www.smartshares.co.nz 0800 80 87 80

EXCHANGE TRADED FUNDS ANNUAL REPORT 2018

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Chairman's Report..................................................02 Schedule Four Requirements .................................03 Summary of Funds..................................................05 SMART LARGE NZ Top 50 Fund (FNZ)............................................06 NZ Top 10 Fund (TNZ)............................................27 Australian Top 20 Fund (OZY) ................................47 US 500 Fund (USF) .................................................67 Europe Fund (EUF) .................................................87 Asia Pacific Fund (APA).........................................107 Emerging Markets Fund (EMF).............................127 Total World Fund (TWF) .......................................147 US Large Value Fund (USV) ..................................167 US Large Growth Fund (USG)...............................187

SMART SECTOR

NZ Property Fund (NPF) .......................................285 Australian Property Fund (ASP) ............................305 Australian Resources Fund(ASR)...........................325 Australian Financials Fund (ASF) ..........................345 SMART DIVIDEND NZ Dividend Fund (DIV) .......................................365 Australian Dividend Fund (ASD)...........................385 SMART INCOME Global Bond Fund (GBF)......................................405 NZ Bond Fund (NZB)............................................434 NZ Cash Fund (NZC) ............................................457 Corporate Governance ........................................480

SMART MEDIUM

NZ Mid Cap Fund (MDZ)......................................206 Australian Mid Cap Fund (MZY) ...........................227 US Mid Cap Fund (USM) ......................................247 SMART SMALL US Small Cap Fund (USS) .....................................266

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Chairman's Report

Dear Unitholder,

Leadership Update

I am pleased to present the Smartshares Annual Report for 2018, which covers the 23 Exchange Traded Funds (ETFs) offered by Smartshares. Smartshares is a proud New Zealand based company providing the country’s broadest range of passive funds. Our products provide local investors with an accessible, low-cost and diversified investment option.

The last financial year has continued to see an impressive growth in Smartshares applications. Today we have more than 13,000 unitholders who are investing in multiple funds, demonstrating the broad appeal of our product range. Total unitholders increased 37% in 2017 and new retail applications grew a record 84% on the prior year.

Strong uptake has continued in 2018 following the launch of our online investor portal in December 2017. Investors can now administer their regular savings plans, make lump sum contributions and invest in additional ETFs all online using the CSN and FIN and without contacting the Smartshares team. See the existing investor portal at www.smartshares.co.nz

Total Smartshares ETF funds under management increased 21% to just under $2.2 billion as at 31 March 2018. This growth has allowed Smartshares to pass on its commitment to provide investors with a low cost investment offering announcing its second fee reduction in 12 months. In September 2017, the management fee on the NZ Mid Cap Fund (MDZ) was reduced to 0.60% p.a. from 0.75%. There is a growing appetite from investors for low-cost investment options, and with more than 20 years of experience in passive funds management, we remain committed to this approach. The NZ Mid Cap Fund was also recognised as the New Zealand Equity Sector Fund of the year at the 2017 FundSource Awards, a terrific result after producing strong returns for investors in recent years.

In February 2018, we welcomed Hugh Stevens as the new CEO of Smartshares Limited. Hugh is the former Head of Private Equity and Real Estate Fund Services for BNP Paribas based in Paris, France, and prior to that was Head of BNP Paribas Securities Services New Zealand.

He has an extensive fund management and administration background, which includes sales, product development and IT experience. Hugh replaced Aaron Jenkins, who joined NZX in 2014. Aaron led Smartshares through its acquisition of SuperLife, which saw total funds under management grow from $500 million to more than $2.6 billion today. During this time, the Smartshares fund offering expanded from five to 23 ETFs.

In October 2017, Bevan Miller stepped down as Chair of Smartshares. Like Aaron, Bevan has made an enormous contribution to Smartshares during his time with the business. On behalf of the board and management team, I thank both Aaron and Bevan for their dedication to our business during an important chapter in our history.

Following Bevan’s resignation, NZX CEO Mark Peterson was appointed as a director of Smartshares. Mark has extensive experience working in senior roles across the financial services sector, having previously worked for ANZ and FNZC. Prior to becoming CEO, he held the Head of Markets Position at NZX.

In concluding, I would like to sincerely thank you for your investment in Smartshares.

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Paul Baldwin Chairman

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Schedule Four Requirements

Details of scheme

Name of scheme: Smartshares Exchange Traded Funds ( Scheme )

Type of scheme: Managed fund – other Name of the manager : Smartshares Limited ( Smartshares ) Name of the supervisor: Public Trust Date and status of the latest PDS: 21 December 2017 – Open for applications

Date of the latest fund update for each fund to which the scheme relates: 31 March 2018

Reference to the scheme’s financial statements : The Scheme’s latest financial statements for the period ended 31 March 2018, including the auditor’s report relating to those statements, that have been lodged with the Registrar are included in this annual report.

Information on contributions and scheme participants Number of managed investment products on issue at the start of the accounting period: 773,832,984 Number of managed investment products on issue at the end of the accounting period: 854,374,208

Changes relating to the scheme

No material changes were made to the scheme during the 2017 accounting period.

Other information for particular types of managed funds

Fund	Unit Price 31 March 2018	Unit Price 31 March 2017
NZ Top 50 Fund	$2.430	$2.197
NZ Mid Cap Fund	$4.741	$4.140
Australian Mid Cap Fund	$6.762	$6.356
Australian Top 20 Fund	$3.425	$3.774
NZ Top 10 Fund	$1.481	$1.368
Australian Financials Fund	$7.254	$8.441
Australian Resources Fund	$4.147	$3.742
NZ Dividend Fund	$1.071	$1.108
Australian Dividend Fund	$1.586	$1.772
Australian Property Fund	$1.307	$1.372
Asia Pacifc Fund	$2.011	$1.830
Emerging Markets Fund	$1.281	$1.147
Europe Fund	$1.605	$1.474
Total World Fund	$2.022	$1.874
US 500 Fund	$6.631	$6.204
US Large Growth Fund	$3.840	$3.458
US Mid Cap Fund	$4.207	$3.967
US Small Cap Fund	$4.018	$3.794
US Large Value Fund	$2.839	$2.742

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Fund	Unit Price 31 March 2018	Unit Price 31 March 2017
NZ Property Fund	$1.078	$1.055
NZ Cash Fund	$2.986	$2.991
NZ Bond Fund	$3.025	$2.986
Global Bond Fund	$3.142	$3.101

Changes to persons involved in the scheme Directors of the manager: During the accounting period, Bevan Keith Miller resigned as a director of Smartshares and Mark John Peterson was appointed on 27 October 2017.

Telephone: 0800 808 780

Email: [email protected]

Complaints about the Scheme can be made to the manager using the contact details set out above.

Aaron Jenkins resigned as NZX Head of Funds Management, effective 5 February 2018. Hugh Stevens was appointed Chief Executive Officer of Smartshares Limited effective 5 February 2018.

Supervisor or any of its directors: Ian Fitzgerald was appointed as a director of Public Trust on 22 May 2017. Sarah Roberts retired as a director of Public Trust on 31 August 2017 at which time Ian Fitzgerald was appointed Chair. Lyn Lim also retired as a director on 30 June 2017.

Supervisor

The supervisor’s contact details are: Public Trust PO Box 1598, Shortland Street Auckland 1140 Telephone: (09) 985 5300 Email: [email protected]

Complaints about the Scheme can be made to the supervisor using the contact details set out above.

Share Registrar

How to find further information

Further information relating to the Scheme and funds, including the Product Disclosure Statement, financial statements, annual reports, fund updates and the SIPO, is available on the offer register and the scheme register at www.business.govt.nz/disclose.

The registrar’s contact details are: Link Market Services PO Box 91976 Auckland 1142 Phone: 09 375 5998 Email: [email protected]

The information set out above is also available at www.smartshares.co.nz or by contacting Smartshares. Details of an investor’s investment is available at www.linkmarketservices.co.nz. This information is available free of charge.

General information about the Scheme and funds is available at www.smartshares.co.nz.

Independent dispute resolution scheme

The independent dispute resolution scheme’s contact details are: Financial Services Complaints Limited ("FSCL") PO Box 5967 Wellington 6140 Telephone: 0800 347 257 Email: [email protected]

Contact details and complaints

Manager

The manager’s contact details are: Smartshares Limited PO Box 105262 Auckland 1143

Smartshares is a member of FSCL, which is an independent dispute resolution scheme. Complaints about the Scheme can be made to FSCL using the contact details set out above. FSCL will not charge any fees to the complainant when investigating or resolving a complaint.

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Summary of Funds

					GROSS FUND PERFORMANCE	GROSS FUND PERFORMANCE	GROSS FUND PERFORMANCE
		Total Fund	Distribution	Funds Under		3 Years	5 Years
Fund Name	Launch Date	Charges	Payment Date	Management	1 year	Annualised	Annualised
SMART LARGE
NZ Top 50 (FNZ)	10 dec 2004	0.50%	Jun/Dec	$383,632,034	15.75%	12.61%	14.26%
NZ Top 10 (TNZ)	11 jun 1996	0.60%	Jun/Dec	$80,177,521	13.53%	11.45%	11.88%
Australian Top 20 (OZY)	27 feb 1997	0.60%	Jun/Dec	$122,554,060	-5.83%	0.32%	1.55%
US 500 (USF)	29 jul 2015	0.34%	Jun/Dec	$164,427,490	7.57%
Europe (EUF)	29 jul 2015	0.55%	Jun/Dec	$139,855,247	10.86%
Asia Pacifc (APA)	29 jul 2015	0.55%	Jun/Dec	$91,448,047	11.35%
Emerging Markets (EMF)	29 jul 2015	0.59%	Jun/Dec	$87,250,353	13.42%
Total World (TWF)	29 jul 2015	0.55%	Jun/Dec	$32,799,938	9.10%
US Large Value (USV)	29 jul 2015	0.51%	Jun/Dec	$54,767,713	4.76%
US Large Growth (USG)	29 jul 2015	0.51%	Jun/Dec	$20,024,583	11.03%
SMART MEDIUM
NZ Mid Cap (MDZ)	16 jun 1997	0.60%	Jun/Dec	$97,392,784	19.20%	14.62%	17.10%
Australian Mid Cap (MZY)	27 sep 2004	0.75%	Jun/Dec	$112,300,380	8.52%	11.71%	8.86%
US Mid Cap (USM)	29 jul 2015	0.51%	Jun/Dec	$56,073,608	6.03%
SMART SMALL
US Small Cap (USS)	29 jul 2015	0.51%	Jun/Dec	$48,334,723	5.91%
SMART SECTOR
NZ Property (NPF)	12 nov 2015	0.54%	Jun/Dec	$41,766,559	7.68%
Australian Property (ASP)	16 dec 2014	0.54%	Jun/Dec	$32,890,681	-0.85%	6.44%
Australian Resources (ASR)	7 apr 2015	0.54%	Jun/Dec	$30,825,062	13.87%
Australian Financials (ASF)	7 apr 2015	0.54%	Mar/Sep	$30,396,775	-9.70%
SMART DIVIDEND
Australian Dividend (ASD)	16 dec 2014	0.54%	Jun/Dec	$28,428,722	-6.49%	0.36%
NZ Dividend (DIV)	7 apr 2015	0.54%	Jun/Dec	$22,789,843	3.18%
SMART INCOME
Global Bond (GBF)	12 nov 2015	0.54%	Mar/Jun/Sep/Dec	$170,215,996	3.28%
NZ Bond (NZB)	12 nov 2015	0.54%	Mar/Jun/Sep/Dec	$211,755,631	4.89%
NZ Cash (NZC)	12 nov 2015	0.33%	Mar/Jun/Sep/Dec	$116,231,933	2.59%

	Total	Smartshares	Funds	$2,176,339,681

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NZ Top 50 Fund (FNZ)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the NZ Top 50 Fund

Report to Unitholders HIGHLIGHTS Launch Date 10-Dec-04

	March 2018	March 2017
Net Tangible Assets (NTA)	$2.430	$2.197
Units On Issue	157,851,179	95,573,079
Funds Under Management	$383,632,034	$209,928,245
Gross Distribution	$0.106	$0.078
Gross Distribution Yield	4.37%	3.54%
Gross Return	15.75%	7.13%
Total Fund Charges	0.50%	0.50%
Distributions paid	Semi-annual

NTA Per Unit

Sector Allocation

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3.00
Utilities 18.3%
2.75 Health Care 16.4%
Industrials 14.9%
Real Estate 10.7%
2.50
Consumer Discret. 9%
Consumer Staples 8.9%
2.25 Telecoms 7.3%
Materials 4.7%
2.00 Energy 4.4%
Other 5.4%
may 17 sep 17 jan 18
NTA ($)
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Growth of $1000*

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3,000
2,400
1,800
1,200
600
2006 2008 2010 2012 2014 2016 2018
Value ($)
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*Since inception with all distributions reinvested.

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NZ TOP 50 FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

INVESTMENT CUSTODIAN

JBWere (NZ) Nominees Limited

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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NZ TOP 50 FUND

Smartshares Limited (the 'Manager') and Public Trust (the 'Supervisor') are parties to a trust deed dated 24 June 2014 as amended and restated on 9 September 2016 (the 'Trust Deed') which sets out the terms and conditions on which units in the funds within the Smartshares Exchange Traded Funds are offered for subscription, whether to the public or otherwise.

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The NZ Top 50 Fund (the 'Fund') was created by an establishment deed dated 9 September 2016 between the Manager and Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are drawn up in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager: Smartshares Limited

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......................................................................................... ............................................................................................. Director Director

This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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NZ TOP 50 FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Securities lending income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 6 Miscellaneous expenses Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	Year Ended 31 March 2018 $'000 11,122 48 23,699 34,869 (1,282) (8) (1,290) 33,579 (79) 33,500 - 33,500 29.89	Period Ended 31 March 2017 $'000 3,954 15 12,313
		16,282
		(403) (2)
		(405)
		15,877 (100)
		15,777 -
		15,777
		16.71

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year/period Total comprehensive income for the year/period Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year/period	Year Ended 31 March 2018 $'000 210,313 33,500 149,135 (958) (7,972) 140,205 384,018	Period Ended 31 March 2017 $'000 - 15,777
		206,848 (9,525) (2,787)
		194,536
		210,313

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss Unsettled sales of investments TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Deferred tax liability Funds held for unit purchases Other current liabilities Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 5,096 2,778 377,448 369 385,691 (16) - (92) (1,194) (2) (369) (1,673) 384,018 385,691	As At 31 March 2017 $'000 4,946 1,613 208,969 -
		215,528
		(9) (13) (62) (2,529) (2) (2,600)
		(5,215)
		210,313
		215,528

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received Securities lending income received *Cash was applied to:* Management fees paid Taxation paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net repayments to the Manager Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions paid to unitholders Distributions paid to unitholders Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of year/period Cash and cash equivalents at the end of year/period Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss (Decrease)/increase in taxation payable Increase in deferred tax liability Increase in management fees payable Increase in receivables Net cash flows from operating activities	Year Ended 31 March 2018 $'000 9,956 49 (1,275) (62) (8) 8,660 38,726 (54,923) - (16,197) 15,666 (7) (7,972) 7,687 150 4,946 5,096 33,500 (23,699) (13) 30 7 (1,165) 8,660	Period Ended 31 March 2017 $'000 2,346 10 (394) (25) (2)
		1,935
		7,969 (12,711) 31
		(4,711)
		10,569 (61) (2,786)
		7,722
		4,946 -
		4,946
		15,777 (12,313) 13 62 9 (1,613)
		1,935

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The NZ Top 50 Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purpose of the FMC Act 2013.

The Fund is governed by the Trust Deed dated 24 June 2014 as amended and restated on 9 September 2016 between the Manager and the Supervisor. The Fund was established on 9 September 2016, and commenced operation on 7 November 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that tracks the S&P/NZX 50 Portfolio Index (the 'Index'). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the NZX Main Board on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to the year/period presented.

Comparative period

These financial statements are for the year ended 31 March 2018. The comparative figures are for the period 9 September 2016 to 31 March 2017.

Basis of preparation

The financial statements of the Fund have been prepared in accordance with the requirements of the FMC Act 2013, Financial Reporting Act 2013, New Zealand equivalents to International Financial Reporting Standards ('NZ IFRS') and International Financial Reporting Standards ('IFRS'). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets at fair value through profit or loss. The functional currency of this entity is the same as the presentation currency of these financial statements being the New Zealand Dollar ('NZD'), rounded to the nearest thousand.

The preparation of financial statements in conformity with NZ IFRS requires the use of certain critical accounting estimates. It also requires the Smartshares Limited Board of Directors to exercise its judgement in the process of applying the Fund's Statement of Accounting Policies.

Financial assets at fair value through profit or loss

(a) Classification

The Fund classifies its investments in equity securities held at fair value as financial assets at fair value through profit or loss. These financial assets are designated by the Smartshares Board of Directors at inception as the financial assets' performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments has expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

Financial assets at fair value through profit or loss are recognised at fair value. Gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are presented in the Statement of Comprehensive Income when they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the Statement of Comprehensive Income within dividend income when the Fund’s right to receive payment is established.

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Receivables

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘receivables’. Receivables are measured at amortised cost using the effective interest method less impairment.

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities are those activities that relate to cash contributions, withdrawals and distributions.

Units

The Fund issues units, which provide the holder with a beneficial interest in the Fund. The units can be put back to the Fund via a basket redemption, in accordance with the redemption rules as defined in the Trust Deed, for securities of the constituent companies in proportion to the Index and of a proportion of cash held in the Fund.

The units are issued and redeemed based on the Fund's net asset value per unit at the time of issue or redemption, which is calculated by dividing the net assets attributable to the unitholders by the total number of outstanding units. In accordance with the provisions of the Trust Deed, investment positions are valued based on the last traded market price for the purpose of determining the net asset value per unit for subscriptions and redemptions.

Dividend income

Dividend income is recognised when the right to receive payment is established. Foreign exchange gains and losses resulting from the settlement of dividends received from the companies incorporated overseas are recognised in the Statement of Comprehensive Income.

Distributions to unitholders

Distributions are made up of income received from the investments and security lending income less expenses paid and allowances for future liabilities. Income from investments held are attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record dates for the distributions are on the last business days of May and November each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

The Fund is liable for tax at the prevailing company tax rate on taxable dividends from its investments in securities and securities lending income after the deduction of management fees. The Fund is able to utilise imputation credits when they arise. The Fund pays tax to the extent that the imputation credits do not cover the tax liability in full.

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Securities lending

The Fund enters into securities lending transactions whereby it gives loans of securities recognised on the Statement of Financial Position, but retains either all or substantially all of the risks and rewards of the lent securities or a portion of them. As all or substantially all risks and rewards are retained, the lent securities are not derecognised.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Segment information

The Fund operates solely in the business of investment management, investing in New Zealand equities. The Fund received all of its income from its Australian equity investments.

Changes in accounting policies and accounting standards adopted during the period

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior period.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact to the financial statements of the Fund.

Issued but not yet effective accounting standards

A number of accounting standards have been issued or revised that are not yet effective as at 31 March 2018, and have not been applied in preparing the financial statements. The Fund has not adopted these standards early. The standards which are relevant to the Fund are as follows:

NZ IFRS 9: Financial Instruments

NZ IFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the multiple classification and measurement models in IAS 39 and is effective for reporting periods beginning on or after 1 January 2018. Earlier application is permitted.

Classification and measurement of debt assets will be driven by the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. A debt instrument is measured at amortised cost if the objective of the business model is to hold the financial asset for the collection of the contractual cash flows and contractual cash flows under the instrument solely represent payments of principal and interest (SPPI). A debt instrument is measured at fair value through other comprehensive income if the objective of the business model is to hold the financial asset both to collect contractual cash flows from SPPI and to sell. All other debt business instruments must be recognized at fair value through profit or loss. An entity may however, at initial recognition, irrevocably designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency. Derivative and equity instruments are measured at fair value through profit or loss unless, for equity instruments not held for trading, an irrevocable option is taken to measure at fair value through other comprehensive income. IFRS 9 also introduces a new expected credit loss (ECL) impairment model.

On adoption of IFRS 9 the Fund’s investment portfolio will continue to be classified as fair value through profit or loss. Other financial assets which are held for collection will continue to be measured at amortised cost with no material impact expected from application of the new impairment model. As a result, the adoption of IFRS 9 is not expected to have a material impact on the Fund’s financial statements.

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distributions and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Prior period adjustment Deferred tax movement Total tax expense	31 March 2018 $'000 (46) (3) (30) (79)	31 March 2017 $'000 (38) - (62) (100)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:


Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Gross up of imputation credits Less imputation credits and other tax credits Prior period adjustment Income tax expense as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Prior period adjustment Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	31 March 2018 $'000 33,579 (9,402) 6,634 472 (863) (3,159) 3,083 (3) (79)	31 March 2017 $'000 15,877 (4,446) 3,447 441 (178) (736) 636 - (100) 31 March 2017 $'000 - (62) - (62) 31 March 2017 $'000 1,203
	31 March 2018 $'000 (62) (30) -
	(92)
	31 March 2018 $'000 1,787

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 - Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 - Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

The following table presents the Fund's assets and liabilities measured and recognised at fair value as at 31 March 2018.

		31 March			31 March
		2018			2017
	Level 1	Level 3	Total	Level 1	Level	3	Total
	$'000	$'000	$'000	$'000	$'000		$'000
Financial assets
Equity securities	377,315	133	377,448	208,969		-	208,969

The Fund's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

As at 31 March 2018 there was one transfer (31 March 2017: none) from level 1 to level 3 totalling $133,000 (31 March 2017: $nil).

The Fund’s level 3 investment is an unquoted investment held by the Fund which is reviewed on a monthly basis by the Fund’s oversight committee. The Fund initially valued the investment using the entry price and subsequently revalued the investment per the Fund’s ‘Measurement’ policy in the Statement of Accounting Policies .

3. EARNINGS PER UNIT

The basic earnings/(losses) per unit (EPU) is calculated by dividing the net profit/(loss) attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	31 March 2018 33,500 112,086 29.89	31 March 2017 15,777 94,397
		16.71

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

31 March Distribution per unit (cents per unit) November 2016 (paid December 2016) 31/03/2017 2.99 May 2017 (paid June 2017) 31/03/2018 3.52 November 2017 (paid December 2017) 31/03/2018 4.26	31 March 2018 $'000 - 3,491 4,481 7,972	31 March 2017 $'000 2,787 - -
		2,787

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 157,851,000 (31 March 2017: 95,573,000) units on issue.

All issued units are fully paid and redeemable, and are quoted on the NZX Main Board. The Fund’s net asset attributable to unitholders are represented by these units. The relevant movements are shown in the Statement of Changes in Unitholders' Funds.

The number of units allotted during the year ended 31 March 2018 was 62,678,000 (31 March 2017: 99,980,000) for total value of $149,135,000 (31 March 2017: $206,848,000).

The number of units redeemed during the year ended 31 March 2018 was 400,000 (31 March 2017: 4,407,000) for total value of $958,000 (31 March 2017: $9,525,000)

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Redemptions made during the year/period Units on issue at the end of the year/period	31 March 2018 '000 95,573 62,678 (400) 157,851	31 March 2017 '000 - 99,980 (4,407)
		95,573

Applications and redemptions are transacted in the form of baskets rather than cash. Baskets are made up of the proportionate number of underlying securities in return for units plus a small cash amount representing the accrued income to be distributed. Subscription cash also includes new direct applications for units as well as regular contributions by current unitholders.

The net asset value of each unit per the financial statements is $2.43279 (31 March 2017: $2.20055). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board. The Fund holds shares in NZX Limited as NZX Limited shares constitute part of the Index that the Fund tracks.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by Smartshares Limited, a wholly owned subsidiary of NZX Limited, held 72,476,689 (31 March 2017: 24,241,640) units valued at $176,143,000 (31 March 2017: $53,247,000) in the Fund.

Distributions

The Fund paid distributions of $1,922,000 to SLI for the year ended 31 March 2018 (31 March 2017: $689,000). The balance remaining as payable at the end of the year was $nil (31 March 2017: $nil).

Management fees

The Manager receives management fees from the Fund. Under the Trust Deed the Manager pays the supervisor, custodian, registrar and auditor on behalf of the Fund and receives direct purchase application fees and interest earned on cash at banks.

Total gross management fees excluding rebates for the year ended 31 March 2018 amounted to $1,282,000 (31 March 2017: $403,000) with $16,000 (31 March 2017: $9,000) of outstanding accrued management fees due to the Manager at the end of the year.

For the year ended 31 March 2018, total direct purchase application fees amounted to $34,000 (31 March 2017: $13,000) and the total interest earned on cash at banks amounted to $82,000 (31 March 2017: $21,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS (Continued)

Other related party transactions

As at 31 March 2018 the Fund had a payable to the Manager of $2,000 (31 March 2017: payable to the Manager of $2,000).

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

Total security lending fees for the year ended 31 March 2018 amounted to $48,000 (31 March 2017: $15,000), with the accrued fees due to the Fund of $4,000 (31 March 2017: $4,000). The fees earned by the Fund represent fifty percent of the total fee earned from the securities lending agreement the Fund has with NZCL. The other fifty percent is income of the Manager for administering the securities lending agreement.

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The Fund utilises a number of financial instruments in the course of its normal investing activities. Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset and financial liability are disclosed in accordance to the Statement of Accounting Policies.

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	31 March	31 March
	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	5,096	4,946
Receivables	2,778	1,613
Unsettled sales of investments	369	-
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	377,448	208,969
Other financial liabilities
Management fees payable	(16)	(9)
Funds held for unit purchases	(1,194)	(2,529)
Other current liabilities	(2)	(2)
Unsettled purchases of investments	(369)	(2,600)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and securities lending risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

Because the Fund tracks a New Zealand equity index and is fully invested in the index's underlying New Zealand equity securities, the value of the Fund will move up and down with the New Zealand market.

A 10% increase/decrease of equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $37,745,000 (31 March 2017: $20,897,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7b. Credit risk

The Fund is exposed to the potential risk of financial loss resulting from the failure of counterparties to fully honour the terms and conditions of a contract with the Fund. Financial instruments that subject the Fund to credit risk consisted primarily of cash and receivables.

The maximum credit risk of financial instruments is considered to be their carrying value. The risk of non-recovery of monetary assets is considered very low due to the quality of counterparties dealt with.

The Fund does not require collateral or other security to support financial instruments with credit risk. Maximum exposures to credit risk at the reporting date are:

	31 March	31 March
	2018	2017
	$'000	$'000
Cash and cash equivalents	5,096	4,946
Receivables	2,778	1,613
Unsettled sales of investments	369	-

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ') and Bank of New Zealand Limited ('BNZ').

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank at reporting date.

ANZ BNZ	31 March 2018 Balance $'000 Credit rating 1,589 AA- 3,507 AA- 5,096	31 March 2017 Balance $'000 Credit rating 2,925 AA- 2,021 AA- 4,946

7c. Liquidity risk

Liquidity risk is the risk that the Fund would encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund’s investments in listed securities are considered readily realisable, as they are quoted on the NZX Main Board. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning the proportionate number of underlying securities in return for the units. Liquidity risk for the Fund is therefore low.

7d. Securities lending risk

A number of possible risks arise from the securities lending program implemented for the Fund. These include, but are not limited to, the risk that a borrower of securities will fail to deliver equivalent securities on termination of a loan or would encounter financial difficulties (resulting in delays in or failure to redeliver securities to the Fund), the risk of failure of the central counterparty settlement system, the risk that the contract relating to the lending will for whatever reason not be legally enforceable or documented correctly (resulting, for example, in an inability to enforce an obligation to re-transfer securities) and the risk that the operational procedures adopted in respect of the Fund will result in errors, fraud or misconduct that will cause a loss to the Fund.

In order to limit the Fund’s exposure to risk that may arise as a result of securities lending, the Fund has a limitation of 50% of the value of its securities it may lend at any point in time. Individual or multiple securities can be lent at any given time, for a minimum of one day. Fees are charged accordingly.

At 31 March 2018, the single borrower of the Fund’s securities is New Zealand Clearing Limited (‘NZCL’), a wholly owned subsidiary of NZX Limited.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018, there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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NZ TOP 50 FUND

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Independent Auditor�s Report

To�the�unitholders�of�NZ�Top�50�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�NZ�Top�50�Fund��(the�fund) on� pages�3�to�15:

We have audited the accompanying financial statements�which�comprise: the�statement�of�financial�position�as�at�31 March�2018; the�statement�of�comprehensive�income, statement�of�changes�in�unitholders��funds�and statement�of�cash�flows�for�the�year�then ended;�and notes,�including�a�summary�of�significant accounting�policies�and�other�explanatory information.

present�fairly�in�all�material�respects�the�fund�s financial�position�as�at�31�March�2018�and�its financial�performance�and�cash�flows�for�the year�ended�on�that�date;�and comply�with�New�Zealand�Equivalents�to International�Financial�Reporting�Standards�and International�Financial�Reporting�Standards.

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Basis for opinion

We�conducted�our�audit�in�accordance�with�International�Standards�on�Auditing�(New�Zealand)�(�ISAs�(NZ)�).�We believe�that�the�audit�evidence�we�have�obtained�is�sufficient�and�appropriate�to�provide�a�basis�for�our�opinion.�

We�are�independent�of�the�fund�in�accordance�with�Professional�and�Ethical�Standard�1�(Revised)�Code�of�Ethics for�Assurance�Practitioners�issued�by�the�New�Zealand�Auditing�and�Assurance�Standards�Board�and�the International�Ethics�Standards�Board�for�Accountants��Code�of�Ethics�for�Professional�Accountants�(IESBA Code),�and�we�have�fulfilled�our�other�ethical�responsibilities�in�accordance�with�these�requirements�and�the IESBA�Code.�

Our�responsibilities�under�ISAs�(NZ)�are�further�described�in�the�Auditor�s�Responsibilities�for�the�Audit�of�the financial�statements�section�of�our�report.�

Our�firm�has�also�provided�other�assurance�services�to�the�fund�in�relation�to�reporting�to�the�supervisor.�Subject to�certain�restrictions,�employees�of�our�firm�may�also�deal�with�the�fund�on�normal�terms�within�the�ordinary course�of�trading�activities�of�the�business�of�the�fund.�These�matters�have�not�impaired�our�independence�as auditor�of�the�fund.�The�firm�has�no�other�relationship�with,�or�interest�in,�the�fund.�

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $3,857,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

©�2018�KPMG,�a�New�Zealand�partnership�and�a�member�firm�of�the�KPMG�network�of�independent member�firms�affiliated�with�KPMG�International�Cooperative�(�KPMG�International�),�a�Swiss�entity.

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NZ TOP 50 FUND

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Key Audit Matters

Key�audit�matters�are�those�matters�that,�in�our�professional�judgement,�were�of�most�significance�in�our�audit of�the�financial�statements�in�the�current�period.�We�summarise�below�those�matters�and�our�key�audit procedures�to�address�those�matters�in�order�that�the�members�as�a�body�may�better�understand�the�process by�which�we�arrived�at�our�audit�opinion.�Our�procedures�were�undertaken�in�the�context�of�and�solely�for�the purpose�of�our�statutory�audit�opinion�on�the�financial�statements�as�a�whole�and�we�do�not�express�discrete opinions�on�separate�elements�of�the�financial�statements.�

The key audit matter How the matter was addressed in our audit

Carrying amount of investments The�fund�s�portfolio�of�investments� Our�audit�procedures�included:� makes�up�97.9%�of�total�assets.�We� � documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� independent�auditor�on�the�design�and�operation�of�those�controls� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� � agreeing�the�31�March�2018�valuation�of�listed�equity�investments� materiality�in�the�context�of�the� to�externally�quoted�prices� financial�statements�as�a�whole,�they� are�considered�to�be�the�area�which� had�the�greatest�effect�on�our�overall� � agreeing�investment�holdings�to�confirmations�received�from�the� audit�strategy�and�allocation�of� administration�manager� resources�in�planning�and� completing�our�audit. We�did�not�identify�any�material�differences�in�relation�to�the�carrying� amount�of�investments.

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Other Information

The�Manager,�on�behalf�of�the�fund,�is�responsible�for�the�other�information�included�in�the�entity�s�Annual Report.�Other�information�may�include�the�Chairman�s�report,�fund�highlights,�disclosures�relating�to�corporate governance�and�statutory�information.�Our�opinion�on�the�financial�statements�does�not�cover�any�other information�and�we�do�not�express�any�form�of�assurance�conclusion�thereon.�

The�Annual�Report�is�expected�to�be�made�available�to�us�after�the�date�of�this�Independent�Auditor�s�Report.�Our responsibility�is�to�read�the�Annual�Report�when�it�becomes�available�and�consider�whether�the�other�information it�contains�is�materially�inconsistent�with�the�financial�statements,�or�our�knowledge�obtained�in�the�audit,�or otherwise�appear�misstated.�If�so,�we�are�required�to�report�such�matters�to�the�Manager.�

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Use of this Independent Auditor�s Report

This�report�is�made�solely�to�the�unitholders�as�a�body.�Our�audit�work�has�been�undertaken�so�that�we�might state�to�the�unitholders�those�matters�we�are�required�to�state�to�them�in�the�Independent�Auditor�s�Report�and for�no�other�purpose.�To�the�fullest�extent�permitted�by�law,�we�do�not�accept�or�assume�responsibility�to anyone�other�than�the�unitholders�as�a�body�for�our�audit�work,�this�report,�or�any�of�the�opinions�we�have formed.�

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NZ TOP 50 FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

Reasonable�assurance�is�a�high�level�of�assurance,�but�is�not�a�guarantee�that�an�audit�conducted�in�accordance with�ISAs�NZ�will�always�detect�a�material�misstatement�when�it�exists.�

Misstatements�can�arise�from�fraud�or�error.�They�are�considered�material�if,�individually�or�in�the�aggregate, they�could�reasonably�be�expected�to�influence�the�economic�decisions�of�users�taken�on�the�basis�of�these financial�statements.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	1,814	29.07%	802,725	0.47%
1,001-5,000	2,057	32.96%	5,287,585	3.07%
5,001-10,000	932	14.93%	6,744,133	3.92%
10,001-50,000	1,251	20.04%	26,212,148	15.24%
50,001-100,000	105	1.68%	6,810,078	3.96%
Greater than 100,000	82	1.31%	126,194,510	73.35%
TOTAL	6,241	100.00%	172,051,179	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	85,837,111	49.89%
Investment Custodial Services Limited	15,935,422	9.26%
FNZ Custodians Limited	2,327,639	1.35%
Investment Custodial Services Limited	1,740,202	1.01%
Robin Michael Brews	1,648,470	0.96%
David Robert Rich & Carolyn Frances Elley	1,477,524	0.86%
Investment Custodial Services Limited	1,269,620	0.74%
Citibank Nominees (Nz) Ltd	1,084,638	0.63%
Sharesies Nominee Limited	962,185	0.56%
Custodial Services Limited	679,558	0.39%
Philippa Jane Stubbins & Comac Trustee Limited	590,811	0.34%
James Mc Daniel Thomas & Teri Jo Thomas	572,518	0.33%
Ajd Family Nominees Limited	555,348	0.32%
Adminis Custodial Nominees Ltd Class D	426,624	0.25%
Custodial Services Limited	423,477	0.25%
Investment Custodial Services Limited	414,104	0.24%
Custodial Services Limited	326,999	0.19%
HSBC Nominees (New Zealand) Limited	307,082	0.18%
Trevor Paul Fitzjohn & John Livingston Marshall & Strato Cotsilinis	306,424	0.18%
Dmitry Moroz	267,731	0.16%
	117,153,487	68.09%

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SUBSTANTIAL PRODUCT HOLDERS

The following information has been given pursuant to section 293 of the Financial Markets Conduct Act 2013 (FMCA). According to Smartshares records and disclosures made under section 280(1)(b) of the FMCA, there were no substantial product holders in the Fund as at 31 March 2018. The total number of units on issue at 31 March 2018 was 157,851,179.

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	15,912*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

The Special Division of the New Zealand Markets Disciplinary Tribunal (Special Division) has granted, either fully, partially or subject to conditions a number of waivers to the fund.

The waiver decisions that Smartshares currently relies upon are available on smartshares.co.nz. Special Division granted the following waivers from the Listing Rules that continue to be relied upon as at 31 March 2018:

3.1.1(a) - compliance with the Listing Rules	7.5 - Issues and Buybacks Affecting Control
	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and
3.1.1(b) - compliance with Takeover Provisions	Financial Assistance
3.3.5 to 3.3.15 - Appointment and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party Securities

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NZ Top 10 Fund (TNZ)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the NZ Top 10 Fund

Report to Unitholders HIGHLIGHTS Launch Date 11-Jun-96

	March 2018	March 2017
Net Tangible Assets (NTA)	$1.481	$1.368
Units On Issue	54,131,573	56,582,943
Funds Under Management	$80,177,521	$77,403,643
Gross Distribution	$0.067	$0.051
Gross Distribution Yield	4.53%	3.76%
Gross Return	13.53%	3.51%
Total Fund Charges	0.60%	0.60%
Distributions paid	Semi-annual

Sector Allocation

NTA Per Unit

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----- Start of picture text -----

2.00
1.75 Health Care 24.8%
Consumer Staples 18.1%
Utilities 14.3%
1.50
Telecoms 12.2%
Industrials 11.4%
1.25 Materials 8.4%
Energy 5.6%
1.00 Consumer Discret. 5.2%
may 17 sep 17 jan 18
Growth of $1000
6,400
4,800
3,200
1,600
0
2000 2005 2010 2015
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1000*

*Since inception with all distributions reinvested.

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NZ TOP 10 FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

INVESTMENT CUSTODIAN

JBWere (NZ) Nominees Limited

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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NZ TOP 10 FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The NZ Top 10 Fund (the 'Fund') was created by an establishment deed dated 9 September 2016 between the Manager and Supervisor.

STATEMENT BY THE MANAGER

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager: Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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NZ TOP 10 FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Securities lending income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 6 Total expenses Profit before tax Income tax credit/(expense) 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	Year Ended 31 March 2018 $'000 2,990 22 6,643 9,655 (491) (491) 9,164 19 9,183 - 9,183 16.01	Period Ended 31 March 2017 $'000 1,593 5 1,294
		2,892
		(185)
		(185)
		2,707 (36)
		2,671 -
		2,671
		4.75

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year/period Total comprehensive income for the year/period Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year/period	Year Ended 31 March 2018 $'000 77,486 9,183 3,540 (7,155) (2,804) (6,419) 80,250	Period Ended 31 March 2017 $'000 - 2,671
		77,440 (1,380) (1,245)
		74,815
		77,486

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss Taxation receivable Deferred tax asset TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Deferred tax liability Distribution payable to unitholders Funds held for unit purchases TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 312 818 79,193 6 10 80,339 (4) - - (11) (74) (89) 80,250 80,339	As At 31 March 2017 $'000 750 1,005 75,964 - -
		77,719
		(4) (14) (22) - (193)
		(233)
		77,486
		77,719

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received Securities lending income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments Net repayments from the Manager *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions paid to unitholders Distributions paid to unitholders Net cash flows from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of year/period Cash and cash equivalents at the end of year/period Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Increase in taxation receivable (Decrease)/increase in taxation payable Increase in deferred tax asset (Decrease)/increase in deferred tax liability Increase in management fees payable Decrease/(increase) in receivables Net cash flows from operating activities	Year Ended 31 March 2018 $'000 3,178 21 (491) (33) 2,675 13,349 - (14,821) (1,472) 1,166 (14) (2,793) (1,641) (438) 750 312 9,183 (6,643) (6) (14) (10) (22) - 187 2,675	Period Ended 31 March 2017 $'000 589 4 (181) -
		412
		56 19 (778)
		(703)
		2,309 (23) (1,245)
		1,041
		750 -
		750
		2,671 (1,294) - 14 - 22 4 (1,005)
		412

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The NZ Top 10 Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purpose of the FMC Act 2013.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that tracks the S&P/NZX 10 Index (the 'Index'). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the NZX Main Board on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to the year/period presented.

Comparative period

These financial statements are for the year ended 31 March 2018. The comparative figures are for the period 9 September 2016 to 31 March 2017.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

Cash and cash equivalents

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Securities lending

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Segment information

The Fund operates solely in the business of investment management, investing in New Zealand equities. The Fund receives all of its income from its New Zealand equities.

Changes in accounting policies and accounting standards adopted during the period

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior period.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact to the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax credit/(expense) comprises: Current tax expense Prior period adjustment Deferred tax movement Total tax credit/(expense)	31 March 2018 $'000 (12) (1) 32 19	31 March 2017 $'000 (14) - (22) (36)

The prima facie income tax expense on profit before tax reconciles to the income tax (credit)/expense in the financial statements as follows:


Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Gross up of imputation credits Less imputation credits and other tax credits Prior period adjustment Income tax credit/(expense) as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	31 March 2018 $'000 9,164	31 March 2017 $'000 2,707 (758) 362 259 (39) (176) 140 - (36) 31 March 2017 $'000 - (22) (22) 31 March 2017 $'000 513
	(2,566) 1,860 (72) (310)
	(1,088) 1,108 (1)
	19

	31 March 2018 $'000 (22) 32
	10
	31 March 2018 $'000 453

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 - Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 - Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

The fair value of the Fund's financial instrument are quoted market prices and are categorised as level 1 in the hierarchy. There were no transfers between levels in the year ended 31 March 2018 (31 March 2017: none).

3. EARNINGS PER UNIT

The basic earnings/(losses) per unit (EPU) is calculated by dividing the net profit/(loss) attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	31 March 2018 9,183 57,362 16.01	31 March 2017 2,671 56,233
		4.75

4. DISTRIBUTION PAYABLE TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) November 2016 (paid December 2016) 31/03/2017 2.24 May 2017 (paid June 2017) 31/03/2018 2.27 November 2017 (paid December 2017) 31/03/2018 2.56	31 March 2018 $'000 - 1,297 1,499 2,796	31 March 2017 $'000 1,245 - -
		1,245

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 54,132,000 (31 March 2017: 56,583,000) units on issue.

The number of units allotted during the year ended 31 March 2018 was 2,500,000 (31 March 2017: 57,583,000) for total value of $3,540,000 (31 March 2017: $77,440,000).

