Smart US 500 ETF - Annual Report 2017

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SMART SHARES a Member of the NZX Group

SMARTSHARES EXCHANGE TRADED FUNDS SCHEME ANNUAL REPORT 2017

0800 80 87 80 www.smartshares.co.nz

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Chairman's Report..................................................02 Schedule Four Requirements .................................03 Summary of Funds..................................................06 SMART LARGE

NZ Top 50 Fund (FNZ)............................................07 NZ Top 10 Fund (TNZ)............................................28 Australian Top 20 Fund (OZY) ................................48 US 500 Fund (USF) .................................................68 Europe Fund (EUF) .................................................88 Asia Pacific Fund (APA).........................................108 Emerging Markets Fund (EMF).............................128 Total World Fund (TWF) .......................................148 US Large Value Fund (USV) ..................................168 US Large Growth Fund (USG)...............................188

SMART SECTOR

NZ Property Fund (NPF) .......................................293 Australian Property Fund (ASP) ............................314 Australian Resources (ASR)...................................334 Australian Financials Fund (ASF) ..........................355 SMART DIVIDEND NZ Dividend Fund (DIV) .......................................376 Australian Dividend Fund (ASD)...........................398 SMART INCOME Global Bond Fund (GBF)......................................420 NZ Bond Fund (NZB)............................................449 NZ Cash Fund (NZC) ............................................473 Corporate Governance ........................................496

SMART MEDIUM

NZ Mid Cap Fund (MDZ)......................................209 Australian Mid Cap Fund (MZY) ...........................230 US Mid Cap Fund (USM) ......................................251 SMART SMALL US Small Cap Fund (USS) .....................................272

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Chairman's Report

Dear Unitholder,

I am pleased to present the Smartshares Annual Report for 2017, covering the 23 Exchange Traded Funds (ETFs) that are offered by Smartshares. Smartshares is the issuer of New Zealand’s broadest range of passive funds, and we are committed to providing our investors with diversified, low-cost and easily accessible investment options.

In June 2016, Smartshares celebrated 20 years since the launch of New Zealand’s first ETF, the NZ Top 10 Fund (TNZ). New Zealand was the fourth country in the world to launch ETFs behind Canada (1990), the USA (1993) and Japan (1995), and since then, we have continued to develop different investment options so that our investors can now invest in ETFs in New Zealand, using New Zealand dollars, across the main asset classes of cash, bonds, shares and property.

In the last financial year, the number of investors have increased substantially to over 11,000 unique unitholders, with the majority of unitholders holding multiple funds. Additionally, New Zealanders who are invested via their KiwiSaver scheme or their financial advisor has increased to more than 60,000. Smartshares applications increased 177% in the 2016 calendar year, and for the first quarter of 2017 were up a record 300%, demonstrating the increasing appeal of the product range. In addition, total Smartshares funds under management has now surpassed $1.8 billion, with the NZ Top 50 Fund (FNZ) above $200 million. As a direct result of this growth, Smartshares was able to reduce the management fee for FNZ from 0.75% to 0.50% in September 2016.

Smartshares completed its transition to the Financial Markets Conduct Act (FMCA) regime in September 2016. The focus of the FMCA was to simplify and standardise information provided to investors so that they can easily compare the products provided by different financial institutions. The transition required Smartshares to undertake several changes to its

processes and drew on a significant amount of resources across the business. However, this now means all our ETFs have the same legal structure and the new Product Disclosure Statement (PDS) regime has been implemented, resulting in documents that are considerably simpler and easier to read than the previous prospectuses and investment statements. It also required in November the resettlement of each of the five original ETFs from a Group Investment Fund structure to a Unit Trust structure. Thank you to the team involved in this complex but necessary legal work that now brings all Smartshares ETFs under the same Master Trust Deed that streamlines our operations and is easier to understand for investors.

Thanks also to Craigs Investment Partners for their continued support as our market maker, an important role to ensure that there are always units available to buy or sell on market as retail investors require and that the spreads between the buy and sell prices do not exceed specified limits. Total units on issue were up 14% in the financial year.

GOVERNANCE UPDATE

In December 2016 we welcomed Paul Baldwin on to the Smartshares board, replacing former NZX CEO Tim Bennett as a director. Paul is the previous head of NZX’s Wealth Technologies business and now holds an executive consultant role. Paul’s extensive experience in the funds management industry made him ideally suited to join the Board as we continue to promote passive investment options and grow the Smartshares ETFs.

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

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Bevan Miller 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: 11 April 2017 – Open for applications

Date of the latest fund update for each fund to which the scheme relates: 27 April 2017

Reference to the scheme’s financial statements: The Scheme’s latest financial statements for the period ended 31 March 2017, including the auditor’s report relating to those statements, that have been lodged with the Registrar are included in this annual report.

The Statement of Investment Policy and Objectives – Smartshares Exchange Traded Funds (SIPO) was adopted. The SIPO sets out the investment governance and management framework, philosophy, strategies and objectives of the Scheme and funds.

The following related party transactions were approved in the accounting period (these are related party transactions because an investment manager, administration manager, or other person to whom Smartshares has contracted out some or all of its functions as a manager is a related party under the FMCA):

the appointment of BNP Paribas Fund Services Australasia Pty Limited as the administration manager for the Scheme;

Information on contributions and scheme participants Number of managed investment products on issue at the start of the accounting period: 23 Number of managed investment products on issue at the end of the accounting period: 23

the appointment of Link Market Services Limited as the unit registrar for the Scheme;
the appointment of Nikko Asset Management New Zealand Limited as the investment manager for the NZ Bonds Fund and NZ Cash Fund;

Changes relating to the scheme

On 9 September 2016, the Scheme transitioned to the Financial Markets Conduct Act 2013 ( FMCA ) regime. As part of this transition, five funds that were group investment funds under the Trustee Companies Act 1967 were migrated to a unit trust legal structure to enable those funds to be offered as part of the Scheme under the FMCA.

The Master Trust Deed – Smartshares Exchange Traded Funds and the Establishment Deeds for each of the funds were amended principally to ensure compliance with the requirements of the FMCA. Some other amendments were also made to improve the readability of the deeds, improve some processes and move the deeds more into line with current market practices.

the appointment of PIMCO Australia Pty Limited as the investment manager for the Global Bond Fund;
Smartshares carrying out financial product lending through the NZCDC Settlement System;
Nikko Asset Management New Zealand Limited buying and selling financial products issued by related entities in accordance with the SIPO;
PIMCO Australia Pty Limited buying and selling financial products issued by related entities in accordance with the SIPO; and
Smartshares buying and selling financial products issued by related entities in accordance with the SIPO.

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All related party transactions were on arm’s length terms.

Other information for particular types of managed funds

Fund	Unit Price 31 March 2017	Unit Price 31 March 2016
NZ Top 50 Fund	$2.197	$2.124
NZ Mid Cap Fund	$4.140	$3.927
Australian Mid Cap Fund	$6.356	$5.558
Australian Top 20 Fund	$3.774	$3.278
NZ Top 10 Fund	$1.368	$1.370
Australian Financials Fund	$8.441	$7.233
Australian Resources Fund	$3.742	$2.772
NZ Dividend Fund	$1.108	$1.092
Australian Dividend Fund	$1.772	$1.587
Australian Property Fund	$1.372	$1.348
Asia Pacifc Fund	$1.830	$1.622
Emerging Markets Fund	$1.147	$1.000
Europe Fund	$1.474	$1.417
Total World Fund	$1.875	$1.674
US 500 Fund	$6.204	$5.484
US Large Growth Fund	$3.458	$3.079
US Mid Cap Fund	$3.967	$3.495
US Small Cap Fund	$3.794	$3.218
US Large Value Fund	$2.742	$2.401
NZ Property Fund	$1.055	$1.105
NZ Cash Fund	$2.991	$2.994
NZ Bond Fund	$2.986	$3.012
Global Bond Fund	$3.101	$3.063

Changes to persons involved in the scheme Directors of the manager: During the accounting period, Timothy Oliver Bennett resigned as a director of Smartshares and Paul James Baldwin was appointed on 30 December 2016.

Supervisor or any of its directors: Public Trust was appointed as the supervisor on 9 September 2016. Graham Arthur Naylor, Dianne Victoria McAteer and Bevan Edward Killick were appointed on 1 November 2016. Diana Puketapu and Dinu Harry’s terms ended on 31 October 2016.

statements, annual reports, fund updates and the SIPO, is available on the offer register and the scheme register at www.business.govt.nz/disclose. A copy of the information on the offer register or scheme register is available on request to the Registrar of Financial Service Providers.

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

How to find further information

Further information relating to the Scheme and funds, including the Product Disclosure Statement, financial

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

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Contact details and complaints

Manager The manager’s contact details are: Smartshares Limited PO Box 105262 Auckland 1143 Telephone: 0800 808 780 Email: [email protected]

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

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.

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

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

Smartshares is a member of the Financial Services Complaints Limited Scheme (the supervisor is also a member), which is an independent dispute resolution scheme. Complaints about the Scheme can be made to the independent dispute resolution scheme using the contact details set out above. The independent dispute resolution scheme will not charge a complainant fee to investigate or resolve 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	$209,928,245	7.13%	13.13%	16.64%
NZ Top 10 (TNZ)	11 jun 1996	0.60%	Jun/Dec	$77,403,643	3.51%	9.05%	13.61%
Australian Top 20 (OZY)	27 feb 1997	0.60%	Jun/Dec	$97,089,212	18.19%	5.04%	6.79%
US 500 (USF)	29 jul 2015	0.35%	Jun/Dec	$105,762,155	13.71%
Europe (EUF)	29 jul 2015	0.55%	Jun/Dec	$159,326,154	6.07%
Asia Pacifc (APA)	29 jul 2015	0.55%	Jun/Dec	$59,394,976	13.51%
Emerging Markets (EMF)	29 jul 2015	0.59%	Jun/Dec	$43,121,155	14.74%
Total World (TWF)	29 jul 2015	0.56%	Jun/Dec	$31,923,093	12.66%
US Large Value (USV)	29 jul 2015	0.53%	Jun/Dec	$36,228,456	15.63%
US Large Growth (USG)	29 jul 2015	0.53%	Jun/Dec	$36,239,702	12.32%
SMART MEDIUM
NZ Mid Cap (MDZ)	16 jun 1997	0.75%	Jun/Dec	$77,204,618	9.14%	16.77%	19.69%
Australian Mid Cap (MZY)	27 sep 2004	0.75%	Jun/Dec	$96,020,118	16.80%	13.90%	8.68%
US Mid Cap (USM)	29 jul 2015	0.53%	Jun/Dec	$28,503,339	13.50%
SMART SMALL
US Small Cap (USS)	29 jul 2015	0.53%	Jun/Dec	$28,103,888	17.91%
SMART SECTOR
NZ Property (NPF)	12 nov 2015	0.54%	Jun/Dec	$49,025,308	-1.28%
Australian Property (ASP)	16 dec 2014	0.54%	Jun/Dec	$46,030,489	3.62%
Australian Resources (ASR)	7 apr 2015	0.54%	Jun/Dec	$23,915,338	36.55%
Australian Financials (ASF)	7 apr 2015	0.54%	Mar/Sep	$23,528,829	23.08%
SMART DIVIDEND
Australian Dividend (ASD)	16 dec 2014	0.54%	Jun/Dec	$70,486,888	17.20%
NZ Dividend (DIV)	7 apr 2015	0.54%	Jun/Dec	$34,029,893	7.61%
SMART INCOME
Global Bond (GBF)	12 nov 2015	0.54%	Mar/Jun/Sep/Dec	$130,463,970	4.41%
NZ Bond (NZB)	12 nov 2015	0.54%	Mar/Jun/Sep/Dec	$202,869,711	3.18%
NZ Cash (NZC)	12 nov 2015	0.33%	Mar/Jun/Sep/Dec	$125,553,553	2.77%

	Total	Smartshares	Funds	$1,792,152,732

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NZ Top 50 Fund (FNZ)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the NZ Top 50 Fund

Report to Unitholders HIGHLIGHTS Launch Date 10-Dec-04

	March 2017	March 2016
Net Tangible Assets (NTA)	$2.197	$2.124
Units On Issue	95,573,079	100,274,271
Funds Under Management	$209,928,245	$212,967,510
Gross Distribution	$0.078	$0.096
Gross Distribution Yield	3.54%	4.53%
Gross Return	7.13%	15.16%
Total Fund Charges	0.50%	0.75%
Distributions paid	Semi-annual

NTA Per Unit

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4.00
3.00
2.00
1.00
may 16 sep 16 jan 17
NTA ($)
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Sector Allocation

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Utilities 18.6%
Health Care 15.6%
Industrials 14.1%
Real Estate 10.9%
Consumer Discret. 10.7%
Telecoms 7.5%
Consumer Staples 6.3%
Energy 4.7%
Materials 4.4%
Other 7.2%
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Growth of $1000*

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3,000
2,000
1,000
0
2006 2008 2010 2012 2014 2016
Value ($)
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*Since inception with all distributions reinvested.

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NZ TOP 50 FUND

THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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. The Fund replicates the group investment fund which was known as the NZX 50 Portfolio Index Fund. On 26 October 2016 unitholders in the NZX 50 Portfolio Index Fund resolved by extraordinary resolution that it was to be resettled as a unit trust. As a result, on 7 November 2016, its assets and liabilities were resettled on the Fund. The units in the NZX 50 Portfolio Index Fund were then redeemed for units in the Fund.

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 2017, and the results of its financial performance and cash flows for the period ended 31 March 2017 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 25 May 2017.

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NZ TOP 50 FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 31 MARCH 2017

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 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) 4	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 PERIOD ENDED 31 MARCH 2017

Unitholders' funds at the beginning of the period Total comprehensive income for the period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the period	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 2017

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable Taxation payable Deferred tax liability Funds held for unit purchases Other current liabilities Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	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 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 PERIOD ENDED 31 MARCH 2017

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received Securities lending income received Tax refund received *Cash was applied to:* Management fees 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 the period Cash and cash equivalents at the end of the 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 payable (Increase) in deferred tax liability Increase in management fees payable Increase in receivables Net cash flows from operating activities	Period Ended 31 March 2017 $'000 2,346 10 (25) (394) (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 PERIOD ENDED 31 MARCH 2017

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 replicates the group investment fund which was known as the NZX 50 Portfolio Index Fund, which was resettled as the Fund 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 31 March 2017 (see Note 2).

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below.

Reporting period

These are the Fund's first financial statements and 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 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 Smartshares Board of Directors at inception as their 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 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 PERIOD ENDED 31 MARCH 2017

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 in 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 to and from, or distributions to the unitholders.

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. The Fund’s net asset value per unit 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 is attributed to unitholders on the basis of the number of units held at 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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semi-annual basis directly from the fund 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 the investments in securities listed in Note 2 and securities lending income after the deduction of management fees. With most of this income, the Fund is able to utilise imputation credits to satisfy the tax liability. 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 Statement of Financial Position 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.

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 PERIOD ENDED 31 MARCH 2017

Segment information

The Fund operates solely in the business of investment management, investing in New Zealand equities. For the period ended 31 March 2017, no individual equity investment contributed 10% or more of the Fund's dividend income. The dividend income from this investment was $nil.

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 2017, 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 - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

1. TAXATION

Tax expense comprises: Current tax expense Deferred tax movement Total tax expense	31 March 2017 $'000 (38) (62)
	(100)

The prima facie income tax expense on profit before tax from operations 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 Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods		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

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

		As at
	31	March 2017
	Number of	Fair value
	Shares
	'000	$'000
Underlying securities
A2 Milk Company Limited	2,230	6,667
Air New Zealand Limited	1,622	3,989
Argosy Property Limited	2,523	2,447
Arvinda Group Limited	1,027	1,305
Auckland International Airport Limited	1,473	9,960
Australia and New Zealand Banking Group Limited	66	2,298
Chorus Limited	1,251	5,403
Comvita Limited	117	1,010
Contact Energy Limited	2,128	10,766
Ebos Group Limited	252	4,601
Fisher & Paykel Healthcare Corporation Limited	1,100	10,666
Fletcher Building Limited	1,097	9,130
Fletcher Building LimitedFonterra Shareholders Fund	383	2,324
Freightways Limited	476	3,566
Genesis Energy Limited	1,475	3,068
Goodman Property Trust	3,108	3,745
Heartland New Zealand Limited	1,411	2,315
Incitec Pivot Limited	644	856
Infratil Limited	1,721	5,008
Kathmandu Holdings Limited	495	981
Kiwi Income Property Group Limited	3,993	5,690
Mainfreight Limited	260	5,872
Mercury NZ Limited	1,989	6,266
Meridian Energy Limited	3,702	10,365
Metlifecare Limited	399	2,448
Metro Performance Glass Limited	570	741
New Zealand Refining Company Limited	548	1,303
NZX Limited	825	890
Port of Tauranga Limited	962	4,012
Precinct Properties New Zealand Limited	3,089	3,769
Property For Industry Limited	1,390	2,246
Restaurant Brands New Zealand Limited	351	1,913
Ryman Healthcare Limited	1,208	10,156
Sandord Limited (NS)	181	1,332
Scales Corporation Limited	365	1,267
Sky Network Television Limited	1,196	4,688
SKYCITY Entertainment Group Limited	2,033	8,436
Spark New Zealand Limited	2,930	10,254
Stride Property Limited	1,120	1,938
Summerset Group Holdings Limited	680	3,517
Tegel Group Holdings Limited	591	667
Tourism Holdings Limited	366	1,373
Trade Me Group Limited	1,220	6,261
TrustPower Limited	221	1,018

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE (Continued)

Underlying securities Vector Limited Vista Group International Limited Vital Healthcare Property Trust Westpac Banking Corporation Xero limited Z Energy Limited	As at 31 March 2017 Number of Shares Fair value '000 $'000 768 2,458 252 1,506 997 2,050 83 3,185 237 4,688 1,229 8,555 208,969	As at 31 March 2017 Number of Shares Fair value '000 $'000 768 2,458 252 1,506 997 2,050 83 3,185 237 4,688 1,229 8,555 208,969
		208,969

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of JBWere (NZ) Nominees Limited, the custodian of the Fund.

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.

All financial instruments of the Fund measured at fair value are categorised as level 1 in the hierarchy. There were no transfers between levels in the period ended 31 March 2017.

4. 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 period.

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 2017 15,777 94,397
	16.71

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	31 March 2017 $'000 - 2,787 (2,787)
	-

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

5. DISTRIBUTION PAYABLE TO UNITHOLDERS (Continued)

Distributions declared and paid

Year ended Distribution per unit (cents per unit) November 2016 (paid December 2016) 31/03/2017 2.99	31 March 2017 $'000 2,787
	2,787

6. UNITHOLDERS' FUNDS

The Fund was established on 9 September 2016 by way of the Manager depositing $100 with the Supervisor.

On 7 November 2016 the Fund received assets and liabilities as a result of the resettlement of the NZX 50 Portfolio Index Fund. A total of 92,180,000 units in the Fund were issued for a total value of $190,528,000, represented by:

Investments in equity securities held at fair value through profit or loss Cash and cash equivalents Receivables Payables As at 31 March 2017 there were 95,573,000 units on issue.	$'000 187,058 3,444 27 (1)
	190,528

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 in the Statement of Changes in Unitholders' Funds.

The number of units allotted during the period ended 31 March 2017 was 99,980,000 for total value of $206,848,000.

The number of units redeemed during the period ended 31 March 2017 was 4,407,000 for total value of $9,525,000.

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

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

7. RELATED PARTY TRANSACTION

Related party holdings

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

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 (refer to note 2) 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, also a wholly owned subsidiary of NZX Limited, is an investor in the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

As at 31 March 2017 the SLI scheme held 24,241,640 units valued at $53,247,000 in the Fund.

Distributions

The Fund paid distributions of $689,000 to SLI for the period ended 31 March 2017. The balance remaining as payable at the end of the period was $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.

For the period ended 31 March 2017 total direct purchase application fees amounted to $13,000 and the total interest earned on cash at banks amounted to $21,000.

Total gross management fees excluding rebates for the period ended 31 March 2017 amounted to $403,000 with $9,000 of outstanding accrued management fees due to the Manager at the end of the period.

Other related party transactions

As at 31 March 2017 the Fund had other payables to the Manager of $2,000.

The audit fee paid by the Manager for the audit of the Fund for the period ended 31 March 2017 was $5,000.

The Fund has entered into 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 2017 the value of securities the Fund had on loan to NZCL was $5,033,000.

Total security lending fees for the period ended 31 March 2017 amounted to $15,000, with the accrued fees of $4,000 due to the Fund. 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.

On 16 February 2017 3,807,046 units were redeemed for an in specie transfer of securities valued at $8,217,000 and a cash portion of $43,000 for a total value of $8,260,000 to NZ Core Equity Trust, a fund managed by the Manager.

8. 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 the Statement of Accounting Policies.

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 PERIOD ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

Financial instruments by category

Financial instruments by category
	As at
	31 March 2017
	$'000
Loans and receivables
Cash and cash equivalents	4,946
Receivables	1,613
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	208,969
Other financial liabilities
Management fees payable	(9)
Other current liabilities	(2)
Funds held for unit purchases	(2,529)
Unsettled trades	(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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $20,897,000.

8b. Credit risk

The Fund is exposed to the potential risk of financial loss resulting from the failure of counterparties to honour fully 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 2017
	$'000
Cash and cash equivalents	4,946
Receivables	1,613

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').

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

8. 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 BNZ	31 March 2017 Balance Credit rating $'000 2,925 AA- 2,021 AA- 4,946

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’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.

8d. 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 2017, the single borrower of the Fund’s securities is New Zealand Clearing Limited (‘NZCL’), a wholly owned subsidiary of NZX Limited. Securities lent are backed by collateral of the borrower.

On 31 March 2017 the value of securities the Fund had on loan to NZCL was $5,033,000.

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017.

10. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2017 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 10 to 22 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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.

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 $2,155,000 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 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 97.0% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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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 members as a body. Our audit work has been undertaken so that we might state to the members 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

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NZ TOP 50 FUND

anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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:

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	1,096	23.75%	457,443	0.47%
1,001-5,000	1,447	31.35%	3,734,693	3.86%
5,001-10,000	828	17.94%	5,932,941	6.13%
10,001-50,000	1,107	23.99%	23,343,311	24.12%
50,001-100,000	83	1.80%	5,582,759	5.77%
Greater than 100,000	54	1.17%	57,721,932	59.65%
TOTAL	4,615	100.00%	96,773,079	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	24,690,387	24.9
Investment Custodial Services Limited	16,588,485	16.73
FNZ Custodians Limited	2,236,849	2.26
New Zealand Central Securities Depository Limited	1,809,000	1.82
Robin Michael Brews	1,602,229	1.61
Investment Custodial Services Limited	1,535,324	1.55
David Robert Rich & Carolyn Frances Elley	1,477,524	1.49
Investment Custodial Services Limited	728,845	0.73
Custodial Services Limited	716,944	0.72
Philippa Jane Stubbins & Comac Trustee Limited	571,784	0.58
James Mc Daniel Thomas & Teri Jo Thomas	554,080	0.56
Ajd Family Nominees Limited	537,463	0.54
Custodial Services Limited	354,491	0.36
Trevor Paul Fitzjohn & John Livingston Marshall & Strato Cotsilinis	287,538	0.29
Custodial Services Limited	284,104	0.29
Marjory Elizabeth Davie	233,614	0.24
Gil David Retter	232,479	0.23
Kimbal Stephen Von Lanthen & Deidra Francesca Von Lanthen & Public Trust Limited	220,404	0.22
FNZ Custodians Limited	208,031	0.21
Kynance Holdings Limited	204,316	0.21
	55,073,891	55.54

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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 2017. The total number of units on issue at 31 March 2017 was 95,573,079.

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	1,147*	0
Paul Baldwin	0	0
Guy Elliffe	2,289*	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 2017:

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

In October 2015, Special Division granted Smartshares a waiver from Listing Rules 3.3.1(c), 3.3.3 and 3.6.2(c) to enable Mr Elliffe and Mr Williams to continue to be regarded as Independent Directors following their appointment to the board of SuperLife Limited in May 2016. As Smartshares and SuperLife Limited were amalgamated on 9 November 2016, Smartshares no longer relies on this waiver. In June 2016, Special Division granted Smartshares a waiver from Listing Rule 9.2.1 to enable Smartshares to amalgamate with SuperLife Limited without the need for unitholder approval. Smartshares no longer relies on this waiver.

On 8 September 2016, Special Division granted fully, partially or subject to conditions, waivers from the following Listing Rules in relation to the transition of the group investment funds to the FMCA:

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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NZ Top 10 Fund (TNZ)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the NZ Top 10 Fund

Report to the Unitholders HIGHLIGHTS Launch Date 11-Jun-96

	March 2017	March 2016
Net Tangible Assets (NTA)	$1.368	$1.370
Units On Issue	56,582,943	49,832,943
Funds Under Management	$77,403,643	$68,255,185
Gross Distribution	$0.051	$0.065
Gross Distribution Yield	3.76%	4.75%
Gross Return	3.51%	17.81%
Total Fund Charges	0.60%	0.60%
Distributions paid	Semi-annual

Sector Allocation

NTA Per Unit

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

1.75
Health Care 22.5%
1.50
Utilities 16.6%
Telecoms 15.3%
Industrials 15%
1.25 Materials 13.8%
Consumer Discret. 10.2%
Energy 6.6%
1.00
may 16 sep 16 jan 17
Growth of $1000
4,000
3,000
2,000
1,000
0
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1000*

*Since inception with all distributions reinvested.

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NZ TOP 10 FUND

THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (ceased 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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. The Fund replicates the group investment fund which was known as the NZX 10 Fund. On 26 October 2016 unitholders in the NZX 10 Fund resolved by extraordinary resolution that it was to be resettled as a unit trust. As a result, on 7 November 2016, its assets and liabilities were resettled on the Fund. The units in the NZX 10 Fund were then redeemed for units in the Fund.

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 25 May 2017.

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NZ TOP 10 FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 31 MARCH 2017

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 7 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) 4	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 PERIOD ENDED 31 MARCH 2017

Unitholders' funds at the beginning of the period Total comprehensive income for the period Subscriptions from unitholders Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the period	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 2017

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Deferred tax liability Funds held for unit purchases TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	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 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 PERIOD ENDED 31 MARCH 2017

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received Securities lending income received *Cash was applied to:* Management fees 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 increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the 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 payable (Increase) in deferred tax liability Increase in management fees payable Increase in receivables Net cash flows from operating activities	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 PERIOD ENDED 31 MARCH 2017

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 replicates the group investment fund which was known as the NZX 10 Fund, which was resettled as the Fund on 7 November 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that tracked 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 in equity securities are valued at fair value according to last traded market prices on the NZX Main Board on 31 March 2017 (see Note 2).

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below.

Reporting period

These are the Fund's first financial statements and 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

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 their performance was 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 committed to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments had 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

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 and securities not falling within the definition of cash. Financing activities are those activities that relate to cash contributions to and from, or distributions to the unitholders.

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 and security lending income 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 at 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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semiannual basis directly from the fund 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

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

Segment information

The Fund operates solely in the business of investment management, investing in New Zealand equities. For the period ended 31 March 2017, 4 equity investments individually contributed 10% or more of the Fund's dividend income. The individual dividend income received from these four equity investments was $168,000, $251,000, $170,000 and $415,000.

Issued but not yet effective accounting standards

A number of accounting standards have been issued or revised that are not yet effective as at 9 November 2016, 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 - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

1. TAXATION

Tax expense comprises: Current tax expense Deferred tax movement Total tax expense	31 March 2017 $'000 (14) (22)
	(36)

The prima facie income tax expense on profit before tax from operations 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 Current period movement Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods		31 March 2017 $'000 2,707
		(758) 362 259 (39)
		(176) 140
		(36)

		31 March 2017 $'000 (22) (22) 31 March 2017 $'000 513

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

		As at
	31	March 2017
	Number of	Fair value
	Shares
	'000	$'000
Underlying securities
Auckland International Airport Limited	1,683	11,376
Contact Energy Limited	1,296	6,559
Fletcher Building Limited	1,257	10,460
Fisher & Paykel Healthcare Corporation Limited	1,028	9,972
Meridian Energy Limited	2,182	6,111
Ryman Healthcare Limited	842	7,085
Sky City Entertainment Group Limited	1,198	4,973
Sky Network Television Limited	705	2,764
Spark New Zealand Limited	3,320	11,620
Z Energy Limited	725	5,044
		75,964

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.

All financial instruments of the Fund measured at fair value are categorised as level 1 in the hierarchy. There were no transfers between levels in the period ended 31 March 2017.

4. 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 period.

The Fund’s diluted EPU is the same as the basic EPU since the Fund had 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 2017 2,671 56,233
	4.75

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	31 March 2017 $'000 - 1,245 (1,245) -

Distributions declared and paid

Year ended Distribution per unit (cents per unit) November 2016 (paid December 2016) 31/03/2017 2.24	31 March 2017 $'000 1,245
	1,245

6. UNITHOLDERS' FUNDS

The Fund was established on 9 September 2016 by way of the Manager depositing $100 with the Supervisor.

On 7 November 2016 the Fund received assets and liabilities as a result of the resettlement of the NZX 10 Fund. A total of 56,583,000 units in the Fund were issued for a total value of $76,090,000, represented by:

Investments in equity securities held at fair value through profit or loss Cash and cash equivalents Receivables	$'000 74,581 1,488 21
	76,090

As at 31 March 2017 there were 56,583,000 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 were represented by these units. The relevant movements are shown on the Statement of Changes in Unitholders' Funds.

The number of units allotted during the period ended 31 March 2017 was 57,583,000 for total value of $77,440,000.

The number of units redeemed during the period ended 31 March 2017 was 1,000,000 for total value of $1,380,000.

Movement in the number of units Balance at the beginning of the period Subscriptions received during the period Redemptions made during the period Units on issue at the end of the period	31 March 2017 '000 - 57,583 (1,000)
	56,583

The net asset value of each unit per the financial statements is $1.36942. Any difference between the net asset value announced to the market for 31 March 2017 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 PERIOD ENDED 31 MARCH 2017

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 period.

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, also a wholly owned subsidiary of NZX Limited, is an investor in the Fund.

As at 31 March 2017 the SLI scheme held 5,637,000 units valued at $7,711,000 in the Fund.

Distributions

The Fund paid distributions of $126,000 to SLI for the period ended 31 March 2017. The balance remaining as payable at the end of the period was $nil.

Management fees

The Manager received 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.

For the period ended 31 March 2017, total direct purchase application fees amounted to $2,000 and the total interest earned on cash at banks amounted to $7,000.

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

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the period ended 31 March 2017 was $5,000.

The Fund has entered into a securities lending agreement with New Zealand Clearing Limited ('NZCL'), a wholly owned subsidiary of NZX Limited. Securities lent were backed against the collateral of the borrower. As at 31 March 2017 the value of securities the Fund had on loan to NZCL was $2,535,000.

Total security lending fees for the period ended 31 March 2017 amounted to $5,000, with the accrued fees due to the Fund of $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.

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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

Financial instruments by category

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

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $7,596,000.

8b. 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 2017
	$'000
Cash and cash equivalents	750
Receivables	1,005

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').

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

8. 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 BNZ	31 March 2017 Balance Credit rating $'000 277 AA- 473 AA- 750

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.

8d. 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 will 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.

At 31 March 2017, the single borrower of the Fund’s securities was New Zealand Clearing Limited (‘NZCL’), a wholly owned subsidiary of NZX Limited. Securities lent were backed by collateral of the borrower.

