Product Review BetaShares Global Sustainability Leaders ETF

Key information What this Rating means FUND MANAGER BETASHARES CAPITAL LTD The ‘Recommended Index’ rating indicates that Lonsec ASSET CLASS GLOBAL EQUITIES has strong conviction the financial product can generate SECTOR GLOBAL LARGE CAP risk adjusted returns in line with relevant objectives. SUB SECTOR SECTOR - PASSIVE The financial product is considered an appropriate entry INVESTMENT EXCHANGE TRADED FUND (ETF) LISTED ON THE point to this asset class or strategy. TYPE AUSTRALIAN SECURITIES EXCHANGE ISSUE DATE 30-11-2020 PDS OBJECTIVE PROVIDE AN INVESTMENT RETURN THAT TRACKS THE Strengths PERFORMANCE OF THE NASDAQ FUTURE GLOBAL • The Fund offers investors passively managed SUSTAINABILITY LEADERS INDEX, BEFORE TAKING INTO exposure to a portfolio of stocks that have passed ACCOUNT FEES AND EXPENSES. a fairly strict and pragmatic ethical and socially INDEX PROVIDER NASDAQ responsible investment screening process. UNDERLYING NASDAQ FUTURE GLOBAL SUSTAINABILITY LEADERS • Compared to purely market capitalisation weighted INDEX INDEX ESG-focused indices, the Underlying Index promotes DERIVATIVE USE LIMITED BUT CANNOT BE USED FOR SPECULATION OR and up-weights investment in companies that are LEVERAGE deemed to be ‘Climate Leaders’. SECURITIES THE FUND DOES NOT INTEND TO ENGAGE IN • The Fund also has a high level of disclosure of the LENDING SECURITIES LENDING BUT MAY DO SO IN THE Manager's proxy voting policy around ESG related FUTURE issues. ASX LISTING DATE JANUARY 2017 • The Fund has attracted strong net inflows since DISTRIBUTION FREQUENCY SEMI-ANNUAL inception and, as at November 2020, had Funds FUND SIZE $955.8M Under Management (FUM) in excess of $955m which benefits liquidity and generally acts to tighten the Fees Bid / Ask Spread. MANAGEMENT 0.59% P.A. (INCLUDES EXPENSE RECOVERY FEE UP COSTS TO 0.10% P.A.) Weaknesses • The Fund's portfolio is only formally reconstituted Daily trading information on an annual basis; however monthly monitoring TICKER ETHI allows portfolio changes to be made. A more regular 52 WEEK LOW $8.53 reconstitution process would be preferred by Lonsec 52 WEEK HIGH $11.04 to ensure holdings remain consistent with the strategy, especially considering the global reach of the LAST PRICE $10.71 portfolio. LAST NET ASSET VALUE (NAV) $10.74 • The Fund's management fees are in the top quartile PREMIUM / DISCOUNT TO NAV (DAILY) -0.003% amongst Lonsec's Global Ethical ETF Peer Group. AVERAGE DAILY TRADED VOLUME 181,782 • The engagement of a Responsible Investment AVERAGE DAILY TRADED VALUE $1.8M Committee (RIC) to implement some of the rules of the Underlying Index contains a greater level of subjectivity than most passive index products. • Lonsec considers the RIC to be small given the workload of reviewing Australian equities, global equities and global fixed income products. • Some of the ESG screening considerations may be difficult to calculate and quantify objectively. • The investment strategy is still being bedded down due to the recent updates on its index methodology. ANALYST: NATHAN UMAPATHY | APPROVED BY: PETER GREEN 9

- We strongly recommend that potential investors read the product disclosure statement Lonsec Research Pty Ltd ABN 11 151 658 1 561 • AFSL No. 421 445 • This information must be read in conjunction with the warning, disclaimer, and disclosure at the end of P this document. This report supersedes all prior reports. BetaShares Global Sustainability Leaders ETF

Fund Risk Characteristics may expose investors to significant unintended macro-economic or idiosyncratic stock risks. LOW MODERATE HIGH • The Fund is unhedged and its assets are denominated BUSINESS SUSTAINABILITY RISK in a variety of global currencies. The capital and CAPITAL VOLATILITY income component will therefore be impacted SECURITY CONCENTRATION RISK directly by fluctuations between these currencies and SECURITY LIQUIDITY RISK the Australian dollar.