The number of units redeemed during the year ended 31 March 2018 was 4,951,000 (31 March 2017: 1,000,000) for total value of $7,155,000 (31 March 2017: $1,380,000)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

5. UNITHOLDERS' FUNDS (Continued)

5. UNITHOLDERS' FUNDS (Continued)
Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Redemptions made during the year/period Units on issue at the end of the period	31 March 2018 '000 56,583 2,500 (4,951) 54,132	31 March 2017 '000 - 57,583 (1,000)
		56,583

The net asset value of each unit per the financial statements is $1.48249 (31 March 2017: $1.36942). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by Smartshares Limited, a wholly owned subsidiary of NZX Limited, held 815,937 (31 March 2017: 5,636,239) units valued at $1,209,000 (31 March 2017: $7,711,000) in the Fund.

Distributions

The Fund paid distributions of $273,000 to SLI for the year ended 31 March 2018 (31 March 2017: $126,000). The balance remaining as payable at the end of the year was $nil (31 March 2017: $nil).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2018 amounted to $491,000 (31 March 2017: $185,000) with $4,000 (31 March 2017: $4,000) of outstanding accrued management fees due to the Manager at the end of the year.

For the year ended 31 March 2018, total direct purchase application fees amounted to $3,000 (31 March 2017: $2,000) and the total interest earned on cash at banks amounted to $21,000 (31 March 2017: $7,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

Total security lending fees for the year ended 31 March 2018 amounted to $22,000 (31 March 2017: $5,000), with the accrued fees due to the Fund of $2,000 (31 March 2017: $1,000). The fees earned by the fund above represent fifty percent of the total fee earned from the securities lending agreement the Fund has with NZCL. The other fifty percent is income of the Manager for administering the securities lending agreement.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	31 March	31 March
	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	312	750
Receivables	818	1,005
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	79,193	75,964
Other financial liabilities
Management fees payable	(4)	(4)
Distribution payable to unitholders	(11)	-
Funds held for unit purchases	(74)	(193)

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease of equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $7,919,000 (31 March 2017: $7,596,000).

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. Maximum exposures to credit risk at the reporting date are:

	31 March	31 March
	2018	2017
	$'000	$'000
Cash and cash equivalents	312	750
Receivables	818	1,005

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ') and Bank of New Zealand Limited ('BNZ').

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank at reporting date.

ANZ BNZ	31 March 2018 Balance $'000 Credit rating 160 AA- 152 AA- 312	31 March 2017 Balance $'000 Credit rating 277 AA- 473 AA- 750

7c. Liquidity risk

Liquidity risk is the risk that the Fund would encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

7d. Securities lending risk

At 31 March 2018, the single borrower of the Fund’s securities is New Zealand Clearing Limited (‘NZCL’), a wholly owned subsidiary of NZX Limited.

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018, there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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NZ TOP 10 FUND

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Independent Auditor�s Report

To�the�unitholders�of�NZ�Top�10�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�NZ�Top�10�Fund��(the�fund) on� pages�3�to�14:

comply�with�New�Zealand�Equivalents�to International�Financial�Reporting�Standards�and International�Financial�Reporting�Standards.

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $803,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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NZ TOP 10 FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments

The�fund�s�portfolio�of�investments� Our�audit�procedures�included:� makes�up�98.6%�of�total�assets.�We� ��documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� independent�auditor�on�the�design�and�operation�of�those�controls� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� ��agreeing�the�31�March�2018�valuation�of�listed�equity�investments� materiality�in�the�context�of�the� to�externally�quoted�prices� financial�statements�as�a�whole,�they� are�considered�to�be�the�area�which� ��agreeing�investment�holdings�to�confirmations�received�from�the� had�the�greatest�effect�on�our�overall� administration�manager� audit�strategy�and�allocation�of� resources�in�planning�and� We�did�not�identify�any�material�differences�in�relation�to�the�carrying� completing�our�audit.� amount�of�investments.

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Other Information

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Use of this Independent Auditor�s Report

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NZ TOP 10 FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	378	13.35%	136,328	0.25%
1,001-5,000	675	23.83%	1,894,952	3.48%
5,001-10,000	539	19.03%	4,075,983	7.50%
10,001-50,000	1,088	38.42%	22,276,197	40.96%
50,001-100,000	110	3.88%	7,396,563	13.60%
Greater than 100,000	42	1.48%	18,601,550	34.21%
TOTAL	2,832	100.00%	54,381,573	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018
Full Name	Total	Percentage
Investment Custodial Services Limited	4,066,559	7.48%
Anna Elisabeth Minnaar	1,929,396	3.55%
Public Trust Lifetime Income Nominees Limited	1,627,438	2.99%
Custodial Services Limited	1,422,115	2.62%
Superlife Nominees Limited	887,565	1.63%
Custodial Services Limited	778,088	1.43%
Philippa Jane Stubbins & Comac Trustee Limited	668,049	1.23%
Custodial Services Limited	514,669	0.95%
Eeshala Nominees Limited	506,089	0.93%
Thomas William Schnackenberg & Annette Helen Schnackenberg	347,656	0.64%
ASB Nominees Limited	300,000	0.55%
HSBC Nominees (New Zealand) Limited	296,781	0.55%
Custodial Services Limited	290,448	0.53%
Bnp Paribas Nominees NZ Limited	260,238	0.48%
Shirley Anne Armstrong	232,157	0.43%
Julian Smith Family Trust Custodian Limited	221,723	0.41%
Kathryn May Kelly & Logan Leith Trustee Limited	208,320	0.38%
Lynne Marie Marx Sheather & Walter Brent Sheather & Patricia Vera Sheather & Simon
Middleton Palmer	207,987	0.38%
Wallace John Semmens & Rose Agnes Semmens & Ernest William Gartrell	206,580	0.38%
JPMORGAN Chase Bank	197,668	0.36%
	15,169,526	27.90%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial		Non-Benefcial
Paul Baldwin		0	0
Mark Peterson		0	0
Guy Elliffe		0	0
John Williams		0	0

WAIVERS GRANTED

The Special Division of the New Zealand Markets Disciplinary Tribunal (Special Division) has granted, either fully, partially or subject to conditions a number of waivers to the fund.

3.1.1(a) - compliance with the Listing Rules	7.5 - Issues and Buybacks Affecting Control
	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial
3.1.1(b) - compliance with Takeover Provisions	Assistance
3.3.5 to 3.3.15 - Appointment and Rotation of
Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party Securities

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Australian Top 20 Fund (OZY) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Australian Top 20 Fund

Report to Unitholders HIGHLIGHTS Launch Date 27-Feb-97

	March 2018	March 2017
Net Tangible Assets (NTA)	$3.425	$3.774
Units On Issue	35,781,267	25,726,556
Funds Under Management	$122,554,060	$97,089,212
Gross Distribution	$0.131	$0.088
Gross Distribution Yield	3.83%	2.32%
Gross Return	-5.83%	18.19%
Total Fund Charges	0.60%	0.60%
Distributions paid	Semi-annual

Sector Allocation

NTA Per Unit

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----- Start of picture text -----

4.00
3.75 Financials 51.7%
Materials 15.3%
Consumer Staples 9.1%
3.50
Health Care 7.9%
Industrials 4.6%
3.25 Telecoms 4.2%
Real Estate 4.1%
3.00 Energy 3.1%
may 17 sep 17 jan 18
Growth of $1,000
4,800
3,600
2,400
1,200
0
2000 2005 2010 2015
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception with all distributions reinvested.

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AUSTRALIAN TOP 20 FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand This is also the address of the registered office.

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

REGISTRAR

Link Market Services Limited

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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AUSTRALIAN TOP 20 FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Australian Top 20 Fund (the 'Fund') was created by an establishment deed dated 9 September 2016 between the Manager and Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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AUSTRALIAN TOP 20 FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange gain Total income EXPENSES Management fees expense 6 Foreign exchange loss Miscellaneous expenses Total expenses (Loss)/profit before tax Income tax expense 1 (Loss)/profit after tax Other comprehensive income Total comprehensive (loss)/income EARNINGS PER UNIT Basic and diluted (losses)/earnings per unit (cents per unit) 3	Year Ended 31 March 2018 $'000 4,728 (10,389) - (5,661) (573) (174) (1) (748) (6,409) (1,074) (7,483) - (7,483) (27.52)	Period Ended 31 March 2017 $'000 1,932 15,753 41
		17,726
		(219) - -
		(219)
		17,507 (505)
		17,002 -
		17,002
		65.70

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year/period Total comprehensive (loss)/income for the year/period Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year/period	Year Ended 31 March 2018 $'000 97,104 (7,483) 37,731 (1,646) (2,960) 33,125 122,746	Period Ended 31 March 2017 $'000 - 17,002
		83,382 (2,542) (738)
		80,102
		97,104

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss Unsettled sales of investments TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Deferred tax payable Distribution payable to unitholders Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 3,402 394 120,333 - 124,129 (6) (1,092) (112) (5) (168) - (1,383) 122,746 124,129	As At 31 March 2017 $'000 2,629 614 95,355 12
		98,610
		(5) (179) (159) - (1,150) (13)
		(1,506)
		97,104
		98,610

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

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-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions by unitholders Distributions paid to unitholders Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year/period Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year/period Reconciliation of (loss)/profit after tax to net cash flows from operating activities (Loss)/Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss/(gain) Increase in taxation payable (Decrease)/increase in deferred tax payable Increase in management fees payable Decrease/(increase) in receivables Net cash flows from operating activities	Year Ended 31 March 2018 $'000 4,933 (572) (193) (1) 4,167 3,437 (6,111) (2,674) 2,270 (30) (2,955) (715) 778 2,629 (5) 3,402 (7,483) 10,389 174 913 (47) 1 220 4,167	Period Ended 31 March 2017 $'000 1,573 (214) (162) -
		1,197
		66 (708)
		(642)
		2,842 (35) (738)
		2,069
		2,624 - 5
		2,629
		17,002 (15,753) (41) 179 159 5 (354)
		1,197

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Australian Top 20 Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Market Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purpose of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that tracks the S&P/ASX 20 Index (the ‘Index’). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the Australian Securities Exchange on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the year/period presented.

Basis of preparation

Comparative period

These financial statements are for the year ended 31 March 2018. The comparative figures are for the period 9 September 2016 to 31 March 2017.

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund committed to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments has expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

Financial assets at fair value through profit or loss are recognised at fair value. Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the Statement of Comprehensive Income when they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the Statement of Comprehensive Income within dividend income when the Fund’s right to receive payment is established.

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at balance date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.

Translation differences of non-monetary financial assets such as equities held at fair value through profit or loss are recognised in the Statement of Comprehensive Income as part of the net changes in fair value of financial assets at fair value through profit or loss.

Cash and cash equivalents

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Distributions are made up of income received from the investments less expenses paid and allowances for future liabilities. Income from investments held is attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record dates for the distributions are on the last business days of May and November each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

The Fund is liable for tax at the prevailing company tax rate on taxable dividends (excluding dividends from investments in securities subject to the Fair Dividend Rate method (‘FDR’)) from its investment in securities after the deduction of management fees. For securities subject to FDR, the Fund is liable for tax based on the market value of the security. The Fund is able to utilise imputation credits and foreign withholding tax credits when they are available. The Fund pays tax to the extent that the imputation credits and foreign withholding tax credits do not cover the tax liability in full.

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Segment information

The Fund operates solely in the business of investment management, investing in Australian equities. The Fund receives all of its income from its Australian equity investments.

Changes in accounting policies and accounting standards adopted during the period

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior period.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

1. TAXATION
Tax expense comprises: Current tax expense Deferred tax movement Total tax expense	31 March 2018 $'000 (1,121) 47 (1,074)	31 March 2017 $'000 (346 (159
		(505

The prima facie income tax expense on loss before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense (Loss)/profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Gross up of imputation credits Less imputation credits and other tax credits Income tax expense as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	31 March 2018 $'000 (6,409) 1,795 (2,914) 37 (91) (39) (1,212) 138 (1,074) 31 March 2018 $'000 (159) 47 (112) 31 March 2018 $'000 1,164	31 March 2017 $'000 17,507 (4,902) 4,413 (15) (34) (13) (551) 46 (505) 31 March 2018 $'000 - (159)
		(159)
		31 March 2017 $'000 402

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

The fair value of the Fund's financial instruments are quoted market prices and are categorised as level 1 in the hierarchy. There were no transfers between levels in the year ended 31 March 2018 (31 March 2017: none).

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

(Loss)/Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted (losses)/earnings per unit (cents per unit)	31 March 2018 (7,483) 27,189 (27.52)	31 March 2017 17,002 25,877
		65.70

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) November 2016 (paid December 2016) 31/03/2017 2.86 May 2017 (paid June 2017) 31/03/2018 6.10 November 2017 (paid December 2017) 31/03/2018 5.21	31 March 2018 $'000 - 1,578 1,376 2,954	31 March 2017 $'000 738 - -
		738

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 35,781,000 (31 March 2017: 25,727,000) units on issue.

All issued units are fully paid and redeemable, and are quoted on the NZX Main Board. The Fund’s net assets attributable to unitholders are represented by these units. The relevant movements are shown on the Statement of Changes in Unitholders' Funds.

The number of units allotted during the year ended 31 March 2018 was 10,504,000 (31 March 2017: 26,477,000) for total value of $37,731,000 (31 March 2017: $83,382,000).

The number of units redeemed during the year ended 31 March 2018 was 450,000 (31 March 2017: 750,000) for total value of $1,646,000 (31 March 2017: $2,542,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

5. UNITHOLDERS' FUNDS (Continued)

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Redemptions made during the year/period Units on issue at the end of the year/period	31 March 2018 '000 25,727 10,504 (450) 35,781	31 March 2017 '000 - 26,477 (750)
		25,727

The net asset value of each unit per the financial statements is $3.43048 (31 March 2017: $3.77440). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by Smartshares Limited, a wholly owned subsidiary of NZX Limited, held 10,800,076 (31 March 2017: 1,393,486) units valued at $36,991,000 (31 March 2017: $5,259,000) in the Fund.

Distributions

The Fund paid distributions of $158,000 to SLI for the year ended 31 March 2018 (31 March 2017: $37,000). The balance remaining as payable at the end of the year was $nil (31 March 2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $573,000 (31 March 2017: $219,000) with $6,000 (31 March 2017: $5,000) of outstanding accrued management fees due to the Manager at the end of the year.

For the year ended 31 March 2018, total direct purchase application fees amounted to $4,000 (31 March 2017: $2,000) and the total interest earned on cash at banks amounted to $24,000 (31 March 2017: $6,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

Financial instruments by category	31 March	31 March
	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	3,402	2,629
Receivables	394	614
Unsettled sales of investments	-	12
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	120,333	95,355
Other financial liabilities
Management fees payable	(6)	(5)
Distribution payable to unitholders	(5)	-
Funds held for unit purchases	(168)	(1,150)
Unsettled purchases of investments	-	(13)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

Because the Fund tracks an Australian equity index and is fully invested in the index's underlying Australian equity securities, the value of the Fund will move up and down with the Australian market.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $12,033,000 (31 March 2017: $9,536,000).

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

	31 March	31 March
	2018	2017
	$'000	$'000
Cash and cash equivalents	3,402	2,629
Receivables	394	614
Unsettled sales of investments	-	12

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac').

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank at the reporting date.

ANZ BNP Paribas Westpac	31 March 2018 Balance $'000 Credit rating 213 AA- 45 A 3,144 AA- 3,402	31 March 2017 Balance $'000 Credit rating 1,197 AA- 207 A 1,225 AA- 2,629

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that were settled by delivering cash or another financial asset.

The Fund's investments in listed securities are considered readily realisable, as they are quoted on the Australian Securities Exchange. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning the proportionate number of underlying securities in return for the units. Liquidity risk for the Fund is therefore low.

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds assets denominated in a currency other than the New Zealand dollar, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in Australian dollars will fluctuate due to changes in the exchange rate. The Fund’s policy is not to enter into any currency hedging transactions.

A 10% strengthening/weakening of the New Zealand dollar against the Australian dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $12,073,000 (31 March 2017: $9,618,000).

The table below summarises the Fund’s exposure to currency risks.

	31 March	31 March
	2018	2017
	$'000	$'000
Australian dollar cash held (NZD)	2	207
Receivables	394	614
Investments in equity securities held at fair value through profit or loss	120,333	95,355

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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AUSTRALIAN TOP 20 FUND

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Independent Auditor�s Report

To�the�unitholders�of�Australian�Top�20�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�Australian�Top�20�Fund��(the�fund) on�pages�3�to�14:

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $1,241,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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AUSTRALIAN TOP 20 FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments

The�fund�s�portfolio�of�investments� Our�audit�procedures�included:� makes�up�96.9%�of�total�assets.�We� ��documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� independent�auditor�on�the�design�and�operation�of�those�controls� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� ��agreeing�the�31�March�2018�valuation�of�listed�equity�investments� materiality�in�the�context�of�the� to�externally�quoted�prices� financial�statements�as�a�whole,�they� are�considered�to�be�the�area�which� ��agreeing�investment�holdings�to�confirmations�received�from�the� had�the�greatest�effect�on�our�overall� administration�manager� audit�strategy�and�allocation�of� resources�in�planning�and� We�did�not�identify�any�material�differences�in�relation�to�the�carrying� completing�our�audit.� amount�of�investments.

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Other Information

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Use of this Independent Auditor�s Report

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AUSTRALIAN TOP 20 FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	590	20.67%	235,934	0.66%
1,001-5,000	1,145	40.12%	3,113,230	8.76%
5,001-10,000	612	21.44%	4,227,038	11.89%
10,001-50,000	467	16.36%	8,536,565	24.01%
50,001-100,000	23	0.81%	1,517,679	4.27%
Greater than 100,000	17	0.60%	17,925,821	50.42%
TOTAL	2,854	100.00%	35,556,267	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	10,624,994	29.88%
Investment Custodial Services Limited	3,070,509	8.64%
Anna Elisabeth Minnaar	1,077,708	3.03%
FNZ Custodians Limited	437,065	1.23%
FNZ Custodians Limited	420,352	1.18%
Michael Donald Wight & Geraldine Louise Wight	386,486	1.09%
Sharesies Nominee Limited	322,284	0.91%
Philippa Jane Stubbins & Comac Trustee Limited	209,803	0.59%
Custodial Services Limited	209,770	0.59%
Citibank Nominees (Nz) Ltd	155,596	0.44%
Michael Donald Wight & Geraldine Louise Wight & David Leonard Gill	154,627	0.43%
Forsyth Barr Custodians Limited	149,133	0.42%
David Owen Neill & Jennifer Jill Neill & Lisa Ann Wilson	126,037	0.35%
Custodial Services Limited	124,700	0.35%
Fund Management Limited Mft	119,088	0.33%
Ajd Family Nominees Limited	107,704	0.30%
Shirley Anne Armstrong	105,920	0.30%
Eeshala Nominees Limited	100,000	0.28%
Mona B Rodgerson & Anthony M Grace & John F Rodgerson	99,203	0.28%
JBWERE (Nz) Nominees Limited	82,172	0.23%
	18,083,151	50.85%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	2,873*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

The Special Division of the New Zealand Markets Disciplinary Tribunal (Special Division) has granted, either fully, partially or subject to conditions a number of waivers to the fund. The waiver decisions that Smartshares currently relies upon are available on smartshares.co.nz. Special Division granted the following waivers from the Listing Rules that continue to be relied upon as at 31 March 2018:

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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US 500 Fund (USF)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the US 500 Fund

Report to Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$6.631	$6.204
Units On Issue	24,796,001	17,046,501
Funds Under Management	$164,427,490	$105,762,155
Gross Distribution	$0.043	$0.029
Gross Distribution Yield	0.64%	0.46%
Gross Return	7.57%	13.71%
Total Fund Charges	0.34%	0.35%
Distributions paid	Semi-annual

NTA Per Unit

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----- Start of picture text -----

8.00
7.20
6.40
5.60
4.80
may 17 sep 17 jan 18
NTA ($)
----- End of picture text -----

Sector Allocation

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----- Start of picture text -----

I.T. 24.9%
Financials 14.7%
Health Care 13.7%
Consumer Discret. 12.7%
Industrials 10.2%
Consumer Staples 7.6%
Energy 5.7%
Materials 2.9%
Utilities 2.9%
Other 4.7%
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Growth of $1,000*

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----- Start of picture text -----

1,320
1,200
1,080
960
840
jan 16 jul 16 jan 17 jul 17 jan 18
Value ($)
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*Since inception with all distributions reinvested.

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US 500 FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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US 500 FUND

Smartshares Limited (the 'Manager') and Public Trust (the 'Supervisor') are parties to a master trust deed dated 24 June 2014 as amended and restated on 9 September 2016 (the 'Trust Deed'). The Trust Deed sets out the terms and conditions on which units in the funds within the Smartshares Exchange Traded Funds are offered for subscription, whether to the public or otherwise.

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The US 500 Fund (the 'Fund') was created by an establishment deed dated 10 July 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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US 500 FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange gain Total income EXPENSES Management fees expense 6 Foreign exchange loss Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 2,409 7,865 - 10,274 (357) (198) (555) 9,719 (1,558) 8,161 - 8,161 44.16	2017 $'000 1,908 12,764 55
		14,727
		(277) -
		(277)
		14,450 (1,227)
		13,223 -
		13,223
		80.95

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 106,101 8,161 53,325 - (540) 52,785 167,047	2017 $'000 79,509 13,223
		14,312 (613) (330)
		13,369
		106,101

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 1,897 170,107 172,004 (4) (854) (493) (3,606) (4,957) 167,047 172,004	As At 31 March 2017 $'000 1,401 106,010
		107,411
		(3) (333) (479) (495)
		(1,310)
		106,101
		107,411

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions by unitholders Distributions paid to unitholders Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss/(gain) Increase in taxation payable Increase/(decrease) in management fees payable Net cash flows from operating activities	2018 $'000 2,048 (356) (676) 1,016 - (5,982) (5,982) 6,002 - (540) 5,462 496 1,401 - 1,897 8,161 (7,865) 198 521 1 1,016	2017 $'000 1,622 (294) (726)
		602
		- (2,262)
		(2,262)
		2,670 (3) (330)
		2,337
		677 727 (3)
		1,401
		13,223 (12,764) (55) 215 (17)
		602

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The US 500 Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund is governed by the Trust Deed dated 24 June 2014 as amended and restated on 9 September 2016 between the Manager and the Supervisor. The Fund was established on 10 July 2015 and commenced operation on 29 July 2015.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in the Vanguard S&P 500 ETF (the 'Underlying Fund'), which tracks the S&P 500 Index (the 'Underlying Index'). The Underlying Fund invests in securities contained in the Underlying Index broadly in proportion to the weightings of the Underlying Index. Investments are valued at fair value according to last traded market prices on the New York Stock Exchange Arca on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

The Fund is liable for tax at the prevailing company tax rate on investments in securities subject to the Fair Dividend Rate method (‘FDR’) after the deduction of management fees. FDR income is based on the market value of the security. The Fund is able to utilise foreign withholding tax credits when they are available. The Fund pays tax to the extent that the foreign withholding tax credits do not cover the tax liability in full.

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in the Underlying Fund - Vanguard S&P 500 ETF. The Fund receives all of its dividend income from this investment.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distribution and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (1,558) (1,558)	2017 $'000 (1,227) (1,227)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 9,719	2017 $'000 14,450 (4,046) 3,573 533 (1,287) (1,227) (1,227) 2017 $'000 1,114
	(2,721) 2,197 628 (1,662)
	(1,558) (1,558)
	2018 $'000 2,101

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 8,161 18,479 44.16	2017 13,223 16,334
		80.95

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) April 2016 (paid May 2016) 31/03/2017 0.69 November 2016 (paid December 2016) 31/03/2017 1.37 May 2017 (paid June 2017) 31/03/2018 1.60 November 2017 (paid December 2017) 31/03/2018 1.46	2018 $'000 - - 275 265 540	2017 $'000 100 230 - -
		330

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 24,797,000 units on issue (31 March 2017: 17,047,000).

The number of units allotted during the year ended 31 March 2018 was 7,750,000 (31 March 2017: 2,607,000) for total value of $53,325,000 (31 March 2017: $14,312,000).

The number of units redeemed during the year ended 31 March 2018 was nil (31 March 2017: 110,000) for total value of $nil (31 March 2017: $613,000).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Redemptions made during the year Units on issue at the end of the year	2018 '000 17,047 7,750 - 24,797	2017 '000 14,550 2,607 (110)
		17,047

The net asset value of each unit per the financial statements is $6.73658 (31 March 2017: $6.22403). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 22,312,093 units (31 March 2017: 15,994,898) valued at $147,956,000 (31 March 2017: $99,238,000) in the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS (Continued)

Distributions

The Fund paid distributions of $490,000 to SLI for the year ended 31 March 2018 (31 March 2017: $220,000). The balance remaining as payable at the end of the year is $nil (31 March 2017: $nil).

Management fees

The Manager receives management fees from the Fund. Under the Trust Deed the Manager pays the supervisor, custodian, registrar and auditor on behalf of the Fund and receives all direct purchase application fees and interest earned on cash at banks.

Total gross management fees for the year ended 31 March 2018 amounted to $357,000 (31 March 2017: $277,000), with $4,000 (31 March 2017: $3,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $14,000 (31 March 2017: $25,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $18,000 (31 March 2017: $13,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,897	1,401
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	170,107	106,010
Other financial liabilities
Management fees payable	(4)	(3)
Funds held for unit purchases	(493)	(479)
Unsettled purchases of investments	(3,606)	(495)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

The Fund's market price risk is affected by actual changes in market prices. As the Fund invests in an Underlying Fund which tracks an Underlying Index, any change in the Underlying Index will result in a corresponding change in the assets at fair value through profit or loss.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $17,011,000 (31 March 2017: $10,601,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

Cash and cash equivalents

2018	2017
$'000	$'000
1,897	1,401

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac') .

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 493 AA- - A 1,404 AA- 1,897	2017 Balance $'000 Credit rating 478 AA- - A 923 AA- 1,401

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund's investment in the Vanguard S&P 500 ETF is considered readily realisable, as it is quoted on the New York Stock Exchange Arca. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning units in the Underlying Fund. Liquidity risk for the Fund is therefore low.

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds assets denominated in a currency other than the New Zealand dollar, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in US dollars will fluctuate due to changes in the exchange rate. The Fund’s policy is not to enter into any currency hedging transactions.

A 10% strengthening/weakening of the New Zealand dollar against the US dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $16,650,000 (31 March 2017: $10,552,000).

The table below summarises the Fund’s exposure to currency risks.

	2018	2017
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	170,107	106,010
Unsettled purchases of investments	(3,606)	(495)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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US 500 FUND

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Independent Auditor�s Report

To�the�unitholders�of�US�500�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�US�500�Fund��(the�fund) on�pages�3� to�14:

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $1,720,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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US 500 FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments

The�fund�s�portfolio�of�investments� Our�audit�procedures�included:� makes�up�98.9%�of�total�assets.�We� ��documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� independent�auditor�on�the�design�and�operation�of�those�controls� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� ��agreeing�the�31�March�2018�valuation�of�listed�equity�investments� materiality�in�the�context�of�the� to�externally�quoted�prices� financial�statements�as�a�whole,�they� are�considered�to�be�the�area�which� ��agreeing�investment�holdings�to�confirmations�received�from�the� had�the�greatest�effect�on�our�overall� administration�manager� audit�strategy�and�allocation�of� resources�in�planning�and� We�did�not�identify�any�material�differences�in�relation�to�the�carrying� completing�our�audit.� amount�of�investments.

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Other Information

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Use of this Independent Auditor�s Report

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US 500 FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	1,066	66.54%	376,044	1.47%
1,001-5,000	422	26.34%	927,199	3.63%
5,001-10,000	71	4.43%	489,998	1.92%
10,001-50,000	40	2.50%	691,543	2.71%
50,001-100,000	-	0.00%	-	0.00%
Greater than 100,000	3	0.19%	23,031,217	90.26%
TOTAL	1,602	100.00%	25,516,001	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	22,445,793	87.97%
Sharesies Nominee Limited	317,616	1.24%
Adminis Custodial Nominees Ltd Class D	267,808	1.05%
Nicoletta Maria Bartoli	43,655	0.17%
FNZ Custodians Limited	30,983	0.12%
Graham Edward Taylor & Heather Doreen Taylor & David Snedden	30,062	0.12%
Paul Anthony Wallace	29,445	0.12%
Adminis Custodial Nominees Ltd Class C	26,617	0.10%
Ian Robert Mckim & Anne Marie Mckim	26,613	0.10%
Nigel Russell Fannin & Rosemary Anne O`Brien & Kevin Wayne Harborne	25,126	0.10%
Benjamin David Bonoma & Sarah Victoria Bonoma	23,548	0.09%
4 Eyes Limited	22,631	0.09%
Thomas Edward Robinson & Tsui Wen Chen & David Bruce Bell	20,838	0.08%
Paul Anthony Kathro	20,670	0.08%
Reece Hall & Kathryn Hall	18,786	0.07%
Stephen Allan Mcgregor & Jane Costigan	18,711	0.07%
Grant Harold Spencer & Lynda Jennifer Anne Spencer	18,538	0.07%
Eugene John Gibney	18,493	0.07%
Izak Andries Delport Van Blerk & Petronella Erendina Van Blerk	17,240	0.07%
Bruce John Ferguson	16,436	0.06%
	23,439,609	91.84%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	4,999*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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Europe Fund (EUF) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Europe Fund

Report to Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$1.605	$1.474
Units On Issue	87,119,313	108,103,400
Funds Under Management	$139,855,247	$159,326,154
Gross Distribution	$0.029	$0.027
Gross Distribution Yield	1.83%	1.85%
Gross Return	10.86%	6.07%
Total Fund Charges	0.55%	0.55%
Distributions paid	Semi-annual

NTA Per Unit

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----- Start of picture text -----

1.76
1.68
1.60
1.52
1.44
may 17 sep 17 jan 18
NTA ($)
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Holdings By Sector
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Financials 22.4% Consumer Goods 18.1% Industrials 15.1% Health Care 12% Basic Materials 7.9% Consumer Services 7.2% Oil & Gas 6.4% Technology 3.8% Telecoms 3.6% Utilities 3.5%

Growth of $1000*

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1,400
1,200
1,000
800
600
2016 2017 2018
Value ($)
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Country Allocation

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United Kingdom 29.5% France 14.5% Germany 14.5% Switzerland 13.4% Spain 5.2% Netherlands 5.1% Sweden 5% Italy 4% Denmark 2.6% Belgium 2.1% Other 4.1%

*Since inception with all distributions reinvested.

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EUROPE FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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EUROPE FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Europe Fund (the 'Fund') was created by an establishment deed dated 10 July 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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EUROPE FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange gain Total income EXPENSES Management fees expense 6 Foreign exchange loss Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 4,862 16,268 - 21,130 (834) (61) (895) 20,235 (2,343) 17,892 - 17,892 15.62	2017 $'000 3,486 11,354 26
		14,866
		(492) -
		(492)
		14,374 (1,377)
		12,997 -
		12,997
		15.86

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 160,620 17,892 23,309 (58,372) (2,467) (37,530) 140,982	2017 $'000 81,408 12,997
		67,492 - (1,277)
		66,215
		160,620

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 1,838 141,835 143,673 (5) (1,162) (156) (1,368) (2,691) 140,982 143,673	As At 31 March 2017 $'000 1,513 159,529
		161,042
		(6) (348) (38) (30)
		(422)
		160,620
		161,042

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Distributions paid to unitholders Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss/(gain) Increase in taxation payable Decrease in management fees payable Net cash flows from operating activities	2018 $'000 4,133 (835) (800) 2,498 38 (2,580) (2,542) 2,836 (2,467) 369 325 1,513 - 1,838 17,892 (16,268) 61 814 (1) 2,498	2017 $'000 2,964 (517) (639)
		1,808
		- (712)
		(712)
		1,031 (1,277)
		(246)
		850 682 (19)
		1,513
		12,997 (11,354) (26) 216 (25)
		1,808

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Europe Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in the Vanguard FTSE Europe ETF (the 'Underlying Fund'), which tracks the FTSE Developed Europe All Cap Index (the 'Underlying Index'). The Underlying Fund invests in securities contained in the Underlying Index broadly in proportion to the weightings of the Underlying Index. Investments are valued at fair value according to last traded market prices on the New York Stock Exchange Arca on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in the Underlying Fund - Vanguard FTSE Europe ETF. The Fund receives all of its dividend income from this investment.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distribution and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (2,343) (2,343)	2017 $'000 (1,377) (1,377)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 20,235	2017 $'000 14,374 (4,025) 3,179 990 (1,521) (1,377) (1,377) 2017 $'000 854
	(5,666) 4,553 1,350 (2,580)
	(2,343) (2,343)
	2018 $'000 1,509

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 17,892 114,541 15.62	2017 12,997 81,972
		15.86

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) July 2016 (paid August 2016) 31/03/2017 2.06 May 2017 (paid June 2017) 31/03/2018 0.72 November 2017 (paid December 17) 31/03/2018 1.39	2018 $'000 - 784 1,683 2,467	2017 $'000 1,277 - -
		1,277

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 87,119,000 units on issue (31 March 2017: 108,103,000).

The number of units allotted during the year ended 31 March 2018 was 14,756,000 (31 March 2017: 50,170,000) for total value of $23,309,000 (31 March 2017: $67,492,000).

The number of units redeemed during the year ended 31 March 2018 was 35,740,000 (31 March 2017: nil) for total value of $58,372,000 (31 March 2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Redemptions made during the year Units on issue at the end of the year	2018 '000 108,103 14,756 (35,740) 87,119	2017 '000 57,933 50,170 -
		108,103

The net asset value of each unit per the financial statements is $1.61827 (31 March 2017: $1.48581). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 82,341,448 units (31 March 2017: 106,437,239) valued at $132,185,000 (31 March 2017: $156,870,000) in the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS (Continued)

Distributions

The Fund paid distributions of $2,404,000 to SLI for the year ended 31 March 2018 (31 March 2017: $nil). The balance remaining as payable at the end of the year is $nil (31 March 2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $834,000 (31 March 2017: $492,000), with $5,000 (31 March 2017: $6,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $23,000 (31 March 2017: $12,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $5,000 (31 March 2017: $2,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,838	1,513
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	141,835	159,529
Other financial liabilities
Management fees payable	(5)	(6)
Funds held for unit purchases	(156)	(38)
Unsettled purchases of investments	(1,368)	(30)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $14,184,000 (31 March 2017: $15,953,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

Cash and cash equivalents

2018	2017
$'000	$'000
1,838	1,513

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac') .

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 156 AA- - A 1,682 AA- 1,838	2017 Balance $'000 Credit rating 38 AA- - A 1,475 AA- 1,513

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund's investment in the Vanguard FTSE Europe ETF is considered readily realisable, as it is quoted on the New York Stock Exchange Arca. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning units in the Underlying Fund. Liquidity risk for the Fund is therefore low.

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds assets denominated in a currency other than the New Zealand dollar, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in US dollars will fluctuate due to changes in the exchange rate. The Fund’s policy is not to enter into any currency hedging transactions.

A 10% strengthening/weakening of the New Zealand dollar against the US dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $14,047,000 (31 March 2017: $15,950,000).

The table below summarises the Fund’s exposure to currency risks.

	2018	2017
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	141,835	159,529
Unsettled purchases of investments	(1,368)	(30)

100

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

101

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EUROPE FUND

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Independent Auditor�s Report

To�the�unitholders�of�Europe�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�Europe�Fund��(the�fund) on�pages�3� to�14:

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $1,437,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

102

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EUROPE FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments The�fund�s�portfolio�of�investments� Our�audit�procedures�included:� makes�up�98.7%�of�total�assets.�We� � documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� independent�auditor�on�the�design�and�operation�of�those�controls� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� � agreeing�the�31�March�2018�valuation�of�listed�equity�investments� materiality�in�the�context�of�the� to�externally�quoted�prices� financial�statements�as�a�whole,�they� are�considered�to�be�the�area�which� had�the�greatest�effect�on�our�overall� � agreeing�investment�holdings�to�confirmations�received�from�the� audit�strategy�and�allocation�of� administration�manager� resources�in�planning�and� completing�our�audit. We�did�not�identify�any�material�differences�in�relation�to�the�carrying� amount�of�investments.

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Other Information

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Use of this Independent Auditor�s Report

103

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EUROPE FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	171	28.22%	91,454	0.10%
1,001-5,000	220	36.30%	546,864	0.62%
5,001-10,000	98	16.17%	681,472	0.77%
10,001-50,000	97	16.01%	1,979,378	2.25%
50,001-100,000	13	2.15%	873,691	0.99%
Greater than 100,000	7	1.16%	83,861,454	95.26%
TOTAL	606	100.00%	88,034,313	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	82,341,448	93.53%
Adminis Custodial Nominees Ltd Class D	639,681	0.73%
Sharesies Nominee Limited	378,630	0.43%
Nicoletta Maria Bartoli	176,596	0.20%
Phillip Stephen Thumath	110,061	0.13%
Adminis Custodial Nominees Ltd Class C	107,922	0.12%
FNZ Custodians Limited	107,116	0.12%
Benjamin David Bonoma & Sarah Victoria Bonoma	93,767	0.11%
Brian Joseph Connor & Maureen Shannahan Connor	76,986	0.09%
Grant Wilbert Dorey	75,587	0.09%
Sun Properties International Limited	73,425	0.08%
Nigel Russell Fannin & Rosemary Anne O`Brien & Kevin Wayne Harborne	73,055	0.08%
Arthur William Young & Peter Webster Wilson	64,884	0.07%
Richard George Lane	64,875	0.07%
Mark Reid Craig	64,000	0.07%
John Farquharson Hancock & Amanda Jane Hancock & Urlich AND Company Trustees Limited	63,704	0.07%
Paul Davidson Veitch & Timothy Robert Coleman & Duncan Dovico Trustees Limited	58,848	0.07%
Paul Rodger Day & Amanda Cheryl Day	56,577	0.06%
Izak Andries Delport Van Blerk & Petronella Erendina Van Blerk	54,983	0.06%
Piers Toby Agmen & Ross Hannay Mckechine	53,000	0.06%
	84,735,145	96.24%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	18,512*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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Asia Pacific Fund (APA) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Asia Pacific Fund

Report to Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$2.011	$1.830
Units On Issue	45,475,500	32,450,500
Funds Under Management	$91,448,047	$59,394,976
Gross Distribution	$0.026	$0.010
Gross Distribution Yield	1.28%	0.54%
Gross Return	11.35%	13.51%
Total Fund Charges	0.55%	0.55%
Distributions paid	Semi-annual

NTA Per Unit

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----- Start of picture text -----

2.40
2.20
2.00
1.80
1.60
may 17 sep 17 jan 18
Growth of $1,000
1,680
1,440
1,200
960
720
2016 2017 2018
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

Sector Allocation

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Country Allocation

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Financials 23.7% Consumer Goods 21.1% Industrials 18.9% Consumer Services 10% Basic Materials 7.5% Health Care 6.5% Technology 5.1% Telecoms 3.1% Utilities 2.3% Oil & Gas 1.8%

Japan 59.1% Australia 15.5% Korea 12.9% Hong Kong 8.6% Singapore 3.2% New Zealand 0.7%

*Since inception with all distributions reinvested.

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ASIA PACIFIC FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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ASIA PACIFIC FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Asia Pacific Fund (the 'Fund') was created by an establishment deed dated 10 July 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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ASIA PACIFIC FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange gain Total income EXPENSES Management fees expense 6 Foreign exchange loss Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 1,835 7,176 - 9,011 (304) (111) (415) 8,596 (854) 7,742 - 7,742 21.94	2017 $'000 1,242 6,530 5
		7,777
		(213) -
		(213)
		7,564 (599)
		6,965 -
		6,965
		24.29

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 59,309 7,742 26,356 (623) 25,733 92,784	2017 $'000 39,890 6,965
		12,644 (190)
		12,454
		59,309

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 1,364 93,044 94,408 (3) (395) (174) (1,052) (1,624) 92,784 94,408	As At 31 March 2017 $'000 756 58,786
		59,542
		(2) (151) (44) (36)
		(233)
		59,309
		59,542

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Distributions paid to unitholders Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss/(gain) Increase in taxation payable Increase/(decrease) in management fees payable Net cash flows from operating activities	2018 $'000 1,560 (303) (335) 922 - (1,768) (1,768) 2,077 (623) 1,454 608 756 1,364 7,742 (7,176) 111 244 1 922	2017 $'000 1,056 (227) (347)
		482
		- (410)
		(410)
		543 (190)
		353
		425 331
		756
		6,965 (6,530) (5) 66 (14)
		482

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Asia Pacific Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in the Vanguard FTSE Pacific ETF (the 'Underlying Fund'), which tracks the FTSE Developed Asia Pacific All Cap Index (the 'Underlying Index'). The Underlying Fund invests in securities contained in the Underlying Index broadly in proportion to the weightings of the Underlying Index. Investments are valued at fair value according to last traded market prices on the New York Stock Exchange Arca on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in the Underlying Fund - Vanguard FTSE Pacific ETF. The Fund receives all of its dividend income from this investment.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distribution and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (854) (854)	2017 $'000 (599) (599)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 8,596	2017 $'000 7,564 (2,118) 1,828 350 (659) (599) (599) 2017 $'000 482
	(2,407) 2,008 485 (940)
	(854) (854)
	2018 $'000 818

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 7,742 35,283 21.94	2017 6,965 28,671
		24.29

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) July 2016 (paid August 2016) 31/03/2017 0.71 May 2017 (paid June 2017) 31/03/2018 1.34 November 2017 (paid December 2017) 31/03/2018 0.51	2018 $'000 - 443 180 623	2017 $'000 190 - -
		190

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 45,476,000 units on issue (31 March 2017: 32,451,000).

The number of units allotted during the year ended 31 March 2018 was 13,025,000 (31 March 2017: 7,533,000) for total value of $26,356,000 (31 March 2017: $12,644,000).

