Smartshares Investment Statement Jan 20 2015

8/16/2019 Smartshares Investment Statement Jan 20 2015

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Smartshares Lim ited Investment Statement

To view the investment statements for:New Zealand Dividend Index Trust – NZ Dividend Fund (DIV) Australian Financials Index Trust - Aus Financials Fund (ASF) Australian Resources Index Trust - Aus Resources Fund (ASR)

Click Here

To view the investment statements for: Australian Property Index Trust - Aus Property Fund (ASP) Australian Dividend Index Trust - Aus Dividend Fund (ASD)

Click Here

To view the investment statements for:

smartTENZ - NZX 10 Fund (TNZ)smartMIDZ - NZX MidCap Index Fund (MDZ)smartFONZ - NZX 50 Portfolio Index Fund (FNZ)smartMOZY - NZX Australian MidCap Index Fund (MZY)smartOZZY – NZX Australian 20 Leaders Index Fund (OZY)

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Global Bond Trust

New Zealand Bond Trust

New Zealand Cash Trust

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Click Here

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US 500 Trust (USF)Europe Trust (EUF) Asia Pacific Trust (APA)Emerging Markets Trust (EMF)Total World Trust (TWF)US Large Value Trust (USV)US Large Growth Trust (USG)US Mid Cap Trust (USM)US Small Cap Trust (USS)


New Zealand Property Trust


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Smartshares Lim ited Investment Statement

AUSTRALIAN PROPERTY INDEX TRUST (Aus Property Fund)

AUSTRALIAN DIVIDEND INDEX TRUST (Aus Dividend Fund)

Investment Statement for the purposes of the Securities Act 1978.Dated 5 June 2015


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Contents

IMPORTANT INFORMATION 3

HOW DO IAPPLY? 10

AUSTRALIAN PROPERTY INDEX TRUST (AUS PROPERTY FUND) 13

AUSTRALIAN DIVIDEND INDEX TRUST (AUS DIVIDEND FUND) 15

ANSWERS TO IMPORTANTQUESTIONS 18

What sort of investment is this? 18

Who is involved in providing it for me? 18

How much do I pay? 21 What are the charges? 23

What returns will I get? 25

What are my risks? 30

Can the investment be altered? 34

Amendments to an Investment Policy 35

Replacement of an index 35

How do I cash in my investment? 35

Who do I contact with inquiries about my investment? 36

Is there anyone to whom I can complain if I have problems with the investment? 37

What other information can I obtain about this investment? 37

GLOSSARY OF TERMS 40


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IMPORTANT INFORMATION

(The information in this section is required under the Securities Act 1978.)

Investment decisions are very important. They often have long-term consequences. Read all documentscarefully. Ask questions. Seek advice before committing yourself.

Choosing an investment

When deciding whether to invest, consider carefully the answers to the following questions that can be found

on the pages noted below:

Page

What sort of investment is this? 18

Who is involved in providing it for me? 18

How much do I pay? 21

What are the charges? 23

What returns will I get? 25

What are my risks? 30

Can the investment be altered? 34

How do I cash in my investment? 35

Who do I contact with inquiries about my investment? 36

Is there anyone to whom I can complain if I have problems with the investment? 37

What other information can I obtain about this investment? 37

In addition to the information in this document, important information can be found in the current registered

prospectus for the investment. You are entitled to a copy of that prospectus on request.

The Financial Markets Authority regulates conduct in financial markets

The Financial Markets Authority regulates conduct in New Zealand’s financial markets. The Financial

Markets Authority’s main objective is to promote and facilitate the development of fair, efficient, and

transparent financial markets.

For more information about investing, go to http://www.fma.govt.nz.

Financial advisers can help you make investment decisions

Using a financial adviser cannot prevent you from losing money, but it should be able to help you make

better investment decisions.

Financial advisers are regulated by the Financial Markets Authority to varying levels, depending on the type

of adviser and the nature of the services they provide. Some financial advisers are only allowed to provide

advice on a limited range of products.

When seeking or receiving financial advice, you should check—

the type of adviser you are dealing with;


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the services the adviser can provide you with;

the products the adviser can advise you on.

A financial adviser who provides you with personalised financial adviser services may be required to give

you a disclosure statement covering these and other matters. You should ask your adviser about how he orshe is paid and any conflicts of interest he or she may have.

Financial advisers must have a complaints process in place and they, or the financial services provider they

work for, must belong to a dispute resolution scheme if they provide services to retail clients. So if there is a

dispute over an investment, you can ask someone independent to resolve it.

Most financial advisers, or the financial services provider they work for, must also be registered on the

financial service providers register. You can search for information about registered financial service

providers at http://www.fspr.govt.nz.

You can also complain to the Financial Markets Authority if you have concerns about the behaviour of afinancial adviser.

NZX Main Board Listing & Quotation

Units in the Funds have been accepted for quotation by the Special Division on the NZX Main Board and will

be quoted on completion of allotment procedures. However, the Special Division accepts no responsibility

for any statement in this Investment Statement. The NZX Main Board is a licensed market operated by NZX,

a licensed market operator regulated under the Financial Markets Conduct Act.

DisclaimerThe Return on each Smartshares Fund is intended to closely match the Return on the index it tracks (the

Aus Property Fund tracks the S&P/ASX 200 A-REIT Equal Weight Index and the Aus Dividend Fund tracks

the S&P/ASX Dividend Opportunities Index). These indices rise and fall according to market events and

conditions. None of the Trustee, the Manager, the Custodian, the Administration Manager, NZX, nor any

other person guarantees the Return on the indices or the Return on each Smartshares Fund or investment in

either Smartshares Fund. No warranty expressed or implied is given as to the results to be obtained by the

Manager or each Smartshares Fund from the use of the indices or any data included in them, or as to the

liquidity of investment in each Smartshares Fund, Smartshares Units or the fitness of any Smartshares Fund

for any Unitholder ’s purposes. The offer set out in this Investment Statement is only made in New Zealand.

No person may offer, sell or deliver Smartshares Units or distribute any documents in relation to the offer(including any copy or extract from this Investment Statement) to any person in any jurisdiction other than in

compliance with any applicable laws and regulations.

Definitions

Defined terms in this Investment Statement have the meaning set out in the Glossary of Terms on pages 40to 42.


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KEY INFORMATION SUMMARY

This section of the Investment Statement contains a summary of the key information relating to this offer.The rest of this Investment Statement contains important information. You should read all of it beforedeciding whether to invest.

How do the Smartshares Funds work?

This Investment Statement relates to the following Smartshares Funds:

- AUSTRALIAN PROPERTY INDEX TRUST (Aus Property Fund); and

- AUSTRALIAN DIVIDEND INDEX TRUST (Aus Dividend Fund).

The basic concept

Each Smartshares Fund is a unit trust, as defined in the Unit Trusts Act 1960. The beneficial interest in eachSmartshares Fund is divided into Units with each Unit representing an equal interest in the assets of thatSmartshares Fund but not conferring any interest in any specific asset of that Smartshares Fund.

The objective of each of the Smartshares Funds is to provide a Return to Unitholders that closely matchesthe Return on a specific equity market index. An equity market index is a measure of the Return on a groupof individual securities and is typically independently calculated by an index provider. To meet this objective,each Smartshares Fund aims to hold securities (Index Securities) of the entities that are part of the relevantindex (Index Issuers) in proportions that match their weightings in the relevant index. This is called indextracking, and there is further information about it below on this page and on page 30, together with morespecific comments about tracking performance for each of the Smartshares Funds in the descriptions ofeach individual Smartshares Fund from pages 13 to 17.

Exchange traded funds

Your Units are quoted on a stock exchange, in this case on the NZX Main Board. As quoted securities, Unitscan be traded like shares in Listed companies. For most investors, trading their Units on market through anNZX Firm will be the only way of redeeming their investment, because there is no general right to redeemUnits.

Differences from direct investment

Although an investment in a Smartshares Fund is similar to a direct investment in the relevant IndexSecurities, you will not have any rights in relation to specific Index Securities held by a Smartshares Fund.There are also some differences between the Returns you will receive on the two investments. The principaldifferences are as follows:

Tracking differences – The Manager aims to track the relevant index for a Smartshares Fund byinvesting in the relevant Index Issuers in proportions that match their weightings in the relevantindex. However, there will inevitably be some differences. For example, the makeup of the relevantindex may be changed, and the Manager may not be able to exactly match the change by buying

and selling Index Securities because the prices it pays and receives for the Index Securities may notexactly match the prices used to adjust the index. This means that the net asset value (NAV) of theIndex Securities held by the Smartshares Fund diverges over time from the value of the relevantindex (and therefore from the value of an equivalent direct investment in the Index Issuers).

