DIVERSIFIED INVESTMENT STRATEGIES DIRECTORS' REPORT AND FINANCIAL REPORT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

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1 DIRECTORS' REPORT AND FINANCIAL REPORT ipac Asset Management Limited 33 Alfred Street, Sydney, NSW 2000 ACN

2 TABLE OF CONTENTS Page Directors' Report 1 Auditor's Independence Declaration 4 Financial Report Statements of Comprehensive Income 5 Statements of Financial Position 7 Statements of Changes in Net Assets Attributable to Unitholders 9 Statements of Cash Flows 11 Notes to the Financial Statements 13 Directors' Declaration 35 Auditor's Report 36

3 DIRECTORS' REPORT The Directors of ipac Asset Management Limited (ABN ), the "Responsible Entity" of the Strategies (the "Schemes ), listed below, present their report together with the Financial Report of the Schemes for the financial year ended 31 December Schemes Name ARSN Strategy No Strategy No Strategy No Strategy No Strategy No Strategy No Directors The Directors of the Responsible Entity during the financial year and up to the date of this report are shown below. Directors were in office for this entire period except where stated otherwise: A.K. Abey P.H. Clitheroe N.R. Swindells C.W. Keary J. Brunton Schemes Information The Schemes are Australian Registered Schemes. ipac Asset Management Limited, the Responsible Entity of the Schemes, is incorporated and domiciled in Australia. The registered office of the Responsible Entity is located at 33 Alfred Street, Sydney, NSW Principal Activity The principal activity of the Schemes is the investment of unitholders funds in accordance with each Scheme s mandate. There has been no significant change in the nature of this activity during the financial year. Review of Results and Operations The performance of the Schemes as represented by the results of operations, were as follows: Net profit/(loss) attributable to unitholders after tax expense and Distributions paid and/or payable before finance costs during the financial year 31 December December December December 2014 $ $ $ $ Strategy No. 1 10,032,764 1,968,102 7,493,616 1,768,143 Strategy No ,186,859 35,628,377 76,732,813 14,904,437 Strategy No. 3 72,761,969 15,999,033 42,335,796 6,513,843 Strategy No. 4 20,028,115 5,551,847 12,057,149 2,227,863 Strategy No. 5 8,011,363 11,221,531 9,215,514 4,660,467 Strategy No. 6 13,728,999 9,242,066 19,545,511 7,020,

4 DIRECTORS' REPORT (Continued) Significant Changes in the State of Affairs There have been no significant changes in the state of affairs of the Schemes during the financial year ended 31 December Significant Events After the Balance Date As at the date of this report, the Directors are not aware of any matter or circumstance that has arisen since the end of the financial year that has significantly affected or may significantly affect the operations of the Schemes, the results of their operations or their state of affairs, which is not already reflected in this Financial Report. Likely Developments and Expected Results The investment strategy of the Schemes will be maintained in accordance with each Scheme s Constitution. Currently, there are no significant developments expected in respect of the Schemes. The performance of the Schemes in the future will be subject to movements in the underlying investment markets over time. Environmental Regulation and Performance The operations of the Schemes are not subject to any particular or significant environmental regulations under a Commonwealth, State or Territory law. Relevant Information Following is a list of relevant information required under the Corporations Act: - Fees paid to the Responsible Entity - Refer to Note 7 to the Financial Statements - Units held by the Responsible Entity in the Schemes - Refer to Note 7 to the Financial Statements - Units issued in the Schemes during the financial year - Refer to Note 5 to the Financial Statements. During the financial year, certain Schemes issued new units in new classes called L Class and/or No Fee Class. - Units withdrawn from the Schemes during the financial year - Refer to Note 5 to the Financial Statements - The value of the Schemes assets and basis of valuation - Refer to the Statement of Financial Position and Note 1 respectively - The number of units in the Schemes as at 31 December Refer to Note 5 to the Financial Statements - Distributions payable to unitholders at the balance date - Refer to the Statement of Financial Position These notes have been presented in accordance with ASIC Class Order 98/2395. Indemnification and Insurance of Directors and Officers Under its Constitution, ipac Asset Management Limited (the "company") indemnifies, to the extent permitted by law, all officers of the company, (including the Directors), for any liability (including the costs and expenses of defending actions for an actual or alleged liability) incurred in their capacity as an officer of the company. This indemnity is not extended to current or former employees of the AMP group against liability incurred in their capacity as an employee unless approved by the Board of AMP Limited. During or since the end of the financial year, no such indemnities have been provided. During the financial year, AMP Limited agreed to insure all the officers of the company against certain liabilities as permitted by the Corporations Act. The insurance policy prohibits disclosure of the nature of the cover, the amount of the premium, the limit of liability and other terms. AMP Group Holdings Limited ( AMPGH ) has entered into a deed of indemnity and access with each Director and secretary of the company. Each deed of indemnity and access provides that: - These officers will have access to the books of the company for their period of office and for ten (and in certain cases, seven) years after they cease to hold office (subject to certain conditions); and - AMPGH agrees to indemnify the officer, to the extent permitted by law, against any liability incurred by the officer in his or her capacity as a Director or secretary of the company and of other AMP group companies