The number of units redeemed during the year ended 31 March 2018 was nil (31 March 2017: nil) for total value of $nil (31 March 2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Units on issue at the end of the year	2018 '000 32,451 13,025 45,476	2017 '000 24,918 7,533
		32,451

The net asset value of each unit per the financial statements is $2.04028 (31 March 2017: $1.82765). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 43,308,624 units (31 March 2017: 31,764,838) valued at $87,091,000 (31 March 2017: $58,140,000) in the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS (Continued)

Distributions

The Fund paid distributions of $603,000 to SLI for the year ended 31 March 2018 (31 March 2017: $nil). The balance remaining as payable at the end of the year is $nil (31 March 2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $304,000 (31 March 2017: $213,000), with $3,000 (31 March 2017: $2,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $9,000 (31 March 2017: $6,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $4,000 (31 March 2017: $3,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,364	756
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	93,044	58,786
Other financial liabilities
Management fees payable	(3)	(2)
Funds held for unit purchases	(174)	(44)
Unsettled purchases of investments	(1,052)	(36)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $9,304,000 (31 March 2017: $5,879,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

Cash and cash equivalents

2018	2017
$'000	$'000
1,364	756

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac') .

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 174 AA- - A 1,190 AA- 1,364	2017 Balance $'000 Credit rating 44 AA- - A 712 AA- 756

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund's investment in the Vanguard FTSE Pacific ETF is considered readily realisable, as it is quoted on the New York Stock Exchange Arca. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning units in the Underlying Fund. Liquidity risk for the Fund is therefore low.

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds assets denominated in a currency other than the New Zealand dollar, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in US dollars will fluctuate due to changes in the exchange rate. The Fund’s policy is not to enter into any currency hedging transactions.

A 10% strengthening/weakening of the New Zealand dollar against the US dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $9,199,000 (31 March 2017: $5,875,000).

The table below summarises the Fund’s exposure to currency risks.

	2018	2017
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	93,044	58,786
Unsettled purchases of investments	(1,052)	(36)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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ASIA PACIFIC FUND

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Independent Auditor�s Report

To�the�unitholders�of�Asia�Pacific�Fund.�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial� statements�of�Asia�Pacific�Fund�(the�fund)�on�pages� 3�to�14:�

We�have�audited�the�accompanying�financial� statements�which�comprise:�

the�statement�of�financial�position�as�at�31� March�2018;�
i. present�fairly�in�all�material�respects�the�fund�s� financial�position�as�at�31�March�2018�and�its� financial�performance�and�cash�flows�for�the� year�ended�on�that�date;�and�
the�statement�of�comprehensive�income,� statement�of�changes�in�unitholders��funds��and� statement�of�cash�flows�for�the�year�then� ended;�and��
ii. comply�with�New�Zealand�Equivalents�to� International�Financial�Reporting�Standards�and� International�Financial�Reporting�Standards.��
notes,�including�a�summary�of�significant� accounting�policies�and�other�explanatory� information.�

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Basis for opinion

We�conducted�our�audit�in�accordance�with�International�Standards�on�Auditing�(New�Zealand)�(�ISAs�(NZ)�).�We� believe�that�the�audit�evidence�we�have�obtained�is�sufficient�and�appropriate�to�provide�a�basis�for�our�opinion.�

We�are�independent�of�the�fund�in�accordance�with�Professional�and�Ethical�Standard�1�(Revised)�Code�of�Ethics� for�Assurance�Practitioners�issued�by�the�New�Zealand�Auditing�and�Assurance�Standards�Board�and�the� International�Ethics�Standards�Board�for�Accountants��Code�of�Ethics�for�Professional�Accountants�(IESBA� Code),�and�we�have�fulfilled�our�other�ethical�responsibilities�in�accordance�with�these�requirements�and�the� IESBA�Code.��

Our�responsibilities�under�ISAs�(NZ)�are�further�described�in�the�auditor�s�responsibilities�for�the�audit�of�the� financial�statements�section�of�our�report.�

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the� nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually� and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $944,000�determined�with�reference�to�a�benchmark�of�the�fund's�total�assets.�We�chose�the�benchmark� because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.��

©�2018�KPMG,�a�New�Zealand�partnership�and�a�member�firm�of�the�KPMG�network�of�independent� member�firms�affiliated�with�KPMG�International�Cooperative�(�KPMG�International�),�a�Swiss�entity.

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ASIA PACIFIC FUND

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Key audit matters

Key�audit�matters�are�those�matters�that,�in�our�professional�judgement,�were�of�most�significance�in�our�audit� of�the�financial�statements�in�the�current�period.�We�summarise�below�those�matters�and�our�key�audit� procedures�to�address�those�matters�in�order�that�the�members�as�a�body�may�better�understand�the�process� by�which�we�arrived�at�our�audit�opinion.�Our�procedures�were�undertaken�in�the�context�of�and�solely�for�the� purpose�of�our�statutory�audit�opinion�on�the�financial�statements�as�a�whole�and�we�do�not�express�discrete� opinions�on�separate�elements�of�the�financial�statements�

The key audit matter	How the matter was addressed in our audit
Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup98.6%oftotalassets.We
donotconsidertheseinvestments	�documentingandunderstandingtheprocessesinplacetorecord
tobeathighriskofsignificant	investmenttransactionsandtovaluetheportfolio.Thisincluded
misstatement,orbesubjecttoa	evaluatingthecontrolenvironmentinplaceattheadministration
significantlevelofjudgement,	managerbyobtainingandreadingareportissuedbyan
becausetheycompriseliquid,listed	independentauditoronthedesignandoperationofthosecontrols
investments.However,duetotheir
materialityinthecontextofthe	�agreeingthe31March2018valuationoflistedequityinvestments
financialstatementsasawhole,they	toexternallyquotedprices
areconsideredtobetheareawhich
hadthegreatesteffectonouroverall auditstrategyandallocationof resourcesinplanningand	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe administrationmanager
completingouraudit.	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

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Other information

The�Manager,�on�behalf�of�the�fund,�is�responsible�for�the�other�information�included�in�the�entity�s�Annual� Report.�Other�information�may�include�the�Chairman's�report,�fund�highlights,�disclosures�relating�to�corporate� governance�and�statutory�information.�Our�opinion�on�the�financial�statements�does�not�cover�any�other� information�and�we�do�not�express�any�form�of�assurance�conclusion�thereon.��

The�Annual�Report�is�expected�to�be�made�available�to�us�after�the�date�of�this�Independent�Auditor's�Report.� Our�responsibility�is�to�read�the�Annual�Report�when�it�becomes�available�and�consider�whether�the�other� information�it�contains�is�materially�inconsistent�with�the�financial�statements,�or�our�knowledge�obtained�in�the� audit,�or�otherwise�appear�misstated.�If�so,�we�are�required�to�report�such�matters�to�the�Manager.��

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Use of this independent auditor�s report

This�report�is�made�solely�to�the�unitholders�as�a�body.�Our�audit�work�has�been�undertaken�so�that�we�might� state�to�the�unitholders�those�matters�we�are�required�to�state�to�them�in�the�Independent�Auditor�s�Report�and� for�no�other�purpose.�To�the�fullest�extent�permitted�by�law,�we�do�not�accept�or�assume�responsibility�to� anyone�other�than�the�unitholders�as�a�body�for�our�audit�work,�this�independent�auditor�s�report,�or�any�of�the� opinions�we�have�formed.��

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ASIA PACIFIC FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted� accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting� Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is� fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related� to�going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to� cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s responsibilities for the audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material� misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

Reasonable�assurance�is�a�high�level�of�assurance,�but�is�not�a�guarantee�that�an�audit�conducted�in�accordance� with�ISAs�NZ�will�always�detect�a�material�misstatement�when�it�exists.�

Misstatements�can�arise�from�fraud�or�error.�They�are�considered�material�if,�individually�or�in�the�aggregate,� they�could�reasonably�be�expected�to�influence�the�economic�decisions�of�users�taken�on�the�basis�of�these� financial�statements.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External� Reporting�Board�(XRB)�website�at:�

�http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG�

Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	205	38.25%	101,761	0.22%
1,001-5,000	199	37.13%	530,874	1.15%
5,001-10,000	65	12.13%	469,459	1.02%
10,001-50,000	61	11.38%	1,162,231	2.52%
50,001-100,000	3	0.56%	220,184	0.48%
Greater than 100,000	3	0.56%	43,565,991	94.60%
TOTAL	536	100.00%	46,050,500	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	43,308,624	94.05%
Shirley Anne Armstrong	140,080	0.30%
Benjamin David Bonoma & Sarah Victoria Bonoma	117,287	0.25%
Brent Reginald Ellison	91,970	0.20%
Graham Edward Taylor & Heather Doreen Taylor & David Snedden	75,184	0.16%
Richard George Lane	53,030	0.12%
Igor Daniel Divjak & Rose Blair Divjak	50,000	0.11%
Paul Rodger Day & Amanda Cheryl Day	49,715	0.11%
Grant Wilbert Dorey	46,452	0.10%
Izak Andries Delport Van Blerk & Petronella Erendina Van Blerk	43,763	0.10%
Sun Properties International Limited	42,000	0.09%
Billy Cheung Services Limited	40,532	0.09%
Cdk Limited	28,918	0.06%
FNZ Custodians Limited	28,494	0.06%
Glenda Lowe	27,773	0.06%
Bruce John Ferguson	27,696	0.06%
Begg & Allen Properties Limited	27,457	0.06%
Piers Toby Agmen & Ross Hannay Mckechine	26,000	0.06%
Karen Marie Fairweather	24,860	0.05%
Christiaan William Clark	24,859	0.05%
	44,274,694	96.14%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	9,659*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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Emerging Markets Fund (EMF) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Emerging Markets Fund

Report to Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$1.281	$1.147
Units On Issue	68,109,000	37,587,000
Funds Under Management	$87,250,353	$43,121,155
Gross Distribution	$0.020	-
Gross Distribution Yield	1.53%	N/A
Gross Return	13.42%	14.74%
Total Fund Charges	0.59%	0.59%
Distributions paid	Semi-annual

NTA Per Unit

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----- Start of picture text -----

1.60
1.44
1.28
1.12
0.96
may 17 sep 17 jan 18
NTA ($)
----- End of picture text -----

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----- Start of picture text -----

Sector Allocation
----- End of picture text -----

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Financials 28.7% Technology 15.5% Consumer Services 11% Industrials 10.7% Consumer Goods 8.9% Basic Materials 7.3% Oil & Gas 7.3% Telecoms 4.4% Health Care 3.1% Utilities 3.1%

Growth of $1,000*

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----- Start of picture text -----

1,350
1,200
1,050
900
750
2016 2017 2018
Value ($)
----- End of picture text -----

Country Allocation

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China 34.2% Taiwan 14.5% India 10.6% Brazil 8.3% South Africa 7.4% Thailand 3.9% Russia 3.8% Malaysia 3.3% Mexico 3.2% Indonesia 2.2% Other 8.6%

*Since inception with all distributions reinvested.

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EMERGING MARKETS FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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EMERGING MARKETS FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Emerging Markets Fund (the 'Fund') was created by an establishment deed dated 10 July 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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EMERGING MARKETS FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange gain Total income EXPENSES Management fees expense 6 Foreign exchange loss Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 1,249 8,047 - 9,296 (244) (277) (521) 8,775 (685) 8,090 - 8,090 18.13	2017 $'000 918 5,056 67
		6,041
		(166) -
		(166)
		5,875 (489)
		5,386 -
		5,386
		15.13

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 43,040 8,090 38,391 (569) 37,822 88,952	2017 $'000 31,753 5,386
		5,901 -
		5,901
		43,040

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 806 90,488 91,294 (3) (348) (239) (1,752) (2,342) 88,952 91,294	As At 31 March 2017 $'000 640 42,884
		43,524
		(2) (118) (194) (170)
		(484)
		43,040
		43,524

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Distributions paid to unitholders Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss/(gain) Increase in taxation payable Increase/(decrease) in management fees payable Net cash flows from operating activities	2018 $'000 1,062 (243) (268) 551 - (3,058) (3,058) 3,242 (569) 2,673 166 640 806 8,090 (8,047) 277 230 1 551	2017 $'000 780 (176) (289)
		315
		- (706)
		(706)
		898 -
		898
		507 133
		640
		5,386 (5,056) (67) 62 (10)
		315

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Emerging Markets Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in the Vanguard FTSE Emerging Markets ETF (the 'Underlying Fund'), which tracks the FTSE Emerging Markets All Cap China A Inclusion Index (the 'Underlying Index'). The Underlying Fund invests in securities contained in the Underlying Index broadly in proportion to the weightings of the Underlying Index. Investments are valued at fair value according to last traded market prices on the New York Stock Exchange Arca on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in the Underlying Fund - Vanguard FTSE Emerging Markets ETF. The Fund receives all of its dividend income from this investment.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distribution and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (685) (685)	2017 $'000 (489) (489)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 8,775	2017 $'000 5,875 (1,645) 1,415 255 (514) (489) (489) 2017 $'000 408
	(2,457) 2,251 276 (755)
	(685) (685)
	2018 $'000 685

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 8,090 44,624 18.13	2017 5,386 35,588
		15.13

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Distributions declared and paid
Year ended Distribution per unit (cents per unit) May 2017 (paid June 2017) 31/03/2018 0.53 Nov 2017 (paid Dec 2017 ) 31/03/2018 0.88	2018 $'000 201 368 569	2017 $'000 - -
		-

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 68,109,000 units on issue (31 March 2017: 37,587,000).

The number of units allotted during the year ended 31 March 2018 was 30,522,000 (31 March 2017: 5,758,000) for total value of $38,391,000 (31 March 2017: $5,901,000).

The number of units redeemed during the year ended 31 March 2018 was nil (31 March 2017: nil) for total value of $nil (31 March 2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Units on issue at the end of the year	2018 '000 37,587 30,522 68,109	2017 '000 31,829 5,758
		37,587

The net asset value of each unit per the financial statements is $1.30602 (31 March 2017: $1.14508). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 61,604,782 units (31 March 2017: 35,840,050) valued at $78,918,000 (31 March 2017: $41,117,000) in the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS (Continued)

Distributions

The Fund paid distributions of $513,000 to SLI for the year ended 31 March 2018 (31 March 2017: $nil). The balance remaining as payable at the end of the year is $nil (31 March 2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $244,000 (31 March 2017: $166,000), with $3,000 (31 March 2017: $2,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $7,000 (31 March 2017: $5,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $8,000 (31 March 2017: $5,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	806	640
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	90,488	42,884
Other financial liabilities
Management fees payable	(3)	(2)
Funds held for unit purchases	(239)	(194)
Unsettled purchases of investments	(1,752)	(170)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $9,049,000 (31 March 2017: $4,288,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

Cash and cash equivalents

2018	2017
$'000	$'000
806	640

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac') .

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 239 AA- - A 567 AA- 806	2017 Balance $'000 Credit rating 194 AA- - A 446 AA- 640

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund's investment in the Vanguard FTSE Emerging Markets ETF is considered readily realisable, as it is quoted on the New York Stock Exchange Arca. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning units in the Underlying Fund. Liquidity risk for the Fund is therefore low.

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds assets denominated in a currency other than the New Zealand dollar, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in US dollars will fluctuate due to changes in the exchange rate. The Fund’s policy is not to enter into any currency hedging transactions.

A 10% strengthening/weakening of the New Zealand dollar against the US dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $8,874,000 (31 March 2017: $4,271,000).

The table below summarises the Fund’s exposure to currency risks.

	2018	2017
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	90,488	42,884
Unsettled purchases of investments	(1,752)	(170)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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EMERGING MARKETS FUND

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Independent Auditor�s Report

To�the�unitholders�of�Emerging�Markets�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial We have audited the accompanying financial statements�of�Emerging�Markets�Fund��(the�fund) statements�which�comprise: on�pages�3�to�14: the�statement�of�financial�position�as�at�31 present�fairly�in�all�material�respects�the�fund�s March�2018; financial�position�as�at�31�March�2018�and�its the�statement�of�comprehensive�income, financial�performance�and�cash�flows�for�the statement�of�changes�in�unitholders��funds�and year�ended�on�that�date;�and statement�of�cash�flows�for�the�year�then comply�with�New�Zealand�Equivalents�to ended;�and International�Financial�Reporting�Standards�and notes,�including�a�summary�of�significant International�Financial�Reporting�Standards. accounting�policies�and�other�explanatory information.

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $913,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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EMERGING MARKETS FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup99.1%oftotalassets.We donotconsidertheseinvestments tobeathighriskofsignificant misstatement,orbesubjecttoa significantlevelofjudgement, becausetheycompriseliquid,listed	�documentingandunderstandingtheprocessesinplacetorecord investmenttransactionsandtovaluetheportfolio.Thisincluded evaluatingthecontrolenvironmentinplaceattheadministration managerbyobtainingandreadingareportissuedbyanindependent auditoronthedesignandoperationofthosecontrols
investments.However,duetotheir materialityinthecontextofthe financialstatementsasawhole,they	�agreeingthe31March2018valuationoflistedequityinvestmentsto externallyquotedprices
areconsideredtobetheareawhich
hadthegreatesteffectonouroverall	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe
auditstrategyandallocationof	administrationmanager
resourcesinplanningand
completingouraudit.	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

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Other Information

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Use of this Independent Auditor�s Report

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EMERGING MARKETS FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

�http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	260	29.31%	156,737	0.22%
1,001-5,000	346	39.01%	892,662	1.28%
5,001-10,000	121	13.64%	894,971	1.28%
10,001-50,000	138	15.56%	2,787,554	4.00%
50,001-100,000	14	1.58%	964,388	1.38%
Greater than 100,000	8	0.90%	63,966,188	91.82%
TOTAL	887	100.00%	69,662,500	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	61,591,534	88.41%
Sharesies Nominee Limited	890,677	1.28%
FNZ Custodians Limited	676,454	0.97%
Nicoletta Maria Bartoli	231,501	0.33%
Brian Joseph Connor & Maureen Shannahan Connor	187,000	0.27%
Benjamin David Bonoma & Sarah Victoria Bonoma	181,249	0.26%
Sun Properties International Limited	107,080	0.15%
Graham Edward Taylor & Heather Doreen Taylor & David Snedden	100,693	0.14%
Karin Won	89,987	0.13%
Grant Wilbert Dorey	82,452	0.12%
Marcus Michael Yass	77,144	0.11%
Wendy Victoria Edmondson & Robert William Edmondson	76,805	0.11%
Investment Custodial Services Limited	75,303	0.11%
Claire Frances Trotter	72,011	0.10%
Darcy Cowan	70,649	0.10%
Billy Cheung Services Limited	65,278	0.09%
Gert Franz Johannes Starker & Elma Starker	62,430	0.09%
Richard George Lane	61,439	0.09%
Begg & Allen Properties Limited	59,729	0.09%
Nicole Monique Fawcett	58,482	0.08%
	64,817,897	93.03%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	20,696*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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Total World Fund (TWF) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Total World Fund

Report to Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$2.022	$1.874
Units On Issue	16,221,773	17,030,500
Funds Under Management	$32,799,938	$31,923,093
Gross Distribution	$0.023	$0.010
Gross Distribution Yield	1.12%	0.53%
Gross Return	9.10%	12.66%
Total Fund Charges	0.55%	0.56%
Distributions paid	Semi-annual

NTA Per Unit

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----- Start of picture text -----

2.20
2.10
2.00
1.90
1.80
may 17 sep 17 jan 18
NTA ($)
----- End of picture text -----

Sector Allocation

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Financials 22.8% Industrials 14.1% Technology 13.7% Consumer Goods 12.1% Consumer Services 10.9% Health Care 10.1% Oil & Gas 5.8% Basic Materials 4.9% Utilites 3% Telecoms 2.6%

Growth of $1,000*

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----- Start of picture text -----

1,680
1,440
1,200
960
720
2016 2017 2018
Value ($)
----- End of picture text -----

Country Allocation

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United States 51.7% Japan 8.5% United Kingdom 5.8% China 3.2% France 3.1% Canada 3% Germany 3% Switzerland 2.4% Australia 2.2% Korea 1.9% Other 15.2%

*Since inception with all distributions reinvested.

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TOTAL WORLD FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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TOTAL WORLD FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Total World Fund (the 'Fund') was created by an establishment deed dated 10 July 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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TOTAL WORLD FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 6 Foreign exchange loss Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 801 3,387 4,188 (166) (12) (178) 4,010 (468) 3,542 - 3,542 19.14	2017 $'000 680 3,375
		4,055
		(124) (4)
		(128)
		3,927 (349)
		3,578 -
		3,578
		22.26

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 32,025 3,542 7,501 (9,522) (298) (2,319) 33,248	2017 $'000 25,450 3,578
		3,108 - (111)
		2,997
		32,025

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 579 1 33,583 34,163 (1) (205) (249) (460) (915) 33,248 34,163	As At 31 March 2017 $'000 347 104 31,909
		32,360
		(1) (87) (117) (130)
		(335)
		32,025
		32,360

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions by unitholders Distributions paid to unitholders Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss Increase in taxation payable Decrease in management fees payable Decrease/(increase) in receivables Net cash flows from operating activities	2018 $'000 784 (166) (230) 388 - (3,040) (3,040) 3,194 (12) (298) 2,884 232 347 579 3,542 (3,387) 12 118 - 103 388	2017 $'000 474 (133) (209)
		132
		- (1,204)
		(1,204)
		1,312 - (111)
		1,201
		129 218
		347
		3,578 (3,375) 4 38 (9) (104)
		132

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Total World Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in the Vanguard Total World Stock ETF (the 'Underlying Fund'), which tracks the FTSE Global All Cap Index (the 'Underlying Index'). The Underlying Fund invests in securities contained in the Underlying Index broadly in proportion to the weightings of the Underlying Index. Investments are valued at fair value according to last traded market prices on the New York Stock Exchange Arca on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in the Underlying Fund - Vanguard Total World Stock ETF. The Fund receives all of its dividend income from this investment.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distribution and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (468) (468)	2017 $'000 (349) (349)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 4,010	2017 $'000 3,927 (1,100) 945 190 (384) (349) (349) 2017 $'000 334
	(1,123) 948 223 (516)
	(468) (468)
	2018 $'000 566

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 3,542 18,507 19.14	2017 3,578 16,076
		22.26

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) July 2016 (paid August 2016) 31/03/2017 0.71 May 2017 (paid June 2017) 31/03/2018 0.98 November 2017 (paid December 2017) 31/03/2018 0.65	2018 $'000 - 171 127 298	2017 $'000 111 - -
		111

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 16,222,000 units on issue (31 March 2017: 17,030,000).

The number of units allotted during the year ended 31 March 2018 was 3,718,000 (31 March 2017: 1,798,000) for total value of $7,501,000 (31 March 2017: $3,108,000).

The number of units redeemed during the year ended 31 March 2018 was 4,526,000 (31 March 2017: nil) for total value of $9,522,000 (31 March 2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Redemptions made during the year Units on issue at the end of the year	2018 '000 17,030 3,718 (4,526) 16,222	2017 '000 15,232 1,798 -
		17,030

The net asset value of each unit per the financial statements is $2.04956 (31 March 2017: $1.88050). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 10,157,447 units (31 March 2017: 14,514,171) valued at $20,538,000 (31 March 2017: $27,206,000) in the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS (Continued)

Distributions

The Fund paid distributions of $237,000 to SLI for the year ended 31 March 2018 (31 March 2017: $nil). The balance remaining as payable at the end of the year is $nil (31 March 2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $166,000 (31 March 2017: $124,000), with $1,000 (31 March 2017: $1,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $5,000 (31 March 2017: $4,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $6,000 (31 March 2017: $5,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	579	347
Receivables	1	104
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	33,583	31,909
Other financial liabilities
Management fees payable	(1)	(1)
Funds held for unit purchases	(249)	(117)
Unsettled purchases of investments	(460)	(130)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $3,358,000 (31 March 2017: $3,191,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

Cash and cash equivalents Receivables

2018	2017
$'000	$'000
579	347
1	104

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac') .

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 249 AA- - A 330 AA- 579	2017 Balance $'000 Credit rating 117 AA- - A 230 AA- 347

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund's investment in the Vanguard Total World Stock ETF is considered readily realisable, as it is quoted on the New York Stock Exchange Arca. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning units in the Underlying Fund. Liquidity risk for the Fund is therefore low.

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds assets denominated in a currency other than the New Zealand dollar, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in US dollars will fluctuate due to changes in the exchange rate. The Fund’s policy is not to enter into any currency hedging transactions.

A 10% strengthening/weakening of the New Zealand dollar against the US dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $3,312,000 (31 March 2017: $3,189,000).

The table below summarises the Fund’s exposure to currency risks.

	2018	2017
	$'000	$'000
Receivables	1	104
Investments in equity securities held at fair value through profit or loss	33,583	31,909
Unsettled purchases of investments	(460)	(130)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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TOTAL WORLD FUND

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Independent Auditor�s Report

To�the�unitholders�of�Total�World�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�Total�World�Fund��(the�fund) on� pages�3�to�14:

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $342,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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TOTAL WORLD FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments

The�fund�s�portfolio�of�investments� Our�audit�procedures�included:� makes�up�98.3%�of�total�assets.�We� ��documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� independent�auditor�on�the�design�and�operation�of�those�controls� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� ��agreeing�the�31�March�2018�valuation�of�listed�equity�investments� materiality�in�the�context�of�the� to�externally�quoted�prices� financial�statements�as�a�whole,�they� are�considered�to�be�the�area�which� ��agreeing�investment�holdings�to�confirmations�received�from�the� had�the�greatest�effect�on�our�overall� administration�manager� audit�strategy�and�allocation�of� resources�in�planning�and� We�did�not�identify�any�material�differences�in�relation�to�the�carrying� completing�our�audit� amount�of�investments.

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Other Information

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Use of this Independent Auditor�s Report

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TOTAL WORLD FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	205	27.12%	109,983	0.66%
1,001-5,000	279	36.90%	729,756	4.39%
5,001-10,000	119	15.74%	830,251	4.99%
10,001-50,000	131	17.33%	2,778,167	16.70%
50,001-100,000	16	2.12%	1,028,507	6.18%
Greater than 100,000	6	0.79%	11,162,109	67.08%
TOTAL	756	100.00%	16,638,773	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	10,190,923	61.25%
Adminis Custodial Nominees Ltd Class D	401,631	2.41%
Custodial Services Limited	203,801	1.22%
FNZ Custodians Limited	132,217	0.79%
Graeme Andrew Don & Margaret Joan Don & Richard Vale Harris	117,737	0.71%
William Paul Mcsweeney & Margaret Helen Moretti	115,800	0.70%
Ursula Jayne Clark & Cms Trustees	92,500	0.56%
Ian Robert Mckim & Anne Marie Mckim	88,079	0.53%
Benjamin David Bonoma & Sarah Victoria Bonoma	77,036	0.46%
Caillor Ian Woon	71,144	0.43%
Rosalie Barnes	69,212	0.42%
Paul Anthony Wallace	67,777	0.41%
Karin Won	61,421	0.37%
Gopinath Nayar & Gellert Ivanson Trustee No 12 Limited	61,100	0.37%
Gordon Chan	59,869	0.36%
Eugene John Gibney	57,204	0.34%
Catherine Linda Marshall	55,733	0.33%
Timothy Shepheard Walwyn	54,461	0.33%
Jon Patrick Finn Angelo	53,893	0.32%
Nigel Russell Fannin & Rosemary Anne O`Brien & Kevin Wayne Harborne	53,712	0.32%
	12,085,250	72.63%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	1,825*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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US Large Value Fund (USV) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the US Large Value Fund

Report to Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$2.839	$2.742
Units On Issue	19,289,500	13,214,500
Funds Under Management	$54,767,713	$36,228,456
Gross Distribution	$0.033	$0.032
Gross Distribution Yield	1.17%	1.17%
Gross Return	4.76%	15.63%
Total Fund Charges	0.51%	0.53%
Distributions paid	Semi-annual

NTA Per Unit

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----- Start of picture text -----

3.15
3.00
2.85
2.70
2.55
may 17 sep 17 jan 18
NTA ($)
----- End of picture text -----

Sector Allocation

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==> picture [89 x 89] intentionally omitted <==

----- Start of picture text -----

Financials 25.4%
Technology 14.5%
Health Care 14%
Industrials 10.8%
Consumer Goods 8.8%
Oil & Gas 7.5%
Consumer Services 7.1%
Utilities 5.2%
Telecoms 3.5%
Basic Materials 3.2%
----- End of picture text -----

Growth of $1,000*

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----- Start of picture text -----

1,320
1,200
1,080
960
840
jan 16 jul 16 jan 17 jul 17 jan 18
Value ($)
----- End of picture text -----

*Since inception with all distributions reinvested.

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US LARGE VALUE FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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US LARGE VALUE FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The US Large Value Fund (the 'Fund') was created by an establishment deed dated 10 July 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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US LARGE VALUE FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 6 Foreign exchange loss Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 1,026 1,374 2,400 (174) (91) (265) 2,135 (489) 1,646 - 1,646 11.80	2017 $'000 855 4,670
		5,525
		(149) (5)
		(154)
		5,371 (418)
		4,953 -
		4,953
		37.75

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 36,314 1,646 17,876 (321) 17,555 55,515	2017 $'000 31,111 4,953
		551 (301)
		250
		36,314

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 539 56,466 57,005 (2) (196) (33) (1,259) (1,490) 55,515 57,005	As At 31 March 2017 $'000 380 36,111
		36,491
		(1) (102) (19) (55)
		(177)
		36,314
		36,491

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Distributions paid to unitholders Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss Increase in taxation payable Increase/(decrease) in management fees payable Net cash flows from operating activities	2018 $'000 872 (173) (241) 458 - (387) (387) 409 (321) 88 159 380 539 1,646 (1,374) 91 94 1 458	2017 $'000 727 (160) (241)
		326
		- (372)
		(372)
		330 (301)
		29
		(17) 397
		380
		4,953 (4,670) 5 49 (11)
		326

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The US Large Value Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in the Vanguard Value ETF (the 'Underlying Fund'), which tracks the CRSP US Large Cap Value Index (the 'Underlying Index'). The Underlying Fund invests in securities contained in the Underlying Index broadly in proportion to the weightings of the Underlying Index. Investments are valued at fair value according to last traded market prices on the New York Stock Exchange Arca on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in the Underlying Fund - Vanguard Value ETF. The Fund receives all of its dividend income from this investment.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distribution and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (489) (489)	2017 $'000 (418) (418)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 2,135	2017 $'000 5,371 (1,504) 1,308 238 (460) (418) (418) 2017 $'000 285
	(598) 383 265 (539)
	(489) (489)
	2018 $'000 496

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 1,646 13,947 11.80	2017 4,953 13,119
		37.75

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) April 2016 (paid May 2016) 31/03/2017 0.86 November 2016 (paid December 2016) 31/03/2017 1.44 May 2017 (paid June 2017) 31/03/2018 0.96 November 2017 (paid December 2017) 31/03/2018 1.43	2018 $'000 - - 128 193 321	2017 $'000 112 189 - -
		301

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 19,290,000 units on issue (31 March 2017: nil).

The number of units allotted during the year ended 31 March 2018 was 6,075,000 (31 March 2017: 221,000) for total value of $17,876,000 (31 March 2017: $551,000).

The number of units redeemed during the year ended 31 March 2018 was nil (31 March 2017: nil) for total value of $nil (31 March 2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Units on issue at the end of the year	2018 '000 13,215 6,075 19,290	2017 '000 12,994 221
		13,215

The net asset value of each unit per the financial statements is $2.87792 (31 March 2017: $2.74794). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 19,057,971 units (31 March 2017: 12,917,842) valued at $54,110,000 (31 March 2017: $35,415,000) in the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS (Continued)

Distributions

The Fund paid distributions of $309,000 to SLI for the year ended 31 March 2018 (31 March 2017: $111,000). The balance remaining as payable at the end of the year is $nil (31 March 2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $174,000 (31 March 2017: $149,000), with $2,000 (31 March 2017: $1,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $4,000 (31 March 2017: $4,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $1,000 (31 March 2017: $1,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	539	380
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	56,466	36,111
Other financial liabilities
Management fees payable	(2)	(1)
Funds held for unit purchases	(33)	(19)
Unsettled purchases of investments	(1,259)	(55)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $5,647,000 (31 March 2017: $3,611,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

Cash and cash equivalents

2018	2017
$'000	$'000
539	380

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac') .

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 33 AA- - A 506 AA- 539	2017 Balance $'000 Credit rating 19 AA- - A 361 AA- 380

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund's investment in the Vanguard Value ETF is considered readily realisable, as it is quoted on the New York Stock Exchange Arca. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning units in the Underlying Fund. Liquidity risk for the Fund is therefore low.

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds assets denominated in a currency other than the New Zealand dollar, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in US dollars will fluctuate due to changes in the exchange rate. The Fund’s policy is not to enter into any currency hedging transactions.

A 10% strengthening/weakening of the New Zealand dollar against the US dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $5,521,000 (31 March 2017: $3,606,000).

The table below summarises the Fund’s exposure to currency risks.

	2018	2017
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	56,466	36,111
Unsettled purchases of investments	(1,259)	(55)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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US LARGE VALUE FUND

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Independent Auditor�s Report

To�the�unitholders�of�US�Large�Value�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�US�Large�Value�Fund��(the�fund) on� pages�3�to�14:

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $570,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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US LARGE VALUE FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments

The�fund�s�portfolio�of�investments� �Our�audit�procedures�included:� makes�up�99.1%�of�total�assets.�We� ��documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� �investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� �evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� �manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� �independent�auditor�on�the�design�and�operation�of�those�controls� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� ��agreeing�the�31�March�2018�valuation�of�listed�equity�investments� materiality�in�the�context�of�the� �to�externally�quoted�prices� financial�statements�as�a�whole,�they� are�considered�to�be�the�area�which� ��agreeing�investment�holdings�to�confirmations�received�from�the� had�the�greatest�effect�on�our�overall� �administration�manager� audit�strategy�and�allocation�of� resources�in�planning�and� �We�did�not�identify�any�material�differences�in�relation�to�the�carrying�� completing�our�audit.� amount�of�investments.

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Other Information

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Use of this Independent Auditor�s Report

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US LARGE VALUE FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

==> picture [30 x 20] intentionally omitted <==

Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	76	42.22%	34,606	0.17%
1,001-5,000	73	40.56%	191,799	0.97%
5,001-10,000	15	8.33%	112,529	0.57%
10,001-50,000	13	7.22%	186,520	0.94%
50,001-100,000	1	0.56%	54,553	0.28%
Greater than 100,000	2	1.11%	19,239,493	97.07%
TOTAL	180	100.00%	19,819,500	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	19,132,066	96.53%
FNZ Custodians Limited	107,427	0.54%
Benjamin David Bonoma & Sarah Victoria Bonoma	54,553	0.28%
Matthew Weir	30,140	0.15%
Billy Cheung Services Limited	23,170	0.12%
Lynn Mathias Clayton & Michael Rowley Clayton & Cameron Denis Clayton	19,300	0.10%
Michael Frederick Keith	17,154	0.09%
Rosalie Barnes	12,457	0.06%
Adam Charles Tommy & Shu Yu Tseng	11,303	0.06%
Robert Andrew James Stewart	11,056	0.06%
Julie Ann Worsley	10,740	0.05%
Ryan Mark Lewis & Beatrice Schuster Lewis	10,472	0.05%
4 Eyes Limited	10,350	0.05%
Julian Oliver Smith	10,215	0.05%
Hamish Davidson	10,082	0.05%
David Mountfort Haywood & Annette Maree Haywood	10,081	0.05%
Andrew William Smith	9,879	0.05%
Craigs Investment Partners Limited	9,793	0.05%
Linda Faye Graham & Trustee Management Services Limited	9,642	0.05%
Weisi Xia	9,337	0.05%
	19,519,217	98.49%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	4,471*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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US Large Growth Fund (USG) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the US Large Growth Fund

Report to Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$3.840	$3.458
Units On Issue	5,215,034	10,478,850
Funds Under Management	$20,024,583	$36,239,702
Gross Distribution	-	-
Gross Distribution Yield	N/A	N/A
Gross Return	11.03%	12.32%
Total Fund Charges	0.51%	0.53%
Distributions paid	Semi-annual

Sector Allocation

NTA Per Unit

==> picture [473 x 230] intentionally omitted <==

----- Start of picture text -----

4.20
Technology 27.5%
4.00 Consumer Services 20.4%
Industrials 14.2%
3.80 Financials 13.2%
Health Care 11.2%
Consumer Goods 8.7%
3.60
Oil & Gas 3.5%
Basic Materials 1.1%
3.40 Telecoms 0.2%
may 17 sep 17 jan 18
Growth of $1,000
1,680
1,440
1,200
960
720
jan 16 jul 16 jan 17 jul 17 jan 18
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

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US LARGE GROWTH FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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US LARGE GROWTH FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The US Large Growth Fund (the 'Fund') was created by an establishment deed dated 10 July 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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US LARGE GROWTH FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 5 Foreign exchange loss Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 419 6,038 6,457 (176) (16) (192) 6,265 (499) 5,766 - 5,766 56.09	2017 $'000 474 4,320
		4,794
		(148) (4)
		(152)
		4,642 (418)
		4,224 -
		4,224
		40.58

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 4 Redemptions by unitholders 4 Unitholders' funds at the end of the year	2018 $'000 36,432 5,766 2,527 (24,348) (21,821) 20,377	2017 $'000 31,794 4,224
		475 (61)
		414
		36,432

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 5 Taxation payable Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 232 20,582 20,814 (1) (260) (42) (134) (437) 20,377 20,814	As At 31 March 2017 $'000 189 36,396
		36,585
		(1) (118) (34) -
		(153)
		36,432
		36,585

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions by unitholders Distributions paid to unitholders Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss Increase in taxation payable Decrease in management fees payable Net cash flows from operating activities	2018 $'000 356 (176) (294) (114) 175 (941) (766) 929 (6) - 923 43 189 232 5,766 (6,038) 16 142 - (114)	2017 $'000 403 (159) (295)
		(51)
		71 (380)
		(309)
		398 - -
		398
		38 151
		189
		4,224 (4,320) 4 52 (11)
		(51)

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The US Large Growth Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in the Vanguard Growth ETF (the 'Underlying Fund'), which tracks the CRSP US Large Cap Growth Index (the 'Underlying Index'). The Underlying Fund invests in securities contained in the Underlying Index broadly in proportion to the weightings of the Underlying Index. Investments are valued at fair value according to last traded market prices on the New York Stock Exchange Arca on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in the Underlying Fund - Vanguard Growth ETF. The Fund receives all of its dividend income from this investment.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distribution and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (499) (499)	2017 $'000 (418) (418)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 6,265	2017 $'000 4,642 (1,300) 1,210 132 (460) (418) (418) 2017 $'000 552
	(1,754) 1,690 114 (549)
	(499) (499)
	2018 $'000 988

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 5,766 10,280 56.09	2017 4,224 10,409
		40.58

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 5,215,000 units on issue (31 March 2017: 10,479,000).

The number of units allotted during the year ended 31 March 2018 was 657,000 (31 March 2017: 150,000) for total value of $2,527,000 (31 March 2017: $475,000).

The number of units redeemed during the year ended 31 March 2018 was 5,921,000 (31 March 2017: 20,000) for total value of $24,348,000 (31 March 2017: $61,000).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Redemptions made during the year Units on issue at the end of the year	2018 '000 10,479 657 (5,921) 5,215	2017 '000 10,349 150 (20)
		10,479

The net asset value of each unit per the financial statements is $3.90738 (31 March 2017: $3.47667). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

5. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 4,243,865 units (31 March 2017: 10,125,160) valued at $16,296,000 (31 March 2017: $35,017,000) in the Fund.

Distributions

The Fund paid distributions of $nil to SLI for the year ended 31 March 2018 (31 March 2017: $nil). The balance remaining as payable at the end of the year is $nil (31 March 2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $176,000 (31 March 2017: $148,000), with $1,000 (31 March 2017: $1,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $2,000 (31 March 2017: $2,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $4,000 (31 March 2017: $2,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	232	189
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	20,582	36,396
Other financial liabilities
Management fees payable	(1)	(1)
Funds held for unit purchases	(42)	(34)
Unsettled purchases of investments	(134)	-

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

6a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $2,058,000 (31 March 2017: $3,640,000).

6b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

	2018	2017
	$'000	$'000
Cash and cash equivalents	232	189

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac') .

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. FINANCIAL RISK MANAGEMENT (Continued)

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 42 AA- - A 190 AA- 232	2017 Balance $'000 Credit rating 34 AA- - A 155 AA- 189

6c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund's investment in the Vanguard Growth ETF is considered readily realisable, as it is quoted on the New York Stock Exchange Arca. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning units in the Underlying Fund. Liquidity risk for the Fund is therefore low.

6d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds assets denominated in a currency other than the New Zealand dollar, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in US dollars will fluctuate due to changes in the exchange rate. The Fund’s policy is not to enter into any currency hedging transactions.

A 10% strengthening/weakening of the New Zealand dollar against the US dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $2,045,000 (31 March 2017: $3,640,000).

The table below summarises the Fund’s exposure to currency risks.

