,619  

Honda Auto Receivables Owner Trust

   

Series 2022-2, Class A2, 3.81%, 3/18/2025

    646,544       642,970  

Series 2023-3, Class A2, 5.71%, 3/18/2026

    3,400,000       3,391,874  

Hyundai Auto Receivables Trust

   

Series 2022-A, Class A2A, 1.81%, 2/18/2025

    109,892       109,595  

Series 2022-B, Class A2A, 3.64%, 5/15/2025

    375,124       373,329  

Series 2021-A, Class A3, 0.38%, 9/15/2025

    1,066,481       1,046,129  

Series 2020-B, Class A4, 0.62%, 12/15/2025

    1,054,819       1,042,292  
Investments   Principal
Amount
    Value  

Mercedes-Benz Auto Lease Trust

   

Series 2021-B, Class A4, 0.51%, 3/15/2027

  $ 3,840,000     $ 3,770,078  

Mercedes-Benz Auto Receivables Trust

   

Series 2022-1, Class A2, 5.26%, 10/15/2025

    840,700       838,597  

Series 2023-1, Class A2, 5.09%, 1/15/2026

    453,664       451,923  

Series 2021-1, Class A3, 0.46%, 6/15/2026

    1,951,549       1,886,709  

Series 2023-2, Class A2, 5.92%, 11/16/2026

    2,000,000       1,999,643  

Nissan Auto Lease Trust

   

Series 2021-A, Class A3, 0.52%, 8/15/2024

    33,871       33,822  

Nissan Auto Receivables Owner Trust

   

Series 2022-B, Class A2, 4.50%, 8/15/2025

    1,841,974       1,832,771  

Santander Drive Auto Receivables Trust

   

Series 2022-7, Class A2, 5.81%, 1/15/2026

    463,463       463,199  

Series 2023-1, Class A2, 5.36%, 5/15/2026

    994,828       993,203  

Series 2023-3, Class A2, 6.08%, 8/17/2026

    1,400,000       1,398,745  

Toyota Auto Receivables Owner Trust

   

Series 2020-D, Class A4, 0.47%, 1/15/2026

    1,097,000       1,067,268  

Series 2022-D, Class A2A, 5.27%, 1/15/2026

    862,056       859,343  

Series 2023-C, Class A2A, 5.60%, 8/17/2026

    1,300,000       1,295,583  

Verizon Master Trust

   

Series 2021-1, Class A, 0.50%, 5/20/2027

    3,000,000       2,909,864  

World Omni Auto Receivables Trust

   

Series 2022-C, Class A2, 3.73%, 3/16/2026

    1,082,705       1,073,792  

Series 2021-B, Class A3, 0.42%, 6/15/2026

    1,109,752       1,076,311  

 

See Accompanying Notes to the Financial Statements.

 

466    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

FlexShares® Ultra-Short Income Fund (cont.)

 

 

Investments   Principal
Amount
    Value  
ASSET-BACKED SECURITIES – (continued)  

Series 2023-D, Class A2A, 5.91%, 2/16/2027

  $ 1,700,000     $ 1,699,857  
Total Asset-Backed Securities
(Cost $56,459,510)

 

    56,545,946  
   
MUNICIPAL BONDS – 0.2%  

University of Missouri, System Facilities Revenue Bonds

   

Series 2020-A, 1.47%, 11/1/2023

    1,000,000       1,000,000  

Anaheim Public Financing Authority

   

Series 2021-A, 0.63%, 7/1/2024

    500,000       482,936  

New York City Transitional Finance Authority, Building Aid

   

Series 2022 Subseries S-1B, 0.64%, 7/15/2024

    1,000,000       964,822  
Total Municipal Bonds
(Cost $2,500,000)

 

    2,447,758  
   
SHORT-TERM INVESTMENTS – 6.9%(f)  
U.S. TREASURY OBLIGATIONS – 6.9%  

U.S. Treasury Bills

   

4.91%, 11/2/2023

    15,000,000       14,997,811  

5.40%, 11/9/2023

    15,000,000       14,982,347  

5.41%, 11/30/2023

    15,000,000       14,936,091  

5.22%, 12/14/2023

    10,000,000       9,936,784  

5.31%, 12/21/2023

    20,000,000       19,852,709  
Total U.S. Treasury Obligations
(Cost $74,712,336)

 

    74,705,742  
Total Investments – 99.3%
(Cost $1,072,642,754)

 

    1,069,254,268  

Other assets less liabilities – 0.7%

 

    7,134,810  
NET ASSETS – 100.0%

 

  $ 1,076,389,078  
(a) 

Variable or floating rate security, linked to the referenced benchmark. The interest rate shown is the rate in effect as of October 31, 2023.

 

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

 

(c) 

Step bond. Interest rate is a fixed rate for an initial period that either resets at a specific date or may reset in the future at a contingent upon predetermined trigger. The interest rate shown was the current rate as of October 31, 2023.

 

(d) 

Security issued at a fixed coupon rate, which converts to a variable rate at a future date. Rate shown is the rate in effect as of period end.

 

(e) 

Represents less than 0.05% of net assets.

 

(f) 

The rate shown was the current yield as of October 31, 2023.

 

Percentages shown are based on Net Assets.

 

Abbreviations

 

CME Chicago Mercantile Exchange

ICE Intercontinental Exchange

LIBOR London Interbank Offered Rate

REIT Real Estate Investment Trust

SOFR Secured Overnight Financing Rate

USD US Dollar

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

   

Aggregate gross unrealized appreciation

  $ 731,366  

Aggregate gross unrealized depreciation

    (4,156,526

Net unrealized depreciation

  $ (3,425,160

Federal income tax cost

  $ 1,072,679,428  

 

See Accompanying Notes to the Financial Statements.

 

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FlexShares® Ultra-Short Income Fund (cont.)

 

 

FlexShares® Ultra-Short Income Fund invested, as a percentage of net assets, in companies domiciled in the following countries as of October 31, 2023:

 

Australia

    4.1

Canada

    9.6  

Denmark

    0.1  

Finland

    0.2  

France

    2.3  

Germany

    3.1  

Ireland

    0.6  

Japan

    1.9  

Netherlands

    1.6  

New Zealand

    0.5  

Saudi Arabia

    0.0  

South Korea

    0.1  

Spain

    0.7  

Sweden

    1.2  

Switzerland

    0.9  

United Kingdom

    2.0  

United States

    70.4  

Other1

    0.7  
      100.0

 

Amount represents less than 0.05%.

 

1 

Includes any non-fixed-income securities and net other assets (liabilities).

 

Security Type   % of Net Assets  

Corporate Bonds

    86.9

Asset-Backed Securities

    5.3  

Municipal Bonds

    0.2  

Short-Term Investments

    6.9  

Others(1)

    0.7  
      100.0

 

(1)

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

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Schedule of Investments

FlexShares® Core Select Bond Fund

 

October 31, 2023

 

 

Investments   Shares     Value  
EXCHANGE TRADED FUNDS – 99.8%  

FlexShares® Credit-Scored US Corporate Bond Index Fund(a)

    292,428     $ 13,290,121  

FlexShares® Credit-Scored US Long Corporate Bond Index Fund(a)

    22,200       847,983  

FlexShares® Disciplined Duration MBS Index Fund(a)

    1,184,745       23,209,155  

FlexShares® iBoxx 3-Year Target Duration TIPS Index Fund(a)

    166,341       3,854,121  

FlexShares® Ultra-Short Income Fund(a)

    79,477       5,969,915  

iShares 10+ Year Investment Grade Corporate Bond ETF

    347,766       15,656,425  

iShares 20+ Year Treasury Bond ETF

    130,488       10,906,187  

iShares 3-7 Year Treasury Bond ETF(b)

    233,834       26,257,220  

iShares 5-10 Year Investment Grade Corporate Bond ETF

    135,709       6,471,962  

iShares 7-10 Year Treasury Bond ETF

    176,822       15,841,483  

iShares MBS ETF(b)

    508,968       44,086,808  

iShares Trust iShares 1-5 Year Investment Grade Corporate Bond ETF(b)

    313,656       15,579,294  
Total Exchange Traded Funds
(Cost $199,416,048)

 

    181,970,674  
    Principal
Amount
       
SECURITIES LENDING REINVESTMENTS – 0.0%(c)(d)  
REPURCHASE AGREEMENTS – 0.0%(c)         

CF Secured LLC, 5.30%, dated 10/31/2023, due 11/1/2023, repurchase price $80,337, collateralized by various U.S. Treasury Securities, ranging from 0.00% – 7.63%, maturing 11/15/2023 - 5/15/2051; total market value $81,000 (Cost $80,325)

  $ 80,325       80,325  
Investments   Principal
Amount
    Value  
SHORT-TERM INVESTMENTS – 0.0%(c)(e)(f)  
U.S. TREASURY OBLIGATIONS – 0.0%  

U.S. Treasury Bills 5.44%, 4/11/2024
(Cost $63,448)

  $ 65,000     $ 63,447  
Total Investments – 99.8%
(Cost $199,559,821)

 

    182,114,446  

Other assets less liabilities – 0.2%

 

    316,417  
NET ASSETS – 100.0%           $ 182,430,863  

 

(a) 

Investment in affiliated Fund. Northern Trust Investments, Inc. is the Investment Adviser to both the Fund and the affiliated Funds.

 

(b) 

The security or a portion of this security is on loan at October 31, 2023. The total value of securities on loan at October 31, 2023 was $12,937,865, collateralized in the form of cash with a value of $80,325 that was reinvested in the securities shown in the Securities Lending Reinvestment section of the Schedule of Investments; $12,831,450 of collateral in the form of U.S. Government Treasury Securities, interest rates ranging from 0.00% — 6.13%, and maturity dates ranging from December 14, 2023 — August 15, 2051 and $310,108 of collateral in the form of Foreign Government Fixed Income Securities, interest rates ranging from 0.00% — 4.25%, and maturity dates ranging from November 13, 2023 — October 22, 2071; a total value of $13,221,883.

 

(c) 

Represents less than 0.05% of net assets.

 

(d) 

The security was purchased with cash collateral held from securities on loan at October 31, 2023. The total value of securities purchased was $80,325.

 

(e) 

The rate shown was the current yield as of October 31, 2023.

 

(f) 

All or a portion of the security pledged as collateral for Futures Contracts.

 

Percentages shown are based on Net Assets.

 

As of October 31, 2023, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments (including derivative instruments, if applicable) for federal income tax purposes was as follows:

 

       

Aggregate gross unrealized appreciation

  $ 49,688  

Aggregate gross unrealized depreciation

    (21,918,868

Net unrealized depreciation

  $ (21,869,180

Federal income tax cost

  $ 203,946,377  

 

See Accompanying Notes to the Financial Statements.

 

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FlexShares® Core Select Bond Fund (cont.)

 

 

For the period ended October 31, 2023, the FlexShares® Core Select Bond Fund was invested in securities of affiliated FlexShares® Funds. The Schedules of Investments of the affiliated FlexShares® Funds are located elsewhere in this Report.

 

Investment in a company which was affiliated for the period ended October 31, 2023, was as follows:

 

Security   Value
October 31,
2022
    Purchases
at Cost
    Sales
Proceeds
    Shares
October 31,
2023
    Value
October 31,
2023
    Change in
Unrealized
Appreciation
(Depreciation)
    Dividend
Income
    Realized
Gain/(Loss)
 

FlexShares® Credit-Scored US Corporate Bond Index Fund

  $ 11,170,323     $ 3,677,357     $ 1,516,721       292,428     $ 13,290,121     $ (41,755   $ 468,256     $ 917  

FlexShares® Credit-Scored US Long Corporate Bond Index Fund

    797,284       255,358       165,986       22,200       847,983       (37,911     45,867       (762

FlexShares® Disciplined Duration MBS Index Fund

    21,492,612       17,945,044       16,589,407       1,184,745       23,209,155       1,276,791       485,385       (915,885

FlexShares® iBoxx 3-Year Target Duration TIPS Index Fund

    6,398,688       1,813,433       4,370,772       166,341       3,854,121       245,457       174,454       (232,685

FlexShares® Ultra-Short Income Fund

    16,002,325       3,923,642       14,096,511       79,477       5,969,915       92,604       524,871       47,855  
    $ 55,861,232     $ 27,614,834     $ 36,739,397       1,745,191     $ 47,171,295     $ 1,535,186     $ 1,698,833     $ (1,100,560

 

Futures Contracts

FlexShares® Core Select Bond Fund had the following open futures contracts as of October 31, 2023:

 

    Number of
Contracts
    Expiration
Date
    Trading
Currency
    Notional
Amount
    Value and
Unrealized
Depreciation*
 

Long Contracts

 

U.S. Treasury 2 Year Note

    51       12/29/2023       USD     $ 10,323,516     $ (37,249

 

*

This amount represents the cumulative appreciation/depreciation on futures contracts. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

Abbreviations:

 

USD – US Dollar

 

Security Type   % of Net Assets  

Exchange Traded Funds

    99.8

Securities Lending Reinvestments

    0.0  

Short-Term Investments

    0.0  

Others(1)

    0.2  
      100.0

 

Amount represents less than 0.05%.

 

(1)

Includes any other net assets/(liabilities).

 

See Accompanying Notes to the Financial Statements.

 

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Notes to the Financial Statements October 31, 2023

 

 

1. Organization

 

FlexShares® Trust (the “Trust”), a Maryland statutory trust, was formed on May 13, 2010, originally named NT ETF Trust and renamed FlexShares® Trust as of April 12, 2011. The Trust is registered as an open-end management investment company under the Investment Company Act of 1940 (the “1940 Act”), as amended. The Trust consists of thirty operational exchange-traded funds as of October 31, 2023 (each a “Fund” and collectively, the “Funds”).

 

FlexShares® ESG & Climate US Large Cap Core Index Fund, FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund, FlexShares® ESG & Climate Emerging Markets Core Index Fund, and FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund are non-diversified series of the Trust, pursuant to the 1940 Act. Each of the other Funds are diversified series of the Trust, pursuant to the 1940 Act.

 

Each Fund, except the FlexShares Ultra-Short Income Fund and the FlexShares Core Select Bond Fund, seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of a specified benchmark index (each an “Underlying Index”). The FlexShares US Quality Low Volatility Index Fund, FlexShares Developed Markets ex-US Quality Low Volatility Index Fund, FlexShares Emerging Markets Quality Low Volatility Index Fund, FlexShares US Quality Large Cap Index Fund, FlexShares Global Quality Real Estate Index Fund, FlexShares Real Assets Allocation Index Fund, FlexShares Quality Dividend Index Fund, FlexShares Quality Dividend Defensive Index Fund, FlexShares International Quality Dividend Index Fund, FlexShares International Quality Dividend Defensive Index Fund, FlexShares International Quality Dividend Dynamic Index Fund, FlexShares Credit-Scored US Corporate Bond Index Fund, FlexShares Credit-Scored US Long Corporate Bond Index Fund, FlexShares High Yield Value-Scored Bond Index Fund, FlexShares ESG & Climate US Large Cap Core Index Fund, FlexShares ESG & Climate Developed Markets ex-US Core Index Fund, FlexShares ESG & Climate Emerging Markets Core Index Fund and the FlexShares ESG & Climate Investment Grade Corporate Core Index Fund seek to track Underlying Indexes developed by Northern Trust Investments, Inc.

(“NTI” or “Investment Adviser”), an indirect subsidiary of Northern Trust Corporation. The FlexShares Morningstar US Market Factor Tilt Index Fund, FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund, FlexShares Morningstar Emerging Markets Factor Tilt Index Fund and FlexShares Morningstar Global Upstream Natural Resources Index Fund seek to track Underlying Indexes sponsored by Morningstar, Inc. The FlexShares STOXX® US ESG Select Index Fund, FlexShares STOXX® Global ESG Select Index Fund, and FlexShares STOXX® Global Broad Infrastructure Index Fund seek to track Underlying Indexes sponsored by STOXX. The FlexShares iBoxx 3-Year Target Duration TIPS Index Fund and FlexShares iBoxx 5-Year Target Duration TIPS Index Fund seek to track Underlying Indexes sponsored by Markit Indexes Limited. The FlexShares Disciplined Duration MBS Index Fund seeks to track an Underlying Index sponsored by ICE Data Indexes, LLC.

 

The FlexShares Real Assets Allocation Index Fund is a fund of funds that seeks to achieve its investment objective by investing primarily in the shares of other FlexShares ETFs that are eligible for inclusion in its Underlying Index, rather than in securities of individual companies. The FlexShares Core Select Bond Fund seeks to achieve its investment objective by investing, under normal circumstances in U.S. dollar-denominated investment-grade fixed-income securities either directly or indirectly through FlexShares ETFs, unaffiliated ETFs and other registered investment companies. The investment performance of each of the FlexShares Real Assets Allocation Index Fund and FlexShares Core Select Bond Fund is directly related to the performance of the underlying funds in which it invests (“Underlying Fund”).

 

The FlexShares Ultra-Short Income Fund and the FlexShares Core Select Bond Fund are actively managed and do not seek to replicate the performance of a specified index. The FlexShares Ultra-Short Income Fund seeks maximum current income consistent with the preservation of capital and liquidity. The FlexShares Core Select Bond Fund seeks total return and preservation of capital. Each Fund, except the FlexShares Ultra-Short Income Fund and the FlexShares Core Select Bond Fund, is referred to herein as an “Index Fund.” Each Fund is managed by the Investment Adviser.

 

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Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

On March 23, 2023, the Trust’s Board of Trustees (“Board”) unanimously approved a reorganization whereby the FlexShares Quality Dividend Index Fund acquired all of the assets and liabilities of the FlexShares Quality Dividend Dynamic Index Fund on June 30, 2023. All costs related to the reorganization were paid by NTI.

 

2. Significant Accounting Policies

 

The Trust, which is an investment company, follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946, “Financial Services-Investment Companies.” The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

Investment Valuation

 

Each Fund’s net asset value (“NAV”) is determined daily as of the close of regular trading on the New York Stock Exchange (“NYSE”), normally 4:00 p.m. Eastern time, on each day the NYSE is open for trading, based on prices at the time of closing provided that any U.S. fixed-income assets may be valued as of the announced closing time for trading in fixed-income instruments on any day that the Securities Industry and Financial Markets Association announces an early closing time. The NAV of a Fund is calculated by dividing the value of all assets of the Fund (including accrued interest and dividends), less all liabilities (including accrued expenses and dividends declared but unpaid), by the total number of shares outstanding.

 

The investments of the Funds are valued at fair value pursuant to the pricing policy and procedures approved by the Trust’s Board of Trustees (“Board”). The Funds’ investments are valued using market quotations when available. The Board has designated NTI as the valuation designee pursuant to Rule 2a-5 under the 1940 Act to perform fair value determinations relating to any or all Fund invest-

ments. Accordingly, when market quotations are not readily available, are deemed unreliable, or do not reflect material events occurring between the close of local markets and the time of valuation, NTI values Fund securities at fair value as determined in good faith in accordance with the Funds’ fair value pricing procedures as approved by the Board. Such circumstances include periods when trading in a security is suspended, the exchange or market on which a security trades closes early, the trading volume in a security is limited, corporate actions and announcements take place, or regulatory news affecting an issuer is released, such as government approvals. The Board oversees NTI in its role as valuation designee in accordance with the requirements of Rule 2a-5 under the 1940 Act. Additionally, NTI, in its discretion, may make adjustments to the prices of securities held by a Fund if an event occurs after the publication of market values normally used by NTI on behalf of a Fund but before the time as of which the Fund calculates its NAV, depending on the nature and significance of the event, consistent with applicable regulatory guidance and the Trust’s fair value procedures. Other events that can trigger fair valuing of foreign securities include, for example, significant fluctuations in general market indicators, government actions, or natural disasters.

 

The use of fair valuation involves the risk that the values used by NTI to price a Fund’s investments may be higher or lower than the values used by other investment companies and investors to price the same investments. Fair value pricing involves subjective judgments and it is possible that a fair value determination for a portfolio security may be materially different than the value that could be realized upon the sale of such security. In addition, fair value pricing could result in a difference between the prices used to calculate an Index Fund’s NAV and the prices used by an Index Fund’s Underlying Index. This difference may adversely affect an Index Fund’s ability to track its Underlying Index. Portfolio securities of certain Funds are listed on foreign exchanges and their value may change on days when shareholders will not be able to purchase or sell Fund shares.

 

Security prices are generally provided by independent pricing services. Portfolio securities listed or traded on domestic securities exchanges or the NASDAQ/NMS, including

 

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Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

dollar-denominated foreign securities or American Depositary Receipts (“ADRs”), are valued at the closing price, or last sale price, reported on the exchange or system where the security is principally traded. The closing price for securities traded on the NASDAQ/NMS is the Nasdaq Official Closing Price (“NOCP”). If there have been no sales for that day on the exchange or system where the security is principally traded, then the value is determined with reference to the last sale price, or the NOCP, if applicable, on any other exchange or system. If there have been no sales of the security for that day on any exchange or system, the security is valued at fair value pursuant to the Trust’s fair value procedures.

 

Securities that are traded regularly in the over-the-counter market (other than the NASDAQ/NMS), including securities listed on exchanges but primarily traded over-the-counter, are valued on the basis of bid quotes or the mean between the bid and asked quotes based upon quotes furnished by one or more broker-dealers or market makers for those securities. Securities that may be traded over-the-counter include equity securities, fixed-income securities, non-exchange-listed foreign securities, and certain derivative instruments. Fixed-income securities may be valued using prices provided directly from one or more broker-dealers, market makers, or independent third-party pricing services which may use matrix pricing and valuation models, as well as recent market transactions for the same or similar assets, to derive values when such prices are believed to reflect fair market values of such securities. Such prices may be determined by taking into account securities prices, yields, maturities, call features, ratings, prepayment speeds, credit risks, cash flows, institutional size trading in similar groups of securities and developments related to specific securities. Fixed-income securities maturing within a relatively short period, less than 60 days, are valued at amortized cost when it approximates fair value.

 

Foreign equity securities are generally priced at the closing price or last sales price reported on the foreign exchange on which they are principally traded. If there have been no sales for that day on the primary exchange, then the value is determined with reference to the last sale price on any other exchange. If there have been no sales of the security for that

day on any exchange, the security will be valued at fair value pursuant to the Trust’s fair value procedures. Spot and forward foreign currency exchange contracts generally are valued using an independent pricing service. The value of assets denominated in foreign currencies is converted into U.S. dollars using exchange rates deemed appropriate by NTI as Investment Adviser. Any use of a different rate from the rates used by an Underlying Index’s index provider may adversely affect an Index Fund’s ability to track its Underlying Index. An Underlying Index’s 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.

 

Exchange-traded financial futures and options thereon are valued at the settlement price as established by the exchange on which they are traded. Over-the-counter options are valued at broker-provided bid prices, as are swaps. The foregoing prices may be obtained from one or more independent pricing services or, as needed or applicable, independent broker-dealers. If there was no sale on that day, and for other non-exchange traded derivatives, the contract is valued at fair value pursuant to the Trust’s fair value procedures.

 

Each Fund relies on various sources to calculate its NAV. The ability of the Funds’ administrator to calculate the NAV per share of the Funds is subject to operational risks associated with processing or human errors, systems or technology failures, and errors caused by third party service providers, data sources, or trading counterparties. Such failures may result in delays in the calculation of the Funds’ NAVs and/or the inability to calculate NAV over extended time periods. The Funds may be unable to recover any losses associated with such failures, and it may be necessary for alternative procedures to be followed to price portfolio securities when determining the Funds’ NAVs.

 

Various inputs are used in determining the value of each Fund’s investments. These inputs are summarized in three levels listed below:

 

    Level 1—Quoted prices in active markets for identical assets on the measurement date.

 

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Notes to the Financial Statements (cont.)

 

 

    Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

 

    Level 3—Significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, short-term debt securities may be valued at amortized cost, as long as amortized cost approximates the current fair value of a security, but since the valuation is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

 

The following is a summary of the valuations as of October 31, 2023 for each Fund based upon the three levels defined above. The value of level 3 securities compared to the total Fund net assets is not material and, therefore, the reconciliation of Level 3 securities and related valuation techniques are not disclosed. Please refer to the Schedules of Investments to view equity and debt securities segregated by industry type, where applicable.

