ETF Research Center

FlexShares Quality Dividend Defensive Index Fund is an exchange-traded fund incorporated in the USA. The Fund seeks to track the performance of the Northern Trust Quality Dividend Defensive Index.

FUND BASICS
Category	US Equities
Fund Sponsor	Northern Trust Investments Inc
Website	www.flexshares.com
Inception date	Dec 14, 2012
Assets (mns)	$508
Currency	USD
Expense ratio	37 bp
Distributions	Quarterly

FUND STRUCTURE
Regulation	Open-Ended Fund
Custodian	State Street Bank and Trust Co
Weighting	Multi-Factor
Index replication	Optimized
Uses derivatives	No
Options available	No

SECTOR BREAKDOWN

CONSTITUENT BREAKDOWN
No. of constituents	162
Wgt avg mkt cap (mns)	$222,672
Large cap (>$10bn)	81.9%
Mid cap ($2-10bn)	18.1%
Small cap (<$2bn)	0.0%
Developed mkts	100.0%
Emerging mkts	0.0%

TOP TEN HOLDINGS
Total	28.5 %
MICROSOFT CORP	4.0 %
JOHNSON & JOHNSON	3.7 %
APPLE INC	3.6 %
UNITEDHEALTH GROUP INC	3.1 %
CHEVRON CORP	2.9 %
WELLS FARGO & CO	2.9 %
CISCO SYSTEMS INC	2.2 %
PHILIP MORRIS INTERNATIONAL	2.2 %
HOME DEPOT INC	2.1 %
ELI LILLY & CO	1.8 %

TOP COUNTRY EXPOSURE
	UNITED STATES	95.5 %
	IRELAND	2.0 %
	CANADA	0.5 %
	BERMUDA	0.4 %
	BRITAIN	0.3 %

HISTORICAL PERFORMANCE info

	Custom date range	Compare to
	thru

Standardized Annual Returns (thru January 31)
Year-to-date	1 year	5 years	10 years	Since Incep.
-1.6%	14.8%	9.9%	--	13.1%

Market Correlations
versus...	Beta	R-squared
S&P500	0.88	94%
MSCI EAFE	0.80	64%
MSCI Emg. Mkts.	0.52	48%

Technical Indicators
Recent close	$48.63
30d moving avg.	$48.17
Annualized volatility	10.9%
Short interest (ETF)	0.2%
Short interest (Underlying)	3.6%
Relative strength (RSI)	57

Liquidity measures
Avg. volume (thou.)	40
Turnover	0.4%
Bid/Ask (% of price)	0.04%
ADV underlying (mns)	$58,600

Distributions

FINDING ALTERNATIVE FUNDS

Below is a list of 20 potential alternatives to the FlexShares Quality Dividend Defensive ETF based on the alternatives' overlap in portfolio holdings with QDEF. Consider funds with lower expense ratios and/or higher ALTAR Score™ ratings as possible alternatives.

Benchmark ticker:

QDEF

Expense:

37 bp

ALTAR Score™:

6.2%

ALTERNATIVE ETFs BASED ON OVERLAP WITH QDEF
Ticker	Fund Name	Overlap¹ vs QDEF (%)	Expense ratio (bp)	Savings vs QDEF (bp)	ALTAR Score™ (%)	ALTAR vs QDEF (%)
QDF	FlexShares Quality Dividend	56.5	37	0	7.2	+1.0
QDYN	FlexShares Quality Dividend Dynamic	49.9	37	0	7.0	+0.9
DLN	WisdomTree Large Cap Dividend	47.7	28	9	6.4	+0.3
DTD	WisdomTree Total Dividend	44.8	28	9	6.6	+0.4
OUSA	O'Shares FTSE U.S. Quality Dividend	44.4	48	-11	5.9	-0.3
OVOL	Invesco Russell 1000 Low Volatility Factor ETF	43.7	19	18	6.6	+0.4
OYLD	Invesco Russell 1000 Yield Factor ETF	43.6	19	18	7.4	+1.2
DGRO	iShares Core Dividend Growth	43.4	8	29	6.3	+0.2
FDRR	Fidelity Dividend for Rising Rates	43.0	29	8	7.3	+1.1
VYM	Vanguard High Dividend Yield ETF	42.1	6	31	7.1	+1.0
DIVB	iShares U.S. Dividend & Buyback	41.1	25	12	6.6	+0.5
USMC	Principal U.S. Mega-Cap Multi-Factor Index	39.1	12	25	5.2	-0.9
EPS	WisdomTree Earnings 500	38.4	8	29	6.7	+0.6
OEF	iShares S&P 100	38.1	20	17	5.2	-0.9
USDY	Pacific Global US Equity Income	38.1	29	8	7.5	+1.3
XLG	Invesco S&P Top 50	37.8	20	17	4.9	-1.3
FDVV	Fidelity Core Dividend	37.3	29	8	6.9	+0.7
QUS	SPDR MSCI USA Quality Mix	37.2	15	22	5.7	-0.5
SCHV	Schwab U.S. Large-Cap Value	36.8	4	33	6.9	+0.7
FNDX	Schwab Fundamental Large Cap	36.8	25	12	5.5	-0.6

¹Overlap is the percentage of holdings by weight that are identical. For example, if Fund A has a 2% position in Apple, Inc. (AAPL) and Fund B has a 5% position, their overlapping position in AAPL is 2%.

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RESULTS & ESTIMATES

	2015	2016	2017	2018	2019	2020E	2021E
Sales per share	**	**	**	**	**	**	**
Earnings per share	**	**	**	**	**	**	**
Dividends per share	**	**	**	**	**	**	**
Book value per share	**	**	**	**	**	**	**

Sales per share growth		**%	**%	**%	**%	**%	**%
EPS growth		**%	**%	**%	**%	**%	**%

Sales per share growth		**%	**%	**%	**%	**%	**%
EPS growth		**%	**%	**%	**%	**%	**%

OTHER FUNDAMENTAL METRICS

Long term EPS growth est.	**%		Debt-to-equity	**x
Asset turnover	**%		Assets-to-equity	**x

Return on equity

Revision activity*

*Six months ago = 100

Net margins

Compound annual growth rates

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VALUATION METRICS

	2019	2020E	2021E
Price-to-sales	**	**	**
Price-to-earnings	**	**	**
Price-to-cash flow	**	**	**
Price-to-growth	**	**	**
Price-to-book value	**	**	**
Yield	**	**	**

Historical valuation trends

Forward multiple:	FlexShares Quality Dividend Defensive
Relative to:	S&P500	MSCI EAFE	MSCI Emg. Mkts.	Other ETF:

NEUTRAL

Average appreciation potential. A rating of NEUTRAL is assigned to ETFs with ALTAR Scores in the middle quintile (ranking between 40%-60%) of their category. This indicates that valuations adequately reflect the fundamentals of stocks in these funds.

ALTAR Score™

Calculation of ALTAR Score™
Avg. Return on Equity	19.1	%
Divided by: Fwd. P/BV	2.9	x
Less: Expense ratio	37	bp
Equals: ALTAR Score	6.2	%

More information on ALTAR Score™

MODERN PORTFOLIO THEORY info

CONSENSUS RECOMMENDATIONS: FUND CONSTITUENTS

COMPOSITE RATING	1.62	CATEGORY AVERAGE	1.56

The composite rating is a weighted average of analysts' consensus recommendations for individual ETF constituents, based on the following scale: BUY = 1; OVERWEIGHT = 1.5, HOLD = 2; UNDERWEIGHT = 2.5; and SELL = 3. Readers are cautioned that because analyst ratings tend to be inflated, the composite score may be more useful as a relative measure of sentiment between funds rather than as a stand-alone recommendation.