	2018	2017
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	20,582	36,396
Unsettled purchases of investments	(134)	-

7. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

8. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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US LARGE GROWTH FUND

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Independent Auditor�s Report

To�the�unitholders�of�US�Large�Growth�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�US�Large�Growth�Fund��(the�fund) on�pages�3�to�13:

==> picture [31 x 20] intentionally omitted <==

Basis for opinion

==> picture [31 x 20] intentionally omitted <==

Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $208,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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US LARGE GROWTH FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments

==> picture [31 x 20] intentionally omitted <==

Other Information

==> picture [30 x 20] intentionally omitted <==

Use of this Independent Auditor�s Report

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US LARGE GROWTH FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

==> picture [30 x 20] intentionally omitted <==

Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

==> picture [59 x 27] intentionally omitted <==

KPMG�

Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	219	52.52%	93,323	1.77%
1,001-5,000	154	36.93%	370,533	7.01%
5,001-10,000	29	6.95%	214,377	4.06%
10,001-50,000	11	2.64%	167,771	3.17%
50,001-100,000	3	0.72%	165,675	3.13%
Greater than 100,000	1	0.24%	4,273,565	80.86%
TOTAL	417	100.00%	5,285,244	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	4,273,565	80.86%
Benjamin David Bonoma & Sarah Victoria Bonoma	61,900	1.17%
David John Craig	52,500	0.99%
FNZ Custodians Limited	51,275	0.97%
Matthew Weir	22,000	0.42%
Karen Marie Fairweather	21,980	0.42%
Billy Cheung Services Limited	17,822	0.34%
Christopher Seller	15,869	0.30%
Arthur William Young & Peter Webster Wilson	15,134	0.29%
Timothy Orlando Reep & Kim Angela Orlando Reep	15,000	0.28%
Simon Roy Vannini	14,623	0.28%
Marcus Michael Yass	12,670	0.24%
Nigel Russell Fannin & Rosemary Anne O`Brien	11,000	0.21%
Karen Anne Tews & Christopher John Tews	10,969	0.21%
James Punnett	10,704	0.20%
Daniel John Brader	10,000	0.19%
Susan Rae Fawcet	9,900	0.19%
Kyra Marion Cooper	9,810	0.19%
Michael Rodney Ogle	9,800	0.19%
Rachel Marie Baxter	9,516	0.18%
	4,656,037	88.12%

SUBSTANTIAL PRODUCT HOLDERS

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DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial		Non-Benefcial
Paul Baldwin		0	0
Mark Peterson		0	0
Guy Elliffe		833*	0
John Williams		0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

The Special Division of the New	Zealand Markets Disciplinary Tribunal (Special Division) has granted, either fully, partially or subject to
conditions a number of waivers	to the fund.
The waiver decisions that Smartshares currently relies upon are available on smartshares.co.nz.
Special Division granted the following waivers from the Listing Rules that continue to be relied upon as at 31 March 2018:
3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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NZ Mid Cap Fund (MDZ)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the NZ Mid Cap Fund

Report to Unitholders HIGHLIGHTS Launch Date 16-Jun-97

	March 2018	March 2017
Net Tangible Assets (NTA)	$4.741	$4.140
Units On Issue	20,540,674	18,650,223
Funds Under Management	$97,392,784	$77,204,618
Gross Distribution	$0.183	$0.140
Gross Distribution Yield	3.86%	3.39%
Gross Return	19.20%	9.14%
Total Fund Charges	0.60%	0.75%
Distributions paid	Semi-annual

Sector Allocation

NTA Per Unit

==> picture [473 x 266] intentionally omitted <==

----- Start of picture text -----

6.00
Real Estate 21%
5.50 Industrials 19.6%
Utilities 16.6%
Health Care 12.2%
5.00
Consumer Discret. 10.4%
Consumer Staples 7.7%
4.50 Telecoms 4.6%
Financials 4.1%
4.00 I.T. 2.7%
Energy 1.1%
may 17 sep 17 jan 18
Growth of $1,000
12,000
9,000
6,000
3,000
0
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception, all distributions reinvested.

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MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

INVESTMENT CUSTODIAN

JBWere (NZ) Nominees Limited

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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NZ MID CAP FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The NZ Mid Cap Fund (the 'Fund') was created by an establishment deed dated 9 September 2016 between the Manager and Supervisor.

STATEMENT BY THE MANAGER

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager: Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Securities lending income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 6 Miscellaneous expenses Total expenses Profit before tax Income tax credit 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	Year Ended 31 March 2018 $'000 3,620 19 11,305 14,944 (610) (5) (615) 14,329 (50) 14,279 - 14,279 70.96	Period Ended 31 March 2017 $'000 1,347 5 6,029
		7,381
		(220) (1)
		(221)
		7,160 30
		7,190 -
		7,190
		38.93

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year/period Total comprehensive income for the year/period Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year/period	Year Ended 31 March 2018 $'000 77,377 14,279 14,761 (6,243) (2,656) 5,862 97,518	Period Ended 31 March 2017 $'000 - 7,190
		71,417 (389) (841)
		70,187
		77,377

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss Deferred tax asset Unsettled sales of investments TOTAL ASSETS LIABILITIES Management fees payable 6 Deferred tax liability Distribution payable to unitholders Funds held for unit purchases Other current liabilities Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 1,450 435 95,900 - 182 97,967 (5) (15) (3) (244) - (182) (449) 97,518 97,967	As At 31 March 2017 $'000 2,225 435 76,858 30 -
		79,548
		(5) - - (1,352) (1) (813)
		(2,171)
		77,377
		79,548

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received Securities lending income received *Cash was applied to:* Management fees paid Taxation paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments Net repayments from the Manager *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions paid to unitholders Distributions paid to unitholders Net cash flows from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of year/period Cash and cash equivalents at the end of year/period Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Decrease/(increase) in deferred tax asset Increase in deferred tax liability Increase in management fees payable Increase in receivables Net cash flows from operating activities	Year Ended 31 March 2018 $'000 3,621 18 (610) (5) (5) 3,019 28,769 - (36,098) (7,329) 6,215 (27) (2,653) 3,535 (775) 2,225 1,450 14,279 (11,305) 30 15 - - 3,019	Period Ended 31 March 2017 $'000 932 4 (215) - (1)
		720
		2,898 2 (4,079)
		(1,179)
		3,530 (5) (841)
		2,684
		2,225 -
		2,225
		7,190 (6,029) (30) - 5 (416)
		720

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The NZ Mid Cap Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purpose of the FMC Act 2013.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that tracks the S&P/NZX Mid Cap Index (the 'Index'). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the NZX Main Board on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to the year/period presented.

Comparative period

These financial statements are for the year ended 31 March 2018. The comparative figures are for the period 9 September 2016 to 31 March 2017.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

Cash and cash equivalents

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Deferred tax is recognised in respect of temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Current and deferred tax is measured using the tax rates enacted or substantively enacted at the reporting date. The temporary differences relate to accrued dividends. Tax losses that have arisen in prior years and the current reporting period have not been recognised as an asset in the Statement of Financial Position as it is unlikely that the tax losses will be able to be utilised in future reporting periods.

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Securities lending

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Segment information

The Fund operates solely in the business of investment management, investing in New Zealand equities. The Fund received all of its income from its New Zealand equity investments.

Changes in accounting policies and accounting standards adopted during the period

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior period.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact to the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax credit comprises: Current tax expense Prior period adjustment Deferred tax movement Total tax credit	31 March 2018 $'000 (5) (49) 4 (50)	31 March 2017 $'000 - - 30 30

The prima facie income tax expense on profit before tax reconciles to the income tax (credit)/expense in the financial statements as follows:


Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Gross up of imputation credits Less imputation credits and other tax credits Tax losses written off Prior period adjustment Income tax (expense)/credit as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Prior period adjustment Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	31 March 2018 $'000 14,329	31 March 2017 $'000 7,160 (2,005) 1,688 139 (81) (259) 289 - - 30 31 March 2017 $'000 - 30 - 30 31 March 2017 $'000 423
	(4,012) 3,164 140 (303)
	(1,011) 1,082 (72) (49)
	(50)

	31 March 2018 $'000 30 4 (49)
	(15)
	31 March 2018 $'000 519

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 - Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 - Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

The following table presents the fund's assets and liabilities measured and recognised at fair value as at 31 March 2018.

		31 March			31 March
		2018			2017
	Level 1	Level 3	Total	Level 1	Level 3	Total
	$'000	$'000	$'000	$'000	$'000	$'000
Financial assets
Equity securities	95,808	92	95,900	76,858	-	76,858

The Fund's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

As at 31 March 2018 there was one transfer (31 March 2017: none) from level 1 to level 3 totalling $92,000 (31 March 2017: $nil).

3. EARNINGS PER UNIT

The basic earnings/(losses) per unit (EPU) is calculated by dividing the net profit/(loss) attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	31 March 2018 14,279 20,124 70.96	31 March 2017 7,190 18,470
		38.93

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) November 2016 (paid December 2016) 31/03/2017 4.62 May 2017 (paid June 2017) 31/03/2018 6.08 November 2017 (paid December 2017) 31/03/2018 7.22	31 March 2018 $'000 - 1,151 1,505 2,656	31 March 2017 $'000 841 - -
		841

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 20,541,000 (31 March 2017: 18,650,000) units on issue.

The number of units allotted during the year ended 31 March 2018 was 3,200,000 (31 March 2017: 18,750,000) for total value of $14,761,000 (31 March 2017: $71,417,000).

The number of units redeemed during the year ended 31 March 2018 was 1,309,000 (31 March 2017: 100,000) for total value of $6,243,000 (31 March 2017: $389,000)

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Redemptions made during the year/period Units on issue at the end of the year/period	31 March 2018 '000 18,650 3,200 (1,309) 20,541	31 March 2017 '000 - 18,750 (100)
		18,650

The net asset value of each unit per the financial statements is $4.74748 (31 March 2017: $4.14890). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.The Fund holds shares in NZX Limited as NZX Limited shares constitute part of the Index that the Fund tracks.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by Smartshares Limited, a wholly owned subsidiary of NZX Limited, held 879,138 (31 March 2017: 2,067,765) units valued at $4,168,000 (31 March 2017: $8,560,000) in the Fund.

Distributions

The Fund paid distributions of $277,000 to SLI for the year ended 31 March 2018 (31 March 2017: $95,000). The balance remaining as payable at the end of the year was $nil (31 March 2017: $nil).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2018 amounted to $610,000 (31 March 2017: $220,000) with $5,000 (31 March 2017: $5,000) of outstanding accrued management fees due to the Manager at the end of the year.

For the year ended 31 March 2018, total direct purchase application fees amounted to $10,000 (31 March 2017: $4,000) and the total interest earned on cash at banks amounted to $29,000 (31 March 2017: $7,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS (Continued)

Other related party transactions

As at 31 March 2018 the Fund had a receivable from the Manager of $nil (31 March 2017: payable to the Manager of $1,000).

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

Total security lending fees for the year ended 31 March 2018 amounted to $19,000 (31 March 2017: $5,000), with the accrued fees due to the Fund of $2,000 (31 March 2017: $1,000). The fees earned by the Fund represent fifty percent of the total fee earned from the securities lending agreement the Fund has with NZCL. The other fifty percent is income of the Manager for administering the securities lending agreement.

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	31 March	31 March
	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,450	2,225
Receivables	435	435
Unsettled sales of investments	182	-
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	95,900	76,858
Other financial liabilities
Management fees payable	(5)	(5)
Distribution payable to unitholders	(3)	-
Funds held for unit purchases	(244)	(1,352)
Other current liabilities	-	(1)
Unsettled purchases of investments	(182)	(813)

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease of equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $9,590,000 (31 March 2017: $7,686,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. Maximum exposures to credit risk at the reporting date are:

the reporting date are:
	31 March	31 March
	2018	2017
	$'000	$'000
Cash and cash equivalents	1,450	2,225
Receivables	435	435
Unsettled sales of investments	182	-

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ') and Bank of New Zealand Limited ('BNZ').

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank at reporting date.

ANZ BNZ	31 March 2018 Balance $'000 Credit rating 388 AA- 1,062 AA- 1,450	31 March 2017 Balance $'000 Credit rating 1,495 AA- 730 AA- 2,225

7c. Liquidity risk

Liquidity risk is the risk that the Fund would encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

7d. Securities lending risk

At 31 March 2018, the single borrower of the Fund’s securities is New Zealand Clearing Limited (‘NZCL’), a wholly owned subsidiary of NZX Limited.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018, there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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Independent Auditor�s Report

To�the�unitholders�of�NZ�Mid�Cap�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�NZ�Mid�Cap�Fund��(the�fund) on� pages�3�to�15:

comply�with�New�Zealand�Equivalents�to International�Financial�Reporting�Standards�and International�Financial�Reporting�Standards.

==> picture [31 x 20] intentionally omitted <==

Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $980,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments

The�fund�s�portfolio�of�investments� Our�audit�procedures�included:� makes�up�97.9%�of�total�assets.�We� � documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� independent�auditor�on�the�design�and�operation�of�those�controls� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� � agreeing�the�31�March�2018�valuation�of�listed�equity�investments� materiality�in�the�context�of�the� to�externally�quoted�prices� financial�statements�as�a�whole,�they� are�considered�to�be�the�area�which� had�the�greatest�effect�on�our�overall� � agreeing�investment�holdings�to�confirmations�received�from�the� audit�strategy�and�allocation�of� administration�manager� resources�in�planning�and� completing�our�audit. We�did�not�identify�any�material�differences�in�relation�to�the�carrying� amount�of�investments.

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Other Information

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Use of this Independent Auditor�s Report

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

==> picture [30 x 20] intentionally omitted <==

Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	849	30.42%	322,379	1.56%
1,001-5,000	995	35.65%	2,577,255	12.49%
5,001-10,000	486	17.41%	3,464,776	16.79%
10,001-50,000	422	15.12%	7,758,742	37.59%
50,001-100,000	23	0.82%	1,554,283	7.53%
Greater than 100,000	16	0.57%	4,963,239	24.05%
TOTAL	2,791	100.00%	20,640,674	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	963,175	4.67%
Anna Elisabeth Minnaar	923,715	4.48%
Adminis Custodial Nominees Ltd Class D	452,729	2.19%
Custodial Services Limited	375,989	1.82%
FNZ Custodians Limited	250,806	1.22%
Custodial Services Limited	233,140	1.13%
New Zealand Law Foundation	214,252	1.04%
Custodial Services Limited	206,151	1.00%
Sharesies Nominee Limited	201,872	0.98%
Nicholas John Blythe	178,633	0.87%
Bnp Paribas Nominees NZ Limited	175,483	0.85%
Peter French Meyer	165,400	0.80%
Keith Orsbourne Ballagh & Josephine Jane Frances Ballagh	116,557	0.56%
Adminis Custodial Nominees Ltd Class C	113,278	0.55%
Citibank Nominees (Nz) Ltd	109,465	0.53%
Custodial Services Limited	106,736	0.52%
North Star Trustees Limited	105,433	0.51%
Custodial Services Limited	98,754	0.48%
Gwenda Heron Trustee Limited	96,889	0.47%
David Bruce Whyte & Jane Karinya Whyte	92,629	0.45%
	5,181,086	25.12%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial		Non-Benefcial
Paul Baldwin		0	0
Mark Peterson		0	0
Guy Elliffe		0	0
John Williams		0	0

WAIVERS GRANTED

The Special Division of the New	Zealand Markets Disciplinary Tribunal (Special Division) has granted, either fully, partially or subject to
conditions a number of waivers	to the fund.
The waiver decisions that Smartshares currently relies upon are available on smartshares.co.nz.
Special Division granted the following waivers from the Listing Rules that continue to be relied upon as at 31 March 2018:
3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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Australian Mid Cap Fund (MZY) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Australian Mid Cap Fund

Report to Unitholders HIGHLIGHTS Launch Date 27-Sep-04

	March 2018	March 2017
Net Tangible Assets (NTA)	$6.762	$6.356
Units On Issue	16,607,274	15,107,274
Funds Under Management	$112,300,380	$96,020,118
Gross Distribution	$0.131	$0.124
Gross Distribution Yield	1.93%	1.94%
Gross Return	8.52%	16.80%
Total Fund Charges	0.75%	0.75%
Distributions paid	Semi-annual

NTA Per Unit

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----- Start of picture text -----

8.00
7.50
7.00
6.50
6.00
may 17 sep 17 jan 18
NTA ($)
----- End of picture text -----

Sector Allocation

==> picture [113 x 99] intentionally omitted <==

==> picture [92 x 89] intentionally omitted <==

----- Start of picture text -----

Materials 23.9%
Financials 16.5%
Consumer Discret. 13.9%
Industrials 13.6%
Health Care 11.4%
I.T. 7.1%
Consumer Staples 7.1%
Utilities 3.3%
Real Estate 2.3%
Telecoms 0.9%
----- End of picture text -----

Growth of $1,000

==> picture [473 x 107] intentionally omitted <==

----- Start of picture text -----

4,000
3,000
2,000
1,000
0
2006 2008 2010 2012 2014 2016 2018
Value ($)
----- End of picture text -----

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MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

REGISTRAR

Link Market Services Limited

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Australian Mid Cap Fund (the 'Fund') was created by an establishment deed dated 9 September 2016 between the Manager and Supervisor.

STATEMENT BY THE MANAGER

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange gain Total income EXPENSES Management fees expense 6 Foreign exchange loss Interest expense Miscellaneous expenses Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	Year Ended 31 March 2018 $'000 4,283 6,440 - 10,723 (806) (4) (1) (10) (821) 9,902 (1,064) 8,838 - 8,838 54.53	Period Ended 31 March 2017 $'000 1,675 13,096 43
		14,814
		(263) - - (8)
		(271)
		14,543 (434)
		14,109 -
		14,109
		95.19

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year/period Total comprehensive income for the year/period Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year/period	Year Ended 31 March 2018 $'000 96,264 8,838 9,989 (522) (1,809) 7,658 112,760	Period Ended 31 March 2017 $'000 - 14,109
		82,961 - (806)
		82,155
		96,264

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Deferred tax payable Distribution payable to unitholders Funds held for unit purchases Unsettled purchases of investments Other current liabilities TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 1,918 543 111,412 113,873 (7) (910) (143) (1) (52) - - (1,113) 112,760 113,873	As At 31 March 2017 $'000 2,341 509 95,008
		97,858
		(6) (200) (124) - (1,099) (164) (1)
		(1,594)
		96,264
		97,858

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

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-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Interest paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments Net repayments from the Manager *Cash was applied to:* Purchase of investments Net repayments to the Manager Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions by unitholders Distributions paid to unitholders Net cash flows from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year/period Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year/period Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss/(gain) Increase in taxation payable Increase in deferred tax payable Increase in management fees payable Increase in receivables Net cash flows from operating activities	Year Ended 31 March 2018 $'000 4,192 (805) (278) (1) (10) 3,098 19,918 - (23,536) (1) (3,619) 1,897 (5) (1,808) 84 (437) 2,341 14 1,918 8,838 (6,440) 4 710 19 1 (34) 3,098	Period Ended 31 March 2017 $'000 1,272 (257) (55) - (8)
		952
		15,442 1 (16,093) -
		(650)
		2,847 - (808)
		2,039
		2,341 - -
		2,341
		14,109 (13,096) (43) 200 124 6 (348)
		952

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Australian Mid Cap Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Market Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purpose of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that tracks the S&P/ASX Mid Cap 50 Index (the ‘Index’). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the Australian Securities Exchange on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the year/period presented.

Basis of preparation

Comparative period

These financial statements are for the year ended 31 March 2018. The comparative figures are for the period 9 September 2016 to 31 March 2017.

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

The Fund is liable for tax at the prevailing company tax rate on taxable dividends (excluding dividends from investments in securities subject to the Fair Dividend Rate method (‘FDR’)) from its investment in securities after the deduction of management fees. For securities subject to FDR, the Fund is liable for tax based on the market value of the security. The Fund is able to utilise foreign withholding tax credits when they are available. The Fund pays tax to the extent that the foreign withholding tax credits do not cover the tax liability in full.

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Segment information

The Fund operates solely in the business of investment management, investing in Australian equities. The Fund receives all of its income from its Australian equity investments.

Changes in accounting policies and accounting standards adopted during the period

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior period.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

1. TAXATION
Tax expense comprises: Current tax expense Prior period adjustment Deferred tax movement Total tax expense	31 March 2018 $'000 (1,043) (2) (19) (1,064)	31 March 2017 $'000 (310 - (124
		(434

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Less imputation credits and other tax credits Prior period adjustment Income tax expense as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	31 March 2018 $'000 9,902 (2,773) 1,762 132 (190) (1,069) 7 (2) (1,064) 31 March 2018 $'000 (124) (19) (143) 31 March 2018 $'000 985	31 March 2017 $'000 14,543 (4,072) 3,667 46 (67) (426) (8) - (434) 31 March 2018 $'000 - (124)
		(124)
		31 March 2017 $'000 254

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	31 March 2018 8,838 16,207 54.53	31 March 2017 14,109 14,822
		95.19

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) November 2016 (paid December 2016) 31/03/2017 5.57 May 2017 (paid June 2017) 31/03/2018 5.65 June2017 (paid December 2017) 31/03/2018 5.72	31 March 2018 $'000 - 862 942 1,804	31 March 2017 $'000 808 - -
		808

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 16,607,000 (31 March 2017: 15,107,000) units on issue.

The number of units allotted during the year ended 31 March 2018 was 1,575,000 (31 March 2017: 15,107,000) for total value of $9,989,000 (31 March 2017: $82,961,000).

The number of units redeemed during the year ended 31 March 2018 was 75,000 (31 March 2017: nil) for total value of $522,000 (31 March 2017: $nil).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

5. UNITHOLDERS' FUNDS (Continued)

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Redemptions made during the year/period Units on issue at the end of the year/period	31 March 2018 '000 15,107 1,575 (75) 16,607	31 March 2017 '000 - 15,107 -
		15,107

The net asset value of each unit per the financial statements is $6.78991 (31 March 2017: $6.37215). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by Smartshares Limited, a wholly owned subsidiary of NZX Limited, held 8,018,706 (31 March 2017: 6,891,447) units valued at $54,223,000 (31 March 2017: $43,801,000) in the Fund.

Distributions

The Fund paid distributions of $847,000 to SLI for the year ended 31 March 2018 (31 March 2017: $354,000). The balance remaining as payable at the end of the year was $nil (31 March 2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $806,000 (31 March 2017: $263,000) with $7,000 (31 March 2017: $6,000) of outstanding accrued management fees due to the Manager at the end of the year.

For the year ended 31 March 2018, total direct purchase application fees amounted to $2,000 (31 March 2017: $1,000) and the total interest earned on cash at banks amounted to $18,000 (31 March 2017: $4,000).

Other related party transactions

As at 31 March 2018 the Fund had other payables to the Manager of $nil (31 March 2017: $1,000).

The audit fee paid by the Manager for the audit of the Fund for the the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

Financial instruments by category	31 March	31 March
	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,918	2,341
Receivables	543	509
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	111,412	95,008
Other financial liabilities
Management fees payable	(7)	(6)
Distribution payable to unitholders	(1)	-
Funds held for unit purchases	(52)	(1,099)
Unsettled purchases of investments	-	(164)
Other current liabilities	-	(1)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $11,141,000 (31 March 2017: $9,501,000).

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

	31 March	31 March
	2018	2017
	$'000	$'000
Cash and cash equivalents	1,918	2,341
Receivables	543	509

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac').

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank at the reporting date.

ANZ BNP Paribas Westpac	31 March 2018 Balance $'000 Credit rating 329 AA- 55 A 1,534 AA- 1,918	31 March 2017 Balance $'000 Credit rating 1,382 AA- 6 A 953 AA- 2,341

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that were settled by delivering cash or another financial asset.

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

A 10% strengthening/weakening of the New Zealand dollar against the Australian dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $11,197,000 (31 March 2017: $9,533,000).

The table below summarises the Fund’s exposure to currency risks.

The table below summarises the Fund’s exposure to currency risks.
	31 March	31 March
	2018	2017
	$'000	$'000
Australian dollar cash held (NZD)	48	6
Receivables	508	476
Investments in equity securities held at fair value through profit or loss	111,412	95,008
Unsettled purchases of investments	-	(164)

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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Independent Auditor�s Report

To�the�unitholders�of�Australian�Mid�Cap�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial We have audited the accompanying financial statements�of�Australian�Mid�Cap�Fund��(the�fund) statements�which�comprise: on�pages�3�to�14: the�statement�of�financial�position�as�at�31 present�fairly�in�all�material�respects�the�fund�s March�2018; financial�position�as�at�31�March�2018�and�its the�statement�of�comprehensive�income, financial�performance�and�cash�flows�for�the statement�of�changes�in�unitholders��funds�and year�ended�on�that�date;�and statement�of�cash�flows�for�the�year�then comply�with�New�Zealand�Equivalents�to ended;�and International�Financial�Reporting�Standards�and notes,�including�a�summary�of�significant International�Financial�Reporting�Standards. accounting�policies�and�other�explanatory information.

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $1,139,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments

The�fund�s�portfolio�of�investments� Our�audit�procedures�included:� makes�up�97.8%�of�total�assets.�We� � documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� independent�auditor�on�the�design�and�operation�of�those�controls� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� � agreeing�the�31�March�2018�valuation�of�listed�equity�investments� materiality�in�the�context�of�the� to�externally�quoted�prices� financial�statements�as�a�whole,�they� are�considered�to�be�the�area�which� had�the�greatest�effect�on�our�overall� � agreeing�investment�holdings�to�confirmations�received�from�the� audit�strategy�and�allocation�of� administration�manager� resources�in�planning�and� completing�our�audit. We�did�not�identify�any�material�differences�in�relation�to�the�carrying� amount�of�investments.

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Other Information

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Use of this Independent Auditor�s Report

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	749	36.99%	273,779	1.66%
1,001-5,000	863	42.62%	2,040,413	12.34%
5,001-10,000	248	12.25%	1,705,369	10.32%
10,001-50,000	155	7.65%	2,863,621	17.32%
50,001-100,000	4	0.20%	306,617	1.85%
Greater than 100,000	6	0.30%	9,342,475	56.51%
TOTAL	2,025	100.00%	16,532,274	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	7,965,278	48.18%
Anna Elisabeth Minnaar	655,843	3.97%
FNZ Custodians Limited	226,952	1.37%
Custodial Services Limited	164,163	0.99%
Philippa Jane Stubbins & Comac Trustee Limited	148,041	0.90%
Custodial Services Limited	90,920	0.55%
Custodial Services Limited	88,576	0.54%
Craigs Investment Partners Limited	74,419	0.45%
Citibank Nominees (Nz) Ltd	67,674	0.41%
Elwyn Dianne Mayall	52,702	0.32%
Catherine Mary Newman	46,870	0.28%
Gavin Ronald Walker & Susan Eleanor Walker & William Malcom Patterson	45,490	0.28%
Gavin Ronald Walker & Susan Eleanor Walker & William Malcolm Patterson	45,490	0.28%
Bnp Paribas Nominees NZ Limited	45,197	0.27%
Michael Geoffrey Byrne & Catherine Anne Byrne	43,476	0.26%
Ajd Family Nominees Limited	43,310	0.26%
North Star Trustees Limited	43,181	0.26%
Alastair John Kenworthy	42,875	0.26%
Christopher Graham Paice	41,816	0.25%
JBWERE (Nz) Nominees Limited	41,664	0.25%
	9,973,937	60.33%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	1,358*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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US Mid Cap Fund (USM) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the US Mid Cap Fund

Report to Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$4.207	$3.967
Units On Issue	13,329,500	7,184,500
Funds Under Management	$56,073,608	$28,503,339
Gross Distribution	-	-
Gross Distribution Yield	N/A	N/A
Gross Return	6.03%	13.50%
Total Fund Charges	0.51%	0.53%
Distributions paid	Semi-annual

NTA Per Unit

Sector Allocation

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----- Start of picture text -----

4.60
Financials 22.7%
4.40 Industrials 18.3%
Technology 14.9%
Consumer Goods 11.1%
4.20
Consumer Services 9.9%
Health Care 8.2%
4.00 Oil & Gas 5.9%
Utilities 4.6%
3.80 Basic Materials 3.8%
Telecoms 0.6%
may 17 sep 17 jan 18
NTA ($)
----- End of picture text -----

Growth of $1,000*

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----- Start of picture text -----

1,400
1,200
1,000
800
600
jan 16 jul 16 jan 17 jul 17 jan 18
Value ($)
----- End of picture text -----

*Since inception with all distributions reinvested.

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MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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US MID CAP FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The US Mid Cap Fund (the 'Fund') was created by an establishment deed dated 10 July 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 5 Foreign exchange loss Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 526 1,715 2,241 (142) (124) (266) 1,975 (401) 1,574 - 1,574 20.00	2017 $'000 420 3,496
		3,916
		(116) (5)
		(121)
		3,795 (328)
		3,467 -
		3,467
		48.92

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 4 Unitholders' funds at the end of the year	2018 $'000 28,656 1,574 26,688 26,688 56,918	2017 $'000 24,255 3,467
		934
		934
		28,656

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 5 Taxation payable Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 193 - 57,770 57,963 (2) (192) (15) (836) (1,045) 56,918 57,963	As At 31 March 2017 $'000 68 80 28,621
		28,769
		(1) (86) (26) -
		(113)
		28,656
		28,769

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Distributions paid to unitholders Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss Increase in taxation payable Increase/(decrease) in management fees payable Decrease/(increase) in receivables Net cash flows from operating activities	2018 $'000 527 (141) (216) 170 74 (518) (444) 399 - 399 125 68 193 1,574 (1,715) 124 106 1 80 170	2017 $'000 277 (124) (234)
		(81)
		- (404)
		(404)
		422 -
		422
		(63) 131
		68
		3,467 (3,496) 5 31 (8) (80)
		(81)

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The US Mid Cap Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in the Vanguard Mid Cap ETF (the 'Underlying Fund'), which tracks the CRSP US Mid Cap Index (the 'Underlying Index'). The Underlying Fund invests in securities contained in the Underlying Index broadly in proportion to the weightings of the Underlying Index. Investments are valued at fair value according to last traded market prices on the New York Stock Exchange Arca on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in the Underlying Fund - Vanguard Mid Cap ETF. The Fund receives all of its dividend income from this investment.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distribution and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (401) (401)	2017 $'000 (328) (328)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 1,975	2017 $'000 3,795 (1,063) 979 117 (361) (328) (328) 2017 $'000 338
	(553) 479 114 (441)
	(401) (401)
	2018 $'000 661

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 1,574 7,870 20.00	2017 3,467 7,087
		48.92

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 13,330,000 units on issue (31 March 2017: 7,185,000).

The number of units allotted during the year ended 31 March 2018 was 6,145,000 (31 March 2017: 256,000) for total value of $26,688,000 (31 March 2017: $934,000).

The number of units redeemed during the year ended 31 March 2018 was nil (31 March 2017: nil) for total value of $nil (31 March 2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Units on issue at the end of the year	2018 '000 7,185 6,145 13,330	2017 '000 6,929 256
		7,185

The net asset value of each unit per the financial statements is $4.26992 (31 March 2017: $3.98831). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

5. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 12,860,393 units (31 March 2017: 6,827,896) valued at $54,100,000 (31 March 2017: $27,089,000) in the Fund.

Distributions

The Fund paid distributions of $nil to SLI for the year ended 31 March 2018 (31 March 2017: $nil). The balance remaining as payable at the end of the year is $nil (31 March 2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $142,000 (31 March 2017: $116,000), with $2,000 (31 March 2017: $1,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $1,000 (31 March 2017: $2,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $1,000 (31 March 2017: $2,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	193	68
Receivables	-	80
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	57,770	28,621
Other financial liabilities
Management fees payable	(2)	(1)
Funds held for unit purchases	(15)	(26)
Unsettled purchases of investments	(836)	-

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

6a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $5,777,000 (31 March 2017: $2,862,000).

6b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

	2018	2017
	$'000	$'000
Cash and cash equivalents	193	68
Receivables	-	80

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac') .

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. FINANCIAL RISK MANAGEMENT (Continued)

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 15 AA- - A 178 AA- 193	2017 Balance $'000 Credit rating 26 AA- - A 42 AA- 68

6c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund's investment in the Vanguard Mid Cap ETF is considered readily realisable, as it is quoted on the New York Stock Exchange Arca. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning units in the Underlying Fund. Liquidity risk for the Fund is therefore low.

6d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds assets denominated in a currency other than the New Zealand dollar, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in US dollars will fluctuate due to changes in the exchange rate. The Fund’s policy is not to enter into any currency hedging transactions.

A 10% strengthening/weakening of the New Zealand dollar against the US dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $5,693,000 (31 March 2017: $2,870,000).

The table below summarises the Fund’s exposure to currency risks.

	2018	2017
	$'000	$'000
Receivables	-	80
Investments in equity securities held at fair value through profit or loss	57,770	28,621
Unsettled purchases of investments	(836)	-

7. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

8. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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Independent Auditor�s Report

To�the�unitholders�of�US�Mid�Cap�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�US�Mid�Cap�Fund��(the�fund) on� pages�3�to�13:

comply�with�New�Zealand�Equivalents�to International�Financial�Reporting�Standards�and International�Financial�Reporting�Standards.

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $580,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments

The�fund�s�portfolio�of�investments� Our�audit�procedures�included:� makes�up�99.7%�of�total�assets.�We� ��documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� independent�auditor�on�the�design�and�operation�of�those�controls� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� ��agreeing�the�31�March�2018�valuation�of�listed�equity�investments� materiality�in�the�context�of�the� to�externally�quoted�prices� financial�statements�as�a�whole,�they� are�considered�to�be�the�area�which� ��agreeing�investment�holdings�to�confirmations�received�from�the� had�the�greatest�effect�on�our�overall� administration�manager� audit�strategy�and�allocation�of� resources�in�planning�and� We�did�not�identify�any�material�differences�in�relation�to�the�carrying� completing�our�audit.� amount�of�investments.

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Other Information

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Use of this Independent Auditor�s Report

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	86	45.26%	36,487	0.27%
1,001-5,000	74	38.95%	172,155	1.27%
5,001-10,000	16	8.42%	118,019	0.87%
10,001-50,000	12	6.32%	257,301	1.89%
50,001-100,000	1	0.53%	87,710	0.65%
Greater than 100,000	1	0.53%	12,923,093	95.06%
TOTAL	190	100.00%	13,594,765	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	12,923,093	95.06%
Nigel Russell Fannin & Rosemary Anne O`Brien & Kevin Wayne Harborne	87,710	0.65%
Graham Edward Taylor & Heather Doreen Taylor & David Snedden	50,000	0.37%
Twominds Limited	32,900	0.24%
FNZ Custodians Limited	31,296	0.23%
Benjamin David Bonoma & Sarah Victoria Bonoma	28,000	0.21%
Paul Davidson Veitch & Timothy Robert Coleman & Duncan Dovico Trustees Limited	23,169	0.17%
William Hugh Walmsley	16,379	0.12%
Billy Cheung Services Limited	15,725	0.12%
Paul Anthony Wallace	14,161	0.10%
4 Eyes Limited	13,000	0.10%
Jennifer Elizabeth Barraclough	11,500	0.08%
Paul Edward Coll & Helen Marie Coll & Andrew John Anderson	10,615	0.08%
Jocelyn Jane Torrie	10,556	0.08%
Graham John Skipper & Anne Skipper & Gregory Mark Lay	10,000	0.07%
Roger Alan Johnston & Jeanette Johnston & Gellert Ivanson Trustee No 3 Limited	10,000	0.07%
James Punnett	9,479	0.07%
Paul Paget Mayhew	9,300	0.07%
Peter Hazael & Carol Hazael & Pkf Martin Jarvie Trustees Ltd	9,033	0.07%
Russell Donn De Silva	8,471	0.06%
	13,324,387	98.02%

SUBSTANTIAL PRODUCT HOLDERS

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DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	3,030*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

The Special Division of the New	Zealand Markets Disciplinary Tribunal (Special Division) has granted, either fully, partially or subject to
conditions a number of waivers	to the fund.
The waiver decisions that Smartshares currently relies upon are available on smartshares.co.nz.
Special Division granted the following waivers from the Listing Rules that continue to be relied upon as at 31 March 2018:
3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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US Small Cap Fund (USS)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the US Small Cap Fund

Report to Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$4.018	$3.794
Units On Issue	12,028,500	7,407,500
Funds Under Management	$48,334,723	$28,103,888
Gross Distribution	-	-
Gross Distribution Yield	N/A	N/A
Gross Return	5.91%	17.91%
Total Fund Charges	0.51%	0.53%
Distributions paid	Semi-annual

NTA Per Unit

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----- Start of picture text -----

4.80
4.40
4.00
3.60
3.20
may 17 sep 17 jan 18
NTA ($)
----- End of picture text -----

Sector Allocation

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----- Start of picture text -----

Financials 25%
Industrials 20.3%
Technology 12.6%
Consumer Services 12.1%
Health Care 10.3%
Consumer Goods 6.7%
Oil & Gas 4.6%
Basic Materials 4.4%
Utilities 3.6%
Telecoms 0.4%
----- End of picture text -----

Growth of $1,000*

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----- Start of picture text -----

2,000
1,600
1,200
800
400
jan 16 jul 16 jan 17 jul 17 jan 18
Value ($)
----- End of picture text -----

*Since inception with all distributions reinvested.

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US SMALL CAP FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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US SMALL CAP FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The US Small Cap Fund (the 'Fund') was created by an establishment deed dated 10 July 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for the year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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US SMALL CAP FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 5 Foreign exchange loss Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 486 1,732 2,218 (137) (87) (224) 1,994 (388) 1,606 - 1,606 20.21	2017 $'000 426 4,399
		4,825
		(114) (5)
		(119)
		4,706 (322)
		4,384 -
		4,384
		59.90

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 4 Redemptions by unitholders 4 Unitholders' funds at the end of the year	2018 $'000 28,317 1,606 19,068 - 19,068 48,991	2017 $'000 23,412 4,384
		587 (66)
		521
		28,317

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 5 Taxation payable Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 206 49,626 49,832 (2) (201) (22) (616) (841) 48,991 49,832	As At 31 March 2017 $'000 189 28,246
		28,435
		(1) (87) (30) -
		(118)
		28,317
		28,435

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Distributions paid to unitholders Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss Increase in taxation payable Increase/(decrease) in management fees payable Net cash flows from operating activities	2018 $'000 413 (136) (201) 76 - (589) (589) 530 - 530 17 189 206 1,606 (1,732) 87 114 1 76	2017 $'000 362 (122) (223)
		17
		- (244)
		(244)
		267 -
		267
		40 149
		189
		4,384 (4,399) 5 35 (8)
		17

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The US Small Cap Fund (the ‘Fund’) is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in the Vanguard Small Cap ETF (the 'Underlying Fund'), which tracks the CRSP US Small Cap Index (the 'Underlying Index'). The Underlying Fund invests in securities contained in the Underlying Index broadly in proportion to the weightings of the Underlying Index. Investments are valued at fair value according to last traded market prices on the New York Stock Exchange Arca on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in the Underlying Fund - Vanguard Small Cap ETF. The Fund receives all of its dividend income from this investment.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distribution and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (388) (388)	2017 $'000 (322) (322)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 1,994	2017 $'000 4,706 (1,318) 1,232 118 (354) (322) (322) 2017 $'000 337
	(558) 484 113 (427)
	(388) (388)
	2018 $'000 652

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 1,606 7,945 20.21	2017 4,384 7,319
		59.90

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 12,028,000 units on issue (31 March 2017: 7,407,000).

The number of units allotted during the year ended 31 March 2018 was 4,621,000 (31 March 2017: 165,000) for total value of $19,068,000 (31 March 2017: $587,000).

The number of units redeemed during the year ended 31 March 2018 was nil (31 March 2017: 20,000) for total value of $nil (31 March 2017: $66,000).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Redemptions made during the year Units on issue at the end of the year	2018 '000 7,407 4,621 - 12,028	2017 '000 7,262 165 (20)
		7,407

The net asset value of each unit per the financial statements is $4.07308 (31 March 2017: $3.82301). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

5. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 11,691,612 units (31 March 2017: 7,190,026) valued at $46,981,000 (31 March 2017: $27,279,000) in the Fund.

Distributions

The Fund paid distributions of $nil to SLI for the year ended 31 March 2018 (31 March 2017: $nil). The balance remaining as payable at the end of the year is $nil (31 March 2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $137,000 (31 March 2017: $114,000), with $2,000 (31 March 2017: $1,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $2,000 (31 March 2017: $2,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $2,000 (31 March 2017: $2,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (31 March 2017: $5,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	206	189
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	49,626	28,246
Other financial liabilities
Management fees payable	(2)	(1)
Funds held for unit purchases	(22)	(30)
Unsettled purchases of investments	(616)	-

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

6a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $4,963,000 (31 March 2017: $2,825,000).

6b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

	2018	2017
	$'000	$'000
Cash and cash equivalents	206	189

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac') .

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. FINANCIAL RISK MANAGEMENT (Continued)

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 22 AA- - A 184 AA- 206	2017 Balance $'000 Credit rating 30 AA- - A 159 AA- 189

6c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund's investment in the Vanguard Small Cap ETF is considered readily realisable, as it is quoted on the New York Stock Exchange Arca. In addition, liquidity risk associated with redemptions is managed by meeting redemptions in the form of baskets rather than cash. The Fund meets its redemption obligations by returning units in the Underlying Fund. Liquidity risk for the Fund is therefore low.

6d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds assets denominated in a currency other than the New Zealand dollar, the functional currency. It is therefore exposed to currency risk, as the value of the securities denominated in US dollars will fluctuate due to changes in the exchange rate. The Fund’s policy is not to enter into any currency hedging transactions.

A 10% strengthening/weakening of the New Zealand dollar against the US dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $4,901,000 (31 March 2017: $2,825,000).

The table below summarises the Fund’s exposure to currency risks.

	2018	2017
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	49,626	28,246
Unsettled purchases of investments	(616)	-

7. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (31 March 2017: none).

8. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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US SMALL CAP FUND

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Independent Auditor�s Report

To�the�unitholders�of�US�Small�Cap�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�US�Small�Cap�Fund��(the�fund) on� pages�3�to�13:

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $498,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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US SMALL CAP FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments The�fund�s�portfolio�of�investments� Our�audit�procedures�included:� makes�up�99.6%�of�total�assets.�We� ��documenting�and�understanding�the�processes�in�place�to�record� do�not�consider�these�investments� investment�transactions�and�to�value�the�portfolio.�This�included� to�be�at�high�risk�of�significant� evaluating�the�control�environment�in�place�at�the�administration� misstatement,�or�be�subject�to�a� manager�by�obtaining�and�reading�a�report�issued�by�an� significant�level�of�judgement,� independent�auditor�on�the�design�and�operation�of�those�control� because�they�comprise�liquid,�listed� investments.�However,�due�to�their� materiality�in�the�context�of�the� ��agreeing�the�31�March�2018�valuation�of�listed�equity�investments�to� financial�statements�as�a�whole,�they� externally�quoted�prices� are�considered�to�be�the�area�which� had�the�greatest�effect�on�our�overall� ��agreeing�investment�holdings�to�confirmations�received�from�the� audit�strategy�and�allocation�of� administration�manager� resources�in�planning�and� completing�our�audit.� We�did�not�identify�any�material�differences�in�relation�to�the�carrying� amount�of�investments.