5 DIRECTORS' REPORT (Continued) Auditor's Independence Declaration We have obtained an independence declaration from our auditors, Ernst & Young, a copy of which is attached to this report and forms part of the Directors' Report for the financial year ended 31 December Related Scheme Reports ASIC Corporations (Related Scheme Reports) Instrument 2015/839 allows the Financial Statements and the Directors' Report of related registered schemes to be presented in a single Financial Report. This Financial Report has been prepared in accordance with this relief. Signed in accordance with a resolution of the Directors: Director 16 March 2016, Sydney - 3 -

6 Ernst & Young 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: Fax: ey.com/au Auditor s Independence Declaration to the Directors of ipac Asset Management Limited For the following Strategies (the Schemes ): Strategy No.1 Strategy No.4 Strategy No.2 Strategy No.3 Strategy No.5 Strategy No.6 As lead auditor for the audit of the Schemes for the financial year ended 31 December 2015, I declare to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) no contraventions of any applicable code of professional conduct in relation to the audit. Ernst & Young Darren Handley-Greaves Partner 16 March 2016 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

7 STATEMENT OF COMPREHENSIVE INCOME Strategy No. 1 Strategy No. 2 Strategy No. 3 Strategy No December 31 December 31 December 31 December 31 December 31 December 31 December 31 December Notes $ $ $ $ $ $ $ $ INVESTMENT INCOME Distributions 7,203,144 1,351,321 80,146,613 21,306,042 41,966,745 10,254,994 14,903,395 3,701,975 Interest income 62,907 11, ,295 88, ,352 75,477 47,790 13,541 Net changes in the fair value of financial instruments measured at fair value through profit or loss 3,169, ,524 29,527,950 17,588,802 32,416,934 7,316,128 5,974,834 2,467,717 Responsible entity fee rebates 7(c) 73, , ,768-76,040 - Other income Total investment income/(loss) 10,509,179 2,168, ,538,178 38,983,292 75,076,618 17,646,599 21,002,059 6,183,233 EXPENSES Responsible entity fees 7(c) (447,782) (186,057) (4,858,474) (3,016,438) (2,055,101) (1,454,818) (865,809) (553,522) Custody and transaction fees (15,984) (5,459) (123,430) (38,959) (72,139) (19,879) (23,179) (9,747) Other expenses (280) (404) (4,329) (6,199) (2,227) (2,341) (795) (1,139) Total expenses (464,046) (191,920) (4,986,233) (3,061,596) (2,129,467) (1,477,038) (889,783) (564,408) NET PROFIT/(LOSS) ATTRIBUTABLE TO UNITHOLDERS BEFORE TAX EXPENSE AND FINANCE COSTS 10,045,133 1,976, ,551,945 35,921,696 72,947,151 16,169,561 20,112,276 5,618,825 Withholding tax expense (12,369) (8,635) (365,086) (293,319) (185,182) (170,528) (84,161) (66,978) NET PROFIT/(LOSS) ATTRIBUTABLE TO UNITHOLDERS AFTER TAX EXPENSE AND BEFORE FINANCE COSTS 10,032,764 1,968, ,186,859 35,628,377 72,761,969 15,999,033 20,028,115 5,551,847 Finance costs attributable to unitholders Distributions to unitholders Payable (7,493,616) (1,768,143) (76,732,813) (14,904,437) (42,335,796) (6,513,843) (12,057,149) (2,227,863) (Increase)/decrease in net assets attributable to unitholders (2,539,148) (199,959) (28,454,046) (20,723,940) (30,426,173) (9,485,190) (7,970,966) (3,323,984) NET PROFIT/(LOSS) ATTRIBUTABLE TO UNITHOLDERS AFTER TAX EXPENSE AND FINANCE COSTS Other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR

8 STATEMENT OF COMPREHENSIVE INCOME Strategy No. 5 Strategy No December 31 December 31 December 31 December Notes $ $ $ $ INVESTMENT INCOME Distributions 12,191,091 6,096,427 17,965,071 5,954,256 Interest income 40,047 31,347 97,920 46,820 Net changes in the fair value of financial instruments measured at fair value through profit or loss (3,428,246) 5,728,118 (3,094,151) 4,025,697 Responsible entity fee rebates 7(c) 44,782-93,099 - Other income 85,199 71, Total investment income/(loss) 8,932,873 11,927,607 15,062,445 10,026,773 EXPENSES Responsible entity fees 7(c) (843,132) (618,985) (1,220,454) (713,236) Custody and transaction fees (12,369) (10,517) (25,237) (13,251) Other expenses (1,171) (1,751) (1,220) (289) Total expenses (856,672) (631,253) (1,246,911) (726,776) NET PROFIT/(LOSS) ATTRIBUTABLE TO UNITHOLDERS BEFORE TAX EXPENSE AND FINANCE COSTS 8,076,201 11,296,354 13,815,534 9,299,997 Withholding tax expense (64,838) (74,823) (86,535) (57,931) NET PROFIT/(LOSS) ATTRIBUTABLE TO UNITHOLDERS AFTER TAX EXPENSE AND BEFORE FINANCE COSTS 8,011,363 11,221,531 13,728,999 9,242,066 Finance costs attributable to unitholders Distributions to unitholders Payable (9,215,514) (4,660,467) (19,545,511) (7,020,481) (Increase)/decrease in net assets attributable to unitholders 1,204,151 (6,561,064) 5,816,512 (2,221,585) NET PROFIT/(LOSS) ATTRIBUTABLE TO UNITHOLDERS AFTER TAX EXPENSE AND FINANCE COSTS Other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR

9 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015 Strategy No. 1 Strategy No. 2 Strategy No. 3 Strategy No December 31 December 31 December 31 December 31 December 31 December 31 December 31 December Notes $ $ $ $ $ $ $ $ ASSETS Cash and cash equivalents 6(a) 15,760,315 2,853,603 29,132,144 18,239,670 35,214,733 12,809,676 7,711,503 3,113,455 Receivables 3 4,951, ,441 35,540,215 6,390,660 21,309,010 2,712,657 6,079, ,831 Financial assets measured at fair value through profit or loss Unlisted managed investment funds 622,415,920 45,412,284 3,442,516, ,622,638 1,954,477, ,071, ,948,981 71,064,250 TOTAL ASSETS 643,127,684 48,990,328 3,507,188, ,252,968 2,011,001, ,593, ,740,333 75,166,536 LIABILITIES Payables 4 121,578 1,118, , , , ,530 99,994 63,196 Distribution payable 4,704, ,657 32,462,143 4,963,154 20,314,293 2,022,888 5,566, ,746 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 4,825,754 1,550,683 33,080,652 5,311,291 20,605,241 2,483,418 5,666, ,942 NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 638,301,930 47,439,645 3,474,107, ,941,677 1,990,396, ,110, ,073,756 74,380,

10 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015 Strategy No. 5 Strategy No December 31 December 31 December 31 December Notes $ $ $ $ ASSETS Cash and cash equivalents 6(a) 3,185,301 2,739,801 17,843,479 9,235,911 Receivables 3 2,454,087 1,259,237 5,775,565 2,032,913 Financial assets measured at fair value through profit or loss Unlisted managed investment funds 306,844, ,230, ,379, ,403,519 TOTAL ASSETS 312,483, ,229, ,998, ,672,343 LIABILITIES Payables 4 72,168 60, , ,530 Distribution payable 1,947,335 1,041,422 4,993,220 1,686,589 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 2,019,503 1,101,663 5,338,712 2,373,119 NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 310,463, ,127, ,659, ,299,