 

   

Level 1 — Quoted

Prices

    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares US Quality Low Volatility Index Fund

 

Investments

       

Common Stocks*

  $ 184,777,273     $     $     $ 184,777,273  

Securities Lending Reinvestments Repurchase Agreements

          2,683,994             2,683,994  
Short-Term Investments           19,522             19,522  
Total Investments   $ 184,777,273     $ 2,703,516     $     $ 187,480,789  

Other Financial Instruments

       

Assets

       

Futures Contracts

  $ 2,310     $     $     $ 2,310  

Liabilities

       

Futures Contracts

    (345                 (345
Total Other Financial Instruments   $ 1,965     $     $     $ 1,965  
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Developed Markets ex-US Quality Low Volatility Index Fund

 

Investments

 

Common Stocks*

  $  64,658,984     $  —     $     $ 64,658,984  
Warrants                        
Total Investments   $ 64,658,984     $     $     $ 64,658,984  

Other Financial Instruments

       

Assets

       

Forward Foreign Currency Contracts

  $     $ 27,699     $     $ 27,699  

Liabilities

       

Futures Contracts

    (79,276                 (79,276

Forward Foreign Currency Contracts

          (18,644           (18,644
Total Other Financial Instruments   $ (79,276   $ 9,055     $     $ (70,221

 

474    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Emerging Markets Quality Low Volatility Index Fund

 

Investments

       
Common Stocks*   $ 12,867,943     $     $     $ 12,867,943  
Total Investments   $ 12,867,943     $     $     $ 12,867,943  

Other Financial Instruments

       

Liabilities

       

Futures Contracts

  $ (12,537   $     $     $ (12,537
Total Other Financial Instruments   $ (12,537   $     $     $ (12,537
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Morningstar US Market Factor Tilt Index Fund

 

Investments

       

Common Stocks

       

Biotechnology

  $ 31,681,342     $ 701,519     $ 149     $ 32,383,010  

Life Sciences Tools & Services

    13,327,089             90       13,327,179  

Other*

    1,277,816,265                   1,277,816,265  

Rights

                62,082       62,082  

Warrants

    170,043                   170,043  

Securities Lending Reinvestments

       

Certificates of Deposit

          50,978,517             50,978,517  

Commercial Paper

          6,000,000             6,000,000  

Investment Companies

          17,000,000             17,000,000  

Repurchase Agreements

          93,173,156             93,173,156  
Total Investments   $ 1,322,994,739     $ 167,853,192     $ 62,321     $ 1,490,910,252  

Other Financial Instruments

       

Liabilities

       

Futures Contracts

  $ (730,606   $     $     $ (730,606
Total Other Financial Instruments   $ (730,606   $     $     $ (730,606

 

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Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund

 

Investments

       

Closed End Funds

  $  58,143     $  —     $  —     $ 58,143  

Common Stocks

       

Beverages

    4,661,728       66,407             4,728,135  

Food Products

    12,058,362       47,895             12,106,257  

Metals & Mining

    23,539,055             13,355       23,552,410  

Other*

    421,567,064                   421,567,064  

Rights

    2,063       32,422             34,485  

Warrants

                       

Securities Lending Reinvestments

       

Investment Companies

          1,000,000             1,000,000  

Repurchase Agreements

          7,760,452             7,760,452  
Total Investments   $ 461,886,415     $ 8,907,176     $ 13,355     $ 470,806,946  

Other Financial Instruments

       

Assets

       

Forward Foreign Currency Contracts

  $     $ 14,407     $     $ 14,407  

Liabilities

       

Futures Contracts

    (329,765                 (329,765

Forward Foreign Currency Contracts

          (44,298           (44,298
Total Other Financial Instruments   $ (329,765   $ (29,891   $     $ (359,656

 

476    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund

 

Investments

       

Common Stocks

       

Automobile Components

  $ 2,592,413     $ 26,496     $     $ 2,618,909  

Banks

    29,920,232       691             29,920,923  

Commercial Services & Supplies

    347,865             27,518       375,383  

Construction & Engineering

    3,080,729             2,021       3,082,750  

Consumer Staples Distribution & Retail

    2,602,124       393             2,602,517  

Distributors

    188,452       809             189,261  

Food Products

    5,972,830       13,917             5,986,747  

Health Care Equipment & Supplies

    486,228       12,838             499,066  

Health Care Providers & Services

    2,138,209       8,663             2,146,872  

Hotels, Restaurants & Leisure

    4,567,267       2,003             4,569,270  

Independent Power and Renewable Electricity Producers

    2,946,919       3,418             2,950,337  

Marine Transportation

    856,942             23,403       880,345  

Oil, Gas & Consumable Fuels

    11,825,999       2,140             11,828,139  

Real Estate Management & Development

    6,941,928             51,372       6,993,300  

Retail REITs

    746,061       11,656             757,717  

Transportation Infrastructure

    1,682,767       100,285             1,783,052  

Other*

    141,717,496                   141,717,496  

Corporate Bonds*

          4,971             4,971  

Rights

    194       773             967  
Securities Lending Reinvestments Repurchase Agreements           677,315             677,315  
Total Investments   $ 218,614,655     $ 866,368     $ 104,314     $ 219,585,337  

Other Financial Instruments

       

Assets

       

Forward Foreign Currency Contracts

  $     $ 6,171     $     $ 6,171  

Liabilities

       

Futures Contracts

    (51,792                 (51,792

Forward Foreign Currency Contracts

          (333           (333
Total Other Financial Instruments   $ (51,792   $ 5,838     $     $ (45,954

 

   FLEXSHARES ANNUAL REPORT     477  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares US Quality Large Cap Index Fund

 

Investments

       
Common Stocks*   $  145,727,979     $  —     $  —     $ 145,727,979  
Total Investments   $ 145,727,979     $     $     $ 145,727,979  

Other Financial Instruments

       

Liabilities

       

Futures Contracts

  $ (65,571   $     $     $ (65,571
Total Other Financial Instruments   $ (65,571   $     $     $ (65,571
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares STOXX® US ESG Select Index Fund

 

Investments

       

Common Stocks*

  $ 164,929,437     $     $     $ 164,929,437  
Securities Lending Reinvestments Repurchase Agreements           97,159             97,159  
Total Investments   $ 164,929,437     $ 97,159     $     $ 165,026,596  

Other Financial Instruments

 

Liabilities

       

Futures Contracts

  $ (116,118   $     $     $ (116,118
Total Other Financial Instruments   $ (116,118   $     $     $ (116,118

 

478    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares STOXX® Global ESG Select Index Fund

 

Investments

       

Common Stocks

       

Beverages

  $  2,565,386     $  44,404     $     $ 2,609,790  

Metals & Mining

    2,425,518       76,847             2,502,365  

Other*

    144,935,968                   144,935,968  
Securities Lending Reinvestments Repurchase Agreements           857,504             857,504  
Total Investments   $ 149,926,872     $ 978,755     $     $ 150,905,627  

Other Financial Instruments

       

Assets

       

Forward Foreign Currency Contracts

  $     $ 7,756           $ 7,756  

Liabilities

       

Futures Contracts

    (90,109                 (90,109
Total Other Financial Instruments   $ (90,109   $ 7,756     $     $ (82,353
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares ESG & Climate US Large Cap Core Index Fund

 

Investments

       

Common Stocks*

  $  36,588,876     $  —     $  —     $ 36,588,876  
Short-Term Investments           24,403             24,403  
Total Investments   $ 36,588,876     $ 24,403     $     $ 36,613,279  

Other Financial Instruments

 

Liabilities

       

Futures Contracts

  $ (17,721   $     $     $ (17,721
Total Other Financial Instruments   $ (17,721   $     $     $ (17,721

 

   FLEXSHARES ANNUAL REPORT     479  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund

 

Investments

       
Common Stocks*   $ 36,835,813     $     $     $ 36,835,813  
Total Investments   $ 36,835,813     $     $     $ 36,835,813  

Other Financial Instruments

 

Assets

       

Forward Foreign Currency Contracts

  $     $ 6,492     $     $ 6,492  

Liabilities

       

Futures Contracts

    (21,494                 (21,494

Forward Foreign Currency Contracts

          (3,294           (3,294
Total Other Financial Instruments   $ (21,494   $ 3,198     $     $ (18,296
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares ESG & Climate Emerging Markets Core Index Fund

 

Investments

       
Common Stocks*   $  4,152,508     $  —     $  —     $ 4,152,508  
Total Investments   $ 4,152,508     $     $     $ 4,152,508  

Other Financial Instruments

 

Assets

       

Forward Foreign Currency Contracts

  $     $ 3     $     $ 3  

Liabilities

       

Futures Contracts

    (3,512                 (3,512
Total Other Financial Instruments   $ (3,512   $ 3     $     $ (3,509

 

480    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Morningstar Global Upstream Natural Resources Index Fund

 

Investments

       

Common Stocks*

  $  6,897,383,095     $  —     $  —     $ 6,897,383,095  

Securities Lending Reinvestments

       

Certificates of Deposit

          60,967,202             60,967,202  

Commercial Paper

          2,000,000             2,000,000  

Investment Companies

          78,000,000             78,000,000  

Repurchase Agreements

          162,795,983             162,795,983  
Total Investments   $ 6,897,383,095     $ 303,763,185     $     $ 7,201,146,280  

Other Financial Instruments

 

Assets

       

Forward Foreign Currency Contracts

  $     $ 805,889     $     $ 805,889  

Liabilities

       

Futures Contracts

    (1,738,108                 (1,738,108

Forward Foreign Currency Contracts

          (827,889           (827,889
Total Other Financial Instruments   $ (1,738,108   $ (22,000   $     $ (1,760,108
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares STOXX® Global Broad Infrastructure Index Fund

 

Investments

       

Common Stocks*

  $ 2,006,949,303     $     $     $ 2,006,949,303  

Securities Lending Reinvestments

       

Investment Companies

          11,000,000             11,000,000  

Repurchase Agreements

          29,144,363             29,144,363  
Total Investments   $ 2,006,949,303     $ 40,144,363     $     $ 2,047,093,666  

Other Financial Instruments

 

Assets

       

Forward Foreign Currency Contracts

  $     $ 78,847     $     $ 78,847  

Liabilities

       

Futures Contracts

    (920,022                 (920,022

Forward Foreign Currency Contracts

          (14,821           (14,821
Total Other Financial Instruments   $ (920,022   $ 64,026     $     $ (855,996

 

   FLEXSHARES ANNUAL REPORT     481  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Global Quality Real Estate Index Fund

 

Investments

       

Common Stocks*

  $  241,286,554     $  —     $  —     $ 241,286,554  
Securities Lending Reinvestments Repurchase Agreements           2,704,220             2,704,220  
Total Investments   $ 241,286,554     $ 2,704,220     $     $ 243,990,774  

Other Financial Instruments

 

Assets

       

Forward Foreign Currency Contracts

  $     $ 17,694     $     $ 17,694  

Liabilities

       

Futures Contracts

    (239,027                 (239,027

Forward Foreign Currency Contracts

          (20,492           (20,492
Total Other Financial Instruments   $ (239,027   $ (2,798   $     $ (241,825
       
    Level 1 — Quoted
Prices
    Level 2 —Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Real Assets Allocation Index Fund

 

Investments

       
Exchange Traded Funds   $  16,571,447     $  —     $  —     $ 16,571,447  
Total Investments   $ 16,571,447     $     $     $ 16,571,447  
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Quality Dividend Index Fund

 

Investments

       

Common Stocks*

  $ 1,475,944,235     $     $     $ 1,475,944,235  

Securities Lending Reinvestments

       

Certificates of Deposit

          31,984,158             31,984,158  

Commercial Paper

          2,000,000             2,000,000  

Investment Companies

          18,000,000             18,000,000  

Repurchase Agreements

          77,465,697             77,465,697  
Total Investments   $ 1,475,944,235     $ 129,449,855     $     $ 1,605,394,090  

Other Financial Instruments

 

Liabilities

       

Futures Contracts

  $ (55,107   $     $     $ (55,107
Total Other Financial Instruments   $ (55,107   $     $     $ (55,107

 

482    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Quality Dividend Defensive Index Fund

 

Investments

       

Common Stocks*

  $  311,680,030     $  —     $  —     $ 311,680,030  

Securities Lending Reinvestments

       

Investment Companies

          1,000,000             1,000,000  

Repurchase Agreements

          17,783,683             17,783,683  
Total Investments   $ 311,680,030     $ 18,783,683     $     $ 330,463,713  

Other Financial Instruments

 

Liabilities

       

Futures Contracts

  $ (70,583   $     $     $ (70,583
Total Other Financial Instruments   $ (70,583   $     $     $ (70,583
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares International Quality Dividend Index Fund

 

Investments

       

Common Stocks*

  $  489,966,079     $  —     $  —     $ 489,966,079  

Securities Lending Reinvestments

       

Investment Companies

          2,000,000             2,000,000  

Repurchase Agreements

          149,574             149,574  
Total Investments   $ 489,966,079     $ 2,149,574     $     $ 492,115,653  

Other Financial Instruments

 

Assets

       

Forward Foreign Currency Contracts

  $     $ 212,595     $     $ 212,595  

Liabilities

       

Futures Contracts

    (505,171                 (505,171

Forward Foreign Currency Contracts

          (135,605           (135,605
Total Other Financial Instruments   $ (505,171   $ 76,990     $     $ (428,181

 

   FLEXSHARES ANNUAL REPORT     483  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares International Quality Dividend Defensive Index Fund

 

Investments

       

Common Stocks*

  $ 25,342,351     $     $     $ 25,342,351  
Securities Lending Reinvestments Repurchase Agreements           125,891             125,891  
Total Investments   $ 25,342,351     $ 125,891     $     $ 25,468,242  

Other Financial Instruments

 

Liabilities

       

Futures Contracts

  $ (74,486   $     $     $ (74,486
Total Other Financial Instruments   $ (74,486   $     $     $ (74,486
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares International Quality Dividend Dynamic Index Fund

 

Investments

       

Common Stocks*

  $  64,781,455     $  —     $  —     $ 64,781,455  
Securities Lending Reinvestments Repurchase Agreements           695,880             695,880  
Total Investments   $ 64,781,455     $ 695,880     $     $ 65,477,335  

Other Financial Instruments

 

Assets

       

Forward Foreign Currency Contracts

  $     $ 5,506     $     $  5,506  

Liabilities

       

Futures Contracts

    (62,745                 (62,745

Forward Foreign Currency Contracts

          (1,549           (1,549
Total Other Financial Instruments   $ (62,745   $ 3,957     $     $ (58,788
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares iBoxx 3-Year Target Duration TIPS Index Fund

 

Investments

       
U.S. Treasury Obligations   $  —     $  1,923,187,015     $  —     $ 1,923,187,015  
Total Investments   $     $ 1,923,187,015     $     $ 1,923,187,015  

 

484    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares iBoxx 5-Year Target Duration TIPS Index Fund

 

Investments

       
U.S. Treasury Obligations   $     $ 809,374,738     $     $ 809,374,738  
Total Investments   $     $ 809,374,738     $     $ 809,374,738  
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Disciplined Duration MBS Index Fund

 

Investments

       
Mortgage-Backed Securities   $  —     $  73,778,449     $  —     $ 73,778,449  
Total Investments   $     $ 73,778,449     $     $ 73,778,449  
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Credit-Scored US Corporate Bond Index Fund

 

Investments

       
Corporate Bonds*   $  —     $  265,621,732     $  —     $ 265,621,732  
Total Investments   $     $ 265,621,732     $     $ 265,621,732  
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Credit-Scored US Long Corporate Bond Index Fund

 

Investments

       
Corporate Bonds*   $  —     $  27,787,389     $  —     $ 27,787,389  
Total Investments   $     $ 27,787,389     $     $ 27,787,389  
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares High Yield Value-Scored Bond Index Fund

 

Investments

       
Corporate Bonds*   $  —     $  1,199,469,056     $  —     $ 1,199,469,056  
Total Investments   $     $ 1,199,469,056     $     $ 1,199,469,056  

 

   FLEXSHARES ANNUAL REPORT     485  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares ESG & Climate Investment Grade Corporate Core Index Fund

 

Investments

       
Corporate Bonds*   $  —     $  23,856,368     $  —     $ 23,856,368  
Total Investments   $     $ 23,856,368     $     $ 23,856,368  
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Ultra-Short Income Fund

 

Investments

 

Asset-Backed Securities

  $  —     $  56,545,946     $  —     $ 56,545,946  

Corporate Bonds*

          935,554,822             935,554,822  

Municipal Bonds

          2,447,758             2,447,758  
Short-Term Investments           74,705,742             74,705,742  
Total Investments   $     $ 1,069,254,268     $     $ 1,069,254,268  
       
    Level 1 — Quoted
Prices
    Level 2 — Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  
FlexShares Core Select Bond Fund

 

Investments

       

Exchange Traded Funds

  $ 181,970,674     $     $     $ 181,970,674  

Securities Lending Reinvestments Repurchase Agreements

          80,325             80,325  
Short-Term Investments           63,447             63,447  
Total Investments   $ 181,970,674     $ 143,772     $     $ 182,114,446  

Other Financial Instruments

 

Liabilities

       

Futures Contracts

  $ (37,249   $     $     $ (37,249
Total Other Financial Instruments   $ (37,249   $     $     $ (37,249

 

*

See Schedules of Investments for segregation by industry type.

 

486    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Foreign Securities

 

The FlexShares Developed Markets ex-US Quality Low Volatility Index Fund, FlexShares Emerging Markets Quality Low Volatility Index Fund, FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund, FlexShares Morningstar Emerging Markets Factor Tilt Index Fund, FlexShares STOXX® Global ESG Select Index Fund, FlexShares Morningstar Global Upstream Natural Resources Index Fund, FlexShares STOXX® Global Broad Infrastructure Index Fund, FlexShares Global Quality Real Estate Index Fund, FlexShares Real Assets Allocation Index Fund (through its investment in its Underlying Funds), FlexShares International Quality Dividend Index Fund, FlexShares International Quality Dividend Defensive Index Fund, FlexShares International Quality Dividend Dynamic Index Fund, FlexShares ESG & Climate Developed Markets ex-US Core Index Fund and the FlexShares ESG & Climate Emerging Markets Core Index Fund invest in publicly-traded equity securities of issuers in countries other than the United States of America (“U.S.”). Such investments include direct investments in non-U.S. dollar denominated securities traded outside the U.S. The Funds’ investments in foreign securities also may be in the form of ADRs and Global Depositary Receipts (“GDRs”) (collectively, “Depositary Receipts”) based on securities in their Underlying Indexes. ADRs are receipts that are traded in the United States evidencing ownership of the underlying foreign securities and are denominated in U.S. dollars. GDRs are receipts issued by a non-U.S. financial institution evidencing ownership of underlying foreign or U.S. securities and usually are denominated in foreign currencies. GDRs may not be denominated in the same currency as the securities they represent. Generally, GDRs are designed for use in foreign securities markets.

 

In addition to investment risks associated with the underlying issuer, ADRs and GDRs expose a Fund to risk associated with non-uniform terms that apply to ADR and GDR programs, credit exposure to the depository bank and to the sponsors and other parties with whom the depository bank establishes the programs, currency and liquidity risk. ADRs and GDRs are generally subject to the same risks as the foreign securities that they evidence or into which they may be converted.

To the extent a Fund invests in ADRs, such ADRs will be listed on a national securities exchange. To the extent a Fund invests in GDRs, such GDRs will be listed on a foreign exchange. A Fund will not invest in any unlisted Depositary Receipt, any Depositary Receipt that NTI deems to be illiquid or any Depositary Receipt for which market quotations are not readily available. Generally, all Depositary Receipts must be sponsored.

 

The FlexShares Credit-Scored US Corporate Bond Index Fund, FlexShares Credit-Scored US Long Corporate Bond Index Fund, FlexShares High Yield Value-Scored Bond Index Fund and the FlexShares ESG & Climate Investment Grade Corporate Core Index Fund may invest in U.S. dollar denominated bonds of non-U.S. corporations to the extent such bonds are included in each Fund’s Underlying Index. The FlexShares Core Select Bond Fund may invest in U.S. dollar denominated bonds of non-U.S. corporations, either directly or indirectly through Underlying Funds, to achieve its investment objective.

 

The FlexShares Ultra-Short Income Fund may invest, without limitation, in fixed-income securities and instruments of foreign issuers in developed and emerging markets, including debt securities of foreign governments.

 

Investing in foreign securities, including Depositary Receipts, may result in a Fund experiencing more rapid and extreme changes in value than a fund that invests exclusively in U.S. securities, due to less liquid markets, and adverse economic, political, diplomatic, financial, and regulatory factors. Foreign governments also may impose taxes and limits on investment and repatriation. Any of these events could cause the value of a Fund’s foreign investment to decline. To the extent that a Fund’s assets are significantly invested in a single country or geographic region, a Fund will be subject to the risks associated with that particular country or region.

 

The FlexShares Emerging Markets Quality Low Volatility Fund, FlexShares Morningstar Emerging Markets Factor Tilt Index Fund, and FlexShares ESG & Climate Emerging Markets Core Index Fund will invest primarily in emerging market countries. In addition, the FlexShares Morningstar Global Upstream Natural Resources Index Fund, FlexShares

 

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Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

STOXX® Global Broad Infrastructure Index Fund, FlexShares Global Quality Real Estate Index Fund, FlexShares Real Assets Allocation Index Fund (through its investment in its Underlying Funds), FlexShares International Quality Dividend Index Fund, FlexShares International Quality Dividend Defensive Index Fund, and the FlexShares International Quality Dividend Dynamic Index Fund may invest its assets in emerging market countries. The FlexShares Ultra-Short Income Fund may invest up to 20% of its total assets in fixed-income securities and instruments of issuers in emerging markets. The markets of emerging market countries are less developed and less liquid, subject to greater price volatility and generally subject to increased economic, political, regulatory and other uncertainties than more developed foreign markets. The risks of foreign investment are increased when the issuer is located in a country with an emerging economy or securities market.

 

Inflation-Indexed Securities

 

The FlexShares iBoxx 3-Year Target Duration TIPS Index Fund and the FlexShares iBoxx 5-Year Target Duration TIPS Index Fund invest primarily in U.S. Treasury Inflation-Protected Securities (“TIPS”).

 

TIPS have varying maturities and pay interest on a semiannual basis equal to a fixed percentage of the inflation-adjusted principal amount. If the periodic adjustment rate measuring inflation falls, the principal value of TIPS will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of TIPS, even during a period of deflation.

 

The value of TIPS is expected to change in response to changes in real interest rates. Real interest rates in turn are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if the rate of inflation rises at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of TIPS. In contrast, if nominal interest rates increase at a faster rate

than inflation, real interest rates might rise, leading to a decrease in value of TIPS. Any increase in the principal amount of TIPS will be considered taxable ordinary income, even though investors do not receive their principal until maturity.

 

While these securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. If interest rates rise due to reasons other than inflation, investors in these securities may not be protected to the extent that the increase is not reflected in the TIPS’ inflation measure.

 

The periodic adjustment of TIPS is tied to the Consumer Price Index for Urban Consumers (“CPI-U”), which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in the cost of living, made up of components such as housing, food, transportation and energy. There can be no assurance that the CPI-U will accurately measure the real rate of inflation in the prices of goods and services.

 

Mortgage-Backed Pass-Through Securities

 

The FlexShares Disciplined Duration MBS Index Fund invests primarily in U.S. agency mortgage-backed pass-through securities (“MBS”), a category of pass-through securities backed by pools of mortgages and issued by one of the following U.S. government agencies: the Federal National Mortgage Association (FNMA or Fannie Mae), the Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) or the Government National Mortgage Association (GNMA or Ginnie Mae) (each a “US Agency”). Under normal circumstances, the Fund will invest at least 80% of its total assets in the securities of its Underlying Index and in “to-be announced transactions” (“TBA transactions”) that represent securities in its Underlying Index. 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 settlement.

 

Pending settlement of such TBA contracts, the FlexShares Disciplined Duration MBS Index Fund will invest in liquid,

 

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short-term instruments. The FlexShares Core Select Bond Fund may also invest either directly or through its Underlying Funds in MBS, including TBA transactions.