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Other Information

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Use of this Independent Auditor�s Report

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US SMALL CAP FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	118	51.53%	51,334	0.42%
1,001-5,000	84	36.68%	178,154	1.45%
5,001-10,000	18	7.86%	112,367	0.92%
10,001-50,000	8	3.49%	154,733	1.26%
50,001-100,000	-	0.00%	-	0.00%
Greater than 100,000	1	0.44%	11,751,912	95.95%
TOTAL	229	100.00%	12,248,500	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	11,751,912	95.95%
Benjamin David Bonoma & Sarah Victoria Bonoma	30,000	0.24%
Rosalie Barnes	30,000	0.24%
FNZ Custodians Limited	28,197	0.23%
Billy Cheung Services Limited	16,655	0.14%
Investment Custodial Services Limited	14,195	0.12%
4 Eyes Limited	14,000	0.11%
Craigs Investment Partners Limited	11,647	0.10%
James Punnett	10,039	0.08%
Philip Arthur Wrigley	8,185	0.07%
Scott William Priestley & John William Priestley & Bassett Trustees 5 Limited	7,993	0.07%
Begg & Allen Properties Limited	7,514	0.06%
Izak Andries Delport Van Blerk & Petronella Erendina Van Blerk	7,392	0.06%
Geoffrey Ernest Tyler	7,266	0.06%
Anthony Charles Williams	6,636	0.05%
Robert Andrew Fry & Andrea Shelley Moses	6,055	0.05%
Timothy Richard Hitchings & Bridget Frances Williams & Raoul Edwin Neave	6,000	0.05%
Alison Clare Kuiper & Koenraad Kuiper	5,980	0.05%
Warren Noel Preston & Deborah Loive Preston & Karenza Marie Paine	5,900	0.05%
Timothy Orlando Reep & Kim Angela Orlando Reep	5,730	0.05%
	11,981,296	97.83%

SUBSTANTIAL PRODUCT HOLDERS

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DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	2,763*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

The Special Division of the New	Zealand Markets Disciplinary Tribunal (Special Division) has granted, either fully, partially or subject to
conditions a number of waivers	to the fund.
The waiver decisions that Smartshares currently relies upon are available on smartshares.co.nz.
Special Division granted the following waivers from the Listing Rules that continue to be relied upon as at 31 March 2018:
3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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NZ Property Fund (NPF) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the NZ Property Fund

Report to Unitholders HIGHLIGHTS Launch Date 12-Nov-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$1.078	$1.055
Units On Issue	38,761,748	46,480,787
Funds Under Management	$41,766,559	$49,025,308
Gross Distribution	$0.057	$0.037
Gross Distribution Yield	5.30%	3.52%
Gross Return	7.68%	-1.28%
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

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----- Start of picture text -----

NTA Per Unit Sector Allocation
1.20
1.16
Diversified REITs 38.7%
1.12 Retail REITs 21.8%
Office REITs 17.6%
Industrial REITs 11.9%
1.08
Health Care REITs 9.9%
1.04
may 17 sep 17 jan 18
Growth of $1,000
1,200
1,140
1,080
1,020
960
jan 16 jul 16 jan 17 jul 17 jan 18
NTA ($)
Value ($)
----- End of picture text -----*

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----- Start of picture text -----

NTA Per Unit
----- End of picture text -----

Growth of $1,000*

*Since inception with all distributions reinvested.

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NZ PROPERTY FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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NZ PROPERTY FUND

Smartshares Limited (the ‘Manager’) and Public Trust (the ‘Supervisor’) are parties to a master trust deed dated 24 June 2014 as amended and restated on 9 September 2016 (the 'Trust Deed'). The Trust Deed sets out the terms and conditions on which units in the funds within the Smartshares Exchange Traded Funds are offered for subscription, whether to the public or otherwise.

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The NZ Property Fund (the ‘Fund’) was created by an establishment deed dated 15 October 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager: Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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NZ PROPERTY FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 6 Total expenses Profit/(loss) before tax Income tax (expense)/credit 1 Profit/(loss) after tax Other comprehensive income Total comprehensive income/(loss) EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 2,490 1,281 3,771 (280) (280) 3,491 (98) 3,393 - 3,393 7.04	2017 $'000 2,249 (3,013)
		(764)
		(258)
		(258)
		(1,022) 72
		(950) -
		(950)
		(2.17)

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Unitholders' funds at the beginning of the year Total comprehensive income/(loss) for the year Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 49,025 3,393 9,607 (17,949) (2,310) (10,652) 41,766	2017 $'000 44,588 (950)
		6,687 - (1,300)
		5,387
		49,025

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss Deferred tax asset TOTAL ASSETS LIABILITIES Management fees payable 6 Funds held for unit purchases TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 1,068 40,821 - 41,889 (2) (121) (123) 41,766 41,889	As At 31 March 2017 $'000 1,275 47,789 97
		49,161
		(2) (134)
		(136)
		49,025
		49,161

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions paid to unitholders Distributions paid to unitholders Net cash flows from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of year Reconciliation of profit after tax to net cash flows from operating activities Profit/(loss) after tax Net changes in fair value of financial assets at fair value through profit or loss Decrease in deferred tax asset Increase in deferred tax liability Decrease in management fees payable Net cash flows from operating activities	2018 $'000 2,490 (280) (1) 2,209 2,024 (3,201) (1,177) 1,306 (235) (2,310) (1,239) (207) 1,275 1,068 3,393 (1,281) 97 - - 2,209	2017 $'000 2,248 (276) -
		1,972
		3,450 (4,418)
		(968)
		1,161 - (1,884)
		(723)
		281 994
		1,275
		(950) 3,013 - (73) (18)
		1,972

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The NZ Property Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund is governed by the Trust Deed dated 24 June 2014 as amended and restated on 9 September 2016 between the Manager and the Supervisor. The Fund was established on 15 October 2015 and commenced operation on 12 November 2015.

The Fund's units are quoted on the NZX Main Board. The fund is a passive investment fund that tracks the S&P/NZX Real Estate Select ('the Index'). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the NZX Main Board on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

The Fund issues units, which provide the holder with a beneficial interest in the Fund. The units can be put back to the Fund via a basket redemption, in accordance with the redemption rules as defined in the Trust Deed, for securities of the constituent companies in proportion to the index and of a proportion of cash held in the Fund.

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Distributions are made up of income received from the investments less expenses paid and allowances for future liabilities. Income from investments held is attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record date for the distributions are on the last business day of May and November in each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

The Fund is liable for tax at the prevailing company tax rate on taxable dividends from investments in securities after the deduction of management fees. The Fund is able to utilise imputation credits when they arise. The Fund pays tax to the extent that the imputation credits do not cover the tax liability in full.

Deferred tax is recognised in respect of temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Current and deferred tax is measured using the tax rates enacted or substantively enacted at the reporting date. Tax losses that have arisen in prior years and the current reporting period have not been recognised as an asset in the Statement of Financial Position as it is unlikely that the tax losses will be able to be utilised in future reporting periods.

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in New Zealand equities. The Fund received all of its income from its New Zealand equity investments.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact to the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

1. TAXATION
Tax credit/(expense) comprises: Current tax expense Prior period adjustment Deferred tax movement Total tax (expense)/credit	2018 $'000 (1) (97) -	2017 $'000 (1) - 73
	(98)	72

The prima facie income tax expense on profit/(loss) before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit/(loss) before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Gross up of imputation credits Less imputation credits and other tax credits Current year loss not recognised Prior period adjustment Income tax expense as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Prior period adjustment Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 3,491 (977) 359 394 (117) (341) 417 (77) (97) (98) 2018 $'000 97 - (97) - 2018 $'000 197	2017 $'000 (1,022) 286 (844) 255 (146) (449) 521 - - 72 2017 $'000 24 73 - 97 2017 $'000 283

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit/(loss) after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 3,393 48,226 7.04	2017 (950) 43,783
		(2.17)

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) June 2016 (paid July 2016) 31/03/2017 1.11 September 2016 (paid October 2016) 31/03/2017 1.15 November 2016 (paid December 2016) 31/03/2017 0.76 May 2017 (paid June 2017) 31/03/2018 2.36 November 2017 (paid December 2017 ) 31/03/2018 2.31	2018 $'000 - - - 1,105 1,205 2,310	2017 $'000 469 495 336 - -
		1,300

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 38,762,000 units on issue (2017: 46,481,000).

The number of units allotted during the year ended 31 March 2018 was 8,875,000 (2017: 6,125,000) for total value of $9,607,000 (2017: $6,687,000).

The number of units redeemed during the year ended 31 March 2018 was 16,594,000 (2017: nil) for total value of $17,949,000 (2017: $nil).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

5. UNITHOLDERS' FUNDS (Continued)

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Redemptions made during the year Units on issue at the end of the year	2018 '000 46,481 8,875 (16,594) 38,762	2017 '000 40,356 6,125 -
		46,481

The net asset value of each unit per the financial statements is $1.07750 (2017: $1.05473). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 28,263,506 units (2017: 41,238,787) valued at $30,454,000 (2017: $43,496,000) in the Fund.

Distributions

The Fund paid distributions of $1,993,000 to SLI for the year ended 31 March 2018 (2017: $312,000). The balance remaining as payable at the end of the year is $nil (2017: $nil).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2018 amounted to $280,000 (2017: $258,000) with $2,000 (2017: $2,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $13,000 (2017: $10,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $2,000 (2017: $3,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through the profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

Financial instruments by category

7. FINANCIAL RISK MANAGEMENT (Continued) Financial instruments by category
	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,068	1,275
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	40,821	47,789
Other financial liabilities
Management fees payable	(2)	(2)
Funds held for unit purchases	(121)	(134)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk and liquidity risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

Because the Fund tracks a New Zealand equity index and is fully invested in the index’s underlying New Zealand equity securities, the value of the Fund will move up and down with the New Zealand market.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $4,082,000 (2017: $4,779,000).

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

risk at the reporting date are:
	2018	2017
	$'000	$'000
Cash and cash equivalents	1,068	1,275

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ') and Westpac New Zealand Limited ('Westpac').

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank at reporting date.

ANZ Westpac	2018 Balance $'000 Credit rating 121 AA- 947 AA- 1,068	2017 Balance $'000 Credit rating 134 AA- 1,141 AA- 1,275

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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NZ PROPERTY FUND

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Independent Auditor�s Report

To�the�unitholders�of�NZ�Property�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�NZ�Property�Fund��(the�fund) on� pages�3�to�14:

We have audited the accompanying financial statements�which�comprise: the�statement�of�financial�position�as�at�31 March�2018;

the�statement�of�comprehensive�income, statement�of�changes�in�unitholders��funds�and statement�of�cash�flows�for�the�year�then ended;�and notes,�including�a�summary�of�significant accounting�policies�and�other�explanatory information.

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $419,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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NZ PROPERTY FUND

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Key Audit Matters

The key audit matter	How the matter was addressed in our audit
Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup97.5%oftotalassets.We donotconsidertheseinvestments tobeathighriskofsignificant misstatement,orbesubjecttoa significantlevelofjudgement, becausetheycompriseliquid,listed	�documentingandunderstandingtheprocessesinplacetorecord investmenttransactionsandtovaluetheportfolio.Thisincluded evaluatingthecontrolenvironmentinplaceattheadministration managerbyobtainingandreadingareportissuedbyanindependent auditoronthedesignandoperationofthosecontrols
investments.However,duetotheir materialityinthecontextofthe financialstatementsasawhole,they	�agreeingthe31March2018valuationoflistedequityinvestmentsto externallyquotedprices
areconsideredtobetheareawhich
hadthegreatesteffectonouroverall	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe
auditstrategyandallocationof	administrationmanager
resourcesinplanningand
completingouraudit.	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

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Other Information

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Use of this Independent Auditor�s Report

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NZ PROPERTY FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

�http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	86	22.28%	48,597	0.12%
1,001-5,000	148	38.34%	401,580	1.03%
5,001-10,000	63	16.32%	466,491	1.19%
10,001-50,000	69	17.88%	1,401,495	3.58%
50,001-100,000	11	2.85%	747,911	1.91%
Greater than 100,000	9	2.33%	36,070,674	92.17%
TOTAL	386	100.00%	39,136,748	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	28,099,090	71.80%
Investment Custodial Services Limited	4,002,304	10.23%
Investment Custodial Services Limited	1,124,275	2.87%
Investment Custodial Services Limited	832,746	2.13%
FNZ Custodians Limited	770,290	1.97%
Sharesies Nominee Limited	738,953	1.89%
Gary Anthony Vink & Jane Margaret Vink	248,904	0.64%
Alan James Phillips & Helen Marie Phillips	152,802	0.39%
Stephen Allan Mcgregor & Jane Costigan	101,310	0.26%
Lewis John Randal & John Gerard Phibbs	100,000	0.26%
Forsyth Barr Custodians Limited	96,942	0.25%
Gert Franz Johannes Starker & Elma Starker	83,704	0.21%
Anthony Smith & Barbara Smith	75,446	0.19%
Benjamin David Bonoma & Sarah Victoria Bonoma	63,288	0.16%
Brian Manson Barraclough	61,247	0.16%
Investment Custodial Services Limited	56,663	0.14%
Julie Anne Bodger	55,658	0.14%
Graham John Cockroft	52,289	0.13%
Gavin Matthew Irving & George Harold Irving	51,337	0.13%
George Harold Irving & Gavin Mathew Irving	51,337	0.13%
	36,818,585	94.08%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	6,402*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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Australian Property Fund (ASP) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Australian Property Fund

Report to Unitholders HIGHLIGHTS Launch Date 16-Dec-14

	March 2018	March 2017
Net Tangible Assets (NTA)	$1.307	$1.372
Units On Issue	25,172,531	33,548,089
Funds Under Management	$32,890,681	$46,030,489
Gross Distribution	$0.057	$0.024
Gross Distribution Yield	4.35%	1.74%
Gross Return	-0.85%	3.62%
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

Sector Allocation

NTA Per Unit

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----- Start of picture text -----

1.68
1.56
Diversified REITs 34.8%
1.44 Retail REITs 34.7%
Office REITs 15.2%
1.32 Specialised REITs 10.2%
Industrial REITs 5%
1.20
may 17 sep 17 jan 18
Growth of $1,000
1,440
1,320
1,200
1,080
960
jan 15 jul 15 jan 16 jul 16 jan 17 jul 17 jan 18
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception with all distributions reinvested.

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AUSTRALIAN PROPERTY FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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AUSTRALIAN PROPERTY FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Australian Property Fund (the 'Fund') was created by an establishment deed dated 1 December 2014 as amended on 5 June 2015 and amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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AUSTRALIAN PROPERTY FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange gain Total income EXPENSES Management fees expense 6 Miscellaneous expenses Total expenses Profit before tax Income tax expense 1 (Loss)/profit after tax Other comprehensive income Total comprehensive (loss)/income EARNINGS PER UNIT Basic and diluted (losses)/earnings per unit (cents per unit) 3	2018 $'000 2,632 (2,345) 13 300 (259) (2) (261) 39 (593) (554) - (554) (1.58)	2017 $'000 2,239 5 19
		2,263
		(236) (7)
		(243)
		2,020 (547)
		1,473 -
		1,473
		4.46

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Unitholders' funds at the beginning of the year Total comprehensive (loss)/income for the year Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 46,015 (554) 6,180 (17,083) (1,625) (12,528) 32,933	2017 $'000 42,793 1,473
		2,368 - (619)
		1,749
		46,015

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Taxation receivable Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Funds held for unit purchases Other current liabilities TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 903 80 - 32,107 33,090 (1) (26) (36) (94) (157) 32,933 33,090	As At 31 March 2017 $'000 566 82 281 45,108
		46,037
		(2) - (20) -
		(22)
		46,015
		46,037

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received Tax refund received *Cash was applied to:* Management fees paid Taxation paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions by unitholders Distributions paid to unitholders Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year Reconciliation of (loss)/profit after tax to net cash flows from operating activities (Loss)/profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange gain Increase/(decrease) in taxation payable Decrease/(increase) in taxation receivable Decrease in management fees payable Decrease/(increase) in receivables Increase in payable to Manager Net cash flows from operating activities	2018 $'000 2,349 93 (260) - (2) 2,180 5,114 (5,448) (334) 484 (403) (1,625) (1,544) 302 566 35 903 (554) 2,345 (13) 26 281 (1) 2 94 2,180	2017 $'000 1,948 - (254) (582) (7)
		1,105
		7,612 (7,864)
		(252)
		292 - (1,434)
		(1,142)
		(289) 855 -
		566
		1,473 (5) (19) (14) (281) (18) (31) -
		1,105

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Australian Property Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund is governed by the Trust Deed dated 24 June 2014 as amended and restated on 9 September 2016 between the Manager and the Supervisor. The Fund was established on 1 December 2014 and commenced operation on 16 December 2014.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that tracks the S&P/ASX 200 A-REIT Equal Weight Index (the ‘Index’). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the Australian Securities Exchange on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Distributions are made up of income received from the investments less expenses paid and allowances for future liabilities. Income from investments held is attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record dates for the distributions are the last business days of May and November each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

The Fund is liable for tax at the prevailing company tax rate on taxable dividends (excluding dividends from investments in securities subject to the Fair Dividend Rate method (‘FDR’)) from its investments in securities after the deduction of management fees. For securities subject to FDR, the Fund is liable for tax based on the market value of the security. The Fund is able to utilise foreign withholding tax credits when they arise. The Fund pays tax to the extent that the foreign withholding tax credits do not cover the tax liability in full.

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in Australian equities. The Fund received all of its income from its Australian equity investments.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Prior period adjustment Total tax expense	2018 $'000 (593) - (593)	2017 $'000 (545) (2) (547)

The prima facie income tax expense on loss before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Prior period adjustment Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 39 (11) (657) 732 (657) (593) - (593) 2018 $'000 26	2017 $'000 2,020 (566) 1 626 (606) (545) (2) (547) 2017 $'000 406

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

(Loss)/profit after tax ($'000) Weighted average number of units ('000) Basic and diluted (losses)/earnings per unit (cents per unit)	2018 (554) 35,152 (1.58)	2017 1,473 33,059
		4.46

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Distributions declared and paid
Year ended Distribution per unit (cents per unit) September 2016 (paid October 2016) 31/03/2017 1.86 May 2017 (paid June 2017) 31/03/2018 1.52 Nov 2017 (paid Dec 2017) 31/03/2018 3.01	2018 $'000 - 506 1,119 1,625	2017 $'000 619 - -
		619

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 25,173,000 units on issue (2017: 33,548,000).

The number of units allotted during the year ended 31 March 2018 was 4,750,000 (2017: 1,750,000) for total value of $6,180,000 (2017: $2,368,000).

The number of units redeemed during the year ended 31 March 2018 was 13,125,000 (2017: nil) for total value of $17,083,000 (2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Redemptions made during the year Units on issue at the end of the year	2018 '000 33,548 4,750 (13,125) 25,173	2017 '000 31,798 1,750 -
		33,548

The net asset value of each unit per the financial statements is $1.30827 (2017: $1.37162). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 23,310,995 (2017: 31,595,544) units valued at $30,458,000 (2017: $43,351,000) in the Fund.

Distributions

The Fund paid distribution of $1,546,000 to SLI for the year ended 31 March 2018 (2017: $nil). The balance remaining as payable at the end of the year is $nil (2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $259,000 (2017: $236,000), with $1,000 (2017: $2,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $8,000 (2017: $3,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $1,000 (2017: $2,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the the year ended 31 March 2018 was $5,000 (2017: $5,000).

As at 31 March 2018 the Fund had a payable to the Manager of $94,000 (2017: $nil) for tax payment made by the Manager on behalf of the Fund.

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	903	566
Receivables	80	82
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	32,107	45,108
Other financial liabilities
Management fees payable	(1)	(2)
Funds held for unit purchases	(36)	(20)
Other current liabilities	(94)	-

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $3,211,000 (2017: $4,511,000).

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

risk at the reporting date are:
	2018	2017
	$'000	$'000
Cash and cash equivalents	903	566
Receivables	80	82

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac').

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 36 AA- 14 A 853 AA- 903	2017 Balance $'000 Credit rating 20 AA- 2 A 544 AA- 566

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

A 10% strengthening/weakening of the New Zealand dollar against the Australian dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $3,220,000 (2017: $4,520,000).

The table below summarises the Fund’s exposure to currency risks.

The table below summarises the Fund’s exposure to currency risks.
	2018	2017
	$'000	$'000
Australian dollar cash held (NZD)	14	2
Receivables	80	82
Investments in equity securities held at fair value through profit or loss	32,107	45,108

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (2017: none).

9. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2018 there have been no matters or circumstances not dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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AUSTRALIAN PROPERTY FUND

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Independent Auditor�s Report

To�the�unitholders�of�Australian�Property�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial� statements�of�Australian�Property�Fund�(the�fund)� on�pages�3�to�14:�

We�have�audited�the�accompanying�financial� statements�which�comprise:�

the�statement�of�financial�position�as�at�31� March�2018;�
i. present�fairly�in�all�material�respects�the�fund�s� financial�position�as�at�31�March�2018�and�its� financial�performance�and�cash�flows�for�the� year�ended�on�that�date;�and�
the��statements�of�comprehensive�income,� statement�of�changes�in�unitholders��funds�and� cash�flows�for�the�year�then�ended;�and�

ii. comply�with�New�Zealand�Equivalents�to� International�Financial�Reporting�Standards�and� International�Financial�Reporting�Standards..�

notes,�including�a�summary�of�significant� accounting�policies�and�other�explanatory� information.�

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Basis for opinion

Our�firm�has�also�provided�other�assurance�services�to�the�fund�in�relation�to�reporting�to�the�supervisor.�Subject� to�certain�restrictions,�employees�of�our�firm�may�also�deal�with�the�fund�on�normal�terms�within�the�ordinary� course�of�trading�activities�of�the�business�of�the�fund.�These�matter�have�not�impaired�our�independence�as� auditor�of�the�fund.�The�firm�has�no�other�relationship�with,�or�interest�in,�the�fund�

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the� nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually� and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $331,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark� because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.��

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AUSTRALIAN PROPERTY FUND

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Key audit matters

Key�audit�matters�are�those�matters�that,�in�our�professional�judgement,�were�of�most�significance�in�our�audit� of�the�financial�statements�in�the�current�period.�We�summarise�below�those�matters�and�our�key�audit� procedures�to�address�those�matters�in�order�that�the�unitholders�as�a�body�may�better�understand�the�process� by�which�we�arrived�at�our�audit�opinion.�Our�procedures�were�undertaken�in�the�context�of�and�solely�for�the� purpose�of�our�statutory�audit�opinion�on�the�financial�statements�as�a�whole�and�we�do�not�express�discrete� opinions�on�separate�elements�of�the�financial�statements�

The key audit matter How the matter was addressed in our audit

Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup97.0%oftotalassets.We
donotconsidertheseinvestments	�documentingandunderstandingtheprocessesinplacetorecord
tobeathighriskofsignificant	investmenttransactionsandtovaluetheportfolio.Thisincluded
misstatement,orbesubjecttoa	evaluatingthecontrolenvironmentinplaceattheadministration
significantlevelofjudgement,	managerbyobtainingandreadingareportissuedbyan
becausetheycompriseliquid,listed investments.However,duetotheir	independentauditoronthedesignandoperationofthosecontrols
materialityinthecontextofthe	�agreeingthe31March2018valuationoflistedequityinvestments
financialstatementsasawhole,they	toexternallyquotedprices
areconsideredtobetheareawhich
hadthegreatesteffectonouroverall auditstrategyandallocationof	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe administrationmanager
resourcesinplanningand
completingouraudit.	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

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Other information

The�Manager,�on�behalf�of�the�fund,�are�responsible�for�the�other�information�included�in�the�entity�s�Annual� Report.�Other�information�may�include�the�Chairman�s�report,�fund�highlights,�disclosures�relating�to�corporate� governance�and�statutory�information.�Our�opinion�on�the�financial�statements�does�not�cover�any�other� information�and�we�do�not�express�any�form�of�assurance�conclusion�thereon.��

The�Annual�Report�is�expected�to�be�made�available�to�us�after�the�date�of�this�Independent�Auditor�s�Report.� Our�responsibility�is�to�read�the�Annual�Report�when�it�becomes�available�and�consider�whether�the�other� information�it�contains�is�materially�inconsistent�with�the�financial�statements,�or�our�knowledge�obtained�in�the� audit,�or�otherwise�appear�misstated.�If�so,�we�are�required�to�report�such�matters�to�the�Manager.�

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Use of this independent auditor�s report

This�independent�auditor�s�report�is�made�solely�to�the�unitholders�as�a�body.�Our�audit�work�has�been� undertaken�so�that�we�might�state�to�the�unitholders�those�matters�we�are�required�to�state�to�them�in�the� independent�auditor�s�report�and�for�no�other�purpose.�To�the�fullest�extent�permitted�by�law,�we�do�not�accept� or�assume�responsibility�to�anyone�other�than�the�unitholders�as�a�body�for�our�audit�work,�this�report,�or�any�of� the�opinions�we�have�formed.��

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AUSTRALIAN PROPERTY FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted� accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting� Standards);�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is� fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related� to�going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to� cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s responsibilities for the audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material� misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�independent�auditor�s�report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External� Reporting�Board�(XRB)�website�at:�

�http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG�

Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	50	19.76%	28,989	0.12%
1,001-5,000	100	39.53%	238,474	0.95%
5,001-10,000	49	19.37%	361,353	1.44%
10,001-50,000	49	19.37%	950,641	3.78%
50,001-100,000	3	1.19%	179,514	0.71%
Greater than 100,000	2	0.79%	23,413,560	93.01%
TOTAL	253	100.00%	25,172,531	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	23,310,995	92.60%
Tania Natasha Tikus Murray & Neil Lawrence Murray & Brown Street Trustees Ltd	102,565	0.41%
Neil Lawrence Murray & Tania Natasha Tikus Murray & Graeme William Elvin	69,499	0.28%
James Llewelyn Lloyd	56,000	0.22%
FNZ Custodians Limited	54,015	0.21%
Raymon Williams	49,984	0.20%
Benjamin David Bonoma & Sarah Victoria Bonoma	46,949	0.19%
Billy Cheung Services Limited	45,756	0.18%
Stephen John Kennedy & Maureen O`Callaghan	36,647	0.15%
Craig Plim & Fiona Margaret Plim	33,299	0.13%
John Francis Paige Hudson & Laura Margaret Victoria Hudson	30,000	0.12%
Nyala Limited	30,000	0.12%
Raymond Grant Krissansen & Ann Krissansen	25,803	0.10%
Michael Frederick Keith	24,734	0.10%
Cynthia Loretta Stacey	23,538	0.09%
Raymond Arthur Hancox & Janice Gay Hancox & Clive Basil Cleland	23,377	0.09%
John Lindsay Holland & Annabel Mary Holland	23,297	0.09%
Franick Holdings Limited	21,717	0.09%
Marjo Riitta Ramaekers	20,800	0.08%
Brendan Phillip Queree & Leonie Margaret Queree	20,103	0.08%
	24,049,078	95.53%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	5,546*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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Australian Resources Fund(ASR)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Australian Resources Fund

Report to Unitholders HIGHLIGHTS Launch Date 7-Apr-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$4.147	$3.742
Units On Issue	7,432,633	6,391,647
Funds Under Management	$30,825,062	$23,915,338
Gross Distribution	$0.103	$0.040
Gross Distribution Yield	2.48%	1.08%
Gross Return	13.87%	36.55%
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

Sector Allocation

NTA Per Unit

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----- Start of picture text -----

4.80
4.40
4.00
Materials 72.6%
Energy 27.4%
3.60
3.20
may 17 sep 17 jan 18
Growth of $1,000
1,440
1,200
960
720
480
jul 15 jan 16 jul 16 jan 17 jul 17 jan 18
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception with all distributions reinvested.

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AUSTRALIAN RESOURCES FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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AUSTRALIAN RESOURCES FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Australian Resources Fund (the 'Fund') was created by an establishment deed dated 19 March 2015 as amended on 5 June 2015 and amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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AUSTRALIAN RESOURCES FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange gain Total income EXPENSES Management fees expense 6 Foreign exchange loss Miscellaneous expenses Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 1,014 2,450 - 3,464 (145) (19) (1) (165) 3,299 (251) 3,048 - 3,048 45.30	2017 $'000 568 5,953 1
		6,522
		(112) - (1)
		(113)
		6,409 (136)
		6,273 -
		6,273
		100.00

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 23,907 3,048 4,397 (487) 3,910 30,865	2017 $'000 17,277 6,273
		538 (181)
		357
		23,907

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Taxation receivable Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Deferred tax liability 1 Funds held for unit purchases TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 570 202 - 30,322 31,094 (1) (138) (57) (33) (229) 30,865 31,094	As At 31 March 2017 $'000 315 132 38 23,503
		23,988
		(1) - (37) (43)
		(81)
		23,907
		23,988

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Distributions paid to unitholders Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss/(gain) Increase/(decrease) in taxation payable Increase in deferred tax liability Decrease/(increase) in taxation receivable Decrease in management fees payable (Increase)/decrease in receivables Net cash flows from operating activities	2018 $'000 941 (145) (52) (1) 743 2,016 (2,569) (553) 554 (487) 67 257 315 (2) 570 3,048 (2,450) 19 138 20 38 - (70) 743	2017 $'000 571 (119) (272) (1)
		179
		869 (1,094)
		(225)
		289 (291)
		(2)
		(48) 363 -
		315
		6,273 (5,953) (1) (136) 37 (38) (7) 4
		179

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Australian Resources Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund is governed by the Trust Deed dated 24 June 2014 as amended and restated on 9 September 2016 between the Manager and the Supervisor. The Fund was established on 19 March 2015 and commenced operation on 7 April 2015.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that tracks the S&P/ASX 200 Resources Index (the ‘Index’). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the Australian Securities Exchange on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Distributions are made up of income received from the investments less expenses paid and allowances for future liabilities. Income from investments held is attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record dates for the distributions are the last business days of May and November each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

The Fund is liable for tax at the prevailing company tax rate on taxable dividends (excluding dividends from investments in securities subject to the Fair Dividend Rate method (‘FDR’)) from its investments in securities after the deduction of management fees. For securities subject to FDR, the Fund is liable for tax based on the market value of the security. The Fund is able to utilise imputation credits and foreign withholding tax credits when they arise. The Fund pays tax to the extent that the imputation credits and foreign withholding tax credits do not cover the tax liability in full.

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in Australian equities. The Fund received all of its income from its Australian equity investments.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Prior period adjustment Deferred tax movement Total tax expense	2018 $'000 (231) - (20) (251)	2017 $'000 (139) 2 1 (136)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Prior period adjustment Income tax expense as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Prior period adjustment Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 3,299	2017 $'000 6,409 (1,795) 1,666 1 (10) (138) 2 (136) 2017 $'000 - 1 (38) (37) 2017 $'000 389
	(924) 684 1 (12)
	(251) -
	(251)
	2018 $'000 (37) (20) -
	(57)
	2018 $'000 389

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 3,048 6,728 45.30	2017 6,273 6,273
		100.00

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Distributions declared and paid
Year ended Distribution per unit (cents per unit) September 2016 (paid October 2016) 31/03/2017 1.01 November 2016 (paid December 2016) 31/03/2017 1.89 May 2017 (paid June 2017) 31/03/2018 4.73 November 2017 (paid December 2017) 31/03/2018 2.67	2018 $'000 - - 306 181 487	2017 $'000 63 118 - -
		181

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 7,433,000 units on issue (2017: 6,392,000).

The number of units allotted during the year ended 31 March 2018 was 1,041,000 (2017: 150,000) for total value of $4,397,000 (2017: $538,000).

The number of units redeemed during the year ended 31 March 2018 was nil (2017: nil) for total value of $nil (2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Units on issue at the end of the year	2018 '000 6,392 1,041 7,433	2017 '000 6,242 150 6,392

The net asset value of each unit per the financial statements is $4.15243 (2017: $3.74014). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 6,409,502 (2017: 6,021,077) units valued at $26,582,000 (2017: $22,529,000) in the Fund.

Distributions

The Fund paid distribution of $446,000 to SLI for the year ended 31 March 2018 (2017: $114,000). The balance remaining as payable at the end of the year is $nil (2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $145,000 (2017: $112,000), with $1,000 (2017: $1,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $3,000 (2017: $3,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $2,000 (2017: $1,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the the year ended 31 March 2018 was $5,000 (2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	570	315
Receivables	202	132
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	30,322	23,503
Other financial liabilities
Management fees payable	(1)	(1)
Funds held for unit purchases	(33)	(43)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $3,032,000 (2017: $2,350,000).

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

risk at the reporting date are:
	2018	2017
	$'000	$'000
Cash and cash equivalents	570	315
Receivables	202	132

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac').

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 33 AA- 14 A 523 AA- 570	2017 Balance $'000 Credit rating 43 AA- 23 A 249 AA- 315

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

A 10% strengthening/weakening of the New Zealand dollar against the Australian dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $3,054,000 (2017: $2,366,000).

The table below summarises the Fund’s exposure to currency risks.

The table below summarises the Fund’s exposure to currency risks.
	2018	2017
	$'000	$'000
Australian dollar cash held (NZD)	14	23
Receivables	202	132
Investments in equity securities held at fair value through profit or loss	30,322	23,503

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (2017: none).

9. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2018 there have been no matters or circumstances not dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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Independent Auditor�s Report

To�the�unitholders�of�Australian�Resources�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial� statements�of�Australian�Resources�Fund�(the�fund)� on�pages�3�to�14:�

We�have�audited�the�accompanying�financial� statements�which�comprise:�

the�statement�of�financial�position�as�at�31� March�2018;�
i. present�fairly�in�all�material�respects�the�fund�s� financial�position�as�at�31�March�2018�and�its� financial�performance�and�cash�flows�for�the� year�ended�on�that�date;�and�
the��statements�of�comprehensive�income,� statement�of�changes�in�unitholders��funds�and� cash�flows�for�the�year�then�ended;�and�

ii. comply�with�New�Zealand�Equivalents�to� International�Financial�Reporting�Standards�and� International�Financial�Reporting�Standards..�

notes,�including�a�summary�of�significant� accounting�policies�and�other�explanatory� information.�

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Basis for opinion

==> picture [30 x 20] intentionally omitted <==

Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the� nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually� and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $311,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark� because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.��

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AUSTRALIAN RESOURCES FUND

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Key audit matters

Key�audit�matters�are�those�matters�that,�in�our�professional�judgement,�were�of�most�significance�in�our�audit� of�the�financial�statements�in�the�current�period.�We�summarise�below�those�matters�and�our�key�audit� procedures�to�address�those�matters�in�order�that�the�unitholders�as�a�body�may�better�understand�the�process� by�which�we�arrived�at�our�audit�opinion.�Our�procedures�were�undertaken�in�the�context�of�and�solely�for�the� purpose�of�our�statutory�audit�opinion�on�the�financial�statements�as�a�whole�and�we�do�not�express�discrete� opinions�on�separate�elements�of�the�financial�statements�

The key audit matter	How the matter was addressed in our audit
Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup97.5%oftotalassets.We
donotconsidertheseinvestments	�documentingandunderstandingtheprocessesinplacetorecord
tobeathighriskofsignificant	investmenttransactionsandtovaluetheportfolio.Thisincluded
misstatement,orbesubjecttoa	evaluatingthecontrolenvironmentinplaceattheadministration
significantlevelofjudgement,	managerbyobtainingandreadingareportissuedbyan
becausetheycompriseliquid,listed investments.However,duetotheir	independentauditoronthedesignandoperationofthosecontrols
materialityinthecontextofthe	�agreeingthe31March2018valuationoflistedequityinvestments
financialstatementsasawhole,they	toexternallyquotedprices
areconsideredtobetheareawhich
hadthegreatesteffectonouroverall auditstrategyandallocationof	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe administrationmanager
resourcesinplanningand
completingouraudit.	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

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Other information

==> picture [30 x 19] intentionally omitted <==

Use of this independent auditor�s report

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AUSTRALIAN RESOURCES FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted� accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting� Standards);�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is� fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related� to�going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to� cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s responsibilities for the audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material� misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�independent�auditor�s�report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External� Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards�� For�and�on�behalf�of�

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KPMG�

Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	135	48.56%	48,372	0.66%
1,001-5,000	105	37.77%	254,536	3.50%
5,001-10,000	20	7.19%	133,200	1.83%
10,001-50,000	14	5.04%	232,690	3.20%
50,001-100,000	2	0.72%	114,020	1.57%
Greater than 100,000	2	0.72%	6,499,815	89.25%
TOTAL	278	100.00%	7,282,633	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	6,212,802	85.31%
Sharesies Nominee Limited	287,013	3.94%
JBWERE (Nz) Nominees Limited	57,567	0.79%
Jennifer Gaye Simpson	56,453	0.78%
FNZ Custodians Limited	34,260	0.47%
David John Craig	30,000	0.41%
Maria Joan Sandiford	20,105	0.28%
Kenneth John Simpson	16,835	0.23%
Benjamin David Bonoma & Sarah Victoria Bonoma	15,497	0.21%
FNZ Custodians Limited	15,422	0.21%
Claire Elizabeth Kathro	14,955	0.21%
Billy Cheung Services Limited	14,924	0.20%
Shaoming Yu	14,900	0.20%
Roger Alan Johnston & Jeanette Johnston & Gellert Ivanson Trustee No 3 Limited	12,727	0.17%
Craigs Investment Partners Limited	12,339	0.17%
David James Traiton Pearson	10,600	0.15%
Nelson Chao Tsung Liu & Judian Chen Chu Yu Liu	10,063	0.14%
Systems People Limited	10,063	0.14%
Peter Hazael & Carol Hazael & Pkf Martin Jarvie Trustees Ltd	9,493	0.13%
David Georges Andre Dromer	8,847	0.12%
	6,864,865	94.26%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	1,485*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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Australian Financials Fund (ASF) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Australian Financials Fund

Report to Unitholders HIGHLIGHTS Launch Date 7-Apr-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$7.254	$8.441
Units On Issue	4,190,468	2,787,352
Funds Under Management	$30,396,775	$23,528,829
Gross Distribution	$0.391	$0.400
Gross Distribution Yield	5.39%	4.74%
Gross Return	-9.70%	23.08%
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

NTA Per Unit

Sector Allocation

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----- Start of picture text -----

9.60
8.80
8.00
Financials 100%
7.20
6.40
may 17 sep 17 jan 18
NTA ($)
----- End of picture text -----

Growth of $1,000*

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----- Start of picture text -----

1,400
1,200
1,000
800
600
jul 15 jan 16 jul 16 jan 17 jul 17 jan 18
Value ($)
----- End of picture text -----

*Since inception with all distributions reinvested.

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AUSTRALIAN FINANCIALS FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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AUSTRALIAN FINANCIALS FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Australian Financials Fund (the 'Fund') was created by an establishment deed dated 19 March 2015 as amended on 5 June 2015 and amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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AUSTRALIAN FINANCIALS FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange gain Total income EXPENSES Management fees expense 6 Foreign exchange loss Miscellaneous expenses Total expenses (Loss)/profit before tax Income tax expense 1 (Loss)/profit after tax Other comprehensive income Total comprehensive (loss)/income EARNINGS PER UNIT Basic and diluted (losses)/earnings per unit (cents per unit) 3	2018 $'000 1,239 (3,799) - (2,560) (124) (67) - (191) (2,751) (271) (3,022) - (3,022) (101.44)	2017 $'000 1,139 3,429 3
		4,571
		(111) - (1)
		(112)
		4,459 (256)
		4,203 -
		4,203
		151.02

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Unitholders' funds at the beginning of the year Total comprehensive (loss)/income for the year Subscriptions from unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 23,522 (3,022) 10,808 (872) 9,936 30,436	2017 $'000 19,951 4,203
		171 (803)
		(632)
		23,522

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Deferred tax liability 1 Funds held for unit purchases TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 358 21 30,212 30,591 (1) (138) (6) (10) (155) 30,436 30,591	As At 31 March 2017 $'000 184 169 23,314
		23,667
		(1) (52) (42) (50)
		(145)
		23,522
		23,667

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

==> picture [144 x 66] intentionally omitted <==

==> picture [106 x 66] intentionally omitted <==

--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Distributions paid to unitholders Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year Reconciliation of (loss)/profit after tax to net cash flows from operating activities (Loss)/profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss/(gain) Increase/(decrease) in taxation payable (Decrease)/increase in deferred tax liability Decrease in management fees payable Decrease/(increase) in receivables Net cash flows from operating activities	2018 $'000 1,387 (124) (221) - 1,042 426 (898) (472) 500 (872) (372) 198 184 (24) 358 (3,022) 3,799 67 86 (36) - 148 1,042	2017 $'000 1,020 (119) (291) (1)
		609
		627 (744)
		(117)
		170 (1,034)
		(864)
		(372) 556 -
		184
		4,203 (3,429) (3) (78) 42 (8) (118)
		609

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Australian Financials Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that tracks the S&P/ASX 200 Financials Ex-AREIT Index (the ‘Index’). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the Australian Securities Exchange on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Distributions are made up of income received from the investments less expenses paid and allowances for future liabilities. Income from investments held is attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record dates for the distributions are the last business days of February and August each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

The Fund is liable for tax at the prevailing company tax rate on taxable dividends (excluding dividends from investments in securities subject to the Fair Dividend Rate method (‘FDR’)) from its investments in securities after the deduction of management fees. For securities subject to FDR, the Fund is liable for tax based on the market value of the security. The Fund is able to utilise imputation credits and foreign withholding tax credits when they arise. The Fund pays tax to the extent that the imputation credits and foreign withholding tax credits do not cover the tax liability in full.