ISSUE DATE 30-11-2020 Risk categories are based on Lonsec’s qualitative opinion of the risks • The Fund charges a Management Expense Ratio inherent in the financial product’s asset class and the risks relative to (MER) of 0.49% p.a. plus an additional 0.10% p.a. other financial products in the relevant Lonsec sector universe. in Expense Recovery Fees. Relative to the Fund’s peer group average, the Fund’s MER is significantly BIOmetrics higher. That said, Lonsec considers the screening Aggregated risks process and focus on ESG considerations to be 1 2 3 4 5 6 7 materially more robust for this Fund. Relative to actively managed products with a responsible STD RISK MEASURE investment focus, Lonsec believes the Fund to be competitively priced. A Standard Risk Measure score of 6 equates to a Risk Label of ‘High’ and an estimated number of negative annual returns over any 20 year period of 4 to less than 6. This is a measure of expected frequency (not Responsible investment checklist magnitude) of capital losses, calculated in accordance with ASFA/FSC LONSEC RESPONSIBLE INVESTMENT (RI) RATING MODERATE guidelines. INTERNAL OR OUTSOURCED RI RESEARCH OUTSOURCED LOW MODERATE HIGH NEGATIVE SCREENING OF EXCLUDED INDUSTRIES YES RISK TO INCOME POSITIVE SCREENING OF COMPANIES ON RI CRITERIA YES BIG MINING TOLERANCE NO Features and benefits MEMBER OF UNPRI NO LOW MODERATE HIGH PORTFOLIO SUSTAINABILITY MONITORED YES COMPLEXITY ACTIVE ENGAGEMENT WITH COMPANIES ON RI ISSUES YES ESG DOES THE FUND ADHERE TO AN ESG CHARTER? YES Fee profile DOES THE MANAGER EMPLOY RESPONSIBLE INVESTMENT YES PERSONNEL? LOW MODERATE HIGH FEES VS. UNIVERSE Using this Fund FEES VS. ASSET CLASS FEES VS. SUB-SECTOR This is General Advice only and should be read in conjunction with the Disclaimer, Disclosure and Fee BIOmetrics are a function of expected total fee as a percentage of Warning on the final page. expected total return.

What is this Fund? • The Fund is a long-only, global equity product investing in large and mid-capitalisation stocks • BetaShares (’the Manager’) adopts a passive and as such, will generally sit within the growth investment strategy in managing the BetaShares component of a balanced portfolio. As a broad Global Sustainability Leaders ETF (’ETHI’ sector focused fund, Lonsec considers the Fund to be or ‘the Fund’). The Fund is designed to track suitable for blending with other beta or 'smart beta' the performance of the Nasdaq Future Global funds. Sustainability Leaders Index (or ‘the Underlying • The Fund screens stocks for a broad range of ethical Index’) before fees and expenses. factors and considers broader environmental and • The Underlying Index aims to provide an exposure to governance factors. Lonsec believes the Fund may 200 global (ex Australia) companies which are climate suit investors seeking a portfolio of global equities (ex change leaders and/or which are not materially Australia) that is passively managed to replicate the engaged in activities deemed inconsistent with performance of a RI-aware Index. responsible investment considerations. • The Fund intends to vote on shareholder resolutions • The Manager will generally employ a ‘full that are related to ESG criteria included in the Index replication’ strategy of the Underlying Index. A ‘full methodology and to vote on these resolutions in a replication’ strategy invests in all securities and at the way that aligns with the ESG criteria of the Index. same weightings as they are held in the Underlying Index. Suggested Lonsec risk profile suitability • The Fund’s portfolio as at September 2020 comprised SECURE DEFENSIVE CONSERVATIVE BALANCED GROWTH HIGH GROWTH 199 stocks listed across the eligible 22 developed markets defined by Nasdaq (’the Index Provider’). Approximately 34% of the portfolio is in the 'top 10' For guidance on appropriate asset allocations and risk profiles, refer holdings. Sector bias is tilted to companies within to the latest Lonsec Strategic Asset Allocation Review and Risk Profile Definitions on our website. the Information Technology (39%), Health Care (15%) and Consumer Discretionary (15%) industries.

ANALYST: NATHAN UMAPATHY | APPROVED BY: PETER GREEN Regional exposure is weighted to US-listed equities (72%). Lonsec notes that these index concentrations 9

- Lonsec Research Pty Ltd ABN 11 151 658 561 • AFSL No. 421 445 • This information must be read in conjunction with the warning, 2 disclaimer, and disclosure at the end of this document. This report supersedes all prior reports. P BetaShares Global Sustainability Leaders ETF

Responsible investment classification — carbon efficiency is determined by calculating the greenhouse gas emissions from a company’s • Lonsec’s Responsible Investment sector includes operations divided by its annual revenue (rather funds adopting a variety of intensity in their than divided by its market cap); and responsible investment philosophy including Ethical, Socially Responsible Investing and ESG — change to the Annual Index rebalance date from (Sustainability) approaches. Lonsec applies the April to May. following definitions to differentiate funds in the