 

Mortgage Dollar Rolls

 

The FlexShares Disciplined Duration MBS Index Fund, the FlexShares Ultra-Short Income Fund and the FlexShares Core Select Bond Fund (directly or through its Underlying Funds) may enter into mortgage dollar roll transactions. A mortgage dollar roll involves the sale by the Fund of securities for delivery in the future (generally within 30 days). The Fund simultaneously contracts with the same counterparty to repurchase substantially similar (same type, coupon and maturity) but not identical securities on a specified future date. During the roll period, the Fund will not be entitled to accrue interest and receive principal payments on the securities sold. However, the Fund benefits to the extent of any difference between (a) the price received for the securities sold and (b) the lower forward price for the future purchase and/or fee income plus the interest earned on the cash proceeds of the securities sold. Successful use of mortgage dollar rolls depends upon the Investment Adviser’s ability to predict correctly interest rates and mortgage prepayments. The use of this technique may diminish the investment performance of the Fund compared with what such performance would have been without the use of mortgage dollar rolls.

 

For financial reporting and tax purposes, a Fund treats mortgage dollar rolls as two separate transactions: one involving the purchase of a security and a separate transaction involving a sale. The Fund currently does not intend to enter into mortgage dollar rolls that are accounted for as financing and does not treat them as borrowings.

 

Repurchase Agreements

 

To the extent consistent with its investment policies, each Fund may enter into repurchase agreements under which it purchases securities (collateral) for cash from a seller and agrees to resell those securities to the same seller within a specified time at a specified price. During the term of a repurchase agreement, the market value of the underlying collateral, including accrued interest, is required to equal or exceed the market value of the repurchase agreement. The

underlying collateral for tri-party repurchase agreements is held in accounts at JPMorgan Chase, the Fund’s custodian, and is not reflected in the assets of the Funds, at the Bank of New York or JPMorgan Chase which, in turn, holds securities through the book-entry system at the Federal Reserve Bank of New York. The Fund is subject to credit risk on repurchase agreements to the extent that the counterparty fails to perform under the agreement and the value of the collateral received falls below the agreed repurchase price.

 

The Northern Trust Company, the parent of NTI, currently is a party to various Master Repurchase Agreements with a number of different counterparties, and acts as agent on behalf of various disclosed principals, including the Funds and various other accounts managed by NTI, in entering into repurchase agreements under the Master Repurchase Agreements. NTI administers and manages these repurchase agreements in accordance with and as part of its duties under its investment advisory agreement with the Funds and does not collect any additional fees from the Funds for such services. As of October 31, 2023, none of the Funds presented in these financial statements had repurchase agreements outstanding except as discussed below.

 

As of October 31, 2023, the FlexShares US Quality Low Volatility Index Fund, FlexShares Morningstar US Market Factor Tilt Index Fund, FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund, FlexShares Morningstar Emerging Markets Factor Tilt Index Fund, FlexShares STOXX® US ESG Select Index Fund, FlexShares STOXX® Global ESG Select Index Fund, FlexShares Morningstar Global Upstream Natural Resources Index Fund, FlexShares STOXX® Global Broad Infrastructure Index Fund, FlexShares Global Quality Real Estate Index Fund, FlexShares Quality Dividend Index Fund, FlexShares Quality Dividend Defensive Index Fund, FlexShares International Quality Dividend Index Fund, FlexShares International Quality Dividend Defensive Index Fund, FlexShares International Quality Dividend Dynamic Index Fund, and the FlexShares Core Select Bond Fund invested cash collateral for loans of portfolio securities in repurchase agreements, as reflected in the respective Schedule of Investments under the caption “Securities Lending Reinvestments.”

 

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Notes to the Financial Statements (cont.)

 

 

Securities Lending

 

Each Fund may lend securities to banks, brokers and dealers or other qualified institutions. In exchange, the Fund is required to receive minimum initial collateral value as follows:

 

Type of Loan   Minimum Initial
Collateral Requirement
 
U.S. dollar denominated securities secured by U.S. dollar denominated government securities or cash collateral     102
U.S. dollar denominated securities secured by non-U.S. dollar denominated government securities or cash collateral     105
Non-U.S. dollar denominated securities secured by government securities or cash collateral in the same denomination as the lent securities     102
Non-U.S. dollar denominated securities secured by government securities or cash collateral in the different denomination from the lent securities     105
U.S. dollar and Non-U.S. dollar denominated securities secured by equity securities collateral     105

 

The collateral is maintained thereafter, at a value equal to at least 100% of the value of the securities loaned. The collateral amount is valued at the beginning of each business day and is compared to the market value of the loaned securities from the prior business day to determine if additional collateral is required. If additional collateral is required, a request is sent to the borrower.

 

Securities lending may represent no more than one-third of the value of a Fund’s total assets (including the loan collateral). JPMorgan Chase Bank, N.A. (the “Securities Lending Agent”) serves as the securities lending agent for the securities lending program of a Fund.

 

Collateral for loans of portfolio securities made by a Fund may consist of cash, cash equivalents, securities issued or guaranteed by the U.S. government or foreign governments or its agencies (or any combination thereof). Any cash collateral received by the Fund in connection with these

loans may be invested in a variety of short-term investments, either directly or indirectly through money market portfolios. The market value of securities on loan and the value of investments made with cash collateral received are disclosed in the Schedules of Investments. Securities lending income includes income from the securities lending program recorded when earned from the Securities Lending Agent and any fees charged to borrowers less expenses associated with the loan. The net amount is reflected in the Statement of Operations under “Securities lending income (net of fees).” The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day.

 

When a Fund lends its securities, it will continue to receive payments equal to the dividends and interest paid on the securities loaned and simultaneously may earn interest on the investment of the cash collateral.

 

A Fund will have the right to terminate a loan at any time and recall the loaned securities within the normal and customary settlement time for securities transactions. A Fund does not have the right to vote securities on loan, but can terminate the loan and regain the right to vote if a material event affecting the securities occurred. A borrower might become insolvent or refuse to honor its obligation to return the securities. In the event of a default by a borrower with respect to any loan, the Securities Lending Agent will exercise any and all remedies provided under the applicable borrower agreement. These remedies include purchasing replacement securities for the Fund by applying the collateral held from the defaulting borrower against the purchase cost of the replacement securities. If the proceeds from the collateral are less than the purchase cost of the replacement securities, the Securities Lending Agent is responsible for such shortfall, subject to certain limitations that are set forth in detail in the Securities Lending Agency Agreement. In this event, a Fund could experience delays in recovering its securities and possibly may incur a capital loss. Each Fund will be responsible for any loss that might result from its investment of the cash collateral it receives from a borrower.

 

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Notes to the Financial Statements (cont.)

 

 

In accordance with guidance presented in FASB Accounting Standard Update (“ASU”) 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, liabilities under the outstanding securities lending transactions as of October 31, 2023, which were comprised of cash, were as follows:

 

Fund      
FlexShares® US Quality Low Volatility Index Fund   $ 2,683,994  
FlexShares® Morningstar US Market Factor Tilt Index Fund     167,151,893  
FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund     8,760,452  
FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund     677,315  
FlexShares® STOXX® US ESG Select Index Fund     97,159  
FlexShares® STOXX® Global ESG Select Index Fund     857,504  
FlexShares® Morningstar Global Upstream Natural Resources Index Fund     303,760,945  
FlexShares® STOXX® Global Broad Infrastructure Index Fund     40,144,363  
FlexShares® Global Quality Real Estate Index Fund     2,704,220  
FlexShares® Quality Dividend Index Fund     129,448,662  
FlexShares® Quality Dividend Defensive Index Fund     18,783,683  
FlexShares® International Quality Dividend Index Fund     2,149,574  
FlexShares® International Quality Dividend Defensive Index Fund     125,891  
FlexShares® International Quality Dividend Dynamic Index Fund     695,880  
FlexShares® Core Select Bond Fund     80,325  

 

As of October 31, 2023, the Securities Lending Agency Agreement does not permit the Funds to enforce a netting arrangement.

 

The cash collateral received from securities loaned as disclosed in the Statements of Assets and Liabilities is

collateralized by securities on loan as disclosed within the Schedules of Investments and such borrowings have maturities that are overnight and continuous.

 

Securities lending agreements may be subject to regulation as qualified financial contracts (“QFCs”). Regulations adopted by federal banking regulators under the Dodd-Frank Act, which took effect in 2019, require that certain QFCs with counterparties that are part of U.S. or foreign global systemically important banking organizations be amended to include contractual restrictions on close-out and cross-default rights. If a covered counterparty of a Fund or certain of the covered counterparty’s affiliates were to become subject to certain insolvency proceedings, the Fund may be temporarily unable to exercise certain default rights, and the QFC may be transferred to another entity. These requirements may impact a Fund’s credit and counterparty risks. The remaining maturities of the securities lending transactions are considered overnight and continuous.

 

Derivative Contracts

 

Futures Contracts

 

All of the Index Funds may invest in futures contracts to help track the price and yield performance of their Underlying Indexes. At the time a Fund enters into a futures contract, it is generally required to make a margin deposit with the custodian of a specified amount of liquid assets. Subsequent payments to be made or received by the Funds equal to the change in contract value are recorded as variation margin payable or receivable and offset in unrealized gains or losses. Futures are marked to market each day with the change in value reflected in the unrealized gains or losses. A Fund recognizes a realized gain or loss when a contract is closed or expires. The Statements of Operations reflect unrealized gains or losses on open futures contracts, as “Net change in unrealized appreciation (depreciation) on futures contracts”, and any realized gains (losses) on closed futures contracts as “Net realized gain (loss) from Expiration or closing of futures contracts”.

 

The FlexShares Core Select Bond Fund may take long or short positions in futures to manage the Fund’s exposure to interest rate risk. The Fund seeks to mitigate the potential impact of interest rates on the performance of bonds by

 

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Notes to the Financial Statements (cont.)

 

 

entering into short positions in U.S. Treasury futures or transactions in interest rate swaps. The Fund’s short positions in U.S. Treasury futures and interest rate swaps are not intended to mitigate credit spread risk or other factors influencing the price of bonds, which may have a greater impact than interest rates. In addition, when interest rates fall, long-only bond investments will perform better than the Fund’s investments. As of October 31, 2023, the FlexShares Core Select Bond Fund did not hold swaps.

 

As of October 31, 2023, the FlexShares US Quality Low Volatility Index Fund, FlexShares Developed Markets ex-US Quality Low Volatility Index Fund, FlexShares Emerging Markets Quality Low Volatility Index Fund, FlexShares Morningstar US Market Factor Tilt Index Fund, FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund, FlexShares Morningstar Emerging Markets Factor Tilt Index Fund, FlexShares US Quality Large Cap Index Fund, FlexShares STOXX® US ESG Select Index Fund, FlexShares STOXX® Global ESG Select Index Fund, FlexShares ESG & Climate US Large Cap Core Index Fund, FlexShares ESG & Climate Developed Markets ex-US Core Index Fund, FlexShares ESG & Climate Emerging Markets Core Index Fund, FlexShares Morningstar Global Upstream Natural Resources Index Fund, FlexShares STOXX® Global Broad Infrastructure Index Fund, FlexShares Global Quality Real Estate Index Fund, FlexShares Quality Dividend Index Fund, FlexShares Quality Dividend Defensive Index Fund, FlexShares International Quality Dividend Index Fund, FlexShares International Quality Dividend Defensive Index Fund, FlexShares International Quality Dividend Dynamic Index Fund, and the FlexShares Core Select Bond Fund had open futures contracts.

 

The use of futures contracts involves, to varying degrees, elements of market and counterparty risk, which may exceed the amounts recognized in the Statements of Assets and Liabilities. Futures contracts present the following risks: imperfect correlation between the change in market value of a Fund’s securities and the price of futures contracts; the possible inability to close a futures contract when desired; losses due to unanticipated market movements, which potentially are unlimited; and the possible inability of NTI to correctly predict the direction of securities prices, interest

rates, currency exchange rates and other economic factors. Futures markets are highly volatile and the use of futures may increase the volatility of a Fund’s NAV. As a result of the low margin deposits normally required in futures trading, a relatively small price movement in a futures contract may result in substantial losses to a Fund. Futures contracts may be illiquid, and exchanges may limit fluctuations in futures contract prices during a single day. Foreign exchanges or boards of trade generally do not offer the same protection as U.S. exchanges.

 

Foreign Currency Translations

 

Values of investments denominated in foreign currencies are converted into U.S. dollars using the prevailing market rates on the date of valuation as quoted by one or more banks or dealers that make a two-way market in such currencies (or a data service provider based on quotations received from such banks or dealers). Any use of a rate different from the rates used by an Underlying Index’s index provider may affect the corresponding Index Fund’s ability to track its Underlying Index. The cost of purchases and proceeds from sales of investments, interest and dividend income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. “Net realized gain (loss) on foreign currency transactions” on the Statements of Operations include the effect of changes in exchange rates between trade date and settlement date on investment security transactions, foreign currency transactions and interest and dividends received, and the portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in “Net realized gain (loss) on investment in securities” on the Statements of Operations. Unrealized gains and losses on assets and liabilities, other than investments in securities, which result from changes in foreign currency exchange rates have been included in “Net change in unrealized appreciation (depreciation) on translation of other assets and liabilities denominated in foreign currencies” on the Statements of Operations.

 

Forward Foreign Currency Exchange Contracts

 

The FlexShares Developed Markets ex-US Quality Low Volatility Index Fund, FlexShares Emerging Markets Quality Low

 

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Volatility Index Fund, FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund, FlexShares Morningstar Emerging Markets Factor Tilt Index Fund, FlexShares STOXX® Global ESG Select Index Fund, FlexShares ESG & Climate Developed Markets ex-US Core Index Fund, FlexShares ESG & Climate Emerging Markets Core Index Fund, FlexShares Morningstar Global Upstream Natural Resources Index Fund, FlexShares STOXX® Global Broad Infrastructure Index Fund, FlexShares Global Quality Real Estate Index Fund, FlexShares Real Assets Allocation Index Fund, FlexShares International Quality Dividend Index Fund, FlexShares International Quality Dividend Defensive Index Fund, FlexShares International Quality Dividend Dynamic Index Fund, and the FlexShares Ultra-Short Income Fund may enter into forward foreign currency exchange contracts to facilitate local settlements or to protect against currency exposure in connection with its distributions to shareholders. The FlexShares Ultra-Short Income Fund also may engage in forward foreign currency transactions for hedging purposes in order to protect against uncertainty in the level of future foreign currency exchange rates. The Funds, however, do not expect to engage in currency transactions for speculative purposes (e.g., for potential income or capital gain). All forward foreign currency exchange contracts held are “marked-to-market” daily at the applicable exchange rates and any resulting unrealized gains or losses are recorded. The Funds record realized gains or losses at the time the forward foreign currency exchange contract is offset by entering into a closing transaction or extinguished by delivery of the currency. The difference between the future foreign currency exchange rates at the date of entry into the contract and the rates at the reporting date are included in “Net change in unrealized appreciation (depreciation) on forward foreign currency contracts” in the Statements of Operations. Realized gains or losses, if any, are included in “Net realized gain (loss) from settlement of forward foreign currency contracts” in the Statements of Operations. Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in U.S. Dollars without the delivery of foreign currency.

 

There are several risks associated with these contracts. One risk is the potential inability of counterparties to meet the terms of their contracts, and unanticipated movements in the value of a foreign currency relative to the U.S. dollar.

The contractual amounts of forward foreign currency exchange contracts do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. The Statements of Operations reflect (i) realized gains or losses, if any, in “Net realized gain (loss) from settlement of forward foreign currency contracts” and (ii) unrealized gains or losses in “Net change in unrealized appreciation (depreciation) on forward foreign currency contracts”. Forward foreign currency exchange contracts are privately negotiated transactions and can have substantial price volatility. As a result, they offer less protection against default by the other party than is available for instruments traded on an exchange. The institutions that deal in forward foreign currency exchange contracts are not required to continue to make markets in the currencies they trade, and these markets can experience periods of illiquidity.

 

As of October 31, 2023, the FlexShares Developed Markets ex-US Quality Low Volatility Index Fund, FlexShares Morningstar® Developed Markets ex-US Factor Tilt Index Fund, FlexShares Morningstar® Emerging Markets Factor Tilt Index Fund, FlexShares STOXX® Global ESG Select Index Fund, FlexShares ESG & Climate Developed Markets ex-US Core Index Fund, FlexShares ESG & Climate Emerging Markets Core Index Fund, FlexShares Morningstar® Global Upstream Natural Resources Index Fund, FlexShares STOXX® Global Broad Infrastructure Index Fund, FlexShares Global Quality Real Estate Index Fund, FlexShares International Quality Dividend Index Fund, and the FlexShares International Quality Dividend Dynamic Index Fund had open forward foreign currency contracts.

 

Offsetting of Financial Assets and Derivative Assets

 

The Funds’ accounting policy with respect to balance sheet offsetting is that, absent an event of default by the counterparty or a termination of the agreement, the International Swaps and Derivatives Association (ISDA) Master Agreement or similar agreement does not result in an offset of reported amounts of financial assets and financial liabilities in the Statements of Assets and Liabilities across transactions between the Fund and the applicable counterparty. In the event of a default, the agreement provides the right for the

 

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Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

non-defaulting party to liquidate the collateral and calculate the net exposure to the defaulting party or request additional collateral. The Funds’ right to setoff may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which a specific master netting agreement counterparty is subject.

 

For financial reporting purposes, the Trust can offset financial assets and financial liabilities of the FlexShares Developed Markets ex-US Quality Low Volatility Index Fund, FlexShares Emerging Markets Quality Low Volatility Index Fund, FlexShares Morningstar® Developed Markets ex-US Factor Tilt Index Fund, FlexShares Morningstar® Emerging Markets Factor Tilt Index Fund, FlexShares STOXX® Global

ESG Select Index Fund, FlexShares ESG & Climate Developed Market ex-US Core Index Fund, FlexShares ESG & Climate Emerging Markets Core Index Fund, FlexShares Morningstar® Global Upstream Natural Resources Index Fund, FlexShares STOXX® Global Broad Infrastructure Index Fund, FlexShares Global Quality Real Estate Index Fund, FlexShares International Quality Dividend Index Fund, FlexShares International Quality Dividend Defensive Index Fund and the FlexShares International Quality Dividend Dynamic Index Fund that are subject to master netting arrangements or similar agreements in the Statements of Assets and Liabilities. The following table presents the gross and net amounts of these assets and liabilities:

 

                 Gross Amounts Not Offset in the
Statement of Assets and Liabilities
        
          Gross Amounts of
Assets presented in
Statements of Assets
and Liabilities
     Financial
Instruments
     Cash Collateral
Received
     Net Amount  
FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund    Foreign Currency Contracts — Citibank NA    $ 1,083      $ (1,083)      $      $  
   Foreign Currency Contracts — Goldman Sachs & Co.      137                      137  
   Foreign Currency Contracts — JPMorgan Chase Bank NA      17,132        (14,800)               2,332  
   Foreign Currency Contracts — Morgan Stanley      3,734                      3,734  
     Foreign Currency Contracts — Toronto-Dominion Bank (The)      5,613        (974)               4,639  
     Total    $ 27,699      $ (16,857)      $      $ 10,842  
FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index    Foreign Currency Contracts — BNP Paribas SA    $ 14,407      $      $      $ 14,407  
     Total    $ 14,407      $      $      $ 14,407  
FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund    Foreign Currency Contracts — BNP Paribas SA    $ 222      $ (222)      $      $  
   Foreign Currency Contracts — Citibank NA      2,031                      2,031  
     Foreign Currency Contracts — Morgan Stanley      3,918                      3,918  
     Total    $ 6,171      $ (222)      $      $ 5,949  
FlexShares® STOXX® Global ESG Select Index Fund    Foreign Currency Contracts — Citibank NA    $ 2,997      $      $      $ 2,997  
   Foreign Currency Contracts — Toronto-Dominion Bank (The)      1,563                      1,563  
     Foreign Currency Contracts — UBS AG      3,196                      3,196  
     Total    $ 7,756      $      $      $ 7,756  
FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund    Foreign Currency Contracts — BNP Paribas SA    $ 381      $      $      $ 381  
   Foreign Currency Contracts — Citibank NA      3,592                      3,592  
   Foreign Currency Contracts — Toronto-Dominion Bank (The)      1,497        (1,497)                
     Foreign Currency Contracts — UBS AG      1,022                      1,022  
     Total    $ 6,492      $ (1,497)      $      $ 4,995  

 

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Notes to the Financial Statements (cont.)

 

 

                 Gross Amounts Not Offset in the
Statement of Assets and Liabilities
        
          Gross Amounts of
Assets presented in
Statements of Assets
and Liabilities
     Financial
Instruments
     Cash Collateral
Received
     Net Amount  
FlexShares® ESG & Climate Emerging Markets Core Index Fund    Foreign Currency Contracts — Toronto-Dominion Bank (The)    $ 3      $      $      $ 3  
     Total    $ 3      $      $      $ 3  
FlexShares® Morningstar Global Upstream Natural Resources Index    Foreign Currency Contracts — Bank of Montreal    $ 14,861      $      $      $ 14,861  
   Foreign Currency Contracts — BNP Paribas SA      5,334                      5,334  
   Foreign Currency Contracts — Citibank NA      5,615        (5,615)                
   Foreign Currency Contracts — JPMorgan Chase Bank NA      212,011        (212,011)                
   Foreign Currency Contracts — Morgan Stanley      36,539                      36,539  
     Foreign Currency Contracts — Toronto-Dominion Bank (The)      531,529        (181,227)               350,302  
     Total    $ 805,889      $ (398,853)      $      $ 407,036  
FlexShares® STOXX® Global Broad Infrastructure Index Fund    Foreign Currency Contracts — Bank of Montreal    $ 6,925      $      $      $ 6,925  
     Foreign Currency Contracts — Toronto-Dominion Bank (The)      71,922                      71,922  
     Total    $ 78,847      $      $      $ 78,847  
FlexShares® Global Quality Real Estate Index Fund    Foreign Currency Contracts — BNP Paribas SA    $ 434      $      $      $ 434  
   Foreign Currency Contracts — Citibank NA      14,797                      14,797  
     Foreign Currency Contracts — Toronto-Dominion Bank (The)      2,463                      2,463  
     Total    $ 17,694      $      $      $ 17,694  
FlexShares® International Quality Dividend Index Fund    Foreign Currency Contracts — Bank of Montreal    $ 12,982      $      $      $ 12,982  
   Foreign Currency Contracts — BNP Paribas SA      21,044        (2,190)               18,854  
   Foreign Currency Contracts — Citibank NA      23,494        (23,494)                
   Foreign Currency Contracts — JPMorgan Chase Bank NA      25,369                      25,369  
   Foreign Currency Contracts — Morgan Stanley      59,766                      59,766  
   Foreign Currency Contracts — Toronto-Dominion Bank (The)      69,077        (69,077)                
     Foreign Currency Contracts — UBS AG      863        (863)                
     Total    $ 212,595      $ (95,624)      $      $ 116,971  
FlexShares® International Quality Dividend Dynamic Index Fund    Foreign Currency Contracts — Toronto-Dominion Bank (The)    $ 5,506      $      $      $ 5,506  
     Total    $ 5,506      $      $      $ 5,506  

 

   FLEXSHARES ANNUAL REPORT     495  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

                 Gross Amounts Not Offset in the
Statement of Assets and Liabilities
        
          Gross Amounts of
Liabilities presented in
Statements of Assets
and Liabilities
     Financial
Instruments
     Cash Collateral
Pledged
     Net Amount  
FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund               
   Foreign Currency Contracts — BNP Paribas SA    $ 113      $      $      $ 113  
   Foreign Currency Contracts — Citibank NA      2,757        (1,083)               1,674  
   Foreign Currency Contracts — JPMorgan Chase Bank NA      14,800        (14,800)                
     Foreign Currency Contracts —Toronto-Dominion Bank (The)      974        (974)                
     Total    $ 18,644      $ (16,857)      $      $ 1,787  
FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index    Foreign Currency Contracts — Citibank NA    $ 13,108      $      $      $ 13,108  
     Foreign Currency Contracts — Toronto-Dominion Bank (The)      31,190                      31,190  
     Total    $ 44,298      $      $      $ 44,298  
FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund    Foreign Currency Contracts — BNP Paribas SA    $ 333      $ (222)      $      $ 111  
     Total    $ 333      $ (222)      $      $ 111  
FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund    Foreign Currency Contracts — Goldman Sachs & Co.    $ 585      $      $      $ 585  
   Foreign Currency Contracts — JPMorgan Chase Bank NA      317                      317  
     Foreign Currency Contracts — Toronto-Dominion Bank (The)      2,392        (1,497)               895  
     Total    $ 3,294      $ (1,497)      $      $ 1,797  
FlexShares® Morningstar Global Upstream Natural Resources Index    Foreign Currency Contracts — Citibank NA    $  197,390      $ (5,615)      $      $  191,775  
   Foreign Currency Contracts — Goldman Sachs & Co.      43,664                      43,664  
   Foreign Currency Contracts — JPMorgan Chase Bank NA      405,608        (212,011)               193,597  
     Foreign Currency Contracts — Toronto-Dominion Bank (The)      181,227        (181,227)                
     Total    $ 827,889      $ (398,853)      $      $ 429,036  
FlexShares® STOXX® Global Broad Infrastructure Index Fund    Foreign Currency Contracts — JPMorgan Chase Bank NA    $ 14,821      $      $      $ 14,821  
     Total    $ 14,821      $      $      $ 14,821  
FlexShares® Global Quality Real Estate Index Fund    Foreign Currency Contracts — UBS AG    $ 20,492      $      $      $ 20,492  
     Total    $ 20,492      $      $      $ 20,492  
FlexShares® International Quality Dividend Index Fund    Foreign Currency Contracts — BNP Paribas SA    $ 2,190      $ (2,190)      $      $  
   Foreign Currency Contracts — Citibank NA      30,577        (23,494)               7,083  
   Foreign Currency Contracts — Toronto-Dominion Bank (The)      81,369        (69,077)               12,292  
     Foreign Currency Contracts — UBS AG      21,469        (863)               20,606  
     Total    $ 135,605      $ (95,624)      $      $ 39,981  
FlexShares® International Quality Dividend Dynamic Index Fund    Foreign Currency Contracts — Citibank NA    $ 1,549      $      $      $ 1,549  
     Total    $ 1,549      $      $      $ 1,549  

 

496    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

The following tables indicate the location of derivative-related items on the Statements of Assets and Liabilities as well as the effect of derivative instruments on the Statements of Operations during the reporting period.