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in Australian equities. The Fund received all of its income from its Australian equity investments.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Prior period adjustment Deferred tax movement Total tax expense	2018 $'000 (308) 1 36 (271)	2017 $'000 (228) - (28) (256)

The prima facie income tax expense on (loss)/profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense (Loss)/profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Gross up of imputation credits Less imputation credits and other tax credits Prior period adjustment Income tax expense as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Prior period adjustment Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 (2,751)	2017 $'000 4,459 (1,249) 961 7 (5) (11) (297) 41 - (256) 2017 $'000 - (28) (14) (42) 2017 $'000 83
	770 (1,064) (12) (4) (15)
	(325) 53 1
	(271)
	2018 $'000 (42) 36 -
	(6)
	2018 $'000 166

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

(Loss)/profit after tax ($'000) Weighted average number of units ('000) Basic and diluted (losses)/earnings per unit (cents per unit)	2018 (3,022) 2,979 (101.44)	2017 4,203 2,783
		151.02

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) June 2016 (paid July 2016) 31/03/2017 4.63 September 2016 (paid October 2016) 31/03/2017 8.97 February 2017 (paid March 2017) 31/03/2017 15.23 August 2017 (paid September 2017) 31/03/2018 15.04 February 2018 (paid March 2018) 31/03/2018 14.76	2018 $'000 - - - 431 441 872	2017 $'000 129 250 424 - -
		803

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 4,190,000 units on issue (2017: 2,787,000).

The number of units allotted during the year ended 31 March 2018 was 1,403,000 (2017: 25,000) for total value of $10,808,000 (2017: $171,000).

The number of units redeemed during the year ended 31 March 2018 was nil (2017: nil) for total value of $nil (2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Units on issue at the end of the year	2018 '000 2,787 1,403 4,190	2017 '000 2,762 25 2,787

The net asset value of each unit per the financial statements is $7.26396 (2017: $8.43990). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 3,969,012 (2017: 2,703,896) units valued at $28,790,000 (2017: $22,824,000) in the Fund.

Distributions

The Fund paid distribution of $819,000 to SLI for the year ended 31 March 2018 (2017: $412,000). The balance remaining as payable at the end of the year is $nil (2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $124,000 (2017: $111,000), with $1,000 (2017: $1,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $5,000 (2017: $6,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $1,000 (2017: $1,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the the year ended 31 March 2018 was $5,000 (2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	358	184
Receivables	21	169
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	30,212	23,314
Other financial liabilities
Management fees payable	(1)	(1)
Funds held for unit purchases	(10)	(50)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $3,021,000 (2017: $2,331,000).

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

	2018	2017
	$'000	$'000
Cash and cash equivalents	358	184
Receivables	21	169

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac').

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 10 AA- 2 A 346 AA- 358	2017 Balance $'000 Credit rating 50 AA- 18 A 116 AA- 184

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

A 10% strengthening/weakening of the New Zealand dollar against the Australian dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $3,023,000 (2017: $2,350,000).

The table below summarises the Fund’s exposure to currency risks.

	2018	2017
	$'000	$'000
Australian dollar cash held (NZD)	1	18
Receivables	21	169
Investments in equity securities held at fair value through profit or loss	30,212	23,314

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (2017: none).

9. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2018 there have been no matters or circumstances not dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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AUSTRALIAN FINANCIALS FUND

==> picture [52 x 726] intentionally omitted <==

Independent Auditor�s Report

To�the�unitholders�of�Australian�Financials�Fund�

Report on the financial statements

Opinion


Inouropinion,theaccompanyingfinancial		We have audited the accompanying financial
statementsofAustralianFinancialsFund(thefund)		statementswhichcomprise:
onpages3to14:		thestatementoffinancialpositionasat31
	presentfairlyinallmaterialrespectsthefund�s	March2018;
	financialpositionasat31March2018andits financialperformanceandcashflowsforthe yearendedonthatdate;and	thestatementofcomprehensiveincome, statementofchangesinunitholders�fundsand statementofcashflowsfortheyearthen
	complywithNewZealandEquivalentsto	ended;and
	InternationalFinancialReportingStandardsand InternationalFinancialReportingStandards.	notes,includingasummaryofsignificant accountingpoliciesandotherexplanatory
		information.

==> picture [31 x 20] intentionally omitted <==

Basis for opinion

==> picture [31 x 20] intentionally omitted <==

Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $306,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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AUSTRALIAN FINANCIALS FUND

==> picture [31 x 20] intentionally omitted <==

Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup98.8%oftotalassets.We
donotconsidertheseinvestments
tobeathighriskofsignificant misstatement,orbesubjecttoa significantlevelofjudgement, becausetheycompriseliquid,listed investments.However,duetotheir	�documentingandunderstandingtheprocessesinplacetorecord investmenttransactionsandtovaluetheportfolio.Thisincluded evaluatingthecontrolenvironmentinplaceattheadministration managerbyobtainingandreadingareportissuedbyanindependent auditoronthedesignandoperationofthosecontrols
materialityinthecontextofthe
financialstatementsasawhole,they	�agreeingthe31March2018valuationoflistedequityinvestmentsto
areconsideredtobetheareawhich	externallyquotedprices
hadthegreatesteffectonouroverall
auditstrategyandallocationof	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe
resourcesinplanningand	administrationmanager
completingouraudit.
	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

==> picture [31 x 20] intentionally omitted <==

Other Information

==> picture [30 x 20] intentionally omitted <==

Use of this Independent Auditor�s Report

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AUSTRALIAN FINANCIALS FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

==> picture [30 x 20] intentionally omitted <==

Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

�http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

==> picture [59 x 27] intentionally omitted <==

KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	78	57.78%	21,163	0.51%
1,001-5,000	41	30.37%	96,252	2.31%
5,001-10,000	13	9.63%	90,048	2.16%
10,001-50,000	2	1.48%	39,493	0.95%
50,001-100,000	0	0.00%	-	0.00%
Greater than 100,000	1	0.74%	3,918,512	94.07%
TOTAL	135	100.00%	4,165,468	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	3,918,512	94.07%
FNZ Custodians Limited	27,884	0.67%
Craigs Investment Partners Limited	11,609	0.28%
George Heatherwick Findlay	9,062	0.22%
Robert Lindsay Mellars	9,000	0.22%
David Georges Andre Dromer	8,681	0.21%
Dean Ashley Crow & Kim Ileene Crow & David Oliver Jones	7,787	0.19%
Gert Franz Johannes Starker & Elma Starker	7,355	0.18%
Billy Cheung Services Limited	6,673	0.16%
Albert James Renner	6,500	0.16%
John Alexander Jermyn & Edith Heather Jermyn	6,300	0.15%
Grant Mayson Scurr	6,093	0.15%
Hugh Duff Eaton & Jane Margaret Eaton	6,021	0.14%
Robert Ian Alistair Young	5,710	0.14%
Jenny Marie Cochrane & Aimee Lee Clarke & Finman Trustees Ltd	5,675	0.14%
Anthony Hastings Macrae & Wendy Nancy Jollasse Macrae	5,191	0.12%
FNZ Custodians Limited	4,913	0.12%
Kerry Michelle O`Connor	4,816	0.12%
Phillip John Tait & Darien Patricia Tait & Jenny Catherine Hirst	4,390	0.11%
Lincoln Lewis Evelyn Broad	4,344	0.10%
	4,066,516	97.65%

SUBSTANTIAL PRODUCT HOLDERS

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DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	1,043*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

The Special Division of the New	Zealand Markets Disciplinary Tribunal (Special Division) has granted, either fully, partially or subject to
conditions a number of waivers	to the fund.
The waiver decisions that Smartshares currently relies upon are available on smartshares.co.nz.
Special Division granted the following waivers from the Listing Rules that continue to be relied upon as at 31 March 2018:
3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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NZ Dividend Fund (DIV)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the NZ Dividend Fund

Report to Unitholders HIGHLIGHTS Launch Date 7-Apr-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$1.071	$1.108
Units On Issue	21,282,211	30,712,302
Funds Under Management	$22,789,843	$34,029,893
Gross Distribution	$0.073	$0.064
Gross Distribution Yield	6.83%	5.80%
Gross Return	3.18%	7.61%
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

==> picture [452 x 124] intentionally omitted <==

----- Start of picture text -----

NTA Per Unit Sector Allocation
1.17
Utilities 38%
1.14 Industrials 11.9%
Telecoms 12.9%
1.11 Consumer Discret. 11%
Real Estate 10.4%
Materials 7.9%
1.08
Energy 5.3%
Financials 1.4%
1.05 Consumer Staples 1.2%
may 17 sep 17 jan 18
NTA ($
----- End of picture text -----

NTA Per Unit

Growth of $1,000*

==> picture [473 x 99] intentionally omitted <==

----- Start of picture text -----

1,600
1,400
1,200
1,000
800
jul 15 jan 16 jul 16 jan 17 jul 17 jan 18
Value ($)
----- End of picture text -----

*Since inception with all distributions reinvested.

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MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand This is also the address of the registered office.

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

INVESTMENT CUSTODIAN

JBWere (NZ) Nominees Limited

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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NZ DIVIDEND FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The NZ Dividend Fund (the ‘Fund’) was created by an establishment deed dated 19 March 2015 as amended on 5 June 2015 and amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager: Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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NZ DIVIDEND FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Securities lending income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 6 Miscellaneous expenses Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 1,753 8 (846) 915 (192) (2) (194) 721 (1) 720 - 720 2.29	2017 $'000 1,803 9 (124)
		1,688
		(158) (1)
		(159)
		1,529 (38)
		1,491 -
		1,491
		5.62

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 34,029 720 8,234 (18,451) (1,742) (11,959) 22,790	2017 $'000 24,806 1,491
		8,943 - (1,211)
		7,732
		34,029

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss Taxation receivable Deferred tax asset Unsettled sales of investments TOTAL ASSETS LIABILITIES Management fees payable 6 Deferred tax liability 1 Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 389 263 22,312 3 2 1,760 24,729 (1) - (178) (1,760) (1,939) 22,790 24,729	As At 31 March 2017 $'000 922 414 33,798 20 - -
		35,154
		(2) (14) (566) (543)
		(1,125)
		34,029
		35,154

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received Securities lending income received *Cash was applied to:* Management fees paid Taxation paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions paid to unitholders Distributions paid to unitholders Net cash flows from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Decrease/(increase) in taxation receivable Increase in deferred tax asset Decrease in taxation payable (Decrease)/increase in deferred tax liability Decrease in management fees payable Decrease/(increase) in receivables Net cash flows from operating activities	2018 $'000 1,904 8 (193) - (2) 1,717 9,129 (12,311) (3,182) 2,733 (59) (1,742) 932 (533) 922 389 720 846 17 (2) - (14) (1) 151 1,717	2017 $'000 1,691 9 (167) (78) (1)
		1,454
		7,890 (12,513)
		(4,623)
		4,968 - (1,211)
		3,757
		588 334
		922
		1,491 124 (20) - (34) 14 (9) (112)
		1,454

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The NZ Dividend Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund's units are quoted on the NZX Main Board. The fund is a passive investment fund that tracks the S&P/NZX 50 High Dividend Index ('the Index'). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the NZX Main Board on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

The Fund issues units, which provide the holder with a beneficial interest in the Fund. The units can be put back to the Fund via a basket redemption, in accordance with the redemption rules as defined in the Trust Deed, for securities of the constituent companies in proportion to the index and of a proportion of cash held in the Fund.

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Distributions are made up of income received from the investments less expenses paid and allowances for future liabilities. Income from investments held is attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record date for the distributions are on the last business day of May and November in each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Securities lending

Segment information

The Fund operates solely in the business of investment management, investing in New Zealand equities. The Fund received all of its income from its New Zealand equity investments.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact to the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

1. TAXATION
Tax expense comprises: Current tax expense Deferred tax movement Total tax expense	2018 $'000 (17) 16	2017 $'000 (54) 16
	(1)	(38)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Gross up of imputation credits Less imputation credits and other tax credits Income tax expense as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Prior period adjustment Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 721	2017 $'000 1,529 (428) (35) 63 (141) (541) 503 (38) 2017 $'000 - 16 (30) (14) 2017 $'000 352
	(202) (237) (16) (177)
	(632) 631
	(1)
	2018 $'000 (14) 16 -
	2
	2018 $'000 250

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 720 31,432 2.29	2017 1,491 26,535
		5.62

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) June 2016 (paid July 2016) 31/03/2017 2.15 November 2016 (paid December 2016) 31/03/2017 2.48 May 2017 (paid June 2017) 31/03/2018 2.37 November 2017 (paid December 2017) 31/03/2018 2.90	2018 $'000 - - 750 992 1,742	2017 $'000 497 714 - -
		1,211

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 21,282,000 units on issue (2017: 30,712,000).

The number of units allotted during the year ended 31 March 2018 was 7,375,000 (2017: 8,000,000) for total value of $8,234,000 (2017: $8,943,000).

The number of units redeemed during the year ended 31 March 2018 was 16,805,000 (2017: nil) for total value of $18,451,000 (2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Redemptions made during the year Units on issue at the end of the year	2018 '000 30,712 7,375 (16,805) 21,282	2017 '000 22,712 8,000 -
		30,712

The net asset value of each unit per the financial statements is $1.07086 (2017: $1.10800). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 2,834,876 units (2017: 19,626,510) valued at $3,036,000 (2017: $21,747,000) in the Fund.

Distributions

The Fund paid distributions of $1,033,000 to SLI for the year ended 31 March 2018 (2017: $486,000). The balance remaining as payable at the end of the year is $nil (2017: $nil).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2018 amounted to $192,000 (2017: $158,000) with $1,000 (2017: $2,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $13,000 (2017: $13,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $6,000 (2017: $9,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (2017: $5,000).

The Fund has a securities lending agreement with New Zealand Clearing Limited ('NZCL'), a wholly owned subsidiary of NZX Limited. Securities lent are backed against the collateral of the borrower. As at 31 March 2018 the value of securities the Fund had on loan to NZCL was $724,000 (2017: $861,000). Total security lending fees for the year ended 31 March 2018 amounted to $8,000 (2017: $9,000), with the accrued fees due to the Fund of $1,000 (2017: $1,000). The fees earned by the Fund represent fifty percent of the total fee earned from the securities lending agreement the Fund has with NZCL. The other fifty percent is income of the Manager for administering the securities lending agreement.

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through the profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category

Financial instruments by category
	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	389	922
Receivables	263	414
Unsettled sales of investments	1,760	-
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	22,312	33,798

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

Financial instruments by category

Financial instruments by category
	2018	2017
	$'000	$'000
Other financial liabilities
Management fees payable	(1)	(2)
Funds held for unit purchases	(178)	(566)
Unsettled purchases of investments	(1,760)	(543)

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $2,231,000 (2017: $3,380,000).

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

risk at the reporting date are:
	2018	2017
	$'000	$'000
Cash and cash equivalents	389	922
Receivables	263	414
Unsettled sales of investments	1,760	-

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ') and Bank of New Zealand Limited ('BNZ').

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank at reporting date.

ANZ BNZ	2018 Balance $'000 Credit rating 178 AA- 211 AA- 389	2017 Balance $'000 Credit rating 566 AA- 356 AA- 922

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

7d. Securities lending risk

A number of possible risks arise from the securities lending program implemented for the Fund. These include, but are not limited to, the risk that a borrower of securities could fail to deliver equivalent securities on termination of a loan or encounter financial difficulties (resulting in delays in or failure to redeliver securities to the Fund), the risk of failure of the central counterparty settlement system, the risk that the contract relating to the lending will for whatever reason not be legally enforceable or documented correctly (resulting, for example, in an inability to enforce an obligation to re-transfer securities) and the risk that the operational procedures adopted in respect of the Fund could result in errors, fraud or misconduct that cause a loss to the Fund.

At 31 March 2018, the single borrower of the Fund’s securities is New Zealand Clearing Limited (‘NZCL’), a wholly owned subsidiary of NZX Limited.

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (2017: none).

9. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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Independent Auditor�s Report

To�the�unitholders�of�NZ�Dividend�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�NZ�Dividend�Fund��(the�fund) on� pages�3�to�14:

We have audited the accompanying financial statements�which�comprise: the�statement�of�financial�position�as�at�31 March�2018;

present�fairly�in�all�material�respects�the�fund�s March�2018; financial�position�as�at�31�March�2018�and�its the�statement�of�comprehensive�income, financial�performance�and�cash�flows�for�the statement�of�changes�in�unitholders��funds�and year�ended�on�that�date;�and statement�of�cash�flows�for�the�year�then comply�with�New�Zealand�Equivalents�to ended;�and International�Financial�Reporting�Standards�and notes,�including�a�summary�of�significant International�Financial�Reporting�Standards. accounting�policies�and�other�explanatory information.

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $247,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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Key Audit Matters

The key audit matter	How the matter was addressed in our audit
Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup90.2%oftotalassets.We donotconsidertheseinvestments tobeathighriskofsignificant misstatement,orbesubjecttoa significantlevelofjudgement, becausetheycompriseliquid,listed	�documentingandunderstandingtheprocessesinplacetorecord investmenttransactionsandtovaluetheportfolio.Thisincluded evaluatingthecontrolenvironmentinplaceattheadministration managerbyobtainingandreadingareportissuedbyanindependent auditoronthedesignandoperationofthosecontrols
investments.However,duetotheir materialityinthecontextofthe financialstatementsasawhole,they	�agreeingthe31March2018valuationoflistedequityinvestmentsto externallyquotedprices
areconsideredtobetheareawhich
hadthegreatesteffectonouroverall	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe
auditstrategyandallocationof	administrationmanager
resourcesinplanningand
completingouraudit.	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

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Other Information

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Use of this Independent Auditor�s Report

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

�http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	237	22.19%	143,179	0.66%
1,001-5,000	409	38.30%	1,068,199	4.96%
5,001-10,000	154	14.42%	1,183,041	5.49%
10,001-50,000	219	20.51%	5,091,147	23.64%
50,001-100,000	28	2.62%	2,075,413	9.64%
Greater than 100,000	21	1.97%	11,971,232	55.60%
TOTAL	1,068	100.00%	21,532,211	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018
Full Name	Total	Percentage
Investment Custodial Services Limited	2,956,306	13.73%
Superlife Nominees Limited	2,759,876	12.82%
Gary Anthony Vink & Jane Margaret Vink	1,490,040	6.92%
JBWERE (Nz) Nominees Limited	946,190	4.39%
FNZ Custodians Limited	580,183	2.69%
Joanna Marie Deighton	451,570	2.10%
My Tax Back NZ Limited	436,681	2.03%
Martin Clive Farrell & Karin Joanne Farrell & Jill Maree Darragh	353,328	1.64%
Nicholas John Blythe	297,467	1.38%
Martin Clive Farrell & Denise Ruth Farrell & Richard Heywood Taylor	219,243	1.02%
Benjamin David Bonoma & Sarah Victoria Bonoma	205,149	0.95%
Matthew Weir	182,728	0.85%
Alan James Phillips & Helen Marie Phillips	143,775	0.67%
Jonathan Schwass & Ann Howarth	142,626	0.66%
Barbara Anne Bridger	133,086	0.62%
Forsyth Barr Custodians Limited	125,861	0.58%
Donald John Lyon	120,000	0.56%
Theodore Francis Duyvestyn & Maree Margaret Ashton & Graham Brown & Co Trustees
Limited	112,635	0.52%
Investment Custodial Services Limited	111,367	0.52%
MLT Investments Limited	101,705	0.47%
	11,869,816	55.12%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial		Non-Benefcial
Paul Baldwin		0	0
Mark Peterson		0	0
Guy Elliffe		0	0
John Williams		0	0

WAIVERS GRANTED

The Special Division of the New	Zealand Markets Disciplinary Tribunal (Special Division) has granted, either fully, partially or subject to
conditions a number of waivers	to the fund.
The waiver decisions that Smartshares currently relies upon are available on smartshares.co.nz.
Special Division granted the following waivers from the Listing Rules that continue to be relied upon as at 31 March 2018:
3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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Australian Dividend Fund (ASD) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Australian Dividend Fund

Report to Unitholders HIGHLIGHTS Launch Date 16-Dec-14

	March 2018	March 2017
Net Tangible Assets (NTA)	$1.586	$1.771
Units On Issue	17,929,541	39,790,493
Funds Under Management	$28,428,722	$70,486,888
Gross Distribution	$0.074	$0.076
Gross Distribution Yield	4.67%	4.27%
Gross Return	-6.49%	17.20%
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

NTA Per Unit

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----- Start of picture text -----

Sector Allocation
----- End of picture text -----

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----- Start of picture text -----

1.80
1.74 Financials 30.2%
Materials 23.8%
Consumer Staples 21.6%
1.68
Consumer Discret. 11.6%
Industrials 6.1%
1.62 Utilities 5.7%
Health Care 0.7%
1.56 Telecoms 0.3%
may 17 sep 17 jan 18
NTA ($)
----- End of picture text -----

Growth of $1,000*

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----- Start of picture text -----

1,600
1,400
1,200
1,000
800
jan 15 jul 15 jan 16 jul 16 jan 17 jul 17 jan 18
Value ($)
----- End of picture text -----

*Since inception with all distributions reinvested.

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AUSTRALIAN DIVIDEND FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

REGISTRAR

Link Market Services Limited

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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AUSTRALIAN DIVIDEND FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Australian Dividend Fund (the 'Fund') was created by an establishment deed dated 19 March 2015 as amended on 5 June 2015 and amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

In our opinion, the accompanying financial statements and notes are prepared in accordance with Generally Accepted Accounting Practice in New Zealand ('NZ GAAP'), and fairly present the financial position of the Fund as at 31 March 2018, and the results of its financial performance and cash flows for year ended 31 March 2018 in accordance with the requirement of the Trust Deed.

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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AUSTRALIAN DIVIDEND FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 6 Foreign exchange loss Miscellaneous expenses Total expenses (Loss)/profit before tax Income tax expense 1 (Loss)/profit after tax Other comprehensive income Total comprehensive (loss)/income EARNINGS PER UNIT Basic and diluted (losses)/earnings per unit (cents per unit) 3	2018 $'000 4,011 (6,359) (2,348) (375) (283) (17) (675) (3,023) (941) (3,964) - (3,964) (9.96)	2017 $'000 3,623 7,052
		10,675
		(339) (1) (8)
		(348)
		10,327 (747)
		9,580 -
		9,580
		24.27

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Unitholders' funds at the beginning of the year Total comprehensive (loss)/income for the year Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 70,465 (3,964) 4,935 (40,596) (2,374) (38,035) 28,466	2017 $'000 61,066 9,580
		1,972 - (2,153)
		(181)
		70,465

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss TOTAL ASSETS LIABILITIES Management fees payable 6 Taxation payable Deferred tax liability 1 Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 746 557 27,872 29,175 (1) (474) (156) (78) - (709) 28,466 29,175	As At 31 March 2017 $'000 1,174 570 69,119
		70,863
		(3) (232) (91) (23) (49)
		(398)
		70,465
		70,863

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received *Cash was applied to:* Management fees paid Taxation paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions by unitholders Distributions paid to unitholders Net cash flows from financing activities Net (Decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year Reconciliation of (loss)/profit after tax to net cash flows from operating activities (Loss)/profit after tax Net changes in fair value of financial assets at fair value through profit or loss Foreign exchange loss Increase/(decrease) in taxation payable Increase in deferred tax liability Decrease in management fees payable Decrease in receivables Net cash flows from operating activities	2018 $'000 3,984 (377) (594) (17) 2,996 34,381 (36,318) (1,937) 1,682 (765) (2,374) (1,457) (398) 1,174 (30) 746 (3,964) 6,359 283 242 65 (2) 13 2,996	2017 $'000 3,822 (364) (704) (8)
		2,746
		34,724 (35,339)
		(615)
		655 - (2,351)
		(1,696)
		435 733 6
		1,174
		9,580 (7,052) 1 (87) 91 (25) 238
		2,746

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Australian Dividend Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purposes of the FMC Act 2013.

The Fund’s units are quoted on the NZX Main Board. The Fund is a passive investment fund that tracks the S&P/ASX Dividend Opportunities Index (the ‘Index’). As prescribed by the Trust Deed, the Fund invests in the securities included in the Index broadly in proportion to the weightings of the Index. Investments are valued at fair value according to last traded market prices on the Australian Securities Exchange on 29 March 2018.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

(c) Measurement

(d) Fair value estimation

The fair value of the financial instruments is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Fund is the last traded market price.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Units

Dividend income

Dividend income is recognised when the right to receive payment is established.

Distributions to unitholders

Distributions are made up of income received from the investments less expenses paid and allowances for future liabilities. Income from investments held is attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record dates for the distributions are the last business days of May and November each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

The Fund is liable for tax at the prevailing company tax rate on taxable dividends (excluding dividends from investments in securities subject to the Fair Dividend Rate method (‘FDR’)) from its investments in securities after the deduction of management fees. For securities subject to FDR, the Fund is liable for tax based on the market value of the security. The Fund is able to utilise imputation credits and foreign withholding tax credits when they arise. The Fund pays tax to the extent that the imputation credits and foreign withholding tax credits do not cover the tax liability in full.

Goods and services tax (GST)

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in Australian equities. The Fund received all of its income from its Australian equity investments.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are dividends, distributions and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to havee a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

Tax expense comprises: Current tax expense Prior period adjustment Deferred tax movement Total tax expense	2018 $'000 (877) 1 (65) (941)	2017 $'000 (850) 4 99 (747)

The prima facie income tax expense on (Loss)/profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense (Loss)/profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Tax on securities subject to FDR Gross up of imputation credits Less imputation credits and other tax credits Prior period adjustment Income tax expense as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Prior period adjustment Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 (3,023)	2017 $'000 10,327 (2,892) 1,971 105 (57) (48) (921) 170 4 (747) 2017 $'000 - 99 (190) (91) 2017 $'000 488
	846 (1,797) (46) (54) (42)
	(1,093) 151 1
	(941)
	2018 $'000 (91) (65) -
	(156)
	2018 $'000 671

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

(Loss)/profit after tax ($'000) Weighted average number of units ('000) Basic and diluted (losses)/earnings per unit (cents per unit)	2018 (3,964) 39,812 (9.96)	2017 9,580 39,468
		24.27

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) June 2016 (paid July 2016) 31/03/2017 2.20 September 2016 (paid October 2016) 31/03/2017 0.53 November 2016 (paid December 2016) 31/03/2017 2.72 May 2017 (paid June 2017) 31/03/2018 3.22 November 2017 (paid December 2017) 31/03/2018 2.47	2018 $'000 - - - 1,326 1,048 2,374	2017 $'000 865 210 1,078 - -
		2,153

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 17,929,000 units on issue (2017: 39,790,000).

The number of units allotted during the year ended 31 March 2018 was 2,875,000 (2017: 1,250,000) for total value of $4,935,000 (2017: $1,972,000).

The number of units redeemed during the year ended 31 March 2018 was 24,736,000 (2017: nil) for total value of $40,596,000 (2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Redemptions made during the year Units on issue at the end of the year	2018 '000 39,790 2,875 (24,736) 17,929	2017 '000 38,540 1,250 - 39,790

The net asset value of each unit per the financial statements is $1.58771 (2017: $1.77092). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 13,992,735 (2017: 37,655,556) units valued at $22,187,000 (2017: $66,705,000) in the Fund.

Distributions

The Fund paid distribution of $2,209,000 to SLI for the year ended 31 March 2018 (2017: $1,024,000). The balance remaining as payable at the end of the year is $nil (2017: $nil).

Management fees

Total gross management fees for the year ended 31 March 2018 amounted to $375,000 (2017: $339,000), with $1,000 (2017: $3,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $12,000 (2017: $13,000).

Total direct purchase application fees for the year ended 31 March 2018 amounted to $3,000 (2017: $2,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the the year ended 31 March 2018 was $5,000 (2017: $5,000).

7. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	746	1,174
Receivables	557	570
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	27,872	69,119
Other financial liabilities
Management fees payable	(1)	(3)
Funds held for unit purchases	(78)	(23)
Unsettled purchases of investments	-	(49)

The Fund’s activities expose it to a variety of financial risks: market price risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

7a. Market price risk

The Fund's equity securities are exposed to market price risk arising from uncertainties about future prices of the financial instruments.

A 10% increase/decrease in equity prices as at 31 March 2018 would have increased/decreased net profit and unitholder funds by $2,787,000 (2017: $6,912,000).

7b. Credit risk

The Fund does not require collateral or other security to support financial instruments with credit risk. The maximum exposures to credit risk at the reporting date are:

risk at the reporting date are:
	2018	2017
	$'000	$'000
Cash and cash equivalents	746	1,174
Receivables	557	570

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac').

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 78 AA- 7 A 661 AA- 746	2017 Balance $'000 Credit rating 23 AA- 206 A 945 AA- 1,174

7c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

7d. Currency risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

A 10% strengthening/weakening of the New Zealand dollar against the Australian dollar as at 31 March 2018 would have decreased/increased profit and unitholders funds by $2,844,000 (2017: $6,985,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. FINANCIAL RISK MANAGEMENT (Continued)

The table below summarises the Fund’s exposure to currency risks.

The table below summarises the Fund’s exposure to currency risks.
	2018	2017
	$'000	$'000
Australian dollar cash held (NZD)	7	206
Receivables	557	570
Investments in equity securities held at fair value through profit or loss	27,872	69,119
Unsettled purchases of investments	-	(49)

8. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (2017: none).

9. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2018 there have been no matters or circumstances not dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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AUSTRALIAN DIVIDEND FUND

==> picture [52 x 726] intentionally omitted <==

Independent Auditor�s Report

To�the�unitholders�of�Australian�Dividend�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�Australian�Dividend�Fund�(the�fund) on�pages�3�to�14:

We have audited the accompanying financial statements�which�comprise:

the�statement�of�financial�position�as�at�31 March�2018;
i. present�fairly�in�all�material�respects�the�fund�s financial�position�as�at�31�March�2018�and�its financial�performance�and�cash�flows�for�the year�ended�on�that�date;�and
the�statement�of�comprehensive�income, statement�of�changes�in�unitholders��funds�and statement�of�cash�flows�for�the�year�then ended;�and
� notes,�including�a�summary�of�significant accounting�policies�and�other�explanatory information.
ii. comply�with�New�Zealand�Equivalents�to International�Financial�Reporting�Standards�and International�Financial�Reporting�Standards.

==> picture [31 x 20] intentionally omitted <==

Basis for opinion

==> picture [31 x 20] intentionally omitted <==

Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $292,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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AUSTRALIAN DIVIDEND FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup95.5%oftotalassets.We
donotconsidertheseinvestments tobeathighriskofsignificant misstatement,orbesubjecttoa significantlevelofjudgement, becausetheycompriseliquid,listed investments.However,duetotheir	�documentingandunderstandingtheprocessesinplacetorecord investmenttransactionsandtovaluetheportfolio.Thisincluded evaluatingthecontrolenvironmentinplaceattheadministration managerbyobtainingandreadingareportissuedbyanindependent auditoronthedesignandoperationofthosecontrols
materialityinthecontextofthe financialstatementsasawhole,they areconsideredtobetheareawhich	�agreeingthe31March2018valuationoflistedequityinvestmentsto externallyquotedprices
hadthegreatesteffectonouroverall auditstrategyandallocationof	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe
resourcesinplanningand	administrationmanager
completingouraudit.
	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

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Other Information

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Use of this Independent Auditor�s Report

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AUSTRALIAN DIVIDEND FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�
the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

==> picture [30 x 20] intentionally omitted <==

Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�
Reasonable�assurance�is�a�high�level�of�assurance,�but�is�not�a�guarantee�that�an�audit�conducted�in�accordance with�ISAs�NZ�will�always�detect�a�material�misstatement�when�it�exists.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

�http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards�� For�and�on�behalf�of�

==> picture [59 x 28] intentionally omitted <==

KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	125	27.35%	63,268	0.36%
1,001-5,000	165	36.11%	381,622	2.14%
5,001-10,000	75	16.41%	495,362	2.78%
10,001-50,000	77	16.85%	1,494,444	8.39%
50,001-100,000	7	1.53%	459,237	2.58%
Greater than 100,000	8	1.75%	14,910,608	83.75%
TOTAL	457	100.00%	17,804,541	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	13,731,035	77.12%
My Tax Back NZ Limited	303,582	1.71%
FNZ Custodians Limited	252,593	1.42%
Philippa Jane Stubbins & Comac Trustee Limited	165,308	0.93%
Investment Custodial Services Limited	132,086	0.74%
Benjamin David Bonoma & Sarah Victoria Bonoma	121,717	0.68%
Terence Murray Fleming & Jane Michelle Fleming & Sw Trust Services (Ten) Ltd	103,447	0.58%
Bianca Helena Yianni	100,840	0.57%
Barbara Anne Bridger	91,450	0.51%
Joanna Marie Deighton	75,180	0.42%
Matthew Weir	65,930	0.37%
Richard George Lane	63,507	0.36%
Tracy Barbara Olberg	61,350	0.34%
Thierry Adam	51,104	0.29%
David Georges Andre Dromer	50,716	0.28%
Mark John Scott Mckearney	47,635	0.27%
Craigs Investment Partners Limited	43,009	0.24%
David Martirus Peters	42,625	0.24%
Billy Cheung Services Limited	36,528	0.21%
Anthony Neil Hooks & Jillian Jeanette Hooks	34,592	0.19%
	15,574,234	87.47%

SUBSTANTIAL PRODUCT HOLDERS

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DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	3,652*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

The Special Division of the New	Zealand Markets Disciplinary Tribunal (Special Division) has granted, either fully, partially or subject to
conditions a number of waivers	to the fund.
The waiver decisions that Smartshares currently relies upon are available on smartshares.co.nz.
Special Division granted the following waivers from the Listing Rules that continue to be relied upon as at 31 March 2018:
3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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Global Bond Fund (GBF)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the Global Bond Fund

Report to Unitholders HIGHLIGHTS Launch Date 12-Nov-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$3.142	$3.101
Units On Issue	54,176,479	42,071,479
Funds Under Management	$170,215,996	$130,463,970
Gross Return	3.28%	4.41%
Duration	5.4	6.97
Yield to Maturity	4.17%	4.95%
Average Rating	AA	A+
Total Fund Charges	0.54%	0.54%
Distributions paid	Quarterly

Growth of $1,000*

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----- Start of picture text -----

1,110
1,080
1,050
1,020
990
2016 2017 2018
Value ($)
----- End of picture text -----

Country Allocation

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North America 49.8% Europe - EMU 32.6% Japan 4.4% United Kingdom 0.3% Europe - NonEMU 6.7% Aus/NZ 4.1% Emerging Market 2.1%

*Since inception with all distributions reinvested.

Credit Allocation

Sector Allocation

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Governments 50% Corporates 16.7% Mortgage 12.9% Front End 6.8% Agency 3.8% ILBs 4.5% High Yield 2.3% Emerging Markets 3%

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AAA 61% AA 8% A 12% BBB 14% Other 5%

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GLOBAL BOND FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

INVESTMENT MANAGER

PIMCO Australia Pty Limited Level 19, 363 George Street Sydney, New South Wales 2000 Australia

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

REGISTRAR

Link Market Services Limited

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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GLOBAL BOND FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The Global Bond Fund (the 'Fund') was created by an establishment deed dated 15 October 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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GLOBAL BOND FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Interest income Net changes in fair value of financial assets and financial liabilities at fair value through profit or loss Foreign exchange gain Other income Total income EXPENSES Management fees expense 9 Foreign exchange loss Interest expense Miscellaneous expenses Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 5	2018 $'000 3 3,427 1,198 1,386 2 6,016 (755) - (83) (38) (876) 5,140 (1,440) 3,700 - 3,700 8.19	2017 $'000 2 2,427 5,253 - -
		7,682
		(699) (832) (25) (28)
		(1,584)
		6,098 (1,708)
		4,390 -
		4,390
		10.51

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 7 Distributions to unitholders 6 Unitholders' funds at the end of the year	2018 $'000 130,491 3,700 38,059 (1,945) 36,114 170,305	2017 $'000 123,222 4,390
		5,782 (2,903)
		2,879
		130,491

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash at banks Balances due from brokers 4 Receivables Investment securities held at fair value through profit or loss Equity securities held at fair value through profit or loss Derivatives held for trading 2 Unsettled sales of investments TOTAL ASSETS LIABILITIES Bank overdraft Management fees payable 9 Taxation payable Derivatives held for trading 2 Funds held for unit purchases Unsettled purchases of investments TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 2,595 2,480 956 166,181 85 5,184 395 177,876 - (8) (355) (6,368) (83) (757) (7,571) 170,305 177,876	As At 31 March 2017 $'000 833 4,548 981 133,091 - 2,718 1,371
		143,542
		(63) (6) (229) (6,639) (83) (6,031)
		(13,051)
		130,491
		143,542

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

Note CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received Interest income received Miscellaneous income received *Cash was applied to:* Management fees paid Taxation paid Interest paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments Balance due from broker movement *Cash was applied to:* Purchase of investments Balance due to broker movement Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Distributions paid to unitholders Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets and financial liabilities at fair value through profit or loss Foreign exchange (gain)/loss Increase/(decrease) in taxation payable Increase/(decrease) in payables Decrease/(increase) in receivables Net cash flows from operating activities	2018 $'000 3 3,452 2 (753) (1,314) (83) (38) 1,269 215,134 2,068 (252,917) - (35,715) 38,059 (1,945) 36,114 1,668 770 157 2,595 3,700 (1,198) (1,386) 126 2 25 1,269	2017 $'000 2 2,272 - (749) (2,535) (25) (28)
		(1,063)
		277,515 - (278,501) (2,550)
		(3,536)
		5,782 (3,508)
		2,274
		(2,325) 2,997 98
		770
		4,390 (5,253) 832 (834) (50) (148)
		(1,063)

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The Global Bond Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purpose of the FMC Act 2013.

The Fund's units are quoted on the NZX Main Board. The Fund is an investment fund that aims to outperform the Barclays Global Aggregate Index (the 'Index') by 1% per annum over a rolling three-year period, hedged in NZ dollars. As prescribed by the Trust Deed, the Fund invests in securities of all types represented in the Index and any other investment that is consistent with the objectives of the Fund.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

The financial statements of the Fund have been prepared in accordance with the requirements of the FMC Act 2013, Financial Reporting Act 2013, New Zealand equivalents to International Financial Reporting Standards ('NZ IFRS') and International Financial Reporting Standards ('IFRS'). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss. The functional currency of this entity is the same as the presentation currency of these financial statements being the New Zealand Dollar ('NZD'), rounded to the nearest thousand.

Income recognition

Income is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Fund and the income can be reliably measured. The following specific recognition criteria must also be met before income is recognised:

(a) Interest income

Interest income is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.

(b) Changes in fair value of financial assets and financial liabilities

Changes in financial assets and financial liabilities at fair value through profit or loss are calculated as the difference between the fair value at sale, or at year end, and the fair value at the previous valuation point or cost. This includes both realised and unrealised gains and losses, but does not include interest income.

Financial assets and financial liabilities at fair value through profit or loss

(a) Classification

The Fund classifies its underlying investments and derivatives as financial assets and financial liabilities at fair value through profit or loss. This category has two sub-categories: financial assets or financial liabilities held for trading; and those held at fair value through profit or loss at inception.

(i) Financial assets and financial liabilities held for trading

Financial instruments held for trading are those acquired or incurred principally for the purposes of selling or repurchasing in the shortterm. Derivatives are categorised as held for trading. The Fund does not classify any derivatives as hedges in a hedging relationship.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

(ii) Financial assets designated at fair value through profit or loss

Financial instruments designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Fund's documented investment strategy. The Fund's policy is for the Manager to evaluate the information about these financial instruments on a fair value basis together with other related financial information. The Manager has determined that investments are designated at fair value through profit or loss.

The Fund does not make short sales in which a borrowed security is sold in anticipation of a decline in the market value of that security, nor does it make use of short sales for arbitrage transactions.

(b) Recognition, derecognition and measurement

Purchases and sales of investments and derivatives are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment or derivatives. Financial assets and financial liabilities designated at fair value through profit or loss are initially recognised at fair value, with transaction costs recognised in profit or loss.

Financial assets and financial liabilities are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

Subsequent to initial recognition, all financial assets and financial liabilities at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of the ‘financial assets or financial liabilities at fair value through profit or loss’ category are presented in the Statement of Comprehensive Income when they arise.

(c) Fair value determination

The fair value of financial instruments traded in active markets (such as trading securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets and financial liabilities held by the Fund is the last traded price.

For investments with no active markets, fair values are determined using valuation techniques. Such techniques include: using recent arm’s length transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible and keeping judgmental inputs to a minimum.

(d) Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the Statement of Financial Position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Fund and counterparty.

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

Balance due from/to brokers

Balance due from/to brokers includes margin cash and cash collateral that are identified in the Statement of Financial Position and not included as a component of cash and cash equivalents.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency (NZD) using the exchange rate prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated into the functional currency using the exchange rate prevailing at the Statement of Financial Position date. Foreign exchange gains and losses arising from translation are included in the Statement of Comprehensive Income.

Translation differences of non-monetary financial assets and financial liabilities held at fair value through profit or loss are recognised in the Statement of Comprehensive Income as part of the net changes in fair value on financial assets and financial liabilities at fair value through profit or loss.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments and securities not falling within the definition of cash. Financing activities relate to cash contributions, withdrawals and distributions.

Repurchase agreements

Securities subject to repurchase agreements are recognised within the investments in "investment securities held at fair value through profit or loss".

Units

The Fund issues units, which provide the holder with a beneficial interest in the Fund. The units can be put back to the Fund via a basket redemption, in accordance with the redemption rules as defined in the Trust Deed, by delivery to the investor of the cash amount and/or authorised investments that the Manager agrees to accept as consideration for, and determines to have a value equal to the price of the units issued.

Distributions to unitholders

Distributions are made up of income received from the investments less expenses paid and allowances for future liabilities. Income from investments held is attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record dates for the distributions are on the last business days of February, May, August and November each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

The Fund is liable for tax at the prevailing company tax rate on taxable interest and gains and losses from its investments in securities after the deduction of management fees and other deductible expenses. The Fund is able to utilise foreign withholding tax credits when they are available. The Fund pays tax to the extent that the foreign withholding tax credits do not cover the tax liability in full.