ISSUE DATE 30-11-2020 universe: Lonsec Opinion of this Fund — Ethical: Negative screening of companies in certain industries deemed to have a harmful societal People and resources impact. Avoiding investments in bad companies is • BetaShares is a specialist provider of ETFs with the overarching investment motivation. approximately $14.4 billion in funds under — Socially Responsible Investing (SRI): Generally management (FUM) across 65 exchange-traded negative screening of certain sectors in line with products as at November 2020. This includes both above but may also include a positive screening active and passive ETFs. element seeking to include socially responsible • BetaShares was formed in 2009 with Horizons ETFs companies. Rewarding good corporate citizens is a ('Horizon') being a strategic shareholder at the time. partial investment motivation. Post-BetaShares inception, Horizon was acquired — Sustainable investing (ESG): A belief that by Mirae Asset Management (‘Mirae’), a South those companies with advanced approaches Korean asset management firm with significant to environmental, social and governance risk scale. Subsequently, Mirae became a substantial management will exhibit superior performance shareholder in BetaShares. Mirae is one of Asia's than companies with sub optimal approaches. largest asset management firms with a global While it is likely that these companies will presence. Mirae has created over 200 ETFs since 1998. tend to rank highly on corporate ethics, unlike Lonsec considers that this relationship with Mirae ethical investment, financial performance is the ensures that the Fund has appropriate resourcing at overarching investment consideration. the Group level. • The Fund’s ‘Moderate Ethical’ classification is not • The Fund is managed by an investment team of an investment rating or recommendation. This seven in Louis Crous (CIO), Thong Nguyen (Senior classification is an indication only of Lonsec’s Portfolio Manager), Chamath De Silva (Portfolio assessment of the level of Ethical / Socially Manager), Don Hoang (Assistant Portfolio Manager), Responsible Investing (SRI) / Environmental, Social Jing Jia (Assistant Portfolio Manager), Jessica Leung and Governance (ESG) criteria applied to, and (Assistant Portfolio Manager) and Parker Guan evident in, the Manager’s investment process. (Assistant Trader). Lonsec notes that Leung and Investors must make their own assessment as to Guan recently joined and Luke Sheather, previously any trade-off between investment merit and the Investment Analyst, has left the team. Lonsec notes Manager’s / Fund’s degree of ‘ethicalness’ that may be that outside of this departure the team has been applicable. stable. Lonsec has met with Crous, Nguyen and De Silva on numerous occasions and believes them to be suitably experienced and qualified to oversee this Changes Since Previous Lonsec Review strategy in the Australian market. • The team added Jessica Leung as an Assistant • The Underlying Index is maintained by Nasdaq OMX Portfolio Manager in July 2020 and Parker Guan as Group. While it is more customary for third parties to an Assistant Trader in September 2020. However, the calculate indices, Lonsec believes any conflict arising team lost Luke Sheather as Investment Analyst in from the NASDAQ OMX Group acting as index August 2020. sponsor to be manageable. • Additionally, Simon Sheikh (Managing Director • Given the Fund’s returns are driven by a mostly of Future Super Holdings) resigned from the rules-based investment process, the active Responsible Investment Committee (RIC) in management decision that often rests with an September 2020. Kylie Charlton (Managing Director individual portfolio manager is significantly reduced. of Australian Impact Investments) was appointed as That said, in the case of ETHI, some of the rules of his replacement. the Underlying Index are enforced by a Responsible • In April 2020, the Index Provider made several Investment Committee (RIC). The key person risk changes to the Underlying Index:- identified by Lonsec for ‘ETHI’ is therefore somewhat — increased number of constituents from 100 to 200; higher than what is typically associated with a — introduced industry sector caps, therefore industry passively managed fund. weights cannot exceed the weights in the Nasdaq • The RIC formally evaluates the index constituents Developed Markets Index (a traditional broad annually, but has in place a monthly monitoring and global equities benchmark), by more than 3%; reporting process to review the constituents between — Climate Leaders are now a company whose the annual Underlying Index reconstitution. The RIC carbon efficiency places it in the top one-third of presently consists of three members; Adam Verwey, companies in its industry (rather than a company David Nathanson, and Kylie Charlton. The RIC whose carbon efficiency is 60% above the average includes representatives with suitable experience, for its industry); expertise and background in responsible investing,

ANALYST: NATHAN UMAPATHY | APPROVED BY: PETER GREEN and are appointed by BetaShares. 9

- Lonsec Research Pty Ltd ABN 11 151 658 561 • AFSL No. 421 445 • This information must be read in conjunction with the warning, 3 disclaimer, and disclosure at the end of this document. This report supersedes all prior reports. P BetaShares Global Sustainability Leaders ETF