 

Fair Value of Derivative Instruments as of October 31, 2023

 

Derivatives by risk type  

Statements of Assets

and Liabilities Location

  Fund   Value  
Equity Index Futures Contracts   Assets — Unrealized appreciation on futures contracts*   FlexShares US Quality Low Volatility Index Fund   $ 2,310  
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares US Quality Low Volatility Index Fund     (345
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     (79,276
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     27,699  
Foreign Currency Contracts   Liabilities — Unrealized depreciation on forward foreign currency contracts   FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     (18,644
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares Emerging Markets Quality Low Volatility Index Fund     (12,537
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares Morningstar US Market Factor Tilt Index Fund     (730,606
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     (329,765
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     14,407  
Foreign Currency Contracts   Liabilities — Unrealized depreciation on forward foreign currency contracts   FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     (44,298
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     (51,792
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     6,171  
Foreign Currency Contracts   Liabilities — Unrealized depreciation on forward foreign currency contracts   FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     (333
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares US Quality Large Cap Index Fund     (65,571
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares STOXX® US ESG Select Index Fund     (116,118
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares STOXX® Global ESG Select Index Fund     (90,109
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares STOXX® Global ESG Select Index Fund     7,756  
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares ESG & Climate US Large Cap Core Index Fund     (17,721

 

   FLEXSHARES ANNUAL REPORT     497  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Derivatives by risk type  

Statements of Assets

and Liabilities Location

  Fund   Value  
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares ESG & Climate Developed Markets ex-US Core Index Fund   $ (21,494
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     6,492  
Foreign Currency Contracts   Liabilities — Unrealized depreciation on forward foreign currency contracts   FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     (3,294
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares ESG & Climate Emerging Markets Core Index Fund     (3,512
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares ESG & Climate Emerging Markets Core Index Fund     3  
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares Morningstar Global Upstream Natural Resources Index Fund     (1,738,108
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares Morningstar Global Upstream Natural Resources Index Fund     805,889  
Foreign Currency Contracts   Liabilities — Unrealized depreciation on forward foreign currency contracts   FlexShares Morningstar Global Upstream Natural Resources Index Fund     (827,889
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares STOXX® Global Broad Infrastructure Index Fund     (920,022
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares STOXX® Global Broad Infrastructure Index Fund     78,847  
Foreign Currency Contracts   Liabilities — Unrealized depreciation on forward foreign currency contracts   FlexShares STOXX® Global Broad Infrastructure Index Fund     (14,821
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares Global Quality Real Estate Index Fund     (239,027
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares Global Quality Real Estate Index Fund     17,694  
Foreign Currency Contracts   Liabilities — Unrealized depreciation on forward foreign currency contracts   FlexShares Global Quality Real Estate Index Fund     (20,492
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares Quality Dividend Index Fund     (55,107
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares Quality Dividend Defensive Index Fund     (70,583
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares International Quality Dividend Index Fund     (505,171
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares International Quality Dividend Index Fund     212,595  
Foreign Currency Contracts   Liabilities — Unrealized depreciation on forward foreign currency contracts   FlexShares International Quality Dividend Index Fund     (135,605
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares International Quality Dividend Defensive Index Fund     (74,486

 

498    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Derivatives by risk type  

Statements of Assets

and Liabilities Location

  Fund   Value  
Equity Index Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares International Quality Dividend Dynamic Index Fund   $ (62,745
Foreign Currency Contracts   Assets — Unrealized appreciation on forward foreign currency contracts   FlexShares International Quality Dividend Dynamic Index Fund     5,506  
Foreign Currency Contracts   Liabilities — Unrealized depreciation on forward foreign currency contracts   FlexShares International Quality Dividend Dynamic Index Fund     (1,549
Interest Rate Futures Contracts   Liabilities — Unrealized depreciation on futures contracts*   FlexShares Core Select Bond Fund     (37,249

 

*

Includes cumulative appreciation/depreciation on futures contracts as reported in the Schedule of Investments. Current day’s variation margin is reported within the Statement of Assets and Liabilities for futures contracts.

 

The Effect of Derivative Instruments on the Statements of Operations for the Period Ended October 31, 2023

 

Derivatives by
risk type
 

Location of Gain or (Loss) on

Derivatives on the Statements of
Operations

  Fund  

Realized

Gain or

(Loss) on

Derivatives

   

Change in Unrealized

Appreciation or

(Depreciation) on

Derivatives

 
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares US Quality Low Volatility Index Fund   $ 82,116     $ (4,832
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     202,228       (36,753
Foreign
Currency
Contracts
  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     (1,334     (5,891
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares Emerging Markets Quality Low Volatility Index Fund     (5,586     (4,868

Foreign

Currency
Contracts

  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares Emerging Markets Quality Low Volatility Index Fund     (8      

Equity Index

Futures
Contracts

  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares Morningstar US Market Factor Tilt Index Fund     292,338       (1,016,036

 

   FLEXSHARES ANNUAL REPORT     499  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Derivatives by
risk type
 

Location of Gain or (Loss) on

Derivatives on the Statements of
Operations

  Fund  

Realized

Gain or

(Loss) on

Derivatives

   

Change in Unrealized

Appreciation or

(Depreciation) on

Derivatives

 
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund   $ 1,184,364     $ (391,983
Foreign
Currency
Contracts
  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     (47,567     21,599  
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     (15,728     125,329  
Foreign
Currency
Contracts
  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     18,704       1,326  
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares US Quality Large Cap Index Fund     20,757       (17,315
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares STOXX® US ESG Select Index Fund     112,767       (80,050
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares STOXX® Global ESG Select Index Fund     140,996       (54,222
Foreign
Currency
Contracts
  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares STOXX® Global ESG Select Index Fund     957       3,160  
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares ESG & Climate US Large Cap Core Index Fund     23,434       (12,103
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     34,251       (16,718

 

500    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Derivatives by
risk type
 

Location of Gain or (Loss) on

Derivatives on the Statements of
Operations

  Fund  

Realized

Gain or

(Loss) on

Derivatives

   

Change in Unrealized

Appreciation or

(Depreciation) on

Derivatives

 
Foreign
Currency
Contracts
  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares ESG & Climate Developed Markets ex-US Core Index Fund   $ 343     $ 408  
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares ESG & Climate Emerging Markets Core Index Fund     (1,316     3,300  
Foreign
Currency
Contracts
  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares ESG & Climate Emerging Markets Core Index Fund     7       3  
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares Morningstar Global Upstream Natural Resources Index Fund     (1,699,233     (1,694,521
Foreign
Currency
Contracts
  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares Morningstar Global Upstream Natural Resources Index Fund     (492,100     266,510  
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares STOXX® Global Broad Infrastructure Index Fund     1,789,383       (921,993

Foreign
Currency

Contracts

  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares STOXX® Global Broad Infrastructure Index Fund     53,105       112,999  
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares Global Quality Real Estate Index Fund     425,518       (187,225
Foreign
Currency
Contracts
  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares Global Quality Real Estate Index Fund     112,370       (16,487

 

   FLEXSHARES ANNUAL REPORT     501  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Derivatives by
risk type
 

Location of Gain or (Loss) on

Derivatives on the Statements of
Operations

  Fund  

Realized

Gain or

(Loss) on

Derivatives

   

Change in Unrealized

Appreciation or

(Depreciation) on

Derivatives

 
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares Quality Dividend Index Fund   $ 357,938     $ (101,537
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares Quality Dividend Defensive Index Fund     154,895       (31,829
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares International Quality Dividend Index Fund     926,785       (180,632
Foreign
Currency
Contracts
  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares International Quality Dividend Index Fund     (74,191     93,106  
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares International Quality Dividend Defensive Index Fund     68,091       (41,044
Foreign
Currency
Contracts
  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares International Quality Dividend Defensive Index Fund     (41,670     (18,270
Equity Index
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares International Quality Dividend Dynamic Index Fund     234,106       (24,231

Foreign

Currency
Contracts

  Net realized gain (loss) on
Foreign currency transactions, Net change in unrealized appreciation (depreciation) on Forward foreign currency contracts
  FlexShares International Quality Dividend Dynamic Index Fund     (4,559     (6,064
Interest Rate
Futures
Contracts
  Net realized gain (loss) on
Futures contracts, Net change in unrealized appreciation (depreciation) on Futures contracts
  FlexShares Core Select Bond Fund     (145,963     (33,289

 

502    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

At October 31, 2023, the volume of derivative activities, which represents activities throughout the period, was as follows:

 

    Foreign Exchange
Contracts
    Equity Contracts     Interest Rate future  
Fund   Number of
Trades
    Average
Notional
Amount
    Number of
Trades
Long
   

Average
Notional
Balance

Long

    Number
of
Trades
Short
    Average
Notional
Balance Short
    Number
of
Trades
Long
    Average
Notional
Balance
Long
    Number of
Trades
Short
    Average
Notional
Balance Short
 
FlexShares US Quality Low Volatility Index Fund         $       61     $ 211,311           $           $           $  
FlexShares Developed Markets Ex-US Quality Low Volatility Index Fund     142       82,562       43       217,938                                      
FlexShares Emerging Markets Quality Low Volatility Index Fund     1       6,395       28       68,947                                      
FlexShares Morningstar US Market Factor Tilt Index Fund                 138       699,128                                      
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     68       582,710       177       434,626                                      
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     55       172,460       80       247,106                                      
FlexShares US Quality Large Cap Index Fund                 36       262,845                                      
FlexShares STOXX US ESG Select Index Fund                 24       446,717                                      
FlexShares STOXX Global ESG Select Index Fund     24       129,587       58       218,899                                      
FlexShares® ESG & Climate US Large Cap Core Index Fund                 27       77,960                                      
FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund     155       37,651       37       111,159                                      
FlexShares ESG & Climate Emerging Markets Core Index Fund     3       4,756       4       49,141                                      
FlexShares Morningstar Global Upstream Natural Resources Index Fund     238       1,615,312       459       1,174,942                                      
FlexShares STOXX Global Broad Infrastructure Index Fund     12       3,557,814       253       732,367                                      
FlexShares Global Quality Real Estate Index Fund     99       184,113       117       351,831                                      
FlexShares Quality Dividend Index Fund                 113       815,181                                      
FlexShares Quality Dividend Defensive Index Fund                 49       513,980                                      
FlexShares Quality Dividend Dynamic Index Fund                                                            

 

   FLEXSHARES ANNUAL REPORT     503  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Foreign Exchange
Contracts
    Equity Contracts     Interest Rate future  
Fund   Number of
Trades
    Average
Notional
Amount
    Number of
Trades
Long
   

Average
Notional
Balance

Long

    Number
of
Trades
Short
    Average
Notional
Balance Short
    Number
of
Trades
Long
    Average
Notional
Balance
Long
    Number of
Trades
Short
    Average
Notional
Balance Short
 
FlexShares International Quality Dividend Index Fund     178       588,989       264       395,702                                      
FlexShares International Quality Dividend Defensive Index Fund     46       61,651       51       128,704                                      
FlexShares International Quality Dividend Dynamic Index Fund     46       92,406       82       202,994                                      
FlexShares Core Select Bond Fund                                         7       6,958,368              

 

Taxes and Distributions

 

Each Fund has qualified and intends to continue to qualify as a regulated investment company by complying with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, which includes distributing substantially all of its net investment income and net capital gains to shareholders. Accordingly, no provision for federal and state income taxes is required in the financial statements.

 

As of October 31, 2023, management of the Funds has reviewed all open tax years and major jurisdictions and concluded that there is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next 12 months. On an ongoing basis management will monitor the tax positions taken to determine if adjustment to conclusions are necessary based on factors including but not limited to further implementation on guidance expected from FASB and on-going analysis of tax law, regulation, and interpretations thereof.

Dividends from net investment income, including any net foreign currency gains, are generally declared and paid by each Fund according to the following schedule:

 

Fund  

Declared

And Paid
Monthly

   

Declared

And Paid
Quarterly

 
FlexShares US Quality Low Volatility Index Fund             x  
FlexShares Developed Markets ex-US Quality Low Volatility Index Fund             x  
FlexShares Emerging Markets Quality Low Volatility Index Fund             x  
FlexShares Morningstar US Market Factor Tilt Index Fund             x  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund             x  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund             x  
FlexShares US Quality Large Cap Index Fund             x  
FlexShares STOXX® US ESG Select Index Fund             x  
FlexShares STOXX® Global ESG Select Index Fund             x  
FlexShares ESG & Climate US Large Cap Core Index Fund             x  

 

 

504    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Fund  

Declared

And Paid
Monthly

   

Declared

And Paid
Quarterly

 
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund             x  

FlexShares ESG & Climate

Emerging Markets Core Index Fund

            x  

FlexShares Morningstar Global Upstream Natural Resources Index

Fund

            x  
FlexShares STOXX® Global Broad Infrastructure Index Fund             x  
FlexShares Global Quality Real Estate Index Fund             x  
FlexShares Real Assets Allocation Index Fund             x  
FlexShares Quality Dividend Index Fund             x  
FlexShares Quality Dividend Defensive Index Fund             x  
FlexShares International Quality Dividend Index Fund             x  
FlexShares International Quality Dividend Defensive Index Fund             x  
FlexShares International Quality Dividend Dynamic Index Fund             x  
FlexShares iBoxx 3-Year Target Duration TIPS Index Fund     x          
FlexShares iBoxx 5-Year Target Duration TIPS Index Fund     x          
FlexShares Disciplined Duration MBS Index Fund     x          
FlexShares Credit-Scored US Corporate Bond Index Fund     x          
FlexShares Credit-Scored US Long Corporate Bond Index Fund     x          
FlexShares High Yield Value-Scored Bond Index Fund     x          
FlexShares ESG & Climate Investment Grade Corporate Core Index Fund     x          
FlexShares Ultra-Short Income Fund     x          
FlexShares Core Select Bond Fund     x          

Distribution of net realized securities gains, if any, generally are distributed at least annually. The Trust reserves the right to declare special distributions if, in its reasonable discretion, such action is necessary or advisable to improve tracking error, to preserve its status as a regulated investment company or to avoid imposition of income or excise taxes on undistributed income or realized gains. Tracking error is a measurement of how much the return on a portfolio deviates from the return on its benchmark index.

 

Dividends and securities gains distributions are distributed in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds. The amount of distributions from net investment income and net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences (e.g., wash sales) do not require a reclassification. The Funds may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as a part of the dividends paid deduction for income tax purposes. The Funds’ tax year end is October 31st and the tax character of current year distributions and current components of accumulated earnings (deficit) will be determined at the end of the current tax year.

 

Temporary differences are generally due to different book and tax treatments for the timing of the recognition of gains and losses on certain investment transactions, mark to market of forward foreign currency contracts, mark to market of futures contracts, mark to market of passive foreign investment companies (“PFICs”), non-taxable special dividends, wash sale loss deferrals and capital loss carryforward.

 

   FLEXSHARES ANNUAL REPORT     505  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Permanent differences, primarily due to gain (loss) on in-kind redemptions, paydown loss reclassification, foreign currency gains and losses, forward foreign currency gains and losses, PFICs gains and losses, non-taxable special dividends, investments in partnerships, taxable over-distributions, foreign capital gains tax reclassification, perpetual bonds and equalization as of October 31, 2023 (the Funds’ tax year end), among the Funds’ components of net assets are as follows:

 

Fund   Accumulated
undistributed net
investment income (loss)
    Accumulated net
realized gain (loss) on
investments
    Paid in
capital
 
FlexShares US Quality Low Volatility Index Fund*   $ (13,945   $ (11,001,162   $ 11,015,107  
FlexShares Developed Markets ex-US Quality Low Volatility Index Fund*     33,327       (970,745     937,418  
FlexShares Emerging Markets Quality Low Volatility Index Fund*     (55,239     58,099       (2,860
FlexShares Morningstar US Market Factor Tilt Index Fund     204,975       (68,274,121     68,069,146  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     1,030,391       (6,160,567     5,130,176  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     1,819,060       (2,198,699     379,639  
FlexShares US Quality Large Cap Index Fund     (17,009     (3,338,471     3,355,480  
FlexShares STOXX® US ESG Select Index Fund     (19,984     (7,383,819     7,403,803  
FlexShares STOXX® Global ESG Select Index Fund     74,021       (3,850,325     3,776,304  
FlexShares ESG & Climate US Large Cap Core Index Fund     (85     (357,942     358,027  
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     (8,949     8,949        
FlexShares ESG & Climate Emerging Markets Core Index Fund     9,473       (9,473      
FlexShares Morningstar Global Upstream Natural Resources Index Fund     (309,290     (12,936,571     13,245,861  
FlexShares STOXX® Global Broad Infrastructure Index Fund     (563,031     (118,403,721     118,966,752  
FlexShares Global Quality Real Estate Index Fund     641,884       (4,049,278     3,407,394  
FlexShares Real Assets Allocation Index Fund     2,105       1,355,879       (1,357,984
FlexShares Quality Dividend Index Fund     135,612       (152,576,779     152,441,167  
FlexShares Quality Dividend Defensive Index Fund     (24,320     (26,165,774     26,190,094  
FlexShares International Quality Dividend Index Fund     1,502,180       (4,627,667     3,125,487  
FlexShares International Quality Dividend Defensive Index Fund     13,656       (1,073,213     1,059,557  
FlexShares International Quality Dividend Dynamic Index Fund     518,087       (5,166,502     4,648,415  
FlexShares iBoxx 3-Year Target Duration TIPS Index Fund           11,218,790       (11,218,790
FlexShares iBoxx 5-Year Target Duration TIPS Index Fund           5,873,720       (5,873,720
FlexShares Disciplined Duration MBS Index Fund     532,189       (532,189      
FlexShares Credit-Scored US Corporate Bond Index Fund     105,963       (105,963      
FlexShares Credit-Scored US Long Corporate Bond Index Fund     4,223       (4,223      
FlexShares High Yield Value-Scored Bond Index Fund     174,353       (174,353      

 

506    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Fund   Accumulated
undistributed net
investment income (loss)
    Accumulated net
realized gain (loss) on
investments
    Paid in
capital
 
FlexShares ESG & Climate Investment Grade Corporate Core Index Fund   $ 13,983     $ (13,983   $  
FlexShares Ultra-Short Income Fund     (67,633     67,633        
FlexShares Core Select Bond Fund     50,923       1,258,404       (1,309,327

 

The tax character of distributions paid for the tax year ended October 31, 2023, and October 31, 2022, were as follows:

 

    Year Ended October 31, 2023     Year Ended October 31, 2022  
Fund   Distributions
paid from
ordinary
income
    Distributions
paid from net
long term
capital gains
    Tax Return
of Capital
    Total
Distributions
    Distributions
paid from
ordinary
income
    Distributions
paid from net
long term
capital gains
    Tax Return
of Capital
    Total
Distributions
 
FlexShares US Quality Low Volatility Index Fund   $ 3,156,833     $     $     $ 3,156,833     $ 2,196,287     $     $     $ 2,196,287  
FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     2,014,225                   2,014,225       2,140,729                   2,140,729  
FlexShares Emerging Markets Quality Low Volatility Index Fund     436,593                   436,593       416,284             24,777       441,061  
FlexShares Morningstar US Market Factor Tilt Index Fund     21,821,054                   21,821,054       22,299,297                   22,299,297  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     13,198,440                   13,198,440       22,504,833             992,999       23,497,832  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     7,099,686                   7,099,686       12,431,512                   12,431,512  
FlexShares US Quality Large Cap Index Fund     1,897,433                   1,897,433       1,808,374                   1,808,374  
FlexShares STOXX® US ESG Select Index Fund     2,147,796                   2,147,796       2,266,829                   2,266,829  
FlexShares STOXX® Global ESG Select Index Fund     2,604,964                   2,604,964       3,114,461                   3,114,461  
FlexShares ESG & Climate US Large Cap Core Index Fund     460,917                   460,917       128,991       706             129,697  
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     958,970                   958,970       406,987                   406,987  

 

   FLEXSHARES ANNUAL REPORT     507  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Year Ended October 31, 2023     Year Ended October 31, 2022  
Fund   Distributions
paid from
ordinary
income
    Distributions
paid from net
long term
capital gains
    Tax Return
of Capital
    Total
Distributions
    Distributions
paid from
ordinary
income
    Distributions
paid from net
long term
capital gains
    Tax Return
of Capital
    Total
Distributions
 
FlexShares ESG & Climate Emerging Markets Core Index Fund*   $ 104,863     $     $     $ 104,863     $ 65,664     $     $     $ 65,664  
FlexShares Morningstar Global Upstream Natural Resources Index Fund     217,789,649                   217,789,649       349,767,759                   349,767,759  
FlexShares STOXX® Global Broad Infrastructure Index Fund     54,907,766                   54,907,766       71,164,043                   71,164,043  
FlexShares Global Quality Real Estate Index Fund     8,872,134                   8,872,134       12,433,295             212,283       12,645,578  
FlexShares Real Assets Allocation Index Fund     512,404                   512,404       1,056,448                   1,056,448  
FlexShares Quality Dividend Index Fund     36,041,105                   36,041,105       36,901,147                   36,901,147  
FlexShares Quality Dividend Defensive Index Fund     7,830,976                   7,830,976       9,019,363                   9,019,363  
FlexShares International Quality Dividend Index Fund     25,465,739                   25,465,739       29,536,094                   29,536,094  
FlexShares International Quality Dividend Defensive Index Fund     1,463,869                   1,463,869       2,940,092                   2,940,092  
FlexShares International Quality Dividend Dynamic Index Fund     4,043,930                   4,043,930       4,368,329                   4,368,329  
FlexShares iBoxx 3-Year Target Duration TIPS Index Fund     70,475,144                   70,475,144       131,367,411             2,470,987       133,838,398  
FlexShares iBoxx 5-Year Target Duration TIPS Index Fund     25,865,870                   25,865,870       53,319,431             769,089       54,088,520  
FlexShares Disciplined Duration MBS Index Fund     2,711,658                   2,711,658       2,906,209                   2,906,209  
FlexShares Credit-Scored US Corporate Bond Index Fund     8,908,201                   8,908,201       6,279,015       2,010,194             8,289,209  
FlexShares Credit-Scored US Long Corporate Bond Index Fund     1,709,535                   1,709,535       2,152,418       685,037             2,837,455  
FlexShares High Yield Value-Scored Bond Index Fund     93,229,360                   93,229,360       55,009,030       1,007,533             56,016,563  