Goods and services tax ('GST')

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in marketable and debt securities. The Fund receives all of its income from its investments. Note 11 has a breakdown of interest income by geographical location.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are interest income and gains on financial instruments measured at fair value through profit or loss. As these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

1. TAXATION
Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (1,440) (1,440)	2017 $'000 (1,708)
		(1,708)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense

Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets and financial liabilities Non-taxable income Gross up of imputation credits Less imputation credits and other tax credits Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 5,140
	(1,439) - - -
	- (1)
	(1,440)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

2. DERIVATIVES HELD FOR TRADING

The Fund holds the following derivative instruments:

(a) Forward foreign exchange contracts

Forward foreign exchange contracts are contractual obligations to buy or sell foreign currencies on a future date at a specified price. Forward foreign exchange contracts are settled on a net basis.

(b) Forward rate agreements

Forward rate agreements are contracts for borrowing or lending at a stated interest rate over a stated time period that begins at some time in the future.

(c) To-Be-Announced forwards (TBA)

To-Be-Announced forward contracts are contractual obligations to buy or sell mortgage-backed financial instruments on a future date at a specified price.

To-Be-Announced forward contracts are normally settled on a cash basis.

(d) Swaps

Swaps are contractual agreements between two parties to exchange streams of payments over time based on specified notional amounts.

Interest rate swaps (IRS) are contractual arrangements to receive or pay a net amount based on changes in interest rates at a future date at a specified price.

Credit default swaps (CDS) are contractual obligations to make payments over time based on specified notional amounts in return for payout in the case of default by the underlying financial instruments.

(e) Options

Options are contractual agreements that convey the right, but not the obligation, for the purchaser either to buy or sell a specific amount of financial instrument at a stipulated price within a stated period of time for the current fair value of the instruments.

(f) Futures

Futures are exchange-traded derivatives which represent agreements to buy/sell some underlying asset in the future for a specified price, established in an organised market.

Derivative assets held for trading : Forward foreign exchange contracts To-Be-Announced forwards Forward rate agreements Interest rate swaps Credit default swaps Options Futures Derivative liabilities held for trading : Forward foreign exchange contracts To-Be-Announced forwards Interest rate swaps Credit default swaps Options Futures	2018 $'000 2,618 192 15 1,353 8 101 897 5,184 (4,411) (40) (805) (342) (297) (473) (6,368)	2017 $'000 1,110 147 - 950 198 53 260
		2,718
		(4,365) (128) (1,369) (427) (237) (113)
		(6,639)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

There were no transfers between levels in the year ended 31 March 2018 (2017: none).

The following table analyses financial instruments measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measured is categorised. The amounts are based on the values recognised in the Statement of Financial Position.

There are no financial instruments are categorised at level 3 (2017: none).

Financial assets held at fair value through profit or loss Interest-bearing securities Investments in listed equity securities Derivative assets held for trading: Forward foreign exchange contracts To-Be-Announced forwards Forward rate agreements Interest rate swaps Credit default swaps Options Futures Derivative liabilities held for trading: Forward foreign exchange contracts To-Be-Announced forwards Interest rate swaps Credit default swaps Options Futures	Level 1 $'000 - 85 85 - - - - - - 897 897 - - - - - (473) (473)	2018 Level 2 $'000 166,181 - 166,181 2,618 192 15 1,353 8 101 - 4,287 (4,411) (40) (805) (342) (297) - (5,895)	Total $'000 166,181 85 166,266 2,618 192 15 1,353 8 101 897 5,184 (4,411) (40) (805) (342) (297) (473) (6,368)	Level 1 $'000 - - - - - - - - - 260 260 - - - - - (113) (113)	2017 Level 2 $'000 133,091 - 133,091 1,110 147 - 950 198 53 - 2,458 (4,365) (128) (1,369) (427) (237) - (6,526)	Total $'000 133,091 -
						133,091
						1,110 147 - 950 198 53 260
						2,718
						(4,365) (128) (1,369) (427) (237) (113)
						(6,639)

The fair value of fixed interest securities at the reporting date are based on binding dealer price quotations and are categorised within level 2.

The fair value of exchange-traded futures and preference shares are based on quoted market prices and are included within level 1.

The Fund uses widely recognised valuation models for determining fair values of over-the-counter derivatives such as options. For these financial instruments, inputs into models are market observable and are therefore included within level 2. The fair values of forward foreign exchange contracts are calculated by reference to current exchange rates for contracts with similar maturity and risk profiles. The fair values of To-Be-Announced forwards are calculated by reference to underlying bond prices. The fair value of credit default swaps is based on the quoted market prices and included in within level 2. The fair value of the interest rate swaps is calculated by the yield curve of underlying interest securities interest rates and is included in the within level 2.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

4. BALANCES DUE FROM BROKERS

Margin accounts Cash collateral	2018 $'000 88 2,392 2,480	2017 $'000 427 4,121
		4,548

Margin accounts represent cash deposits with brokers, transferred as collateral against open derivative contracts.

5. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 3,700 45,163 8.19	2017 4,390 41,753
		10.51

6. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) June 2016 (paid July 2016) 31/03/2017 1.44 September 2016 (paid October 2016) 31/03/2017 3.03 November 2016 (paid December 2016) 31/03/2017 1.30 February 2017 (paid March 2017) 31/03/2017 1.18 May 2017 (paid June 2017) 31/03/2018 1.20 August 2017 (paid September 2017) 31/03/2018 1.15 November 2017 (paid December 2017) 31/03/2018 1.09 February 2018 (paid March 2018) 31/03/2018 0.91	2018 $'000 - - - - 505 490 485 465 1,945	2017 $'000 600 1,264 544 495 - - - -
		2,903

7. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 54,176,000 units on issue (2017: 42,071,000).

The number of units allotted during the year ended 31 March 2018 was 12,105,000 (2017: 1,875,000) for total value of $38,059,000 (2017: $5,782,000 ).

The number of units redeemed during the year ended 31 March 2018 was nil (2017: nil) for total value of $nil (2017: $nil).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. UNITHOLDERS' FUNDS (Continued)

7. UNITHOLDERS' FUNDS (Continued)
Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Units on issue at the end of the year	2018 '000 42,071 12,105 54,176	2017 '000 40,196 1,875
		42,071

The net asset value of each unit per the financial statements is $3.14355 (2017: $3.10169). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

8. MATURITY ANALYSIS

The Fund invests in international interest-bearing assets and other fixed income securities.

The tables below show an analysis of financial assets and financial liabilities analysed according to when they are expected to be recovered or settled.

ASSETS Cash at banks Balances due from brokers Receivables Investment securities held at fair value through profit or loss Equity securities held at fair value through profit or loss Derivatives held for trading Unsettled sales of investments Total assets LIABILITIES Bank overdraft Management fees payable Taxation payable Derivatives held for trading Funds held for unit purchases Unsettled purchases of investments Total liabilities	Within 12 months $'000 2,595 2,480 956 44,336 - 3,675 395 54,437 - (8) (355) (5,194) (83) (757) (6,397)	2018 Over 12 months $'000 - - - 121,845 85 1,509 - 123,439 - - - (1,174) - - (1,174)	Total $'000 2,595 2,480 956 166,181 85 5,184 395 177,876 - (8) (355) (6,368) (83) (757) (7,571)	Within 12 months $'000 833 4,548 981 18,842 - 1,310 1,371 27,885 (63) (6) (229) (4,508) (83) (6,031) (10,920)	2017 Over 12 months $'000 - - - 114,249 - 1,408 - 115,657 - - - (2,131) - - (2,131)	Total $'000 833 4,548 981 133,091 - 2,718 1,371
						143,542
						(63) (6) (229) (6,639) (83) (6,031)
						(13,051)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

9. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme (“SLI”), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited held 46,145,199 units (2017: 40,091,479) valued at $144,983,000 (2017: $124,324,000) in the Fund.

Distributions

The Fund paid distributions of $1,812,000 to SLI for the year ended 31 March 2018 (2017: $993,000). The balance remaining as payable at the end of the year is $nil (2017: $nil).

Management fees

The Manager receives management fees from the Fund. Under the Trust Deed the Manager pays the supervisor, investment manager, custodian, registrar and auditor on behalf of the Fund and receives direct purchase application fees and interest earned on cash retained for the purpose of distribution prior to the distribution being made.

Total gross management fees excluding rebates for the year ended 31 March 2018 amounted to $755,000 (2017: $699,000), with $8,000 (2017: $6,000) of outstanding accrued management fees due to the Manager at the end of the year.

Total direct purchase application fees for the year ended 31 March 2018 amounted to $2,000 (2017: $3,000).

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $3,000 (2017: $nil).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (2017: $5,000).

10. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through the profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category

Financial instruments by category
	2018	2017
	$'000	$'000
Loans and receivables
Cash at banks	2,595	833
Balances due from brokers	2,480	4,548
Receivables	956	981
Unsettled sales of investments	395	1,371
Financial assets and financial liabilities at fair value through profit and loss
Investment securities held at fair value through profit or loss	166,181	133,091
Equity securities held at fair value through profit or loss	85	-
Derivatives held for trading (financial assets)	5,184	2,718
Derivatives held for trading (financial liabilities)	(6,368)	(6,639)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

10. FINANCIAL RISK MANAGEMENT (Continued)

Financial instruments by category

Financial instruments by category
	2018	2017
	$'000	$'000
Other financial liabilities
Bank overdraft	-	(63)
Management fees payable	(8)	(6)
Distribution payable to unitholders	-	-
Funds held for unit purchases	(83)	(83)
Unsettled purchases of investments	(757)	(6,031)

The Fund’s activities expose it to a variety of financial risks: market price risk, interest rate risk, credit risk, liquidity risk and currency risk. The risk management policies used by the Fund are detailed below:

10a. Market price risk

Market price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.

The Fund invests mainly in interest-bearing assets which are not directly subject to market price risk. However, the Fund holds futures contracts which are subject to market price risk. A 10% increase/decrease in market price will result in an increase/decrease in fair value on financial assets and financial liabilities through profit or loss of $10,740,000 (2017: $8,865,000). The Fund also holds listed preference shares which are subject to market price risk, however this risk is not considered to be significant.

10b. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Interest rate risk is a direct consequence of investing in fixed income securities (mainly debt securities) and derivatives (including interest rate swaps).

The Fund holds interest-bearing financial assets and liabilities - the values of which move up and down inversely to movements in market interest rates and is therefore exposed to interest rate risk.

The exposure of the Fund to interest rate risk is an investment decision taken by the Investment Manager and the size of that risk is limited in the mandate of the Investment Manager.

The following table analyses the Fund's interest rate risk exposure. The analysis has been prepared on the basis of the remaining period to contractual repricing or maturity dates.

ASSETS Cash at banks International interest-bearing securities Derivatives held for trading Total financial assets subject to interest rate risk LIABILITIES Derivatives held for trading Total financial liabilities subject to interest rate risk	Within 6 months $'000 2,595 39,826 208 42,629 (40) (40)	Between 6-12 months $'000 - 4,510 - 4,510 - -	2018 Between 1-2 years Between 2-5 years $'000 $'000 - - 12,660 44,995 31 512 12,691 45,507 (562) (61) (562) (61)	Over 5 years $'000 - 64,190 803 64,993 (182) (182)	Total $'000 2,595 166,181 1,554
					170,330
					(845)
					(845)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

10. FINANCIAL RISK MANAGEMENT (Continued)

ASSETS Cash and Cash Equivalents International interest-bearing securities Interest-bearing securities - repurchase agreements Derivatives held for trading Total financial assets subject to interest rate risk LIABILITIES Overdraft Derivatives held for trading Total financial liabilities subject to interest rate risk	Within 6 months $'000 833 24,312 (12,380) - 12,765 (63) - (63)	Between 6-12 months $'000 - 6,756 - - 6,756 - - -	2017 Between 1-2 years Between 2-5 years $'000 $'000 - - 15,227 34,229 - - - 24 15,227 34,253 - - - (482) - (482)	Over 5 years $'000 - 64,947 - 697 65,644 - (760) (760)	Total $'000 833 145,471 (12,380) 721
					134,645
					(63) (1,242)
					(1,305)

The tables below show the sensitivity of the Fund's Statement of Comprehensive Income to a reasonably possible change in interest rates with all other variables remaining constant. The analysis is performed on the same basis for 31 March 2017. The sensitivity of the Statement of Comprehensive Income is the effect of the assumed changes in interest rates on:

1) The interest income for the year based on floating rate financial assets held at 31 March 2018.

2) Changes in fair value of investments for the year based on revaluing fixed rate financial assets at 31 March 2018.

		2018	2018
	Sensitivity of	interest	Sensitivity of changes in
	income		fair value of investments
	100 basis	100 basis	100 basis	100 basis
	points	points	points	points
	increase	decrease	increase	decrease
	$'000	$'000	$'000	$'000
Cash at banks	26	(26)	-	-
International interest-bearing securities	103	(103)	(9,173)	10,284
Derivatives held for trading	-	-	2,746	(3,423)

		2017	2017
	Sensitivity of interest		Sensitivity of changes in
	income		fair value of investments
	100 basis	100 basis	100 basis	100 basis
	points	points	points	points
	increase	decrease	increase	decrease
	$'000	$'000	$'000	$'000
Cash at banks	9	(9)	-	-
International interest-bearing securities	-	-	(8,393)	9,469
Derivatives held for trading	-	-	2,944	(2,864)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

10. FINANCIAL RISK MANAGEMENT (Continued)

10c. Credit risk

Credit risk represents the risk that a counterparty to the financial instrument will fail to perform contractual obligations under a contract and cause the Fund to incur a loss.

With respect to credit risk arising from the financial assets (excluding repurchase agreements) of the Fund, the Fund's exposure to credit risk arises from the default of the counterparty, with the current exposure equal to the fair value of these instruments as disclosed in the Statement of Financial Position. This does not represent the maximum risk exposure that could arise in the future as a result of changes in values, but best represents the current maximum exposure at the reporting date.

Credit risk arising from derivative financial instruments, such as forward foreign exchange contracts, interest rate swaps and credit default swaps, at any time, is limited to those with net positive fair value (Note 2).

There are no financial assets that are past due or impaired, or would otherwise be past due or impaired except for the terms having been renegotiated.

The analysis below summarises the credit quality of the Fund's exposure rated externally by Standard & Poor's, Moody's or Fitch. In situations where a security has different ratings by the agencies, the highest credit rating applies. If a security is not rated by one of these agencies, the Investment Manager will assess what rating the security might attain if it were to seek an external rating.

AAA to AA- $'000 International interest-bearing securities 71,359 Derivatives held for trading 1,375 72,734	A+ to A- $'000 43,531 2,488 46,019	2018 BBB+ to B- CCC+ to C- $'000 $'000 50,451 840 116 - 50,567 840	Total $'000 166,181 3,979
			170,160

AAA to AA- $'000 International interest-bearing securities 72,785 Derivatives held for trading 77 72,862	A+ to A- $'000 25,276 2,181 27,457	2017 BBB+ to B- CCC+ to C- $'000 $'000 43,285 4,125 - - 43,285 4,125	Total $'000 145,471 2,258
			147,729

Cash and cash equivalents

The Fund's cash and cash equivalents are held with ANZ Bank New Zealand Limited ('ANZ'), BNP Paribas Securities Services ('BNP Paribas') and Westpac New Zealand Limited ('Westpac').

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance excluding bank overdraft with each bank above at the reporting date.

ANZ BNP Paribas Westpac	2018 Balance $'000 Credit rating 83 AA- 2,512 A - AA- 2,595	2017 Balance $'000 Credit rating 83 AA- 750 A - AA- 833

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

10. FINANCIAL RISK MANAGEMENT (Continued)

Balances due from brokers

Balances due from brokers represent margin accounts and cash collaterals. At the reporting date, the Fund's futures margin accounts are held with Morgan Stanley (A+ S&P credit rating) (2017: A+). The Fund's cash collateral balances are also mainly held with Morgan Stanley.

The Investment Manager is responsible for assessing and monitoring the creditworthiness of borrower, guarantors, issuers of debt securities, acceptors of bills of exchange, or other sources of credit risk.

10d. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund is able to generate sufficient cash on a timely manner to meet its financial commitments and normal level of redemptions. The Investment Manager ensures that the Fund has appropriate liquidity levels within allowable benchmark ranges. In the event of abnormal levels of redemptions, timing of payments may depend on the ability of the Fund to realise its underlying investments on a timely basis, subject to provisions in the Trust Deed.

The table below analyses the net settled derivative financial assets and financial liabilities into relevant maturity groupings based on the remaining periods at balance date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.

The contractual cash flows are based on the spot rate at the reporting date.

2018	Statement of
	Financial	Contractual	Within 6		Between 6-		Between 1-	Over 5
	Position	cash flows	months		12 months		5 years	years
	$000	$000	$000		$000		$000	$000
Derivative assets held for trading	5,184
Inflow		370,648	363,203		6,424		929	92
Outflow		(366,409)	(359,630)		(6,149)		(563)	(67)
Derivative liabilities held for trading	(6,368)
Inflow		383,453	378,067		1,248		1,015	3,123
Outflow		(390,557)	(383,029)		(1,641)		(1,841)	(4,046)
2017	Statement
	of Financial	Contractual	Within 6	Between 6-		Between 1-		Over 5
	Position	cash flows	months		12 months		5 years	years
	$000	$000	$000		$000		$000	$000
Derivative assets held for trading	2,718
Inflow		245,342	220,453		3,549		12,760	8,580
Outflow		(236,838)	(218,179)		(3,094)		(9,508)	(6,057)
Derivative liabilities held for trading	(6,639)
Inflow		387,166	356,925		1,239		22,591	6,411
Outflow		(408,360)	(362,895)		(3,094)		(30,496)	(11,875)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

10. FINANCIAL RISK MANAGEMENT (Continued)

10e. Currency Risk

Currency risk is the risk that the value of the financial instruments will fluctuate due to changes in foreign exchange rates.

The Fund holds financial instruments denominated in currencies other than the New Zealand dollar, the functional currency, at year end. The Fund is therefore subject to risk due to fluctuations in the prevailing currency exchange rate. A change in exchange rates would impact the New Zealand dollar equivalent market price of the financial instruments in which the Fund invests.

The Fund enters into forward exchange contracts designed to economically hedge the foreign exposure of the underlying investments. The Fund is to be economically hedged to New Zealand dollars between 95% and 105%.

The currency risk disclosures have been prepared on the basis of the Fund’s direct investments.

The table below summarises the Fund's exposure to currency risk in New Zealand dollar value of the financial instruments.

Assets and liabilities Foreign currency cash balances held (NZD) Investment securities held at fair value through profit or loss Derivatives held for trading Receivables/(payables) Total financial assets and liabilities	AUD $'000 36 2,269 (853) 5	CAD $'000 (23) 7,641 (7,648) 42	EUR $'000 149 26,256 (30,295) 509	2018 GBP $'000 156 16,070 (12,215) (665)	JPY $'000 6 20,176 (19,822) -	USD $'000 3,289 76,471 (97,991) 494	Other $'000 152 17,383 (2,394) 206
	1,457	12	(3,381)	3,346	360	(17,737)	15,347

Assets and liabilities Foreign currency cash balances held (NZD) Investment securities held at fair value through profit or loss Derivatives held for trading Receivables/(payables) Total financial assets and liabilities	AUD $'000 125 717 (1,137) (232)	CAD $'000 62 4,198 (4,240) 40	EUR $'000 456 14,391 (14,832) (1,118)	2017 GBP $'000 379 10,373 (10,033) (2,007)	JPY $'000 167 22,746 (22,989) 1	USD $'000 4,015 67,522 (71,736) 10	Other $'000 97 13,150 (10,004) (606)
	(527)	60	(1,103)	(1,288)	(75)	(189)	2,637

The table below summarises the sensitivity analysis in NZD currency to an increase or decrease in the exchange rate with all other variables remaining constant, where the Fund has significant currency risk exposure, based on an assumed increase/decrease by the percentage disclosed in the table.

Assets and liabilities Foreign currency cash balances held (NZD) Investment securities held at fair value through profit or loss Derivatives held for trading Receivables/(payables)	2018 Profit or loss and Unitholders' Funds 10% increase 10% decrease $'000 $'000 (376) 376 (16,627) 16,627 17,122 (17,122) (59) 59 60 (60)	2017 Profit or loss and Unit Holders' Funds 10% increase 10% decrease $'000 $'000 (530) 530 (13,310) 13,310 13,497 (13,497) 391 (391) 48 (48)	2017 Profit or loss and Unit Holders' Funds 10% increase 10% decrease $'000 $'000 (530) 530 (13,310) 13,310 13,497 (13,497) 391 (391) 48 (48)
			(48)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

10. FINANCIAL RISK MANAGEMENT (Continued)

10f. Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and similar agreements

The following table presents the recognised derivatives that are subject to offsetting, or other similar arrangements but not offset, as at 31 March 2018 and 31 March 2017.

	2018 Related amounts not set-off in the statement of financial position
	Gross amounts of recognised financial instruments Gross amounts of recognised financial instruments set-off in the statement of financial position Net amounts of financial instruments presented in the statement of financial position Financial instruments Cash collateral received/ pledged Net amount
Total derivative assets Total derivative liabilities	$'000 $'000 $'000 $'000 $'000 $'000 4,992 - 4,992 (1,681) - 3,311 (6,329) - (6,329) 1,681 - (4,648) 2017 Related amounts not set-off in the statement of financial position
	Gross amounts of recognised financial instruments Gross amounts of recognised financial instruments set-off in the statement of financial position Net amounts of financial instruments presented in the statement of financial position Financial instruments Cash collateral received/ pledged Net amount
Total derivative assets Total derivative liabilities	$'000 $'000 $'000 $'000 $'000 $'000 2,571 - 2,571 (2,424) - 147 (6,511) - (6,511) 2,424 - (4,087)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

11. SEGMENT INFORMATION

The table below analyses the Fund’s interest income grouped by geographical location.

United Kingdom Euro Zone United States of America (USA) Americas (excluding USA) Other	2018 $'000 326 669 2,189 206 37 3,427	2017 $'000 (17) 625 1,836 (105) 88
		2,427

12. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (2017: none).

13. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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GLOBAL BOND FUND

==> picture [52 x 726] intentionally omitted <==

Independent Auditor�s Report

To�the�unitholders�of�Global�Bond�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�Global�Bond�Fund��(the�fund) on� pages�3�to�23:

==> picture [31 x 20] intentionally omitted <==

Basis for opinion

==> picture [31 x 20] intentionally omitted <==

Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $1,779,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

429

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GLOBAL BOND FUND

==> picture [31 x 20] intentionally omitted <==

Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup93.4%oftotalassets.We
donotconsidertheseinvestments	�documentingandunderstandingtheprocessesinplacetorecord
tobeathighriskofsignificant	investmenttransactionsandtovaluetheportfolio.Thisincluded
misstatement,orbesubjecttoa	evaluatingthecontrolenvironmentinplaceattheadministration
significantlevelofjudgement,	managerbyobtainingandreadingareportissuedbyan
becausetheycomprisebondsor	independentauditoronthedesignandoperationofthosecontrols
othersimplefixedinterest
instruments.However,duetotheir	�agreeingasampleofthe31March2018valuationsoflistedfixed
materialityinthecontextofthe	interestinstrumentstoexternallyquotedpricesandunlistedfixed
financialstatementsasawhole,they	interestinvestmentstobrokerquotes.Whereexternallyquotedpricesor
areconsideredtobetheareawhich	brokerquotesarenotavailableweappliedvaluationmethodsusing
hadthegreatesteffectonouroverall	observablemarketinterestratestoassessthevaluation
auditstrategyandallocationof
resourcesinplanningand completingouraudit.	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe administrationmanager
	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

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Other Information

==> picture [30 x 19] intentionally omitted <==

Use of this Independent Auditor�s Report

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GLOBAL BOND FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

==> picture [30 x 20] intentionally omitted <==

Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

==> picture [59 x 27] intentionally omitted <==

KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	100	40.00%	43,767	0.08%
1,001-5,000	87	34.80%	203,864	0.37%
5,001-10,000	23	9.20%	167,623	0.31%
10,001-50,000	32	12.80%	629,665	1.15%
50,001-100,000	3	1.20%	227,205	0.41%
Greater than 100,000	5	2.00%	53,554,355	97.68%
TOTAL	250	100.00%	54,826,479	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	46,765,599	85.30%
FNZ Custodians Limited	5,126,128	9.35%
Bnp Paribas Nominees NZ Limited	1,100,825	2.01%
Investment Custodial Services Limited	361,440	0.66%
Rosalie Barnes	120,562	0.22%
Izak Andries Delport Van Blerk & Petronella Erendina Van Blerk	95,940	0.17%
Tea Custodians Limited	79,801	0.15%
Custodial Services Limited	68,368	0.12%
Somsmith Nominees Limited	62,897	0.11%
Maryanne Nola Gane & Marcia Clare Jasmine Fullam	47,455	0.09%
Forsyth Barr Custodians Limited	46,650	0.09%
David Alan Shackleton & Scott Francis Whitaker	41,470	0.08%
Robyn Elizabeth Taylor	32,614	0.06%
Jonathan Schwass & Ann Howarth	28,665	0.05%
William John Duff Eaton	26,600	0.05%
Anthony Smith & Barbara Smith	25,754	0.05%
Brendan Dennis Catchpole & Connie Yvonne Catchpole & Anthony Raymond Wentworth	24,800	0.05%
John Huthwaite Ronaldson & Marian Elizabeth Ronaldson & Franklin Trustee Services Ltd	21,800	0.04%
Kenneth Drayton & Michael Grey Glen	21,319	0.04%
Billy Cheung Services Limited	20,318	0.04%
	54,119,005	98.73%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	12,610*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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NZ Bond Fund (NZB)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the NZ Bond Fund

Report to Unitholders HIGHLIGHTS Launch Date 12-Nov-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$3.025	$2.986
Units On Issue	70,008,573	67,933,573
Funds Under Management	$211,755,631	$202,869,711
Gross Return	4.89%	3.18%
Duration	3.39	3.65
Yield to Maturity	3.46%	3.96%
Average Rating	A	A
Total Fund Charges	0.54%	0.54%
Distributions paid	Quarterly

Credit Allocation

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==> picture [41 x 34] intentionally omitted <==

----- Start of picture text -----

AAA 0.4%
AA 38.6%
A 24.6%
BBB 36.4%
----- End of picture text -----

Sector Allocation

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==> picture [95 x 36] intentionally omitted <==

----- Start of picture text -----

Corporates & SOEs 46.1%
New Zealand Banks 38%
NZ Government 10.8%
Local Authority 5.1%
----- End of picture text -----

Growth of $1,000*

==> picture [473 x 90] intentionally omitted <==

----- Start of picture text -----

1,150
1,100
1,050
1,000
950
jan 16 jul 16 jan 17 jul 17 jan 18
Value ($)
----- End of picture text -----

*Since inception with all distributions reinvested.

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NZ BOND FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Drive Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

INVESTMENT MANAGER

Nikko Asset Management New Zealand Limited Level 9, Vero Centre, 48 Shortland Street Auckland, 1010 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

REGISTRAR

Link Market Services Limited

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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NZ BOND FUND

Smartshares Limited (the ‘Manager') and Public Trust (the ‘Supervisor’) are parties to a master trust deed dated 24 June 2014 as amended and restated on 9 September 2016 (the 'Trust Deed'). The Trust Deed sets out the terms and conditions on which units in the funds within the Smartshares Exchange Traded Funds are offered for subscription, whether to the public or otherwise.

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The NZ Bond Fund (the 'Fund') was created by an establishment deed dated 15 October 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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NZ BOND FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Dividend income Interest income Net changes in fair value of financial assets and financial liabilities at fair value through profit or loss Other income Total income EXPENSES Management fees expense 7 Miscellaneous expenses Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 - 9,480 3,094 11 12,585 (1,119) (1) (1,120) 11,465 (3,210) 8,255 - 8,255 11.95	2017 $'000 20 9,509 (2,848) 109
		6,790
		(1,095) (1)
		(1,096)
		5,694 (1,588)
		4,106 -
		4,106
		6.11

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 202,887 8,255 6,258 (5,608) 650 211,792	2017 $'000 199,510 4,106
		5,110 (5,839)
		(729)
		202,887

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash at banks Receivables Investment securities held at fair value through profit or loss Taxation receivable Unsettled sales of investments TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Distribution payable to unitholders Funds held for unit purchases Unsettled purchase of investments Other current liabilities 7 TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 540 2,152 211,383 - - 214,075 (9) (2,226) (2) (45) - (1) (2,283) 211,792 214,075	As At 31 March 2017 $'000 1,597 2,084 199,227 121 4,401
		207,430
		(9) - (3) (29) (4,500) (2)
		(4,543)
		202,887
		207,430

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received Interest income received Other income received *Cash was applied to:* Management fees paid Taxation paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments Net repayments from the Manager *Cash was applied to:* Purchase of investments Net repayments to the Manager Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Distributions paid to unitholders Net cash flows from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets and financial liabilities at fair value through profit or loss Decrease/(increase) in taxation receivable Increase/(decrease) in taxation payable Decrease in deferred tax asset receivable Decrease in management fees payable (Increase)/decrease in receivables Net cash flows from operating activities	2018 $'000 - 9,412 11 (1,119) (863) (1) 7,440 76,224 - (85,385) (1) (9,162) 6,274 (5,609) 665 (1,057) 1,597 540 8,255 (3,094) 121 2,226 - - (68) 7,440	2017 $'000 20 9,691 109 (1,178) (3,000) (1)
		5,641
		69,005 2 (72,914) -
		(3,907)
		5,135 (7,616)
		(2,481)
		(747) 2,344
		1,597
		4,106 2,848 (121) (1,328) 37 (83) 182
		5,641

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The NZ Bond Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purpose of the FMC Act 2013.

The Fund's units are quoted on the NZX Main Board. The Fund holds a portfolio of fixed and floating income securities. It is an investment fund that aims to outperform the S&P/NZX A-Grade Corporate Bond Index (the 'Index') over a rolling three year period. As prescribed by the Trust Deed, the Fund can invest in securities of all types represented in the Index and any other investment that is consistent with the objectives of the Fund.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

The financial statements of the Fund have been prepared in accordance with the requirements of the FMC Act 2013, Financial Reporting Act 2013, New Zealand equivalents to International Financial Reporting Standards ('NZ IFRS') and International Financial Reporting Standards ('IFRS'). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss. The functional currency of this entity is the same as the presentation currency of these financial statements being the New Zealand Dollar ('NZD'), rounded to the nearest thousand.

Income recognition

(a) Dividends

Dividend income is recognised when the right to receive payment is established.

(b) Interest income

(c) Changes in fair value of financial assets and financial liabilities

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Financial assets and financial liabilities at fair value through profit or loss

(a) Classification

(i) Financial assets and financial liabilities held for trading

Financial instruments designated for trading are those acquired or incurred principally for the purposes of selling or repurchasing in the short-term. Derivatives are categorised as held for trading. The Fund does not classify any derivatives as hedges in a hedging relationship.

(ii) Financial assets designated at fair value through profit or loss

The Fund does not use short sales, but can use these as part of spread trades, hedging transactions or income-enhancing strategies.

(b) Recognition, derecognition and measurement

Purchases and sales of investments (including derivatives) are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Financial assets and financial liabilities designated at fair value through profit or loss are initially recognised at fair value, with transaction costs recognised in profit or loss.

(c) Fair value determination

The fair value of financial assets traded in active markets (such as trading securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets and financial liabilities held by the Fund is the last traded price.

(d) Offsetting financial instruments

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

Cash and cash equivalents

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Units

The Fund issues units, which provide the holder with a beneficial interest in the Fund. The units can be put back to the Fund via a basket redemption, in accordance with the redemption rules as defined in the Trust Deed, by delivery to the investor of the cash amount and/or authorised investments that the Manager agrees to accept as consideration for, and determines to have a value equal to the price of the units issued.

Distributions to unitholders

Distributions are made up of income received from the investments less expenses paid and allowances for future liabilities. Income from investments held is attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record date for the distributions are on the last business day of February, May, August and November in each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax ('GST')

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in New Zealand marketable and debt securities. The Fund receives all of its income from its investments.

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact on the financial statements of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the multiple classification and measurement models in IAS 39 and is effective for reporting periods beginning on or after 1 January 2018. Earlier application is permitted.

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are interest income and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

1. TAXATION
Tax expense comprises: Current tax expense Deferred tax movement Total tax expense	2018 $'000 (3,210) - (3,210)	2017 $'000 (1,551) (37)
		(1,588)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets and financial liabilities Non taxable income Gross up of imputation credits Less imputation credits and other tax credits Income tax expense as per Statement of Comprehensive Income Deferred tax Opening balance Current period movement Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 11,465 (3,210) - - - (3,210) - (3,210) 2018 $'000 - - - 2018 $'000 2,120	2017 $'000 5,694 (1,594) - - (2) (1,596) 8 (1,588) 2017 $'000 37 (37) - 2017 $'000 738

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 – Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 – Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

The fair value of fixed interest securities at the reporting date are based on binding dealer price quotations and are categorised as level 2 in the hierarchy. There were no transfers between levels in the year ended 31 March 2018 (2017: none)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 8,255 69,086 11.95	2017 4,106 67,178
		6.11

4. DISTRIBUTION PAYABLE TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) June 2016 (paid July 2016) 31/03/2017 1.61 September 2016 (paid October 2016) 31/03/2017 1.97 November 2016 (paid December 2016) 31/03/2017 2.14 February 2017 (paid March 2017) 31/03/2017 2.95 May 2017 (Paid June 2017) 31/03/2018 2.22 August 2017 (Paid September 2017) 31/03/2018 1.65 November 2017 (paid December 2017) 31/03/2018 2.23 February 2018 (paid March 2018) 31/03/2018 2.01	2018 $'000 - - - - 1,525 1,133 1,546 1,404 5,608	2017 $'000 1,076 1,319 1,449 1,995 - - - -
		5,839

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 70,009,000 units on issue (2017: 67,934,000).

The number of units allotted during the year ended 31 March 2018 was 2,075,000 (2017: 1,690,000) for total value of $6,258,000 (2017: $5,110,000)

The number of units redeemed during the year ended 31 March 2018 was nil (2017: nil) for total value of $nil (2017: $5,110,000)

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Units on issue at the end of the year	2018 '000 67,934 2,075 70,009	2017 '000 66,244 1,690
		67,934

The net asset value of each unit per the financial statements is $3.02521 (2017: $2.98653). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

6. MATURITY ANALYSIS

The Fund invests in interest-bearing assets and other New Zealand bond investments.

The tables below show an analysis of financial assets and financial liabilities analysed according to when they are expected to be recovered or settled.

ASSETS Cash at banks Receivables Investment securities held at fair value through profit or loss Taxation receivable Unsettled sales of investments Total assets LIABILITIES Management fees payable Taxation payable Distribution payable to unitholders Funds held for unit purchases Unsettled purchase of investments Other current liabilities Total liabilities	Within 12 months $'000 540 2,152 6,299 - - 8,991 (9) (2,226) (2) (45) - (1) (2,283)	2018 Over 12 months $'000 - - 205,084 - - 205,084 - - - - - - -	Total $'000 540 2,152 211,383 - - 214,075 (9) (2,226) (2) (45) - (1) (2,283)	Within 12 months $'000 1,597 2,084 12,366 121 4,401 20,569 (9) - (3) (29) (4,500) (2) (4,543)	2017 Over 12 months $'000 - - 186,861 - - 186,861 - - - - - - -	Total $'000 1,597 2,084 199,227 121 4,401
						207,430
						(9) - (3) (29) (4,500) (2)
						(4,543)

7. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 65,965,638 units (2017: 65,955,132) valued at $199,527,000 (2017: $196,962,000) in the Fund.

Distributions

The Fund paid distributions of $5,351,000 to SLI for the year ended 31 March 2018 (2017: $3,357,000). The balance remaining as payable at the end of the year is $nil (2017: $nil).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. RELATED PARTY TRANSACTIONS (Continued)

Management fees

The Manager receives management fees from the Fund. Under the Trust Deed the Manager pays the supervisor, investment manager, custodian, registrar and auditor on behalf of the Fund and receives direct purchase application fees and interest earned on cash held for the purpose of distribution prior to the distribution being made.

Total gross management fees excluding rebates for the year ended 31 March 2018 amounted to $1,119,000 (2017: $1,095,000), with $9,000 (2017: $9,000) of outstanding accrued management fees due to the Manager at the end of the year.

For the year ended 31 March 2018, total direct purchase application fees amounted to $2,000 (2017: $2,000).

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $7,000 (2017: $nil).

Other related party transactions

As at 31 March 2018 the Fund had a payable to the Manager of $1,000 (2017: $2,000).

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (2017: $5,000).

8. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through the profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category

Financial instruments by category
	2018	2017
	$'000	$'000
Loans and receivables
Cash at banks	540	1,597
Receivables	2,152	2,084
Unsettled sales of investments	-	4,401
Financial assets and financial liabilities at fair value through profit and loss
Investment securities held at fair value through profit or loss	211,383	199,227
Other financial liabilities
Management fees payable	(9)	(9)
Distribution payable to unitholders	(2)	(3)
Funds held for unit purchases	(45)	(29)
Unsettled purchase of investments	-	(4,500)
Other current liabilities	(1)	(2)

The Fund’s activities expose it to a variety of financial risks: interest rate risk, credit risk and liquidity risk. The risk management policies used by the Fund are detailed below:

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. FINANCIAL RISK MANAGEMENT (Continued)

8a. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Interest rate risk is a direct consequence of investing in fixed income securities (mainly debt securities).

The Fund holds interest-bearing financial assets and liabilities - the values of which move up and down inversely to movements in market interest rates and is therefore exposed to interest rate risk.

The exposure of the Fund to interest rate risk is an investment decision taken by the Investment Manager and the size of that risk is limited in the mandate of the Investment Manager.

The following table analyses the Fund's interest rate risk exposure. The analysis has been prepared on the basis of the remaining period to contractual repricing or maturity dates.

ASSETS Cash at banks Investment securities held at fair value through profit or loss Total financial assets subject to interest rate risk	2018 Within 6 months Between 6- 12 months Between 1- 2 years Between 2- 5 years $'000 $'000 $'000 $'000 540 - - - 6,299 - 17,366 147,487 6,839 - 17,366 147,487	Over 5 years $'000 - 40,231 40,231	Total $'000 540 211,383
			211,923

ASSETS Cash at banks Investment securities held at fair value through profit or loss Total financial assets subject to interest rate risk	Within 6 months Between 6- 12 months $'000 $'000 1,597 - 2,075 10,290 3,672 10,290	2017 Between 1-2 years Between 2-5 years $'000 $'000 - - 10,469 112,186 10,469 112,186	Over 5 years $'000 - 64,207 64,207	Total $'000 1,597 199,227
				200,824

The tables below show the sensitivity of the Fund's Statement of Comprehensive Income to a reasonably possible change in interest rate with all other variables remaining constant. The analysis is performed on the same basis for 31 March 2017. The sensitivity of the Statement of Comprehensive Income is the effect of the assumed changes in interest rate on:

1) The interest income for the period based on floating rate financial assets held at 31 March 2018.

2) Changes in fair value of financial assets for the period based on revaluing fixed rate financial assets at 31 March 2018.

		2018	2018
				Sensitivity of changes in fair
	Sensitivity of interest income			value of investments
	100 basis points	100 basis points	100	basis points	100 basis points
	increase	decrease		increase	decrease
	$'000	$'000		$'000	$'000
Cash and cash equivalents	5	(5)		-	-
Investment securities held at fair value through profit or loss	27	(27)		(7,225)	7,587

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. FINANCIAL RISK MANAGEMENT (Continued)

		2017	2017
				Sensitivity of changes in fair
	Sensitivity of interest income			value of investments
	100 basis points	100 basis points	100	basis points	100 basis points
	increase	decrease		increase	decrease
	$'000	$'000		$'000	$'000
Cash and cash equivalents	16	(16)		-	-
Investment securities held at fair value through profit or loss	132	(132)		(7,090)	7,608

8b. Credit risk

Credit risk represents the risk that a counterparty to the financial instrument will fail to perform contractual obligations under a contract and cause the Fund to incur a loss.

With respect to credit risk arising from the financial assets of the Fund, the Fund's exposure to credit risk arises from the default of the counterparty, with the current exposure equal to the fair value of these instruments as disclosed in the Statement of Financial Position. This does not represent the maximum risk exposure that could arise in the future as a result of changes in values, but best represents the current maximum exposure at the reporting date.

The Fund holds no collateral as security or any other credit enhancements. There are no financial assets that are past due or impaired, or would otherwise be past due or impaired except for the terms having been renegotiated.

AAA to AA- $'000 NZ bank bills 1,168 NZ government and local government bonds 27,109 NZ corporate bonds 53,760 82,037 AAA to AA- $'000 NZ bank bills - NZ government and local government bonds 27,141 NZ corporate bonds 56,314 83,455	A+ to A- $'000 - - 51,916 51,916 A+ to A- $'000 507 - 39,722 40,229	2018 BBB+ to BBB- $'000 - - 77,430 77,430 2017 BBB+ to BBB- $'000 - - 69,603 69,603	Less than BBB- $'000 - - - - Less than BBB- $'000 - - 5,940 5,940	Total $'000 1,168 27,109 183,106 211,383 Total $'000 507 27,141 171,579
				199,227

The Investment Manager is responsible for assessing and monitoring the creditworthiness of borrowers, guarantors, issuers of debt securities, acceptors of bills of exchange, or other sources of credit risk.

Cash and cash equivalents

The Fund's cash and cash equivalents balances are held with ANZ Bank New Zealand Limited ('ANZ') and Westpac New Zealand Limited ('Westpac').

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. FINANCIAL RISK MANAGEMENT (Continued)

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance excluding bank overdraft with each bank above at the reporting date.