Distribution differences – An investor that invests directly in Index Securities will receivedistributions in relation to those Index Securities when they are paid by the relevant Index Issuers.In contrast, distributions that are received by a Smartshares Fund from the relevant Index Issuerswill be held by that Smartshares Fund (and included in the Smartshares Fund's NAV) until aquarterly Distribution Date. It is only on that quarterly Distribution Date that distributions receivedduring the previous three months will be paid out (or reinvested for you) in one lump sum.

Management fees – Management fees are deducted before distributions are paid to you, meaningyou get less than the full distributions paid on the Index Securities the Smartshares Fund invests in.

Of course, it is unlikely that you would be able to invest in the Index Securities directly without alsopaying brokerage and potentially other investment fees to third parties.


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Different market values – Units trade at the market price for Units, which is unlikely to be exactlythe same as the Current Unit Value. One mechanism in place to reduce this difference is provisionfor larger investors to be able to exchange Baskets of Index Securities for the equivalent Units andvice versa. With this ability, larger investors are able to take advantage of any difference betweenthe market price of Units and the equivalent Index Securities. If they do take advantage of thatdifference, it affects the demand and supply of Units in a way that is expected to align the market

price of Units more closely with the per Unit value of the relevant Index Securities. However, despitethis mechanism, the market price of the Units and the per Unit value of the relevant Index Securitiesare not always closely aligned due to market forces that are outside the control of the Manager.

Distributions

Distributions to Unitholders are currently made directly from each Smartshares Fund within 20 BusinessDays of each Record Date. The Record Date is currently on or around the last Business Day of each ofMarch, June, September and December in any year. These distributions comprise dividends or any otherincome received by the Smartshares Fund, less fees and other expenses. Unitholders will automaticallyhave their distributions re-invested for Smartshares Units unless they elect to have them paid directly to anominated New Zealand bank account in New Zealand dollars. There is further information about

distributions on page 26.

Who is involved in providing the Smartshares Funds?

Smartshares Limited (the Manager) is a wholly owned subsidiary of NZX Limited (NZX). SmartsharesLimited offers a range of funds.

The Manager is responsible for all adjustments to the Smartshares Funds' portfolios, the maintenance ofaccounting records of the Smartshares Funds, communication with Unitholders, supervision of the UnitRegistrar, including the payment of distributions to Unitholders and the purchase or sale of Index Securitiesas determined by the Smartshares Funds in the event of any required adjustments to the different indicesthat the Smartshares Funds track. Some of these duties are delegated to the Administration Manager,Custodian and the Unit Registrar.

The other principal persons involved in providing the Smartshares Funds are:

Trustees Executors Limited (the Trustee);

BNP Paribas Fund Services Australasia Pty Ltd, acting through its New Zealand branch (the Administration Manager and the Custodian); and

Link Market Services Limited (the Unit Registrar).

None of the Manager, Trustee, Administration Manager, Custodian, Unit Registrar or NZX (as the parentcompany of the Manager) provide any guarantee in relation to the Smartshares Funds.

There is further information about the persons involved in providing the Smartshares Funds on pages 18 to20.

Particular Smartshares Funds

The Smartshares Fund you choose to invest in is designed to give you Returns similar to the Returns on theindex tracked by the relevant Smartshares Fund. The Manager buys and sells Index Securities to track therelevant index rather than making investment decisions based on its own assessment of the Index Issuers.This means the Smartshares Funds are what is commonly referred to as “passive funds” (as opposed to“active funds”, which involve a manager making its own judgement about where and when to invest anddivest).


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The Smartshares Funds are:

Fund Name Index Description

Aus PropertyFund

S&P/ASX 200 A-REITEqual Weight Index

Comprises around 16 of the largest realestate investment trusts listed on the ASX

Aus DividendFund

S&P/ASX DividendOpportunities Index

Comprises 50 of the highest yielding issuerslisted on the ASX.

When the index that your Smartshares Fund tracks changes, your investment is designed to change with it.

The unit price of each Smartshares Unit (the Current Unit Value) reflects the value of the Index Securitiesheld in the relevant Smartshares Fund and the dividends and other income received or accrued by and heldin the relevant Smartshares Fund, less liabilities (such as tax, fees and expenses). As noted above, if yousell your Units on the market, the price you receive may differ from the Current Unit Value.

Further information about the index tracked by each of the Smartshares Funds can be found in theregistered prospectus for the Smartshares Funds, and also on pages 13 to 17 of this Investment Statement.

Benefits of Smartshares

Spread your investment

When you invest in a Smartshares Fund, you get an indirect investment through the Smartshares Fund ineach entity in the index in which the Smartshares Fund invests. With one simple purchase you get aninvestment in the issuers included in the relevant index, spreading your risk across a portfolio of securities,which makes this a more diversified investment than an investment in a single issuer. Diversification mayreduce risk. This is because it is unlikely that all the entities in the Smartshares Fund will perform similarly atthe same time. For example, the losses from entities performing poorly may be balanced by the gains fromthose performing well. However, each Smartshares Fund only allows diversification within the asset class,investment type or Index Issuer industry represented in the index tracked by that specific Smartshares Fund.

Flexibility

Smartshares Funds provide the diversification of a fund investment while giving you similar transparency andconvenience to an investment in individual shares – the ability to know the value of your investment at anymoment, and the flexibility to trade your investment quickly (subject to liquidity risk). This is becauseSmartshares Units are expected to trade like individual shares, with their prices published in the newspapersand on-line (www.nzx.com) so you can track the progress of your investment at any time. You are able totrade your Smartshares Units on market at any point (subject to liquidity), just like a share in a Listedcompany.

Smartshares makes contributing simple

Once you hold the Minimum Holding of 100 Units in a Smartshares Fund, you can make regular

contributions from as little as $50 per month by way of the Regular Savings Plan. And you can stop, restart,increase or decrease your regular contributions whenever you like (subject to providing the Unit Registrarwith ten Business Days' notice prior to the 20th of a month and, unless you are completely stoppingcontributions, maintaining a minimum contribution of $50 per month). You can also add to your investmentthrough the Distribution Reinvestment Plan – where your distributions are automatically reinvested asadditional Smartshares Units or you can choose to have your distributions paid directly to you by directcredit.

Lower Fees

Smartshares Funds are able to keep costs down because the Manager does not make active investmentdecisions, which may require expensive research, analytical and trading expertise. Trading only occurs torebalance the Smartshares Funds' holdings to match the weighting of each entity ’s shares in the indices. By

contrast, actively managed funds, where the manager makes active investment decisions, generally incurhigher costs and therefore may charge a higher management fee.


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What types of risks are involved with the Smartshares Funds?

In summary, some of the principal risks are:

Risks arising because of investment in Index Securities

Market risk – Fluctuations in the security price of, and distributions paid by, the Index Issuers will

lead to fluctuations in the Returns on Units in the Smartshares Funds. Such fluctuations could berelated to the circumstances of an individual Index Issuer and affect the share price or distributionsof that Index Issuer only, or could be related to circumstances with more widespread effects andaffect a number of, or all, Index Issuers or Index Issuers within a particular industry.

Risks arising because of investment through Smartshares Funds

Tracking risk – For a variety of reasons, including those described on page 5, the Manager will notalways manage to exactly track the relevant index for each Smartshares Fund. As a result of this,the Index Securities held by a Smartshares Fund may, over time, not exactly match the compositionof the relevant index. Of course, investors investing directly in order to track an index are likely toface the same issues as the Manager in trying to exactly track the relevant index. There is furtherinformation about index tracking on page 30.

Operational risk – Tracking an index is complex and, as a result, operational errors can occur.Such errors could potentially affect Unitholders' Returns.

Passive management risk – The Smartshares Funds are passive investments, which means theManager will not react to events that affect the value of particular Index Issuers unless and untilthose events lead to a change in the composition of the relevant index.

Liquidity risk – Investors are only able to cash in their investment by selling their Units on marketunless they have enough Units to redeem their Units through a Basket withdrawal. (Basketwithdrawals are described on page 35.) The market price per Unit may vary from the Current UnitValue due to supply and demand factors. Units in each Smartshares Fund are quoted on the NZXMain Board and, in the opinion of the Manager, a market will develop for sales of Units. However,although the Smartshares Funds are listed on the NZX Main Board, the fact that investors can applyto purchase Units directly from the Manager may mean there are fewer buyers of Units on the NZX

Main Board.