On 31 March 2017 the value of securities the Fund had on loan to NZCL was $2,535,000.

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017.

10. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2017, 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 31 to 42 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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 $777,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 97.7% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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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

anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	280	10.33%	93,312	0.16%
1,001-5,000	645	23.80%	1,836,671	3.22%
5,001-10,000	542	20.00%	4,126,675	7.23%
10,001-50,000	1,103	40.70%	22,632,966	39.65%
50,001-100,000	101	3.73%	6,841,638	11.99%
Greater than 100,000	39	1.44%	21,551,681	37.76%
TOTAL	2,710	100.00%	57,082,943	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	5,636,864	9.87
Investment Custodial Services Limited	4,426,937	7.76
Anna Elisabeth Minnaar	1,865,763	3.27
Custodial Services Limited	1,447,352	2.54
New Zealand Central Securities Depository Limited	1,097,539	1.92
Philippa Jane Stubbins & Comac Trustee Limited	646,016	1.13
Public Trust Lifetime Income Nominees Limited	636,824	1.12
Eeshala Nominees Limited	506,089	0.89
Custodial Services Limited	505,793	0.89
Custodial Services Limited	455,491	0.8
Thomas William Schnackenberg & Annette Helen Schnackenberg	336,190	0.59
Julian Smith Family Trust Custodian Limited	214,410	0.38
Lynne Marie Marx Sheather & Walter Brent Sheather & Patricia Vera Sheather & Simon
Middleton Palmer	207,576	0.36
Kathryn May Kelly & Logan Leith Trustee Limited	201,449	0.35
ASB Nominees Limited	200,000	0.35
Wallace John Semmens & Rose Agnes Semmens & Ernest William Gartrell	199,767	0.35
Anthony James Marquette & Beatrice Reine Marquette	172,874	0.3
Diana Renker	170,012	0.3
Brian Jonathan Collett	169,307	0.3
Craigs Investment Partners Limited	164,742	0.29
	19,260,995	33.76

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	612*	0
Paul Baldwin	0	0
Guy Elliffe	1,222*	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.

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

As Smartshares and SuperLife Limited were amalgamated on 9 November 2016, Smartshares no longer relies on this waiver. In June 2016, Special Division granted Smartshares a waiver from Listing Rule 9.2.1 to enable Smartshares to amalgamate with SuperLife Limited without the need for unitholder approval. Smartshares no longer relies on this waiver.

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Australian Top 20 Fund (OZY) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Australian Top 20 Fund

Report to the Unitholders HIGHLIGHTS Launch Date 27-Feb-97

	March 2017	March 2016
Net Tangible Assets (NTA)	$3.774	$3.278
Units On Issue	25,726,556	25,426,556
Funds Under Management	$97,089,212	$83,337,063
Gross Distribution	$0.088	$0.161
Gross Distribution Yield	2.32%	4.90%
Gross Return	18.19%	-9.27%
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
Financials 57.4%
Materials 10.9%
Consumer Staples 9%
3.50
Health Care 6%
Telecoms 5.9%
Real Estate 4.2%
Industrials 4.1%
3.00 Energy 2.5%
may 16 sep 16 jan 17
Growth of $1,000
4,000
3,000
2,000
1,000
0
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception with all distributions reinvested.

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AUSTRALIAN TOP 20 FUND

THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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. The Fund replicates the group investment fund which was known as the NZX Australian 20 Leaders Index Fund. On 26 October 2016 unitholders in the NZX Australian 20 Leaders Index Fund resolved by extraordinary resolution that it was to be resettled as a unit trust. As a result, on 7 November 2016, its assets and liabilities were resettled on the Fund. The units in the NZX Australian 20 Leaders Index Fund were then redeemed for units in the Fund.

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 2017, and the results of its financial performance and cash flows for the period ended 31 March 2017 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 25 May 2017.

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AUSTRALIAN TOP 20 FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 31 MARCH 2017

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 7 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) 4	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 PERIOD ENDED 31 MARCH 2017

Unitholders' funds at the beginning of the period Total comprehensive income for the period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the period	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 2017

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Deferred tax payable Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 $'000 2,629 626 95,355
	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 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 PERIOD ENDED 31 MARCH 2017

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 period Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the 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 gain Increase in taxation payable Increase in deferred tax payable Increase in management fees payable Increase in receivables Net cash flows from operating activities	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 PERIOD ENDED 31 MARCH 2017

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 replicates the group investment fund which was known as the NZX Australian 20 Leaders Index Fund, which was resettled as the Fund 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/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 31 March 2017 (see Note 2).

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below.

Basis of preparation

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.

Reporting period

These are the Fund's first financial statements and are for the period 9 September 2016 to 31 March 2017.

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 their 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 were 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 were 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 PERIOD ENDED 31 MARCH 2017

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 date for the Fund is on the last business day of May and November in each year. Currently, distributions to unitholders are made on a semi-annual basis directly from the fund 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 the investment in securities listed in Note 2 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. With some of this income, the Fund is able to utilise foreign withholding tax credits to satisfy the tax liability. The Fund pays tax to the extent that the foreign withholding tax credits do not cover the tax liability in full. The temporary differences relate to accrued dividends.

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 PERIOD ENDED 31 MARCH 2017

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. For the period ended 31 March 2017, three equity investments individually contributed 10% or more of the Fund's dividend income. The individual dividend income received from these equity investments amounted to $228,000, $342,000 and $306,000.

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 2017, and have not been applied in preparing the financial statements. The Fund did not adopt these standards early. The standards which are relevant to the Fund are as follows:

NZ IFRS 9 Financial Instruments - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

1. TAXATION

Tax expense comprises: Current tax expense Deferred tax movement Total tax expense	31 March 2017 $'000 (346) (159) (505)

The prima facie income tax expense on profit before tax from operations 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
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 movements
Closing balance
Imputation credit account (ICA)
Imputation credits available for use in subsequent periods

31 March 2017
$'000
17,507
(4,902)
4,413
(15)
(34)
(13)
(551)
46
(505)
31 March 2017
$'000
-
(159)
(159)
31 March 2017
$'000
402

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

		As At
	31	March 2017
	Number of	Fair Value
	Shares
	'000	$'000
Underlying securities
AMP Limited	273	1,545
ANZ Banking Group Limited	271	9,421
BHP Billiton Limited	297	7,780
Brambles Industries Limited	147	1,497
Commonwealth Bank Australia	159	14,925
CSL Limited	42	5,756
Insurance Australia Group Limited	219	1,444
Macquarie Group Limited	31	3,095
National Australia Bank Limited	247	8,995
QBE Insurance Group Limited	126	1,774
Rio Tinto Limited	39	2,586
Suncorp Group Limited	119	1,714
Telstra Corp Limited	1,099	5,589
Westpac Banking Corp	310	11,865
Wesfarmers Limited	105	5,153
Woolworths Limited	119	3,442
Woodside Petroleum Limited	67	2,344
Scentre Group	492	2,303
Westfield Corporation	177	1,712
Transurban Group	190	2,415
		95,355

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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.

All financial instruments of the Fund measured at fair value are categorised as level 1 in the hierarchy. There were no transfers between levels in the period ended 31 March 2017.

4. 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 period.

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

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

4. EARNINGS PER UNIT (Continued)

Profit after tax ($'000) Weighted average number of units ('000) Basic and diluted earnings per unit (cents per unit)	31 March 2017 17,002 25,877 65.70

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable Distributions declared and paid Year ended Distribution per unit (cents per unit) November 2016 (paid December 2016) 31/03/2017 2.86	31 March 2017 $'000 - 738 (738)
	-
	31 March 2017 $'000 738
	738

6. UNITHOLDERS' FUNDS

The Fund was established on 9 September 2016 by way of the Manager depositing $100 with the Supervisor.

On 7 November 2016 the Fund received assets and liabilities as a result of the resettlement of the NZX Australian 20 Leaders Index Fund. A total of 26,177,000 units in the Fund were issued for a total value of $82,359,000, represented by:

Investments in equity securities held at fair value through profit or loss Cash and cash equivalents Receivables Payables	$'000 81,060 1,030 270 (1)
	82,359

As at 31 March 2017 there were 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 asset 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 period ended 31 March 2017 was 26,477,000 for total value of $83,382,000.

The number of units redeemed during the period ended 31 March 2017 was 750,000 for total value of $2,542,000.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS (Continued)

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

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

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 period.

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, also a wholly owned subsidiary of NZX Limited, is an investor in the Fund.

As at 31 March 2017 the SLI scheme held 1,393,486 units valued at $5,259,000 in the Fund

Distributions

The Fund paid distributions of $37,000 to SLI for the period ended 31 March 2017. The balance remaining as payable at the end of the period was $nil.

Management fees

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

For the period ended 31 March 2017, total direct purchase application fees amounted to $2,000 and the total interest earned on cash at banks amounted to $6,000.

Total gross management fees for the period ended 31 March 2017 amounted to $219,000 with $5,000 of outstanding accrued management fees due to the Manager at the end of the period.

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the the period ended 31 March 2017 was $5,000.

8. 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 PERIOD ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)
Financial instruments by category	As At
	31 March 2017
	$'000
Loans and receivables
Cash and cash equivalents	2,629
Receivables	626
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	95,355
Other financial liabilities
Management fees payable	(5)
Unsettled trades	(13)
Funds held for unit purchases	(1,150)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $9,536,000.

8b. 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 2017
	$'000
Cash and cash equivalents	2,629
Receivables	626

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 PERIOD ENDED 31 MARCH 2017

8. 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 2017 Balance Credit rating $'000 1,197 AA- 207 A 1,225 AA- 2,629

8c. 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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $9,618,000.

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

The table below summarises the Fund’s exposure to currency risks.
	31 March 2017
	$'000
Australian dollar cash held (NZD)	207
Receivables	614
Investments in equity securities held at fair value through profit or loss	95,355

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017.

10. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2017 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 51 to 62 :

We have audited the accompanying financial statements which comprise:
�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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.

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Basis for opinion

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 $986,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 96.7% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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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

anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	476	17.19%	183,503	0.71%
1,001-5,000	1,159	41.86%	3,170,904	12.18%
5,001-10,000	625	22.57%	4,300,809	16.52%
10,001-50,000	471	17.01%	8,570,410	32.93%
50,001-100,000	21	0.76%	1,398,637	5.37%
Greater than 100,000	17	0.61%	8,402,293	32.28%
TOTAL	2,769	100.00%	26,026,556	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
Investment Custodial Services Limited	2,789,373	10.72
SuperLife Nominees Limited	1,393,486	5.35
Anna Elisabeth Minnaar	1,043,841	4.01
FNZ Custodians Limited	538,321	2.07
Michael Donald Wight & Geraldine Louise Wight	386,486	1.48
New Zealand Central Securities Depository Limited	383,649	1.47
FNZ Custodians Limited	272,405	1.05
Aratrust Limited	241,500	0.93
Custodial Services Limited	233,363	0.9
Philippa Jane Stubbins & Comac Trustee Limited	203,209	0.78
Forsyth Barr Custodians Ltd	160,264	0.62
Michael Donald Wight & Geraldine Louise Wight & David Leonard Gill	154,627	0.59
Judith Anne Knowles	135,688	0.52
David Owen Neill & Jennifer Jill Neill & Lindsay John Brown	126,037	0.48
Ajd Family Nominees Limited	120,988	0.46
Fund Management Limited Mft	115,346	0.44
Custodial Services Limited	103,710	0.4
Eeshala Nominees Limited	100,000	0.38
Mona B Rodgerson & Anthony M Grace & John F Rodgerson	96,086	0.37
Custodial Services Limited	84,264	0.32
	8,682,643	33.34

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial		Non-Benefcial
Bevan Miller		182*	0
Paul Baldwin		0	0
Guy Elliffe		362*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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US 500 Fund (USF)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the NZ Top 50 Fund

Report to Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$6.204	$5.484
Units On Issue	17,046,501	14,549,500
Funds Under Management	$105,762,155	$79,782,474
Gross Distribution	$0.029	$0.040*
Gross Distribution Yield	0.46%	N/A
Gross Return	13.71%	-4.36%*
Total Fund Charges	0.35%	0.35%
Distributions paid	Semi-annual

Since Inception

NTA Per Unit

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

6.50
6.00
5.50
5.00
may 16 sep 16 jan 17
NTA ($)
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Sector Allocation

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I.T. 22.1%
Financials 14.4%
Health Care 13.9%
Consumer Discret. 12.3%
Industrials 10.1%
Consumer Staples 9.3%
Energy 6.6%
Utilities 3.2%
Materials 2.8%
Other 5.3%
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Growth of $1,000*

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1,200
1,000
800
sep 15 jan 16 may 16 sep 16 jan 17
Value ($)
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*Since inception with all distributions reinvested.

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US 500 FUND

THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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'). Under a Deed of Retirement and Appointment dated 6 September 2016, Trustees Executors Limited retired as the trustee and Public Trust was appointed as the Supervisor. 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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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US 500 FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
7
Foreign exchange loss
Total expenses
Profit/(loss) before tax
Income tax expense
1
Profit/(loss) after tax
Other comprehensive income
Total comprehensive income/(loss)
EARNINGS PER UNIT
Basic and diluted earnings/(losses) per unit (cents per unit)
4

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
1,908
1,191
12,764
(3,396)
55
-
14,727
(2,205)
(277)
(144)
-
(56)
(277)
(200)
14,450
(2,405)
(1,227)
(618)
13,223
(3,023)
-
-
13,223
(3,023)
80.95
(23.52)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income/(loss) for the year/period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 79,509 - 13,223 (3,023) 14,312 85,262 (613) (2,378) (330) (352) 13,369 82,532 106,101 79,509

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 2017

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through proft or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 1,401 727 106,010 79,191 107,411 79,918 (3) (20) (333) (118) (479) (108) (495) (163) (1,310) (409) 106,101 79,509 107,411 79,918

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 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/(loss) 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
Foreign exchange (gain)/loss
Increase in taxation payable
(Decrease)/increase in management fees payable
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
1,622
1,012
(294)
(124)
(726)
(321)
602
567
-
-
(2,262)
(675)
(2,262)
(675)
2,670
1,196
(3)
(9)
(330)
(352)
2,337
835
677
727
727
-
(3)
-
1,401
727
13,223
(3,023)
(12,764)
3,396
(55)
56
215
118
(17)
20
602
567

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 2017

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 changed its name from US 500 Index Trust to US 500 Fund effective 16 September 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in 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 31 March 2017 (see Note 2).

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.

Comparative period and amounts

These financial statements are for the year ended 31 March 2017. The comparative figures are for the period 29 July 2015 to 31 March 2016. Where necessary, comparative figures have been restated to correspond to the current year classifications.

Basis of preparation

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 their 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 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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 holders of units

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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semi-annual basis directly from the Fund 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 investments in securities subject to the Fair Dividend Rate method (‘FDR’) listed in Note 2 after the deduction of management fees. FDR income is based on the market value of the security. With some of this income, the Fund is able to utilise foreign withholding tax credits to satisfy the tax liability. 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 2017

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.

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; the impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2017 2016 $'000 $'000 (1,227) (618) (1,227) (618)

The prima facie income tax expense on profit/(loss) before tax from operations 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 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	2017 $'000 14,450
	(4,046) 3,573 533 (1,287)
	(1,227) (1,227)

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of units '000 Underlying fund Vanguard S&P 500 ETF 343	2017 2016 Fair value Number of units Fair value $'000 '000 $'000 106,010 292 79,191 106,010 79,191

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price on the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

All financial instruments of the Fund measured at fair value have been categorised as level 1 in the hierarchy. There were no transfers between levels in the year ended 31 March 2017 (31 March 2016: none).

4. 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/(losses) per unit (cents per unit)	2017 2016 13,223 (3,023) 16,334 12,853 80.95 (23.52)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 - - 330 352 (330) (352) - -

Distributions declared and paid

Year Ended Distribution per unit (cents per unit) October 2015 (paid November 2015) 31/03/2016 2.44 January 2016 (paid February 2016) 31/03/2016 0.46 April 2016 (paid May 2016) 31/03/2017 0.69 November 2016 (paid December 2016) 31/03/2017 1.37	2017 2016 $'000 $'000 - 286 - 66 100 - 230 - 330 352

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 17,047,000 units on issue (31 March 2016: 14,550,000).

The number of units allotted during the year ended 31 March 2017 was 2,607,000 (31 March 2016: 14,970,000) for total value of $14,312,000 (31 March 2016: $85,262,000).

The number of units redeemed during the year ended 31 March 2017 was 110,000 (31 March 2016: 420,000) for total value of $613,000 (31 March 2016: $2,378,000).

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	2017 2016 '000 '000 14,550 - 2,607 14,970 (110) (420) 17,047 14,550

The net asset value of each unit per the financial statements is $6.22403 (31 March 2016: $5.46454). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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 superannuation scheme (“SLSS”), a scheme managed by SuperLife Limited, a wholly owned subsidiary of NZX Limited, was an investor in the Fund in the year between 1 April 2016 and 27 October 2016. Effective 28 October 2016, the investments were transferred from SLSS to SuperLife Invest managed investment scheme (“SLI”), a scheme managed by the Manager, also a wholly owned subsidiary of NZX Limited. The transfer of assets and change of Manager was completed as part of the transition of the SuperLife scheme to the Financial Markets Conduct Act 2013.

As at 31 March 2017, SLI held 15,994,898 units valued at $99,238,000 in the Fund. As at 31 March 2016, SLSS held 14,248,631 units valued at $78,055,000 in the Fund.

Distributions

The Fund paid distributions of $98,000 (31 March 2016: $348,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining payable as at 31 March 2016 was $nil. The Fund paid distributions of $220,000 to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $277,000 (31 March 2016: $144,000), with $3,000 (31 March 2016: $20,000) 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 2017 amounted to $25,000 (31 March 2016: $4,000).

The total direct purchase application fees for the year ended 31 March 2017 amounted to $13,000 (31 March 2016: $5,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund at the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

8. 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	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,401	727
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	106,010	79,191
Other financial liabilities
Management fees payable	(3)	(20)
Funds held for unit purchases	(479)	(108)
Unsettled trades	(495)	(163)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $10,601,000 (31 March 2016: $7,919,000).

8b. 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

2017	2016
$'000	$'000
1,401	727

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. 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'), 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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 478 AA- 108 AA- - A - A- 923 AA- 619 AA- 1,401 727

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'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.

8d. 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 2017 would have decreased/increased net profit and unitholders funds by $10,552,000 (31 March 2016: $7,903,000).

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

	2017	2016
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	106,010	79,191
Unsettled trades	(495)	(163)

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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.

Auditor's Report

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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 71 to 82 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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 $1,074,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 98.7% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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US 500 FUND

anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	490	65.16%	175,465	1.02%
1,001-5,000	207	27.53%	458,596	2.67%
5,001-10,000	35	4.65%	241,075	1.41%
10,001-50,000	19	2.53%	306,467	1.79%
50,001-100,000	-	0.00%	-	0.00%
Greater than 100,000	1	0.13%	15,974,898	93.11%
TOTAL	752	100.00%	17,156,501	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	15,974,898	93.11
FNZ Custodians Limited	35,168	0.2
Marcus Spencer Daniell	21,691	0.13
Paul Anthony Kathro	19,662	0.11
Ian Robert Mckim & Anne Marie Mckim	19,285	0.11
Craigs Investment Partners Limited	18,669	0.11
Stephen Allan Mcgregor & Jane Costigan	18,624	0.11
Paul Edward Coll & Helen Marie Coll & Andrew John Anderson	17,854	0.1
Jon Patrick Finn Angelo	16,268	0.09
Thomas Edward Robinson & Tsui Wen Chen & David Bruce Bell	15,764	0.09
Geoffrey John Duckett	15,082	0.09
Michael Gray Warrington & Wendy Marie Warrington & Suzanne Gaye Mcpherson	15,035	0.09
Nigel Russell Fannin & Rosemary Anne O`Brien & Kevin Wayne Harborne	15,035	0.09
Petra Mingneau	13,365	0.08
Jan Feld	13,258	0.08
Phillip Charles Boyle & Teresa Allison Cuthbert	11,036	0.06
John Reginald Spray	10,468	0.06
Investment Custodial Services Limited	10,085	0.06
ASB Nominees Limited	10,085	0.06
Janice Mary Graham	10,033	0.06
	16,281,365	94.89

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	1,826*	0
Paul Baldwin	0	0
Guy Elliffe	3,645*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Europe Fund (EUF) FINANCIAL STATEMENTS FOR THE PERIOD ENDEN 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Europe Fund

Report to the Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$1.474	$1.417
Units On Issue	108,103,400	57,933,400
Funds Under Management	$159,326,154	$82,113,642
Gross Distribution	$0.027	$0.008*
Gross Distribution Yield	1.85%	N/A
Gross Return	6.07%	-13.18%*
Total Fund Charges	0.55%	0.57%
Distributions paid	Semi-annual

Since Inception

NTA Per Unit

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1.60
1.40
1.20
may 16 sep 16 jan 17
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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1,200
1,000
800
600
jan 16 jul 16 jan 17
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

THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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

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'). Under a Deed of Retirement and Appointment dated on 6 September 2016, Trustees Executors Limited retired as trustee and Public Trust was appointed as the Supervisor. 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 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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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EUROPE FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
7
Total expenses
Profit/(loss) before tax
Income tax expense
1
Profit/(loss) after tax
Other comprehensive income
Total comprehensive income/(loss)
EARNINGS PER UNIT
Basic and diluted earnings/(losses) per unit (cents per unit)
4

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
3,486
1,158
11,354
(12,525)
26
13
14,866
(11,354)
(492)
(246)
(492)
(246)
14,374
(11,600)
(1,377)
(704)
12,997
(12,304)
-
-
12,997
(12,304)
15.86
(22.86)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income/(loss) for the year/period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 81,408 - 12,997 (12,304) 67,492 96,954 - (2,945) (1,277) (297) 66,215 93,712 160,620 81,408

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 2017

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 1,513 682 159,529 81,159 161,042 81,841 (6) (31) (348) (132) (38) (116) (30) (154) (422) (433) 160,620 81,408 161,042 81,841

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 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 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/(loss) 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
Foreign exchange gain
Increase in taxation payable
(Decrease)/increase in management fees payable
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
2,964
984
(517)
(215)
(639)
(398)
1,808
371
(712)
(232)
(712)
(232)
1,031
853
-
(13)
(1,277)
(297)
(246)
543
850
682
682
-
(19)
-
1,513
682
12,997
(12,304)
(11,354)
12,525
(26)
(13)
216
132
(25)
31
1,808
371

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 2017

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 purpose of the FMC Act 2013.

The Fund changed its name from Europe Trust to Europe Fund effective 16 September 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in 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 31 March 2017 (see Note 2).

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 all the year/period presented.

Comparative period and amounts

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(b) Recognition/derecognition

(c) Measurement

(d) Fair value determination

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 2017

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

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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semi-annual basis directly from the Fund 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; the impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2017 2016 $'000 $'000 (1,377) (704) (1,377) (704)

The prima facie income tax expense on profit/(loss) before tax from operations 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 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	2017 2016 $'000 $'000 14,374 (11,600) (4,025) 3,248 3,179 (3,507) 990 322 (1,521) (767) (1,377) (704) (1,377) (704) 2017 2016 $'000 $'000 854 415	2016 $'000 (11,600)
		3,248 (3,507) 322 (767)
		(704) (704)

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of units '000 Underlying fund Vanguard FTSE Europe ETF 2,162	2017 2016 Fair value Number of units Fair value $'000 '000 $'000 159,529 1,161 81,159 159,529 81,159

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

4. 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 losses per unit (cents per unit)	2017 2016 12,997 (12,304) 81,972 53,820 15.86 (22.86)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 - - 1,277 297 (1,277) (297) - -

Distributions declared and paid

Year Ended Distributions per unit (cents per unit) October 2015 (paid November 2015) 31/03/2016 0.59 July 2016 (paid August 2016) 31/03/2017 2.06	2017 2016 $'000 $'000 - 297 1,277 - 1,277 297

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 108,103,000 units on issue (31 March 2016: 57,933,000).

The number of units allotted during the year ended 31 March 2017 was 50,170,000 (31 March 2016: 59,773,000) for total value of $67,492,000 (31 March 2016: $96,954,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: 1,840,000) for total value of $nil (31 March 2016: $2,945,000).

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	2017 2016 '000 '000 57,933 - 50,170 59,773 - (1,840) 108,103 57,933

The net asset value of each unit per the financial statements is $1.48581 (31 March 2016: $1.40521). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017, SLI held 106,437,239 units valued at $156,870,000 in the Fund. As at 31 March 2016, SLSS held 57,205,339 units valued at $81,001,000 in the Fund.

Distributions

The Fund paid distributions of $1,261,000 (31 March 2016: $294,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining payable as at 31 March 2016 was $nil. The Fund paid distributions of $nil to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $491,000 (31 March 2016: $246,000), with $6,000 (31 March 2016: $31,000) 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 2017 amounted to $12,000 (31 March 2016: $4,000).

The total direct purchase application fees for the year ended 31 March 2017 amounted to $2,000 (31 March 2016: $1,000).

100

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund at the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

8. 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	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,513	682
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss
	159,529	81,159
Other financial liabilities
Management fees payable	(6)	(31)
Funds held for unit purchases	(38)	(116)
Unsettled trades	(30)	(154)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $15,953,000 (31 March 2016: $8,116,000).

8b. 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 reporting date are:

Cash and cash equivalents

2017	2016
$'000	$'000
1,513	682

101

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. 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'), 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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 38 AA- 116 AA- - A - A- 1,475 AA- 566 AA- 1,513 682

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'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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $15,950,000 (31 March 2016: $8,101,000).

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

	2017	2016
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	159,529	81,159
Unsettled trades	(30)	(154)

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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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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 91 to 102 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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 $1,610,000 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.

103

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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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 99.1% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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EUROPE FUND

anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	50	25.64%	27,819	0.03%
1,001-5,000	72	36.92%	179,374	0.17%
5,001-10,000	28	14.36%	192,957	0.18%
10,001-50,000	37	18.97%	800,667	0.74%
50,001-100,000	6	3.08%	391,693	0.36%
Greater than 100,000	2	1.03%	106,530,890	98.53%
TOTAL	195	100.00%	108,123,400	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	106,422,239	98.43
Phillip Stephen Thumath	108,651	0.1
Brian Joseph Connor & Maureen Shannahan Connor	76,000	0.07
Grant Wilbert Dorey	74,619	0.07
Sun Properties International Limited	73,425	0.07
Paul Edward Coll & Helen Marie Coll & Andrew John Anderson	63,694	0.06
Piers Toby Agmen & Ross Hannay Mckechine	53,000	0.05
Russell Stuart Hay & Cynthia Jill Hay & Douglas Kim Fisher	50,955	0.05
Paul Rodger Day & Amanda Cheryl Day	48,587	0.04
Anthony David Batterton & Karl Richard Moreton	47,913	0.04
John Farquharson Hancock & Amanda Jane Hancock & Urlich AND Company Trustees Limited	39,000	0.04
Dean Richard Prebble	36,626	0.03
Investment Custodial Services Limited	31,846	0.03
Andrew David Wilson	31,653	0.03
Arthur William Young & Peter Webster Wilson	31,082	0.03
Geoffrey Alan King & Anne Constance King & Fraser Gordon Mckenzie	30,000	0.03
Craigs Investment Partners Limited	28,425	0.03
FNZ Custodians Limited	28,215	0.03
Billy Cheung Services Limited	26,503	0.02
Justine Malcolm Smith	22,744	0.02
	107,325,177	99.27

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	13,000*	0
Paul Baldwin	0	0
Guy Elliffe	25,947*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Asia Pacific Fund (APA) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Asia Pacific Fund

Report to the Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$1.830	$1.622
Units On Issue	32,450,500	24,918,000
Funds Under Management	$59,394,976	$40,416,248
Gross Distribution	$0.010	$0.014*
Gross Distribution Yield	0.54%	N/A
Gross Return	13.51%	-9.41%*
Total Fund Charges	0.55%	0.57%
Distributions paid	Semi-annual

Since Inception

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

NTA Per Unit
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----- Start of picture text -----

2.00
1.80
1.60
1.40
may 16 sep 16 jan 17
NTA ($)
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Sector Allocation

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Financials 25.8% Consumer Goods 20.7% Industrials 18.1% Consumer Services 10.1% Basic Materials 7.2% Health Care 5.8% Technology 4.5% Telecoms 3.4% Utilities 2.7% Oil & Gas 1.7%

Growth of $1,000*

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

1,100
1,000
900
800
jan 16 jul 16 jan 17
Value ($)
----- End of picture text -----

Country Allocation

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Japan 57.6% Australia 17.9% Korea 11.8% Hong Kong 8.7% Singapore 3.3% New Zealand 0.7%

*Since inception with all distributions reinvested.

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ASIA PACIFIC FUND

THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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

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'). Under a Deed of Retirement and Appointment dated on 6 September 2016, Trustees Executors Limited retired as the trustee and Public Trust was appointed as the Supervisor. 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 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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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ASIA PACIFIC FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
1,242
642
6,530
(4,623)
5
-
7,777
(3,981)
(213)
(116)
-
(12)
(213)
(128)
7,564
(4,109)
(599)
(328)
6,965
(4,437)
-
-
6,965
(4,437)
24.29
(19.46)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income/(loss) for the year/period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 39,890 - 6,965 (4,437) 12,644 45,888 - (1,335) (190) (226) 12,454 44,327 59,309 39,890

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 2017

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 756 331 58,786 39,696 59,542 40,027 (2) (16) (151) (85) (44) (12) (36) (24) (233) (137) 59,309 39,890 59,542 40,027

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year/period
Cash and cash equivalents at the end of the year/period
Reconciliation of profit/(loss) 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
Foreign exchange (gain)/loss
Increase in taxation payable
(Decrease)/increase in management fees payable
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
1,056
546
(227)
(100)
(347)
(147)
482
299
-
-
(410)
(102)
(410)
(102)
543
366
-
(6)
(190)
(226)
353
134
425
331
331
-
756
331
6,965
(4,437)
(6,530)
4,623
(5)
12
66
85
(14)
16
482
299

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 2017

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 changed its name from Asia Pacific Trust to Asia Pacific Fund effective 16 September 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in 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 31 March 2017 (see Note 2).

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.

Comparative period and amounts

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(b) Recognition/derecognition

(c) Measurement

(d) Fair value determination

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 2017

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

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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semi-annual basis directly from the Fund 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2017 2016 $'000 $'000 (599) (328) (599) (328)

The prima facie income tax expense on profit/(loss) before tax from operations 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 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	2017 $'000 7,564
	(2,118) 1,828 350 (659)
	(599) (599)

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of units '000 Underlying fund Vanguard FTSE Pacific ETF 649	2017 2016 Fair Value Number of units Fair Value $'000 '000 $'000 58,786 499 39,696 58,786 39,696

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the repoting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

4. 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/(losses) per unit (cents per unit)	2017 2016 6,965 (4,437) 28,671 22,796 24.29 (19.46)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 - - 190 226 (190) (226) - -

Distributions declared and paid

Year ended Distribution per unit (cents per unit) October 2015 (paid November 2015) 31/03/2016 0.48 January 2016 (paid February 2016) 31/03/2016 0.50 July 2016 (paid August 2016) 31/03/2017 0.71	2017 2016 $'000 $'000 - 102 - 124 190 - 190 226

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 32,451,000 units on issue (31 March 2016: 24,918,000).