ANZ Westpac	2018 Balance $'000 Credit rating 46 AA- 494 AA- 540	2017 Balance $'000 Credit rating 31 AA- 1,566 AA- 1,597

8c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund is able to generate sufficient cash on a timely basis to meet its financial commitments and normal level of redemptions. The Investment Manager ensures that the Fund has appropriate liquidity levels within allowable benchmark ranges. In the event of abnormal levels of redemptions, timing of payments may depend on the ability of the Fund to realise its underlying investments on a timely basis, subject to provisions in the Trust Deed.

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (2017: none).

10. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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NZ BOND FUND

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Independent Auditor�s Report

To�the�unitholders�of�NZ�Bond�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�NZ�Bond�Fund��(the�fund) on�pages� 3�to�17:

comply�with�New�Zealand�Equivalents�to International�Financial�Reporting�Standards�and International�Financial�Reporting�Standards.

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $2,141,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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NZ BOND FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup98.7%oftotalassets.We donotconsidertheseinvestments tobeathighriskofsignificant misstatement,orbesubjecttoa significantlevelofjudgement, becausetheycomprisebondsor	�documentingandunderstandingtheprocessesinplacetorecord investmenttransactionsandtovaluetheportfolio.Thisincluded evaluatingthecontrolenvironmentinplaceattheadministration managerbyobtainingandreadingareportissuedbyan independentauditoronthedesignandoperationofthosecontrols
othersimplefixedinterest instruments.However,duetotheir materialityinthecontextofthe financialstatementsasawhole,they areconsideredtobetheareawhich	�agreeingasampleofthe31March2018valuationsoflistedfixed interestinstrumentstoexternallyquotedpricesandunlistedfixed interestinvestmentstobrokerquotes.Whereexternallyquotedpricesor brokerquotesarenotavailableweappliedvaluationmethodsusing observablemarketinterestratestoassessthevaluation
hadthegreatesteffectonouroverall
auditstrategyandallocationof resourcesinplanningand completingouraudit.	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe administrationmanager
	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

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Other Information

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Use of this Independent Auditor�s Report

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NZ BOND FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1000	116	39.06%	45,388	0.06%
1001-5000	94	31.65%	216,365	0.31%
5001-10000	33	11.11%	231,478	0.33%
10001-50000	41	13.80%	756,233	1.07%
50001-100000	2	0.67%	153,086	0.22%
Greater than 100000	11	3.70%	69,061,023	98.01%
TOTAL	297	100.00%	70,463,573	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	65,835,638	93.43%
Bnp Paribas Nominees NZ Limited	597,014	0.85%
Gary Anthony Vink & Jane Margaret Vink	542,667	0.77%
James Mc Daniel Thomas & Teri Jo Thomas	427,551	0.61%
Sharesies Nominee Limited	335,371	0.48%
FNZ Custodians Limited	316,153	0.45%
Investment Custodial Services Limited	303,652	0.43%
FNZ Custodians Limited	228,491	0.32%
Citibank Nominees (Nz) Ltd	130,800	0.19%
Forsyth Barr Custodians Limited	121,568	0.17%
Terence Murray Fleming & Jane Michelle Fleming & Sw Trust Services (Ten) Ltd	102,715	0.15%
Cameron Ure & Anne Lesley Ure & Vallant Hooker Trustees Ltd	100,133	0.14%
Izak Andries Delport Van Blerk & Petronella Erendina Van Blerk	99,402	0.14%
Ajd Family Nominees Limited	53,684	0.08%
Philip Ralph Smith & Wendy Carol Anne Marjorie & D A & C Trustee Services Limited	45,366	0.06%
Craigs Investment Partners Limited	38,190	0.05%
Robyn Elizabeth Taylor	34,170	0.05%
Benjamin David Bonoma & Sarah Victoria Bonoma	33,465	0.05%
Investment Custodial Services Limited	33,298	0.05%
Custodial Services Limited	32,600	0.05%
	69,411,928	98.52%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	15,908*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

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NZ Cash Fund (NZC)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2018 Presented by Smartshares Limited, Manager of the NZ Cash Fund

Report to Unitholders HIGHLIGHTS Launch Date 12-Nov-15

	March 2018	March 2017
Net Tangible Assets (NTA)	$2.986	$2.991
Units On Issue	38,923,936	41,973,936
Funds Under Management	$116,231,933	$125,553,553
Gross Return	2.59%	2.77%
Average Rating	A+	AA-
Total Fund Charges	0.33%	0.33%
Distributions paid	Quarterly

Sector Allocation

Credit Allocation

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----- Start of picture text -----

NZ Banks 78% AA 53.7%
NZ Government 9.7% A 28.3%
Corporate & SOEs 12.3% BBB 18%
Growth of $1,000
1,110
1,080
1,050
1,020
990
jan 16 jul 16 jan 17 jul 17 jan 18
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception with all distributions reinvested.

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NZ CASH FUND

MANAGER

Smartshares Limited Level 1, NZX Centre 11 Cable Street, Wellington 6140 New Zealand

SUPERVISOR

Public Trust Level 5, 40-42 Queens Street Lower Hutt 5010, Wellington New Zealand

This is also the address of the registered office.

Phone: 0800 80 87 80 Email: [email protected] Website: www.smartshares.co.nz

PRINCIPAL OFFICE OF THE MANAGER

Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand

INVESTMENT MANAGER

Nikko Asset Management New Zealand Limited Level 9, Vero Centre, 48 Shortland Street, Auckland 1010 New Zealand

DIRECTORS OF THE MANAGER

Bevan K. Miller (resigned 27 October 2017) Guy R. Elliffe A. John Williams Paul J. Baldwin Mark J. Peterson (appointed 27 October 2017)

SOLICITOR

Buddle Findlay Level 17, State Insurance Tower 1 Willis Street, Wellington 6140 New Zealand

AUDITOR

KPMG 10 Customhouse Quay PO Box 996, Wellington 6140 New Zealand

REGISTRAR

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

CORRESPONDENCE

All correspondence and enquiries to the Manager about the Fund should be addressed to the Manager, Smartshares Limited, at the above address.

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NZ CASH FUND

The Trust Deed provides that each fund is to be established by the Manager and the Supervisor entering into an establishment deed setting out the specific terms and conditions relating to that fund.

The NZ Cash Fund (the 'Fund') was created by an establishment deed dated 15 October 2015 as amended and restated on 9 September 2016 between the Manager and the Supervisor.

STATEMENT BY THE MANAGER

It is believed that there are no circumstances that may materially and adversely affect any interest of the unitholders in the assets other than those already disclosed in this report.

For and on behalf of the Manager:

Smartshares Limited

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......................................................................................... ........................................................................................
Director Director
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This statement was approved for signing at a meeting of the Directors on 24 May 2018.

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NZ CASH FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

Note INCOME Interest income Net changes in fair value of financial assets at fair value through profit or loss Total income EXPENSES Management fees expense 7 Miscellaneous expenses Total expenses Profit before tax Income tax expense 1 Profit after tax Other comprehensive income Total comprehensive income EARNINGS PER UNIT Basic and diluted earnings per unit (cents per unit) 3	2018 $'000 3,965 (136) 3,829 (406) - (406) 3,423 (958) 2,465 - 2,465 5.97	2017 $'000 4,373 (318)
		4,055
		(414) (1)
		(415)
		3,640 (1,019)
		2,621 -
		2,621
		6.26

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

Note Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 5 Redemptions by unitholders 5 Distributions to unitholders 4 Unitholders' funds at the end of the year	2018 $'000 125,538 2,465 730 (9,850) (2,637) (11,757) 116,246	2017 $'000 125,204
		2,621
		449 - (2,736)
		(2,287)
		125,538

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

Note ASSETS Cash and cash equivalents Receivables Investment securities held at fair value through profit or loss Bank term deposits TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Funds held for unit purchases Other current liabilities TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2018 $'000 1,028 283 56,845 58,737 116,893 (3) (635) (8) (1) (647) 116,246 116,893	As At 31 March 2017 $'000 1,307 423 64,375 59,774
		125,879
		(3) (336) (1) (1)
		(341)
		125,538
		125,879

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 24 May 2018.

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--------------------------------------------------------------Director

-------------------------------------------------------------Director

The accompanying notes form part of and should be read in conjunction with these financial statements.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Interest income received *Cash was applied to:* Management fees paid Taxation paid Miscellaneous expenses paid Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES *Cash was provided from:* Sale of investments Net repayments from the Manager *Cash was applied to:* Purchase of investments Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES *Cash was provided from:* Subscriptions received from unitholders *Cash was applied to:* Redemptions paid to unitholders Distributions paid to unitholders Net cash flows from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Reconciliation of profit after tax to net cash flows from operating activities Profit after tax Net changes in fair value of financial assets at fair value through profit or loss Increase in accrued interest on term deposits Increase in taxation payable Decrease in management fees payable Decrease/(increase) in receivables Net cash flows from operating activities	2018 $'000 3,898 (406) (659) - 2,833 182,603 - (173,965) 8,638 737 (9,850) (2,637) (11,750) (279) 1,307 1,028 2,465 136 (207) 299 - 140 2,833	2017 $'000 4,255 (446) (863) (1)
		2,945
		178,408 1 (179,814)
		(1,405)
		490 - (3,865)
		(3,375)
		(1,835) 3,142
		1,307
		2,621 318 (19) 156 (32) (99)
		2,945

The accompanying notes form part of and should be read in conjunction with these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

The NZ Cash Fund (the 'Fund') is a for-profit fund registered in New Zealand and established under the Financial Markets Conduct Act 2013 ('FMC Act 2013'). It is offered under a registered managed investment scheme known as the Smartshares Exchange Traded Funds. Smartshares Limited, the Manager of the Fund is a FMC reporting entity for the purpose of the FMC Act 2013.

The Fund's units are quoted on the NZX Main Board. The Fund is an investment fund that aims to outperform the S&P/NZX 90-Day Bank Bill Index (the 'Index') over a rolling one-year period. As prescribed by the Trust Deed, the Fund invests in short-term interestbearing assets and other cash and cash equivalent investments of all types represented in the Index and any other investments that are consistent with the objectives of the Fund.

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to the years presented.

Basis of preparation

Income recognition

(a) Interest income

(b) Changes in fair value of financial assets

Changes in financial assets at fair value through profit or loss are calculated as the difference between the fair value at sale, or at year end, and the fair value at the previous valuation point or cost. This includes both realised and unrealised gains and losses, but does not include interest income.

Financial assets at fair value through profit or loss

(a) Classification

The Fund classifies its underlying investments as financial assets at fair value through profit or loss. These financial assets are designated at fair value through profit or loss at inception.

The Fund classifies its underlying investments in bank term deposits as loans and receivables. Financial assets classified as loans and receivables are those with fixed or determinable payments that are not quoted in an active market.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

(b) Financial assets designated at fair value through profit or loss

Financial assets designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Fund's documented investment strategy. The Fund's policy is for the Manager to evaluate the information about these financial assets on a fair value basis together with other related financial information. The Manager has determined that investments are designated at fair value through profit or loss.

(c) Recognition, derecognition and measurement

Purchases and sales of investments are recognised on the trade date - the date on which the Fund commits to purchase or sell the investment. Financial assets designated at fair value through profit or loss are initially recognised at fair value, with transaction costs recognised in profit or loss.

Investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

Subsequent to initial recognition, all financial assets at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the Statement of Comprehensive Income when they arise.

Loans and receivables are recognised when, and only when, the Fund becomes a party to the contractual provisions of the instrument.

Loans and receivables are recognised at fair value including directly attributable transaction costs. They are subsequently measured at amortised cost using the effective interest method less an allowance for impairment where there is objective evidence that an impairment loss on the loans and receivables has been incurred.

(d) Fair value determination

Receivables

Payables

Trade payables and other payables are recognised when the entity becomes obliged to make future payments resulting from the purchase of goods and services, and are measured at amortised cost.

Cash and cash equivalents

Cash and cash equivalents are considered to be cash at banks, net of bank overdrafts. Operating activities in the Statement of Cash Flows include all transactions or events that are not investing or financing activities. Investing activities are those activities that relate to the acquisition, holding and disposal of investments not falling within the definition of cash. Financing activities are those activities that relate to cash contributions, withdrawals and distributions.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Units

The Fund issues units, which provide the holder with a beneficial interest in the Fund. The units can be put back to the Fund via a basket redemption, in accordance with the redemption rules as defined in the Trust Deed, by delivery to the investor of the cash amount and/or authorised investments that the Manager agrees to accept as consideration for, and determines to have a value equal to the price of the units issued.

Distributions to unitholders

Distributions are made up of income received from the investments less expenses paid and allowances for future liabilities. Income from investments held is attributed to unitholders on the basis of the number of units held on the record date of the distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record dates for the distributions are on the last business days of February, May, August and November of each year. Currently, distributions are paid to unitholders within 20 business days of the record date.

Taxation

The Fund is domiciled in New Zealand and is registered as a Portfolio Investment Entity (‘PIE’).

Goods and services tax ('GST')

The Fund is not registered for GST and consequently all components of the financial statements are stated inclusive of GST where appropriate.

Segment information

The Fund operates solely in the business of investment management, investing in New Zealand short-term interest-bearing securities and other cash and cash equivalent investments. The Fund receives all of its income from its investments.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Changes in accounting policies and accounting standards adopted during the year

(a) Changes in accounting policies

There have been no significant changes in accounting policies during the year. All policies have been applied on a basis consistent with those used in the prior years.

(b) New accounting standards adopted

There were no new accounting standards adopted during the year that have a material impact to the financial statements of the Fund.

Issued but not yet effective accounting standards

A number of accounting standards have been issued or revised that are not yet effective as at 31 March 2018, and have not been applied in preparing the financial statements. The Fund does not plan to adopt these standards early. The standards which are relevant to the Fund are as follows:

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NZ IFRS 15 makes significant changes to revenue recognition and adds some additional disclosures, replacing NZ IAS 18 'Revenue' and NZ IAS 11 'Construction contracts' and related interpretations. The new standard provides a five step model to be applied to all contracts with customers when determining when to recognise revenue, and at what amount. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Fund’s main sources of revenue are interest income and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, the adoption of NZ IFRS 15 is not expected to have a material impact on the Fund’s financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

1. TAXATION
Tax expense comprises: Current tax expense Total tax expense	2018 $'000 (958)	2017 $'000 (1,019)
	(958)	(1,019)

The prima facie income tax expense on profit before tax reconciles to the income tax expense in the financial statements as follows:

Income tax expense

Profit before tax Income tax using the statutory income tax rate 28% Net changes in fair value of financial assets Non taxable income Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2018 $'000 3,423 (958) - - - (958) 2018 $'000 635	2017 $'000 3,640 (1,019) - - - (1,019) 2017 $'000 403

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value can be categorised across the following 3 levels based on the degree to which their fair value is ‘observable’:

Level 1 - Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable either directly or indirectly;

Level 3 - Fair value measurements are derived from valuation methods that include inputs that are not based on observable market data.

The fair value of bank term deposits with maturities of up to twelve months is deemed to be equivalent to the face value plus accrued interest and have been categorised as level 2 in the hierarchy.

The fair value of fixed interest securities are based on binding dealer price quotations and have been categorised as level 2 in the hierarchy.

There were no transfers between levels in the year ended 31 March 2018 (2017: none).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

3. EARNINGS PER UNIT

The basic earnings per unit (EPU) is calculated by dividing the net profit/(loss) after tax attributable to the unitholders by the weighted average number of units on issue during the year.

The Fund’s diluted EPU is the same as the basic EPU since the Fund has not issued any instrument with dilutive potential.

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	2018 2,465 41,263 5.97	2017 2,621 41,866
		6.26

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

Year ended Distribution per unit (cents per unit) June 2016 (paid July 2016) 31/03/2017 1.80 September 2016 (paid October 2016) 31/03/2017 1.85 November 2016 (paid December 2016) 31/03/2017 1.21 February 2017 (paid March 2017) 31/03/2017 1.68 May 2017 (paid June 2017) 31/03/2018 1.62 August 2017 (paid September 2017) 31/03/2018 1.60 November 2017 (paid December 2017) 31/03/2018 1.56 February 2018 (paid March 2018) 31/03/2018 1.62	2018 $'000 - - - - 679 672 658 628 2,637	2017 $'000 751 773 506 706 - - - - 2,736

5. UNITHOLDERS' FUNDS

As at 31 March 2018 there were 38,924,000 units on issue (2017: 41,974,000).

The number of units allotted during the year ended 31 March 2018 was 245,000 (2017: 150,000) for total value of $730,000 (2017: $449,000).

The number of units redeemed during the year ended 31 March 2018 was 3,295,000 (2017: nil) for total value of $9,850,000 (2017: $nil).

Movement in the number of units Balance at the beginning of the year Subscriptions received during the year Redemptions made during the year Units on issue at the end of the year	2018 '000 41,974 245 (3,295) 38,924	2017 '000 41,824 150 -
		41,974

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

5. UNITHOLDERS' FUNDS (Continued)

The net asset value of each unit per the financial statements is $2.98649 (2017: $2.99085). Any difference between the net asset value announced to the market for 29 March 2018 and the net asset value per the financial statements is due to different unit pricing methodology.

6. MATURITY ANALYSIS

The Fund invests in short-term interest-bearing assets and other cash and cash equivalent investments.

The tables below show an analysis of financial assets and financial liabilities analysed according to when they are expected to be recovered or settled.

ASSETS Cash and cash equivalents Receivables Investment securities held at fair value through profit or loss Bank term deposits Total assets LIABILITIES Management fees payable Taxation payable Funds held for unit purchases Other current liabilities Total liabilities	Within 12 months $'000 1,028 283 28,485 58,737 88,533 (3) (635) (8) (1) (647)	2018 Over 12 months $'000 - - 28,360 - 28,360 - - - - -	Total $'000 1,028 283 56,845 58,737 116,893 (3) (635) (8) (1) (647)	Within 12 months $'000 1,307 423 31,678 59,774 93,182 (3) (336) (1) (1) (341)	2017 Over 12 months $'000 - - 32,697 - 32,697 - - - - -	Total $'000 1,307 423 64,375 59,774
						125,879
						(3) (336) (1) (1)
						(341)

7. RELATED PARTY TRANSACTIONS

Related party holdings

Key management personnel are the Directors of the Manager. There were no transactions with key management personnel during the year.

The Fund is managed by Smartshares Limited, which is a wholly owned subsidiary of NZX Limited, a company listed on the NZX Main Board.

SuperLife Invest managed investment scheme ('SLI'), a scheme managed by the Manager, a wholly owned subsidiary of NZX Limited, held 38,542,636 (2017: 41,753,936) units valued at $115,093,000 (2017: $124,896,000) in the Fund.

Distributions

The Fund paid distributions of $2,618,000 to SLI for the year ended 31 March 2018 (2017: $1,207,000). The balance remaining as payable at the end of the year is $nil (2017: $nil).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

7. RELATED PARTY TRANSACTIONS (Continued)

Management fees

The Manager receives management fees from the Fund. Under the Trust Deed the Manager pays the supervisor, investment manager, custodian, registrar and auditor on behalf of the Fund and receives direct purchase application fees and interest earned on cash held for the purpose of distribution prior to the distribution being made.

Total gross management fees excluding rebates for the year ended 31 March 2018 amounted to $406,000 (2017: $414,000), with $3,000 (2017: $3,000) of outstanding accrued management fees due to the Manager at the end of the year.

The total interest earned on cash at banks for the year ended 31 March 2018 amounted to $3,000 (2017: $2,000).

For the year ended 31 March 2018, total direct purchase application fees amounted to $nil (2017: $nil).

Other related party transactions

As at 31 March 2018 the Fund had a payable to the Manager of $1,000 (2017: $1,000).

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2018 was $5,000 (2017: $5,000).

8. FINANCIAL RISK MANAGEMENT

Strategy in using financial instruments

The financial instruments not accounted for at fair value through the profit and loss are short-term financial assets and financial liabilities whose carrying amounts approximate fair value.

Financial instruments by category

Financial instruments by category
	2018	2017
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,028	1,307
Receivables	283	423
Bank term deposits	58,737	59,774
Financial assets at fair value through profit and loss
Investment securities held at fair value through profit or loss	56,845	64,375
Other financial liabilities
Management fees payable	(3)	(3)
Funds held for unit purchases	(8)	(1)
Other current liabilities	(1)	(1)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. FINANCIAL RISK MANAGEMENT (Continued)

The Fund’s activities expose it to a variety of financial risks: interest rate risk, credit risk and liquidity risk. The risk management policies used by the Fund are detailed below:

8a. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Interest rate risk is a direct consequence of investing in fixed income securities (mainly debt securities).

The Fund holds interest-bearing financial assets - the values of which move up and down inversely to movements in market interest rates and is therefore exposed to interest rate risk.

The exposure of the Fund to interest rate risk is an investment decision taken by the Investment Manager and the size of that risk is limited in the mandate of the Investment Manager.

The following table analyses the Fund's interest rate risk exposure. The analysis has been prepared on the basis of the remaining period to contractual repricing or maturity dates

ASSETS Cash and cash equivalents Investment securities held at fair value through profit or loss Bank term deposits Total financial assets subject to interest rate risk	2018 Within 6 months Between 6- 12 months Between 1- 2 years Between 2- 5 years $'000 $'000 $'000 $'000 1,028 - - - 18,502 9,984 20,951 7,408 40,712 18,025 - - 60,242 28,009 20,951 7,408	Over 5 years $'000 - - - -	Total $'000 1,028 56,845 58,737
			116,610

ASSETS Cash and cash equivalents Investment securities held at fair value through profit or loss Bank term deposits Total financial assets subject to interest rate risk	2017 Within 6 months Between 6- 12 months Between 1- 2 years Between 2- 5 years $'000 $'000 $'000 $'000 1,307 - - - 23,635 8,043 18,116 14,581 37,183 22,591 - - 62,125 30,634 18,116 14,581	Over 5 years $'000 - - - -	Total $'000 1,307 64,375 59,774
			125,456

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. FINANCIAL RISK MANAGEMENT (Continued)

The tables below show the sensitivity of the Fund's Statement of Comprehensive Income to a reasonably possible change in interest rates with all other variables remaining constant. The analysis is performed on the same basis for 31 March 2018 and 31 March 2017. The sensitivity of the Statement of Comprehensive Income is the effect of the assumed changes in interest rates on:

1) The interest income for the year based on floating rate financial assets held at 31 March 2018.

2) Changes in fair value of financial assets for the year based on revaluing fixed rate financial assets at 31 March 2018.

		2018
	Sensitivity	of interest	Sensitivity of changes in fair
		income	value of investments
	100 basis	100 basis	100 basis	100 basis
	points	points	points	points
	increase	decrease	increase	decrease
	$'000	$'000	$'000	$'000
Cash and cash equivalents	10	(10)	-	-
Investment securities held at fair value through profit or loss	753	(753)	(23)	23

		2017
	Sensitivity	of interest	Sensitivity of changes in fair
		income	value of investments
	100 basis	100 basis	100 basis	100 basis
	points	points	points	points
	increase	decrease	increase	decrease
	$'000	$'000	$'000	$'000
Cash and cash equivalents	13	(13)	-	-
Investment securities held at fair value through profit or loss	468	(468)	(7)	8

8b. Credit risk

Credit risk represents the risk that a counterparty to the financial instrument will fail to perform contractual obligations under a contract and cause the Fund to incur a loss.

AAA to AA- $'000 NZ bank bills 16,629 NZ corporate bonds 15,117 NZ bank term deposits 22,682 54,428	2018 A+ to A- $'000 - 14,210 25,913 40,123	BBB+ to B- $'000 - 10,889 10,142 21,031	Total $'000 16,629 40,216 58,737
			115,582

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

8. FINANCIAL RISK MANAGEMENT (Continued)

AAA to AA- $'000 NZ bank bills - NZ corporate bonds 19,801 NZ bank term deposits 33,093 52,894	2017 A+ to A- $'000 14,607 22,477 16,910 53,994	BBB+ to B- $'000 - 7,490 9,771 17,261	Total $'000 14,607 49,768 59,774
			124,149

Cash and cash equivalents

The Fund's cash and cash equivalents are held with ANZ Bank New Zealand Limited ('ANZ') and Westpac New Zealand Limited ('Westpac').

The table below discloses the Standard & Poor's credit rating for the Fund's cash and cash equivalents balance with each bank above at the reporting date.

ANZ Westpac	2018 Balance $'000 Credit rating 9 AA- 1,019 AA- 1,028	2017 Balance $'000 Credit rating 5 AA- 1,302 AA- 1,307

8c. Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the financial liabilities that are settled by delivering cash or another financial asset.

The Fund is able to generate sufficient cash on a timely basis to meet its financial commitments and normal levels of redemptions. The Investment Manager ensures that the Fund has appropriate liquidity levels within allowable benchmark ranges. In the event of abnormal levels of redemptions, timing of payments may depend on the ability of the Fund to realise its underlying investments on a timely basis, subject to provisions in the Trust Deed.

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2018 (2017: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2018 there have been no matters or circumstances not otherwise dealt with in the financial statements that have significantly affected or may significantly affect the Fund.

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NZ CASH FUND

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Independent Auditor�s Report

To�the�unitholders�of�NZ�Cash�Fund�

Report on the financial statements

Opinion

In�our�opinion,�the�accompanying�financial statements�of�NZ�Cash�Fund��(the�fund) on�pages� 3�to�17:

comply�with�New�Zealand�Equivalents�to International�Financial�Reporting�Standards�and International�Financial�Reporting�Standards.

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Basis for opinion

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Materiality

The�scope�of�our�audit�was�influenced�by�our�application�of�materiality.�Materiality�helped�us�to�determine�the nature,�timing�and�extent�of�our�audit�procedures�and�to�evaluate�the�effect�of�misstatements,�both�individually and�on�the�financial�statements�as�a�whole.�The�materiality�for�the�financial�statements�as�a�whole�was�set�at� $1,169,000�determined�with�reference�to�a�benchmark�of�the�fund�s�total�assets.�We�chose�the�benchmark because,�in�our�view,�this�is�a�key�measure�of�the�fund�s�performance.�

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NZ CASH FUND

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Key Audit Matters

The key audit matter How the matter was addressed in our audit

Carrying amount of investments
Thefund�sportfolioofinvestments	Ourauditproceduresincluded:
makesup98.9%oftotalassets.We donotconsidertheseinvestments tobeathighriskofsignificant misstatement,orbesubjecttoa significantlevelofjudgement, becausetheycomprisebondsor	�documentingandunderstandingtheprocessesinplacetorecord investmenttransactionsandtovaluetheportfolio.Thisincluded evaluatingthecontrolenvironmentinplaceattheadministration managerbyobtainingandreadingareportissuedbyan independentauditoronthedesignandoperationofthosecontrols
othersimplefixedinterest instruments.However,duetotheir materialityinthecontextofthe financialstatementsasawhole,they areconsideredtobetheareawhich	�agreeingasampleofthe31March2018valuationsoflistedfixed interestinstrumentstoexternallyquotedpricesandunlistedfixed interestinvestmentstobrokerquotes.Whereexternallyquotedpricesor brokerquotesarenotavailableweappliedvaluationmethodsusing observablemarketinterestratestoassessthevaluation
hadthegreatesteffectonouroverall
auditstrategyandallocationof resourcesinplanningand completingouraudit.	�agreeinginvestmentholdingstoconfirmationsreceivedfromthe administrationmanager
	Wedidnotidentifyanymaterialdifferencesinrelationtothecarrying
	amountofinvestments.

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Other Information

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Use of this Independent Auditor�s Report

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NZ CASH FUND

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Responsibilities of the Manager for the financial statements

The�Manager,�on�behalf�of�the�fund,�are�responsible�for:�

the�preparation�and�fair�presentation�of�the�financial�statements�in�accordance�with�generally�accepted accounting�practice�in�New�Zealand�(being�New�Zealand�Equivalents�to�International�Financial�Reporting Standards)�and�International�Financial�Reporting�Standards;�
implementing�necessary�internal�control�to�enable�the�preparation�of�a�set�of�financial�statements�that�is fairly�presented�and�free�from�material�misstatement,�whether�due�to�fraud�or�error;�and�
assessing�the�ability�to�continue�as�a�going�concern.�This�includes�disclosing,�as�applicable,�matters�related�to� going�concern�and�using�the�going�concern�basis�of�accounting�unless�they�either�intend�to�liquidate�or�to cease�operations,�or�have�no�realistic�alternative�but�to�do�so.�

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Auditor�s Responsibilities for the Audit of the financial statements

Our�objective�is:�

to�obtain�reasonable�assurance�about�whether�the�financial�statements�as�a�whole�are�free�from�material misstatement,�whether�due�to�fraud�or�error;�and�
to�issue�an�Independent�Auditor�s�Report�that�includes�our�opinion.�

A�further�description�of�our�responsibilities�for�the�audit�of�these�financial�statements�is�located�at�the�External Reporting�Board�(XRB)�website�at:�

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/�

This�description�forms�part�of�our�Independent�Auditor�s�Report.�

The�engagement�partner�on�the�audit�resulting�in�this�independent�auditor's�report�is�Graeme�Edwards��

For�and�on�behalf�of�

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KPMG� Wellington

24�May�2018�

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	22	46.81%	7,458	0.02%
1,001-5,000	11	23.40%	27,905	0.07%
5,001-10,000	5	10.64%	33,302	0.09%
10,001-50,000	6	12.77%	107,132	0.28%
50,001-100,000	2	4.26%	145,503	0.37%
Greater than 100,000	1	2.13%	38,542,636	99.17%
TOTAL	47	100.00%	38,863,936	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2018

AS AT 30 APRIL 2018
Full Name	Total	Percentage
Superlife Nominees Limited	38,542,636	99.17%
Izak Andries Delport Van Blerk & Petronella Erendina Van Blerk	80,503	0.21%
HSBC Nominees (New Zealand) Limited	65,000	0.17%
Craigs Investment Partners Limited	30,371	0.08%
David Georges Andre Dromer	27,273	0.07%
Paul Edward Coll & Helen Marie Coll & Andrew John Anderson	16,500	0.04%
Daniel James King	12,864	0.03%
Vicki Patricia Holmes & Kenneth Mark Holmes & NZ Trustee Services Limited	10,106	0.03%
David John Thomas	10,018	0.03%
FNZ Custodians Limited	8,956	0.02%
William Peter Stronach Tuckey	6,967	0.02%
Roger Alan Dodds	6,742	0.02%
James Punnett	5,370	0.01%
Stuart Cameron Walter Holehouse	5,267	0.01%
Alistair Ian Haslett	5,000	0.01%
Kenneth Moffett	3,429	0.01%
Theresa Rose Marie Walker	3,429	0.01%
Thomas Buettner	3,382	0.01%
Grant Neilson Mackenzie	3,092	0.01%
Claire Mary Heeran	1,944	0.01%
	38,848,849	99.97%

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Paul Baldwin	0	0
Mark Peterson	0	0
Guy Elliffe	14,152*	0
John Williams	0	0

*Beneficial interest in these units is indirectly held through the director’s interest in the SuperLife KiwiSaver scheme

WAIVERS GRANTED

3.1.1(a) - compliance with the
Listing Rules	7.5 - Issues and Buybacks Affecting Control
3.1.1(b) - compliance with
Takeover Provisions	7.6.1 to 7.6.3 - Buybacks of Equity Securities, Redemptions and Financial Assistance
3.3.5 to 3.3.15 - Appointment
and Rotation of Directors	7.11.1 Allotment within 5 business days
3.4 - Proceedings and Power of
Directors	9.2.1 - Transactions with Related Parties
3.5 - Directors’ Remuneration	10.3.2 - Preliminary Announcements
Section 4 - Takeover Provisions	10.4.1(d) - Annual and Half-Year Reports availability
7.1.11 - Minimum Subscription	10.4.2 - Half-Yearly Reporting Requirements
7.3 - Issue of New Equity
Securities.	10.6.1(a) - Other Administrative Information
7.4 - Entitlements to Third Party
Securities

479

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Corporate Governance

Smartshares Limited ( Manager ) is a wholly owned subsidiary of NZX Limited ( NZX ), and is the Issuer of the Funds within the Smartshares Exchange Traded Funds scheme ( Scheme ). The Scheme’s Trust Deed contains detailed provisions governing the investment of the Scheme’s property and the role of the Manager of the Funds.

The nature of the business of the Scheme is investment in a defined set of financial products as set out in the Scheme’s Statement of Investment Policy and Objectives ( SIPO ). The Board oversees the business and affairs of the Manager, including monitoring compliance with the SIPO and the Manager’s obligations as a licensed managed investment scheme manager under the Financial Markets Conduct Act 2013 and the Trust Deed.

The Manager is subject to the oversight of the Financial Markets Authority as regulator and Public Trust as supervisor of the Scheme. The Special Division of the NZ Markets Disciplinary Tribunal regulates the Manager as a listed issuer under the NZX Main Board Listing Rules ( Rules ).

The Directors of the Manager recognise the requirement for strong corporate governance procedures, and are committed to ensuring compliance with best practice governance principles. Given the nature of the Scheme's business and corporate structure, much of the NZX Corporate Governance Code ( Code ) set out in Appendix 16 of the Rules is not appropriate to the Manager of the Funds. This section describes the current practices of Smartshares Limited relating to corporate governance matters.

CODE OF ETHICAL BEHAVIOUR

The Manager does not have a code relating to ethical behaviour, however NZX's codes apply directly to the Manager's directors and employees. These include NZX's Code of Conduct and Financial Products Trading Policy.

Code of Conduct

The Code of Conduct sets out the standards of conduct expected of directors and employees. Training on the Code of Conduct is included as part of the induction process for new directors and employees. Employees are required to reconfirm their understanding of the Code of Conduct as part of their annual performance assessment.

Financial Products Trading Policy

The Financial Products Trading Policy sets out restrictions on the Manager's directors and employees for buying and selling financial products. These products include NZX shares, and for employees considered "Restricted People" include financial products quoted on a market operated by NZX. The policy does not restrict trading in Smartshares Exchange Traded Funds. Training on the Policy is included as part of the induction process for new directors and employees.

BOARD AND COMMITTEE COMPOSITION

As at 31 March 2018, the Board comprised four Directors, Paul Baldwin (Chair), Mark Peterson, Guy Elliffe and John Williams. Mr Baldwin and Mr Peterson are employees of NZX and are therefore not Independent Directors as defined in the Rules. Mr Elliffe and Mr Williams were appointed to the Board in November 2015 and are each Independent Directors for the purposes of the Rules.

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Board Charter

In June 2016 the Manager adopted a Board Charter which sets out the Board's obligations, including responsibility for considering the Scheme's investment performance, potential conflicts of interests and related party transactions, and compliance with its legal obligations.

Appointment and Remuneration of Directors

Directors of the Manager are appointed by NZX as the sole shareholder of the Manager. The NZX Human Resources and Remuneration Committee considers the appointment and remuneration of the Manager's directors.

No director received remuneration from Smartshares Limited during the year. The Independent Directors are entitled to remuneration and other benefits from NZX. The total amount of remuneration and other benefits to which each Independent Director was entitled for the year is as listed next to their names below:

Director Remuneration

Director Remuneration
Guy Elliffe	$30,000
John Williams	$30,000

Audit Committee

The Board of the Manager has one standing committee, an Audit Committee, comprising Mr Elliffe (Committee Chairman), Mr Williams and Mr Baldwin. In March 2011, the Board resolved to adopt formal Audit Committee Terms of Reference, which were updated in June 2016. The Terms of Reference set out the Audit Committee's role in assisting the Board with financial reporting and audit matters, and contemplate that the Audit Committee will meet at least two times every year.

Insurance and Indemnification

NZX pays premiums in respect of directors’ liability insurance. The policies do not specify a premium for individuals.

The insurance provides cover against costs and expenses involved in defending legal actions and any damages or judgments awarded or entered against the individual, settlements negotiated and any legal costs or expenses awarded against the individual arising from a liability to persons (other than the company or a related body corporate) incurred in their position as a director unless the conduct involves a wilful breach of duty, improper use of inside information or position to gain any profit or advantage or any criminal, dishonest, fraudulent or malicious acts or omissions or any knowing or wilful violation of any statute or regulation.

NZX has granted indemnities to Smartshares' Directors in relation to potential liabilities and costs they may incur for acts or omissions in their role as a director of an NZX subsidiary. Similar exclusions to those under the insurance apply.

2017/2018 BOARD AND COMMITTEE ATTENDANCE

Board

Board
Director	Smartshares Board Attendance
Paul Baldwin (Chair)	7/7	(Director for 7 meetings)
Guy Elliffe	7/7	(Director for 7 meetings)
John Williams	7/7	(Director for 7 meetings)
Bevan Miller1	3/3	(Director for 3 meetings)
Mark Peterson2	3/4	(Director for 4 meetings)

1 Resigned 27 October 2017

2 Appointed 27 October 2017

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Audit Committee

Audit Committee
Members	Audit Committee Attendance
Guy Elliffe (Chair)	4/4	(Member for 4 meetings)
John Williams	4/4	(Member for 4 meetings)
Bevan Miller1	2/2	(Member for 2 meetings)
Paul Baldwin2	2/2	(Member for 2 meetings)

1 Resigned 27 October 2017 2 Appointed 27 October 2017

Manager Remuneration

The Manager is entitled to remuneration in respect of its management of the Funds. Information about the remuneration received by the Manager for the financial year ended March 2018 can be found in the financial statements for the Scheme as set out in this report. Services are provided to Smartshares Limited by employees of NZX.

Risk Management

The Board has overall responsibility for the Scheme's system of risk management and internal control. The Board of the Manager has procedures to identify areas of significant risk, and policies to manage those risks effectively.

Risk Register

Smartshares Limited management has developed a Risk Management Framework to identify, assess and mitigate risks. This includes a risk register detailing those risks which is shared with the Board. In 2018, the risk register is being reviewed to align to the format of the NZX Group

DIRECTORS’ INTERESTS

Smartshares Limited is required to maintain an Interests Register in which particulars of certain transactions and matters involving the Directors must be recorded.

The Directors have declared interests in the entities listed below. The Directors noted are those that held office between 1 April 2017 and 31 March 2018.

Director	Interest	Entity
Paul Baldwin (Chair)	Consultant NZX Wealth Technologies Limited	NZX Wealth Technologies Limited
	Director	NZX Wealth Technologies Limited
	Director	NZXWT Nominees Limited
	Director	Hobson Wealth Nominees Limited
Bevan Miller1	CFO	NZX Limited
	Director	NZX Wealth Technologies Limited
Guy Elliffe	Corporate Governance Manager	Accident Compensation Corporation
John Williams	Investment Manager	Trust Investments Management Limited
Mark Peterson2	CEO	NZX Limited
	Director	NZX Wealth Technologies Limited
	Director	New Zealand Clearing Limited
	Director	New Zealand Clearing and Depository Corporation Limited

1 Resigned from all positions 27 October 2017

2 Appointed 27 October 2017

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UNITHOLDER RELATIONS

The Board recognises the importance of providing timely and comprehensive updates to unitholders, and has policies in place to ensure that unitholders are informed of all major developments affecting the Scheme.

Reporting and Disclosure

The Manager uses the NZX Funds Management Financial Reporting Procedure to ensure financial reporting is undertaken in compliance with applicable laws.

To ensure compliance with the continuous disclosure obligations found in the Rules, the Manager has a continuous disclosure policy and process which ensures that any material information is disclosed in accordance with the rules.

GENDER AND DIVERSITY

Smartshares does not currently have a Diversity Policy but will consider implementing a policy in the future. As at 31 March 2018, the gender balance of Smartshares Directors and Officers was as follows:

	Directors	Offcers
Female	Nil	Nil
Male	4 (100%)	2 (100%)

As at 31 March 2017, the gender balance of Smartshares Directors and Officers was as follows:

	Directors	Offcers
Female	Nil	Nil
Male	4 (100%)	2 (100%)

This report is signed by and on behalf of the Board of Smartshares Limited by:

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Paul Baldwin

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Guy Elliffe

483

SMART SHARES

a Member of the NZX Group

Smartshares Limited (a wholly owned subsidiary of NZX Limited) NZX Centre, Level 1, 11 Cable Street PO Box 2959, Wellington 6140 NEW ZEALAND

Telephone: 0800 80 87 80 Email: [email protected] www.smartshares.co.nz

AI assistant

Smart NZ Bond ETF — Annual Report 2018

66241_rns_2018-06-20_d876c7a8-a939-4e23-be50-8117fe07e402.pdf

EXCHANGE TRADED FUNDS ANNUAL REPORT 2018

Contents

SMART SECTOR

SMART MEDIUM

Chairman's Report

Dear Unitholder,

Leadership Update

Schedule Four Requirements

Details of scheme

Changes relating to the scheme

Telephone: 0800 808 780

Supervisor

Share Registrar

How to find further information

Independent dispute resolution scheme

Contact details and complaints

Manager

Summary of Funds

NZ Top 50 Fund (FNZ)

Report to Unitholders HIGHLIGHTS Launch Date 10-Dec-04

NTA Per Unit

Sector Allocation

Growth of $1000*

DIRECTORY

MANAGER

SUPERVISOR

PRINCIPAL OFFICE OF THE MANAGER

AUDITOR

DIRECTORS OF THE MANAGER

SOLICITOR

INVESTMENT ADMINISTRATOR

INVESTMENT CUSTODIAN

REGISTRAR

CORRESPONDENCE

STATEMENT BY THE MANAGER

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2018

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

GENERAL INFORMATION

STATEMENT OF ACCOUNTING POLICIES

Comparative period

Basis of preparation

Financial assets at fair value through profit or loss

(a) Classification

(b) Recognition/derecognition

(c) Measurement

(d) Fair value estimation

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Receivables

Payables

Cash and cash equivalents

Units

Dividend income

Distributions to unitholders

Taxation

Goods and services tax (GST)

Securities lending

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

Segment information

Changes in accounting policies and accounting standards adopted during the period

(a) Changes in accounting policies

(b) New accounting standards adopted

Issued but not yet effective accounting standards

NZ IFRS 9: Financial Instruments

NZ IFRS 15: Revenue from contracts with customers

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. TAXATION

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

3. EARNINGS PER UNIT

4. DISTRIBUTION PAID TO UNITHOLDERS

Distributions declared and paid

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

5. UNITHOLDERS' FUNDS

6. RELATED PARTY TRANSACTIONS

Smart NZ Bond ETF Annual Report 2018