Foreign currency risk – Because the Smartshares Funds invest in ASX listed entities, and sotherefore receive Returns in Australian dollars, these will be exposed to currency risk based on theexchange rate between the Australian and New Zealand dollars. This is a risk because the Managerdoes not currently take steps to hedge against currency fluctuations.

Regulatory and tax risk – The Smartshares Funds are subject to an ongoing risk that regulatory ortax law requirements may change, and that this may have an adverse effect on Unitholders' Returns.

Also, the Smartshares Funds are Portfolio Investment Entities (PIEs), with benefits for Unitholders,and there is a risk that this status may be lost, as discussed on pages 26 to 28 below.

There is further information about risks on pages 30 to 33.

What charges do Unitholders pay directly?When Unitholders first subscribe for Units they will pay an application fee to the Manager, which will bededucted from their Subscription Amount. For Subscription Amounts of less than $20,000 this will be a flatfee of $30, and for Subscription Amounts equal to or greater than $20,000 the subscription fee will be 0.2%of the full Subscription Amount. This fee is not payable for subsequent Cash Applications, subscriptionsunder the Regular Savings Plan or the Distribution Reinvestment Plan, or in relation to a Basket application.(Basket applications are for large investors, and are discussed on page 22.)

Unitholders lodging or withdrawing a Basket will be charged a fee by the Manager for each lodgement orwithdrawal. The amount they are charged is set out in the table below:

Basket Creation Basket Withdrawal

$400 for Aus Property Fund $400 for Aus Property Fund


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$800 for Aus Dividend Fund $800 for Aus Dividend Fund Fees are GST inclusive.

The application fees for initial Cash Applications and Baskets may be increased and an application fee forsubsequent Cash Applications may be added by the Manager by giving ten Business Days' notice of thechange to the Trustee. The other fees referred to above may be increased or imposed by the Manager bygiving three months' notice to the Trustee and, if the Manager determines in its reasonable discretion thatthe increase or imposition is material, Unitholders of the relevant Smartshares Fund. All fees may bedecreased by the Manager by giving notice to the Trustee (and such decrease may have immediate effect).There is no limit to the amount by which fees may be increased or imposed.

The Manager is also entitled to charge a Unitholder in respect of non-standard services requested by thatUnitholder.

Further information about charges for Unitholders can be found on pages 23 to 24.

What charges do the Smartshares Funds pay?

Each Smartshares Fund pays a management fee to the Manager. This is currently 0.54% per annum(inclusive of GST) of the relevant Smartshares Fund's NAV (for each of the Smartshares Funds), and isaccrued daily and payable monthly in arrear.

The management fee is currently used by the Manager to pay the Trustee, the Administration Manager, theCustodian, the Unit Registrar, any penalties and interest charged by the Inland Revenue and any bank fees,although the Manager reserves the right to have such amounts paid out of the Smartshares Funds. If theManager does exercise its right to have such amounts paid out of the Smartshares Funds, it will first notifythe Trustee and Unitholders but the Manager is not required to notify potential investors. Other expensesthat arise, such as operating expenses that do not arise in the ordinary course of business, will be paid out ofthe Smartshares Funds.

All of these fees may be increased by the Manager by giving three months' notice of the change to the

Trustee and, if the change is material (as determined by the Manager in its reasonable discretion), toUnitholders of the relevant Smartshares Fund or the fees may be decreased by the Manager by giving noticeto the Trustee (and such decrease may have immediate effect). There is no limit on the changes that theManager may make to fees charged.

The Manager is also entitled to interest on amounts held in respect of distributions and other incomereceived by the Smartshares Funds and on Subscription Amounts (received as Cash Applications or underthe Regular Savings Plan or Distribution Reinvestment Plan) between the date on which they are receivedand the date of issue of Units.

Further information about the Manager's fees can be found on pages 24 to 25.


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HOW DO I APPLY?

How to get started with Smartshares

You can start your investment in a Smartshares Fund by making an initial Cash Application from as little as$500. You can do this by completing the Application Form for new Units at the back of this Investment

Statement.

Alternatively you can obtain an investment in a Smartshares Fund by purchasing existing Units on marketthrough an NZX Firm.

If you are buying new Units, send in your completed Application Form, together with the full amount of theapplication payment, to Link Market Services Limited, PO Box 91976, Auckland 1142. Alternatively, you cansend it to the Manager, an NZX Firm, or through any other channel approved by NZX (of which there arecurrently none).

Make sure you read all the information contained in this Investment Statement before deciding whether toinvest and which Smartshares Fund to invest in. There is also additional information that you may findhelpful in the registered prospectus for the Smartshares Funds.

Before investing, you should consider seeking advice from a financial adviser. Using a financial advisercannot prevent you from losing money, but it should be able to help you make better investment decisions.More information about financial advisers is set out on pages 3 and 4.

Further investments

Once you've made the initial investment, you can make further investments, either:

through a further Cash Application (for a minimum of $250);

through the Regular Savings Plan; or

through the Distribution Reinvestment Plan.

These options are each described below.

Alternatively you can purchase existing Units on market through an NZX Firm.

Cash Application Investment

As with the initial Cash Application, a Cash Application for further Units can be made by completing the Application Form attached to the back of this Investment Statement and sending it with the full amount of theapplication payment to Link Market Services Limited, PO Box 91976, Auckland 1142. Alternatively, you cansend it to the Manager, an NZX Firm, or through any other channel approved by NZX (of which there arecurrently none).

The Manager may suspend the acceptance of Cash Applications at any time by way of an Announcement toNZX. The Manager may also reject any application for any reason.

The Regular Savings Plan

You can currently make a regular monthly investment directly from your bank account with no transactionfees charged by the Manager.

Every month for an amount you choose (minimum contribution $50 per month) the Manager will addSmartshares Units to your investment. Simply complete the Application Form and direct debit authorityincluded in this Investment Statement. Your payments will then be automatically withdrawn from yournominated bank account on a monthly basis.

In addition you can make additional lump sum deposits with your monthly direct debit at any time ($250minimum value).


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How your Regular Savings Plan works

Think about how much you can afford to invest each month. Keep in mind that you can stop, restart,increase or decrease (so long as you don't decrease your contribution to below $50 per month unless youare completely stopping contributions) your contributions at any time by contacting the Unit Registrar.Specify that amount in your application. The Unit Registrar will require notice to change contributions by atleast ten Business Days before the 20th of the month.

On or about the 20th of each month your bank account will be direct debited and the money will then beinvested in Smartshares Units in your Smartshares Fund(s) on or around the end of each month. The UnitRegistrar will send you a statement each month confirming your new Smartshares Unit holding(s).

To join the Smartshares Regular Savings Plan, you must already have the Minimum Holding of 100Smartshares Units for the Smartshares Fund that you wish to invest in on a regular basis or you must makea Cash Application that, if accepted, would mean you held at least 100 Units in the fund you want to investin.

The Manager may open or close the Regular Savings Plan at any time by way of an Announcement to NZX.

Key benefits of the Regular Savings Plan Zero transaction cost – no transaction fees charged by the Manager at present

Affordable – contributions from just $50 per month

Flexible – you can stop, restart, increase or decrease (subject to maintaining a minimum contributionof $50 per month) your regular contributions

Investing regularly provides dollar cost averaging (which is described on page 21)

Helps you accumulate Smartshares Units – every month you acquire additional Smartshares Unitsautomatically without needing to think about it.

The Distribution Reinvestment Plan

Each Smartshares Fund may receive dividends from the Index Issuers in which it invests. These dividendsand other income are retained in the Smartshares Fund (and reflected in the Current Unit Value) and theSmartshares Fund makes quarterly distributions to Unitholders, with each Unitholder’s entitlement based onthe Unitholder ’s holding as at the Record Date for that distribution.

Your share of each distribution by the relevant Smartshares Fund will be automatically reinvested asadditional Smartshares Units four times a year unless you choose to have distributions paid out to you bydirect credit. By having these payments automatically reinvested, you are increasing your unitholdingwithout having to do anything. Compounding distributions can work in your favour if you want to accumulateSmartshares Units over the longer term. See page 28 for more details.


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BOARD OF DIRECTORS

The directors of the Manager are Bevan Miller (Chair), Tim Bennett and Kristin Brandon. The Smartshares

Funds operated by the Manager are passively managed funds or have their investment management

function outsourced. Consequently, the board has been constructed to provide a mix of operational,

financial and legal skills rather than specific funds management experience. Brief profiles for each of the

directors, detailing their experience and qualifications, are set out below.