 

508    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

    Year Ended October 31, 2023     Year Ended October 31, 2022  
Fund   Distributions
paid from
ordinary
income
    Distributions
paid from net
long term
capital gains
    Tax Return
of Capital
    Total
Distributions
    Distributions
paid from
ordinary
income
    Distributions
paid from net
long term
capital gains
    Tax Return
of Capital
    Total
Distributions
 
FlexShares ESG & Climate Investment Grade Corporate Core Index Fund   $ 1,318,208     $     $     $ 1,318,208     $ 1,093,741     $     $     $ 1,093,741  
FlexShares Ultra-Short Income Fund     38,566,601                   38,566,601       7,279,652       627,909             7,907,561  
FlexShares Core Select Bond Fund     5,547,838                   5,547,838       3,352,156                   3,352,156  

 

*

Commencement of operations on April 20, 2022

 

As of October 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:

 

Fund   Undistributed
Ordinary
Income
    Undistributed
Long-Term
Capital Gains
    Accumulated
Capital and
Other Losses
    Unrealized
Appreciated/
(Depreciated)
 
FlexShares US Quality Low Volatility Index Fund   $ 357,431     $     $ (10,885,039   $ 11,291,636  
FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     418,446             (5,150,172     (1,303,271
FlexShares Emerging Markets Quality Low Volatility Index Fund     9,422             (1,374,462     (1,068,277
FlexShares Morningstar US Market Factor Tilt Index Fund     3,214,721             (47,769,070     469,965,558  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     5,241,853             (127,394,105     17,955,993  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     4,850,122             (78,207,093     159,826  
FlexShares US Quality Large Cap Index Fund     215,453             (7,567,330     6,797,985  
FlexShares STOXX® US ESG Select Index Fund     284,490             (7,436,552     11,460,002  
FlexShares STOXX® Global ESG Select Index Fund     526,426             (7,924,425     24,173,819  
FlexShares ESG & Climate US Large Cap Core Index Fund     81,560             (605,306     79,951  
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     144,944             (2,189,649     (1,866,028
FlexShares ESG & Climate Emerging Markets Core Index Fund     30,311             (230,162     (609,488
FlexShares Morningstar Global Upstream Natural Resources Index Fund     43,217,751             (1,098,185,272     216,460,320  
FlexShares STOXX® Global Broad Infrastructure Index Fund     6,643,785             (230,956,317     (137,443,474
FlexShares Global Quality Real Estate Index Fund     298,636             (65,254,222     (43,295,006
FlexShares Real Assets Allocation Index Fund                 (740,661     (3,832,291

 

   FLEXSHARES ANNUAL REPORT     509  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Fund   Undistributed
Ordinary
Income
    Undistributed
Long-Term
Capital Gains
    Accumulated
Capital and
Other Losses
    Unrealized
Appreciated/
(Depreciated)
 
FlexShares Quality Dividend Index Fund   $ 5,614,878     $     $ (150,004,663   $ 145,641,451  
FlexShares Quality Dividend Defensive Index Fund     1,117,618             (38,688,284     24,024,113  
FlexShares International Quality Dividend Index Fund     10,585,320             (196,891,117     (27,842,498
FlexShares International Quality Dividend Defensive Index Fund     343,843             (29,186,806     (1,658,215
FlexShares International Quality Dividend Dynamic Index Fund     1,826,556             (24,086,274     (6,712,222
FlexShares iBoxx 3-Year Target Duration TIPS Index Fund     10,423,162             (146,788,111     (108,003,462
FlexShares iBoxx 5-Year Target Duration TIPS Index Fund     4,587,365             (38,205,305     (76,349,655
FlexShares Disciplined Duration MBS Index Fund     321,558             (14,378,429     (7,851,426
FlexShares Credit-Scored US Corporate Bond Index Fund     1,111,790             (26,605,903     (15,584,572
FlexShares Credit-Scored US Long Corporate Bond Index Fund     143,487             (12,124,960     (6,496,878
FlexShares High Yield Value-Scored Bond Index Fund     9,849,899             (131,676,831     (90,701,539
FlexShares ESG & Climate Investment Grade Corporate Core Index Fund     94,595             (8,049,336     (3,497,949
FlexShares Ultra-Short Income Fund     4,867,065             (1,043,098     (3,429,075
FlexShares Core Select Bond Fund                 (13,822,949     (21,869,180

 

Capital loss carry forwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous law and may be carried forward indefinitely to offset future gains.

 

For the tax year ended October 31, 2023, the following Funds had available post-enactment capital loss carryforwards to offset future net capital gains to the extent provided by regulations:

 

Fund   Short-Term     Long-Term     Total  
FlexShares US Quality Low Volatility Index Fund   $ 7,362,077     $ 3,522,962     $ 10,885,039  
FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     3,241,058       1,909,114       5,150,172  
Fund   Short-Term     Long-Term     Total  
FlexShares Emerging Markets Quality Low Volatility Index Fund   $ 785,129     $ 589,333     $ 1,374,462  
FlexShares Morningstar US Market Factor Tilt Index Fund     32,585,524       15,183,546       47,769,070  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     28,949,295       98,444,810       127,394,105  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     26,007,227       52,199,866       78,207,093  

 

510    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

Fund   Short-Term     Long-Term     Total  
FlexShares US Quality Large Cap Index Fund   $ 3,666,731     $ 3,900,599     $ 7,567,330  
FlexShares STOXX® US ESG Select Index Fund     7,156,636       279,916       7,436,552  
FlexShares STOXX® Global ESG Select Index Fund     7,080,589       843,836       7,924,425  
FlexShares ESG & Climate US Large Cap Core Index Fund     290,150       315,156       605,306  
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     1,620,184       569,465       2,189,649  
FlexShares ESG & Climate Emerging Markets Core Index Fund     171,773       58,389       230,162  
FlexShares Morningstar Global Upstream Natural Resources Index Fund     385,239,809       712,945,463       1,098,185,272  
FlexShares STOXX® Global Broad Infrastructure Index Fund     63,184,453       167,771,864       230,956,317  
Fund   Short-Term     Long-Term     Total  
FlexShares Global Quality Real Estate Index Fund   $ 44,579,447     $ 20,674,775     $ 65,254,222  
FlexShares Real Assets Allocation Index Fund     108,379       632,282       740,661  
FlexShares Quality Dividend Index Fund     99,572,290       50,432,373       150,004,663  
FlexShares Quality Dividend Defensive Index Fund     30,400,105       8,288,179       38,688,284  
FlexShares International Quality Dividend Index Fund     123,079,184       73,811,933       196,891,117  
FlexShares International Quality Dividend Defensive Index Fund     18,194,421       10,992,385       29,186,806  
FlexShares International Quality Dividend Dynamic Index Fund     14,626,606       9,459,668       24,086,274  
FlexShares iBoxx 3-Year Target Duration TIPS Index Fund     117,222,701       29,565,410       146,788,111  
FlexShares iBoxx 5-Year Target Duration TIPS Index Fund     19,478,364       18,726,941       38,205,305  
FlexShares Disciplined Duration MBS Index Fund     7,966,616       6,411,813       14,378,429  

 

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Notes to the Financial Statements (cont.)

 

 

Fund   Short-Term     Long-Term     Total  
FlexShares Credit-Scored US Corporate Bond Index Fund   $ 8,223,295     $ 18,382,608     $ 26,605,903  
FlexShares Credit-Scored US Long Corporate Bond Index Fund     3,219,212       8,905,748       12,124,960  
FlexShares High Yield Value-Scored Bond Index Fund     78,144,414       53,532,417       131,676,831  
FlexShares ESG & Climate Investment Grade Corporate Core Index Fund     5,644,513       2,404,823       8,049,336  
FlexShares Ultra-Short Income Fund     728,302       314,796       1,043,098  
FlexShares Core Select Bond Fund     4,820,403       9,002,546       13,822,949  

 

During the year ended October 31, 2023, the following Funds utilized capital loss carryforwards to offset net capital gains:

 

Fund    Capital Loss
Utilized
 
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund      $    701,203  
FlexShares Morningstar Global Upstream Natural Resources Index Fund      165,510,282  
FlexShares Real Assets Allocation Index Fund      78  
FlexShares Ultra-Short Income Fund      40,482  

 

The FlexShares US Quality Low Volatility Index Fund, FlexShares Developed Markets ex-US Quality Low Volatility Index Fund, FlexShares Emerging Markets Quality Low Volatility Index Fund, FlexShares Morningstar US Market Factor Tilt Index Fund, FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund, FlexShares Morningstar Emerging Markets Factor Tilt Index Fund, FlexShares US Quality Large Cap Index Fund, FlexShares STOXX® Global ESG Select Index Fund, FlexShares ESG &

Climate US Large Cap Core Index Fund, FlexShares ESG & Climate Developed Markets ex-US Core Index Fund, FlexShares ESG & Climate Emerging Markets Core Index Fund, FlexShares Morningstar Global Upstream Natural Resources Index Fund, FlexShares STOXX® Global Broad Infrastructure Index Fund, FlexShares Global Quality Real Estate Index Fund, FlexShares Quality Dividend Index Fund , FlexShares Quality Dividend Defensive Index Fund, FlexShares International Quality Dividend Index Fund, FlexShares International Quality Dividend Defensive Index Fund, FlexShares International Quality Dividend Dynamic Index Fund, FlexShares High Yield Value-Scored Bond Index Fund and the FlexShares ESG & Climate Investment Grade Corporate Core Index Fund may be subject to foreign withholding taxes with respect to dividends or interest received from sources in foreign countries. If, at the close of the taxable year, more than 50% in value of a Fund’s assets consists of stock or securities in foreign corporations the Fund will be eligible to make an election to treat a proportionate amount of those taxes as constituting a distribution to each shareholder, which would allow all shareholders to either (1) credit that proportionate amount of taxes against U.S. Federal income tax liability as a foreign tax credit or (2) take that amount as an itemized deduction. If a Fund is not eligible to make this election or is eligible but does not make the election, it will be entitled to deduct such taxes in computing the amounts it is required to distribute.

 

3. Investment Transactions and Related Income and Expense

 

Throughout the reporting period, investment transactions are accounted for no later than one business day following the trade date. For financial reporting purposes, investment transactions are accounted for on the trade date on the last business day of the reporting period.

 

Interest income is recognized on an accrual basis. Bond discount is accreted and premium is amortized using the effective yield method. Dividend income is recorded on the ex-dividend date, or as soon as information is available. Gains or losses realized on sales of securities are determined using the specific identification method by comparing the identified cost of the security lot sold with the net sales proceeds.

 

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Notes to the Financial Statements (cont.)

 

 

Each Fund except the FlexShares iBoxx 3-Year Target Duration TIPs Index Fund, and the FlexShares iBoxx 5-Year Target Duration TIPs Index Fund may hold the securities of real estate investment trusts (“REITs”). Distributions from such investments may be comprised of return of capital, capital gains and income. The actual character of amounts received during the year is not known until after the REIT’s fiscal year end. The Fund records the character of distributions received from REITs during the year based on estimates available. The characterization of distributions received by the Fund may be subsequently revised based on information received from the REITs after their tax reporting periods concluded.

 

All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign markets in which a Fund invests. These foreign taxes, if any, are paid by the Funds and disclosed in the Statements of Operations. Foreign taxes payable, if any, are reflected in the Funds’ Statements of Assets and Liabilities.

 

Expenses directly attributable to a Fund are charged to that Fund, while expenses which are attributable to more than one Fund are allocated among the respective Funds based upon relative net assets or another reasonable basis.

 

4. Investment Advisory Fees

 

NTI serves as the Investment Adviser of the Funds pursuant to the Investment Advisory Agreement. The Investment Adviser is responsible for making investment decisions for the Funds and for placing purchase and sale orders for portfolio securities, subject to the general supervision of the Board.

 

As compensation for its advisory services and assumption of certain Fund expenses, NTI is entitled to a unitary management fee (“Management Fee”), computed daily and payable monthly, at the annual rates set forth in the table below (expressed as a percentage of each Fund’s respective average daily net assets).

 

From the Management Fee, NTI pays most of the expenses of the Fund, including the cost of transfer agency, custody, fund administration, legal, audit and other services (“Covered Expenses”). Covered Expenses do not include the following fees under the Investment Advisory Agreement: its

advisory fees payable under the Advisory Agreement, distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1, interest expenses, brokerage commissions and other trading expenses, fees and expenses of the independent trustees and their independent legal counsel, taxes and other extraordinary costs such as (i) dividend expenses on short sales; (ii) non-routine items, including litigation expenses and proxy expenses; and (iii) expenses that the Fund has incurred but did not actually pay due to an expense offset agreement, if applicable.

 

The Management Fee rate payable by each Fund is set forth in the following table:

 

Fund   Unitary
Management Fee
 
FlexShares US Quality Low Volatility Index Fund     0.22
FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     0.32
FlexShares Emerging Markets Quality Low Volatility Index Fund     0.40
FlexShares Morningstar US Market Factor Tilt Index Fund     0.25
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     0.39
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     0.59
FlexShares US Quality Large Cap Index Fund     0.25

FlexShares STOXX® US ESG Select

Index Fund

    0.32
FlexShares STOXX® Global ESG Select Index Fund     0.42
FlexShares ESG & Climate US Large Cap Core Index Fund     0.09
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     0.12
FlexShares ESG & Climate Emerging Markets Core Index Fund     0.18
FlexShares Morningstar Global Upstream Natural Resources Index Fund     0.46

 

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Notes to the Financial Statements (cont.)

 

 

Fund   Unitary
Management Fee
 
FlexShares STOXX® Global Broad Infrastructure Index Fund     0.47
FlexShares Global Quality
Real Estate Index Fund
    0.45
FlexShares Real Assets Allocation Index Fund     0.49 %* 
FlexShares Quality Dividend
Index Fund
    0.37
FlexShares Quality Dividend Defensive Index Fund     0.37
FlexShares International Quality Dividend Index Fund     0.47
FlexShares International Quality Dividend Defensive Index Fund     0.47
FlexShares® International Quality Dividend Dynamic Index Fund     0.47
FlexShares iBoxx 3-Year Target Duration TIPS Index Fund     0.18
FlexShares iBoxx 5-Year Target Duration TIPS Index Fund     0.18
FlexShares Disciplined Duration MBS Index Fund     0.20
FlexShares Credit-Scored US Corporate Bond Index Fund     0.22
FlexShares Credit-Scored US Long Corporate Bond Index Fund     0.22
FlexShares High Yield Value-Scored Bond Index Fund     0.37
FlexShares ESG & Climate Investment Grade Corporate Core Index Fund     0.12
FlexShares Ultra-Short Income Fund     0.25
FlexShares Core Select Bond Fund     0.35

 

*

Prior to September 1, 2023, the investment advisory fee for the FlexShares Real Assets Allocation Index Fund was 0.57%.

 

The Investment Adviser has contractually agreed until March 1, 2024 to reimburse a portion of the operating expenses of each Fund (other than Rule 12b-1 fees, tax expenses, extraordinary expenses, and acquired fund fees and expenses (“AFFE”)) so the “Total Annual Fund Operating Expenses After Expense Reimbursement” do not exceed

the Fund’s Management Fee plus (+) 0.0049%. In the case of the FlexShares Real Assets Allocation Index Fund, the Investment Adviser has contractually agreed until March 1, 2024 to waive Management Fees or reimburse certain expenses in an amount equal to the AFFE attributable to the Fund’s investments in its Underlying Funds. After these dates, the contractual arrangements will continue automatically thereafter for periods of one year (each such one-year period, a “Renewal Year”). The contractual arrangements may be terminated, with respect to a Fund, as to any succeeding Renewal Year, by NTI or the Fund upon 60 days’ written notice prior to the end of the current Renewal Year. The Board may terminate the arrangements at any time with respect to a Fund if it determines that it is in the best interest of the Fund and its shareholders. In the case of the FlexShares Core Select Bond Fund, the Investment Adviser has contractually agreed until March 1, 2024 to waive Management Fees or reimburse certain expenses in an amount equal to the sum of (a) any AFFE incurred by the Fund that are attributable to the Fund’s investment in Underlying Funds managed by NTI or an investment adviser controlling, controlled by, or under common control with NTI (“Affiliated Funds”); and (b) 0.05% or such lesser amount in AFFE incurred by the Fund that are attributable to the Fund’s investment in Underlying Funds that are not Affiliated Funds. AFFE are expenses incurred indirectly by the Fund through its ownership of shares in other investment companies. Because AFFE are not direct expenses of a Fund, they are not reflected on a Fund’s financial statements. After these dates, the contractual expense reimbursement agreements continue automatically for periods of one year unless terminated, as to any succeeding renewal year, by either party upon 60 days’ written notice prior to the end of the current term. The Board may terminate the contractual expense reimbursement agreements discussed above with respect to any Fund at any time if it determines that it is in the best interest of a Fund and its shareholders. These expenses and the reimbursements are shown as “Investment advisory fees reimbursed” on the Statements of Operations.

 

The Investment Adviser may voluntarily waive or reimburse additional management fees or expenses. Any such additional voluntary expense reimbursement or fee waiver could be implemented, increased or decreased, or discontinued at

 

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Notes to the Financial Statements (cont.)

 

 

any time. Amounts waived or reimbursed by the Investment Adviser pursuant to voluntary or contractual agreements discussed above may not be recouped by the Investment Adviser. These waivers and/or reimbursements are shown as “Investment advisory fees reimbursed” on the Statements of Operations. For the year ended October 31, 2023, the Investment Adviser voluntarily reimbursed additional management fees for FlexShares Morningstar Emerging Markets Factor Tilt Index Fund, FlexShares Credit-Scored US Long Corporate Bond Index Fund, and FlexShares High Yield Value-Scored Bond Index Fund. The amounts of the voluntary reimbursements are $16,693, $2,167, and $84,821, respectively.

 

5. Administration Fees

 

Per terms of agreements JPMorgan Chase Bank, N.A. (the “Administrator”) serves as administrator of the Funds. The Administrator provides certain administrative services to the Funds. For these services, the Administrator is entitled to certain fees and reasonable out-of-pocket expenses. These fees and expenses are Covered Expenses as defined above.

 

6. Custodian Fees

 

JPMorgan Chase Bank, N.A. (the “Custodian”) acts as custodian for the Funds in accordance with a Global Custody Agreement. The Custodian holds cash, securities and other assets of the Funds as required by the 1940 Act. As compensation for the services rendered under the agreement, the Custodian is entitled to fees and reasonable out-of-pocket expenses. These fees and expenses are Covered Expenses as defined above.

 

7. Trustees Fees

 

The Trust compensates each Trustee who is not an officer, director or employee of Northern Trust Corporation, or its subsidiaries, for his or her services as a Trustee of the Trust and as a member of Board committees.

 

The Trust has adopted a deferred compensation plan (the “DC Plan”) for its Trustees who are not officers of Northern Trust or NTI. Under the DC Plan, Independent Trustees may elect to defer all or a portion of their compensation. The amount deferred is adjusted periodically based upon the performance of the investment options selected by the

Trustees. The investment options currently available under the DC Plan are the FlexShares Morningstar US Market Factor Tilt Index Fund, FlexShares Morningstar Emerging Markets Factor Tilt Index Fund, FlexShares STOXX® US ESG Select Index Fund, FlexShares Morningstar Global Upstream Natural Resources Index Fund, FlexShares Global Quality Real Estate Index Fund, FlexShares Quality Dividend Index Fund, FlexShares iBoxx 5-Year Target Duration TIPS Index Fund, and the FlexShares Ultra-Short Income Fund. Expenses related to the DC Plan are stated on the Statements of Operations.

 

8. Distribution and Service Plan

 

ACA Foreside, formerly known as Foreside Fund Services, LLC (the “Distributor”) serves as the Funds’ distributor and distributes Creation Units (as described in Note 9) for each Fund on an agency basis. The Distributor does not receive a fee from the Funds for its distribution services. However, it receives compensation from NTI for its services as distributor pursuant to a separate letter agreement between it and NTI.

 

The Trust has adopted a Distribution and Service Plan (“the Plan”) pursuant to Rule 12b-1 under the 1940 Act. Payments to financial intermediaries under the Plan are tied directly to their own out-of-pocket expenses. The Plan has not been implemented with respect to the Funds. The Plan may not be implemented without further Board approval. The maximum distribution fee is 0.25% of each Fund’s respective average daily net assets under the Plan. The Funds did not pay any 12b-1 fees during the fiscal year.

 

9. Issuance and Redemption of Fund Shares

 

Each Fund only issues and redeems shares to Authorized Participants in exchange for the deposit or delivery of a basket of assets (securities and/or cash), in large blocks known as Creation Units, each of which is comprised of a specified number of shares.

 

Retail investors may only purchase and sell fund shares in the secondary market through a broker-dealer and such transactions may be subject to customary commission and fee rates imposed by the broker-dealer.

 

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Notes to the Financial Statements (cont.)

 

 

Authorized Participants may pay transaction fees to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units. The transaction fees are paid directly to the Fund and used to offset Fund custody fees. Certain fees or costs associated with Creation Unit purchases may be paid by NTI in certain circumstances. In addition, the Trust may from time to time waive the standard transaction fee. The net custody fees charged to the Fund are paid for by the Investment Adviser through the Fund’s Unitary Fee. Transaction fees remaining in the Funds were as follows:

 

Fund   As of
October 31,
2023
    As of
October 31,
2022
 
FlexShares US Quality Low Volatility Index Fund   $ 2,100     $  
FlexShares Emerging Markets Quality Low Volatility Index Fund     4,000       4,000  
FlexShares Morningstar US Market Factor Tilt Index Fund     6,000       6,000  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     27,000       13,500  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     50,000       50,000  
FlexShares US Quality Large Cap Index Fund     3,000       3,000  
FlexShares STOXX® US ESG Select Index Fund     700       1,050  
FlexShares ESG & Climate US Large Cap Core Index Fund           500  
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     4,500        
FlexShares Morningstar Global Upstream Natural Resources Index Fund     1,500       28,500  
FlexShares STOXX® Global Broad Infrastructure Index Fund     12,000       26,000  
FlexShares Global Quality Real Estate Index Fund     4,000       2,000  
FlexShares Quality Dividend Index Fund     4,950       5,650  
Fund   As of
October 31,
2023
    As of
October 31,
2022
 
FlexShares Quality Dividend Defensive Index Fund   $ 2,500     $ 2,150  
FlexShares International Quality Dividend Index Fund     12,000       12,000  
FlexShares International Quality Dividend Defensive Index Fund           7,000  
FlexShares International Quality Dividend Dynamic Index Fund     3,500       3,500  
FlexShares Disciplined Duration MBS Index Fund     2,000       1,600  
FlexShares Credit-Scored US Corporate Bond Index Fund     3,000       2,500  
FlexShares Credit-Scored US Long Corporate Bond Index Fund           1,000  
FlexShares High Yield Value-Scored Bond Index Fund     24,500       4,000  
FlexShares ESG & Climate Investment Grade Corporate Core Index Fund     2,000       1,500  
FlexShares Ultra-Short Income Fund     1,925       4,025  

 

The FlexShares Real Assets Allocation Index Fund, FlexShares iBoxx 3-Year Target Duration TIPS Index Fund, FlexShares iBoxx 5-Year Target Duration TIPS Index Fund and the FlexShares Core Select Bond Fund do not charge standard creation unit transaction fees.

 

10. Investment Transactions

 

For the year ended October 31, 2023, the FlexShares iBoxx 3-Year Target Duration TIPS Index, FlexShares iBoxx 5-Year Target Duration TIPS Index and FlexShares Disciplined Duration MBS Index Funds invested solely in U.S. Government, including U.S. government agency, securities. The cost of securities purchased by each Fund and proceeds from sales of securities, excluding short-term securities,

 

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Notes to the Financial Statements (cont.)