• Importantly, Verwey and Charlton will be prospective investors to visit the BetaShares’ website compensated for their involvement on the RIC, which and access the portfolio holdings to make their own may mitigate some of the risk of the Fund becoming determination whether the Fund’s holdings meet a ‘set and forget’ portfolio. Furthermore, Lonsec their understanding of socially responsible investing. notes that Verwey is the co-founder and Director of FutureSuper, a super fund which does not invest Overall in fossil fuel companies. FutureSuper currently • Lonsec has maintained the Fund's ’Recommended invests in the Fund as well as the Australian equity Index ISSUE DATE 30-11-2020 ’ rating as part of this review cycle. The rating equivalent. Lonsec believes Verwey’s connection is underpinned by Lonsec's positive regard for the to FutureSuper acts as added motivation to be a methodology and management of the Underlying pro-active Committee member and promotes an Index which Lonsec believes provides exposure alignment of interests between the RIC and the to a portfolio of global companies which have Fund’s investors. demonstrated consistent ESG standards. Lonsec • Lonsec considers the external research and data commends the depth and scope of the responsible providers utilised by Nasdaq and the RIC to be investment (RI) considerations incorporated in the reputable sources of carbon emissions, ESG ratings, index rules of the custom-built Nasdaq Future Global and responsible investment information. Sustainability Leaders Index. • Tempering Lonsec's conviction in the Fund is the Investment approach higher fee load compared to other Global Ethical • The Underlying Index provides investors with the ETFs. Further, the construction of the Underlying opportunity to trade global sustainable companies Index involves a greater amount of discretion by both in a transparent and liquid portfolio. Lonsec notes the RI and Index Provider than typically associated the Fund will approximately hold 200 securities, with passively managed products. which are predominately made up of large-mid cap companies. People and Resources • The Underlying Index's exclusion list is determined by a Responsible Investment Committee (RIC) in BetaShares Holdings was established in 2009 as a accordance with a Charter and guidelines. The specialist provider of exchange traded products. It is Committee is established by the Responsible Entity 51% owned by Mirae, 46.5% owned by BetaShares’ ('RE') of the Fund and consists of three members, one management team and the remainder owned by private of whom is a BetaShares representative and two of investors. Mirae is a Korean based asset management whom are external to BetaShares. The RIC provides entity with over US$130b of FUM. Mirae is particularly advice to the RE in relation to the responsible active in emerging market equities and is currently investment criteria as set out in the relevant Index expanding its ETF platform globally. The Horizons Methodology that applies to the Fund. Specifically, family of ETFs has over $30b in assets in ETFs listed the RIC is responsible for determining the list of across six countries. BetaShares has approximately securities that pass the responsible investment $14.4b of FUM across 65 ETF products as at November screens outlined in the relevant Index Methodology. 2020. • The RIC will meet at least once a year to review Size and experience the exclusions list and provide guidance to the RE EXPERIENCE around Responsible Investment practices more INDUSTRY / broadly. In addition, each month a written report NAME POSITION FIRM is prepared and circulated among RIC members LOUIS CROUS CHIEF INVESTMENT 19 / 10 noting and analysing any activity or events that OFFICER may impact upon the continued eligibility of index constituents, along with a recommendation action in THONG NGUYEN PORTFOLIO MANAGER 15 / 9 response to such events. While it is not recorded as CHAMATH DE SILVA PORTFOLIO MANAGER 10 / 3 a formal monthly "meeting", RIC members confirm DON HOANG ASSISTANT PORTFOLIO 9 / 5 their agreement with any such recommendations in MANAGER writing. JING JIA ASSISTANT PORTFOLIO 7 / 1 • The RIC does not undertake company visits, rather MANAGER their screening process relies mainly on RIC's JESSICA LEUNG ASSISTANT PORTFOLIO 9 / <1 analysis on company data (annual reports, investor MANAGER presentations and other company-related materials). PARKER GUAN ASSISTANT TRADER 5 / <1 The RIC also utilises a variety of industry-specific data sources to assist with decision-making. Lonsec considers the external research and data providers utilised by Nasdaq and the RIC to be reputable sources of carbon emissions, ESG ratings, and responsible investment information. Lonsec considers the RIC's Charter and guidelines to be thorough and the process of managing exclusion to be robust. Further, Lonsec believes the RIC has appropriate resourcing and expertise to fulfil its responsibilities.