Bevan Miller Bevan is the Chief Financial Officer of NZX. He has extensive financial

experience in both the corporate and accounting sectors, previously

working as CFO for Acurity Health Group Limited. Prior to that Bevan

held a number of senior finance roles at Telecom New Zealand, now

Spark, having started his career in the audit division of global

accounting firm KPMG. Bevan is a Chartered Accountant and holds a

Bachelor of Commerce and Administration, Honours (first class) from

Victoria University of Wellington.

Tim Bennett Tim is the Chief Executive Officer of NZX. He has extensive capital

markets and commodity market development experience in Asia, the

Middle East and North America. Prior to joining NZX, Tim was a partner

at Oliver Wyman in Singapore, and previously was a partner with the

Boston Consulting Group in Asia and Australia. Tim holds an MBA in

Strategy and Finance from Wharton School, University of Pennsylvania,

and a Bachelor of Commerce and Administration in Computer Science

and Business Administration from Victoria University of Wellington.

Kristin Brandon Kristin is Head of Compliance at NZX and has worked at NZX since

2007. Kristin has significant legal experience working at Chapman Tripp

Wellington and Dechert LLP London where she specialised in company

and securities law, including advising in relation to capital raisings,

mergers and acquisitions and acting for fund managers. Prior to joining

NZX, Kristin was Assistant Company Secretary at Telecom New

Zealand Limited (now Spark).. Kristin holds an LLB (Hons) and a

Bachelor of Commerce and Administration from Victoria University of

Wellington and is both a barrister and solicitor.


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AUSTRALIAN PROPERTY INDEX TRUST (Aus Property Fund)

The Aus Property Fund gives investors exposure to entities listed on the ASX that are included in theS&P/ASX 200 Index (the index used as the primary gauge for the Australian market) and are classified as

Australian Real Estate Investment Trusts. An Australian Real Estate Investment Trust ("REIT") is an entity

that owns, and generally, operates income producing real estate. These investment vehicles must have mostof their assets and income tied to real estate investment. Securities are classified using the Global IndustryClassification Standard (GICS®). The Global Industry Classification Standard is designed to meet the needsof the investment community by categorising companies into sectors and industries that reflect a company’sprimary business model as determined by its financial performance.

The S&P/ASX 200 A-REIT Equal Weight Index (the index tracked by the Aus Property Fund) is rebalancedquarterly with each constituent allocated a fixed, equal weight at the time of the rebalance. Additions to theindex normally only take place at the quarterly rebalance. However, if a REIT replaces another REIT in the

ASX200 it will enter the index immediately, assuming the weighting of the security it is replacing.

A link to the index methodology for the S&P/ASX 200 A-REIT Equal Weight Index can be found athttp://www.spindices.com/indices/equity/sp-asx-200-a-reit-equal-weight. The methodology for constructingthe index may be changed from time to time by the Index Administrator.

As at 30 April 2015 the S&P/ASX 200 A-REIT Equal Weight Index had 16 constituents with a total marketcapitalisation of AUD $106,957 million. The number of constituents and the specific entities included in theindex may change over time. At 30 April 2015 the following entities were included:

Abacus Property Group

BWP Trust

Charter Hall Group

Cromwell Property Group

Charter Hall Retail REIT

Dexus Property Group

Federation Centres

Goodman GroupGPT Group

Investa Office Fund

Mirvac Group

Novion Property Group

Scentre Group

Shopping Centres Australasia Property GroupStockland

Westfield Corporation

Aus Property Fund performance to 31 March 2015

Return to 31 March 2015

Fund Gross Return 6.65%

Notes to the above table"Fund Gross Return" is the return on total fund net of management fees but including gross dividends reinvested on payment date.Return period is from the date funds were first received by the Fund, being 16 December 2014, to 31 March 2015.

Unitholders are reminded to use care when considering past performance in making long-term decisions.Past performance is not necessarily indicative of future Returns.

S&P Dow Jones Indices and the Australian Stock Exchange Disclaimer

The S&P/ASX 200 A-REIT Equal Weight Index (the “Index”) is a product of S&P Dow Jones Indices LLC, a part ofMcGraw Hill Financial, Inc, (“SPDJI”) and ASX Operations Pty Ltd, and has been licensed for use by Smartshares


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Limited. Standard & Poor ’s® and S&P® are registered trademarks of Standard & Poor ’s Financial Services LLC(“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and ASX is atrademark of ASX Operations Pty Ltd. The trademarks have been licensed to SPDJI and have been sublicensed for usefor certain purposes by Smartshares Limited. The Australian Property Index Trust is not sponsored, endorsed, sold orpromoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or ASXOperations Pty Ltd. Neither S&P Dow Jones Indices nor ASX Operations Pty Ltd make any representation or warranty,express or implied, to the owners of the Australian Property Index Trust or any member of the public regarding the

advisability of investing in securities generally or in the Australian Property Index Trust particularly or the ability of theS&P/ASX 200 A-REIT Equal Weight Index to track general market performance. S&P Dow Jones Indices’ and ASXOperations Pty Ltd's only relationship to Smartshares Limited with respect to the Australian Property Index Trust is thelicensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or itslicensors. The S&P/ASX 200 A-REIT Equal Weight Index is determined, composed and calculated by S&P Dow JonesIndices or ASX Operations Pty Ltd without regard to Smartshares Limited or the Australian Property Index Trust. S&PDow Jones Indices and ASX Operations Pty Ltd have no obligation to take the needs of Smartshares Limited or theowners of the Australian Property Index Trust into consideration in determining, composing or calculating the S&P/ASX200 A-REIT Equal Weight Index. Neither S&P Dow Jones Indices nor ASX Operations Pty Ltd are responsible for andhave not participated in the determination of the prices, and amount of the Australian Property Index Trust or the timingof the issuance or sale of the Australian Property Index Trust or in the determination or calculation of the equation bywhich the Australian Property Index Trust is to be converted into cash, surrendered or redeemed, as the case may be.S&P Dow Jones Indices and ASX Operations Pty Ltd have no obligation or liability in connection with the administration,marketing or trading of the Australian Property Index Trust. There is no assurance that investment products based on

the S&P/ASX 200 A-REIT Equal Weight Index will accurately track index performance or provide positive investmentreturns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not arecommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investmentadvice.

NEITHER S&P DOW JONES INDICES NOR ASX OPERATIONS PTY LTD GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDINGELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND ASXOPERATIONS PTY LTD SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS,OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND ASX OPERATIONS PTY LTD MAKE NOEXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OF MERCHANTABILITYOR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY SMARTSHARESLIMITED, OWNERS OF THE AUSTRALIAN PROPERTY INDEX TRUST, OR ANY OTHER PERSON OR ENTITYFROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING

ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR ASXOPERATIONS PTY LTD BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIALDAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME ORGOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER INCONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY

AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND SMARTSHARES LIMITED,OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.


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AUSTRALIAN DIVIDEND INDEX TRUST (Aus Dividend Fund)

The Aus Dividend Fund gives investors exposure to 50 high yielding securities listed on the ASX, containedin the S&P/ASX 300 Index. The entities are those in the S&P/ASX Dividend Opportunities Index (the indextracked by the Aus Dividend Fund).

Entities in the S&P/ASX Dividend Opportunities Index are selected taking into account their marketcapitalisation, dividend growth history and other filters as defined in the index methodology. To be eligible forinclusion in the index each entity must have a minimum float-adjusted market capitalisation of AUD 500million, a six month average daily value traded of AUD 2 million or higher, positive earnings-per-share beforeextraordinary items, and growing or stable 3-year dividend per share growth.

Securities classified as Real Estate Investment Trusts using the Global Industry Classification Standard(GICS®) are excluded.

A link to the index methodology for the S&P/ASX Dividend Opportunities Index can be found athttp://us.spindices.com/indices/strategy/sp-asx-dividend-opportunities-index. The methodology forconstructing the index may be changed from time to time by the Index Administrator.