 

 

derivatives and in-kind transactions for the period ended October 31, 2023, were as follows:

 

Fund   Purchases     Sales  
FlexShares US Quality Low Volatility Index Fund   $ 93,131,164     $ 92,740,924  
FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     36,678,289       36,941,832  
FlexShares Emerging Markets Quality Low Volatility Index Fund     14,877,163       10,899,781  
FlexShares Morningstar US Market Factor Tilt Index Fund     212,200,681       213,141,623  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     111,953,720       110,229,159  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     91,065,592       97,949,117  
FlexShares US Quality Large Cap Index Fund     28,132,126       27,096,190  
FlexShares STOXX® US ESG Select Index Fund     48,625,803       49,629,639  
FlexShares STOXX® Global ESG Select Index Fund     54,301,660       55,327,700  
FlexShares ESG & Climate US Large Cap Core Index Fund     5,015,258       4,979,754  
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     11,286,030       10,505,558  
FlexShares ESG & Climate Emerging Markets Core Index Fund     1,580,974       1,591,165  
FlexShares Morningstar Global Upstream Natural Resources Index Fund     2,033,684,300       1,933,733,245  
FlexShares STOXX® Global Broad Infrastructure Index Fund     286,610,013       303,547,565  
Fund   Purchases     Sales  
FlexShares Global Quality Real Estate Index Fund   $ 159,166,407     $ 153,176,208  
FlexShares Real Assets Allocation Index Fund     2,374,109       2,370,687  
FlexShares Quality Dividend Index Fund     813,036,880       801,754,933  
FlexShares Quality Dividend Defensive Index Fund     176,766,250       173,101,476  
FlexShares International Quality Dividend Index Fund     254,841,680       247,331,548  
FlexShares International Quality Dividend Defensive Index Fund     21,017,150       27,413,078  
FlexShares International Quality Dividend Dynamic Index Fund     65,289,740       66,281,057  
FlexShares iBoxx 3-Year Target Duration TIPS Index Fund     1,247,512,487       1,308,171,064  
FlexShares iBoxx 5-Year Target Duration TIPS Index Fund     375,228,916       396,897,290  
FlexShares Disciplined Duration MBS Index Fund     37,279,002       58,756,851  
FlexShares Credit-Scored US Corporate Bond Index Fund     323,111,307       294,164,214  
FlexShares Credit-Scored US Long Corporate Bond Index Fund     33,822,585       40,268,237  
FlexShares High Yield Value-Scored Bond Index Fund     2,117,583,248       1,762,999,413  
FlexShares ESG & Climate Investment Grade Corporate Core Index Fund     29,904,605       26,968,684  
FlexShares Ultra-Short Income Fund     382,547,774       183,994,615  
FlexShares Core Select Bond Fund     49,769,155       47,019,068  

 

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Table of Contents

 

 

Notes to the Financial Statements (cont.)

 

 

11. In-Kind Transactions

 

During the period ended October 31, 2023, certain Funds received securities in exchange for subscriptions of shares (subscriptions-in-kind). For the period ended October 31, 2023, the fair value of the securities received for subscriptions for these Funds were as follows:

 

Fund   Fair Value  
FlexShares US Quality Low Volatility Index Fund   $ 68,470,456  
FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     6,600,137  
FlexShares Emerging Markets Quality Low Volatility Index Fund     1,371,110  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     1,383,093  
FlexShares US Quality Large Cap Index Fund     25,938,638  
FlexShares STOXX® US ESG Select Index Fund     7,125,056  
FlexShares ESG & Climate US Large Cap Core Index Fund     13,832,105  
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     18,595,357  
FlexShares Morningstar Global Upstream Natural Resources Index Fund     580,545,586  
FlexShares STOXX® Global Broad Infrastructure Index Fund     11,411,409  
FlexShares Global Quality Real Estate Index Fund     12,194,596  
FlexShares Real Assets Allocation Index Fund     744,272  
FlexShares Quality Dividend Index Fund     474,812,809  
FlexShares Quality Dividend Defensive Index Fund     56,033,401  
FlexShares International Quality Dividend Index Fund     30,324,990  
FlexShares International Quality Dividend Dynamic Index Fund     29,863,178  
FlexShares iBoxx 3-Year Target Duration TIPS Index Fund     357,220,503  
FlexShares iBoxx 5-Year Target Duration TIPS Index Fund     377,738,669  
FlexShares Credit-Scored US Corporate Bond Index Fund     1,999,330  
FlexShares High Yield Value-Scored Bond Index Fund     7,720,827  
FlexShares Core Select Bond Fund     50,271,695  

During the period ended October 31, 2023, certain Funds delivered securities in exchange for redemption of shares (redemptions-in-kind). For financial reporting purposes, these Funds recorded net realized gains and losses in connection with each transaction. For the period ended October 31, 2023, the fair value and realized gain (losses) of the securities transferred for redemptions for these Funds were as follows:

 

Fund   Fair Value     Net Realized
Gains(Losses)
 
FlexShares US Quality Low Volatility Index Fund   $ 50,231,636     $ 11,134,030  
FlexShares Developed Markets ex-US Quality Low Volatility Index Fund     6,860,770       950,797  
FlexShares Emerging Markets Quality Low Volatility Index Fund     625,183       (2,860
FlexShares Morningstar US Market Factor Tilt Index Fund     120,575,308       68,210,356  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     19,338,229       4,871,522  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     2,567,162       384,978  
FlexShares US Quality Large Cap Index Fund     15,348,805       3,349,919  
FlexShares STOXX® US ESG Select Index Fund     29,011,942       7,404,165  
FlexShares STOXX® Global ESG Select Index Fund     12,040,546       3,774,231  
FlexShares ESG & Climate US Large Cap Core Index Fund     1,242,968       358,040  
FlexShares Morningstar Global Upstream Natural Resources Index Fund     35,366,352       13,171,091  
FlexShares STOXX® Global Broad Infrastructure Index Fund     469,431,358       118,182,191  

 

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Notes to the Financial Statements (cont.)

 

 

Fund   Fair Value     Net Realized
Gains(Losses)
 
FlexShares Global Quality Real Estate Index Fund   $ 63,997,131     $ 3,452,008  
FlexShares Real Assets Allocation Index Fund     12,803,516       (1,193,639
FlexShares Quality Dividend Index Fund     602,931,860       152,543,538  
FlexShares Quality Dividend Defensive Index Fund     105,180,993       26,282,096  
FlexShares International Quality Dividend Index Fund     18,767,105       3,130,154  
FlexShares International Quality Dividend Defensive Index Fund     11,898,366       1,103,875  
FlexShares International Quality Dividend Dynamic Index Fund     34,561,443       4,726,915  
FlexShares iBoxx 3-Year Target Duration TIPS Index Fund     553,092,089       (4,342,963
FlexShares iBoxx 5-Year Target Duration TIPS Index Fund     182,025,725       394,493  
FlexShares Core Select Bond Fund     20,677,491       128,567  

 

12. Reorganization Transaction

 

After the close of business on June 30, 2023, FlexShares® Quality Dividend Index Fund, acquired the net assets of the FlexShares® Quality Dividend Dynamic Index Fund, a series of the Trust, pursuant to an Agreement and Plan of Reorganization. For U.S. GAAP purposes, this transaction was treated as a merger. The reorganization was accomplished by a tax-free exchange resulting in the FlexShares® Quality Dividend Index Fund issuing 292,980 (valued at $16,941,795) in exchange for 275,001 FlexShares® Quality Dividend Dynamic Index Fund at a conversion ratio of 1.065. The securities held by FlexShares® Quality Dividend Dynamic Index Fund, with a fair value of $14,967,409 and identified cost of $12,597,211, and cash in the amount of $1,972,151 at June 30, 2023, were the principal assets

acquired by FlexShares® Quality Dividend Index Fund. For U.S. GAAP purposes, assets received and shares issued by FlexShares® Quality Dividend Index Fund were recorded at fair value; however, the cost basis of the investments from FlexShares® Quality Dividend Dynamic Index Fund was carried forward to align ongoing reporting of FlexShares® Quality Dividend Index Fund realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. FlexShares® Quality Dividend Dynamic Index Fund’s net assets at the merger date of $16,941,795, including $2,370,198 of unrealized appreciation, $6,304 of undistributed net investment gain and $638,516 of undistributed net realized gain on investments were combined with those of FlexShares® Quality Dividend Index Fund. Regarding the acquisition completed June 30, 2023, the beginning of the annual reporting period of FlexShares® Quality Dividend Dynamic Index Fund, pro forma results of operations for the year ended October 31, 2023 would have resulted in a net investment income of $38,495,653 and net realized and unrealized gain of $65,719,138 resulting in a increase in net assets from operations of $104,214,791. Because the combined Funds have been managed as a single integrated Fund since the acquisition date, it is not practicable to separate the amounts of revenue and earnings of the FlexShares® Quality Dividend Dynamic Index Fund that have been included in FlexShares® Quality Dividend Index Fund’s Statement of Operations since the merger date. Prior to the combination, the net assets of the FlexShares® Quality Dividend Index Fund totaled $1,590,209,763. Immediately after the combination, the net assets of the FlexShares® Quality Dividend Index Fund totaled $1,607,151,558.

 

13. Guarantees and Indemnifications

 

In the normal course of business each Fund enters into contracts with third-party service providers that contain a variety of representations and warranties and that provide general indemnifications. Additionally, under the Funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. The Funds’ maximum exposure under these arrangements is unknown, as it involves possible future claims that may or may not be made against the Funds.

 

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Notes to the Financial Statements (cont.)

 

 

14. New Accounting Pronouncements

 

In March 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848) “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional temporary financial reporting relief from the effect of certain types of contract modifications and hedging transactions as a result of the global markets anticipated transition away the London Interbank Offered Rate (“LIBOR”) and other interbank-offered based reference rates as of the end of 2021.

 

Preceding the issuance of ASU 2020-04, which established ASC 848, the United Kingdom’s Financial Conduct Authority (FCA) announced that it would no longer need to persuade or compel banks to submit to LIBOR after December 31, 2021. In response, the FASB established a December 31, 2022, expiration date for ASC 848.

 

In March 2021, the FCA announced that the intended cessation date of LIBOR in the United States would be June 30, 2023. Accordingly, ASU 2022-06 defers the expiration date of ASC 848 to December 31, 2024. Management does not believe this update has a material impact on the Funds’ financial statements.

 

15. Legal Proceedings

 

On or about February 14, 2020, Marc S. Kirschner, as Trustee for NWHI Litigation Trust (“Litigation Trustee”) and Wilmington Savings Fund Society, FSB, as indenture Trustee (“Indenture Trustee”) for several series of notes issued by Nine West Holdings, Inc. (“Nine West”), filed separate complaints (docket nos. 20-cv-01129 and 20-cv-01136, respectively ) in the United States District Court for the Northern District of Illinois against a group of defendants including the FlexShares Morningstar US Market Factor Tilt Index Fund that had invested in The Jones Group Inc. (“Jones Group”). The claims in these actions stem from a series of merger transactions (“Transactions”) entered into by Jones Group, Nine West and others in 2014 that allegedly rendered Jones Group insolvent. The matters in these proceedings were transferred from the United States District Court for the Northern District of Illinois to the United States District Court for the Southern District of New York

to centralize the litigation, and were assigned to the Honorable Jed S. Rakoff for coordinated or consolidated pretrial proceedings. The FlexShares Morningstar US Market Factor Tilt Index Fund allegedly received $224,910 as a result of the Transactions. The Litigation Trustee and Indenture Trustee seek to clawback these proceeds for the benefit of the Trust and the noteholders, respectively, on the basis that they were alleged fraudulent conveyances. On June 29, 2020, the former public shareholder defendants, including FlexShares Morningstar US Market Factor Tilt Index Fund, filed a motion to dismiss on the basis that the payments allegedly made to them in connection with the Transactions were shielded from the fraudulent conveyance claims under Section 546(e) of the Bankruptcy Code. On August 27, 2020, all fraudulent conveyance claims against the former public shareholder defendants were dismissed. Plaintiffs appealed from that decision before the U.S. Court of Appeals for the Second Circuit. On November 27, 2023, the Second Circuit affirmed the District Court’s decision insofar as it dismissed all fraudulent conveyance claims against the public shareholder defendants, agreeing with the District Court that the payments made to the public shareholders in connection with the leveraged buyout were safe harbored under Bankruptcy Code Section 546(e). The decision of the Second Circuit remains subject to potential further appeals. The Fund intends to continue to vigorously defend itself against this action.

 

16. Foreign Instability

 

Unexpected political, regulatory and diplomatic events and military conflicts around the world may affect investor and consumer confidence and may adversely impact global financial markets and the broader economy. Foreign conflicts have caused, and could continue to cause, significant market disruptions and volatility within specific markets and globally. The hostilities and sanctions resulting from those conflicts have, and could continue to have, a significant impact on certain Fund investments as well as Fund performance and liquidity. The economies of the United States and its trading partners, as well as the financial markets generally, may be adversely impacted by trade disputes and other matters.

 

520    FLEXSHARES ANNUAL REPORT  


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Notes to the Financial Statements (cont.)

 

 

 

17. Subsequent Events

 

Management has evaluated subsequent events for the Funds through the date the financial statements were issued, and has concluded that there are no recognized or non-recognized subsequent events relevant for financial statement disclosure.

 

   FLEXSHARES ANNUAL REPORT     521  


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Report of Independent Registered Public Accounting Firm

 

 

To the Shareholders and Board of Trustees of FlexShares® Trust

 

Opinion on the Financial Statements and Financial Highlights

 

We have audited the accompanying statements of assets and liabilities of FlexShares® Trust, comprising the FlexShares® US Quality Low Volatility Index Fund, FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund, FlexShares® Emerging Markets Quality Low Volatility Index Fund, FlexShares® Morningstar US Market Factor Tilt Index Fund, FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund, FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund, FlexShares® US Quality Large Cap Index Fund, FlexShares® STOXX® US ESG Select Index Fund, FlexShares® STOXX® Global ESG Select Index Fund, FlexShares® ESG & Climate US Large Cap Core Index Fund, FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund, FlexShares® ESG & Climate Emerging Markets Core Index Fund, FlexShares® Morningstar Global Upstream Natural Resources Index Fund, FlexShares® STOXX® Global Broad Infrastructure Index Fund, FlexShares® Global Quality Real Estate Index Fund, FlexShares® Real Assets Allocation Index Fund, FlexShares® Quality Dividend Index Fund, FlexShares® Quality Dividend Defensive Index Fund, FlexShares® International Quality Dividend Index Fund, FlexShares® International Quality Dividend Defensive Index Fund, FlexShares® International Quality Dividend Dynamic Index Fund, FlexShares® iBoxx 3-Year Target Duration TIPS Index Fund, FlexShares® iBoxx 5-Year Target Duration TIPS Index Fund, FlexShares® Disciplined Duration MBS Index Fund, FlexShares® Credit-Scored US Corporate Bond Index Fund, FlexShares® Credit-Scored US Long Corporate Bond Index Fund, FlexShares® High Yield Value-Scored Bond Index Fund, FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund, FlexShares® Ultra-Short Income Fund (formerly FlexShares® Ready Access Variable Income Fund), and FlexShares® Core Select Bond Fund (collectively, the “Funds”), including the schedules of investments, as of October 31, 2023; the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended for FlexShares® Morningstar US Market Factor Tilt Index Fund, FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund, FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund, FlexShares® US Quality Large Cap Index Fund, FlexShares® STOXX® US ESG Select Index Fund, FlexShares® STOXX® Global ESG Select Index Fund, FlexShares® Morningstar Global Upstream Natural Resources Index Fund, FlexShares® STOXX® Global Broad Infrastructure Index Fund, FlexShares® Global Quality Real Estate Index Fund, FlexShares® Real Assets Allocation Index Fund, FlexShares® Quality Dividend Index Fund, FlexShares® Quality Dividend Defensive Index Fund, FlexShares® International Quality Dividend Index Fund, FlexShares® International Quality Dividend Defensive Index Fund, FlexShares® International Quality Dividend Dynamic Index Fund, FlexShares® iBoxx 3-Year Target Duration TIPS Index Funds, FlexShares® iBoxx 5-Year Target Duration TIPS Index Fund, FlexShares® Disciplined Duration MBS Index Fund, FlexShares® Credit-Scored US Corporate Bond Index Fund, FlexShares® Credit-Scored US Long Corporate Bond Index Fund, FlexShares® High Yield Value-Scored Bond Index Fund, FlexShares® Ultra-Short Income Fund (formerly FlexShares® Ready Access Variable Income Fund), and FlexShares® Core Select Bond Fund; the related statements of operations, changes in net assets, and financial highlights for the periods indicated in the table below for FlexShares® US Quality Low Volatility Index Fund, FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund, FlexShares® Emerging Markets Quality Low Volatility Index Fund, FlexShares® ESG & Climate US Large Cap Core Index Fund, FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund, FlexShares® ESG & Climate Emerging Markets Core Index Fund, and FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund; and the related notes.

 

In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the funds constituting FlexShares® Trust as of October 31, 2023, and the results of their operations for the year then ended (or for the period listed in the table below), the changes in their net assets for each of the two years in the period then ended (or for the period listed in the table below), and the financial highlights for each of the five years in the period then ended (or for the period listed in the table below), in conformity with accounting principles generally accepted in the United States of America.

 

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Report of Independent Registered Public Accounting Firm (cont.)

 

 

Fund Name   Statement of
Operations
  Statements of
Changes in Net
Assets
  Financial Highlights

FlexShares® US Quality Low Volatility Index Fund

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund

FlexShares® Emerging Markets Quality Low Volatility Index Fund

  For the year ended October 31, 2023   For the years ended October 31, 2023 and 2022   For the years ended October 31, 2023, 2022, 2021, 2020 and for the period from July 15, 2019 (commencement of operations) through October 31, 2019

FlexShares® ESG & Climate US Large Cap Core Index Fund

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund

  For the year ended October 31, 2023   For the years ended October 31, 2023 and 2022   For the years ended October 31, 2023, 2022, and for the period from September 20, 2021 (commencement of operations) through October 31, 2021
FlexShares® ESG & Climate Emerging Markets Core Index Fund   For the year ended October 31, 2023   For the year ended October 31, 2023 and for the period from April 20, 2022 (commencement of operations) through October 31, 2022

 

Basis for Opinion

 

These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ DELOITTE & TOUCHE LLP

 

Chicago, Illinois

December 20, 2023

 

We have served as the auditor of one or more Northern Trust investment companies since 2002.

 

   FLEXSHARES ANNUAL REPORT     523  


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Tax Information October 31, 2023 (Unaudited)

 

 

QUALIFIED DIVIDEND INCOME (QDI)

 

Under the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the “Act”), the following percentages of ordinary dividends paid during the fiscal year ended October 31, 2022 are designated as “qualified dividend income”, as defined in the Act, subject to reduced tax rates in 2022:

 

Fund  

QDI

PERCENTAGE

 
FlexShares US Quality Low Volatility Index Fund     100.00
FlexShares Developed Markets Ex-US Quality Low Volatility Index Fund     90.68  
FlexShares Emerging Markets Quality Low Volatility Index Fund     60.75  
FlexShares Morningstar US Market Factor Tilt Index Fund     75.27  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     86.54  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     55.21  
FlexShares US Quality Large Cap Index Fund     100.00  
FlexShares STOXX® US ESG Select Index Fund     100.00  
FlexShares STOXX® Global ESG Select Index Fund     100.00  
FlexShares ESG & Climate US Large Cap Core Index Fund     100.00  
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     100.00  
FlexShares ESG & Climate Emerging Markets Core Index Fund     75.31  
FlexShares Morningstar Global Upstream Natural Resources Index Fund     92.53  
FlexShares STOXX® Global Broad Infrastructure Index Fund     89.88  
FlexShares Global Quality Real Estate Index Fund     15.99  
FlexShares Real Assets Allocation Index Fund     75.22  
FlexShares Quality Dividend Index Fund     78.11  
FlexShares Quality Dividend Defensive Index Fund     86.96  
FlexShares International Quality Dividend Index Fund     63.17  
Fund  

QDI

PERCENTAGE

 
FlexShares International Quality Dividend Defensive Index Fund     69.66
FlexShares International Quality Dividend Dynamic Index Fund     67.64  

 

CORPORATE DIVIDENDS RECEIVED

DEDUCTION (DRD)

 

A percentage of the dividends distributed during the fiscal year for the following Funds qualifies for the dividends received deduction for corporate shareholders:

 

Fund   CORPORATE
DRD
PERCENTAGE
 
FlexShares US Quality Low Volatility Index Fund     100.00
FlexShares Emerging Markets Quality Low Volatility Index Fund     0.01  
FlexShares Morningstar US Market Factor Tilt Index Fund     72.63  
FlexShares US Quality Large Cap Index Fund     100.00  
FlexShares STOXX® US ESG Select Index Fund     100.00  
FlexShares STOXX® Global ESG Select Index Fund     50.55  
FlexShares ESG & Climate US Large Cap Core Index Fund     100.00  
FlexShares ESG & Climate Emerging Markets Core Index Fund     0.35  
FlexShares Morningstar Global Upstream Natural Resources Index Fund     27.17  
FlexShares STOXX® Global Broad Infrastructure Index Fund     43.65  
FlexShares Real Assets Allocation Index Fund     29.05  
FlexShares Quality Dividend Index Fund     75.44  
FlexShares Quality Dividend Defensive Index Fund     85.17  
FlexShares International Quality Dividend Dynamic Index Fund     0.02  

 

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Table of Contents

 

 

Tax Information (cont.)

 

 

FOREIGN TAX CREDIT

 

Each Fund below intends to make an election that will allow its shareholders to treat their proportionate share of foreign taxes paid by the Fund as having been paid by them. The amounts per share, which represent income from sources within, and taxes paid to foreign countries, are as follows:

 

Fund   TAXES     INCOME  
FlexShares Developed Markets Ex-US Quality Low Volatility Index Fund   $ 0.0851     $ 0.8607  
FlexShares Emerging Markets Quality Low Volatility Index Fund     0.1463       0.8785  
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund     0.1708       2.2234  
FlexShares Morningstar Emerging Markets Factor Tilt Index Fund     0.2759       1.6046  
FlexShares ESG & Climate Developed Markets ex-US Core Index Fund     0.1386       1.3109  
FlexShares ESG & Climate Emerging Markets Core Index Fund     0.1888       1.2186  
FlexShares Morningstar Global Upstream Natural Resources Index Fund     0.0492       1.1539  
FlexShares STOXX Global Broad Infrastructure Index Fund     0.0846       0.9792  
FlexShares Real Assets Allocation Index Fund     0.0388       0.5393  
FlexShares International Quality Dividend Index Fund     0.1431       1.2626  
FlexShares International Quality Dividend Defensive Index Fund     0.1105       1.2217  
FlexShares International Quality Dividend Dynamic Index Fund     0.2174       1.8051  

 

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Fund Expenses (Unaudited)

 

 

As a shareholder, you incur two types of costs:

(1) Transaction costs for purchasing and selling shares and (2) ongoing costs, including advisory and other Fund expenses. The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds.

 

Actual Expenses

 

The actual expense examples are based on an investment of $1,000 invested at the beginning of a six month period and held through the period ended October 31, 2023.

 

The first line under each Fund in the following tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

 

The hypothetical expense examples are based on an investment of $1,000 invested at the beginning of a six month period and held through the period ended October 31, 2023.

 

The second line under each Fund in the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as brokerage commissions on purchases or sales of Fund shares. Therefore, the second line for each Fund in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

 

526    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Fund Expenses (cont.)