The number of units allotted during the year ended 31 March 2017 was 7,533,000 (31 March 2016: 25,698,000) for total value of $12,644,000 (31 March 2016: $45,888,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: 780,000) for total value of $nil (31 March 2016: $1,335,000).

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	2017 2016 '000 '000 24,918 - 7,533 25,698 - (780) 32,451 24,918

The net asset value of each unit per the financial statements is $1.82765 (31 March 2016: $1.60085). Any difference between the net asset value announced to market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017, SLI held 31,764,838 units valued at $58,140,000 in the Fund. As at 31 March 2016, SLSS held 24,667,958 units valued at $39,971,000 in the Fund

Distributions

The Fund paid distributions of $189,000 (31 March 2016: $224,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as payable as at 31 March 2016 was $nil. The Fund paid distributions of $nil to SLI for the year ended 31 March 2017 (31 March 2016: $nil). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $213,000 (31 March 2016: $116,000), with $2,000 (31 March 2016: $16,000) 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 2017 amounted to $6,000 (31 March 2016: $3,000).

The total direct purchase application fees for the year ended 31 March 2017 amounted to $3,000 (31 March 2016: $1,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund at the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

8. 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
	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	756	331
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	58,786	39,696
Other financial liabilities
Management fees payable	(2)	(16)
Funds held for unit purchases	(44)	(12)
Unsettled trades	(36)	(24)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $5,879,000 (31 March 2016: $3,970,000).

8b. 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

2017	2016
$'000	$'000
756	331

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. 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'), 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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 44 AA- 12 AA- - A - A- 712 AA- 319 AA- 756 331

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'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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $5,875,000 (31 March 2016: $3,967,000).

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

	2017	2016
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	58,786	39,696
Unsettled trades	(36)	(24)

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 111 to 122 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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

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ASIA PACIFIC FUND

$595,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 98.7% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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ASIA PACIFIC FUND

for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	60	35.29%	30,257	0.09%
1,001-5,000	68	40.00%	174,391	0.54%
5,001-10,000	23	13.53%	149,301	0.46%
10,001-50,000	18	10.59%	376,713	1.16%
50,001-100,000	0	0.00%	-	0.00%
Greater than 100,000	1	0.59%	31,759,838	97.75%
TOTAL	170	100.00%	32,490,500	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	31,759,838	97.75
Grant Wilbert Dorey	46,001	0.14
Paul Rodger Day & Amanda Cheryl Day	43,276	0.13
Sun Properties International Limited	42,000	0.13
Martin Andrew Thomson & Elaine Parnell & Victoria Louise Thomson	23,284	0.07
Rachel Marie Baxter	22,434	0.07
Billy Cheung Services Limited	22,172	0.07
Maria Joan Sandiford	20,000	0.06
Michael Rodney Ogle	17,814	0.05
Karin Won	17,571	0.05
Philip Graham Tilson	17,174	0.05
George Heatherwick Findlay	17,174	0.05
Timothy Shaun Lip	15,063	0.05
Scott Mclean	14,754	0.05
Patricia Meng San Ieong	12,281	0.04
Pink Pelican (Nz) Limited	12,000	0.04
James Punnett	11,839	0.04
Daniel Jacobus Steenkamp	11,351	0.03
Simon James Matthews & Ruth Frances Milton	10,525	0.03
Luke William Leonard & Melanie Kathryn Leonard	10,000	0.03
	32,146,551	98.93

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	3,846*	0
Paul Baldwin	0	0
Guy Elliffe	7,677*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Emerging Markets Fund (EMF) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Emerging Markets Fund

Report to the Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$1.147	$1.000
Units On Issue	37,587,000	31,829,000
Funds Under Management	$43,121,155	$31,824,544
Gross Distribution	-	$0.018*
Gross Distribution Yield	N/A	N/A
Gross Return	14.74%	-10.51%*
Total Fund Charges	0.59%	0.60%
Distributions paid	Semi-annual

Since Inception

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

NTA Per Unit
----- End of picture text -----

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

1.20
1.10
1.00
0.90
may 16 sep 16 jan 17
Growth of $1,000
1,200
1,000
800
600
jan 16 jul 16 jan 17
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

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

Sector Allocation
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Country Allocation

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Financials 29.4% Technology 12.7% Industrials 12.3% Consumer Goods 10.2% Oil & Gas 7.8% Consumer Services 7.7% Basic Materials 7.6% Telecoms 5.5% Utilities 3.7% Health Care 3.1%

China 28.2% Taiwan 15.8% India 12.1% Brazil 8.7% South Africa 7.6% Mexico 4.1% Russia 4.1% Thailand 3.9% Malaysia 3.4% Indonesia 2.7% Other 9.4%

*Since inception with all distributions reinvested.

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EMERGING MARKETS FUND

THE MANAGER

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

THE SUPERVISOR

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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EMERGING MARKETS FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
7
Total expenses
Profit/(loss) before tax
Income tax expense
1
Profit/(loss) after tax
Other comprehensive income
Total comprehensive income/(loss)
EARNINGS PER UNIT
Basic and diluted earnings/(losses) per unit (cents per unit)
4

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
918
637
5,056
(4,221)
67
9
6,041
(3,575)
(166)
(96)
(166)
(96)
5,875
(3,671)
(489)
(276)
5,386
(3,947)
-
-
5,386
(3,947)
15.13
(12.65)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive profit/(loss) for the year/period Subscriptions from unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 31,753 - 5,386 (3,947) 5,901 36,113 - (413) 5,901 35,700 43,040 31,753

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 2017

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 640 133 42,884 31,760 43,524 31,893 (2) (12) (118) (56) (194) (17) (170) (55) (484) (140) 43,040 31,753 43,524 31,893

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 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/period
Cash and cash equivalents at the end of the year/period
Reconciliation of profit/(loss) after tax to net cash flows from operating activities
Profit/(loss) before tax
Net changes in fair value of financial assets at fair value through profit or loss
Foreign exchange gain
Increase in taxation payable
(Decrease)/increase in management fees payable
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
780
541
(176)
(84)
(289)
(124)
315
333
(706)
(87)
(706)
(87)
898
300
-
(413)
898
(113)
507
133
133
-
640
133
5,386
(3,947)
(5,056)
4,221
(67)
(9)
62
56
(10)
12
315
333

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 2017

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 changed its name from Emerging Markets Trust to Emerging Markets Fund effective 16 September 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in Vanguard FTSE Emerging Markets ETF (the 'Underlying Fund'), which tracks the FTSE Emerging Markets All Cap China A Transition 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 31 March 2017 (see Note 2).

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.

Comparative period and amounts

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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 2017

Receivables

Trade receivable 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.

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

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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semi-annual basis directly from the Fund 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; the impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2017 2016 $'000 $'000 (489) (276) (489) (276)

The prima facie income tax expense on profit/(loss) before tax from operations 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 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	2017 2016 $'000 $'000 5,875 (3,671) (1,645) 1,028 1,415 (1,182) 255 178 (514) (300) (489) (276) (489) (276) 2017 2016 $'000 $'000 408 57	2016 $'000 (3,671)
		1,028 (1,182) 178 (300)
		(276) (276)

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

		2017		2016
	Number of	Fair value	Number of	Fair value
	units		units
	'000	$'000	'000	$'000
Underlying fund
Vanguard FTSE Emerging Markets ETF	755	42,884	638	31,760
		42,884		31,760

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

4. 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/(losses) per unit (cents per unit)	2017 2016 5,386 (3,947) 35,588 31,207 15.13 (12.65)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 - - - 413 - (413) - -

Distributions declared and paid

Year ended Distribution per unit (cents per unit) October 2015 (paid November 2015) 31/03/2016 1.35	2017 2016 $'000 $'000 - 413 - 413

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 37,587,000 units on issue (31 March 2016: 31,829,000).

The number of units allotted during the year ended 31 March 2017 was 5,758,000 (31 March 2016: 31,829,000) for total value of $5,901,000 (31 March 2016: $36,113,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: nil) for total value of $nil (31 March 2016: $nil).

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Units on issue at the end of the year/period	2017 2016 '000 '000 31,829 - 5,758 31,829 37,587 31,829

The net asset value of each unit per the financial statements is $1.14508 (31 March 2016: $0.99761). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017, SLI held NIL units valued at $41,117,000 in the Fund. As at 31 March 2016, SLSS held 31,383,050 units valued at $31,347,000 in the Fund.

Distributions

The Fund paid distributions of $nil (31 March 2016: $411,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining payable as at 31 March 2016 was $nil. The Fund paid distributions of $nil to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $166,000 (31 March 2016: $96,000), with $2,000 (31 March 2016: $12,000) 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 2017 amounted to $5,000 (31 March 2016: $2,000).

The total direct purchase application fees for the year ended 31 March 2017 amounted to $5,000 (31 March 2016: $1,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund at the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. 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	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	640	133
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	42,884	31,760
Other financial liabilities
Management fees payable	(2)	(12)
Funds held for unit purchases	(194)	(17)
Unsettled trades	(170)	(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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $4,288,000 (31 March 2016: $3,176,000).

8b. 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 reporting date are:

	2017	2016
	$'000	$'000
Cash and cash equivalents	640	133

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. 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'), 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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 194 AA- 17 AA- - A - A- 446 AA- 116 AA- 640 133

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'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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $4,271,000 (31 March 2016: $3,171,000).

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

The table below summarises the Fund’s exposure to currency risks.
	2017	2016
	$'000	$'000
Investment securities designated at fair value	42,884	31,760
Unsettled trades	(170)	(55)

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 statements of Emerging Markets Fund (the fund) on pages 131 to 142 :

We have audited the accompanying financial statements which comprise:
�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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.

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Basis for opinion

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 $435,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 98.5% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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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.

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:

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	82	29.29%	53,831	0.14%
1,001-5,000	120	42.86%	321,241	0.85%
5,001-10,000	37	13.21%	287,132	0.76%
10,001-50,000	34	12.14%	651,618	1.73%
50,001-100,000	3	1.07%	204,155	0.54%
Greater than 100,000	4	1.43%	36,239,023	95.98%
TOTAL	280	100.00%	37,757,000	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	35,840,050	94.92
Brian Joseph Connor & Maureen Shannahan Connor	187,000	0.5
Sun Properties International Limited	107,080	0.28
FNZ Custodians Limited	104,893	0.28
Grant Wilbert Dorey	81,500	0.22
Darcy Cowan	65,348	0.17
William Hugh Walmsley	57,307	0.15
Billy Cheung Services Limited	36,213	0.1
Claire Frances Trotter	30,842	0.08
ASB Nominees Limited	30,391	0.08
Karin Won	28,846	0.08
Julian Oliver Smith	27,155	0.07
Rachel Marie Baxter	25,350	0.07
Claire Elizabeth Montgomery	25,348	0.07
William John Duff Eaton	25,100	0.07
John Ascroft	24,847	0.07
Jason Brigg Bedford & Janine Carol Bedford	23,905	0.06
Maria Joan Sandiford	20,000	0.05
Janice Mary Graham	20,000	0.05
Kenneth Moffett	19,496	0.05
	36,780,671	97.42

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	7,839*	0
Paul Baldwin	0	0
Guy Elliffe	25,947*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Total World Fund (TWF) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Total World Fund

Report to the Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$1.874	$1.673
Units On Issue	17,030,500	15,232,500
Funds Under Management	$31,923,093	$25,490,827
Gross Distribution	$0.010	$0.009*
Gross Distribution Yield	0.53%	N/A
Gross Return	12.66%	-8.32%*
Total Fund Charges	0.56%	0.59%
Distributions paid	Semi-annual

Since Inception

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NTA Per Unit
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----- Start of picture text -----

2.00
1.80
1.60
1.40
may 16 sep 16 jan 17
NTA ($)
----- End of picture text -----

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

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

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Financials 22.7% Industrials 13.9% Consumer Goods 12.7% Technology 12.3% Consumer Services 10.8% Health Care 10.3% Oil & Gas 6.1% Basic Materials 5.1% Utilites 3.2% Telecoms 2.9%

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Growth of $1,000
----- End of picture text -----*

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

1,100
1,000
900
800
jan 16 jul 16 jan 17
Value ($)
----- End of picture text -----

Country Allocation

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United States 53.3% Japan 8% United Kingdom 6% Canada 3.2% France 2.9% Germany 2.9% Switzerland 2.8% Australia 2.5% China 2.2% Korea 1.7% Other 14.5%

*Since inception with all distributions reinvested.

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TOTAL WORLD FUND

THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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TOTAL WORLD FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
680
396
3,375
(2,526)
-
9
4,055
(2,121)
(124)
(79)
(4)
-
(128)
(79)
3,927
(2,200)
(349)
(228)
3,578
(2,428)
-
-
3,578
(2,428)
22.26
(16.13)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income/(loss) for the year/period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 25,450 - 3,578 (2,428) 3,108 28,909 - (932) (111) (99) 2,997 27,878 32,025 25,450

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 2017

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 347 218 104 - 31,909 25,347 32,360 25,565 (1) (10) (87) (49) (117) (23) (130) (33) (335) (115) 32,025 25,450 32,360 25,565

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year/period
Cash and cash equivalents at the end of the year/period
Reconciliation of profit/(loss) 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
Foreign exchange loss/(gain)
Increase in taxation payable
(Decrease)/increase in management fees payable
Increase in receivables
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
474
337
(133)
(69)
(209)
(120)
132
148
-
922
(1,204)
(312)
(1,204)
610
1,312
491
-
(932)
(111)
(99)
1,201
(540)
129
218
218
-
347
218
3,578
(2,428)
(3,375)
2,526
4
(9)
38
49
(9)
10
(104)
-
132
148

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 2017

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 changed its name from Total World Trust to Total World Fund effective 16 September 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in 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 31 March 2017 (see Note 2).

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.

Comparative period and amounts

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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 2017

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

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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semi-annual basis directly from the Fund 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; the impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2017 2016 $'000 $'000 (349) (228) (349) (228)

The prima facie income tax expense on profit/(loss) before tax from operations 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 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	2017 2016 $'000 $'000 3,927 (2,200) (1,100) 616 945 (707) 190 110 (384) (247) (349) (228) (349) (228) 2017 2016 $'000 $'000 334 130	2016 $'000 (2,200)
		616 (707) 110 (247)
		(228) (228)

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of units '000 Underlying fund Vanguard Total World Stock ETF 342	2017 2016 Fair value Number of units Fair value $'000 '000 $'00 31,909 305 25,347 31,909 25,347

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

4. 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/(losses) per unit (cents per unit)	2017 2016 3,578 (2,428) 16,076 15,052 22.26 (16.13)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 - - 111 99 (111) (99) - -

Distributions declared and paid

Year Ended Distributions per unit (cents per unit) October 2015 (paid November 2015) 31/03/2016 0.66 July 2016 (paid August 2016) 31/03/2017 0.71	2017 2016 $'000 $'000 - 99 111 - 111 99

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 17,030,000 units on issue (31 March 2016: 15,232,000).

The number of units allotted during the year ended 31 March 2017 was 1,798,000 (31 March 2016: 15,777,000) for total value of $3,108,000 (31 March 2016: $28,909,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: 545,000) for total value of $nil (31 March 2016: $932,000).

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	2017 2016 '000 '000 15,232 - 1,798 15,777 - (545) 17,030 15,232

The net asset value of each unit per the financial statements is $1.88050 (31 March 2016: $1.67082). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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 Manager is a 100% owned subsidiary of NZX Limited.

SuperLife superannuation scheme (“SLSS”), a scheme managed by SuperLife Limited, a wholly owned subsidiary of NZX Limited, was an investor in the Fund in this year between 1 April 2016 and 27 October 2016. Effective 28 October 2016, the investments were transferred from SLSS to SuperLife Invest managed investment scheme (“SLI”), a scheme managed by the Manager, also a wholly owned subsidiary of NZX Limited. The transfer of assets and change of Manager was completed as part of the transition of the SuperLife scheme to the Financial Markets Conduct Act 2013.

As at 31 March 2017, SLI held 14,514,171 units valued at $27,206,000 in the Fund. As at 31 March 2016, SLSS held 14,500,623 units valued at $24,242,000 in the Fund.

Distributions

The Fund paid distributions of $103,000 (31 March 2016: $96,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as payable as at 31 March 2016 was $nil. The Fund paid distributions of $nil to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $124,000 (31 March 2016: $79,000) with $1,000 (31 March 2016: $10,000) 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 2017 amounted to $4,000 (31 March 2016: $2,000).

The total direct purchase application fees for the year ended 31 March 2017 amounted to $5,000 (31 March 2016: $2,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund at the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

8. 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	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	347	218
Receivables	104	-
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	31,909	25,347
Other financial liabilities
Management fees payable	(1)	(10)
Funds held for unit purchases	(117)	(23)
Unsettled trades	(130)	(33)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $3,191,000 (31 March 2016: $2,535,000).

8b. 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 reporting date are:

	2017	2016
	$'000	$'000
Cash and cash equivalents	347	218
Receivables	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').

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. 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 reporting date.

ANZ BNP Paribas Westpac	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 117 AA- 23 AA- - A - A- 230 AA- 195 AA- 347 218

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'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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $3,189,000 (31 March 2016: $2,531,000).

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

	2017	2016
	$'000	$'000
Receivables	104	-
Investments in equity securities held at fair value through profit or loss	31,909	25,347
Unsettled trades	(130)	(33)

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 151 to 162 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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 $324,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 98.6% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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TOTAL WORLD FUND

anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	97	26.80%	52,562	0.30%
1,001-5,000	125	34.53%	309,843	1.79%
5,001-10,000	67	18.51%	451,884	2.61%
10,001-50,000	63	17.40%	1,291,883	7.47%
50,001-100,000	7	1.93%	431,944	2.50%
Greater than 100,000	3	0.83%	14,757,384	85.32%
TOTAL	362	100.00%	17,295,500	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	14,474,171	83.69
Timothy Shepheard Walwyn	166,450	0.96
Graeme Andrew Don & Margaret Joan Don & Richard Vale Harris	116,763	0.68
Investment Custodial Services Limited	77,966	0.45
FNZ Custodians Limited	69,299	0.4
Ian Robert Mckim & Anne Marie Mckim	63,758	0.37
Gopinath Nayar & Gellert Ivanson Trustee No 12 Limited	60,474	0.35
William Paul Mcsweeney & Margaret Helen Moretti	55,000	0.32
Jon Patrick Finn Angelo	53,447	0.31
Frederik Theodor Van Peski & Maureen Jeanette Van Peski & Jha Trustee Services Limited	52,000	0.3
Arthur Johannes Hein De Beun	45,070	0.26
Terry Baxter & Jill Tyler	41,077	0.24
Kenneth Moffett	41,077	0.24
Peter James Stewart Moodie	40,000	0.23
Stuart Douglas Thompson	38,865	0.22
Mary Patricia Cooper & Damien John Hannah	35,290	0.2
Paul Richard Clarke	34,527	0.2
Custodial Services Limited	31,750	0.18
Investment Custodial Services Limited	31,726	0.18
Stephen Richard Jelley	31,541	0.18
	15,560,251	89.96

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	1,723*	0
Paul Baldwin	0	0
Guy Elliffe	3,439*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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US Large Value Fund (USV) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the US Large Value Fund

Report to the Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$2.742	$2.401
Units On Issue	13,214,500	12,994,000
Funds Under Management	$36,228,456	$31,197,425
Gross Distribution	$0.032	$0.019*
Gross Distribution Yield	1.17%	N/A
Gross Return	15.63%	-3.36%*
Total Fund Charges	0.53%	0.54%
Distributions paid	Semi-annual

Since Inception

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

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

NTA Per Unit

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

3.00
2.75
2.50
2.25
may 16 sep 16 jan 17
NTA ($)
----- End of picture text -----

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

Financials 25.2%
Health Care 12.2%
2.75 Technology 12.1%
Industrials 12%
Consumer Goods 9.3%
2.50 Oil & Gas 9.1%
Consumer Services 6.3%
Utilities 5.9%
2.25 Telecoms 4.3%
Basic Materials 3.6%
may 16 sep 16 jan 17
Growth of $1,000
1,200
1,000
800
sep 15 jan 16 may 16 sep 16 jan 17
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception with all distributions reinvested.

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US LARGE VALUE FUND

THE MANAGER

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

THE SUPERVISOR

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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US LARGE VALUE FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
855
643
4,670
(1,626)
-
17
5,525
(966)
(149)
(97)
(5)
-
(154)
(97)
5,371
(1,063)
(418)
(278)
4,953
(1,341)
-
-
4,953
(1,341)
37.75
(10.26)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income/(loss) for the year/period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 31,111 - 4,953 (1,341) 551 33,814 - (1,183) (301) (179) 250 32,452 36,314 31,111

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 2017

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 380 397 36,111 30,922 36,491 31,319 (1) (12) (102) (53) (19) (60) (55) (83) (177) (208) 36,314 31,111 36,491 31,319

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 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/period
Cash and cash equivalents at the end of the year/period
Reconciliation of profit/(loss) 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
Foreign exchange loss/(gain)
Increase in taxation payable
(Decrease)/increase in management fees payable
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
727
547
(160)
(85)
(241)
(129)
326
333
(372)
(101)
(372)
(101)
330
349
-
(5)
(301)
(179)
29
165
(17)
397
397
-
380
397
4,953
(1,341)
(4,670)
1,626
5
(17)
49
53
(11)
12
326
333

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 2017

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 changed its name from US Large Value Trust to US Large Value Fund effective 16 September 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in 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 31 March 2017 (see Note 2).

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.

Comparative period and amounts

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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 2017

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

The units are issued and redeemed based on the Fund’s net asset value per unit at the time of issue or redemption. The Fund’s net asset value per unit is calculated by dividing the net asset 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.

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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semi-annual basis directly from the Fund 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; the impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2017 2016 $'000 $'000 (418) (278) (418) (278)

The prima facie income tax expense on profit/(loss) before tax from operations 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 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	2017 2016 $'000 $'000 5,371 (1,063) (1,504) 298 1,308 (455) 238 180 (460) (301) (418) (278) (418) (278) 2017 2016 $'000 $'000 285 112	2016 $'000 (1,063)
		298 (455) 180 (301)
		(278) (278)

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of units '000 Underlying fund Vanguard Value Fund 265	2017 2016 Fair value Number of units Fair value $'000 '000 $'000 36,111 261 30,922 36,111 30,922

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

4. 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/(losses) per unit (cents per unit)	2017 2016 4,953 (1,341) 13,119 13,072 37.75 (10.26)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 - - 301 179 (301) (179) - -

Distributions declared and paid

Year Ended Distribution per unit (cents per unit) October 2015 (paid November 2015) 31/03/2016 1.38 April 2016 (paid May 2016) 31/03/2017 0.86 November 2016 (paid December 2016) 31/03/2017 1.44	2017 2016 $'000 $'000 - 179 112 - 189 - 301 179

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 13,215,000 units on issue (31 March 2016: 12,994,000).

The number of units allotted during the year ended 31 March 2017 was 221,000 (31 March 2016: 13,472,000) for total value of $551,000 (31 March 2016: $33,814,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: 478,000) for total value of $nil (31 March 2016: $1,183,000).

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	2017 2016 '000 '000 12,994 - 221 13,472 - (478) 13,215 12,994

The net asset value of each unit per the financial statements is $2.74794 (31 March 2016: $2.39426). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017, SLI held 12,917,842 units valued at $35,415,000 in the Fund. As at 31 March 2016, SLSS held 12,914,102 units valued at $30,975,000 in the Fund.

Distributions

The Fund paid distributions of $111,000 (31 March 2016: $178,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as payable as at 31 March 2016 was $nil. The Fund paid distributions of $186,000 to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $149,000 (31 March 2016: $97,000), with $1,000 (31 March 2016: $12,000) 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 2017 amounted to $4,000 (31 March 2016: $2,000).

The total direct purchase application fees for the year ended 31 March 2017 amounted to $1,000 (31 March 2016: $1,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund at the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

8. 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	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	380	397
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	36,111	30,922
Other financial liabilities
Management fees payable	(1)	(12)
Funds held for unit purchases	(19)	(60)
Unsettled trades	(55)	(83)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $3,611,000 (31 March 2016: $3,092,000).

8b. Credit risk

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

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

2017	2016
$'000	$'000
380	397

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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 19 AA- 60 AA- - A - A- 361 AA- 337 AA- 380 397

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'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.

8d. 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 2017 would have decreased/increased profits and unitholders funds by $3,606,000 (31 March 2016: $3,084,000).

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

The table below summarises the Fund’s exposure to currency risks.
	2017	2016
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	36,111	30,922
Unsettled trades	(55)	(83)

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 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 171 to 182 :

We have audited the accompanying financial statements which comprise:
�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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.

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Basis for opinion

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 $365,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 99.0% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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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

anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	44	43.56%	24,073	0.18%
1,001-5,000	38	37.62%	101,661	0.77%
5,001-10,000	11	10.89%	85,698	0.65%
10,001-50,000	7	6.93%	125,226	0.94%
50,001-100,000	0	0.00%	-	0.00%
Greater than 100,000	1	0.99%	12,917,842	97.46%
TOTAL	101	100.00%	13,254,500	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	12,917,842	97.46
FNZ Custodians Limited	44,300	0.33
Lynn Mathias Clayton & Michael Rowley Clayton & Cameron Denis Clayton	19,142	0.14
Billy Cheung Services Limited	14,564	0.11
Craigs Investment Partners Limited	14,376	0.11
Michael Frederick Keith	12,632	0.1
Julian Oliver Smith	10,131	0.08
David Mountfort Haywood & Annette Maree Haywood	10,081	0.08
Hamish Davidson	10,000	0.08
Adam Charles Tommy & Shu Yu Tseng	9,859	0.07
Weisi Xia	9,260	0.07
Robert Andrew James Stewart	9,036	0.07
Phillip John Tait & Darien Patricia Tait & Jenny Catherine Hirst	8,186	0.06
Matthew Leigh Gardner	8,000	0.06
Maria Edmonda Savini Creason	7,500	0.06
Andrew Mackay Drummond & Ross Drummond	7,100	0.05
Martin Anthony Evans & Margaret Anne Evans	5,954	0.04
Linda Faye Graham & Trustee Management Services Limited	5,776	0.04
David Paul Hayes	5,027	0.04
Bharat Umesh Ratanpal & Ayesha Bharat Ratanpal	4,954	0.04
	13,133,720	99.09

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	1,566*	0
Paul Baldwin	0	0
Guy Elliffe	3,126*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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US Large Growth Fund (USG) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the US Large Growth Fund

Report to the Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$3.458	$3.079
Units On Issue	10,478,850	10,349,000
Funds Under Management	$36,239,702	$31,864,468
Gross Distribution	-	$0.010*
Gross Distribution Yield	N/A	N/A
Gross Return	12.32%	-5.88%*
Total Fund Charges	0.53%	0.54%
Distributions paid	Semi-annual

Since Inception

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

NTA Per Unit
----- End of picture text -----

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

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

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

4.00
Technology 25.4%
Consumer Services 21.3%
3.50
Health Care 13.6%
Financials 12.5%
Industrials 11.5%
3.00 Consumer Goods 11.1%
Oil & Gas 3.3%
Basic Materials 0.9%
2.50 Telecoms 0.4%
may 16 sep 16 jan 17
Growth of $1,000
1,200
1,000
800
sep 15 jan 16 may 16 sep 16 jan 17
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

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US LARGE GROWTH FUND

THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
474
333
4,320
(2,136)
-
16
4,794
(1,787)
(148)
(99)
(4)
-
(152)
(99)
4,642
(1,886)
(418)
(286)
4,224
(2,172)
-
-
4,224
(2,172)
40.58
(21.03)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income/(loss) for the year/period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 31,794 - 4,224 (2,172) 475 35,247 (61) (1,204) - (77) 414 33,966 36,432 31,794

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 2017

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 189 151 36,396 31,765 36,585 31,916 (1) (12) (118) (66) (34) (13) - (31) (153) (122) 36,432 31,794 36,585 31,916

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year/period
Cash and cash equivalents at the end of the year/period
Reconciliation of profit/(loss) 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
Foreign exchange loss/(gain)
Increase in taxation payable
(Decrease)/increase in management fees payable
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
403
283
(159)
(87)
(295)
(170)
(51)
26
71
-
(380)
(125)
(309)
(125)
398
332
-
(5)
-
(77)
398
250
38
151
151
-
189
151
4,224
(2,172)
(4,320)
2,136
4
(16)
52
66
(11)
12
(51)
26

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 2017

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 changed its name from US Large Growth Trust to US Large Growth Fund effective 16 September 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in 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 31 March 2017 (see Note 2).

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.

Comparative period and amounts

These financial statements are for the year ended 31 March 2017. The comparative figures are for the period from 29 July 2015 to 31 March 2016. Where necessary, comparative figures have been restated to correspond to the current year classifications.

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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 2017

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

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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semi-annual basis directly from the Fund 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; the impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2017 2016 $'000 $'000 (418) (286) (418) (286)

The prima facie income tax expense on profit/(loss) before tax from operations 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 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	2017 2016 $'000 $'000 4,642 (1,886) (1,300) 528 1,210 (598) 132 93 (460) (309) (418) (286) (418) (286) 2017 2016 $'000 $'000 552 206	2016 $'000 (1,886)
		528 (598) 93 (309)
		(286) (286)

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of units '000 Underlying fund Vanguard Growth ETF 209	2017 2016 Fair value Number of units Fair value $'000 '000 $'000 36,396 207 31,765 36,396 31,765

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

4. 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/(losses) per unit (cents per unit)	2017 2016 4,224 (2,172 10,409 10,328 40.58 (21.03

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 - - - 77 - (77) - -

Distributions declared and paid

Year Ended Distribution per unit (cents per unit) October 2015 (paid November 2015) 31/03/2016 0.75	2017 2016 $'000 $'000 - 77 - 77

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 10,479,000 units on issue (31 March 2016: 10,349,000).

The number of units allotted during the year ended 31 March 2017 was 150,000 (31 March 2016: 10,719,000) for total value of $475,000 (31 March 2016: $35,247,000).

The number of units redeemed during the year ended 31 March 2017 was 20,000 (31 March 2016: 370,000) for total value of $61,000 (31 March 2016: $1,204,000).

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	2017 2016 '000 '000 10,349 - 150 10,719 (20) (370) 10,479 10,349

The net asset value of each unit per the financial statements is $3.47667 (31 March 2016: $3.07218). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017, SLI scheme held 10,125,160 units valued at $35,017,000 in the Fund. As at 31 March 2016, SLSS held 10,118,480 units valued at $31,124,000 in the Fund.

Distributions

The Fund paid distributions of $nil (31 March 2016: $76,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as payable as at 31 March 2016 was $nil. The Fund paid distributions of $nil to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $148,000 (31 March 2016: $99,000), with $1,000 (31 March 2016: $12,000) 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 2017 amounted to $2,000 (31 March 2016: $2,000).

The total direct purchase application fees for the year ended 31 March 2017 amounted to $2,000 (31 March 2016: $1,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund at the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

8. 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	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	189	151
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit and loss	36,396	31,765
Other financial liabilities
Management fees payable	(1)	(12)
Funds held for unit purchases	(34)	(13)
Unsettled trades	-	(31)

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:

8a. 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 this 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 2017 would have increased/decreased net profit and unitholder funds by $3,640,000 (31 March 2016: $3,176,000).

8b. Credit risk

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

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

2017	2016
$'000	$'000
189	151

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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 34 AA- 13 AA- - A - A- 155 AA- 138 AA- 189 151

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's investment in the Vanguard Growth ETF shares 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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $3,640,000 (31 March 2016: $3,173,000).