As at 30 April 2015 the S&P/ASX Dividend Opportunities Index had 50 constituents with a total market

capitalisation of AUD $1,141,085 million. The specific entities included in the index may change over time. At 30 April 2015 the following entities were included:

Adelaide Brighton Ltd

AGL Energy Ltd

Asciano Ltd

ALS Ltd

Amcor Ltd

AMP Ltd

Ansell Ltd

ANZ Banking Group

APA Group

ASX Ltd

Aurizon Holdings Ltd

Bendigo and Adelaide Bank Ltd

BHP Billiton Ltd

Brambles LtdCommonwealth Bank Australia

Coca-Cola Amatil Ltd

Challenger Ltd

Cochlear Ltd

Computershare Ltd

CSL LtdFlight Centre Travel Group Ltd

Fortescue Metals Group

Insurance Australia Group Ltd

IOOF Holdings Ltd

Incitec Pivot LtdJB Hi-Fi Ltd

James Hardie Industries plc

Lend Lease GroupMacquarie Group Ltd

Metcash Ltd

National Australia Bank LtdOrigin Energy Ltd


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Orica Ltd

Platinum Asset Management Ltd

Ramsay Health Care Ltd

Rio Tinto Ltd

Seek Ltd

Sonic Healthcare LtdSantos LtdSuncorp Group LtdSydney Airport

Transurban Group NPVTelstra Corp Ltd

Toll Holdings Ltd Tatts

Group Ltd Westpac

Banking Corp

Wesfarmers LtdWorleyparsons Ltd

Woolworths LtdWoodside Petroleum Ltd

Aus Dividend Fund performance to 31 March 2015

Return to 31 March 2015

Fund Gross Return 9.18%

Notes to the above table"Fund Gross Return" is the return on total fund gross of management fees but including gross dividends reinvested on payment date.

Return period is from the date funds were first received by the Fund, being 16 December 2014, to 31 March 2015.

Unitholders are reminded to use care when considering past performance in making long-term decisions.Past performance is not necessarily indicative of future Returns.

S&P Dow Jones Indices and the Australian Stock Exchange Disclaimer

The S&P/ASX Dividend Opportunities Index (the “Index”) is a product of S&P Dow Jones Indices LLC, a part of McGrawHill Financial, Inc, (“SPDJI”) and ASX Operations Pty Ltd, and has been licensed for use by Smartshares Limited.Standard & Poor ’s® and S&P® are registered trademarks of Standard & Poor ’s Financial Services LLC (“S&P”); DowJones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and ASX is a trademark of

ASX Operations Pty Ltd. The trademarks have been licensed to SPDJI and have been sublicensed for use for certainpurposes by Smartshares Limited. The Australian Dividend Index Trust is not sponsored, endorsed, sold or promoted bySPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or ASX Operations Pty

Ltd. Neither S&P Dow Jones Indices nor ASX Operations Pty Ltd make any representation or warranty, express orimplied, to the owners of the Australian Dividend Index Trust or any member of the public regarding the advisability ofinvesting in securities generally or in the Australian Dividend Index Trust particularly or the ability of the S&P/ASXDividend Opportunities Index to track general market performance. S&P Dow Jones Indices’ and ASX Operations PtyLtd's only relationship to Smartshares Limited with respect to the Australian Dividend Index Trust is the licensing of theIndex and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. TheS&P/ASX Dividend Opportunities Index is determined, composed and calculated by S&P Dow Jones Indices or ASXOperations Pty Ltd without regard to Smartshares Limited or the Australian Dividend Index Trust. S&P Dow JonesIndices and ASX Operations Pty Ltd have no obligation to take the needs of Smartshares Limited or the owners of the

Australian Dividend Index Trust into consideration in determining, composing or calculating the S&P/ASX DividendOpportunities Index. Neither S&P Dow Jones Indices nor ASX Operations Pty Ltd are responsible for and have notparticipated in the determination of the prices, and amount of the Australian Dividend Index Trust or the timing of theissuance or sale of the Australian Dividend Index Trust or in the determination or calculation of the equation by which the

Australian Dividend Index Trust is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow

Jones Indices and ASX Operations Pty Ltd have no obligation or liability in connection with the administration, marketingor trading of the Australian Dividend Index Trust. There is no assurance that investment products based on theS&P/ASX Dividend Opportunities Index will accurately track index performance or provide positive investment returns.


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S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not arecommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investmentadvice.

NEITHER S&P DOW JONES INDICES NOR ASX OPERATIONS PTY LTD GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING

ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES AND ASXOPERATIONS PTY LTD SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS,OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND ASX OPERATIONS PTY LTD MAKE NOEXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OF MERCHANTABILITYOR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY SMARTSHARESLIMITED, OWNERS OF THE AUSTRALIAN DIVIDEND INDEX TRUST, OR ANY OTHER PERSON OR ENTITY FROMTHE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OFTHE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR ASX OPERATIONS PTYLTD BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGESINCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IFTHEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT,STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR

ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND SMARTSHARES LIMITED, OTHER THAN THELICENSORS OF S&P DOW JONES INDICES.


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ANSWERS TO IMPORTANT QUESTIONS

Defined terms in this Investment Statement have the meaning set out in the Glossary of Terms on pages 40to 42.

What sort of investment is this?

Each Smartshares Fund is a unit trust constituted under the Unit Trusts Act 1960 and, accordingly, the Unitsoffered in this Investment Statement are units in a unit trust. Each Smartshares Fund was established on 1December 2014 under the relevant Trust Deed.

When you buy Smartshares Units you become a Unitholder in the relevant Smartshares Fund you havechosen to invest in. The Smartshares Funds are passively managed and their objective is to provideReturns that track the Return on the particular index that the Smartshares Fund tracks. Each SmartsharesFund owns a portfolio of securities in a proportion that is as close as possible to the weightings of thesecurities in the relevant index that the Smartshares Fund tracks.

The Units in the Smartshares Funds are quoted on the NZX Main Board, therefore the Funds can beclassified as exchange traded funds.

Who is involved in providing it for me?

Names of Smartshares Funds

The names of the Smartshares Funds in which Units are offered in this Investment Statement are:

AUSTRALIAN PROPERTY INDEX TRUST (Aus Property Fund); and AUSTRALIAN DIVIDEND INDEX TRUST (Aus Dividend Fund).

The ManagerThe Manager for the Smartshares Funds is Smartshares Limited, a wholly-owned subsidiary of NZX.

None of the Manager, any of its directors, any person associated with this offer, or NZX guarantees theSmartshares Units, repayment of Smartshares Units, or the payment of any dividends or distributions onSmartshares Units.

The principal activity of the Manager is to manage funds, including the Smartshares Funds. The Managerled the development of index tracking funds in New Zealand with the launch of the NZX 10 Fund (formerly“The NZSE TeNZ Fund”) in 1996. The NZX 10 Fund remains the longest standing exchange traded indextracking fund listed on the NZX Main Board.

The Financial Markets Conduct Act 2013 requires managers who act as the manager of a registered schemeto be licensed by the FMA before they can make offers under the new disclosure regime in the FinancialMarkets Conduct Act 2013. The Manager intends to begin the application process with the FMA in 2015 inorder to obtain the necessary licence. Licences will be issued at the discretion of the FMA. As the Managerdoes not yet hold a licence, it offers units under the Securities Act 1978, which will apply to this offer.

Address of the Manager

Smartshares LimitedNZX CentreLevel 1, 11 Cable StreetPO Box 2959WellingtonTel: 0800 80 87 80

Email: [email protected]


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The Manager's address may change from time to time. You can find up-to-date details at any time atwww.business.govt.nz/companies.

Directors of the Manager

As at the date of this Investment Statement, the directors of the Manager are:

Timothy Oliver Bennett (Wellington)

Kristin Anne Brandon (Wellington)

Bevan Keith Miller (Wellington)

The directors of the Manager may be contacted at the offices of the Manager.

The directors of the Manager, and their respective addresses, may change from time to time without noticeto you. You can find up-to-date details of the directors, and their respective addresses, at any time, atwww.business.govt.nz/companies. Profiles for each of the directors are set out on page 12.

The powers of the Manager are set out in the “Summary of the Trust Deeds” in the registered prospectus forthe Smartshares Funds.

Summary of Duties

The Manager is responsible for all adjustments to the Smartshares Funds’ portfolios of Index Securities,including the purchase or sale of Index Securities in the event of any required adjustments as a result ofchanges to the indices or corporate actions, the maintenance of accounting records of the SmartsharesFunds, communication with Unitholders, supervision of the Unit Registrar, the payment of distributions toUnitholders and administration of any securities lending programme implemented for the Smartshares Funds(see page 29 for further details). Some of these responsibilities are delegated to the Administration Manager,Custodian and the Unit Registrar.

The Trustee

The Trustee is:

Trustees Executors LimitedLevel 5, 10 Customhouse QuayPO Box 3222WellingtonTel: (04) 495 0999Fax: (04) 496 2952Email: [email protected]

The Trustee's address may change from time to time. You can find up-to-date details at any time atwww.business.govt.nz/companies.