ANALYST: NATHAN UMAPATHY | APPROVED BY: PETER GREEN • Inclusions in the Underlying Index are subject to a degree of subjectivity. Lonsec encourages 9

- Lonsec Research Pty Ltd ABN 11 151 658 561 • AFSL No. 421 445 • This information must be read in conjunction with the warning, 4 disclaimer, and disclosure at the end of this document. This report supersedes all prior reports. P BetaShares Global Sustainability Leaders ETF

58 of Betashares' 65 ETFs are managed in-house by its sequestration. All data relating to carbon emissions is seven-person portfolio management team in Sydney provided by Trucost. Trucost provides sustainability led by Louis Crous. The management of BetaShares data and insight to drive resilient, profitable business FTSE RAFI U.S. 1000 ETF (QUS) is outsourced to models and investment strategies. Trucost were Omega Investors who are located in Melbourne. The recently acquired by well-known index provider, investment decisions for RINC, EINC (Legg Mason Standard & Poor’s (S&P). Martin Currie), BNDS (Legg Mason Western Asset), 3. ESG: The remaining universe is screened to remove DMKT, GLIN, RENT (AMP) and HBRD (CCI) are ISSUE DATE 30-11-2020 companies which are exposed to activities that carry made by the respective active management teams. The significant negative ESG risk (subject to certain BetaShares business currently employs an additional materiality thresholds). Activities and their maximum +40 dedicated financial service professionals and more exposure limit (as % of total revenue) are listed broadly benefits from access to the broader distribution, below: research, infrastructure and risk management systems — Fossil Fuels – direct (0%). Companies which have and resources of its strategic partners. fossil fuel reserves, fossil fuel infrastructure, or involved in the mining, extraction, burning of Investment Approach fossil fuels. Overview — Fossil Fuels – indirect (5% for products and As an index-based ETF provider, the Manager does not services; not applicable for financing). Companies employ analysts and portfolio managers to actively seek which provide products, services, or finance which stocks expected to outperform a particular benchmark. is specific to and significant for the fossil fuel The Manager employs a "full replication" process, industry, as well as companies with very high use whereby the Fund will generally invest in all securities of fossil fuels. in the Underlying Index in the same weights they — Gambling – (0% for casinos and manufacture of are held in the Index. The process is designed on gaming products; 5% for distribution of gambling maintaining and enhancing index tracking efficiency. products). — Tobacco – (0% for production or manufacture; 5% Underlying index for sale of tobacco products). The Underlying Index was custom-built for BetaShares — Uranium and Nuclear Energy (0% for uranium by NASDAQ OMX Group, Inc. (’Nasdaq’) and launched mining and nuclear energy; 5% for products and in November 2016. BetaShares had significant input into services to nuclear energy). the design of the Underlying Index. Within their index — Armaments and Militarism (0% for manufacture business, Nasdaq calculates over 40,000 diverse indices. of armaments and weapons; 5% for specific and The starting universe comprises approximately 6,000 significant services to military and armaments securities for which greenhouse gas emissions data is manufacture). available from Trucost. This is then filtered to include — Destruction of Valuable Environments – (0%). only companies from 22 developed (ex Australia) Companies which have direct negative impact on markets as defined by Nasdaq. Nasdaq adopts a similar recognised World Heritage and High Conservation developed market universe as per the more widely areas. recognised MSCI World Index; the difference being — Animal Cruelty – (0%). Companies involved in that MSCI considers Israel a developed market whereas live animal export, animal testing for cosmetic Nasdaq does not, and includes Luxembourg instead. purposes, factory farming, or controversial animal Free-float market capitalisation (min $3bn USD) and products (ivory, foie gras etc.) three-month average daily trading volumes screens (min — Chemicals of Concern – (0%). Companies which $1m USD) are then applied. produce or use chemicals of concern recognised From here, a Responsible Investment Committee (RIC) by UN Environmental Program; Gold and Silver is engaged by the Manager and the Index Provider miners. to act as an external advisory board responsible for — Mandatory Detention of Asylum Seekers – (0%). determining the list of securities that pass a three-part Companies which operate detention centres. responsible investment checklist. — Alcohol – (20%). Companies which produce or sell The ethical investment considerations are listed below; alcohol. 1. Carbon impact: A company must have a carbon — Junk Foods – (33%). Companies which produce or efficiency that places it in the top one-third within sell junk foods. its industry. Carbon efficiency is based on the greenhouse gas emissions from a company’s — Pornography – (0% for production of operations, fuel use, and supply chain, and divided pornography; 5% for sale of pornography). by its annual revenue. — Controversy - Companies exposed to significant 2. Scope 4 (or avoided) carbon emissions: Superior ESG-related reputational risk or controversy performers in relation to Scope 4 carbon emissions may also be excluded where the Responsible are those companies involved in commercialising Investment Committee considers that its inclusion technologies that have net positive climate benefits would be inconsistent with the values of the Index. through substantial greenhouse gas emissions — Human Rights – Evidence of human rights reductions or sequestration. Companies that qualify violations including child labour, forced labour, typically include those with primary business sweatshops, bribery and corruption.

