FlexShares Launches Disciplined Duration MBS Index ETF
New ETF to provide dependable MBS income generation alternative at reduced
CHICAGO -- September 4, 2014
FlexShares® Exchange Traded Funds, sponsored and managed by Northern Trust,
today introduced the FlexShares Disciplined Duration MBS Index Fund (NASDAQ:
MBSD), a fixed income portfolio consisting of investment-grade U.S. agency
mortgage-backed pass-through securities (“MBS”) issued by 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). The Fund
targets an average effective duration of 3.75 years, with an admissible range
between 3.25 and 4.25 years.
The FlexShares® Disciplined Duration MBS Index Fund features:
*An accessible and efficient investment product which provides fixed income
MBS sector exposure
*Residential agency fixed-rate MBS exposure (excludes adjustable-rate or
*Constrained effective duration, which may help generate incremental
returns with lower volatility
*An index-based strategy with competitive fees
“With our ongoing focus on real-world investor needs, we developed this Fund
as an income generation tool that offers investors the unique characteristics
of the mortgage-backed securities (MBS) sector,” said Shundrawn A. Thomas,
Executive Vice President and Head of Northern Trusts’ Funds and Managed
Accounts Group. “The FlexShares® Disciplined Duration MBS Index Fund is
designed to help investors generate income and diversify their fixed income
exposure while dampening the volatility that can result from duration risk.”
The Underlying Index is The BofA Merrill Lynch Constrained Duration US
Mortgage Backed Securities Index (“M375”), an alternatively-weighted index
composed of 15-year, 20-year and 30-year fixed rate residential agency
mortgage pools sponsored by Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the “Index Provider”). The Index Provider determines the composition and
relative weightings of the securities in the Underlying Index in accordance
with a published methodology and is reconstituted on a monthly basis.
For more information, please visit www.flexshares.com.
Before investing, carefully consider the FlexShares investment objectives,
risks, charges and expenses. This and other information is in the prospectus,
a copy of which may be obtained by visiting www.flexshares.com. Read the
prospectus carefully before you invest.
Foreside Fund Services, LLC, distributor.
FlexShares Exchange Traded Funds are designed to pursue specific investment
goals across both passive and active strategies. FlexShares offers
differentiated ETF strategies that improve and simplify the investment
decision process for the long-term investor. For more information, please
About Northern Trust
Northern Trust Corporation (NASDAQ: NTRS) is a leading provider of investment
management, asset servicing, fund administration, fiduciary and banking
solutions for corporations, institutions, families and individuals worldwide.
Chicago-based Northern Trust has offices in 19 states, Washington, D.C., and
19 international locations in Canada, Europe, the Middle East and the
Asia-Pacific region. As of June 30, 2014, Northern Trust had assets under
custody of US$6 trillion, and assets under investment management of US$924.4
billion. For 125 years, Northern Trust has earned distinction as an industry
leader in combining exceptional service and expertise with innovative products
and technology. For more information, visit www.northerntrust.com and follow
us on Twitter @NorthernTrust.
An investment in FlexShares is subject to numerous risks, including possible
loss of principal. Fund returns may not match the return of the respective
indexes. The Funds are subject to the following principal risks: asset class;
commodity; concentration; counterparty; currency; derivatives; dividend;
emerging markets; equity securities; fluctuation of yield; foreign securities;
geographic; income; industry concentration; inflation-protected securities;
infrastructure-related companies; interest rate / maturity risk; issuer;
management; market; market trading; mid cap stock; MLP; natural resources; new
funds; non-diversification; passive investment; privatization; small cap
stock; tracking error; value investing; and volatility risk. A full
description of risks is in the prospectus.
In addition, FlexShares Disciplined Duration MBS Index Fund (NASDAQ:MBSD) is
subject to credit risk, which is the risk that the inability or unwillingness
of an issuer or guarantor of a fixed-income security, or a counterparty to a
TBA, repurchase or other transaction, to meet its payment or other financial
obligations will adversely affect the value of the Fund’s investments and its
returns. Changes in the credit rating of a debt security held by the Fund
could have a similar effect. Debt extension risk is the risk that an issuer
will exercise its right to pay principal on an obligation held by the Fund
(such as a mortgage-backed security) later than expected. This may happen
during a period of rising interest rates. Under these circumstances, the value
of the obligation will decrease and the Fund will suffer from the inability to
invest in higher yielding securities. Mortgage-backed pass-through securities
risk is the risk of investing in mortgage-backed securities issued by a U.S.
Agency. These securities may not be backed by the full faith and credit of the
U.S. government. As interest rates rise, bond prices fall, reducing the value
of fixed income investments.
About the Index Provider
Merrill Lynch, Pierce, Fenner & Smith Incorporated and/or its affiliates
compile and publish the Underlying Index. Merrill Lynch, Pierce, Fenner &
Smith Incorporated and its affiliates (“BofA Merrill Lynch”) indices and
related information, the name “BofA Merrill Lynch”, and related trademarks,
are intellectual property licensed from BofA Merrill Lynch, and may not be
copied, used, or distributed without BofA Merrill Lynch’s prior written
approval. The licensee’s products have not been passed on as to their legality
or suitability, and are not regulated, issued, endorsed, sold, guaranteed, or
promoted by BofA Merrill Lynch. BOFA MERRILL LYNCH MAKES NO WARRANTIES AND
BEARS NO LIABILITY WITH RESPECT TO THE INDICES, ANY RELATED INFORMATION, ITS
TRADEMARKS, OR THE PRODUCT(S) (INCLUDING WITHOUT LIMITATION, THEIR QUALITY,
ACCURACY, SUITABILITY AND/OR COMPLETENESS).
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