The Trustee has been granted a licence under section 16(1) of the Financial Markets Supervisors Act 2011to act as a trustee in respect of debt securities, unit trusts, and KiwiSaver schemes, and as a statutorysupervisor for participatory securities, for a term expiring 16 January 2018.

A copy of the Trustee’s licence, including the conditions on the licence, can be obtained at the FM A’swebsite: www.fma.govt.nz by clicking on “Help Me Comply”, “Trustees”, “Licensed Trustees and StatutorySupervisors”, “Trustees Executors Limited”. Alternatively, a copy can be found on the Trustee’s website:www.trustees.co.nz. All conditions and reporting obligations have been duly satisfied by the required dates.If you have any queries about the licence please contact the Trustee in the first instance.


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The Administration Manager

The Administration Manager for the Smartshares Funds is:

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

Level 18, State Insurance Tower, 1 Willis StreetPO Box 3299, Wellingtonwww.securities.bnpparibas.com

The Administration Manager's address may change from time to time. You can find up-to-date details at anytime at www.business.govt.nz/companies.

The Administration Manager provides general fund administration services as delegated to it by theManager, including the calculation of the Current Unit Value and fund accounting.

The Custodian

The Custodian for the Smartshares Funds is:

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branchLevel 18, State Insurance Tower, 1 Willis StreetPO Box 3299, Wellingtonwww.securities.bnpparibas.com

The Custodian's address may change from time to time. You can find up-to-date details at any time atwww.business.govt.nz/companies.

The Custodian provides custodial services, including holding assets of the Smartshares Funds in custody forsafekeeping and separate from the personal assets of the Trustee or Manager.

Unit Registrar

The Unit Registrar for the Smartshares Funds is:

Link Market Services LimitedLevel 7, Zurich House21 Queen Street

Auckland 1010

Tel: (09) 375 5998Fax: (09) 375 5990Email: [email protected]

The Unit Registrar's address may change from time to time. You can find up-to-date details at any time atwww.business.govt.nz/companies.

None of the Trustee, the Administration Manager, the Custodian, the Unit Registrar nor any of their directorsnor any other persons associated with the offer guarantees the Smartshares Units, repayment of theSmartshares Units, or the payment of any dividends or distributions on Smartshares Units.

Nature and duration of Smartshares Funds

The Smartshares Funds are unit trusts constituted under the Unit Trusts Act 1960. The Smartshares Fundswere established on 1 December 2014 under the Trust Deeds. For more information regarding the Trust


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Deeds see the "Summary of the Trust Deeds" section in the registered prospectus for the SmartsharesFunds.

How much do I pay?

There are four ways in which you can subscribe for Smartshares Units, and the method you choose affects

how many Units you must subscribe for.

1. Cash Applications

Subscriptions for Smartshares Units can be made by completing the Application Form attached to thisInvestment Statement and sending it with the full amount of the application payment to Smartshares Limitedat the address of the Unit Registrar or to any NZX Firm.

The minimum cash Subscription Amount for investors who do not already have the Minimum Holding of 100Smartshares Units in the Smartshares Fund that they wish to invest in is $500 (which includes a flatapplication fee of $30 for amounts of less than $20,000 or 0.20% of the full Subscription Amount forSubscription Amounts equal to or greater than $20,000, which is deducted from the application amount andpaid to the Manager).

For investors who already have the Minimum Holding in the Smartshares Fund they wish to invest in, theminimum cash Subscription Amount is $250.

Subscription Amounts for Cash Applications need to be received by the Unit Registrar, Link Market Services,by the 20th of the month so Smartshares Units can be priced at the end of the month by the Manager. Thereis no maximum Subscription Amount. No interest will be paid to subscribers on Subscription Amounts.

The Manager will, at its discretion, use a Subscription Amount either to purchase Index Securities and thenissue new Units to the investor or to purchase existing Units on market through an NZX Firm and pass thoseexisting Units on to the investor. In either case, the Manager's purchase of Index Securities or Units with theSubscription Amount will be made on or about the last Business Day of each month at current market prices.Units will not be allocated until after the end of the month in which the Cash Application is received.

If the Manager decides that an investor ’s application will not be accepted, the Subscription Amount will bereturned to the investor within 20 Business Days of making that decision (such decision to be made withinseven days after receiving the application). No interest will be paid on amounts refunded.

2. Regular Savings Plan

Once you have the Minimum Holding of 100 Smartshares Units, investing regularly can be a very effectiveway to accumulate Smartshares Units over the long term. Even small amounts saved on a regular basishave the potential to grow into a significant number of Smartshares Units over a number of years.

Regular investment gives Unitholders the benefit of dollar cost averaging. Dollar cost averaging is theinvestment technique of investing regularly over a period of time, which effectively means that an average

price over that period of time is paid. In theory, this reduces an investor's exposure to the risk of short termfluctuations in the price of Units, as it works to smooth out the market’s ups and downs and helps reduce themarket risk of investing.

The Regular Savings Plan lets Unitholders make a regular investment on or about the 20th of each month,directly from their nominated New Zealand bank account. Provided Unitholders hold the Minimum Holding,or if a they make a Cash Application that, if accepted, would mean they hold the Minimum Holding, they canchoose to participate in the Regular Savings Plan and start saving with contributions as low as $50 permonth. Simply complete the Application Form and direct debit authority included in this InvestmentStatement. Unitholders’ payments will be automatically withdrawn from their nominated bank account on amonthly basis. Unitholders can add an additional lump sum payment ($250 minimum value), or increase ordecrease their contribution at any time (subject to providing the Unit Registrar with ten Business Days' noticeprior to the 20th of a month and, unless contributions are being completely stopped, maintaining a minimum

contribution of $50 per month).


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If Unitholders enter the Regular Savings Plan and then fail to make payments, no additional SmartsharesUnits will be allocated to their investment. If Unitholders fail to make payments for three consecutivemonths, their access to the Regular Savings Plan may be discontinued. Unitholders may at any time, bygiving the Unit Registrar ten Business Days' notice prior to the 20th of a month, cease their payments intothe Regular Savings Plan. The Manager will, at its discretion, use the Regular Savings Plan monies either topurchase Index Securities and then issue new Units to the Unitholder or to purchase existing Units on

market and pass those existing Units on to the Unitholder. In either case, the Manager's purchase of IndexSecurities or Units with Regular Savings Plan monies will be made on or about the last Business Day ofeach month at current market prices. Units will not be allocated until after the end of the month in which thesubscription under the Regular Savings Plan is received.

Any interest earned on the Regular Savings Plan monies prior to the purchase of Smartshares Units or IndexIssuer securities each month will be retained by the Manager. These amounts will be used to cover the costof operating the Regular Savings Plan and other administrative costs. Any amount left over after this will goto the Manager.

3. Basket Investments

For large investment amounts, Smartshares Units can be acquired by way of Basket creation. Baskets may

be created by way of delivery of the proportionate amounts of the securities of the Index Issuers (plus anyapplicable Cash Amount). The Cash Amount is to ensure that each existing Unitholder ’s proportionateinterest in the income held within that Fund prior to the issue of Smartshares Units to the Basket applicant, isnot diluted on a per unit basis by the creation of additional Smartshares Units issued to the Basket applicant.

This should result in the aggregate value of the Basket securities and the Cash Amount being equal to theaggregate Current Unit Value of the Smartshares Units issued. The securities and Cash Amount are thenexchanged for Smartshares Units. Subscriptions for Smartshares Units by Basket creation may only bemade in multiples of 250,000.

Basket applications must be made directly to the Manager by delivery through an NZX Firm. Each deliveryof a Basket must be accompanied by a completed Basket Application Form (not attached to this InvestmentStatement, but available from the Manager or any NZX Firm). Charges for Basket investments are explained

under the section entitled “What are the charges?” on page 23.

4. Distribution Reinvestment Plan

Each Smartshares Fund receives dividends from the Index Issuers in which it invests. As described on page26 these dividends and other income are retained within the relevant Smartshares Fund and then allocatedto Unitholders for distribution. Such distributions are automatically reinvested (after the deduction ofDistribution Reinvestment Plan fees (if any)) to provide you with additional Smartshares Units four times ayear, unless you choose to have these paid out to you by direct credit.

Four times a year, the Manager will, at its discretion, use the reinvestment monies for Unitholders who havetheir quarterly distributions reinvested either to purchase Index Securities and then issue new Units to thoseUnitholders or to purchase existing Units on market and pass those existing Units on to those Unitholders.

In either case, the Manager's purchase of Index Securities or Units with reinvestment monies will be made atcurrent market prices.

