FlexShares Credit-Scored US Corporate Bond Index Fund (SKOR US) – Portfolio Construction Methodology

The underlying Northern Trust US Corporate Bond Quality Value Index targets intermediate-maturity, investment-grade USD corporate bonds and optimizes toward issuers with favorable value and quality characteristics. Eligibility requires SEC-registered or 144A-with-registration debt, fixed-rate structures (including zeros, step-ups, select hybrids), senior or subordinated status, maturity ≥1 and <10 years at reconstitution, minimum issue size USD 250m, and a composite rating ≥BBB-/Baa3. From the eligible universe, an optimizer maximizes a composite alpha (value quality) while controlling risk: issuer weight ≤3%; sector weights constrained to ±10% versus the universe; duration-bucket exposures within ±3%; individual-security weights bounded between zero and 5× their universe weight; and turnover capped at ≤10% per monthly rebalance. The index reconstitutes and rebalances monthly on the last U.S. bond-trading day, effective after close. To explore SKOR in more depth, visit our ETF analytics platform for institutional-grade insights — including performance and risk metrics, correlations, sensitivities, and factor exposure: https://www.etfstrategy.com/etf/SKOR_US