 

 

    Beginning
Account
Value
    Ending
Account
Value
10/31/23
    Expenses Paid
During the
Period*
    Annualized
Expense Ratio
During Period
 
FlexShares® US Quality Low Volatility Index Fund

 

Actual   $ 1,000.00     $ 986.60     $ 1.10       0.22
Hypothetical   $ 1,000.00     $ 1,024.10     $ 1.12       0.22
FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund

 

Actual   $ 1,000.00     $ 920.20     $ 1.55       0.32
Hypothetical   $ 1,000.00     $ 1,023.59     $ 1.63       0.32
FlexShares® Emerging Markets Quality Low Volatility Index Fund

 

Actual   $ 1,000.00     $ 968.40     $ 1.98       0.40
Hypothetical   $ 1,000.00     $ 1,023.19     $ 2.04       0.40
FlexShares® Morningstar US Market Factor Tilt Index Fund

 

Actual   $ 1,000.00     $ 1,003.20     $ 1.26       0.25
Hypothetical   $ 1,000.00     $ 1,023.95     $ 1.28       0.25
FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund

 

Actual   $ 1,000.00     $ 931.70     $ 1.90       0.39
Hypothetical   $ 1,000.00     $ 1,023.24     $ 1.99       0.39
FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund

 

Actual   $ 1,000.00     $ 979.50     $ 2.89       0.58
Hypothetical   $ 1,000.00     $ 1,022.28     $ 2.96       0.58
FlexShares® US Quality Large Cap Index Fund

 

Actual   $ 1,000.00     $ 1,024.20     $ 1.28       0.25
Hypothetical   $ 1,000.00     $ 1,023.95     $ 1.28       0.25
FlexShares® STOXX® US ESG Select Index Fund

 

Actual   $ 1,000.00     $ 1,018.60     $ 1.63       0.32
Hypothetical   $ 1,000.00     $ 1,023.59     $ 1.63       0.32
FlexShares® STOXX® Global ESG Select Index Fund

 

Actual   $ 1,000.00     $ 981.10     $ 2.10       0.42
Hypothetical   $ 1,000.00     $ 1,023.09     $ 2.14       0.42
FlexShares® ESG & Climate US Large Cap Core Index Fund

 

Actual   $ 1,000.00     $ 1,010.10     $ 0.46       0.09
Hypothetical   $ 1,000.00     $ 1,024.75     $ 0.46       0.09
FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund

 

Actual   $ 1,000.00     $ 909.20     $ 0.58       0.12
Hypothetical   $ 1,000.00     $ 1,024.60     $ 0.61       0.12

 

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Fund Expenses (cont.)

 

 

    Beginning
Account
Value
    Ending
Account
Value
10/31/23
    Expenses Paid
During the
Period*
    Annualized
Expense Ratio
During Period
 
FlexShares® ESG & Climate Emerging Markets Core Index Fund

 

Actual   $ 1,000.00     $ 961.40     $ 0.89       0.18
Hypothetical   $ 1,000.00     $ 1,024.30     $ 0.92       0.18
FlexShares® Morningstar Global Upstream Natural Resources Index Fund

 

Actual   $ 1,000.00     $ 924.30     $ 2.23       0.46
Hypothetical   $ 1,000.00     $ 1,022.89     $ 2.35       0.46
FlexShares® STOXX® Global Broad Infrastructure Index Fund

 

Actual   $ 1,000.00     $ 910.60     $ 2.26       0.47
Hypothetical   $ 1,000.00     $ 1,022.84     $ 2.40       0.47
FlexShares® Global Quality Real Estate Index Fund

 

Actual   $ 1,000.00     $ 891.70     $ 2.15       0.45
Hypothetical   $ 1,000.00     $ 1,022.94     $ 2.29       0.45
FlexShares® Real Assets Allocation Index Fund(a)

 

Actual   $ 1,000.00     $ 911.80     $ 0.39       0.08
Hypothetical   $ 1,000.00     $ 1,024.80     $ 0.41       0.08
FlexShares® Quality Dividend Index Fund

 

Actual   $ 1,000.00     $ 1,000.20     $ 1.87       0.37
Hypothetical   $ 1,000.00     $ 1,023.34     $ 1.89       0.37
FlexShares® Quality Dividend Defensive Index Fund

 

Actual   $ 1,000.00     $ 997.50     $ 1.86       0.37
Hypothetical   $ 1,000.00     $ 1,023.34     $ 1.89       0.37
FlexShares® International Quality Dividend Index Fund

 

Actual   $ 1,000.00     $ 948.80     $ 2.31       0.47
Hypothetical   $ 1,000.00     $ 1,022.84     $ 2.40       0.47
FlexShares® International Quality Dividend Defensive Index Fund

 

Actual   $ 1,000.00     $ 954.80     $ 2.32       0.47
Hypothetical   $ 1,000.00     $ 1,022.84     $ 2.40       0.47
FlexShares® International Quality Dividend Dynamic Index Fund

 

Actual   $ 1,000.00     $ 943.70     $ 2.30       0.47
Hypothetical   $ 1,000.00     $ 1,022.84     $ 2.40       0.47
FlexShares® iBoxx 3-Year Target Duration TIPS Index Fund

 

Actual   $ 1,000.00     $ 986.80     $ 0.90       0.18
Hypothetical   $ 1,000.00     $ 1,024.30     $ 0.92       0.18

 

528    FLEXSHARES ANNUAL REPORT  


Table of Contents

 

 

Fund Expenses (cont.)

 

 

    Beginning
Account
Value
    Ending
Account
Value
10/31/23
    Expenses Paid
During the
Period *
    Annualized
Expense Ratio
During Period
 
FlexShares® iBoxx 5-Year Target Duration TIPS Index Fund

 

Actual   $ 1,000.00     $ 956.80     $ 0.89       0.18
Hypothetical   $ 1,000.00     $ 1,024.30     $ 0.92       0.18
FlexShares® Disciplined Duration MBS Index Fund

 

Actual   $ 1,000.00     $ 964.90     $ 0.99       0.20
Hypothetical   $ 1,000.00     $ 1,024.20     $ 1.02       0.20
FlexShares® Credit-Scored US Corporate Bond Index Fund

 

Actual   $ 1,000.00     $ 973.60     $ 1.09       0.22
Hypothetical   $ 1,000.00     $ 1,024.10     $ 1.12       0.22
FlexShares® Credit-Scored US Long Corporate Bond Index Fund

 

Actual   $ 1,000.00     $ 883.80     $ 1.00       0.21
Hypothetical   $ 1,000.00     $ 1,024.15     $ 1.07       0.21
FlexShares® High Yield Value-Scored Bond Index Fund

 

Actual   $ 1,000.00     $ 1,000.90     $ 1.82       0.36
Hypothetical   $ 1,000.00     $ 1,023.39     $ 1.84       0.36
FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund

 

Actual   $ 1,000.00     $ 939.30     $ 0.59       0.12
Hypothetical   $ 1,000.00     $ 1,024.60     $ 0.61       0.12
FlexShares® Ultra-Short Income Fund

 

Actual   $ 1,000.00     $ 1,026.30     $ 1.28       0.25
Hypothetical   $ 1,000.00     $ 1,023.95     $ 1.28       0.25
FlexShares® Core Select Bond Fund(a)

 

Actual   $ 1,000.00     $ 936.40     $ 1.27       0.26
Hypothetical   $ 1,000.00     $ 1,023.89     $ 1.33       0.26

 

*

Expenses are equal to the average account value over the period multiplied by the Fund’s annualized expense ratio, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one half year period).

 

(a)

Annualized expense ratio and expenses paid during the period do not include fees and expenses of the Underlying Fund(s) in which the Fund invests.

 

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Table of Contents

 

 

Trustees and Officers (Unaudited)

 

 

NON-INTERESTED TRUSTEES

Name, Address(1) and Age  

Position(s)

Held with
the Trust

 

Term of

Office and

Length of
Time Served
(2)

  Principal Occupation(s) During
Past 5 Years
 

Number of

Funds

in Fund
Complex
(3)

Overseen

by Trustee

   

Other
Directorships
Held by

Trustee(4)

Sarah N. Garvey

Year of Birth: 1952

  Trustee   July 2011 to present  

•  Chairman of the Board of Navy Pier from 2011 to 2013 and Member of the Board from 2011 to 2020;

•  Member of the Board of Directors of The Civic Federation since 2004;

•  Member of the Executive Committee and Chairman of the Audit and Risk Committee since 2017 and Trustee of the Art Institute of Chicago since 2011.

    30     None

Philip G. Hubbard

Year of Birth: 1951

  Trustee   July 2011 to present  

•  Managing Partner of Solidian Fund, LP and Solidian Management, LLC (a fund of hedge funds platform for family and friends investments) since 2001;

•  President of Hubbard Management Group, LLC (a personal investment vehicle) since 2001;

•  Chairman of the Board of Trustees of the Wheaton College Trust Company, N. A. from 2004 to 2022;

•  Member of the Board of Trustees of Wheaton College from 1998 to 2022;

•  Chairman of the Board of Directors of the English Language Institute/China (a nonprofit educational organization) since 1993;

•  Member of the Board of First Cup, LLC (restaurant franchising) since 2014.

    30     None

 

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Table of Contents

 

 

Trustees and Officers (cont.)

 

 

Name, Address(1) and Age  

Position(s)

Held with
the Trust

 

Term of

Office and

Length of
Time Served
(2)

  Principal Occupation(s) During
Past 5 Years
 

Number of

Funds

in Fund
Complex
(3)

Overseen

by Trustee

   

Other
Directorships
Held by

Trustee(4)

Eric T. McKissack

Year of Birth: 1953

  Trustee and Chairman   July 2011 to present  

•  CEO Emeritus and Founder; CEO and Founder from 2004 to 2020 of Channing Capital Management, LLC (an SEC registered investment adviser);

•  Member of the Board of Trustees, the Investment Committee, and the Finance Committee of the Art Institute of Chicago since 2002;

•  Member of the Board of Grand Victoria Foundation since 2011;

•  Member of the Board of the Graham Foundation since 2014.

•  Member of the Board of Terra Foundation since 2021

    30     Morgan
Stanley
Pathway
Funds
(formerly,
Consulting
Group
Capital
Markets
Funds) (11
Portfolios)
Since April
2013,
Farmer Mac
(NYSE: AGM)
since February
2021
INTERESTED TRUSTEE                        

Darek Wojnar(5)

Year of Birth: 1965

  Trustee   December 2018 to present  

•  Director and Executive Vice President, Head of Funds and Managed Accounts, Northern Trust Investments Inc. since 2018;

•  Managing Member of the Wojnar Group LLC (a publishing industry consulting company) since 2013;

•  Head of Exchange-Traded Funds at Hartford Funds from2016 to 2017 and Managing Director of Lattice Strategies LLC from 2014 to 2016;

•  Managing Director and Head of US iShares Product at BlackRock (including Barclays Global Investors acquired by BlackRock) from 2005 to 2013 and the Equity Long/Short Opportunities Fund (formerly, NT Equity Long/Short Strategies Fund) from 2011 to 2019.

    30     Northern
Funds (43
Portfolios)
since
January 1,
2019 and
Northern
Institutional
Funds (6
Portfolios)
since
January 1,
2019

 

(1) 

Each Non-Interested Trustee may be contacted by writing to the Trustee, c/o Paulita Pike, Ropes & Gray LLP, 191 North Wacker Drive, 32nd Floor, Chicago, IL 60606. Mr. Wojnar may be contacted by writing to him at 50 S. LaSalle St., Chicago, IL 60603.

 

(2) 

Each Trustee will hold office for an indefinite term until the earliest of: (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Trustee and until the election and qualification of his or her successor, if any, elected at such meeting; or (ii) the date a Trustee resigns or retires, or a Trustee is removed by the Board or shareholders, in accordance with the Trust’s Agreement and Declaration of Trust.

 

(3) 

The “Fund Complex” consists of the Trust.

 

(4) 

This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended (i.e., public companies) or other investment companies registered under the 1940 Act.

 

(5) 

An “interested person,” as defined by the 1940 Act. Mr. Wojnar is deemed to be an “interested” Trustee because he is an officer of NTl and its parent company.

 

The Statement of Additional Information (“SAI”) includes additional information about the Trust’s Trustees and is available, without charge, upon request by contacting the Fund directly at (855) 933-6287.

 

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Table of Contents

 

 

Trustees and Officers (cont.)

 

 

OFFICERS

Name, Address and Age   Position(s)
Held with
the Trust
 

Term of
Office
(1) and
Length of

Time Served

  Principal Occupation(s) During Past 5 Years

Darlene Chappell

Year of Birth: 1963

50 South LaSalle Street Chicago, IL 60603

  Anti-Money Laundering Officer   July 2011 to present   Anti-Money Laundering Compliance Officer for Northern Trust Investments, Inc., Northern Trust Securities, Inc., Northern Funds, Northern Institutional Funds, and Alpha Core Strategies Fund (formerly NT Alpha Strategies Fund) since 2009, 50 South Capital Advisors, LLC since 2015 and Belvedere Advisors LLC since September 2019; Vice President and Compliance Consultant for The Northern Trust Company since 2006, and the Equity Long/Short Opportunities Fund (formerly NT Equity Long/ Short Strategies Fund) from 2011 to 2019.

Tim Handell

Year of Birth: 1989

50 South LaSalle Street

Chicago, IL 60603

  Assistant Secretary   December 2022 to present   Senior Counsel and Senior Vice-President of The Northern Trust Company since November 2021; Assistant Secretary of FlexShares® Trust since December 2022; Assistant General Counsel of Legal & General Investment Management America, Inc. from March 2021 to November 2021; Associate Counsel of Legal & General Investment Management America, Inc. from March 2017 to March 2021.

Jose J. Del Real, Esq.

Year of Birth: 1977

50 South LaSalle Street

Chicago, IL 60603

  Secretary   December 2018 to present   Assistant General Counsel and Senior Vice President of The Northern Trust Company since August 2020; Senior Legal Counsel and Senior Vice President of The Northern Trust Company from March 2017 to July 2020; Assistant Secretary of Northern Trust Investments, Inc. since 2016; Secretary of Northern Funds and Northern Institutional Funds since November 2018; Assistant Secretary of Northern Funds and Northern Institutional Funds from 2011 to 2014 and from May 2015 to November 2018; Assistant Secretary of FlexShares Trust from June 2015 to December 2018.

Maya Teufel

Year of Birth: 1972

50 South LaSalle Street Chicago, IL 60603

  Chief Compliance Officer   July 2019 to present   Chief Compliance Officer of FlexShares Trust since July 2019; Chief Compliance Officer of Northern Trust Investments, Inc. since July 2019; Co-Head of U.S. Regulatory Compliance Group of Goldman Sachs Asset Management, LP from September 2016 to June 2019.

Randal E. Rein

Year of Birth: 1970

50 South Lasalle Street Chicago, IL 60603

  Treasurer and Principal Financial Officer   July 2011 to present   Senior Vice President of Northern Trust Investments, Inc. since 2010; Treasurer of Northern Funds and Northern Institutional Funds since 2008; Treasurer of Alpha Core Strategies Fund from 2008 to 2018; Treasurer of Equity Long/Short Opportunities Fund from 2011 to 2018.

Peter K. Ewing

Year of Birth: 1958

50 South LaSalle Street Chicago, IL 60603

  President   March 2017 to present   President of Northern Funds, Northern Institutional Funds and the Trust since March 2017; Vice President of the Trust from July 2011 to February 2017; Director of Product Management, ETFs & Mutual Funds, and Director of Northern Trust Investments, Inc. since March 2017; Senior Vice President of, The Northern Trust Company and Northern Trust Investments, Inc., since September 2010; Director of ETF Product Management of, Northern Trust Investments, Inc. from September 2010 to February 2017.

 

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Table of Contents

 

 

Trustees and Officers (cont.)

 

 

Name, Address and Age   Position(s)
Held with
the Trust
 

Term of
Office
(1) and
Length of

Time Served

  Principal Occupation(s) During Past 5 Years

Craig R. Carberry, Esq.

Year of Birth: 1960

50 South LaSalle Street Chicago, IL 60603

  Chief Legal Officer   June 2019 to present   Chief Legal Officer and Secretary of Northern Trust Investments, Inc. since May 2000; Chief Compliance Officer of Northern Trust Investments, Inc. from October 2015 to June 2017; Chief Legal Officer and Secretary of 50 South Capital Advisors, LLC since 2015; Chief Legal Officer and Secretary of Belvedere Advisors LLC since September 2019; Deputy General Counsel and Senior Vice President of The Northern Trust Company since August 2020; Associate General Counsel and Senior Vice President at The Northern Trust Company from June 2015 to 2021; Secretary of Alpha Core Strategies Fund since 2004; Secretary of Equity Long/Short Opportunities Fund (formerly NT Equity Long/Short Strategies Fund) from 2011-2019; Secretary of Northern Institutional Funds and Northern Funds from 2010-2018; Secretary of FlexShares Trust from 2011-2018.

Christopher P. Fair

Year of Birth: 1982

50 South LaSalle Street Chicago, IL 60603

  Vice President   June 2019 to present   Vice President, The Northern Trust Company since March 2020; ETF Services Manager, Northern Trust Investments, Inc. since June 2019; Second Vice President, The Northern Trust Company from November 2015 to March 2020; ETF Product Manager, Northern Trust Investments, Inc. from November 2015 to June 2019.

Himanshu S. Surti

Year of Birth: 1974

50 South LaSalle Street Chicago, IL 60603

  Vice President   December 2020 to present   Director, ETF Product Management, Northern Trust Investments, Inc. since November 2020; Senior Vice President, The Northern Trust Company since November 2020; Portfolio Manager and Chief Operating Officer, Cambria Investment Management from June 2014 to November 2020; Vice President, Cambria ETF Trust from March 2018 to November 2020.

 

(1) 

Officers hold office at the pleasure of the Board until their successors are duly elected and qualified, or until their death, resignation, or disqualification.

 

   FLEXSHARES ANNUAL REPORT     533  


Table of Contents

 

 

Approval of Advisory Agreement (Unaudited)

 

 

The Board of Trustees (the “Board”) of the FlexShares Trust (the “Trust”) oversees the management of the Trust and each separate series of the Trust covered in this report (each, a “Fund” and, collectively, the “Funds”) and, as required by law, determines whether to approve the Trust’s investment advisory and ancillary services agreement (the “Advisory Agreement”) with Northern Trust Investments, Inc. (the “Adviser”), an indirect subsidiary of the Northern Trust Corporation.

 

* * * * *

 

At a meeting on June 22, 2023 (the “June Meeting”), the Board, including all of the Trustees who are not parties to the Advisory Agreement or interested persons of any such party (the “Independent Trustees”), considered whether to approve the continuation of the Advisory Agreement between the Adviser and the Trust, on behalf of each Fund.

 

In advance of, and in preparation for, the Trustees’ consideration of the Advisory Agreement at the June Meeting, the Trustees received written materials relating to the Advisory Agreement and had the opportunity to ask questions and request further information in connection with their consideration. At the June Meeting, the Trustees considered the Adviser’s presentations and discussed all of the information that had been provided. Among other things, the Board considered comparisons with other funds in relevant peer universes and peer groups that had been determined by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of fund data, which included, among other things, the following information: (1) a description of the types of funds chosen by Broadridge to compare to each Fund; (2) comparative performance data for each Fund; (3) data on each Fund’s expenses and fees; and (4) comparative fee data for each Fund’s respective peer group, including comparisons of advisory fees and total expense ratios. In considering the Advisory Agreement, the Independent Trustees met with their independent legal counsel separately from the “interested” Trustee of the Trust and officers and employees of the Adviser. After evaluating all the materials, the Trustees, including the Independent Trustees, concluded that the Advisory Agreement was in the best interest of each of the

Funds and their shareholders and approved the continuation of the Advisory Agreement on behalf of the Funds.

 

The material factors and conclusions that formed the basis for the Trustees reaching their determination to approve the continuation of the Advisory Agreement are separately discussed below.

 

Nature, Quality and Extent of Services

 

The Board examined the nature, quality and extent of the services provided by the Adviser to each Fund. The Board also considered the Adviser’s responsibilities under the Advisory Agreement to perform securities trading services and ancillary services including, among other things: (i) filing reports with the SEC, (ii) periodically updating the Trust’s registration statement, (iii) establishing and maintaining the Funds’ website to comply with regulatory requirements, (iv) monitoring anticipated purchases and redemptions of creation units by shareholders and new investors, (v) providing information and assistance as required by the Trust’s administrator and fund accountant in connection with the Trust’s shares, and (vi) providing assistance in connection with the operations of the Trust generally.

 

The Board also considered the quality of the Adviser’s resources that are made available to the Trust. The Board noted the Adviser’s and its affiliates’ financial position, stability and commitment to growing their exchange-traded funds (“ETFs”) business. The Board also considered the operation and strength of the Adviser’s compliance program.

 

The Board noted that Foreside Fund Services, LLC, an entity unaffiliated with the Adviser, provides distribution services to the Funds and that JPMorgan Chase Bank, N.A., also an unaffiliated entity, provides custody, transfer agency, securities lending and fund administration support services, and that these service provider arrangements were relevant to the Board’s considerations of the totality of the circumstances surrounding renewal of the Advisory Agreement. The Board concluded that each Fund benefited from the services provided under the Advisory Agreement and as a result of the Adviser’s operations, resources, experience, reputation and personnel.

 

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Approval of Advisory Agreement (cont.)

 

 

Performance, Fees and Expenses

 

The Board considered that, unlike FlexShares® Ultra-Short Income Fund and FlexShares® Core Select Bond Fund (each, an “Active Fund”), the investment objective of each Fund other than the Active Funds (each, an “Index Fund”) is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of a specified index (each, an “Underlying Index”). The Board considered the Adviser’s explanation that performance information with respect to funds in relevant peer universes and peer groups selected by Broadridge is only one of several comparative data points and that none of the peer funds sought to track an index that was the same as any Index Fund’s Underlying Index. The Board considered the information that the Adviser provided regarding the difference between each Fund’s performance, after fees and expenses, and the performance of its Underlying Index or benchmark index (as applicable) over certain periods of time, including as noted further below, ended March 31, 2023 (the “Tracking Difference”). The Board considered the Adviser’s expectations for each Index Fund’s Tracking Difference and noted the Adviser’s view that all instances of Tracking Difference for the Index Funds reflect results well within appropriate expectations after taking into account (i) all of the factors that affect Tracking Difference and (ii) the ancillary objectives of minimizing portfolio transaction costs and tax-related inefficiencies.

 

The Board also considered comparative performance, fee and expense information of each Fund provided by Broadridge. The Broadridge comparisons ranked each Fund in various quintiles over certain periods of time, including as noted further below, ended March 31, 2023, with the first quintile being the lowest or best 20% of the funds in terms of fund cost and fund performance, respectively. The Board noted that, in certain cases, the Broadridge peer funds included funds sponsored by an “at cost” service provider and that there were limitations in providing comparable peer funds.

 

The Board considered that the Adviser contractually agreed to reimburse the portion of the operating expenses of each Fund until at least March 1, 2024, so that, after such reimbursement, the total annual fund operating expenses of

a Fund, excluding any acquired fund fees and expenses, expressed as a percentage of average daily net assets, does not exceed an amount equal to the sum of (i) the Fund’s advisory fee rate and (ii) 0.0049% (the “Expense Reimbursement Agreement”).

 

In reaching its determinations, the Board considered a large amount of data provided by the Adviser in response to a written request previously submitted by the Independent Trustees to the Adviser. Among the information considered by the Board was the following information:

 

Index Funds:

 

FlexShares® Morningstar US Market Factor Tilt Index Fund (TILT)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by 20 basis points or less for all periods, except for the three-year period in which the Fund’s performance differed from the performance of the Underlying Index by less than 35 basis points. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, number of holdings and approach to portfolio and trade construction.

 

The Board also considered that the Fund’s performance was in the third quintile of its performance universe for the one-year, five-year and ten-year periods and in the first quintile for the three-year period.

 

The Board noted that the Fund’s advisory fee net of waivers (“Net Advisory Fee”) was less than one basis point higher than its expense group median, and the Fund’s contractual advisory fee (“Contractual Advisory Fee”) and total expense ratio (which represents the total cost to investors) were below its expense group median.

 

FlexShares® Morningstar Developed Markets ex-US Factor Tilt Index Fund (TLTD)

 

The Board considered that the Fund’s performance, after fees and expenses, was above the performance of its Underlying Index for the five-year period and differed from the performance of the Underlying Index by less than 10 basis points for the remaining periods. The Board considered the factors that influenced the Fund’s Tracking Difference

 

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Table of Contents

 

 

Approval of Advisory Agreement (cont.)

 

 

including, among other things, dividend-related tax differentials, the use of futures, transaction costs and number of holdings.

 

The Board also considered that the Fund’s performance ranked in the second quintile of its performance universe for the ten-year period, the third quintile for the five-year period, the fourth quintile for the three-year period, and the fifth quintile for the one-year period. The Board considered the Adviser’s assertion that it takes a thoughtful and disciplined approach to portfolio and trade construction to find the optimal balance between the effects of transaction costs and a level of sampling that seek to achieve the characteristics and performance of the benchmark. In this regard, it was noted that having a high number of holdings can increase transaction costs relative to peer funds. The Board also considered the Adviser’s assertion that for the one-year period ended March 31, 2023, securities selection related to market capitalization detracted from performance.