The Distribution Reinvestment Plan described in the Prospectus for the Smartshares Funds constitutes thedescription of the "dividend reinvestment plan" for the purposes of the Financial Markets Conduct Act 2013and Financial Markets Conduct Regulations 2014.

Minimum Holding

Unitholders should maintain a minimum number of Smartshares Units at all times (Minimum Holding). If youfail to maintain the minimum number of Smartshares Units, the Manager reserves the right to purchase yourUnits or instruct the Trustee to redeem them (provided that the exercise of that right would not breach theListing Rules). The Minimum Holding of Smartshares Units is 100.


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Smartshares Unit Issue Price

Smartshares Units are issued at the Current Unit Value applying at the relevant time for Cash Applications,the Regular Savings Plan and the Distribution Reinvestment Plan.

The Current Unit Value of a Smartshares Unit is determined by dividing the total value of the Smartshares

Fund’s NAV by the total number of Smartshares Units on issue. The Current Unit Value of a SmartsharesUnit includes not only the value of the underlying Index Securities held in a Smartshares Fund, but alsoaccrued income in relation to the portfolio (for example, dividends and tax credits) less liabilities (forexample, tax expenses and management fees). Please note that these examples of income and liabilitiesare not exhaustive and other types of income may be received and liabilities incurred from time to time.

Oversubscription

There is no limit on the total number of Smartshares Units that may be subscribed for and accordingly noneof the Smartshares Funds have a policy providing for oversubscription. However, the Manager may rejectan application for Units or require redemption of Units to maintain the Fund ’s PIE status where there is a riskthat a Unitholder will exceed the maximum investor interest size requirement prescribed in the Tax Act (andas set out in the “PIE Eligibility” section at page 27 below).

Suspension of Issues and Withdrawals

The Manager is not obliged to issue Smartshares Units or redeem Units (via a Basket withdrawal) in aSmartshares Fund in the period from (and including) the date of the Announcement of a distribution to (andincluding) the Distribution Ex Date for that distribution.

Refunds

The Trustee will not refund any Subscription Amount, except where the Trustee, on the advice of theManager, decides that an investor ’s application will not be accepted. In such situations the Subscription

Amount will be returned to the investor within 20 Business Days of making that decision (such decision to bemade within seven days of receiving the application). No interest will be paid on amounts refunded.

No Cooling-off PeriodThere is no cooling-off period in respect of the Smartshares Units. An investor may not withdraw theirapplication.

Manager may request information

The Manager may request any Unitholder to provide information to the Manager to enable the Manager todetermine whether a Smartshares Fund can continue to meet the PIE eligibility requirements (further detailsare provided in the "Taxation" section on page 26).

The Manager may also ask a Unitholder to provide any other information that the Manager reasonablyrequires in order to manage its obligation to comply with any laws or regulations in New Zealand or any other

country in relation to the Smartshares Funds.

If the Manager requests a Unitholder to provide information to the Manager, the Unitholder must supply suchinformation within 14 days after the request. The Manager may also request such information from any otherperson who the Manager understands has an interest in the Units held by a Unitholder.

What are the charges?

Unless otherwise specified all fees are inclusive of GST.

Entry and Exit charges

If you buy Smartshares Units directly from the Manager through a Cash Application (as described on page21 above) you pay a flat application fee to the Manager of $30 for Subscription Amounts of less than


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$20,000, or 0.20% of the full Subscription Amount for Subscription Amounts equal to or greater than$20,000. However, this application fee is not payable if you already hold the Minimum Holding of 100Smartshares Units in the relevant Smartshares Fund. The application fee may be increased by the Managerby giving ten Business Days' notice of the change to the Trustee. The application fee may be decreased bythe Manager by giving notice to the Trustee (and such decrease may have immediate effect). There is nolimit to the altered fee that may be charged.

The Manager may impose an application fee for subsequent Cash Applications, subscriptions under theRegular Savings Plan or the Distribution Reinvestment Plan, or in relation to a Basket application by givingten Business Days' notice of the change to the Trustee and Unitholders of the relevant Smartshares Fund.There is no limit to the fee that may be imposed.

If you buy or sell Smartshares Units via the NZX Main Board you may be charged a brokerage fee by theNZX Firm with whom you are dealing. The brokerage fee is likely to vary between NZX Firms.

Basket creation and withdrawal charges

When subscribing for Units via Basket creation and redeeming Units via Basket withdrawal the following

charges are payable to the Manager as at the date of this Investment Statement.

Basket Creation Basket Withdrawal

$400 for Aus Property Fund $400 for Aus Property Fund

$800 for Aus Dividend Fund $800 for Aus Dividend Fund

The Basket creation fees may be increased by the Manager by giving ten Business Days' notice of thechange to the Trustee or the fees may be decreased by the Manager by giving notice to the Trustee (andsuch decrease may have immediate effect). There is no limit to the altered fee that may be charged.

The Basket withdrawal fees may be increased by the Manager by giving three months' notice of the changeto the Trustee and, if the change is material (as determined by the Manager in its reasonable discretion), toUnitholders of the relevant Smartshares Fund. The Basket withdrawal fees may be decreased by theManager by giving notice to the Trustee (and such decrease may have immediate effect). There is no limitto the altered fee that may be charged.

There are no other entry or exit charges.

Other management charges

Management fees are charged to the Smartshares Funds and are currently 0.54% of the NAV of the relevantSmartshares Fund and are accrued daily and payable monthly. The Manager may agree payments toindividual Unitholders that are the equivalent of management fee rebates (in the form of additional

Smartshares Units or cash, as agreed between the Manager and the Unitholder).

The fee charged by the Manager may be increased by the Manager by giving three mon ths’ notice of thechange to the Trustee and, if the change is material (as determined by the Manager in its reasonablediscretion), to Unitholders of the relevant Smartshares Fund or the fee may be decreased by the Manager bygiving notice to the Trustee (and such decrease may have immediate effect). There is no limit to the alteredfee that may be charged.

In addition to the management fee, the Manager is entitled to interest on amounts held in respect ofdistributions and other income received by the Smartshares Funds and on cash Subscription Amounts(including amounts received under the Regular Savings Plan or Distribution Reinvestment Plan) between thedate on which they are received and the date of issue of Units.

The Manager is also entitled to charge a Unitholder in respect of non-standard services requested by thatUnitholder.


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The Trustee receives fees for the services it provides. The Trustee’s fees are currently met by the Managerout of the management fee and not from the assets of the Smartshares Funds. The Manager is entitledhowever, in the future to seek to have the Trustee's fees charged to the Smartshares Funds. The Managerwould notify Unitholders if such a change was adopted. The amount of the fees payable to the Trustee shallbe agreed by the Manager and the Trustee.

Persons associated with the Manager are involved in the operation of the designated settlement system thatwill provide services in relation to securities lending if a securities lending programme is implemented for aSmartshares Fund, and these persons may receive fees and other remuneration in that capacity. Theservices that these persons may provide include the holding of the relevant Smartshares Fund's IndexSecurities in the central securities depository and the facilitation of securities lending. The Manager will notpay those fees or remuneration from the relevant Smartshares Funds – they will be paid from themanagement fee.

The management fees cover the expenses for the ongoing operation of the Smartshares Funds. Theseinclude reporting, custodian fees, administration fees, trustee fees, registry costs, brokerage fees forpurchasing securities in the Smartshares Funds and index licensing fees. The Manager reserves the right,however, to have these amounts and any other expenses that arise paid from the Smartshares Funds.

By investing in the Smartshares Funds investors accept and authorise these deductions and fees to occurand understand that these fees can be altered on the terms set out in this Investment Statement and theTrust Deeds.

What returns will I get?

Nature of the returns

Any Returns you get from your Smartshares Units will be a combination of:

(a) any change in the price of Smartshares Units at the time you sell, relative to the price at which you

bought on market, or subscribed if an application was made directly; and

(b) the distribution of dividends or other income received by the Smartshares Fund. Smartshares Fundsdistribute all income received (for example, dividends and tax credits) less liabilities (for example, taxexpenses and management fees). Please note that these examples of incom e and liabilities are notexhaustive and other types of income may be received and liabilities incurred from time to time. Youwill automatically have your distributions re-invested as Smartshares Units unless you elect to havethem paid directly to a nominated bank account.

Key factors that determine returns for Smartshares Funds

The Returns for the Funds are subject to the general fluctuations and direction of the Australian

sharemarket, up or down, and the performance of the Index Issuers, which includes changes in their securityprices and the value of any dividends or other distributions paid. Both of these factors are influenced by the Australian and global economies.