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

	2017	2016
	$'000	$'000
Investment securities designated at fair value through profit and loss	36,396	31,765
Unsettled trades	-	(31)

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 191 to 203 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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.

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Basis for opinion

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

==> picture [31 x 21] 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 $366,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 99.5% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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US LARGE GROWTH FUND

anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	75	50.00%	35,586	0.34%
1,001-5,000	54	36.00%	137,512	1.31%
5,001-10,000	16	10.67%	112,523	1.07%
10,001-50,000	4	2.67%	73,069	0.70%
50,001-100,000	-	0.00%	-	0.00%
Greater than 100,000	1	0.67%	10,120,160	96.58%
TOTAL	150	100.00%	10,478,850	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	10,120,160	96.58
Neville Murray Thompson & Bruce Raymond Sheppard & Murray Lawrence Schnauer	31,500	0.3
Arthur William Young & Peter Webster Wilson	15,134	0.14
Dash Limited	15,000	0.14
Billy Cheung Services Limited	11,435	0.11
Michael Rodney Ogle	9,800	0.09
Rachel Marie Baxter	9,516	0.09
George Heatherwick Findlay	9,020	0.09
Simon Roy Vannini	8,236	0.08
Franick Holdings Limited	8,006	0.08
John Ewen & John Ewen Trust Limited	7,400	0.07
Bharat Umesh Ratanpal & Ayesha Bharat Ratanpal	7,028	0.07
Christopher Seller	6,410	0.06
Charl Johannes De Villiers	6,373	0.06
Sean Michael Wynne & Helen Margaret Taylor	6,328	0.06
James Punnett	6,241	0.06
Phillip John Tait & Darien Patricia Tait & Jenny Catherine Hirst	6,155	0.06
Graham Alfred Walton	5,913	0.06
Michael William Smit	5,750	0.05
Andrew Mackay Drummond & Ross Drummond	5,312	0.05
	10,300,717	98.3

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	1,212*	0
Paul Baldwin	0	0
Guy Elliffe	2,418*	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.

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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NZ Mid Cap Fund (MDZ)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the NZ Mid Cap Fund

Report to the Unitholders HIGHLIGHTS Launch Date 16-Jun-97

	March 2017	March 2016
Net Tangible Assets (NTA)	$4.140	$3.927
Units On Issue	18,650,223	16,250,223
Funds Under Management	$77,204,618	$63,807,801
Gross Distribution	$0.140	$0.178
Gross Distribution Yield	3.39%	4.52%
Gross Return	9.14%	15.77%
Total Fund Charges	0.75%	0.75%
Distributions paid	Semi-annual

Sector Allocation

NTA Per Unit

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

4.50
Real Estate 20.6%
Industrials 17.7%
4.25 Utilities 16.1%
Consumer Staples 12%
Health Care 10.7%
4.00 Consumer Discret. 8.3%
I.T. 5.6%
Telecoms 4.9%
3.75 Financials 2.9%
Energy 1.2%
may 16 sep 16 jan 17
Growth of $1,000
7,500
5,000
2,500
0
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception, all distributions reinvested.

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THE MANAGER

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

THE SUPERVISOR

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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

INVESTMENT ADMINISTRATOR

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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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. The Fund replicates the group investment fund which was known as the NZX Midcap Index Fund. On 26 October 2016 unitholders in the NZX Midcap Index Fund resolved by extraordinary resolution that it was to be resettled as a unit trust. As a result, on 7 November 2016, its assets and liabilities were resettled on the Fund. The units in the NZX Midcap Index Fund were then redeemed for units in the Fund.

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 25 May 2017.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 31 MARCH 2017

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 7 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) 4	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 PERIOD ENDED 31 MARCH 2017

Note Unitholders' funds at the beginning of the period Total comprehensive income for the period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the period	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 2017

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss 2 Deferred tax asset TOTAL ASSETS LIABILITIES Management fees payable 7 Funds held for unit purchases Other current liabilities Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	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 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 PERIOD ENDED 31 MARCH 2017

CASH FLOWS FROM OPERATING ACTIVITIES *Cash was provided from:* Dividend income received Securities lending income received *Cash was applied to:* Management fees 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 increase in cash and cash equivalents Cash and cash equivalents at the beginning of period Cash and cash equivalents at the end of 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 deferred tax asset Increase in management fees payable Increase in receivables Net cash flows from operating activities	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 PERIOD ENDED 31 MARCH 2017

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 replicates the group investment fund which was known as the NZX Midcap Index Fund, which was resettled as the Fund 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 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 31 March 2017 (see Note 2).

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below.

Reporting period

These are the Fund's first financial statements and 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

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 their 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 PERIOD ENDED 31 MARCH 2017

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

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 date for the Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semiannual basis directly from the fund 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 the investments in securities listed in Note 2 and securities lending income after the deduction of management fees. With this income, the Fund is able to utilise imputation credits to satisfy the tax liability. 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

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

Segment information

Issued but not yet effective accounting standards

NZ IFRS 9 Financial Instruments - Effective for annual reporting periods beginning on or after 1 January 2018; The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

1. TAXATION

Tax credit comprises: Current tax credit Deferred tax movement Total tax credit	31 March 2017 $'000 - 30 30

The prima facie income tax expense on profit before tax from operations 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 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 2017 $'000 7,160
		(2,005) 1,688 139 (81)
		(259) 289
		30

		31 March 2017 $'000 - 30 -
		30
		31 March 2017 $'000 423

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

		As at
	31	March 2017
	Number of	Fair value
	Shares
	'000	$'000
Underlying Securities
A2 Milk Company Limited	1,551	4,637
Air New Zealand Limited	1,128	2,775
Argosy Property Trust	1,755	1,702
Arvinda Group Limited	714	907
Chorus Limited	870	3,758
Comvita Limited	82	702
EBOS Group Limited	175	3,200
Fonterra Shareholders Fund	267	1,616
Freightways Limited	331	2,480
Genesis Energy Limited	1,026	2,134
Goodman Property Trust	2,162	2,605
Heartland New Zealand Limited	982	1,610
Incitec Pivot Limited	448	595
Infratil Limited	1,197	3,483
Kathmandu Holdings Limited	345	682
Kiwi Income Property Trust	2,777	3,957
Mainfreight Limited	181	4,084
Mercury NZ Limited	1,384	4,358
Metlifecare Limited	278	1,702
Metro Performance Glass Limited	396	515
New Zealand Refining Company Limited	381	906
NZX Limited	573	619
Port of Tauranga Limited	669	2,790
Precinct Properties New Zealand Limited	2,148	2,621
Property For Industry Limited	967	1,562
Restaurant Brands NZ Limited	244	1,331
Sanford Limited (NS)	126	927
Scales Corp Limited	254	881
Stride Property Limited	779	1,348
Summerset Group Holdings Limited	473	2,446
Tegel Group Holdings Limited	411	464
TrustPower Limited	154	708
Tourism Holdings Limited	255	955
Trade Me Group Limited	849	4,355
Vector Limited	534	1,710
Vista Group International Limited	175	1,047
Vital Healthcare Property Trust	694	1,426
Xero Limited	165	3,260
		76,858

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price on reporting date. The investments are registered in the name of JBWere (NZ) Nominees Limited, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

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.

All financial instruments of the Fund measured at fair value are categorised as level 1 in the hierarchy. There were no transfers between levels in the year ended 31 March 2017.

4. 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 period.

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) 5. DISTRIBUTION PAYABLE TO UNITHOLDERS Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	31 March 2017 7,190 18,470 38.93 31 March 2017 $'000 - 841 (841)
	-

Distributions declared and paid

Year ended Distribution per unit (cents per unit) November 2016 (paid December 2016) 31/03/2017 4.62	31 March 2017 $'000 841
	841

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

The Fund was established on 9 September 2016 by way of the Manager depositing $100 with the Supervisor.

On 7 November 2016 the Fund received assets and liabilities as a result of the resettlement of the NZX Mid Cap Index Fund. A total of 18,350,000 units in the Fund were issued for a total value of $69,843,000, represented by:

Investments in equity securities held at fair value through profit or loss Cash and cash equivalents Receivables Payables	$'000 68,646 1,196 19 (18) 69,843

As at 31 March 2017 there were 18,650,000 units on issue.

The number of units allotted during the period ended 31 March 2017 was 18,750,000 for total value of $71,417,000.

The number of units redeemed during the period ended 31 March 2017 was 100,000 for total value of $389,000.

Movement in the number of units Balance at the beginning of the period Subscriptions received during the period Redemptions made during the period Units on issue at the end of the period	31 March 2017 '000 - 18,750 (100)
	18,650

The net asset value of each unit per the financial statements is $4.14890. Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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 period.

SuperLife Invest managed investment scheme ("SLI"), a scheme managed by Smartshares Limited, also a wholly owned subsidiary of NZX Limited, is an investor in the Fund.

As at 31 March 2017 the SLI scheme held 2,067,765 units valued at $8,560,000 in the Fund.

Distributions

The Fund paid distributions of $95,000 to SLI for the period ended 31 March 2017. The balance remaining as payable at the end of the period was $nil.

Management fees

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

For the period ended 31 March 2017, total direct purchase application fees amounted to $4,000 and the total interest earned on cash at banks amounted to $7,000.

Total gross management fees excluding rebates for the period ended 31 March 2017 amounted to $220,000 with $5,000 of outstanding accrued management fees due to the Manager at the end of the period.

Other related party transactions

As at 31 March 2017 the Fund had a payable to the Manager of $1,000.

The audit fee paid by the Manager for the audit of the Fund for the period ended 31 March 2017 was $5,000.

The Fund has entered into to 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 2017 the value of securities the Fund had on loan to NZCL was $2,318,000.

8. 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
	As at
	31 March 2017
	$'000
Loans and receivables
Cash and cash equivalents	2,225
Receivables	435
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	76,858
Other financial liabilities
Management fees payable	(5)
Other current liabilities	(1)
Funds held for unit purchases	(1,352)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $7,686,000.

8b. 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 2017
		$'000
Cash and cash equivalents		2,225

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 2017 Balance Credit rating $'000 1,495 AA- 730 AA- 2,225

8c. 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

8d. Securities lending risk

On 31 March 2017 the amount of securities the Fund had on loan to NZCL was $2,318,000.

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017.

10. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2017, 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 MID CAP 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 212 to 224 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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

==> picture [31 x 21] 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 $795,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 96.6% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	536	23.82%	211,844	1.12%
1,001-5,000	825	36.67%	2,182,155	11.52%
5,001-10,000	455	20.22%	3,216,366	16.97%
10,001-50,000	402	17.87%	7,169,106	37.83%
50,001-100,000	20	0.89%	1,221,302	6.44%
Greater than 100,000	12	0.53%	4,949,450	26.12%
TOTAL	2,250	100.00%	18,950,223	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	2,067,765	10.91
Anna Elisabeth Minnaar	897,481	4.74
New Zealand Central Securities Depository Limited	426,585	2.25
Custodial Services Limited	381,932	2.02
New Zealand Law Foundation	214,252	1.13
Custodial Services Limited	210,854	1.11
Custodial Services Limited	174,097	0.92
FNZ Custodians Limited	134,643	0.71
North Star Trustees Limited	112,299	0.59
Custodial Services Limited	111,402	0.59
Keith Orsbourne Ballagh & Josephine Jane Frances Ballagh	110,697	0.58
Custodial Services Limited	107,443	0.57
Peter French Meyer	94,790	0.5
Gwenda Heron Trustee Limited	94,137	0.5
Geoffrey Wayne Smith	75,529	0.4
David James Hunt & Shirley Ann Hunt	74,990	0.4
Christopher Graham Paice	61,682	0.33
Lewis John Randal	58,622	0.31
Christopher Alan Lee Brice	58,494	0.31
Graeme Robert Young	58,494	0.31
	5,526,188	29.18

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial		Non-Benefcial
Bevan Miller		223*	0
Paul Baldwin		0	0
Guy Elliffe		446*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Australian Mid Cap Fund (MZY) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Australian Mid Cap Fund

Report to the Unitholders HIGHLIGHTS Launch Date 27-Sep-04

	March 2017	March 2016
Net Tangible Assets (NTA)	$6.356	$5.558
Units On Issue	15,107,274	13,382,274
Funds Under Management	$96,020,118	$74,373,192
Gross Distribution	$0.124	$0.106
Gross Distribution Yield	1.94%	1.91%
Gross Return	16.80%	9.97%
Total Fund Charges	0.75%	0.75%
Distributions paid	Semi-annual

NTA Per Unit

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

6.50
6.00
5.50
5.00
may 16 sep 16 jan 17
NTA ($)
----- End of picture text -----

Sector Allocation

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==> picture [92 x 89] intentionally omitted <==

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

Materials 20.2%
Consumer Discret. 19.8%
Financials 17.2%
Health Care 12%
Industrials 11.7%
Utilities 7.6%
Consumer Staples 4.3%
I.T. 2.9%
Telecoms 2.7%
Real Estate 1.6%
----- End of picture text -----

Growth of $1,000

==> picture [473 x 107] intentionally omitted <==

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

3,000
2,000
1,000
0
2006 2008 2010 2012 2014 2016
Value ($)
----- End of picture text -----

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THE 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.

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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. The Fund replicates the group investment fund which was known as the NZX Australian Midcap Index Fund. On 26 October 2016 unitholders in the NZX Australian Midcap Index Fund resolved by extraordinary resolution that it was to be resettled as a unit trust. As a result, on 7 November 2016, its assets and liabilities were resettled on the Fund. The units in the NZX Australian Midcap Index Fund were then redeemed for units in the Fund.

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 25 May 2017.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 31 MARCH 2017

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 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) 4	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 PERIOD ENDED 31 MARCH 2017

Unitholders' funds at the beginning of the period Total comprehensive income for the period Subscriptions from unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the period	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 2017

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Deferred tax liability Funds held for unit purchases Unsettled trades Other current liabilities TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	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 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 PERIOD ENDED 31 MARCH 2017

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 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:* 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 period Cash and cash equivalents at the end of the 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 gain Increase in taxation payable Increase in deferred tax liability Increase in management fees payable Increase in receivables Net cash flows from operating activities	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 PERIOD ENDED 31 MARCH 2017

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 replicates the group investment fund which was known as the NZX Australian Midcap Index Fund, which was resettled as the Fund 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/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 31 March 2017 (see Note 2).

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below.

Reporting period

These are the Fund's first financial statements and 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

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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 PERIOD ENDED 31 MARCH 2017

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’).

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 PERIOD ENDED 31 MARCH 2017

Segment information

The Fund operates solely in the business of investment management, investing in Australian equities. The Fund receives all of its revenue from its Australian equity investments. Two individual equity investments contributed 10% or more of the Fund's dividend income for the period ended 31 March 2017. The individual dividend income received from these equity investments amounted to $209,000 and $168,000.

Issued but not yet effective accounting standards

NZ IFRS 9 Financial Instruments - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

1. TAXATION

Tax expense comprises: Current tax expense Deferred tax movement Total tax expense	31 March 2017 $'000 (310) (124)
	(434)

The prima facie income tax expense on profit before tax from operations 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 Add imputation credits and other tax credits Income tax expense as per Statement of Comprehensive Income Deferred tax Current period movement Closing balance Imputation credit account (ICA) Imputation credits available for use in subsequent periods	31 March 2017 $'000 14,543
	(4,072) 3,667 46 (67)
	(426) (8)
	(434)
	31 March 2017 $'000 (124)
	(124)
	31 March 2017 $'000 254

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

		As At
	31	March 2017
	Number of	Fair Value
	Shares
	'000	$'000
Underlying securities
Adelaide Brighton	212	1,316
ALS Limited	241	1,614
Alumina Limited	1,113	2,174
Ansell Limited	71	1,853
Ausnet Services Limited	830	1,527
Bank of Queensland	185	2,455
Bendigo And Adelaide Bank Limited	226	2,991
Bluescope Steel Limited	274	3,668
Boral Limited	560	3,570
Carsales Com Limited	106	1,287
Challenger Limited	269	3,690
Cimic Group Limited	47	1,830
Coca Cola Amatil Limited	252	2,979
Cochlear Limited	27	4,039
Crown Resorts Limited	181	2,332
CSR Limited	247	1,213
CYBG Plc	328	1,616
Dominos Pizza Enterprises Limited	31	1,962
Downer EDI Ltd - Rights	83	1
Downer EDI Ltd	291	1,837
Duet Group	1,180	3,594
Dulux Group Limited	182	1,297
Evolution Mining Limited	554	1,269
Fairfax Media Limited	1,141	1,276
Flight Centre Travel Group Limited	27	849
Graincorp Limited	109	1,082
Harvey Norman Holdings Limited	285	1,411
Healthscope Limited	827	2,050
Henderson Group	334	1,387
Iluka Resources Limited	200	1,662
Investa Office Fund	293	1,520
IOOF Holdings Limited	126	1,174
JB Hi-Fi Limited	53	1,441
Link Administration Holdings Limited	172	1,450
Macquarie Atlas Roads Group	242	1,349
Magellan Financial Group Limited	67	1,717
Navitas Limited	146	706
Northern Star Resources Limited	287	1,270
Orora Limited	576	1,862
Perpetual Trustees Australia Limited	23	1,283
Primary Health Care Limited	198	773
Qube Holdings Limited	582	1,626
REA Group Limited	23	1,507
Resmed Inc	270	2,732
Seek Limited	164	2,855

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

		As At
	31	March 2017
	Number of	Fair Value
	Shares
	'000	$'000
Underlying securities
Spark Infrastructure Limited	803	2,078
Tabcorp Holdings Limited	395	2,047
Tatts Group Limited	628	3,036
The Star Entertainment Group Limited	373	2,226
TPG Telecom Limited	149	1,134
Vocus Group Limited	295	1,391
		95,008

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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.

All financial instruments of the Fund measured at fair value are categorised as level 1 in the hierarchy. There were no transfers between levels in the period ended 31 March 2017.

4. 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 period.

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 2017 14,109 14,822
	95.19

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	31 March 2017 $'000 - 808 (808)
	-

Distributions declared and paid

Distributions declared and paid
Year ended Distribution per unit (cents per unit) November 2016 (paid December 2016) 31/12/2016 5.57	31 March 2017 $'000 808
	808

6. UNITHOLDERS' FUNDS

The Fund was established on 9 September 2016 by way of the Manager depositing $100 with the Supervisor.

On 7 November 2016 the Fund received assets and liabilities as a result of the resettlement of the NZX Australian Midcap Index Fund. A total of 14,507,000 units in the Fund were issued for a total value of $79,414,000, represented by:

Investments in equity securities held at fair value through profit or loss Cash and cash equivalents Receivables Payables	$'000 78,110 1,085 223 (4)
	79,414

As at 31 March 2017 there were 15,107,000 units on issue

The number of units allotted during the period ended 31 March 2017 was 15,107,000 for total value of $82,961,000.

The number of units redeemed during the period ended 31 March 2017 was nil for total value of $nil.

Movement in the number of units Balance at the beginning of the period Subscriptions received during the period Units on issue at the end of the period	31 March 2017 '000 - 15,107
	15,107

The net asset value of each unit per the financial statements is $6.37215. Any difference between the net asset value announced to the market for 31 March 2017 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 PERIOD ENDED 31 MARCH 2017

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 period.

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, also a wholly owned subsidiary of NZX Limited, is an investor in the Fund.

As at 31 March 2017 the SLI scheme held 6,891,447 units valued at $43,801,000 in the Fund.

Distributions

The Fund paid distributions of $354,000 to SLI for the period ended 31 March 2017. The balance remaining as payable at the end of the period is $nil.

Management fees

For the period ended 31 March 2017, total direct purchase application fees amounted to $1,000 and the total interest earned on cash at banks amounted to $4,000.

Total gross management fees excluding rebates for the period ended 31 March 2017 amounted to $263,000 with $6,000 of outstanding accrued management fees due to the Manager at the end of the period.

Other related party transactions

As at 31 March 2017 the Fund has other payables to the Manager of $1,000.

The audit fee paid by the Manager for the audit of the Fund for the period ended 31 March 2017 was $5,000.

8. 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 PERIOD ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

8. FINANCIAL RISK MANAGEMENT (Continued)
Financial instruments by category	As At 31 March 2017
	$'000
Loans and receivables
Cash and cash equivalents	2,341
Receivables	509
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	95,008
Other financial liabilities
Management fees payable	(6)
Unsettled trades	(164)
Funds held for unit purchases	(1,099)
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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $9,501,000.

8b. 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 2017
	$'000
Cash and cash equivalents	2,341
Receivables	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 PERIOD ENDED 31 MARCH 2017

8. 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 2017 Balance Credit rating $'000 1,382 AA- 6 A 953 AA- 2,341

8c. 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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $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 2017
	$'000
Australian dollar cash held (NZD)	6
Receivables	312
Investments in equity securities held at fair value through profit or loss	95,008

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017.

10. EVENTS AFTER THE REPORTING PERIOD

Since 31 March 2017, 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 MID CAP 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 statements of Australian Mid Cap Fund (the fund) on pages 233 to 245 :

We have audited the accompanying financial statements which comprise:
�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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.

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Basis for opinion

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

==> picture [31 x 21] 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 $979,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 97.1% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	632	32.56%	244,601	1.60%
1,001-5,000	892	45.96%	2,100,786	13.77%
5,001-10,000	253	13.03%	1,740,336	11.41%
10,001-50,000	155	7.99%	2,807,655	18.40%
50,001-100,000	3	0.15%	182,708	1.20%
Greater than 100,000	6	0.31%	8,181,188	53.62%
TOTAL	1,941	100.00%	15,257,274	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	6,891,447	45.17
Anna Elisabeth Minnaar	644,705	4.23
New Zealand Central Securities Depository Limited	215,722	1.41
Custodial Services Limited	183,098	1.2
Philippa Jane Stubbins & Comac Trustee Limited	145,527	0.95
FNZ Custodians Limited	100,689	0.66
FNZ Custodians Limited	77,252	0.51
Custodial Services Limited	52,754	0.35
Elwyn Dianne Mayall	52,702	0.35
Custodial Services Limited	45,049	0.3
Gavin Ronald Walker & Susan Eleanor Walker & William Malcom Patterson	44,718	0.29
Gavin Ronald Walker & Susan Eleanor Walker & William Malcolm Patterson	44,718	0.29
Michael Geoffrey Byrne & Catherine Anne Byrne	42,578	0.28
Ajd Family Nominees Limited	42,574	0.28
North Star Trustees Limited	42,448	0.28
Christopher Graham Paice	40,978	0.27
Alastair John Kenworthy	40,371	0.26
Custodial Services Limited	40,028	0.26
Custodial Services Limited	39,478	0.26
Richard Murray Lawson	39,456	0.26
	8,826,292	57.86

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	674*	0
Paul Baldwin	0	0
Guy Elliffe	1,344*	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.

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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US Mid Cap Fund (USM)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the US Mid Cap Fund

Report to the Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$3.967	$3.495
Units On Issue	7,184,500	6,928,500
Funds Under Management	$28,503,339	$24,217,463
Gross Distribution	-	$0.044*
Gross Distribution Yield	N/A	N/A
Gross Return	13.50%	-6.95%*
Total Fund Charges	0.53%	0.54%
Distributions paid	Semi-annual

Since Inception

NTA Per Unit

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

4.50
4.00
3.50
3.00
may 16 sep 16 jan 17
NTA ($)
----- End of picture text -----

Sector Allocation

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==> picture [94 x 89] intentionally omitted <==

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

Financials 23%
Industrials 16.4%
Technology 13.3%
Consumer Goods 12.9%
Consumer Services 11.2%
Health Care 8.1%
Utilities 5.1%
Oil & Gas 4.7%
Basic Materials 4.5%
Telecoms 0.8%
----- End of picture text -----

Growth of $1,000*

==> picture [473 x 99] intentionally omitted <==

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

1,200
1,000
800
sep 15 jan 16 may 16 sep 16 jan 17
Value ($)
----- End of picture text -----

*Since inception, all distributions reinvested.

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THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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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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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
420
430
3,496
(2,063)
-
15
3,916
(1,618)
(116)
(76)
(5)
-
(121)
(76)
3,795
(1,694)
(328)
(222)
3,467
(1,916)
-
-
3,467
(1,916)
48.92
(27.60)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income/(loss) for the year/period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 24,255 - 3,467 (1,916) 934 27,347 - (960) - (216) 934 26,171 28,656 24,255

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 2017

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 68 131 80 - 28,621 24,230 28,769 24,361 (1) (9) (86) (55) (26) (7) - (35) (113) (106) 28,656 24,255 28,769 24,361

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year/period
Cash and cash equivalents at the end of the year/period
Reconciliation of profit/(loss) 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
Foreign exchange loss/(gain)
Increase in taxation payable
(Decrease)/Increase in management fees payable
Increase in accounts receivable
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
277
365
(124)
(67)
(234)
(102)
(81)
196
-
-
(404)
(71)
(404)
(71)
422
226
-
(4)
-
(216)
422
6
(63)
131
131
-
68
131
3,467
(1,916)
(3,496)
2,063
5
(15)
31
55
(8)
9
(80)
-
(81)
196

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 2017

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 changed its name from US Mid Cap Trust to US Mid Cap Fund effective 16 September 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in 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 31 March 2017 (see Note 2).

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.

Comparative period and amounts

These financial statements are for the the year ended 31 March 2017. The comparative figures are for the period 29 July 2015 to 31 March 2016. Where necessary, comparative figures have been restated to correspond to the current year classifications.

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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 2017

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

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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semi-annual basis directly from the Fund 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; the impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

1. TAXATION
	2017	2016
	$'000	$'000
Tax expense comprises:
Current tax expense	(328)	(222)
Total tax expense	(328)	(222)

The prima facie income tax expense on loss before tax from operations 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 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	2017 2016 $'000 $'000 3,795 (1,694) (1,063) 474 979 (578) 117 119 (361) (237) (328) (222) (328) (222) 2017 2016 $'000 $'000 338 73	2016 $'000 (1,694)
		474 (578) 119 (237)
		(222) (222)

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of units '000 Underlying fund Vanguard Mid Cap ETF 144	2017 2016 Fair value Number of units Fair value $'000 '000 $'000 28,621 139 24,230 28,621 24,230

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

4. 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/(losses) per unit (cents per unit)	2017 2016 3,467 (1,916) 7,087 6,943 48.92 (27.60)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 - - - 216 - (216) - -

Distributions declared and paid

Year ended Distribution per unit (cents per unit) October 2015 (paid November 2015) 31/03/2016 3.15	2017 2016 $'000 $'000 - 216 - 216

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 7,185,000 units on issue (31 March 2016: 6,929,000).

All issued units are fully paid and redeemable, and are quoted on the NZX Main Board. The Fund’s net assets attributable to uitholders 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 2017 was 256,000 (31 March 2016: 7,179,000) for total value of $934,000 (31 March 2016: $27,347,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: 250,000) for total value of $nil (31 March 2016: $960,000).

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	2017 2016 '000 '000 6,929 - 256 7,179 - (250) 7,185 6,929

The net asset value of each unit per the financial statements is $3.98831 (31 March 2016: $3.50051). The difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017, SLI held 6,827,896 units valued at $27,089,000 in the Fund. As at 31 March 2016, SLSS held 6,825,226 units valued at $23,833,000 in the Fund.

Distributions

The Fund paid distributions of $nil (31 March 2016: $215,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as payable as at 31 March 2016 was $nil. The Fund paid distributions of $nil to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). Of the total, the balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable) .

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $116,000 (31 March 2016: $76,000), with $1,000 (31 March 2016: $9,000) 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 2017 amounted to $2,000 (31 March 2016: $2,000).

The total direct purchase application fees for the year ended 31 March 2017 amounted to $2,000 (31 March 2016: $1,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund at the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

8. 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	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	68	131
Receivables	80	-
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	28,621	24,230
Other financial liabilities
Management fees payable	(1)	(9)
Funds held for unit purchases	(26)	(7)
Unsettled trades	-	(35)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $2,862,000 (31 March 2016: $2,423,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

8b. 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:

credit risk at the reporting date are:
	2017	2016
	$'000	$'000
Cash and cash equivalents	68	131
Accounts receivable	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').

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

ANZ BNP Paribas Westpac	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 26 AA- 7 AA- - A - A- 42 AA- 124 AA- 68 131

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'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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $2,862,000 (31 March 2016: $2,420,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. 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.
	2017	2016
	$'000	$'000
Receivables	80	-
Investments in equity securities held at fair value through profit or loss	28,621	24,230
Unsettled trades	-	(35)

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 MID CAP 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 254 to 266 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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 $288,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 99.5% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	67	51.15%	27,823	0.39%
1,001-5,000	47	35.88%	110,469	1.54%
5,001-10,000	11	8.40%	80,023	1.11%
10,001-50,000	4	3.05%	50,579	0.70%
50,001-100,000	1	0.76%	87,710	1.22%
Greater than 100,000	1	0.76%	6,827,896	95.04%
TOTAL	131	100.00%	7,184,500	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	6,827,896	95.04
Nigel Russell Fannin & Rosemary Anne O`Brien & Kevin Wayne Harborne	87,710	1.22
William Hugh Walmsley	16,379	0.23
Paul Edward Coll & Helen Marie Coll & Andrew John Anderson	13,615	0.19
Paul Paget Mayhew	10,500	0.15
ASB Nominees Limited	10,085	0.14
Roger Alan Johnston & Jeanette Johnston & Gellert Ivanson Trustee No 3 Limited	10,000	0.14
Graham John Skipper & Anne Skipper & Gregory Mark Lay	10,000	0.14
Billy Cheung Services Limited	9,944	0.14
Peter Blake Waines Morrison	7,503	0.1
Jocelyn Jane Torrie	7,268	0.1
Owen Stuart Campbell & Cheryl Jean Campbell & Craig Stuart Campbell	6,557	0.09
Anthony Charles Williams	6,420	0.09
Craigs Investment Partners Limited	6,100	0.08
Charl Johannes De Villiers	5,463	0.08
James Punnett	5,423	0.08
Julie Robyn Benseman	5,345	0.07
Andrew Mackay Drummond & Ross Drummond	4,639	0.06
Neil Douglas Smart & Simon Michael Smart	4,505	0.06
Audrey Aird & Digby Grant Ngankee & Michael Gordon Lawrence	4,498	0.06
	7,059,850	98.26

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	823*	0
Paul Baldwin	0	0
Guy Elliffe	1,642*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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US Small Cap Fund (USS)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the US Small Cap Fund

Report to the Unitholders HIGHLIGHTS Launch Date 29-Jul-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$3.794	$3.218
Units On Issue	7,407,500	7,262,500
Funds Under Management	$28,103,888	$23,368,619
Gross Distribution	-	$0.036*
Gross Distribution Yield	N/A	N/A
Gross Return	17.91%	-8.98%*
Total Fund Charges	0.53%	0.54%
Distributions paid	Semi-annual

Since Inception

NTA Per Unit

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

4.00
3.50
3.00
may 16 sep 16 jan 17
NTA ($)
----- End of picture text -----

Sector Allocation

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

Financials 26.2%
Industrials 20%
Consumer Services 12%
Technology 11.5%
Health Care 9.7%
Consumer Goods 7.2%
Oil & Gas 4.8%
Basic Materials 4.5%
Utilities 3.7%
Telecoms 0.4%
----- End of picture text -----

Growth of $1,000*

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

1,200
1,000
800
600
sep 15 jan 16 may 16 sep 16 jan 17
Value ($)
----- End of picture text -----

*Since inception, all distributions reinvested.