ANALYST: NATHAN UMAPATHY | APPROVED BY: PETER GREEN activities in renewable energy, energy efficiency, sustainable agriculture and land use, and carbon 9

- Lonsec Research Pty Ltd ABN 11 151 658 561 • AFSL No. 421 445 • This information must be read in conjunction with the warning, 5 disclaimer, and disclosure at the end of this document. This report supersedes all prior reports. P BetaShares Global Sustainability Leaders ETF

— Board Diversity – No women on board of INDEX METRIC DATA directors. INDEX PROVIDER NASDAQ Initially, GICS industry classifications are used to MARKET COVERED GLOBAL EQUITIES process exclusions for the above ESG factors. For WEIGHTING MODIFIED MARKET CAPITALISATION WEIGHTING example, stocks classified under a range of specified METHODOLOGY METHODOLOGY GICS categories (i.e. Oil and Gas Drilling, Casinos and Gaming, Tobacco, Brewers, Distillers and Vintners, CONSTITUENCY DETERMINATION COMMITTEE AND RULES BASED CONSTITUENCY FACTORS LIQUIDITY, MARKET CAPITALISATION

ISSUE DATE 30-11-2020 etc) are disregarded. Companies may then be removed based on revenue contribution considerations. This data REBALANCING FREQUENCY ANNUAL is generally sourced from company financial reports. A degree of qualitative assessment is required to apply Transparency some of the remaining ESG screens. In relation to BetaShares website www.betashares.com.au is both human rights and supply chain issues, information comprehensive and user-friendly. It is designed as is predominately sourced from third party sources a self-service website with information relating to including the Ethical Consumer Guide, Know More, the performance and current holdings for all BetaShares Business and Human Rights Resource Centre, Behind ETFs. the Barcode and Human Rights Watch. Companies which receive a fail grade from such groups (to the extent they produce reports that include rankings or Liquidity grades) are excluded. Company websites, company The Fund offers investors liquidity via the ASX, which annual reports, EIRIS Global Database and Thomson is supported by dedicated market makers that are Reuters Eikon are also consulted. obligated to provide continues liquidity to the market A list of eligible securities is passed onto Nasdaq from by maintaining pre-agreed spreads and volumes on the the RIC at the annual reconstitution (and updated as ASX. As at November 2020, the Fund had funds under per necessary throughout the year). Nasdaq ranks the management ('FUM') of $955m. Further, the Fund traded globally sustainable companies identified by the RIC by regularly on the ASX over the last 12 months. market capitalisation and the largest 200 are selected. The Fund's underlying constituents represents large and That said, five of the 200 securities in the Underlying mid-cap global equities listed on the global exchanges. Index must be Climate Leaders based on Scope 4 carbon Investors should be aware that under normal market emissions. At the time of Lonsec’s review, there was conditions, there should be reasonable liquidity for only the minimum five in the Index. According to the these securities.; however, during periods of heightened Manager, this is to be expected, as companies that volatility, liquidity has the potential to deteriorate. qualify as being superior performers in relation to Scope 4 carbon emissions generally have lower market caps Fees and Indirect Costs and therefore do not make the Index without specific rules to up-weight them. The Fund charges a MER of 0.49% p.a. plus an additional 0.10% p.a. in Expense Recovery Fees. Relative The Underlying Index also has industry sector caps to the Fund’s peer group average, the Fund’s MER is which limits industry weights so it does not exceed significantly higher. That said, Lonsec considers the the corresponding industry weighs of the Nasdaq screening process and focus on ESG considerations to be Developed Markets Index (Parent Index) by more than materially more robust for this Fund. Relative to actively 3%. managed products with a responsible investment focus, The Underlying Index is rebalanced annually in May Lonsec believes the Fund to be competitively priced. (using end of April data) at which time constituents The one-year average Bid / Ask Spread maintained on are given a minimum Index weighting of 0.5% and the Fund averaged 0.20% to September 2020 and was the capped at 4.0%. Index changes are enforced as at the last second lowest amongst its peer group. Business Day of May. Buffers are in place (i.e. if stock falls between 200-220 in market cap ranking and/or between 50-60% on carbon emissions, it is maintained) Fee comparison at the annual rebalance. BID/ASK SPREAD The RIC formally monitors the Index constituents FUND NAME MER (% P.A.) (%)* monthly to ensure they have not violated the above BETASHARES GLOBAL SUSTAINABILITY 0.59 0.20 ethical investment considerations. There is an automatic LEADERS ETF (ETHI) deletion clause so if at any time during the year, a constituent no longer meets the eligibility criteria, it is VANECK VECTORS MSCI INTERNATIONAL 0.55 0.21 SUSTAINABLE EQUITY ETF (ESGI) removed from the Index and not replaced. VANGUARD ETHICALLY CONSCIOUS 0.18 0.12 Standard index rules also apply i.e. a company must be INTERNATIONAL SHARES INDEX ETF (VESG) not currently in bankruptcy proceedings. • Average Bid/Ask Spread to September 2020 (Source: ASX). ANALYST: NATHAN UMAPATHY | APPROVED BY: PETER GREEN 9