 

The Board took into account that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee, and Contractual Advisory Fee were higher than its expense group median and its total expense ratio was within 4 basis points of its expense group median.

 

FlexShares® Morningstar Emerging Markets Factor Tilt Index Fund (TLTE)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 100 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, the use of futures, transaction costs, securities selection, dividend tax differentials compounding of tracking difference and number of holdings.

 

The Board noted that the Fund’s performance ranked in the second quintile of its performance universe for the three-year period and in the third quintile for the remaining periods.

 

The Board and Adviser agreed to a voluntary expense reduction in the management fee for the Fund from 0.59% to 0.57% for one-year, effective June 26, 2023, with a corre-

sponding reduction of the Adviser’s expense limitation agreement with the Fund’s trust.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median and its total expense ratio was within 0.15% of its expense group median.

 

FlexShares® US Quality Large Cap Index Fund (QLC)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its

Underlying Index by 40 basis points or less for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, compounding of tracking difference, transaction costs, the use of futures and securities selection.

 

The Board noted that the Fund’s performance ranked in the second quintile of its performance universe for the three-year period, the third quintile for the one-year period and the fifth quintile for all remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median and considered this in light of the Fund’s performance.

 

FlexShares® STOXX® US ESG Select Index Fund (ESG)

 

The Board considered that the Fund’s performance, after fees and expenses, was above the performance of its Underlying Index for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including dividend-related tax differentials and transaction costs.

 

The Board also considered that the Fund’s performance ranked in the first quintile of its performance universe for all periods, except for the one-year period when the Fund’s performance ranked in the third quintile.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median and considered this in light of the Fund’s performance.

 

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Approval of Advisory Agreement (cont.)

 

 

FlexShares® STOXX® Global ESG Select Index Fund (ESGG)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 15 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, dividend-related tax differentials, securities selection, transaction costs and the use of futures.

 

The Board noted that the Fund’s performance ranked in the first quintile of its performance universe for all periods, except for the one-year period when the Fund’s performance ranked in the fourth quintile.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median and considered this in light of the Fund’s performance.

 

FlexShares® Morningstar Global Upstream Natural Resources Index Fund (GUNR)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 90 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, compounding, the use of futures, securities selection, transaction costs, Indian capital gains tax accruals and dividend tax differentials.

 

The Board also considered that the Fund’s performance ranked in the fourth quintile of its performance universe for the one-year period, in the fifth quintile for the third-year period and in the first quintile for the remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median.

 

FlexShares® STOXX® Global Broad Infrastructure Index Fund (NFRA)

 

The Board considered that the Fund’s performance, after fees and expenses, exceeded the performance of its Under-

lying Index for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, compounding, the use of futures, securities selection, transaction costs, Indian capital gains tax accruals and dividend tax differentials.

 

The Board considered that the Fund’s performance ranked in the third quintile of its performance universe for the one-year period and in the fourth quintile for all remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median and considered this in light of the Fund’s performance.

 

FlexShares® Global Quality Real Estate Index Fund (GQRE)

 

The Board considered that the Fund’s performance, after fees and expenses, exceeded the performance of its Underlying Index for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, securities selection, dividend-related tax differentials, compounding, transaction costs and the use of futures.

 

The Board also considered that the Fund’s performance ranked in the fifth quintile of its performance universe for the one-year and five-year periods, in the third quintile for the since inception period, and the fourth quintile for the three-year period.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors) and Contractual Advisory Fee were lower than its expense group median while its Net Advisory Fee was equal to its expense group median and considered this in light of the Fund’s performance.

 

FlexShares® Real Assets Allocation Index Fund (ASET)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by 15 basis points or less for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, the selections for exposure to certain asset classes.

 

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Table of Contents

 

 

Approval of Advisory Agreement (cont.)

 

 

The Board noted that the Fund’s performance was in the fourth quintile of its performance universe for the one-year period, in the third quintile for the three-year period, and in the second quintile for the remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors) and Net Advisory Fee were lower than its expense group median and the Fund’s Contractual Advisory Fee was higher than its expense group median. The Board noted that the Fund’s Contractual Advisory Fee was within 0.07% of its expense group median Contractual Advisory Fee. The Board also considered that the Adviser had agreed to a contractual expense reduction in the management fee for the Fund from 0.57% to 0.49% per annum, with a corresponding reduction of the Adviser’s expense limitation agreement with the Fund’s trust.

 

FlexShares® Quality Dividend Index Fund (QDF)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 60 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, transaction costs, the use of broad equity index futures used to equitize cash and accruals which can perform differently than the Fund’s index, and stock selection.

 

The Board also considered that the Fund’s performance ranked in the second quintile for the ten-year period, in the third quintile for the three-year period, and in the fourth quintile for the remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee, and Contractual Advisory Fee were higher than its expense group median.

 

FlexShares® Quality Dividend Defensive Index Fund (QDEF)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 60 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, transaction costs, stock selection, and the use of broad equity

index futures used to equitize cash and accruals which can perform differently than the Fund’s index.

 

The Board considered that the Fund’s performance ranked in the second quintile for the one-year and ten-year periods, the third quintile for the five-year period, and the fourth quintile for the three-year period.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee, and Contractual Advisory Fee were higher than its expense group median.

 

FlexShares® Quality Dividend Dynamic Index Fund (QDYN)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 60 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, stock selection, transaction costs, and the use of broad equity index futures used to equitize cash and accruals which can perform differently than the Fund’s index.

 

The Board also considered that the Fund’s performance ranked in the first quintile for the three-year and ten-year periods, in the second quintile for the five-year period, and in the fourth quintile for the one-year period.    

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee, and Contractual Advisory Fee were higher than its expense group median. The Board also considered that the Fund would be reorganized into the FlexShares Quality Dividend Index Fund (QDF) on or about June 30, 2023.

 

FlexShares® International Quality Dividend Index Fund (IQDF)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 40 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, Indian capital gains tax accruals, the use of broad equity index futures used to equitize cash and accruals which can perform

 

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Approval of Advisory Agreement (cont.)

 

 

differently than the Fund’s index, stock selection, dividend tax differentials whereby the Fund may be eligible for different tax withholding and transaction costs.

 

The Board also considered that the Fund’s performance ranked in the third quintile for the three-year period and the fourth quintile for the remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee, and Contractual Advisory Fee were equal to its expense group median.

 

FlexShares® International Quality Dividend Defensive Index Fund (IQDE)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 50 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, differences in security-level weights relative to the Underlying Index which can be impacted by multiple factors including, but not limited to, pending corporate actions, round lot conventions, multiple share classes, transaction cost minimization, and security specific liquidity constraints, the use of broad equity index futures used to equitize cash and accruals which can perform differently than the Fund’s index trade related stamp taxes in certain foreign jurisdictions and transaction costs.

 

The Board also considered that the Fund’s performance ranked in the fifth quintile for all periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee, and Contractual Advisory Fee were equal to its expense group median.

 

At the June Meeting, the Board was advised by the Adviser that the reorganization of IQDE into FlexShares® International Quality Dividend Index Fund (IQDF) would not occur on or about June 30, 2023 as originally scheduled given that the reorganization would not be able to be consummated at such time as a tax-free reorganization as required by the agreement and plan of reorganization.

FlexShares® International Quality Dividend Dynamic Index Fund (IQDY)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 45 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, dividend tax differentials, differences in security-level weights relative to the Underlying Index which can be impacted by multiple factors including, but not limited to, pending corporate actions, round lot conventions, multiple share classes, transaction cost minimization, and security specific liquidity constraints, the use of broad equity index futures used to equitize cash and accruals which can perform differently than the Fund’s index, trade related stamp taxes in certain foreign jurisdictions and accruals from India capital gains taxes that can differ from the Underlying Index.

 

The Board also considered that the Fund’s performance ranked in the fourth quintile of its performance universe for the one-year period, in the third quintile for the five-year period, and in the first or second quintile for the remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee, and Contractual Advisory Fee were equal to its expense group median.

 

FlexShares® iBoxx 3-Year Target Duration TIPS Index Fund (TDTT)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 25 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, shifts in interest rates and liquidity and trading costs.

 

The Board also considered that the Fund’s performance ranked in the first quintile of its performance universe for all periods.

 

The Board took into account that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than

 

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Approval of Advisory Agreement (cont.)

 

 

its expense group median and the Fund’s total expense ratio was within 0.06% of its expense group median.

 

FlexShares® iBoxx 5-Year Target Duration TIPS Index Fund (TDTF)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 30 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, pricing differences, security positioning, liquidity considerations and interest rates.

 

The Board also considered that the Fund’s performance ranked in the second quintile of its performance universe for the one-year period, in the third quintile for the three-year period, and the first quintile for the remaining periods.

 

The Board took into account that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median and the Fund’s total expense ratio was within 0.06% of its expense group median.

 

FlexShares® Disciplined Duration MBS Index Fund (MBSD)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from its Underlying Index by less than 80 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, pricing differences and liquidity and trading costs. The Board also considered that the Fund’s Underlying Index generally achieves its target duration with fewer constituents than its peer indices, and that the Adviser utilizes a representative sampling strategy to manage the Fund.

 

The Board also considered that the Fund’s performance ranked in the first quintile for the one-year period and in the second or third quintile of its performance universe for the remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee, and Contractual Advisory Fee were higher than its expense group median. The Board noted its total expense ratio was within 0.17% of its expense group median.

FlexShares® Credit-Scored US Corporate Bond Index Fund (SKOR)

 

The Board considered the Fund’s performance for the one-, three-, five-year and since inception periods. The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 70 basis points for the one-year period and exceeded the performance of its Underlying Index by more than 200 basis points for the since inception period. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, shifts in interest rates, liquidity and trading costs, security selection, and pricing differences.

 

The Board also considered that the Fund’s performance ranked in the first quintile for the one-year and five-year periods, in the second quintile for the three-year period, and in the third quintile for the since inception period.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median and its total expense ratio was within 0.08% of its expense group median. The Board considered this in the context of the Fund’s performance against its Underlying Index.

 

FlexShares® Credit-Scored US Long Corporate Bond Index Fund (LKOR)

 

The Board considered the Fund’s performance for the one-, three-, five-year and since inception periods. The Board considered that the Fund’s performance, after fees and expenses, differed from the performance of its Underlying Index by less than 85 basis points for the one-year period and exceeded the performance of its Underlying Index by more than 690 basis points for the since inception period. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, pricing differences, shifts in interest rates, liquidity and trading costs, and security selection. The Board also considered that the Adviser utilizes a representative sampling strategy to manage the Fund.

 

The Board also considered that the Fund’s performance ranked in the fifth quintile for the one-year and three-year

 

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Approval of Advisory Agreement (cont.)

 

 

periods, in the third quintile for the five-year period, and the first quintile of its performance universe for the since inception period.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median and its Fund’s total expense ratio was within 0.08% of its expense group median. The Board considered this in the context of the Fund’s performance.

 

The Board and Adviser agreed to a voluntary expense reduction in the management fee for the Fund from 0.22% to 0.20% for one-year, effective June 26, 2023, with a corresponding reduction of the Adviser’s expense limitation agreement with the Fund’s trust.

 

FlexShares® High Yield Value-Scored Bond Index Fund (HYGV)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from its Underlying Index by less than 180 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, liquidity and trading costs, shifts in interest rates, security selection and pricing differences.

 

The Board also considered that the Fund’s performance ranked in the fifth quintile of its performance universe for the one-year period and in the second quintile for the remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median and its total expense ratio was within 0.03% of its expense group median.

 

The Board and Adviser agreed to a voluntary expense reduction in the management fee for the Fund from 0.37% to 0.35% for one-year, effective June 26, 2023, with a corresponding reduction of the Adviser’s expense limitation agreement with the Fund’s trust.

 

FlexShares® US Quality Low Volatility Index Fund (QLV)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from its Underlying Index by 30

basis points or less for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, the compounding effect of tracking error in periods of high volatility, the use of broad equity index futures used to equitize cash and accruals which can perform differently than the Fund’s index, and transaction costs.

 

The Board also considered that the Fund’s performance ranked in the first quintile of its performance universe for the one-year period, the fourth quintile for the three-year period, and the third quintile for the since inception period.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were lower than its expense group median.

 

FlexShares® Developed Markets ex-US Quality Low Volatility Index Fund (QLVD)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from its Underlying Index by less than 25 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, dividend tax differential, stock selection, transaction costs, and the use of broad equity index futures used to equitize cash and accruals which can perform differently than the Fund’s index.

 

The Board also considered that the Fund’s performance ranked in the third quintile of its performance universe for the one-year period and in the fifth quintile for the remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors) and Net Advisory Fee were higher than its expense group median, while its Contractual Advisory Fee was lower than its expense group median. The Board noted that the Fund’s Net Advisory Fee was within 0.01% of its expense group median.

 

FlexShares® Emerging Markets Quality Low Volatility Index Fund (QLVE)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from its Underlying Index by less

 

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Approval of Advisory Agreement (cont.)

 

 

than 90 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, , the use of broad equity index futures to equitize cash and accruals, Indian capital gains tax accruals, transaction costs, stock selection, and compounding of tracking difference.

 

The Board also considered that the Fund’s performance ranked in the second quintile of its performance universe for the one-year period and in the fourth quintile for the remaining periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were lower than its expense group median.

 

FlexShares® ESG & Climate Developed Markets ex-US Core Index Fund (FEDM)

 

The Board considered that the Fund’s performance, after fees and expenses, exceeded its Underlying Index by three basis points for the one-year period and more than five basis points since inception. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, dividend tax differential, stock selection, transaction costs, the compounding of tracking difference, and the use of broad equity index futures used to equitize cash and accruals which can perform differently than the Fund’s index.

 

The Board also considered that the Fund’s performance ranked in the fourth quintile of its performance universe for the one-year period and in the third quintile since inception. Further, the Board considered the Fund’s relatively short performance record and noted that it would be prudent to allow the Adviser more time to develop the Fund’s performance record.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were lower than its expense group median.

FlexShares® ESG & Climate US Large Cap Core Index Fund (FEUS)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from its Underlying Index by less than 15 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, transaction costs, the use of broad equity index futures used to equitize cash and accruals which can perform differently than the Fund’s index, and compounding of tracking difference.

 

The Board also considered that the Fund’s performance ranked in the second quintile of its performance universe since inception and in the third quintile for the one-year period. Further, the Board considered the Fund’s relatively short performance record and noted that it would be prudent to allow the Adviser more time to develop the Fund’s performance record.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were lower than its expense group median.

 

FlexShares® ESG & Climate Investment Grade Corporate Core Index Fund (FEIG)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from its Underlying Index by 55 basis points or less for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, differences in pricing sources, liquidity and trading costs, shifts in interest rates, and security selection.

 

The Board also considered that the Fund’s performance ranked in the third quintile of its performance universe for all periods. Further, the Board considered the Fund’s relatively short performance record and noted that it would be prudent to allow the Adviser more time to develop the Fund’s performance record.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were lower than its expense group median.

 

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Approval of Advisory Agreement (cont.)

 

 

FlexShares® ESG & Climate High Yield Corporate Core Index Fund (FEHY)

 

The Board considered that the Fund’s performance, after fees and expenses, differed from its Underlying Index by less than 80 basis points for all periods. The Board considered the factors that influenced the Fund’s Tracking Difference including, among other things, differences in pricing sources, liquidity and trading costs, shifts in interest rates, and security selection.

 

The Board also considered that the Fund’s performance ranked in the fourth quintile of its performance universe for all periods.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were lower than its expense group median.

 

The Board considered that the Fund was scheduled to be liquidated on or about July 10, 2023.

 

FlexShares® ESG & Climate Emerging Markets Core Index Fund (FEEM)

 

The Board considered the Fund’s performance, after fees and expenses, equaled its Underlying Index since inception. The Board also considered that the Fund’s performance ranked in the fourth quintile of its performance universe since inception. Further, the Board considered the Fund’s relatively short performance record and noted that it would be prudent to allow the Adviser more time to develop the Fund’s performance record.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were lower than its expense group median.

 

Active Funds:

 

FlexShares® Ultra-Short Income Fund (RAVI)

 

The Board considered that the Fund’s performance ranked in the third quintile for the one-year and three-year periods and the second quintile for the remaining periods. The Board also considered that the Fund outperformed its

benchmark index for the three-, five-and ten-year periods and underperformed its benchmark index for the one-year period The Board also considered information provided by the Adviser with regard to the Fund’s performance against certain peer funds identified by the Adviser. In this regard, the Board considered the Adviser’s assertion that consistent with the Adviser’s capital market assumptions, the Fund’s portfolio composition has generally been characterized by longer duration and higher credit quality than certain peer funds.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were higher than its expense group median and the Fund’s total expense ratio was within 0.06% of its expense group median.

 

FlexShares® Core Select Bond Fund (BNDC)

 

The Board considered that the Fund’s performance ranked in the second quintile for the one-year period and in the third or fourth quintile of its performance universe for the remaining periods. The Board also considered that the Fund outperformed its benchmark index for the three-year period and underperformed its benchmark index for all remaining periods. The Board also considered information provided by the Adviser with regard to the Fund’s performance against certain peer funds identified by the Adviser. In this regard, the Board considered the Adviser’s assertion that relative to such peers, the Fund has historically been overweight to treasury securities and investment grade corporate bonds and, as such, the peer funds have historically benefited during risk-on market environments through heavier allocations to securitized debt instruments and lower credit quality securities.

 

The Board considered that the Fund’s total expense ratio (which represents the total cost to investors), Net Advisory Fee and Contractual Advisory Fee were lower than its expense group median. The Board also considered that the Adviser had agreed to waive a portion of its advisory fee and/or reimburse operating expenses in an amount equal to any acquired fund fees and expenses incurred by the Fund that were attributable to its investment in other Funds.

 

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Approval of Advisory Agreement (cont.)

 

 

Costs of Services and Profits of the Adviser

 

The Board considered the unitary fee structure and the expenses for each Fund and noted that, under the Advisory Agreement, the Adviser was responsible for most expenses of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services. The Board considered that the Adviser was not responsible under the Advisory Agreement for certain expenses, including the fees and expenses of the Trust’s Independent Trustees and their independent legal counsel, litigation expenses and other extraordinary expenses.

 

The Board considered the advisory fee for each Fund as compared to that of other comparable funds in relation to its respective Broadridge median. The Board considered the Adviser’s explanation that each Index Fund’s advisory fee (both gross and net of waivers) compared favorably with its respective Broadridge median advisory fee (both gross and net of waivers) for comparable funds set forth in the Broadridge report, especially taking into account, among other factors, important differences between the indexes upon which such comparable funds are based and each Index Fund’s Underlying Index, including in certain cases differences between the number of portfolio holdings for comparable funds and the Funds. The Board considered the advisory fee schedules for other accounts with similar investment advisory mandates as those of the Funds, noting that there were no comparable accounts for certain of the Funds. The Board considered (a) the differences in managing ETFs versus separately managed accounts which involve daily purchase and redemption activity along with robust regulatory and governance requirements; and (b) the Funds’ unitary fee structure.

 

The Board examined the Adviser’s profitability information provided by the Adviser, and the Trustees considered that the Adviser was profitable on a pre-distribution basis but not on a post-distribution basis. The Board considered that the Adviser’s potential for profitability would continue to be subject to financial uncertainties and risks. The Board also considered that the Adviser would continue to develop and offer additional new products in efforts to complete the overall integrity of the Trust’s product suite, consistent with

its product strategy, and that these products may expose the Adviser to additional financial risks and uncertainties.

 

Economies of Scale

 

The Board considered whether the Adviser may realize economies of scale in managing and supporting the Funds. The Board reviewed each Fund’s fee arrangements, which did not include breakpoints, and considered that, in light of the unitary fee structure, the Adviser’s profitability from its services to the Trust and the significant investment that the Adviser had made and continues to make in the Trust, breakpoints were not necessary at this time. The Board also noted the Expense Reimbursement Agreement.

 

Other Benefits to the Adviser

 

In addition to considering the profits that may be realized by the Adviser, the Board considered information regarding other direct and indirect benefits the Adviser may receive as a result of its relationship with the Funds, including whether any compensation would be paid to its affiliates. The Board also considered that some of the Funds’ shareholders have other client relationships with the Adviser or its affiliates. The Board also reviewed the extent to which the Adviser and its other clients, as well as the Funds, benefit from receipt of the research products and services generated by the Funds.

 

The Board, including the Independent Trustees, considered the data provided by the Adviser and concluded that sufficient information had been provided to allow them to evaluate the terms of the Advisory Agreement and each Fund’s investment advisory fee. They determined that each Fund’s advisory fee was reasonable in light of the services provided and the performance achieved by the Fund.

 

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Supplemental Information (Unaudited)

 

 

Premium/Discount Information

 

Information about the differences between the daily market prices on secondary markets for shares of the Funds and the Funds’ net asset values for various time periods, as applicable, is available by visiting the Funds’ website at flexshares.com

 

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For More Information (Unaudited)

 

 

Portfolio Holdings

 

FlexShares® Trust files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year an exhibit to its reports on Form N-PORT. The Funds’ Forms N-PORT are available on the SEC’s website at sec.gov.

 

Proxy Voting

 

FlexShares® Trust Proxy Voting Policies and Procedures are available upon request and without charge by calling 1-855-FLEXETF (1-855-353-9383) or by visiting the Funds’ website flexshares.com or the SEC’s website at sec.gov. Each Fund’s portfolio securities voting record for the 12-month period ended June 30 is available upon request and without charge by calling 1-855-FLEXETF (1-855-353-9383) or by visiting the SEC’s website at sec.gov.

 

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LOGO

 

 

 

FlexShares® Trust

50 S. LaSalle Street

Chicago, IL 60603

800.595.9111

www.flexshares.com

 

FlexShares® is a registered trademark of NTI. Morningstar® is a registered trademark of Morningstar, Inc. (“Morningstar”). Morningstar® US Market Factor Tilt IndexSM, Morningstar® Developed Markets ex-US Factor Tilt IndexSM, Morningstar® Emerging Markets Factor Tilt IndexSM, and Morningstar® Global Upstream Natural Resources IndexSM are service marks of Morningstar, Inc. STOXX and its licensors (the “Licensors”) have no relationship to FlexShares® Trust other than the licensing of the STOXX® USA ESG Select KPIs Index, STOXX® Global ESG Select KPIs Index and STOXX® Global Broad Infrastructure Index and the related trademarks for use in connection with the FlexShares® STOXX® US ESG Select Index Fund, FlexShares® STOXX® Global ESG Select Index Fund and FlexShares® STOXX® Global Broad Infrastructure Index Fund, respectively. The iBoxx 3-Year Target Duration TIPS Index and iBoxx 5-Year Target Duration TIPS Index are each the property of Markit North America, Inc. (“Markit”) and have been licensed for use in connection the FlexShares iBoxx 3-Year Target Duration TIPS Index Fund and the FlexShares iBoxx 5-Year Target Duration TIPS Index Fund, respectively. Northern Trust Quality Low Volatility IndexSM, Northern Trust Developed Markets ex-US Quality Low Volatility IndexSM, Northern Trust Emerging Markets Quality Low Volatility IndexSM, Northern Trust Quality Large Cap IndexSM, Northern Trust Quality Dividend IndexSM, Northern Trust Quality Dividend Defensive IndexSM, Northern Trust International Quality Dividend IndexSM, Northern Trust International Quality Dividend Defensive IndexSM, Northern Trust Global Quality Real Estate IndexSM, Northern Trust Credit-Scored US Corporate Bond IndexSM, Northern Trust Credit-Scored US Long Corporate Bond IndexSM, Northern Trust Real Assets Allocation IndexSM, Northern Trust High Yield US Corporate Bond IndexSM, and Northern Trust High Yield Value-Scored US Corporate Bond IndexSM are service marks of NTI and have been licensed for use by FlexShares Trust. The ICE® BofA® Constrained Duration US Mortgage Backed Securities IndexSM are trademarks of ICE Data Indices, LLC or its affiliates (“ICE”) and have been licensed for use by NTI.

 

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