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US SMALL CAP FUND

THE MANAGER

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

THE SUPERVISOR

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

INVESTMENT ADMINISTRATOR & CUSTODIAN

BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch

SOLICITOR

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

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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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US SMALL CAP FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
7
Foreign exchange loss
Total expenses
Profit/(loss) before tax
Income tax expense
1
Profit/(loss) after tax
Other comprehensive income
Total comprehensive income/(loss)
EARNINGS PER UNIT
Basic and diluted earnings/(losses) per unit (cents per unit)
4

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
426
418
4,399
(2,548)
4,825
(2,130)
(114)
(74)
(5)
(5)
(119)
(79)
4,706
(2,209)
(322)
(209)
4,384
(2,418)
-
-
4,384
(2,418)
59.90
(33.13)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income/(loss) for the year/period Subscriptions from unitholders 6 Redemptions by unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 23,412 - 4,384 (2,418) 587 26,972 (66) (946) - (196) 521 25,830 28,317 23,412

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 2017

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 189 149 28,246 23,363 28,435 23,512 (1) (9) (87) (52) (30) (7) - (32) (118) (100) 28,317 23,412 28,435 23,512

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year/period
Cash and cash equivalents at the end of the year/period
Reconciliation of profit/(loss) 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
Foreign exchange loss
Increase in taxation payable
(Decrease)/increase in management fees payable
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
362
355
(122)
(65)
(223)
(94)
17
196
-
-
(244)
(50)
(244)
(50)
267
203
-
(4)
-
(196)
267
3
40
149
149
-
189
149
4,384
(2,418)
(4,399)
2,548
5
5
35
52
(8)
9
17
196

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 2017

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 changed its name from US Small Cap Trust to US Small Cap Fund effective 16 September 2016.

The Fund's units are quoted on the NZX Main Board. The Fund is a passive investment fund that invests in 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 31 March 2017 (see Note 2).

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.

Comparative period and amounts

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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 2017

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

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 Fund is on the last business day of May and November in each year. Currently distributions to unitholders are made on a semi-annual basis directly from the Fund 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; the impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2017 2016 $'000 $'000 (322) (209) (322) (209)

The prima facie income tax expense on profit/(loss) before tax from operations 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 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	2017 2016 $'000 $'000 4,706 (2,209) (1,318) 619 1,232 (714) 118 117 (354) (231) (322) (209) (322) (209) 2017 2016 $'000 $'000 337 79	2016 $'000 (2,209)
		619 (714) 117 (231)
		(209) (209)

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of units '000 Underlying fund Vanguard Small Cap ETF 148	2017 2016 Fair value Number of units Fair value $'000 '000 $'000 28,246 145 23,363 28,246 23,363

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

4. 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/(losses) per unit (cents per unit)	2017 2016 4,384 (2,418) 7,319 7,298 59.90 (33.13)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 - - - 196 - (196) - -

Distributions declared and paid

Year Ended Distributions per unit (cents per unit) October 2015 (paid November 2015) 31/03/2016 2.70	2017 2016 $'000 $'000 - 196 - 196

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 7,407,000 units on issue (31 March 2016: 7,262,000).

The number of units allotted during the year ended 31 March 2017 was 165,000 (31 March 2016: 7,527,000) for total value of $587,000 (31 March 2016: $26,972,000).

The number of units redeemed during the year ended 31 March 2017 was 20,000 (31 March 2016: 265,000) for total value of $66,000 (31 March 2016: $946,000).

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	2017 2016 '000 '000 7,262 - 165 7,527 (20) (265) 7,407 7,262

The net asset value of each unit per the financial statements is $3.82301 (31 March 2016: $3.22391). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017, SLI held 7,190,026 units valued at $27,279,000 in the Fund. As at 31 March 2016, SLSS held 7,190,026 units valued at $23,112,000 in the Fund.

Distributions

The Fund paid distributions of $nil (31 March 2016: $194,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remianing payable as at 31 March 2016 was $nil. The Fund paid distributions of $nil to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $114,000 (31 March 2016: $74,000), with $1,000 (31 March 2016: $9,000) 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 2017 amounted to $2,000 (31 March 2016: $2,000).

The total direct purchase application fees for the year ended 31 March 2017 amounted to $2,000 (31 March 2016: $1,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund at the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

8. 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	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	189	149
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	28,246	23,363
Other financial liabilities
Management fees payable	(1)	(9)
Funds held for unit purchases	(30)	(7)
Unsettled trades	-	(32)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $2,825,000 (31 March 2016: $2,336,000).

8b. Credit risk

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

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

Cash and cash equivalents

2017	2016
$'000	$'000
189	149

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 reporting date.

ANZ BNP Paribas Westpac	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 30 AA- 7 AA- - A - A- 159 AA- 142 AA- 189 149

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'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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $2,825,000 (31 March 2016: $2,333,000).

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

	2017	2016
	$'000	$'000
Investments in equity securities held at fair value through profit or loss	28,246	23,363
Unsettled trades	-	(32)

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 275 to 287 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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

==> picture [31 x 21] 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 $284,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 99.3% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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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

anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	83	61.94%	33,775	0.46%
1,001-5,000	40	29.85%	82,164	1.11%
5,001-10,000	6	4.48%	37,251	0.50%
10,001-50,000	4	2.99%	64,284	0.87%
50,001-100,000	-	0.00%	-	0.00%
Greater than 100,000	1	0.75%	7,190,026	97.06%
TOTAL	134	100.00%	7,407,500	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	7,190,026	97.06
Craigs Investment Partners Limited	29,431	0.4
Investment Custodial Services Limited	14,195	0.19
Billy Cheung Services Limited	10,580	0.14
ASB Nominees Limited	10,078	0.14
William John Duff Eaton	7,950	0.11
Anthony Charles Williams	6,636	0.09
Paul Alfred Corwin	6,000	0.08
James Punnett	5,777	0.08
Bruce Robert Benseman	5,543	0.07
ASB Nominees Limited	5,345	0.07
Franick Holdings Limited	4,440	0.06
Timothy Martin Sheppard	4,418	0.06
Stuart Douglas Thompson	3,948	0.05
Andrew Wallace	3,454	0.05
Jonathan Gurth Addington Hall	3,200	0.04
Ian George Roper	3,139	0.04
Timothy Richard Hitchings & Bridget Frances Williams & Raoul Edwin Neave	3,000	0.04
Herrrad Ulrike Maria Nann	3,000	0.04
Matthew Ian Mackay	2,818	0.04
	7,322,978	98.85

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	858*	0
Paul Baldwin	0	0
Guy Elliffe	1,712*	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.

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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NZ Property Fund (NPF) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the NZ Property Fund

Report to the Unitholders HIGHLIGHTS Launch Date 12-Nov-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$1.055	$1.105
Units On Issue	46,480,787	40,355,787
Funds Under Management	$49,025,308	$44,587,898
Gross Distribution	$0.037	$0.017*
Gross Distribution Yield	3.52%	N/A
Gross Return	-1.28%	8.71%*
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

Since Inception

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

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

NTA Per Unit

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

1.20
Diversified REITs 38.8%
1.10 Retail REITs 22.1%
Office REITs 17.8%
Industrial REITs 11.1%
Health Care REITs 10.2%
1.00
may 16 sep 16 jan 17
Growth of $1,000
1,200
1,100
1,000
900
jan 16 apr 16 jul 16 oct 16 jan 17 apr 17
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception, all distributions reinvested.

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NZ PROPERTY FUND

THE MANAGER

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

THE SUPERVISOR

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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'). Under a Deed of Retirement and Appointment dated 6 September 2016 Trustees Executors Limited retired as the trustee and Public Trust was appointed as the Supervisor. 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

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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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NZ PROPERTY FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
7
Total expenses
(Loss)/profit before tax
Income tax credit
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)
4

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
2,249
931
(3,013)
2,441
(764)
3,372
(258)
(87)
(258)
(87)
(1,022)
3,285
72
24
(950)
3,309
-
-
(950)
3,309
(2.17)
8.46

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 2017

Note Unitholders' funds at the beginning of the year/period Total comprehensive (loss)/income for the year/period Subscriptions from unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 44,588 - (950) 3,309 6,687 41,863 (1,300) (584) 5,387 41,279 49,025 44,588

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 2017

Note ASSETS Cash and cash equivalents Investments in equity securities held at fair value through profit or loss 2 Deferred tax asset 1 TOTAL ASSETS LIABILITIES Management fees payable 7 Distribution payable to unitholders 5 Funds held for unit purchases TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 1,275 994 47,789 44,201 97 24 49,161 45,219 (2) (20) - (584) (134) (27) (136) (631) 49,025 44,588 49,161 45,219

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the Financial Statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Dividend income received
Cash was applied to:
Management fees 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/period
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
Increase in deferred tax asset
(Decrease)/increase in management fees payable
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
2,248
931
(276)
(67)
1,972
864
3,450
1,070
(4,418)
(1,359)
(968)
(289)
1,161
419
(1,884)
-
(723)
419
281
994
994
-
1,275
994
(950)
3,309
3,013
(2,441)
(73)
(24)
(18)
20
1,972
864

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 2017

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 changed its name from New Zealand Property Index Trust to NZ Property Fund effective 16 September 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 Real Estate Select Index ('the Index'). As prescribed by the Trust Deed, the Fund only 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 31 March 2017 (see Note 2).

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 year/period presented.

Comparative period and amounts

These financial statements are for the year ended 31 March 2017. The comparative figures are for the period 15 October 2015 to 31 March 2016. Where necessary, comparative figures have been restated to correspond to the current year classifications.

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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 2017

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’).

The Fund is liable for tax at the prevailing company tax rate on taxable dividends from the investments in securities listed in Note 2 after the deduction of management fees. With most of this income, the Fund is able to utilise imputation credits to satisfy the tax liability. 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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. For the year ended 31 March 2017, five equity investments individually contributed 10% or more of the Fund's dividend income (31 March 2016: five equity investments). The individual dividend income received from these five equity investments was $425,000, $385,000, $361,000, $350,000 and $230,000 (31 March 2016: $189,000, $166,000, $160,000, $155,000 and $117,000).

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; the impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Deferred tax movement Total tax credit	2017 2016 $'000 $'000 (1) - 73 24 72 24

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

Income tax credit


(Loss)/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 Add imputation credits and other tax credits Income tax 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	2017 2016 $'000 $'000 (1,022) 3,285 286 (920) (844) 684 255 137 (146) (48) (449) (147) 521 171 72 24 2017 2016 $'000 $'000 24 - 73 24 - - 97 24 2017 2016 $'000 $'000 283 66	2016 $'000 3,285
		(920) 684 137 (48)
		(147) 171
		24

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of Shares '000 Underlying Securities Argosy Property Limited 5,984 Goodman Property Trust 6,758 Kiwi Property Group Limited 5,970 Investore Property Limited 1,527 Precinct Properties New Zealand Limited 6,982 Property For Industry Limited 3,298 Stride Stapled GRP NPV Units 2,657 Vital Healthcare Property Trust 2,366	2017 2016 Fair value Number of Shares Fair value $'000 '000 $'000 5,805 5,537 6,562 8,144 5,943 7,845 8,508 5,508 7,958 2,030 - - 8,518 6,112 7,671 5,326 3,060 5,003 4,596 2,490 5,504 4,862 1,793 3,658 47,789 44,201

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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.

4. 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)	2017 2016 (950) 3,309 43,783 39,106 (2.17) 8.46

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 584 - 1,300 584 (1,884) - - 584

Distributions declared and paid

Year ended Distribution per unit (cents per unit) March 2016 (paid April 2016) 31/03/2016 1.45 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	2017 2016 $'000 $'000 - 584 469 - 495 - 336 - 1,300 584

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 46,481,000 units on issue (31 March 2016: 40,356,000).

The number of units allotted, during the year ended 31 March 2017 was 6,125,000 (31 March 2016: 40,356,000) for total value of $6,687,000 (31 March 2016: $41,863,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: nil) for total value of $nil (31 March 2016: nil).

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Units on issue at the end of the year/period	2017 2016 '000 '000 40,356 - 6,125 40,356 46,481 40,356

The net asset value of each unit per the financial statements is $1.05473 (31 March 2016: $1.10487). Any difference between the net asset value announced to the market for 31 March 2017 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 2017

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.

As at 31 March 2017 SLI held 41,238,787 units valued at $43,496,000 in the Fund. As at 31 March 2016, SLSS held 39,798,787 units valued at $43,929,000 in the Fund.

Distributions

The Fund paid distributions of $907,000 (31 March 2016: $576,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as payable as at 31 March 2016 was $576,000. The Fund paid distributions of $312,000 to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the period is $nil (31 March 2016: not applicable).

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 excluding rebates for the period ended 31 March 2017 amounted to $258,000 (31 March 2016: $87,000) with $2,000 (31 March 2016: $20,000) 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 2017 amounted to $10,000 (31 March 2016: $3,000).

Total direct purchase application fees for the year ended 31 March 2017 amounted to $3,000 (31 March 2016: $1,000).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the period ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

8. 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 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

Financial instruments by category

Financial instruments by category
	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,275	994
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	47,789	44,201
Other financial liabilities
Management fees payable	(2)	(20)
Distributions payable to unitholders	-	(584)
Funds held for unit purchases	(134)	(27)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $4,779,000 (31 March 2016: $4,420,000).

8b. 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:
	2017	2016
	$'000	$'000
Cash and cash equivalents	1,275	994

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 2017

8. 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 reporting date.

ANZ Westpac	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 134 AA- 28 AA- 1,141 AA- 966 AA- 1,275 994

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’s listed securities are considered readily realisable, as they are quoted on the NZX Main Board. In addition, for the Fund, 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.

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 296 to 308 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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 $492,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 97.2% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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NZ PROPERTY FUND

anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	53	20.78%	30,247	0.07%
1,001-5,000	107	41.96%	298,936	0.64%
5,001-10,000	45	17.65%	346,240	0.74%
10,001-50,000	40	15.69%	875,003	1.88%
50,001-100,000	4	1.57%	329,157	0.71%
Greater than 100,000	6	2.35%	44,601,204	95.96%
TOTAL	255	100.00%	46,480,787	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	41,158,787	88.55
Investment Custodial Services Limited	2,013,996	4.33
Investment Custodial Services Limited	674,425	1.45
Investment Custodial Services Limited	272,243	0.59
Alan James Phillips & Helen Marie Phillips	242,802	0.52
Gary Anthony Vink & Jane Margaret Vink	238,951	0.51
Lewis John Randal & John Gerard Phibbs	100,000	0.22
Stephen Allan Mcgregor & Jane Costigan	97,119	0.21
Richard Brian Williams	70,510	0.15
Anthony Smith & Barbara Smith	61,528	0.13
Allan Charles Carvell	47,376	0.1
Grant Wayne Fausett & Christine Anne Pyke & Kevin George Horne	47,355	0.1
FNZ Custodians Limited	44,681	0.1
David Richard Gavin Mark & Jayne Mark	43,988	0.09
Arcane Enterprises Limited	40,265	0.09
Andrew John Coop	38,170	0.08
Jenny Marie Cochrane & Aimee Lee Clarke & Finman Trustees Ltd	37,878	0.08
Shani Myrna Joffe	29,614	0.06
Rowena Mary Mcgavin	27,180	0.06
George Heatherwick Findlay	25,000	0.05
	45,311,868	97.47

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	5,970*	0
Paul Baldwin	0	0
Guy Elliffe	11,916*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Australian Property Fund (ASP) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Australian Property Fund

Report to the Unitholders HIGHLIGHTS Launch Date 16-Dec-14

	March 2017	March 2016
Net Tangible Assets (NTA)	$1.372	$1.348
Units On Issue	33,548,089	31,798,089
Funds Under Management	$46,030,489	$42,862,234
Gross Distribution	$0.024	$0.055
Gross Distribution Yield	1.74%	4.11%
Gross Return	3.62%	17.37%
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

Sector Allocation

NTA Per Unit

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

1.60
1.40
1.20
1.00
may 16 sep 16 jan 17
NTA ($)
----- End of picture text -----

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

1.40
Retail REITs 36.8%
Diversified REITs 31.8%
Office REITs 15.9%
1.20 Specialised REITs 10.2%
Industrial REITs 5.3%
1.00
may 16 sep 16 jan 17
Growth of $1,000
1,400
1,200
1,000
800
jan 15 may 15 sep 15 jan 16 may 16 sep 16 jan 17
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception, all distributions reinvested.

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AUSTRALIAN PROPERTY FUND

THE MANAGER

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

THE SUPERVISOR

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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

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'). Under a Deed of Retirement and Appointment dated 6 September 2016, Trustees Executors Limited retired as the trustee and Public Trust was appointed as the Supervisor. 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 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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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AUSTRALIAN PROPERTY FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
7
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)
4

31 March
2017
31 March
2016
$'000
$'000
2,239
1,890
5
4,534
19
-
2,263
6,424
(236)
(186)
-
(19)
(7)
(3)
(243)
(208)
2,020
6,216
(547)
(421)
1,473
5,795
-
-
-
1,473
5,795
4.46
21.14

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 2017

Unitholders' funds at the beginning of the year Total comprehensive income for the year Subscriptions from unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year	31 March 2017 31 March 2016 $'000 $'000 42,793 30,454 1,473 5,795 2,368 7,920 (619) (1,376) 1,749 6,544 46,015 42,793

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 2017

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss 2 Taxation receivable TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Distribution payable to unitholders 5 Funds held for unit purchases TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	31 March 2017 31 March 2016 $'000 $'000 566 855 82 51 45,108 42,743 281 - 46,037 43,649 (2) (20) - (14) - (815) (20) (7) (22) (856) 46,015 42,793 46,037 43,649

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 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 (gain)/loss
(Decrease)/increase in taxation payable
(Decrease)/increase in management fees payable
(Increase)/decrease in taxation receivable
Increase in receivables
Net cash flows from operating activities

31 March
2017
31 March
2016
$'000
$'000
1,948
1,690
(254)
(181)
(582)
(195)
(7)
(3)
1,105
1,311
7,612
7,974
(7,864)
(8,494)
(252)
(520)
292
414
(1,434)
(1,285)
(1,142)
(871)
(289)
(80)
855
937
-
(2)
566
855
1,473
5,795
(5)
(4,534)
(19)
19
(14)
14
(18)
5
(281)
29
(31)
(17)
1,105
1,311

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 2017

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 changed its name from Australian Property Index Trust to Australian Property Fund effective 16 September 2016.

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 31 March 2017 (see Note 2).

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. Where necessary, comparative figures have been restated to correspond to the current year classifications.

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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.

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 2017

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

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

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 Australian equities. The Fund received all of its income from its Australian equity investments. For the year ended 31 March 2017, one equity investment individually contributed 10% or more of the Fund's dividend income (31 March 2016: one equity investment). The dividend income received from this equity investment was $251,000 (31 March 2016: $198,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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 year.

(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 - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

1. TAXATION

Tax expense comprises: Current tax expense Prior period adjustment Total tax expense	2017 2016 $'000 $'000 (545) (423) (2) 2 (547) (421)

The prima facie income tax expense on profit before tax from operations 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 Add imputation credits and other tax credits Prior period adjustment Income tax expense as per Statement of Comprehensive Income Imputation credit account (ICA) Imputation credits available for use in subsequent periods	2017 $'000 2,020
	(566) 1 626 (606)
	(545) - (2)
	(547)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of
Shares
'000
Underlying securities
Abacus Property Group
682
BWP Trust
759
Charter Hall Group
401
Charter Hall Retail - REIT
503
Cromwell Property Group
2,244
Dexus Property Group
228
Goodman Property Group
285
GPT Group
440
Growthpoint Properties Australia
678
Investa Office Fund
462
Iron Mountain Incorporated
46
Mirvac Group Property Trust
997
National Storage REIT
1,466
Scentre Group
494
Shopping Centres Australia Property Group
984
Stockland
459
Vicinity Centres
748
Viva Energy Reit
921
Westfield Corporation
249

2017
2016
Fair Value
Number of
Shares
Fair Value
$'000
'000
$'000
2,411
752
2,482
2,359
674
2,555
2,417
486
2,498
2,384
509
2,590
2,339
2,193
2,527
2,434
287
2,523
2,410
337
2,488
2,471
450
2,491
2,344
718
2,498
2,397
541
2,514
2,312
-
-
2,384
1,200
2,572
2,287
1,436
2,561
2,313
505
2,483
2,405
980
2,487
2,326
525
2,483
2,310
711
2,513
2,391
-
-
2,414
224
2,478
45,108
42,743

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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.

4. 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)	2017 2016 1,473 5,795 33,059 27,413 4.46 21.14

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 815 724 619 1,376 (1,434) (1,285) - 815

Distributions declared and paid

Year ended Distribution per unit (cents per unit) March 2015 (paid April 2015) 31/03/2015 2.65 September 2015 (paid October 2015) 31/03/2016 2.36 March 2016 (paid April 2016) 31/03/2017 2.56 September 2016 (paid October 2016) 31/03/2017 1.86	2017 2016 $'000 $'000 - 674 - 611 815 - 619 - 1,434 1,285

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 33,548,000 units on issue (31 March 2016: 31,798,000).

The number of units allotted during the year ended 31 March 2017 was 1,750,000 (31 March 2016: 6,375,000) for total value of $2,368,000 (31 March 2016: $7,920,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: nil) for total value of $nil (31 March 2016: $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	2017 2016 '000 '000 31,798 25,423 1,750 6,375 33,548 31,798

The net asset value of each unit per the financial statements is $1.37162 (31 March 2016: $1.34578). Any difference between the net asset value announced to the market for 31 March 2017 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 2017

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.

As at 31 March 2017 SLI held 31,595,544 units valued at $43,351,000 in the Fund. As at 31 March 2016 SLSS held 30,507,044 units valued at $41,081,000 in the Fund.

Distributions

The Fund paid distributions of $587,000 (31 March 2016: $1,368,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as payable as at 31 March 2016 was $781,000. The Fund paid distributions of $nil to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management Fees

Total gross management fees for the year ended 31 March 2017 amounted to $236,000 (31 March 2016: $186,000), with $2,000 (31 March 2016: $20,000) 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 2017 amounted to $3,000 (31 March 2016: $8,000).

Total direct purchase application fees for the year ended 31 March 2017 amounted to $2,000 (31 March 2016: $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 2017 was $5,000 (31 March 2016: $6,000).

8. 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 2017

8. FINANCIAL RISK MANAGEMENT (Continued)
Financial instruments by category	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	566	855
Receivables	82	51
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	45,108	42,743
Other financial liabilities
Management fees payable	(2)	(20)
Distribution payable to unitholders	-	(815)
Funds held for unit purchases	(20)	(7)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $4,511,000 (31 March 2016: $4,274,000).

8b. 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:

	2017	2016
	$'000	$'000
Cash and cash equivalents	566	855
Receivables	82	51

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 2017

8. 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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 20 AA- 6 AA- 2 A 6 A- 544 AA- 843 AA- 566 855

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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $4,520,000 (31 March 2016: $4,280,000).

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

	2017	2016
	$'000	$'000
Australian dollar cash held (NZD)	2	6
Receivables	82	51
Investments in equity securities held at fair value through profit or loss	45,108	42,743

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 317 to 328 :

We have audited the accompanying financial statements which comprise:
�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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

==> picture [31 x 21] 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 $460,000 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

The key audit matter	How the matter was addressed in our audit
Carrying amount of investments
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 98.0% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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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) 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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	47	23.38%	28,150	0.08%
1,001-5,000	70	34.83%	186,015	0.56%
5,001-10,000	37	18.41%	275,690	0.83%
10,001-50,000	41	20.40%	784,305	2.36%
50,001-100,000	4	1.99%	314,813	0.95%
Greater than 100,000	2	1.00%	31,709,116	95.23%
TOTAL	201	100.00%	33,298,089	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	31,595,544	94.89
David Georges Andre Dromer	113,572	0.34
John Lindsay Holland & Andrew Nicholas Crosbie Woods	81,899	0.25
Neil Lawrence Murray & Tania Natasha Tikus Murray & Graeme William Elvin	81,499	0.24
Andrew Merfyn Williams	77,754	0.23
Tania Natasha Tikus Murray & Neil Lawrence Murray & Brown Street Trustees Ltd	73,661	0.22
Raymon Williams	49,984	0.15
Billy Cheung Services Limited	38,540	0.12
Stephen John Kennedy & Maureen O`Callaghan	35,506	0.11
Nyala Limited	30,000	0.09
John Francis Paige Hudson & Laura Margaret Victoria Hudson	30,000	0.09
Craig Plim & Fiona Margaret Plim	27,934	0.08
Mark David Sweetapple & Janine Peta Sweetapple	27,664	0.08
Raymond Grant Krissansen & Ann Krissansen	25,000	0.08
Raymond Arthur Hancox & Janice Gay Hancox & Clive Basil Cleland	22,650	0.07
John Lindsay Holland & Annabel Mary Holland	22,572	0.07
Mathew Luke Buckland	21,430	0.06
Marjo Riitta Ramaekers	20,800	0.06
Daniel Tisch & Brigitte Lauper Tisch	19,456	0.06
David Richard Weikart & Jane Meinhardt Weikart & Russell Martin Toplis	18,006	0.05
	32,413,471	97.34

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	4,592*	0
Paul Baldwin	0	0
Guy Elliffe	9,166*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Australian Resources (ASR)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Australian Resources Fund

Report to the Unitholders HIGHLIGHTS

Launch Date 7-Apr-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$3.742	$2.772
Units On Issue	6,391,647	6,241,647
Funds Under Management	$23,915,338	$17,303,094
Gross Distribution	$0.040	$0.025*
Gross Distribution Yield	1.08%	N/A
Gross Return	36.55%	-17.25%*
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

Since Inception

Sector Allocation

NTA Per Unit

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

4.00
3.00
Materials 73.8%
Energy 26.2%
2.00
may 16 sep 16 jan 17
Growth of $1,000
1,250
1,000
750
500
may 15 sep 15 jan 16 may 16 sep 16 jan 17
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception, all distributions reinvested.

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AUSTRALIAN RESOURCES FUND

THE MANAGER

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

THE SUPERVISOR

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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

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'). Under a Deed of Retirement and Appointment dated 6 September 2016, Trustees Executors Limited retired as the trustee and Public Trust was appointed as the Supervisor. 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 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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
7
Miscellaneous expenses
Total expenses
Profit/(loss) before tax
Income tax expense
1
Profit/(loss) after tax
Other comprehensive income
Total comprehensive income/(loss)
EARNINGS PER UNIT
Basic and diluted earnings/(losses) per unit (cents per unit)
4

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
568
1,406
5,953
(4,618)
1
3
6,522
(3,209)
(112)
(101)
(1)
(1)
(113)
(102)
6,409
(3,311)
(136)
(373)
6,273
(3,684)
-
-
6,273
(3,684)
100.00
(60.17)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income/(loss) for the year/period Subscriptions from unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 17,277 - 6,273 (3,684) 538 21,071 (181) (110) 357 20,961 23,907 17,277

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 2017

Note
ASSETS
Cash and cash equivalents
Receivables
Investments in equity securities held at fair value through profit or loss
2
Taxation receivable
TOTAL ASSETS
LIABILITIES
Management fees payable
7
Taxation payable
Deferred tax liability
1
Distribution payable to unitholders
5
Funds held for unit purchases
Unsettled trades
TOTAL LIABILITIES
UNITHOLDERS' FUNDS
TOTAL LIABILITIES AND UNITHOLDERS' FUNDS

As At
31 March
2017
As At
31 March
2016
$'000
$'000
315
363
132
159
23,503
17,035
38
-
23,988
17,557
(1)
(8)
-
(136)
(37)
-
-
(110)
(43)
(5)
-
(21)
(81)
(280)
23,907
17,277
23,988
17,557

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year/period
Cash and cash equivalents at the end of the year/period
Reconciliation of profit/(loss) 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
Foreign exchange gain
(Decrease)/increase in taxation payable
Increase in deferred tax liability
(Decrease)/increase in management fees payable
Increase in taxation receivable
Decrease/(increase) in receivables
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
571
1,263
(119)
(93)
(272)
(230)
(1)
(1)
179
939
869
2,045
(1,094)
(2,781)
(225)
(736)
289
160
(291)
-
(2)
160
(48)
363
363
-
315
363
6,273
(3,684)
(5,953)
4,618
(1)
(3)
(136)
136
37
-
(7)
8
(38)
-
4
(136)
179
939

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 2017

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 changed its name from Australian Resources Index Trust to Australian Resources Fund effective 16 September 2016.

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 31 March 2017 (see Note 2).

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.

Comparative period and amounts

These financial statements are for the year ended 31 March 2017. The comparative figures are for the period 7 April 2015 to 31 March 2016. Where necessary, comparative figures have been restated to correspond to the current year classifications.

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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.

Receivables

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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

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

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 Australian equities. The Fund received all of its income from its Australian equity investments. For the year ended 31 March 2017, three equity investments contributed 10% or more of the Fund's dividend income (31 March 2016: one equity investment). The individual dividend income received from these three equity investments was $219,000, $115,000 and $89,000 (31 March 2016: $990,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Prior period adjustment Deferred tax movement Total tax expense	2017 2016 $'000 $'000 (139) (373) 2 1 - (136) (373)

The prima facie income tax expense on profit/(loss) before tax from operations 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 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	2017 $'000 6,409
	(1,795) 1,666 1 (10)
	(138) 2
	(136)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

		2017	2017	2016
	Number	of	Fair Value	Number of	Fair Value
	Shares			Shares
	'000		$'000	'000	$'000
Underlying securities
Alumina Limited	205		401	220	318
Beach Energy Limited	126		110	128	93
BHP Billiton Limited	283		7,423	286	5,349
Bluescope Steel Limited		51	677	50	346
Caltex Australia Limited		23	740	24	908
Evolution Mining Limited	102		234	88	149
Fortescue Metals Group Limited	150		1,020	152	429
Galaxy Resources Limited	168		83	-	-
Iluka Resources Limited		37	307	37	271
Independence Group NL		41	159	36	114
Liquefied Natural Gas Limited		-	-	45	26
Mineral Resources Limited		14	162	-	-
Newcrest Mining Limited		67	1,636	68	1,280
Northern Star Resources Ltd		53	234	54	204
Orocobre Limited		18	54	-	-
Oil Search Limited	103		813	104	782
Origin Energy Limited	154		1,183	156	877
OZ Minerals Limited		26	225	28	157
Regis Resources Limited		43	156	44	119
Rio Tinto Limited		37	2,468	38	1,790
Resolute Mining Limited		65	92	-	-
Sandfire Resources NL		14	96	14	88
Santos Limited	164		682	142	633
Saracen Mineral Holdings Limited		70	75	-	-
Sims Metal Management Limited		14	190	15	142
South 32 Limited	469		1,413	475	771
St Barbara Limited		43	112	44	96
Syrah Resources Limited		21	66	17	75
Western Areas Limited		21	54	19	46
Whitehaven Coal Limited		60	196	53	38
Woodside Petroleum Limited		64	2,236	63	1,818
Worley Parsons Limited		17	206	20	116
			23,503		17,035

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

4. 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/(losses) per unit (cents per unit)	2017 2016 6,273 (3,684) 6,273 6,123 100.00 (60.17)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 (110) - (181) (110) 291 - - (110)

Distributions declared and paid

Year ended Distribution per unit (cents per unit) March 2016 (paid April 2016) 31/03/2016 1.77 September 2016 (paid October 2016) 31/03/2017 1.01 November 2016 (paid December 2016) 31/03/2017 1.89	2017 2016 $'000 $'000 - 110 63 - 118 - 181 110

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 6,392,000 units on issue (31 March 2016: 6,242,000).