- Lonsec Research Pty Ltd ABN 11 151 658 561 • AFSL No. 421 445 • This information must be read in conjunction with the warning, 6 disclaimer, and disclosure at the end of this document. This report supersedes all prior reports. P BetaShares Global Sustainability Leaders ETF

Performance The Fund commenced in January 2017 and is still building a track record. Over the last three year to September 2020, the Fund delivered a performance return of 22.47% p.a. (after fees). The Fund's Tracking Difference and Tracking Error over the same period was -0.56% p.a. and 0.13% p.a. Lonsec notes the Tracking

ISSUE DATE 30-11-2020 Difference is slightly higher with this Fund due to the Fund's higher MER however, the Tracking Error indicates that the Fund has been able to closely track the Underlying Index. Lonsec remains comfortable with the performance and believes that the Fund has met its investment objectives.

Risks An investment in the Fund carries a number of standard investment risks associated with domestic and international investment markets. These include economic, political, legal, tax and regulatory risks. These and other risks are outlined in the Fund Prospectus and should be read in full and understood by investors. Lonsec considers the major risks to be:

Equity market risk Investments in equity markets are subject to numerous factors which may have an impact on the performance of an investment (both positive and negative). Unexpected changes in economic, technological, structural, regulatory or political conditions can have an impact on the returns of all investments within a particular market.

Tracking Error risk The Fund seeks to minimize the Tracking Error against the Underlying Index it aims to match. There is no guarantee that this objective will be met.

Derivative risk The Manager may utilise derivative instruments, including futures to equitise cash, and risk management purposes. Derivatives will not be used to leverage the portfolio.

Liquidity risk The Fund’s shares trade intra-day at prevailing market prices in a similar manner to other securities on the ASX. Listing or trading on a stock exchange does not guarantee that a liquid market exists for an ETF.

Foreign exchange risk Returns from any investment in the Fund may be eroded or enhanced due to the effects of movements in the AUD relative to the local currencies of the securities in the Fund.

Counter-party risk The Fund takes on counter-party risk with regard to its market-making activities. Counter-parties may default on their contractual obligations, potentially exposing investors to some financial losses.

Further information Further information can be obtained by calling BetaShares on 1300 487 577 or visiting www.betashares.com.au ANALYST: NATHAN UMAPATHY | APPROVED BY: PETER GREEN 9

- Lonsec Research Pty Ltd ABN 11 151 658 561 • AFSL No. 421 445 • This information must be read in conjunction with the warning, 7 disclaimer, and disclosure at the end of this document. This report supersedes all prior reports. P BetaShares Global Sustainability Leaders ETF

Quantitative Performance Analysis - annualised after-fee % returns (at 31-10-2020) Performance metrics 1 YR 2 YR 3 YR 5 YR TOTAL RETURN (% PA) 21.33 22.03 19.39 - STANDARD DEVIATION (% PA) 13.93 12.19 11.72 - EXCESS RETURN (% PA) -0.76 -0.70 -0.58 -

ISSUE DATE 30-11-2020 WORST DRAWDOWN (%) -6.84 -6.84 -9.71 - TIME TO RECOVERY (MTHS) 2 2 3 - TRACKING ERROR (% PA) 0.13 0.14 0.13 -

PRODUCT: BETASHARES GLOBAL SUSTAINABILITY LEADERS ETF PRODUCT BENCHMARK: NASDAQ FUTURE GLOBAL SUSTAINABILITY LEADERS NR INDEX AUD TIME TO RECOVERY: NR - NOT RECOVERED, DASH - NO DRAWDOWN DURING PERIOD

Growth of $10,000 over three years Monthly excess returns over three years

Premium/discount to NAV over three years Traded Volume and FUM ANALYST: NATHAN UMAPATHY | APPROVED BY: PETER GREEN 9

- Lonsec Research Pty Ltd ABN 11 151 658 561 • AFSL No. 421 445 • This information must be read in conjunction with the warning, 8 disclaimer, and disclosure at the end of this document. This report supersedes all prior reports. P BetaShares Global Sustainability Leaders ETF