In addition, currency fluctuations between the New Zealand and Australian dollar will impact on the Returnsfor the Smartshares Funds as the Manager does not currently take steps to hedge against currencyfluctuations.

Amount of the returns

The amount of the Returns you get from your investment in Smartshares Units will vary from time to time,depending on the factors above. Returns cannot be predicted with any accuracy. None of the Manager, theTrustee, NZX, the Custodian and Administration Manager nor any other person guarantees a particular level

of Return on your investment in Smartshares Units. No Returns are promised.


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Distributions

Distributions are currently made directly from each Smartshares Fund within 20 Business Days of theRecord Date and are paid to Unitholders whose names are on the register in respect of Units held on theRecord Date. The Record Date is on or around the last Business Day of each of March, June, Septemberand December in any year.

Unitholders who sell Units or redeem Units (via a Basket withdrawal) from a Smartshares Fund before aDistribution Ex Date for a Record Date will not receive any distributions from that Smartshares Fund inrespect of that Record Date.

These distributions comprise dividends or any other income (including income from securities lending, if asecurities lending programme is implemented, which will be 50% of net revenue received by the Managerfrom securities lending), less fees and other expenses. Income paid into a Smartshares Fund in foreigncurrency will not be available for distribution to Unitholders until it has been exchanged for New Zealanddollars. Unitholders will automatically have their distributions reinvested as Smartshares Units unless theyelect to have them paid directly to a nominated New Zealand bank account.

The Manager may, at its discretion, deduct from any distribution an amount of cash if, and to the extent that,

the Manager reasonably considers that such a deduction is required to meet any liabilities that becomepayable in the next (or later) distribution period. Such deductions will be retained in the Fund.

The Manager receives and retains any interest earned on income held prior to distribution. The directors ofthe Manager expect to continue with this distribution policy.

Taxation

The following comments are intended to be only a general summary and indication of the relevant NewZealand and Australian tax law as at the date of this Investment Statement. There may be non-New Zealandtax consequences which affect the Smartshares Funds or the Unitholders. Neither the Trustee nor theManager accepts any responsibility for the taxation consequences of an investment in the SmartsharesFunds. Unitholders who buy or sell Smartshares Units may have different taxation positions. Consequently,

each Unitholder should consider their own taxation position and if necessary seek professional advice beforeinvesting in Smartshares Units.

Taxation may affect the Returns on the Smartshares Funds and each of the Smartshares Funds may havevarying tax implications. The taxation summary below is based on New Zealand and Australian tax law as atthe date of this Investment Statement.

The Smartshares Funds became portfolio investment entities (PIEs) that are Listed PIEs from the date thatthey were Listed (16 December 2014). As Listed PIEs the Smartshares Funds pay tax on income derived bythe Funds at a rate of 28%.

New Zealand Taxation of investments of the Fund

The Smartshares Funds are not subject to tax on gains that they derive from the sale of shares in most NewZealand resident companies and most companies resident in Australia that are listed on the ASX. Lossesincurred on the disposal of such shares are not deductible. Dividends from such shares are usually fullytaxable to the Smartshares Funds, with a credit allowed for any Imputation Credits attached (but not for any

Australian Franking Credits), and any withholding tax deducted from such dividends subject to certain limits.

Depending on the equities which constitute the index that the relevant Smartshares Fund tracks, any of theSmartshares Funds may be subject to tax in respect of offshore portfolio equity investments. These rulesonly apply to non-New Zealand and certain Australian quoted securities. In relation to the applicableequities, the Funds will apply the “fair dividend rate” (“FDR”) method to calculate the amount of any taxableincome. Under the FDR method, the Smartshares Funds will generally have taxable income in each incomeyear (1 April to 31 March) in relation to the applicable equities calculated by reference to 5% of the averagedaily opening market value of the applicable equities. Dividends or sales proceeds received by the

Smartshares Funds in relation to these shares should not be subject to further tax. The Smartshares Fundsmay be entitled to a credit for any withholding tax paid on dividends received from the applicable equitiessubject to certain limits. No tax deduction may be claimed for any losses in respect of the applicable equities


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under the FDR method.

New Zealand Taxation Liability of New Zealand resident investors - distributions

The following summarises the New Zealand taxation of distributions made by the Smartshares Funds toUnitholders who are resident in New Zealand for New Zealand income tax purposes.

To the extent that Imputation Credits are available, the Smartshares Funds will fully impute distributions toUnitholders by attaching Imputation Credits to the distribution at the maximum permitted ratio.

To the extent that distributions are not fully imputed New Zealand resident Unitholders will not be taxed ondistributions that they receive from the Smartshares Funds. The effect of this is that non-taxable income(e.g. capital gains from the sale of investments) derived by the Smartshares Funds can be distributed tosuch Unitholders free from tax.

Natural person Unitholders and trustee Unitholders (other than a trustee of a unit trust) subject to a tax ratebelow the corporate tax rate (currently 28%) may choose to treat distributions that are fully imputed asassessable income by including that amount in their tax return. This allows such Unitholders to useImputation Credits attached to distributions in excess of what is necessary to fully satisfy the income tax

liability in relation to those distributions, to offset against their other taxable income. How Unitholders shouldtreat distributions from the Smartshares Funds for tax purposes will depend on their personal taxcircumstances and as such it is recommended that all Unitholders should seek independent tax advice.

New Zealand Taxation Liability of non-resident investors - distributions

The following summarises the New Zealand taxation of distributions made by the Smartshares Funds toUnitholders who are not resident in New Zealand for New Zealand income tax purpose.

To the extent that Imputation Credits are available, distributions to Unitholders will be fully imputed.

Non-resident withholding tax (“NRWT”) will be withheld at the rate of 15% from distributions which are fullyimputed. The NRWT rate on fully imputed distributions can be reduced:

to 0% if the Unitholder holds 10% or more of the Smartshares Units in a Smartshares Fund; or

to a rate below 15% if the Unitholder is resident in a jurisdiction with which New Zealand has adouble tax agreement that permits a lower tax rate.

New Zealand also has a foreign investor tax credit regime whereby the impact of NRWT on dividends isreduced by the payment of a supplementary dividend for investors holding less than 10% of the SmartsharesUnits in a Smartshares Fund and if the NRWT rate is 15% or more. The Smartshares Funds intend to paysupplementary dividends to non-resident Unitholders wherever possible, provided that payment meets theTrust Deeds' requirements and does not disadvantage other Unitholders.

To the extent distributions are not fully imputed, non-resident Unitholders will not be taxed on suchdistributions and no NRWT will be withheld by the Smartshares Funds.

Benefits of PIE

A benefit of the PIE regime is that Smartshares Funds will not be taxed on any gains derived from the sale ofmost shares.

The other potential benefit is that tax payable on distributions made by a Smartshares Fund to Unitholders iseffectively capped at 28%. If you are currently paying tax at a rate less than 28% then the excess tax paidby the Smartshares Funds can be used to reduce the tax liabilities of Unitholders in respect of other incomethat they derive at the end of each income year by including the distributions from the Fund(s) in your taxreturn.

PIE Eligibility

The Manager has the discretion to take any steps the Manager considers necessary or desirable to ensurethat each Smartshares Fund is eligible to be enrolled and remain as a PIE. This includes ensuring that any


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one Unitholder ’s unit holding does not exceed the maximum investor interest size requirement in the Tax Act, which is a number of Smartshares Units not exceeding 20% of the total issued Smartshares Units ofeach Smartshares Fund (for these purposes, the Smartshares Units held by the relevant Unitholder ’s“associated persons” that are not Exempt Investors and who, themselves, hold Smartshares Unitsamounting to 5% or more of the units on issue will also be taken into account in determining whether the20% threshold has been exceeded).

There is no investor interest size requirement for a Unitholder that is an Exempt Investor. Any suchexempted Unitholder may hold up to 100% of the Smartshares Units in the Fund.

The Manager also has the ability to request any relevant information from Unitholders to endeavour toensure compliance with the PIE rules and the Trust Deeds. Additionally, the Manager has the ability torectify any breach of the PIE holding restrictions in accordance with the PIE rules and the Trust Deeds.

For further information regarding the eligibility of a Smartshares Fund to operate as a PIE within the PIErequirements please refer to the Smartshares Funds' prospectus or contact the Manager.

Basket Investments

The tax status of some Unitholders may be such that they are liable for tax on profits derived from thedisposal of Index Securities. In

Documents

Smartshares Investment Statement Jan 20 2015