The number of units allotted during the year ended 31 March 2017 was 150,000 (31 March 2016: 6,242,000) for total value of $538,000 (31 March 2016: $21,071,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: nil) for total value of $nil (31 March 2016: $nil).

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Units on issue at the end of the year/period	2017 2016 '000 '000 6,242 - 150 6,242 6,392 6,242

The net asset value of each unit per the financial statements is $3.74014 (31 March 2016: $2.76786). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017 SLI held 6,021,077 units valued at $22,529,000 in the Fund. As at 31 March 2016, SLSS held 6,020,377 units valued at $16,673,000 in the Fund.

Distributions

The Fund paid distributions of $61,000 (31 March 2016: $107,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining payable as at 31 March 2016 was $107,000. The Fund paid distributions of $114,000 to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management Fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $112,000 (31 March 2016: $101,000), with $1,000 (31 March 2016: $8,000) 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 2017 amounted to $3,000 (31 March 2016: $4,000).

Total direct purchase application fees for the year ended 31 March 2017 amounted to $1,000 (31 March 2016: $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 2017 was $5,000 (31 March 2016: $6,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. 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	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	315	363
Receivables	132	159
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	23,503	17,035
Other financial liabilities
Management fees payable	(1)	(8)
Distribution payable to unitholders	-	(110)
Funds held for unit purchases	(43)	(5)
Unsettled trades	-	(21)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $2,350,000 (31 March 2016: $1,704,000).

8b. 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:

	2017	2016
	$'000	$'000
Cash and cash equivalents	315	363
Receivables	132	159

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 2017

8. 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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 43 AA- 5 AA- 23 A 88 A- 249 AA- 270 AA- 315 363

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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $2,366,000 (31 March 2016: $1,726,000).

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

The table below summarises the Fund’s exposure to currency risks.
	2017	2016
	$'000	$'000
Australian dollar cash held (NZD)	23	88
Receivables	132	159
Investments in equity securities held at fair value through profit or loss	23,503	17,035
Unsettled trades	-	(21)

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 RESOURCES 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 We have audited the accompanying financial statements of Australian Resources Fund (the fund) statements which comprise: on pages 337 to 349 : �� the statement of financial position as at 31 i. present fairly in all material respects the fund�s March 2017; financial position as at 31 March 2017 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
ii. 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.

==> picture [31 x 20] intentionally omitted <==

Basis for opinion

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

==> picture [31 x 21] 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 $240,000 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

The key audit matter	How the matter was addressed in our audit
Carrying amount of investments
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 98.0% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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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) 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 [31 x 19] 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:

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington 25 May 2017

18 -

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	56	45.53%	21,701	0.34%
1,001-5,000	48	39.02%	104,290	1.63%
5,001-10,000	9	7.32%	56,809	0.89%
10,001-50,000	9	7.32%	187,770	2.94%
50,001-100,000	0	0.00%	-	0.00%
Greater than 100,000	1	0.81%	6,021,077	94.20%
TOTAL	123	100.00%	6,391,647	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	6,021,077	94.2
Jennifer Gaye Simpson	35,100	0.55
Craigs Investment Partners Limited	31,408	0.49
David Georges Andre Dromer	30,369	0.48
Maria Joan Sandiford	20,105	0.31
Kenneth John Simpson	16,500	0.26
Claire Elizabeth Kathro	14,657	0.23
Shaoming Yu	14,603	0.23
Billy Cheung Services Limited	12,554	0.2
Roger Alan Johnston & Jeanette Johnston & Gellert Ivanson Trustee No 3 Limited	12,474	0.2
Andre Willem Van Zyl & Lorraine Mercedes Marais	8,113	0.13
Diana Mary Clement	6,954	0.11
Denice Muriel Worthington	6,853	0.11
Mark John Atwell	6,629	0.1
Gary Vernon Rorke	6,400	0.1
Charl Johannes De Villiers	5,923	0.09
Katherine Jane Clarke & Advisory Trustees 010 Limited	5,481	0.09
Philip Ralph Smith & Wendy Carol Anne Marjorie & D A & C Trustee Services Limited	5,430	0.08
Maria Joan Sandiford	5,026	0.08
Wallace John Semmens & Rose Agnes Semmens & Ernest William Gartrell	4,056	0.06
	6,269,712	98.1

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	881*	0
Paul Baldwin	0	0
Guy Elliffe	1,759*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Australian Financials Fund (ASF) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Australian Financials Fund

Report to the Unitholders HIGHLIGHTS Launch Date 7-Apr-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$8.441	$7.233
Units On Issue	2,787,352	2,762,352
Funds Under Management	$23,528,829	$19,980,921
Gross Distribution	$0.400	$0.296*
Gross Distribution Yield	4.74%	N/A
Gross Return	23.08%	-9.99%*
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

Since Inception

Sector Allocation

NTA Per Unit

==> picture [473 x 258] intentionally omitted <==

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

9.00
8.00
Financials 100%
7.00
6.00
may 16 sep 16 jan 17
Growth of $1,000
1,200
1,000
800
600
may 15 sep 15 jan 16 may 16 sep 16 jan 17
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception, all distributions reinvested.

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AUSTRALIAN FINANCIALS FUND

THE MANAGER

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

THE SUPERVISOR

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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

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'). Under a Deed of Retirement and Appointment dated 6 September 2016, Trustees Executors Limited retired as the trustee and Public Trust was appointed as the Supervisor. 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 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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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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==> picture [109 x 66] intentionally omitted <==

This statement was approved for signing at a meeting of the Directors on 25 May 2017.

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AUSTRALIAN FINANCIALS FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
7
Miscellaneous expenses
Total expenses
Profit/(loss) before tax
Income tax expense
1
Profit/(loss) after tax
Other comprehensive income
Total comprehensive income/(loss)
EARNINGS PER UNIT
Basic and diluted earnings/(losses) per unit (cents per unit)
4

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
1,139
1,265
3,429
(3,404)
3
14
4,571
(2,125)
(111)
(113)
(1)
-
(112)
(113)
4,459
(2,238)
(256)
(291)
4,203
(2,529)
-
-
4,203
(2,529)
151.02
(92.54)

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 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income/(loss) for the year/period Subscriptions from unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 19,951 - 4,203 (2,529) 171 23,086 (803) (606) (632) 22,480 23,522 19,951

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 2017

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss 2 TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Deferred tax liability 1 Distribution payable to unitholders 5 Funds held for unit purchases TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 184 556 169 51 23,314 19,719 23,667 20,326 (1) (9) (52) (130) (42) - - (231) (50) (5) (145) (375) 23,522 19,951 23,667 20,326

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year/period
Cash and cash equivalents at the end of the year/period
Reconciliation of profit/(loss) 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
Foreign exchange gain
(Decrease)/increase in taxation payable
Increase in deferred tax liability
(Decrease)/increase in management fees payable
Increase in receivables
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
1,020
1,214
(119)
(104)
(291)
(161)
(1)
-
609
949
627
1,931
(744)
(2,084)
(117)
(153)
170
135
(1,034)
(375)
(864)
(240)
(372)
556
556
-
184
556
4,203
(2,529)
(3,429)
3,404
(3)
(14)
(78)
130
42
-
(8)
9
(118)
(51)
609
949

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 2017

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 changed its name from Australian Financials Index Trust to Australian Financials Fund effective 16 September 2016.

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 31 March 2017 (see Note 2).

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.

Comparative periods and amounts

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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.

Receivables

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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

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 Fund is on the last business day of February and August in each year. Currently, distributions to unitholders are made on a semi-annual basis directly from the fund 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 the investment in securities listed in Note 2 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. With some of this income, the Fund is able to utilise imputation credits and foreign withholding tax credits to satisfy the tax liability. 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 2017

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. For the year ended 31 March 2017, four equity investments individually contributed 10% or more of the Fund's dividend income (31 March 2016: four equity investments). The individual dividend income received from these four equity investments was $164,000, $273,000, $197,000 and $235,000 (31 March 2016: $195,000, $271,000, $289,000 and $226,000).

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Deferred tax movement Total tax expense	2017 2016 $'000 $'000 (228) (291) (28) - (256) (291)

The prima facie income tax expense on profit/(loss) before tax from operations 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 Tax on securities subject to FDR Gross up of imputation credits Add 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	2017 $'000 4,459
	(1,249) 961 7 (5) (11)
	(297) 41
	(256)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of
Shares
'000
Underlying securities
AMP Limited
105
ASX Limited
7
Australia and New Zealand Banking Group Limited
104
Aveo Group
-
Bank of Queensland Limited
14
Bendigo and Adelaide Bank Limited
17
BT Investment Management Limited
6
Challenger Limited
20
Commonwealth Bank Australia
61
Cover-More Group Limited
-
CYBG Plc
24
Credit Corp Group Limited
2
Eclipx Group Limited
9
FlexiGroup Limited
10
Genworth Mortgage Insurance Australia Limited
8
Henderson Group PLC
25
Insurance Australia Group Limited
84
Ioof Holdings Limited
9
Iress Limited
5
Lend Lease Group
-
Macquarie Group Limited
12
Magellan Financial Group Limited
5
Medibank Private Limited
98
National Australia Bank Limited
95
OzForex Group Limited
-
Perpetual Limited
2
Platinum Asset Management Limited
8
QBE Insurance Group Limited
48
Steadfast Group Limited
26
Suncorp Group Limited
46
Westpac Banking Corporation
119

2017
2016
Fair Value
Number of
Shares
Fair Value
$'000
'000
$'000
594
104
665
379
7
311
3,621
102
2,658
-
14
52
183
13
177
222
16
154
66
6
62
274
20
184
5,737
60
4,968
-
11
19
120
23
101
31
-
-
40
-
-
24
10
26
27
10
28
103
21
114
555
85
527
87
9
91
62
-
-
-
19
286
1,190
12
873
128
5
115
301
97
313
3,457
92
2,687
-
8
19
95
2
80
43
8
53
682
48
578
73
26
51
659
45
595
4,561
117
3,932
23,314
19,719

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

4. 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/(losses) per unit (cents per unit)	2017 2016 4,203 (2,529) 2,783 2,733 151.02 (92.54)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 231 - 803 606 (1,034) (375) - 231

Distributions declared and paid

Year ended Distribution per unit (cents per unit) September 2015 (paid October 2015) 31/03/2016 8.22 December 2015 (paid January 2016) 31/03/2016 5.49 March 2016 (paid April 2016) 31/03/2016 8.36 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 15.29	2017 2016 $'000 $'000 - 225 - 150 - 231 129 - 250 - 424 - 803 606

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 2,787,000 units on issue (31 March 2016: 2,762,000).

The number of units allotted during the year ended 31 March 2017 was 25,000 (31 March 2016: 2,762,000) for total value of $171,000 (31 March 2016: $23,086,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: nil) for total value of $nil (31 March 2016: $nil).

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Units on issue at the end of the year/period	2017 2016 '000 '000 2,762 - 25 2,762 2,787 2,762

The net asset value of each unit per the financial statements is $8.43990 (31 March 2016: $7.22339). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017 SLI held 2,703,896 units valued at $22,824,000 in the Fund. As at 31 March 2016, SLSS held 2,703,759 units valued at $19,538,000 in the Fund.

Distributions

The Fund paid distributions of $368,000 (31 March 2016: $597,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as payable as at 31 March 2016 was $226,000. The Fund paid distributions of $412,000 to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management Fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $111,000 (31 March 2016: $113,000), with $1,000 (31 March 2016: $9,000) 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 2017 amounted to $6,000 (31 March 2016: $6,000).

Total direct purchase application fees for the year ended 31 March 2017 amounted to $1,000 (31 March 2016: $nil).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. 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	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	184	556
Receivables	169	51
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	23,314	19,719
Other financial liabilities
Management fees payable	(1)	(9)
Distribution payable to unitholders	-	(231)
Funds held for unit purchases	(50)	(5)

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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $2,331,000 (31 March 2016: $1,972,000).

8b. 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:

	2017	2016
	$'000	$'000
Cash and cash equivalents	184	556
Receivables	169	51

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 2017

8. 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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 50 AA- 5 AA- 18 A 3 A- 116 AA- 548 AA- 184 556

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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $2,350,000 (31 March 2016: $1,977,000).

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

The table below summarises the Fund’s exposure to currency risk.
	2017	2016
	$'000	$'000
Australian dollar cash held (NZD)	18	3
Receivables	169	51
Investments in equity securities held at fair value through profit or loss	23,314	19,719

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 Financials Fund

Report on the financial statements

Opinion

In our opinion, the accompanying financial We have audited the accompanying financial statements of Australian Financials Fund (the fund) statements which comprise: on pages 358 to 370 :

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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

==> picture [31 x 21] 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 $237,000 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

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Key Audit Matters

The key audit matter	How the matter was addressed in our audit
Carrying amount of investments
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 98.51% of total assets.	evaluating the control environment in place at the administration
We do not consider these	manager by obtaining and reading a report issued by an
investments to be at high risk of	independent auditor on the design and operation of those controls
significant misstatement, or be
subject to a significant level of	�agreeing the 31 March 2017 valuation of listed equity investments
judgement, because they comprise	to externally quoted prices
liquid, listed investments. However, due to their materiality in the context of the financial statements as a	�agreeing investment holdings to confirmations received from the administration manager
whole, they are considered to be the	We did not identify any material differences in relation to the carrying
area which had the greatest effect	amount of investments.
on our overall audit strategy and
allocation of resources in planning
and completing our audit.

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Other Information

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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.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	40	62.50%	12,847	0.46%
1,001-5,000	18	28.13%	43,036	1.54%
5,001-10,000	4	6.25%	26,712	0.96%
10,001-50,000	1	1.56%	10,861	0.39%
50,001-100,000	0	0.00%	-	0.00%
Greater than 100,000	1	1.56%	2,693,896	0.9665
TOTAL	64	100.00%	2,787,352	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	2,693,896	96.65
David Georges Andre Dromer	10,861	0.39
George Heatherwick Findlay	8,728	0.31
Gert Franz Johannes Starker & Elma Starker	7,084	0.25
Jenny Marie Cochrane & Aimee Lee Clarke & Finman Trustees Ltd	5,466	0.2
Billy Cheung Services Limited	5,434	0.19
Craigs Investment Partners Limited	4,440	0.16
Phillip John Tait & Darien Patricia Tait & Jenny Catherine Hirst	4,228	0.15
World Holdings Nominees Limited	4,177	0.15
Trent William Lawton	3,344	0.12
John Douglas Phillips & Sara Maragret Phillips	2,902	0.1
Peter Andrew Metcalfe & Janis Doreen Metcalfe	2,824	0.1
Bruce Robert Benseman	2,670	0.1
Scott William Priestley & John William Priestley & Bassett Trustees 5 Limited	2,647	0.09
David Neilson Hay & Rebecca Barbara Hay & Wyndham Trustees Limited	2,505	0.09
Daniel Tisch & Brigitte Lauper Tisch	2,429	0.09
Arcane Enterprises Limited	2,010	0.07
Susan Jane Sturman	1,476	0.05
Paul Bruce Johansson	1,416	0.05
Nigel David Riley	1,363	0.05
	2,769,900	99.36

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial		Non-Benefcial
Bevan Miller		436*	0
Paul Baldwin		0	0
Guy Elliffe		869*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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NZ Dividend Fund (DIV)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the NZ Dividend Fund

Report to the Unitholders HIGHLIGHTS Launch Date 7-Apr-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$1.108	$1.092
Units On Issue	30,712,302	22,712,302
Funds Under Management	$34,029,893	$24,805,468
Gross Distribution	$0.064	$0.045*
Gross Distribution Yield	5.80%	N/A
Gross Return	7.61%	14.6%*
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

Since Inception

NTA Per Unit

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1.20
1.10
1.00
may 16 sep 16 jan 17
NTA ($
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Sector Allocation

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Utilities 27.2%
Industrials 16.3%
Telecoms 13.5%
Consumer Discret. 12.9%
Real Estate 10.4%
Materials 8.2%
Energy 4.7%
Financials 3.5%
Health Care 1.9%
Consumer Staples 1.4%
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Growth of $1,000*

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1,500
1,250
1,000
750
may 15 sep 15 jan 16 may 16 sep 16 jan 17
Value ($)
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*Since inception, all distributions reinvested.

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THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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

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

This statement was approved for signing at a meeting of the Directors on 25 May 2017.

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NZ DIVIDEND FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE ENDED 31 MARCH 2017

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
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)
4

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
1,803
1,358
9
15
(124)
1,683
1,688
3,056
(158)
(112)
(1)
-
(159)
(112)
1,529
2,944
(38)
(64)
1,491
2,880
-
-
1,491
2,880
5.62
13.48

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 ENDED 31 MARCH 2017

Unitholders' funds at the beginning of the year/period Total comprehensive income for the year/period Subscriptions from unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 24,806 - 1,491 2,880 8,943 22,660 (1,211) (734) 7,732 21,926 34,029 24,806

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 2017

Note ASSETS Cash and cash equivalents Receivables Investments in equity securities held at fair value through profit or loss 2 Taxation receivable TOTAL ASSETS LIABILITIES Management fees payable 7 Taxation payable Deferred tax liability 1 Funds held for unit purchases Unsettled trades TOTAL LIABILITIES UNITHOLDERS' FUNDS TOTAL LIABILITIES AND UNITHOLDERS' FUNDS	As At 31 March 2017 As At 31 March 2016 $'000 $'000 922 334 414 302 33,798 24,262 20 - 35,154 24,898 (2) (11) - (34) (14) - (566) (47) (543) - (1,125) (92) 34,029 24,806 35,154 24,898

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 ENDED 31 MARCH 2017

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:
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
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 liability
(Decrease)/increase in management fees payable
Increase in receivables
Net cash flows from operating activities

Year
Ended
2017
Period
Ended
2016
$'000
$'000
1,691
1,057
9
14
(167)
(101)
(78)
(30)
(1)
-
1,454
940
7,890
6,096
(12,513)
(7,011)
(4,623)
(915)
4,968
1,043
(1,211)
(734)
3,757
309
588
334
334
-
922
334
1,491
2,880
124
(1,683)
(20)
-
(34)
34
14
-
(9)
11
(112)
(302)
1,454
940

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 ENDED 31 MARCH 2017

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 changed its name from New Zealand Dividend Index Trust to NZ Dividend Fund effective 16 September 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 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 31 March 2017 (see Note 2).

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.

Comparative period and amounts

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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 ENDED 31 MARCH 2017

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

The units are issued and redeemed based on the Fund’s net asset value per unit at the time of issue or redemption. The Fund’s net asset value per unit is calculated by dividing the net asset 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.

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 balance sheet 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.

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 ENDED 31 MARCH 2017

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 equity investments. For the year ended 31 March 2017 two equity investments individually contributed 10% or more of the Fund's dividend income (31 March 2016: three equity investments). The individual dividend income received from these two equity investments was $315,000 and $212,000 (31 March 2016: $156,000, $147,000 and $167,000).

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; the impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE ENDED 31 MARCH 2017

1. TAXATION

1. TAXATION
Tax expense comprises: Current tax expense Deferred tax movement Total tax expense	2017 2016 $'000 $'000 (54) (64) 16 -
	(38) (64)

The prima facie income tax expense on profit before tax from operations 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	2017 2016 $'000 $'000 1,529 2,944 (428) (824) (35) 471 63 16 (141) (106) (541) (443) 503 379 (38) (64) 2017 2016 $'000 $'000 - - 16 - (30) - (14) - 2017 2016 $'000 $'000 352 211	2016 $'000 2,944
		(824) 471 16 (106)
		(443) 379
		(64)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Number of
Shares
'000
Underlying securities
Auckland International Airport Limited
380
Air New Zealand Limited
736
Australia and New Zealand Banking Group Limited
14
Argosy Property Trust
655
Chorus Limited
306
Contact Energy Limited
520
EBOS Group Limited
35
Fletcher Building Limited
333
Freightways Limited
98
Fonterra Shareholders Fund
78
Goodman Property Trust
775
Genesis Energy Limited
548
Heartland New Zealand Limited
-
Infratil Limited
471
Kiwi Income Property Trust
852
Meridian Energy Limited
902
Mercury NZ Limited
472
Mainfreight Limited
-
Metro Performance Glass Limited
91
Mighty River Power Limited
-
Nuplex Industries Limited
-
Precinct Properties New Zealand Limited
607
Sky City Entertainment Group Limited
409
Sky Network Television Limited
403
Spark New Zealand Limited
928
Trade Me Group Limited
212
Westpac Banking Corporation
18
Z Energy Limited
230
Tourism Holdings Limited
77

2017
2016
Fair value
Number of
Shares
Fair value
$'000
'000
$'000
2,566
278
1,785
1,810
334
955
479
12
317
635
426
505
1,320
289
1,444
2,632
-
-
642
27
471
2,768
314
2,474
731
71
448
473
38
228
934
534
705
1,139
463
950
-
300
363
1,371
271
889
1,214
584
844
2,529
746
1,955
1,486
-
-
-
22
342
118
-
-
-
356
1,041
-
95
495
740
447
562
1,699
243
1,218
1,578
315
1,567
3,250
684
2,497
1,087
188
827
710
14
475
1,599
135
905
288
-
-
33,798
24,262

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NOTES TO THE FINANCIAL STATEMENTS FOR THE ENDED 31 MARCH 2017

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.

4. 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/(losses) per unit (cents per unit)	2017 2016 1,491 2,880 26,535 21,358 5.62 13.48

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 - - 1,211 734 (1,211) (734) - -

Distributions declared and paid

Year ended Distribution per unit (cents per unit) June 2015 (paid July 2015) 31/03/2016 0.40 September 2015 (paid October 2015) 31/03/2016 0.99 December 2015 (paid January 2016) 31/03/2016 2.04 June 2016 (paid July 2016) 31/03/2017 2.15 November 2016 (paid December 2016) 31/03/2017 2.48	2017 2016 $'000 $'000 - 82 - 210 - 442 497 - 714 - 1,211 734

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NOTES TO THE FINANCIAL STATEMENTS FOR THE ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 30,712,000 units on issue (31 March 2016: 22,712,000).

The number of units allotted during the year ended 31 March 2017 was 8,000,000 (31 March 2016: 22,712,000) for total value of $8,943,000 (31 March 2016: $22,660,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: nil) for total value of $nil (31 March 2016: $nil).

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Units on issue at the end of the year/period	2017 2016 '000 '000 22,712 - 8,000 22,712 30,712 22,712

The net asset value of each unit per the financial statements is $1.10800 (31 March 2016: $1.09220). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017, SLI held 19,626,510 units valued at $21,747,000 in the Fund. As at 31 March 2016, SLSS held 19,624,858 units valued at $21,412,000 in the Fund.

Distributions

The Fund paid distributions of $423,000 (31 March 2016: $670,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining payable as at 31 March 2016 was $nil. The Fund paid distributions of $486,000 to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $158,000 (31 March 2016: $112,000) with $2,000 (31 March 2016: $11,000) 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 2017 amounted to $13,000 (31 March 2016: $10,000).

Total direct purchase application fees for the year ended 31 March 2017 amounted to $9,000 (31 March 2016: $3,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

Total security lending fees for the period ended 31 March 2017 amounted to $9,000 (31 March 2016: $15,000), with the accrued fees due to the Fund of $1,000 (31 March 2016: $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.

8. 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

Financial instruments by category
	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	922	334
Receivables	414	302
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through proft or loss	33,798	24,262
Other financial liabilities
Management fees payable	(2)	(11)
Funds held for unit purchases	(566)	(47)
Unsettled trades	(543)	-

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $3,380,000 (31 March 2016: $2,426,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

8b. 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:

	2017	2016
	$'000	$'000
Cash and cash equivalents	922	334
Receivables	414	302

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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 566 AA- 47 AA- 356 AA- 287 AA- 922 334

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.

8d. 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE ENDED 31 MARCH 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

On 31 March 2017 the value of securities the Fund had on loan to NZCL was $861,000 (31 March 2016: $478,000).

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 DIVIDEND 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 379 to 392 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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

==> 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 $352,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 96.1% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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Other Information

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Use of this Independent Auditor�s Report

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anyone other than the members as a body for our audit work, this report, or any of the opinions we have formed.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	175	24.79%	109,906	0.35%
1,001-5,000	261	36.97%	638,542	2.03%
5,001-10,000	106	15.01%	803,583	2.55%
10,001-50,000	128	18.13%	3,074,817	9.77%
50,001-100,000	22	3.12%	1,571,713	5.00%
Greater than 100,000	14	1.98%	25,263,741	80.30%
TOTAL	706	100.00%	31,462,302	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	19,626,510	62.38
Investment Custodial Services Limited	1,753,313	5.57
Gary Anthony Vink & Jane Margaret Vink	1,422,773	4.52
FNZ Custodians Limited	578,795	1.84
Joanna Marie Deighton	451,570	1.44
Martin Clive Farrell & Karin Joanne Farrell & Jill Maree Darragh	353,328	1.12
Martin Clive Farrell & Denise Ruth Farrell & Richard Heywood Taylor	209,345	0.67
Timothy Oliver Bennett	180,475	0.57
Alan James Phillips & Helen Marie Phillips	124,075	0.39
Donald John Lyon	120,000	0.38
Craigs Investment Partners Limited	117,635	0.37
Investment Custodial Services Limited	116,667	0.37
Theodore Francis Duyvestyn & Maree Margaret Ashton & Graham Brown & Co Trustees
Limited	107,550	0.34
MLT Investments Limited	101,705	0.32
Geoffrey Stewart Wilkinson	100,000	0.32
Tracy Ann Woodward	93,254	0.3
Michael Brian Howard Kersey	90,224	0.29
Barbara Anne Bridger	88,975	0.28
Christopher Bruce Rennie & Katharine Margaret Price	81,454	0.26
Laurence Michael Diack	80,000	0.25
	25,797,648	81.98

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	2,073*	0
Paul Baldwin	0	0
Guy Elliffe	4,138*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Australian Dividend Fund (ASD) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Australian Dividend Fund

Report to the Unitholders HIGHLIGHTS Launch Date 16-Dec-14

	March 2017	March 2016
Net Tangible Assets (NTA)	$1.771	$1.587
Units On Issue	39,790,493	38,540,493
Funds Under Management	$70,486,888	$61,165,304
Gross Distribution	$0.076	$0.070
Gross Distribution Yield	4.27%	4.43%
Gross Return	17.20%	-7.78%
Total Fund Charges	0.54%	0.54%
Distributions paid	Semi-annual

Sector Allocation

NTA Per Unit

==> picture [473 x 268] intentionally omitted <==

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

1.80
Financials 30.9%
Telecoms 17.9%
Consumer Staples 16.5%
1.60 Utilities 10%
Materials 9.5%
Consumer Discret. 7.5%
Industrials 5.5%
Real Estate 1.8%
1.40 Health Care 0.4%
may 16 sep 16 jan 17
Growth of $1,000
1,400
1,200
1,000
800
jan 15 may 15 sep 15 jan 16 may 16 sep 16 jan 17
NTA ($)
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception, all distributions reinvested.

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AUSTRALIAN DIVIDEND FUND

THE MANAGER

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

THE SUPERVISOR

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

AUDITOR

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

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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

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'). Under a Deed of Retirement and Appointment dated 6 September 2016, Trustees Executors Limited retired as the trustee and Public Trust was appointed as the Supervisor. 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 Australian Dividend 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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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AUSTRALIAN DIVIDEND FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
7
Foreign exchange loss
Miscellaneous expenses
Total expenses
Profit/(loss) before tax
Income tax expense
1
Profit/(loss) after tax
Other comprehensive income
Total comprehensive income/(loss)
EARNINGS PER UNIT
Basic and diluted earnings/(losses) per unit (cents per unit)
4

2017
2016
$'000
$'000
3,623
3,062
7,052
(6,639)
-
3
10,675
(3,574)
(339)
(289)
(1)
-
(8)
-
(348)
(289)
10,327
(3,863)
(747)
(705)
9,580
(4,568)
-
-
-
9,580
(4,568)
24.27
(14.41)

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 2017

Unitholders' funds at the beginning of the year Total comprehensive income/(loss) for the year Subscriptions from unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year	2017 2016 $'000 $'000 61,066 48,150 9,580 (4,568) 1,972 18,491 (2,153) (1,007) (181) 17,484 70,465 61,066

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 2017

Note
ASSETS
Cash and cash equivalents
Receivables
Investments in equity securities held at fair value through profit or loss
2
TOTAL ASSETS
LIABILITIES
Management fees payable
7
Taxation payable
Deferred tax liability
1
Distribution payable to unitholders
5
Funds held for unit purchases
Unsettled trades
TOTAL LIABILITIES
UNITHOLDERS' FUNDS
TOTAL LIABILITIES AND UNITHOLDERS' FUNDS

As At
31 March
2017
As At
31 March
2016
$'000
$'000
1,174
733
570
808
69,119
60,083
70,863
61,624
(3)
(28)
(232)
(319)
(91)
-
-
(198)
(23)
(13)
(49)
-
(398)
(558)
70,465
61,066
70,863
61,624

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

==> picture [115 x 65] intentionally omitted <==

--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

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 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/(loss) 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
Foreign exchange loss/(gain)
(Increase)/decrease in taxation payable
(Decrease)/increase in deferred tax liability
(Decrease)/increase in management fees payable
Decrease/(increase) in receivables
Net cash flows from operating activities

2017
2016
$'000
$'000
3,822
2,748
(364)
(288)
(704)
(544)
(8)
-
2,746
1,916
34,724
42,502
(35,339)
(43,393)
(615)
(891)
655
715
(2,351)
(1,459)
(1,696)
(744)
435
281
733
450
6
2
1,174
733
9,580
(4,568)
(7,052)
6,639
1
(3)
(87)
142
91
-
(25)
1
238
(295)
2,746
1,916

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 2017

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 changed its name from Australian Dividend Index Trust to Australian Dividend Fund effective 16 September 2016

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 31 March 2017 (see Note 2).

STATEMENT OF ACCOUNTING POLICIES

Basis of preparation

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 their performance is managed and evaluated on a fair value basis in accordance with a documented investment strategy.

(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.

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 2017

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

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 unitholder distribution. To the extent that imputation credits are available, distributions to unitholders will be fully imputed. The record date for the Fund is on the last business day of May and November in each year. Currently, distributions to unitholders are made on a semi-annual basis directly from the fund 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 the investment in securities listed in Note 2 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. With some of this income, the Fund is able to utilise imputation credits and foreign withholding tax credits to satisfy the tax liability. 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. For the year ended 31 March 2017, one equity investment individually contributed 10% or more of the Fund's dividend income (31 March 2016: two equity investments). The dividend income received from this equity investment was $431,000 (31 March 2016: $323,000 and $309,000).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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 year.