Glossary Click here for the glossary of terms. About Lonsec Lonsec Research Pty Ltd (Lonsec) is an investment research house with specialist areas of expertise, that was originally established in 1994 and the current entity was registered on 23 June 2011. From 1 July 2011, Lonsec became a fully owned subsidiary of Lonsec Fiscal ISSUE DATE 30-11-2020 Holdings Pty Ltd, a privately owned entity with a multi- brand strategy of providing leading financial services research and investment execution. Lonsec believes that professional financial advisers need informed opinions on the best investment strategies and financial products to provide real value for their clients. To meet this need, Lonsec has in place an experienced research team, which draws on a robust research process to undertake in-depth assessment of managed fund products. Analyst Disclosure and Certification Analyst remuneration is not linked to the research or rating outcome. Where financial products are mentioned, the Analyst(s) may hold the financial product(s) referred to in this document, but Lonsec considers such holdings not to be sufficiently material to compromise the rating or advice. Analyst holdings may change during the life of this document. The Analyst(s) certify that the views expressed in this document accurately reflect their personal, professional opinion about the matters and financial product(s) to which this document refers. ANALYST: NATHAN UMAPATHY | APPROVED BY: PETER GREEN 9

- LONSEC STRONGLY RECOMMENDS THIS DOCUMENT BE READ IN CONJUNCTION WITH THE RELEVANT PRODUCT 9 DISCLOSURE STATEMENT. Important Notice: Issued by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Lonsec P receives a fee from the fund manager or financial product issuer(s) for researching the financial product(s), using objective criteria and for services including research subscriptions. Lonsec’s fee is not linked to the rating(s) outcome. Lonsec Investment Solutions Pty Ltd ABN 95 608 837 583 CAR (CAR: 001236821) of Lonsec receives fees under separate arrangement for providing investment consulting advice to clients, which includes model portfolios, approved product lists and other financial advice and may receive fees from this fund manager or financial product issuer for providing investment consulting services. Refer to the Conflicts of Interest Policy at:https://www.lonsec.com.au/ aspx/IndexedDocs/general/LonsecResearchConflictsofInterestPolicy.pdf Lonsec does not hold the financial product(s) referred to in this document. Lonsec’s representatives and/or their associates may hold the financial product(s) referred to in this document, but details of these holdings are not known to the Analyst(s). Warnings: In line with industry practice returns may be estimated, to access verified returns please refer to the product provider. Past performance is not a reliable indicator of future performance. Any advice is General Advice based on the investment merits of the financial product(s) alone, without considering the investment objectives, financial situation and particular needs of any particular person. It is not a recommendation to purchase, redeem or sell the relevant financial product(s). Before making an investment decision the reader must consider his or her financial circumstances or seek personal financial advice on its appropriateness. Read the Product Disclosure Statement for each financial product before making any decision about whether to acquire a financial product. Lonsec’s research process relies upon the participation of the fund manager or financial product issuer(s). Should the fund manager or financial product issuer(s) no longer participate in Lonsec’s research process, Lonsec reserves the right to withdraw the document at any time and discontinue future coverage. The product rated in this publication may have related financial products or be associated with other financial products and platforms. The rating may only be applied to the financial product outlined in this publication at first instance, seek professional advice before you make an investment decision on related or associated financial products and platforms. You should be aware that the mandate, fees, underlying investments, the issuers of the related and associated financial products and platforms may be different from the financial product specified in this publication.Past performance is not a reliable indicator of future performance. Any advice is General Advice based on the investment merits of the financial product(s) alone, without considering the investment objectives, financial situation and particular needs of any particular person. It is not a recommendation to purchase, redeem or sell the relevant financial product(s). Before making an investment decision the reader must consider his or her financial circumstances or seek personal financial advice on its appropriateness. Read the Product Disclosure Statement for each financial product before making any decision about whether to acquire a financial product. Lonsec’s research process relies upon the participation of the fund manager or financial product issuer(s). Should the fund manager or financial product issuer(s) no longer participate in Lonsec’s research process, Lonsec reserves the right to withdraw the document at any time and discontinue future coverage. The product rated in this publication may have related financial products or be associated with other financial products and platforms. The rating may only be applied to the financial product outlined in this publication at first instance, seek professional advice before you make an investment decision on related or associated financial products and platforms. You should be aware that the mandate, fees, underlying investments, the issuers of the related and associated financial products and platforms may be different from the financial product specified in this publication. Disclaimer: This document is for the exclusive use of the person to whom it is provided by Lonsec and must not be used or relied upon by any other person. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by Lonsec. Financial conclusions, ratings and advice are reasonably held at the time of completion but subject to change without notice. Lonsec assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, Lonsec, its directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it. ©2020 Lonsec. All rights reserved. This report may also contain third party material that is subject to copyright. To the extent that copyright subsists in a third party it remains with the original owner and permission may be required to reuse the material. 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