Current Investors

Q: How does the performance of a Smartshares Fund compare to the performance of the underlying index?

A: Smartshares Funds are designed to provide investment results that generally correspond to the underlying index by holding a portfolio of securities designed to give similar price and yield performance. In the secondary market, arbitrage helps keep the ETF trading at a price close to the underlying index.

Q: What is the significance of net asset value?

A: An ETF's value is based on the Net Asset Value (NAV) of the underlying shares that it represents. The NAV of an ETF is the total value of all the securities held within the ETF (the number of shares held multiplied by the market price) divided by the total number of units of the fund on issue. The initial price of the ETF is usually the value of the index. This means that if the NAV of the ETF is different to the index value, the value of the constituents in the index is higher or lower than the constituents in the ETF. As the ETF tracks the index and holds exactly the same constituents, this means there may be arbitrage opportunities (the simultaneous purchase and selling of a security to profit from a difference in the price, usually on different exchanges or markets) which helps keep the market price of units very close to the NAV.

Q: Do I get paid dividends on Smartshares Funds?

A: Yes, Smartshares holders are eligible to receive their pro rata share of dividends half yearly, if any, accumulated on the securities held in the fund less fees and expenses.

Q: How do I join the Regular Savings Plan?

A: To join the Regular Savings Plan and, make monthly contributions to your investment, all you need do is fill in the relevant section of the application form (on page 5 of the Investment Statement) together with the corresponding direct debit form and send them to the registry, LINK Market Services. Easy as that! Applications need to be received by the 15th of each month in order for your contribution to start that month.

Q: Can I change the amount I am contributing each month through the Regular Savings Plan?

A: Yes. To change the amount you wish to contribute, just send a letter to the Registry, LINK Market Services, stating what you wish to amend, being sure to include the following information:

• What your previous contribution was
• What you now wish to contribute
• Your Investor Number/CSN
• Be sure to sign the letter

The letter needs to be received by the 15th of each month in order for you changes to be put into effect that month.

Q: How do I amend my Dividend Reinvestment Plan Status?

A: To either join or leave the Dividend Reinvestment Plan you will have to send a letter stating your intentions to LINK Market Services. In the letter clearly state that you either wish to join or leave the Dividend Reinvestment Plan, stating your Investor Number/CSN (if applicable), and be sure to sign the letter. If you wish to have your distribution paid to your bank account, please provide full details as follows:

• Bank
• Branch
• Acount number
• Account name

Q: What is the address of LINK Market Services?

A: Smartshares
    LINK Market Services Ltd
    PO BOX 91976
    Auckland 1030

Tax/Distribution Queries:

Q: What do all the different terms mean on my Distribution Statement?

• Distribution Entitlement

  The Distribution Entitlement shows how much you are eligible to receive from the dividends paid out on the underlying securities held in the Fund. The amount you receive is dependent on how many units you hold and the period you have held the units in the Fund. This figure represents your Net Distribution (plus Resident Witholding Tax - "RWT").

• Foreign Withholding Payment Credits (FDWP)

  Foreign Withholding Payment Credits essentially perform the same function as Imputation Credits. They are basically a tax credit which is attached to dividends received from overseas companies to compensate you for tax already paid by the company on its profit. This value represents tax at a rate of 33%. If your tax rate is higher or lower than 33% than you may be liable for more tax or be eligible for a tax rebate.

• NZ$ Imputation Credits (ICs)

  Imputation Credits are basically a tax credit which is attached to dividends received from New Zealand based companies to compensate you for tax already paid by the company on its profit. This value represents tax at a rate of 33%. If your tax rate is higher than 33% then you may be liable for more tax.

• Gross Distribution

  The Gross Distribution amount represents your total Distribution Entitlement plus Foreign Withholding Payments, Imputation Credits and Resident Withholding Tax. This is a nominal figure and represents the total taxable amount and not what you actually receive.

• Resident Withholding Tax (RWT)

  If a dividend is not fully imputed (i.e. the imputation credit issued does not equal 33% of the total dividend plus imputation credit) then a Resident Withholding Tax is deducted. This amount will then be subtracted from your total Dividend Entitlement. This ensures that if you are on the 33% tax rate, you have no further tax to pay on the distribution income.

• Management Fee

  Although the Management Fee* is deducted from your distribution it is not calculated based on your Distribution amount. It is actually calculated as a percentage of the value of your investment on a daily basis. For instance if you are being charged a management fee at a rate of 0.60% per annum, and the value of your holding on a particular day is $10,000. Then your Management Fee for that one day will be $0.164 ((0.0060/365) x $10,000). So for a 6 month period the total Management Fee for your investment is just $29.58.

  * The full Management Fee Schedule for each Fund can be found in the Investment Statements.