(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 - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Prior period adjustment Deferred tax movement Total tax expense	2017 2016 $'000 $'000 (850) (705) 4 - 99 - (747) (705)

The prima facie income tax expense on profit/(loss) before tax from operations 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 Tax on securities subject to FDR Gross up of imputation credits Add 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	2017 $'000 10,327
	(2,892) 1,971 105 (57) (48)
	(921) 170 4
	(747)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

		2017		2016
	Number of	Fair Value	Number of	Fair Value
	Shares		Shares
	'000	$'000	'000	$'000
Underlying securities
Adelaide Brighton Ltd	65	402	38	212
AGL Energy Ltd	86	2,469	53	1,073
AMP Ltd	114	642	103	663
APA Group	165	1,618	81	794
Ardent Leisure Group	-	-	41	104
ASX Ltd	6	307	7	299
Ausnet Services Ltd	366	673	201	332
ANZ Banking Group Ltd	-	-	156	4,055
Automotive Holdings Group Limited	64	287	25	115
Aluminia Limited	317	620	-	-
Aurizon Holdings Limited	393	2,251	-	-
Asaleo Care Limited	2,205	4,236	-	-
Boral Limited	170	1,082	-	-
Bank of Queensland Limited	18	234	15	206
Bendigo and Adelaide Bank Ltd	18	241	20	194
Challenger Ltd	12	163	15	142
Cimic Group Limited	-	-	9	357
Commonwealth Bank of Australia	75	6,985	64	5,326
CSR Ltd	82	404	75	273
Crown Resorts Limited	89	1,141	-	-
Dulux Group Limited Ordinary Fully Paid	59	421	-	-
Downer EDI Ltd	75	475	74	317
Downer EDI Ltd - Rights	28	-	-	-
Duet Group	459	1,397	237	598
Eclipx Group Limited Ordinary Fully Paid	7	29	-	-
Fairfax Media Limited	417	467	221	211
FlexiGroup Limited	-	-	12	34
Flight Centre Travel Group Ltd	-	-	5	239
GWA Group Limited	67	211	-	-
G8 Education Ltd	105	467	56	236
Genworth Mortgage Insurance Australia Limited	14	47	23	64
Harvey Norman Hldgs Ltd	157	777	61	316
Insurance Australia Group Ltd	-	-	99	610
IOOF Holdings Ltd	11	104	12	118
JB Hi Fi Ltd	16	442	9	231
Lend Lease Group	75	1,269	11	176
Macquarie Group Ltd	10	999	10	708
McMillan Shakespeare Limited	19	271	7	97
Magellan Financial Group Ltd	4	96	-	-
Medibank Private Limited	80	246	-	-
National Australia Bank Ltd	125	4,532	136	3,950
Navitas Limited	52	251	29	164
Orica Ltd	-	-	45	764
Perpetual Limited	2	101	2	96
Platinum Asset Management Ltd	-	-	9	61

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

Number of
Shares
'000
Underlying securities
QBE Insurance Group Ltd
38
Retail Food Group Limited
28
Rio Tinto Ltd
56
Sigma Pharmaceuticals Ltd
213
Seven Group Holdings Ltd
21
Sonic Healthcare Ltd
-
Spark Infrastructure Trust
279
Spark New Zealand Limited
1,825
Spotless Group Holdings Limited
306
Suncorp Group Ltd
47
Super Retail Group Limited
25
Sydney Airport Ltd
-
Tabcorp Holdings Ltd
175
Telstra Corporation Ltd
1,183
Transurban Ltd
-
Wesfarmers Ltd
146
Westpac Banking Group
141
Woodside Petroleum Ltd
-
Woolworths Ltd
-

2017
2016
Fair Value
Number of
Shares
Fair Value
$'000
'000
$'000
531
-
-
162
15
86
3,664
73
3,444
300
-
-
250
16
96
-
31
652
720
146
335
6,334
940
3,428
362
161
224
672
61
799
278
12
113
-
133
986
907
-
-
6,014
984
5,813
-
136
1,705
7,188
122
5,607
5,380
144
4,842
-
168
4,827
-
163
3,991
69,119
60,083

All investments are designated at inception as being at fair value through profit or loss. The fair values of investments are calculated using the last traded market price at the reporting date. The investments are registered in the name of BNP Paribas Fund Services Australasia Pty Ltd, New Zealand branch, the custodian of the Fund.

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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

4. 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/(losses) per unit (cents per unit)	2017 2016 9,580 (4,568) 39,468 31,707 24.27 (14.41)

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 198 650 2,153 1,007 (2,351) (1,459) - 198

Distributions declared and paid

Year ended Distribution per unit (cents per unit) June 2015 (July 2015) 31/03/2016 1.88 September 2015 (paid October 2015) 31/03/2016 0.27 December 2015 (paid January 2016) 31/03/2016 2.57 March 2016 (paid April 2016) 31/03/2016 0.51 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	2017 2016 $'000 $'000 - 526 - 75 - 858 198 - 865 - 210 - 1,078 - 2,351 1,459

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 39,790,000 units on issue (31 March 2016: 38,540,000).

The number of units allotted during the year ended 31 March 2017 was 1,250,000 (31 March 2016: 11,375,000) for total value of $1,972,000 (31 March 2016: $18,491,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: nil) for total value of $nil (31 March 2016: $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	2017 2016 '000 '000 38,540 27,165 1,250 11,375 39,790 38,540

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS (Continued)

The net asset value of each unit per the financial statements is $1.77092 (31 March 2016: $1.58448). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

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.

As at 31 March 2017, SLI held 37,655,556 units valued at $66,705,000 in the Fund. As at 31 March 2016, SLSS held 37,032,089 units valued at $58,713,000 in the Fund.

Distributions

The Fund paid distributions of $1,026,000 (31 March 2016: $1,596,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The Fund paid distributions of $1,024,000 to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees for the year ended 31 March 2017 amounted to $339,000 (31 March 2016: $289,000), with $3,000 (31 March 2016: $28,000) 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 2017 amounted to $13,000 (31 March 2016: $17,000).

Total direct purchase application fees for the year ended 31 March 2017 amounted to $2,000 (31 March 2016: $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 2017 was $5,000 (31 March 2016: $6,000).

8. 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 2017

8. FINANCIAL RISK MANAGEMENT (Continued)

8. FINANCIAL RISK MANAGEMENT (Continued)
Financial instruments by category	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,174	733
Receivables	570	808
Financial assets at fair value through profit and loss
Investments in equity securities held at fair value through profit or loss	69,119	60,083
Other financial liabilities
Management fees payable	(3)	(28)
Unsettled trades	(49)	-
Distribution payable to unitholders	-	(198)
Funds held for unit purchases	(23)	(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:

8a. 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 2017 would have increased/decreased net profit and unitholder funds by $6,912,000 (31 March 2016: $6,008,000).

8b. 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:
	2017	2016
	$'000	$'000
Cash and cash equivalents	1,174	733
Receivables	570	808
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 2017

8. 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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 23 AA- 13 AA- 206 A - A- 945 AA- 720 AA- 1,174 733

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.

8d. 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 2017 would have decreased/increased profit and unitholders funds by $6,985,000 (31 March 2016: $6,083,000).

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

The table below summarises the Fund’s exposure to currency risks.
	2017	2016
	$'000	$'000
Australian dollar cash held (NZD)	206	(60)
Receivables	570	808
Investments in equity securities held at fair value through profit or loss	69,119	60,083

9. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

10. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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

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Independent Auditor�s Report

To the unitholders of Australian Dividend Fund

Report on the financial statements

Opinion

In our opinion, the accompanying financial We have audited the accompanying financial statements of Australian Dividend Fund (the fund) statements which comprise: on pages 401 to 414 :

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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

==> picture [31 x 21] 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 $709,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 97.5% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing the 31 March 2017 valuation of listed equity investments
because they comprise liquid, listed	to externally quoted prices
investments. However, due to their
materiality in the context of the financial statements as a whole, they	�agreeing investment holdings to confirmations received from the administration manager
are considered to be the area which	We did not identify any material differences in relation to the carrying
had the greatest effect on our overall	amount of investments.
audit strategy and allocation of
resources in planning and
completing our audit.

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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.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	80	29.74%	42,677	0.11%
1,001-5,000	87	32.34%	209,451	0.53%
5,001-10,000	46	17.10%	314,368	0.79%
10,001-50,000	50	18.59%	992,152	2.49%
50,001-100,000	2	1%	138,367	0%
Greater than 100,000	4	1.49%	38,093,478	95.74%
TOTAL	269	100.00%	39,790,493	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	37,610,556	94.52
FNZ Custodians Limited	220,968	0.56
Philippa Jane Stubbins & Comac Trustee Limited	159,799	0.4
David Georges Andre Dromer	102,155	0.26
Joanna Marie Deighton	75,180	0.19
Barbara Anne Bridger	63,187	0.16
Mark John Scott Mckearney	46,048	0.12
Investment Custodial Services Limited	45,748	0.11
Thierry Adam	42,460	0.11
Anthony Neil Hooks & Jillian Jeanette Hooks	33,439	0.08
Michael Gordon Peake & Anita Forbes Peake	31,056	0.08
Billy Cheung Services Limited	30,661	0.08
Tracy Barbara Olberg	30,350	0.08
Michael Paul Mcgrath & Carol Ann Mcgrath	28,736	0.07
Matthew Norman Clarke	28,087	0.07
Elizabeth Harman & Francis Harman & Pamela Parkin	26,447	0.07
Leonard Starling	25,500	0.06
Peter Stewart Gray & Mary Elizabeth Gray	25,000	0.06
Kirsteen Margaret Pitkin Douglas	24,017	0.06
Roger William Styles	23,514	0.06
	38,672,908	97.2

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	6,156*	0
Paul Baldwin	0	0
Guy Elliffe	12,287*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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Global Bond Fund (GBF)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the Global Bond Fund

Report to the Unitholders HIGHLIGHTS Launch Date 12-Nov-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$3.101	$3.063
Units On Issue	42,071,479	40,196,479
Funds Under Management	$130,463,970	$123,131,864
Gross Return	4.41%	3.11%*
Duration	6.97	5.28
Yield to Maturity	2.09%	5.10%
Average Rating	A+	AA-
Total Fund Charges	0.54%	0.54%
Distributions paid	Quarterly

Since Inception

Growth of $1,000*

==> picture [225 x 105] intentionally omitted <==

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

1,100
1,050
1,000
950
jan 16 jul 16 jan 17
Value ($)
----- End of picture text -----

Country Allocation

==> picture [113 x 99] intentionally omitted <==

North America 48.3% Europe - EMU 21% Japan 17.9% United Kingdom 5.8% Europe - NonEMU 3.1% Aus/NZ 2% Emerging Market 1.9%

*Since inception, all distributions reinvested.

Credit Allocation

Sector Allocation

==> picture [113 x 99] intentionally omitted <==

Governments 48.4% Corporates 21.8% Mortgage 9.7% Front End 7.3% Agency 4.8% ILBs 3.2% High Yield 2.4% Emerging Markets 2.4%

==> picture [113 x 99] intentionally omitted <==

AAA 50% AA 11% A 17% BBB 16% Other 6%

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GLOBAL BOND FUND

THE MANAGER

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

THE SUPERVISOR

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

THE INVESTMENT MANAGER

PIMCO Australia Pty Limited Level 19, 363 George Street Sydney, New South Wales 2000 Australia

DIRECTORS OF THE MANAGER

Bevan K. Miller Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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

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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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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==> picture [109 x 66] intentionally omitted <==

This statement was approved for signing at a meeting of the Directors on 25 May 2017.

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GLOBAL BOND FUND

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

Note
INCOME
Dividend income
Interest income
Net changes in fair value of financial assets and financial liabilities at fair value
through profit or loss
Total income
EXPENSES
Management fees expense
10
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)
6

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
2
-
2,427
1,408
5,253
4,571
7,682
5,979
(699)
(252)
(832)
(429)
(25)
(2)
(28)
(4)
(1,584)
(687)
6,098
5,292
(1,708)
(1,482)
4,390
3,810
-
-
4,390
3,810
10.51
9.49

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 2017

Note Unitholders' funds at the beginning of the year/period Total comprehensive income for the year/period Subscriptions from unitholders 8 Distributions to unitholders 7 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 123,222 - 4,390 3,810 5,782 120,017 (2,903) (605) 2,879 119,412 130,491 123,222

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 2017

Note
ASSETS
Cash at banks
Balances due from brokers
5
Receivables
Investment securities held at fair value through profit or loss
2
Derivatives held for trading
3
Unsettled sales
TOTAL ASSETS
LIABILITIES
Bank overdraft
Management fees payable
10
Taxation payable
Derivatives held for trading
3
Distribution payable to unitholders
7
Funds held for unit purchases
Unsettled purchases
TOTAL LIABILITIES
UNITHOLDERS' FUNDS
TOTAL LIABILITIES AND UNITHOLDERS' FUNDS

As At
31 March
2017
As At
31 March
2016
$'000
$'000
833
2,997
4,548
1,998
981
833
133,091
124,726
2,718
9,477
1,371
-
143,542
140,031
(63)
-
(6)
(56)
(229)
(1,063)
(6,639)
(7,743)
-
(605)
(83)
(10)
(6,031)
(7,332)
(13,051)
(16,809)
130,491
123,222
143,542
140,031

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

==> picture [116 x 65] intentionally omitted <==

--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

Note
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Dividend income received
Interest 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
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 (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 and financial liabilities at fair value through
profit or loss
Foreign exchange loss
(Decrease)/increase in taxation payable
(Decrease)/increase in payables
Increase in receivables
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
2
-
2,272
566
(749)
(196)
(2,535)
(410)
(25)
(2)
(28)
(4)
(1,063)
(46)
277,515
120,561
(278,501)
(235,325)
(2,550)
(1,998)
(3,536)
(116,762)
5,782
120,027
(3,508)
-
2,274
120,027
(2,325)
3,219
2,997
-
98
(222)
770
2,997
4,390
3,810
(5,253)
(4,571)
832
429
(834)
1,063
(50)
56
(148)
(833)
(1,063)
(46)

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 2017

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 changed its name from Global Bond Trust to Global Bond Fund effective 16 September 2016.

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 year/period presented.

Comparative period

These financial statements are for the year ended 31 March 2017. The comparative figures are for the period 9 November 2015 to 31 March 2016. Where necessary, comparative figures have been restated to correspond to the current year classifications.

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/period 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 short term. 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 2017

(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 prevailling 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 2017

Cash and cash equivalents

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 date for the Fund is on the last business day of February, May, August and November in each year. Currently, distributions to unitholders are made on a quarterly basis directly from the Fund 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 outlined in Note 2 after the deduction of management fees and other deductible expenses. With this income, the Fund is able to utilise foreign withholding tax credits to satisfy the tax liability. 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. For the year ended 31 March 2017, no single marketable/debt security contributed more than 10% of the Fund's interest income. Note 12 has a breakdown of interest income by geographical location.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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 period. 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 period that have a material impact to the financial statements of the Fund.

Issued but not yet effective accounting standards

NZ IFRS 9 Financial Instruments - Effective for annual reporting periods beginning on or after 1 January 2018; The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

1. TAXATION

Tax expense comprises: Current tax expense Total tax expense	2017 2016 $'000 $'000 (1,708) (1,482) (1,708) (1,482)

The prima facie income tax expense on profit before tax from operations 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	2017 2016 $'000 $'000 6,098 5,292 (1,707) (1,482) - - - - - - - - (1) - (1,708) (1,482) 2017 2016 $'000 $'000 1,811 1,237	2016 $'000 5,292
		(1,482) - - -
		- -
		(1,482)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

2. INVESTMENTS SECURITIES

Financial assets designated at fair value through profit or loss International interest bearing securities Interest bearing securities - repurchase agreements	2017 2016 $'000 $'000 145,471 124,726 (12,380) - 133,091 124,726

These investments are managed by PIMCO Australia Pty Limited and registered in the name of BNP Paribas Fund Services Australasia Pty Limited, New Zealand branch, the custodian of the Fund.

3. 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) 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.

(c) 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.

(d) 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 fixed price, either at fixed future date or at any time with a specified date or the current fair value of the instruments.

(e) 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

3. DERIVATIVES HELD FOR TRADING (Continued)

Derivative assets held for trading : Forward foreign exchange contracts To-Be-Announced forwards 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	2017 2016 $'000 $'000 1,110 7,634 147 52 950 1,450 198 188 53 26 260 127 2,718 9,477 (4,365) (4,399) (128) - (1,369) (2,825) (427) (303) (237) (138) (113) (78) (6,639) (7,743)

4. 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 2017 (31 March 2016: 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 (31 March 2016: none).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Financial assets held at fair value through profit or loss Investment securities held at fair value through profit or loss Derivative assets held for trading: Forward foreign exchange contracts To-Be-Announced forwards 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 - - - - - - - 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)	Level 1 $'000 - - - - - - - 127 127 - - - - - (78) (78)	2016 Level 2 $'000 Total $'000 124,726 124,726 124,726 124,726 7,634 7,634 52 52 1,450 1,450 188 188 26 26 - 127 9,350 9,477 (4,399) (4,399) - - (2,825) (2,825) (303) (303) (138) (138) - (78) (7,665) (7,743)

5. BALANCES DUE FROM BROKERS

Margin accounts Cash collateral	2017 2016 $'000 $'000 427 546 4,121 1,452 4,548 1,998

Margin accounts represent cash deposits with brokers, transferred as collateral against open derivative contracts.

6. 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 period.

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)	2017 2016 4,390 3,810 41,753 40,160 10.51 9.49

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

7. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 605 - 2,903 605 (3,508) - - 605

Distributions declared and paid

Year ended Distribution per unit (cents per unit) March 2016 (paid April 2016) 31/03/2016 1.51 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	2017 2016 $'000 $'000 - 605 600 - 1,264 - 544 - 495 - 2,903 605

8. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 42,071,000 units on issue (31 March 2016: 40,196,000).

The number of units allotted during the year ended 31 March 2017 was 1,875,000 (31 March 2016: 40,196,000) for total value of $5,782,000 (31 March 2016: $120,017,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: nil) for total value of $nil (31 March 2016: $nil).

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Units on issue at the end of the year/period	2017 2016 '000 '000 40,196 - 1,875 40,196 42,071 40,196

The net asset value of each unit per the financial statements is $3.10169 (31 March 2016: $3.06553). Any difference between the net asset value announced to the market for 31 March 2017 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 2017

9. 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 Derivatives held for trading Unsettled sales Total assets LIABILITIES Bank overdraft Management fees payable Taxation payable Derivatives held for trading Distribution payable to unitholders Funds held for unit purchases Unsettled purchases Total liabilities	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)	Within 12 months $'000 2,997 1,998 833 32,778 7,839 - 46,445 - (56) (1,063) (4,684) (605) (10) (7,332) (13,750)	2016 Over 12 months Total $'000 $'000 - 2,997 - 1,998 - 833 91,948 124,726 1,638 9,477 - - 93,586 140,031 - - - (56) - (1,063) (3,059) (7,743) - (605) - (10) - (7,332) (3,059) (16,809)

10. 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 period.

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

As at 31 March 2017, SLI held 40,091,479 units valued at $124,324,000 in the Fund. As at 31 March 2016, SLSS held 40,091,479 units valued at $122,687,000 in the Fund.

Distributions

The Fund paid distributions of $1,792,000 (31 March 2016: $604,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as payable as at 31 March 2016 was $604,000. The Fund paid distributions of $993,000 to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

10. RELATED PARTY TRANSACTIONS (Continued)

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $699,000 (31 March 2016: $252,000), with $6,000 (31 March 2016: $56,000) 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 2017 amounted to $3,000 (31 March 2016: $1,000).

The total interest earned on cash at banks for the year ended 31 March 2017 amounted to $nil (31 March 2016: $nil).

Other related party transactions

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

11. 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
	2017	2016
	$'000	$'000
Loans and receivables
Cash at banks	833	2,997
Balances due from brokers	4,548	1,998
Receivables	981	833
Unsettled sales	1,371	-
Financial assets and financial liabilities at fair value through profit and loss
Investment securities held at fair value through profit or loss	133,091	124,726
Derivatives held for trading (financial assets)	2,718	9,477
Derivatives held for trading (financial liabilities)	(6,639)	(7,743)
Other financial liabilities
Bank overdraft	(63)	-
Management fees payable	(6)	(56)
Distribution payable to unitholders	-	(605)
Funds held for unit purchases	(83)	(10)
Unsettled purchases	(6,031)	(7,332)

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:

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

11. FINANCIAL RISK MANAGEMENT (Continued)

11a. 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 $8,865,000 (31 March 2016: $3,604,000).

11b. 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 and is monitored and reviewed by the Manager on a regular basis.

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 Bank overdraft Derivatives held for trading Total financial liabilities subject to interest rate risk	Within 6 months $'000 833 11,932 - 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 Total $'000 $'000 - 833 64,947 133,091 697 721 65,644 134,645 - (63) 760 1,242 760 1,179

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

11. FINANCIAL RISK MANAGEMENT (Continued)

ASSETS Cash at banks International interest bearing securities Derivatives held for trading Total financial assets subject to interest rate risk LIABILITIES Bank overdraft Derivatives held for trading Total financial liabilities subject to interest rate risk	Within 6 months $'000 2,997 19,610 - 22,607 - - -	Between 6-12 months $'000 - 13,168 - 13,168 - - -	2016 Between 1-2 years Between 2-5 years $'000 $'000 - - 3,784 29,606 - 111 3,784 29,717 - - 6 287 6 287	Over 5 years Total $'000 $'000 - 2,997 58,558 124,726 1,339 1,450 59,897 129,173 - - 2,532 2,825 2,532 2,825

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 2016. 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 2017.

2) Changes in fair value of investments for the year based on revaluing fixed rate financial assets at 31 March 2017.

		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)
		2016
	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	44	(44)	-	-
International interest bearing securities	30	(30)	(6,653)	6,446
Derivatives held for trading	-	-	1,457	(2,898)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

11. FINANCIAL RISK MANAGEMENT (Continued)

11c. 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 3).

There are no financial assets (including financial assets which are without an available credit rating), 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 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 72,785 Derivatives held for trading 77 72,862	2017 A+ to A- BBB+ to B- CCC+ to C- Total $'000 $'000 $'000 $'000 25,276 43,285 4,125 145,471 2,181 - - 2,258 27,457 43,285 4,125 147,729

AAA to AA- $'000 International interest bearing securities 69,325 Derivatives held for trading 710 70,035	2016 A+ to A- BBB+ to B- CCC+ to C- Total $'000 $'000 $'000 $'000 22,069 32,864 468 124,726 8,562 - - 9,272 30,631 32,864 468 133,998

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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 83 AA- 616 AA- 750 A 2,381 A- - AA- - AA- 833 2,997

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

11. 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) (31 March 2016: 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.

11d. 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.

			2017	2017
	Statement of	Contractual	Within 6	Between 6-	Between 1-	Over 5
	Financial	cash flows	months	12 months	5 years	years
	Position
	$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)
			2016
	Statement	Contractual	Within 6	Between 6-	Between 1-	Over 5
	of Financial	cash flows	months	12 months	5 years	years
	Position
	$000	$000	$000	$000	$000	$000
Derivative assets held for trading	9,477
Inflow		336,088	310,594	890	21,692	2,628
Outflow		(321,678)	(302,251)	(466)	(19,144)	(92)
Derivative liabilities held for trading	(7,743)
Inflow		242,078	224,788	8,884	4,540	3,866
Outflow		(235,080)	(227,977)	(8,500)	(987)	(410)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

11. FINANCIAL RISK MANAGEMENT (Continued)

11e. 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 summaries 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 $'000 125 717 (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 Other $'000 $'000 4,015 97 67,522 13,150 (71,736) (10,004) 10 (606) (189) 2,637
	(527)	60	(1,103)	(1,288)	(75)

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 10 1,473 (1,492) 12 3	CAD $'000 179 4,815 (5,030) 44 8	EUR $'000 (60) 20,388 (20,975) 221 (426)	2016 GBP $'000 251 11,326 (11,580) 47 44	JPY $'000 (777) 93 (774) - (1,458)	USD Other $'000 $'000 4,614 148 72,402 14,232 (70,715) (11,449) 390 70 6,691 3,001

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

11. FINANCIAL RISK MANAGEMENT (Continued)

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.

		2017			2016
	Profit or loss and Unitholders' Funds			Profit or loss and Unitholders' Funds
	10% increase		10% decrease	10% increase		10% decrease
		$'000	$'000		$'000	$'000
Assets and liabilities
Foreign currency cash balances held (NZD)		(530)	530		(437)	437
Investment securities held at fair value through
profit or loss		(13,310)	13,310		(12,473)	12,473
Derivatives held for trading		13,497	(13,497)		12,202	(12,202)
Receivables/(payables)		391	(391)		(78)	78
		48	(48)		(786)	786

11f. Financial assets and liabilities subject to offsetting, enforceable master netting arrangements and aimilar agreements

The following table presents the recognised derivatives that are subject to offsetting, or other similar arrangements but not offset, as at 31 March 2017 and 31 March 2016.

			2017 Related amounts not set-off in the statement of financialposition	2017 Related amounts not set-off in the statement of financialposition	2017 Related amounts not set-off in the statement of financialposition
	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 derivatives liabilities	$'000 2,571 (6,511)	$'000 - -	$'000 $'000 $'000 $'000 2,571 (2,424) - 147 (6,511) 2,424 - (4,087) 2016 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 derivatives liabilities	$'000 9,426 (7,743)	$'000 - -	$'000 9,426 (7,743)	$'000 (6,142) 6,142	$'000 $'000 - 3,284 - (1,601)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

12. 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	2017 2016 $'000 $'000 (17) 158 625 508 1,836 474 (105) 195 88 73 2,427 1,408

Interest income includes mortgage-backed securities principal repayments.

13. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

14. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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

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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 423 to 443 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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 $1,435,000 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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GLOBAL 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 92.7% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing a sample of the 31 March 2017 valuations of listed fixed
because they comprise bonds or	interest instruments to externally quoted prices and unlisted fixed
other simple fixed interest	interest investments to broker quotes. Where externally quoted
instruments. However, due to their	prices or broker quotes are not available we applied valuation
materiality in the context of the	methods using observable market interest rates to assess the
financial statements as a whole, they	valuation
are considered to be the area which
had the greatest effect on our overall audit strategy and allocation of	�agreeing investment holdings to confirmations received from the administration manager
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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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.

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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.

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

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	68	42.50%	30,117	0.07%
1,001-5,000	50	31.25%	117,522	0.28%
5,001-10,000	17	10.63%	119,163	0.28%
10,001-50,000	21	13.13%	442,040	1.05%
50,001-100,000	1	0.63%	52,263	0.12%
Greater than 100,000	3	1.88%	41,340,374	98.19%
TOTAL	160	100.00%	42,101,479	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	40,091,479	95.23
FNZ Custodians Limited	955,824	2.27
Investment Custodial Services Limited	293,071	0.7
Craigs Investment Partners Limited	52,263	0.12
Maryanne Nola Gane & Marcia Clare Jasmine Fullam	47,455	0.11
David Alan Shackleton & Scott Francis Whitaker	40,901	0.1
Forsyth Barr Custodians Ltd	33,500	0.08
Robyn Elizabeth Taylor	32,167	0.08
Custodial Services Limited	32,000	0.08
John Huthwaite Ronaldson & Marian Elizabeth Ronaldson & Franklin Trustee Services Ltd	21,800	0.05
Anthony Smith & Barbara Smith	21,607	0.05
Brendan Dennis Catchpole & Connie Yvonne Catchpole & Anthony Raymond Wentworth	20,905	0.05
Gavin Wallace Mcgougan & Charlotte Elizabeth Mcgougan & Focus Trustee Company Ltd	19,281	0.05
Harsh & Emme Bhoopatkar Trustee Limited	19,072	0.05
Investment Custodial Services Limited	16,196	0.04
Allan Charles Carvell	16,114	0.04
Jason Brigg Bedford & Janine Carol Bedford	16,006	0.04
FNZ Custodians Limited	15,435	0.04
Thomas Michael Gillespie	14,899	0.04
William John Duff Eaton	13,120	0.03
	41,773,095	99.25

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	3,064*	0
Paul Baldwin	0	0
Guy Elliffe	12,762*	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.

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

448

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NZ Bond Fund (NZB)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the NZ Bond Fund

Report to the Unitholders HIGHLIGHTS

Launch Date 12-Nov-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$2.986	$3.012
Units On Issue	67,933,573	66,243,573
Funds Under Management	$202,869,711	$199,512,393
Gross Return	3.18%	2.22%*
Duration	3.65	4.17
Yield to Maturity	3.96%	3.61%
Average Rating	A	A
Total Fund Charges	0.54%	0.54%
Distributions paid	Quarterly

Since Inception

Credit Allocation

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

AAA 1%
AA 41%
A 20%
BBB 38%
----- End of picture text -----

Sector Allocation

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

Corporates & SOEs 45.1%
New Zealand Banks 41%
NZ Government 11.1%
Local Authority 2.8%
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Growth of $1,000*

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

1,100
1,050
1,000
950
jan 16 apr 16 jul 16 oct 16 jan 17 apr 17
Value ($)
----- End of picture text -----

*Since inception, all distributions reinvested.

449

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NZ BOND FUND

THE SUPERVISOR

THE MANAGER

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

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

This is also the address of the registered office.

PRINCIPAL OFFICE OF THE MANAGER

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

THE 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 Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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'). Under a Deed of Retirement and Appointment dated 6 September 2016, Trustees Executors Limited retired as the trustee and Public Trust was appointed as the Supervisor. 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

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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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 25 May 2017.

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
9
Other 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

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
20
8
9,509
3,895
(2,848)
1,792
109
54
6,790
5,749
(1,095)
(413)
(1)
-
(1,096)
(413)
5,694
5,336
(1,588)
(1,492)
4,106
3,844
-
-
4,106
3,844
6.11
5.81

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 2017

Note Unitholders' funds at the beginning of the year/period Total comprehensive income for the year/period Subscriptions from unitholders 7 Distributions to unitholders 6 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 199,510 - 4,106 3,844 5,110 197,446 (5,839) (1,780) (729) 195,666 202,887 199,510

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 2017

Note
ASSETS
Cash at banks
Receivables
Investment securities held at fair value through profit or loss
2
Equity securities held at fair value through profit or loss
2
Taxation receivable
Deferred tax asset
1
TOTAL ASSETS
LIABILITIES
Management fees payable
9
Taxation payable
Derivatives held for trading
3
Distribution payable to unitholders
6
Funds held for unit purchases
Unsettled trades
Other current liabilities
TOTAL LIABILITIES
UNITHOLDERS' FUNDS
TOTAL LIABILITIES AND UNITHOLDERS' FUNDS

As At
31 March
2017
As At
31 March
2016
$'000
$'000
1,597
2,344
6,485
2,266
199,227
197,306
-
789
121
-
-
37
207,430
202,742
(9)
(92)
-
(1,328)
-
(28)
(3)
(1,780)
(29)
(4)
(4,500)
-
(2)
-
(4,543)
(3,232)
202,887
199,510
207,430
202,742

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

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--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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 2017

Note
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
Other 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:
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
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 and financial liabilities at fair value through
profit or loss
Increase in taxation receivable
(Decrease)/increase in taxation payable
Decrease/(increase) in deferred tax asset receivable
(Decrease)/increase in management fees payable
Decrease/(increase) in receivables
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
20
8
9,691
3,405
109
54
(1,178)
(322)
(3,000)
(200)
(1)
-
5,641
2,945
69,005
30,006
2
-
(72,914)
(32,439)
(3,907)
(2,433)
5,135
1,832
(7,616)
-
(2,481)
1,832
(747)
2,344
2,344
-
1,597
2,344
4,106
3,844
2,848
(1,792)
(121)
-
(1,328)
1,328
37
(37)
(83)
92
182
(490)
5,641
2,945

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

455

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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 changed its name from New Zealand Bond Trust to NZ Bond Fund effective 16 September 2016.

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 year/period presented.

Comparative period

These financial statements are for the year ended 31 March 2017. The comparative figures are for the period 6 November 2015 to 31 March 2016.Where necessary, comparative figures have been restated to correspond to the current year classifications.

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

456

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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 2017

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 Fund is on the last business day of February, May, August and November in each year. Currently, distributions to unitholders are made on a quarterly basis directly from the Fund 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, taxable dividends and gains and losses from its investments in securities outlined in Note 2 after the deduction of management fees and other deductible expenses. With some of this income, the Fund is able to utilise imputation credits to satisfy the tax liability. 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.

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. There was no individual security that contributed 10% or more of income received for the year ended 31 March 2017 (31 March 2016: none).

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

Tax expense comprises: Current tax expense Deferred tax movement Total tax expense	2017 2016 $'000 $'000 (1,551) (1,529) (37) 37 (1,588) (1,492)

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

Income tax expense

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		2017 $'000 5,694
		(1,594) - - (2)
		(1,596) 8
		(1,588)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

2. INVESTMENT SECURITIES

Financial assets at fair value through profit or loss NZ bank bills NZ government and local government bonds NZ corporate bonds Preference shares	2017 2016 $'000 $'000 507 1,292 27,141 26,054 171,579 169,960 - 789 199,227 198,095

The Fund's investments are managed by Nikko Asset Management New Zealand Limited and registered in the name of BNP Paribas Fund Services Australasia Pty Limited, New Zealand branch, the custodian of the Fund.

3. DERIVATIVES HELD FOR TRADING

The Fund holds the following derivative financial instrument:

Options

Financial liabilities Held for Trading : Options	2017 2016 $'000 $'000 - (28) - (28)

4. 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 2017 (31 March 2016: none).

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

4. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Financial assets held at fair value through profit or loss Investment securities held at fair value through profit or loss Equity securities held at fair value through profit or loss Derivative assets held for trading: Derivative liabilities held for trading: Options	Level 1 $'000 - - - - -	2017 Level 2 $'000 Level 3 $'000 199,227 - - - 199,227 - - - - -	Total $'000 199,227 - 199,227 - -	Level 1 $'000 - 789 789 - -	2016 Level 2 $'000 Level 3 $'000 Total $'000 197,306 - 197,306 - - 789 197,306 - 198,095 (28) - (28) (28) - (28)

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)	2017 2016 4,106 3,844 67,178 66,155 6.11 5.81

6. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 1,780 - 5,839 1,780 (7,616) - 3 1,780

Distributions declared and paid

Year ended Distribution per unit (cents per unit) March 2016 (paid April 2016) 31/03/2016 2.69 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	2017 2016 $'000 $'000 - 1,780 1,076 - 1,319 - 1,449 - 1,995 - 5,839 1,780

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

7. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 67,934,000 units on issue (31 March 2016: 66,244,000).

The number of units allotted during the year ended 31 March 2017 was 1,690,000 (31 March 2016: 66,244,000) for total value of $5,110,000 (31 March 2016: $197,446,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: nil) for total value of $nil (31 March 2016: $nil).

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Units on issue at the end of the year/period	2017 2016 '000 '000 66,244 - 1,690 66,244 67,934 66,244

The net asset value of each unit per the financial statements is $2.98653 (31 March 2016: $3.01174). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

8. 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 Equity securities held at fair value through profit or loss Taxation receivable Deferred tax asset Total assets LIABILITIES Management fees payable Taxation payable Derivatives held for trading Distribution payable to unitholders Funds held for unit purchases Unsettled trades Other current liabilities Total liabilities	Within 12 months $'000 1,597 6,485 12,366 - 121 - 20,569 (9) - - (3) (29) (4,500) (2) (4,543)	2017 Over 12 months $'000 - - 186,861 - - - 186,861 - - - - - - - -	Total $'000 1,597 6,485 199,227 - 121 - 207,430 (9) - - (3) (29) (4,500) - (4,541)	Within 12 months $'000 2,344 2,266 6,520 - - 37 11,167 (92) (1,328) (28) (1,780) (4) - - (3,232)	2016 Over 12 months Total $'000 $'000 - 2,344 - 2,266 190,786 197,306 789 789 - - - 37 191,575 202,742 - (92) - (1,328) - (28) - (1,780) - (4) - - - - - (3,232)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

As at 31 March 2017, SLI held 65,955,132 units valued at $196,962,000 in the Fund. As at 31 March 2016, SLSS held 65,943,573 units valued at $198,410,000 in the Fund.

Distributions

The Fund paid distributions of $2,360,000 (31 March 2016: $1,772,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as payable as at 31 March 2016 was $1,772,000. The Fund paid distributions of $3,357,000 to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $1,095,000 (31 March 2016: $413,000), with $9,000 (31 March 2016: $92,000) of outstanding accrued management fees due to the Manager at the end of the year.

For the year ended 31 March 2017, total direct purchase application fees amounted to $2,000 (31 March 2016: $1,000).

The total interest earned on cash at banks for the year ended 31 March 2017 amounted to $nil (31 March 2016: $nil).

Other related party transactions

As at 31 March 2017 the Fund had a payable to the Manager of $2,000 (31 March 2016: $nil).

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

10. FINANCIAL RISK MANAGEMENT (Continued)

Financial instruments by category

	2017	2016
	$'000	$'000
Loans and receivables
Cash at banks	1,597	2,344
Receivables	6,485	2,266
Financial assets and financial liabilities at fair value through profit and loss
Investment securities held at fair value through profit or loss	199,227	197,306
Equity securities held at fair value through profit or loss	-	789
Derivative held for trading (financial liabilities)	-	(28)
Other financial liabilities
Management fees payable	(9)	(92)
Distribution payable to unitholders	(3)	(1,780)
Funds held for unit purchases	(29)	(4)
Unsettled trades	(4,500)	-
Other current liabilities	(2)	-

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

10a. 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 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.

Cash at banks Investment securities held at fair value through profit or loss 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 1,597 - - - 2,075 10,290 10,469 112,186 3,672 10,290 10,469 112,186	Over 5 years Total $'000 $'000 - 1,597 64,207 199,227 64,207 200,824

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

10. FINANCIAL RISK MANAGEMENT (Continued)

ASSETS Cash at banks Investment securities held at fair value through profit or loss Total financial assets subject to interest rate risk	2016 Within 6 months Between 6- 12 months Between 1- 2 years Between 2- 5 years $'000 $'000 $'000 $'000 2,344 - - - 996 6,785 19,859 97,150 3,340 6,785 19,859 97,150	Over 5 years Total $'000 $'000 - 2,344 72,516 197,306 72,516 199,650

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 2016. 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 year based on floating rate financial assets held at 31 March 2017.

2) Changes in fair value of financial assets for the year based on revaluing fixed rate financial assets at 31 March 2017.

		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
		2016
				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	23	(23)		-	-
Investment securities held at fair value through profit or loss	144	(144)		(7,835)	8,382

10b. 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

10. FINANCIAL RISK MANAGEMENT (Continued)

AAA to AA- $'000 NZ bank bills - NZ government and local government bonds 27,141 NZ corporate bonds 56,314 83,455 AAA to AA- $'000 NZ bank bills - NZ government and local government bonds 26,054 NZ corporate bonds 65,028 91,082	A+ to A- $'000 507 - 39,722 40,229 A+ to A- $'000 1,292 - 50,003 51,295	2017 BBB+ to B- $'000 - - 69,603 69,603 2016 BBB+ to B- $'000 - - 43,631 43,631	Less than BBB- Total $'000 $'000 - 507 - 27,141 5,940 171,579 5,940 199,227 Less than BBB- Total $'000 $'000 - 1,292 - 26,054 11,298 169,960 11,298 197,306

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').

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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 31 AA- 1,784 AA- 1,566 AA- 560 AA- 1,597 2,344

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.

10c. 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.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

10. FINANCIAL RISK MANAGEMENT (Continued)

				2017	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	-
Inflow			-	-		-		-	-
				2016
	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 liabilities held for trading	(28)
Outflow			28	28			-	-		-

11. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

12. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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 452 to 467 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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 $2,074,000 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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 96.0% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing a sample of the 31 March 2017 valuations of listed fixed
because they comprise bonds or	interest instruments to externally quoted prices and unlisted fixed
other simple fixed interest	interest investments to broker quotes. Where externally quoted
instruments. However, due to their	prices or broker quotes are not available we applied valuation
materiality in the context of the	methods using observable market interest rates to assess the
financial statements as a whole, they	valuation
are considered to be the area which
had the greatest effect on our overall audit strategy and allocation of	�agreeing investment holdings to confirmations received from the administration manager
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

469

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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.

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:

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1000	60	36.81%	23,475	0.03%
1001-5000	58	35.58%	136,948	0.20%
5001-10000	22	13.50%	156,157	0.23%
10001-50000	16	9.82%	298,027	0.44%
50001-100000	2	1.23%	116,649	0.17%
Greater than 100000	5	3.07%	67,222,317	98.92%
TOTAL	163	100.00%	67,953,573	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	65,955,132	97.06
Gary Anthony Vink & Jane Margaret Vink	528,323	0.78
FNZ Custodians Limited	425,628	0.63
Investment Custodial Services Limited	192,995	0.28
FNZ Custodians Limited	120,239	0.18
Investment Custodial Services Limited	64,384	0.09
Ajd Family Nominees Limited	52,265	0.08
Robyn Elizabeth Taylor	33,267	0.05
Investment Custodial Services Limited	32,418	0.05
Jason Brigg Bedford & Janine Carol Bedford	27,248	0.04
Harsh & Emme Bhoopatkar Trustee Limited	24,238	0.04
Somsmith Nominees Limited	23,880	0.04
William John Duff Eaton	19,900	0.03
FNZ Custodians Limited	19,503	0.03
Rosalie Gladys Brown & Dianna Louise Rogers & Raymond Arthur Hancox	16,650	0.02
Investment Custodial Services Limited	14,500	0.02
Effe Alison Edgar & Raymond Arthur Hancox & David Douglas Edgar	13,809	0.02
Valerie Margaret Hampton	13,452	0.02
Investment Custodial Services Limited	13,147	0.02
Somsmith Nominees Limited	12,285	0.02
	67,603,263	99.5

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	4,019*	0
Paul Baldwin	0	0
Guy Elliffe	16,742*	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.

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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NZ Cash Fund (NZC)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017 Presented by Smartshares Limited, Manager of the NZ Cash Fund

Report to the Unitholders HIGHLIGHTS

Launch Date 12-Nov-15

	March 2017	March 2016
Net Tangible Assets (NTA)	$2.991	$2.994
Units On Issue	41,973,936	41,823,936
Funds Under Management	$125,553,553	$125,204,553
Gross Return	2.77%	1.06%*
Average Rating	AA-	AA-
Total Fund Charges	0.33%	0.33%
Distributions paid	Quarterly

Since Inception

Sector Allocation

Credit Allocation

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

NZ Banks 77.6% AA 73%
NZ Government 11.7% A 13%
Corporate & SOEs 10.7% BBB 14%
Growth of $1,000
1,040
1,020
1,000
980
jan 16 apr 16 jul 16 oct 16 jan 17 apr 17
Value ($)
----- End of picture text -----*

Growth of $1,000*

*Since inception, all distributions reinvested.

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NZ CASH FUND

THE MANAGER

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

THE SUPERVISOR

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

PRINCIPAL OFFICE OF THE MANAGER

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

THE 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 Timothy O. Bennett (resigned 30 December 2016) Guy R. Elliffe A. John Williams Paul J. Baldwin (appointed 30 December 2016)

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

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 CASH 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'). Under a Deed of Retirement and Appointment dated 6 September 2016, Trustee Executors Limited retired as the trustee and Public Trust was appointed as the Supervisor. 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 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

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 2017, and the results of its financial performance and cash flows for the year ended 31 March 2017 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

==> picture [115 x 66] intentionally omitted <==

==> picture [109 x 66] intentionally omitted <==

This statement was approved for signing at a meeting of the Directors on 25 May 2017.

475

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

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
8
Other 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)
4

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
4,373
1,882
(318)
(149)
4,055
1,733
(414)
(160)
(1)
-
(415)
(160)
3,640
1,573
(1,019)
(440)
2,621
1,133
-
-
2,621
1,133
6.26
2.71

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

476

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STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2017

Note Unitholders' funds at the beginning of the year/period Total comprehensive income for the year/period Subscriptions from unitholders 6 Distributions to unitholders 5 Unitholders' funds at the end of the year/period	Year Ended 31 March 2017 Period Ended 31 March 2016 $'000 $'000 125,204 - 2,621 1,133 449 125,200 (2,736) (1,129) (2,287) 124,071 125,538 125,204

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

477

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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2017

Note
ASSETS
Cash and cash equivalents
Receivables
Investments securities held at fair value through profit or loss
2
Bank term deposits
2
TOTAL ASSETS
LIABILITIES
Management fees payable
8
Taxation payable
Distribution payable to unitholders
5
Funds held for unit purchases
Other current liabilities
TOTAL LIABILITIES
UNITHOLDERS' FUNDS
TOTAL LIABILITIES AND UNITHOLDERS' FUNDS

As At
31 March
2017
As At
31 March
2016
$'000
$'000
1,307
3,142
423
324
64,375
67,230
59,774
55,852
125,879
126,548
(3)
(35)
(336)
(180)
-
(1,129)
(1)
-
(1)
-
(341)
(1,344)
125,538
125,204
125,879
126,548

For and on behalf of the Manager, Smartshares Limited, who authorised the issue of the financial statements on 25 May 2017.

==> picture [116 x 65] intentionally omitted <==

--------------------------------------------------------------B Miller Chairman Smartshares Limited

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-------------------------------------------------------------G Elliffe Director Smartshares Limited

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

478

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2017

CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Interest income received
Cash was applied to:
Management fees paid
Taxation paid
Other expense
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:
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
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
Increase in accrued interest on term deposits
Increase in taxation payable
(Decrease)/increase in management fees payable
Increase in receivables
Net cash flows from operating activities

Year
Ended
31 March
2017
Period
Ended
31 March
2016
$'000
$'000
4,255
763
(446)
(125)
(863)
(260)
(1)
-
2,945
378
178,408
116,144
1
-
(179,814)
(116,336)
(1,405)
(192)
490
2,956
(3,865)
-
(3,375)
2,956
(1,835)
3,142
3,142
-
1,307
3,142
2,621
1,133
318
149
(19)
(795)
156
180
(32)
35
(99)
(324)
2,945
378

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

479

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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 changed its name from New Zealand Cash Trust to NZ Cash Fund effective 16 September 2016.

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 interest bearing 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 year/period presented.

Comparative period and amounts

These financial statements are for the year ended 31 March 2017. The comparative figures are for the period 6 November 2015 to 31 March 2016. Where necessary, comparative figures have been restated to correspond to the current year classifications.

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/period 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 2017

(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 to and from, or cash distributions to the unitholders.

481

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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 Fund is on the last business day of February, May, August and November of each year. Currently, distributions to unitholders are made on a quarterly basis directly from the Fund 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. There was no individual investment that contributed 10% or more of income received for the year ended 31 March 2017 (31 March 2016: none).

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 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 - Effective for annual reporting periods beginning on or after 1 January 2018; The impact of any changes has not yet been determined.
NZ IFRS 15 Revenue from Contracts with Customers - Effective for annual reporting periods beginning on or after 1 January 2018. The impact of any changes has not yet been determined.

482

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. TAXATION

1. TAXATION
Tax expense comprises: Current tax expense Total tax expense	2017 2016 $'000 $'000 (1,019) (440)
	(1,019) (440)

The prima facie income tax expense on profit before tax from operations 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	2017 $'000 3,640
	(1,019) - -
	- (1,019)

2. INVESTMENT SECURITIES AND BANK TERM DEPOSITS

Financial assets designated at fair value through profit or loss NZ bank bills NZ corporate bonds Loans and receivables NZ bank term deposits	2017 2016 $'000 $'000 14,607 18,973 49,768 48,257 64,375 67,230 59,774 55,852 124,149 123,082

These investments are managed by Nikko Asset Management New Zealand Limited and are registered in the name of BNP Paribas Fund Services Australasia Pty Limited, New Zealand branch, the custodian of the Fund.

483

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

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.

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.

All financial instruments measured at fair value have been categorised as level 2 in the hierarchy.

There were no transfers between levels in the year ended 31 March 2017 (31 March 2016: none).

4. 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 period.

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)	2017 2016 2,621 1,133 41,866 41,820 6.26 2.71

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

Opening distribution payable Distributions accrued to unitholders Distributed to unitholders Closing distribution payable	2017 2016 $'000 $'000 1,129 - 2,736 1,129 (3,865) - - 1,129

Distributions declared and paid

Year ended Distribution per unit (cents per unit) March 2016 (paid April 2016) 31/03/2016 2.70 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	2017 2016 $'000 $'000 - 1,129 751 - 773 - 506 - 706 - 2,736 1,129

484

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

6. UNITHOLDERS' FUNDS

As at 31 March 2017 there were 41,974,000 units on issue (31 March 2016: 41,824,000).

The number of units allotted during the year ended 31 March 2017 was 150,000 (31 March 2016: 41,824,000) for total value of $449,000 (31 March 2016: $125,200,000).

The number of units redeemed during the year ended 31 March 2017 was nil (31 March 2016: nil) for total value of $nil (31 March 2016: $nil).

Movement in the number of units Balance at the beginning of the year/period Subscriptions received during the year/period Units on issue at the end of the year/period	2017 2016 '000 '000 41,824 - 150 41,824 41,974 41,824

The net asset value of each unit per the financial statements is $2.99085 (31 March 2016: $2.99359). Any difference between the net asset value announced to the market for 31 March 2017 and the net asset value per the financial statements is due to different unit pricing methodology.

7. 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 Investments securities held at fair value through profit or loss Bank term deposits Total assets LIABILITIES Management fees payable Taxation payable Distribution payable to unitholders Funds held for unit purchases Other current liabilities Total liabilities	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)	Within 12 months $'000 3,142 324 28,001 34,637 66,104 (35) (180) (1,129) - - (1,344)	2016 Over 12 months Total $'000 $'000 - 3,142 - 324 39,229 67,230 21,215 55,852 60,444 126,548 - (35) - (180) - (1,129) - - - - - (1,344)

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

8. 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 period.

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

As at 31 March 2017, SLI held 41,753,936 units valued at $124,896,000 in the Fund. As at 31 March 2016, SLSS held 41,753,936 units valued at $124,995,000 in the Fund.

Distributions

The Fund paid distributions of $1,522,000 (31 March 2016: $1,127,000) to SLSS. All distributions were settled prior to the transfer of investments from SLSS to SLI. The balance remaining as at 31 March 2016 was $1,127,000. The Fund paid distributions of $1,207,000 to SLI for the year ended 31 March 2017 (31 March 2016: not applicable). The balance remaining as payable at the end of the year is $nil (31 March 2016: not applicable).

Management fees

Total gross management fees excluding rebates for the year ended 31 March 2017 amounted to $414,000 (31 March 2016: $160,000), with $3,000 (31 March 2016: $35,000) 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 2017 amounted to $2,000 (31 March 2016: $nil).

For the year ended 31 March 2017, total direct purchase application fees amounted to $nil (31 March 2016: $nil).

Other related party transactions

As at 31 March 2017 the Fund had a payable to the Manager of $1,000 (31 March 2016: $nil).

The audit fee paid by the Manager for the audit of the Fund for the year ended 31 March 2017 was $5,000 (31 March 2016: $6,000).

9. 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.

486

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

9. FINANCIAL RISK MANAGEMENT (Continued) Financial instruments by category

9. FINANCIAL RISK MANAGEMENT (Continued) Financial instruments by category
	2017	2016
	$'000	$'000
Loans and receivables
Cash and cash equivalents	1,307	3,142
Receivables	423	324
Bank term deposits	59,774	55,852
Financial assets at fair value through profit and loss
Investments securities held at fair value through profit or loss	64,375	67,230
Other financial liabilities
Management fees payable	(3)	(35)
Distribution payable to unitholders	-	(1,129)
Funds held for unit purchases	(1)	-
Other current liabilities	(1)	-

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:

9a. 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. This is monitored and reviewed by the Manager on a regular basis.

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 Investments 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 Total $'000 $'000 - 1,307 - 64,375 - 59,774 - 125,456

487

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

9. FINANCIAL RISK MANAGEMENT (Continued)

ASSETS Cash and cash equivalents Investments securities held at fair value through profit or loss Bank term deposits Total financial assets subject to interest rate risk	2016 Within 6 months Between 6- 12 months Between 1- 2 years Between 2- 5 years $'000 $'000 $'000 $'000 3,142 - - - 28,002 12,961 7,220 19,047 34,636 21,216 - - 65,780 34,177 7,220 19,047	Over 5 years Total $'000 $'000 - 3,142 - 67,230 - 55,852 - 126,224

1) The interest income for the year based on floating rate financial assets held at 31 March 2017.

2) Changes in fair value of financial assets for the year based on revaluing fixed rate financial assets at 31 March 2017.

		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)	-	-
Investments securities held at fair value through profit or loss	468	(468)	(7)	8
		2016
	Sensitivity of interest income		Sensitivity of	changes in 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 and cash equivalents	31	(31)	-	-
Investments securities held at fair value through profit or loss	517	(517)	(40)	40

9b. 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.

488

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

9. FINANCIAL RISK MANAGEMENT (Continued)

NZ bank bills NZ corporate bonds NZ bank term deposits NZ bank bills NZ corporate bonds NZ bank term deposits	AAA to AA- $'000 - 19,801 33,093 52,894 AAA to AA- $'000 - 25,342 28,334 53,676	2017 A+ to A- BBB+ to B- Total $'000 $'000 $'000 14,607 - 14,607 22,477 7,490 49,768 16,910 9,771 59,774 53,994 17,261 124,149 2016 A+ to A- BBB+ to B- Total $'000 $'000 $'000 18,973 - 18,973 18,310 4,605 48,257 18,384 9,134 55,852 55,667 13,739 123,082

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	2017 2016 Balance Credit rating Balance Credit rating $'000 $'000 5 AA- 1,128 AA- 1,302 AA- 2,014 AA- 1,307 3,142

9c. 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.

489

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

10. COMMITMENTS AND CONTINGENCIES

The Fund had no commitments or contingencies as at 31 March 2017 (31 March 2016: none).

11. EVENTS AFTER THE REPORTING YEAR

Since 31 March 2017 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.

490

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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 476 to 490 :

We have audited the accompanying financial statements which comprise:

�� the statement of financial position as at 31 March 2017;
i. present fairly in all material respects the fund�s financial position as at 31 March 2017 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

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 $1,259,000 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.

491

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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
Refer to Note 2 to the Financial	Our audit procedures included:
Statements.
	�documenting and understanding the processes in place to record
The fund�s portfolio of investments	investment transactions and to value the portfolio. This included
makes up 98.6% of total assets. We	evaluating the control environment in place at the administration
do not consider these investments	manager by obtaining and reading a report issued by an
to be at high risk of significant	independent auditor on the design and operation of those controls
misstatement, or be subject to a
significant level of judgement,	�agreeing a sample of the 31 March 2017 valuations of listed fixed
because they comprise bonds or	interest instruments to externally quoted prices and unlisted fixed
other simple fixed interest	interest investments to broker quotes. Where externally quoted
instruments. However, due to their	prices or broker quotes are not available we applied valuation
materiality in the context of the	methods using observable market interest rates to assess the
financial statements as a whole, they	valuation
are considered to be the area which
had the greatest effect on our overall audit strategy and allocation of	�agreeing investment holdings to confirmations received from the administration manager
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 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.

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:

https://www.xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Page2.aspx.

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

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Brent Manning

For and on behalf of

KPMG Wellington

25 May 2017

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Unitholder Information

DISTRIBUTION OF SECURITY HOLDERS AND SECURITY HOLDINGS AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
	No. of holders	% of holders	No. of securities	% of securities
1-1,000	10	38.46%	2,050	0.00%
1,001-5,000	7	26.92%	15,581	0.04%
5,001-10,000	3	11.54%	17,288	0.04%
10,001-50,000	3	11.54%	54,631	0.13%
50,001-100,000	2	7.69%	145,450	0.35%
Greater than 100,000	1	3.85%	41,738,936	99.44%
TOTAL	26	100.00%	41,973,936	100.00%

20 LARGEST REGISTERED HOLDERS OF QUOTED EQUITY SECURITIES AS AT 30 APRIL 2017

AS AT 30 APRIL 2017
Full Name	Total	Percentage
SuperLife Nominees Limited	41,738,936	99.44
Timothy Shepheard Walwyn	80,450	0.19
New Zealand Central Securities Depository Limited	65,000	0.15
David Georges Andre Dromer	23,718	0.06
William Peter Stronach Tuckey	16,895	0.04
David John Thomas	14,018	0.03
Roger Alan Dodds	6,600	0.02
Craigs Investment Partners Limited	5,533	0.01
Stuart Cameron Walter Holehouse	5,155	0.01
Kenneth Moffett	3,356	0.01
Theresa Rose Marie Walker	3,356	0.01
Grant Neilson Mackenzie	3,027	0.01
Margaret Ann Weston & Leslie Karin Marianne Forsyth	1,667	0
Alan Sutcliffe	1,664	0
Claire Mary Heeran	1,506	0
Pjb Limited	1,005	0
Peter Colin Hyde & Debra Ann Hyde	504	0
Nehemias Jr Astrolabio Padayao	350	0
Leonard Johan La Grange & Ilana La Grange	326	0
Barry John Mcdonald	242	0
	41,973,308	100

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SUBSTANTIAL PRODUCT HOLDERS

DIRECTORS' INTERESTS IN UNITS

DIRECTORS' INTERESTS IN UNITS
	Benefcial	Non-Benefcial
Bevan Miller	384*	0
Paul Baldwin	0	0
Guy Elliffe	14,649*	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 2017:

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

7.4.1 - Entitlements to Third Party Securities

7.6.5 - Buy Backs of Equity Securities, Redemptions and Financial Assistance

8.3.1 - Modifications of Rights of Security Holders

9.2.1 - Transactions with Related Parties

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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 and Public Trust as supervisor of the Scheme. The Special Division of the New Zealand Markets Disciplinary Tribunal regulates the Manager as a listed issuer under the NZX Main Board Listing Rules ( Rules ).The Manager has not established a code of ethics but in June 2016 adopted a Board Charter which sets out the Board’s obligations, which include responsibility for considering the Scheme’s investment performance, potential conflicts of interests and related party transactions and compliance with its legal obligations.

For the reasons set out above, given the nature of the Scheme’s business and corporate structure, much of the Corporate Governance Best Practice 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. It differs from the Code in a number of ways for the reasons set out above.

GOVERNANCE ARRANGEMENTS

Smartshares adheres to the NZX Funds Management Conflicts Management Policy which was adopted in June 2016 and sets out Smartshares’ arrangements to identify, approve and disclose conflicts of interest that could materially influence its investment decisions. Smartshares has also adopted a Related Party Transaction Policy which describes Smartshares’ arrangements for identifying and approving related party benefit transactions. The transactions that were approved during the reporting period are set out on page 3 of this report. In addition Smartshares has adopted a number of other policies relating to its management of the Scheme which are summarised in the SIPO.

THE BOARD

As at 31 March 2017, the Board comprised four Directors, Bevan Miller (Chair), Paul Baldwin, Guy Elliffe and John Williams. Mr Miller and Mr Baldwin are employees of NZX Limited (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[1] .

COMMITTEES

The Board of the Manager has one standing committee, an Audit Committee, comprising Mr Elliffe, (Committee Chairman), Mr Miller and Mr Williams. 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

1 The Special Division granted the Manager a waiver from Rules 3.3.1(c) and 3.6.2(c) on 9 May 2016. That waiver enabled Mr Elliffe and Mr Williams to continue to be regarded as Independent Directors following their appointment to the board of SuperLife Limited (which was the Manager’s sister company). As the Manager and SuperLife Limited were amalgamated on 9 November 2016, the Manager no longer relies on this waiver.

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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.

Smartshares Limited has no remuneration or nomination committee. There is no nomination committee as the Manager is a wholly-owned subsidiary of NZX, which appoints Directors to the Board of the Manager. The NZX Human Resources and Remuneration Committee considers the appointment and remuneration of the Directors of Smartshares. No Director received any remuneration from Smartshares Limited during the year. The Independent Directors are entitled to remuneration and other benefits from NZX, in their capacity as Independent Directors of Smartshares Limited. 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

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 2017 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.

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 willful 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 willful 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.

2015/2016 BOARD AND COMMITTEE ATTENDANCE

Board

Board
Director	Smartshares Board Attendance
Bevan Miller (Chair)	12/12	(Director for 12 meetings)
Guy Elliffe	12/12	(Director for 12 meetings)
John Williams	12/12	(Director for 12 meetings)
Tim Bennett1	6/10	(Director for 10 meetings)
Paul Baldwin2	2/2	(Director for 2 meetings)

1 Resigned 30 December 2016

2 Appointed 30 December 2016

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Audit Committee

Audit Committee
Members	Audit Committee Attendance
Guy Elliffe (Chair)	5/5	(Member for 5 meetings)
John Williams	5/5	(Member for 5 meetings)
Bevan Miller	5/5	(Member for 5 meetings)

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 2016 and 31 March 2017.

Director	Interest	Entity
Bevan Miller (Chair)	CFO	NZX Limited
Paul Baldwin1	Head of NZX Wealth Technologies Limited	NZX Wealth Technologies Limited
Guy Elliffe	Corporate Governance Manager	Accident Compensation Corporation
John Williams	Investment Manager	Trust Investments Management Limited
Tim Bennett2	CEO	NZX Limited
	Director	New Zealand Clearing and Depository Corporation Limited
	Director	New Zealand Clearing Limited
	Director	New Zealand Depository Limited

1 Appointed 30 December 2016

2 Resigned 30 December 2016

GENDER AND DIVERSITY

Smartshares does not currently have a Diversity Policy but will consider implementing a policy in the future. 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%)
As at 31 March 2016, thegender 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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Bevan Miller

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Guy Elliffe

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AI assistant

Smart US 500 ETF — Annual Report 2017

66291_rns_2017-06-21_e50129a2-048a-41d7-9db6-80f2f05c5b54.pdf

Contents

SMART SECTOR

SMART MEDIUM

Chairman's Report

Dear Unitholder,

GOVERNANCE UPDATE

Schedule Four Requirements

Details of scheme

Changes relating to the scheme

How to find further information

Contact details and complaints

Supervisor

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

THE MANAGER

THE 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 PERIOD ENDED 31 MARCH 2017

STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS FOR THE PERIOD ENDED 31 MARCH 2017

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2017

STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 31 MARCH 2017

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

GENERAL INFORMATION

STATEMENT OF ACCOUNTING POLICIES

Reporting 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 PERIOD ENDED 31 MARCH 2017

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 PERIOD ENDED 31 MARCH 2017

Segment information

Issued but not yet effective accounting standards

1. TAXATION

Income tax expense

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

2. INVESTMENTS IN EQUITY SECURITIES HELD AT FAIR VALUE (Continued)

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

4. EARNINGS PER UNIT

5. DISTRIBUTION PAYABLE TO UNITHOLDERS

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

5. DISTRIBUTION PAYABLE TO UNITHOLDERS (Continued)

Distributions declared and paid

6. UNITHOLDERS' FUNDS

7. RELATED PARTY TRANSACTION

Related party holdings

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2017

7. RELATED PARTY TRANSACTIONS (Continued)

Distributions

Management fees

Other related party transactions

Smart US 500 ETF Annual Report 2017