11 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS Strategy No. 1 Strategy No. 2 Strategy No. 3 Strategy No December 31 December 31 December 31 December 31 December 31 December 31 December 31 December $ $ $ $ $ $ $ $ Balance at the beginning of the financial year 47,439,645 22,417, ,941, ,093, ,110, ,564,487 74,380,594 47,496,935 Applications 621,807,113 31,184,007 3,085,651, ,228,187 1,836,867,839 87,278, ,729,546 29,585,870 Distributions reinvested 2,027, ,686 12,936,572 2,756,013 6,954,328 1,733,786 2,992, ,119 Redemptions (35,511,303) (6,535,996) (172,875,955) (115,859,649) (101,962,100) (17,951,737) (17,000,103) (6,897,314) 635,762,782 47,239,686 3,445,653, ,217,737 1,959,970, ,624, ,102,790 71,056,610 Increase/(decrease) in net assets attributable to unitholders 2,539, ,959 28,454,046 20,723,940 30,426,173 9,485,190 7,970,966 3,323,984 Balance at the end of the financial year 638,301,930 47,439,645 3,474,107, ,941,677 1,990,396, ,110, ,073,756 74,380,

12 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS Balance at the beginning of the financial year Applications Distributions reinvested Redemptions Increase/(decrease) in net assets attributable to unitholders Balance at the end of the financial year Strategy No. 5 Strategy No December 31 December 31 December 31 December $ $ $ $ 144,127, ,337, ,299,224 72,191, ,193,303 42,788, ,616, ,229,852 7,792,668 4,061,484 5,959, ,078 (28,445,622) (24,620,007) (58,399,088) (21,785,176) 311,668, ,566, ,476, ,077,639 (1,204,151) 6,561,064 (5,816,512) 2,221, ,463, ,127, ,659, ,299,

13 STATEMENT OF CASH FLOWS Strategy No. 1 Strategy No. 2 Strategy No December 31 December 31 December 31 December 31 December 31 December Notes $ $ $ $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from sales of financial instruments measured at fair value through profit or loss 36,445,000 7,558, ,935, ,462, ,720,000 38,701,618 Payments for purchases of financial instruments measured at fair value through profit or loss (608,402,695) (28,055,719) (3,050,240,898) (315,392,295) (1,814,264,816) (92,861,618) Distributions received 12,368 8, , , , ,529 Interest income received Int Rec 62,907 11, ,295 88, ,352 75,478 GST received/(paid) GST re (5,797) (1,828) (40,410) (22,832) (12,525) (11,105) Other income received Responsible entity fee rebates received Responsible entity fees paid Re Fee (426,512) (175,268) (4,766,545) (2,888,071) (2,043,540) (1,397,414) Withholding tax paid (12,369) (8,635) (365,086) (293,319) (185,182) (170,528) Custody and transaction fees paid (9,282) (3,866) (57,844) (33,196) (29,013) (17,061) Other expenses paid Other E (345) (339) (7,379) (3,149) (3,556) (1,012) Net cash inflow/(outflow) from operating activities 6(b) (572,336,725) (20,667,048) (2,864,954,781) (145,788,794) (1,695,436,278) (55,511,113) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from applications by unitholders 621,973,865 31,079,111 3,084,904, ,234,138 1,836,816,438 87,278,335 Payments for redemptions by unitholders (35,535,658) (6,441,381) (172,760,048) (115,867,560) (101,885,040) (17,951,737) Distributions paid (1,194,770) (1,329,953) (36,297,252) (10,057,750) (17,090,063) (4,148,500) Net cash inflow/(outflow) from financing activities 585,243,437 23,307,777 2,875,847, ,308,828 1,717,841,335 65,178,098 Net increase/(decrease) in cash and cash equivalents held 12,906,712 2,640,729 10,892,474 15,520,034 22,405,057 9,666,985 Cash and cash equivalents at the beginning of the financial year 2,853, ,874 18,239,670 2,719,636 12,809,676 3,142,691 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 6(a) 15,760,315 2,853,603 29,132,144 18,239,670 35,214,733 12,809,

14 STATEMENT OF CASH FLOWS Strategy No. 4 Strategy No. 5 Strategy No December 31 December 31 December 31 December 31 December 31 December Notes $ $ $ $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from sales of financial instruments measured at fair value through profit or loss 23,340,000 17,100,036 35,215,000 39,639,241 40,965,000 25,084,757 Payments for purchases of financial instruments measured at fair value through profit or loss (449,337,018) (35,570,036) (193,265,665) (54,967,389) (471,198,439) (111,618,250) Distributions received 84,161 66,979 64,837 74,823 86,535 57,930 Interest income received t Rec P 47,790 13,542 40,006 31,435 97,920 46,820 GST received/(paid) eceived (6,703) (4,319) (8,354) (2,404) (10,151) (8,677) Other income received ,451 58, Responsible entity fee rebates received - - 3,060-23,011 - Responsible entity fees paid e Fee P (847,038) (530,896) (833,754) (607,790) (1,186,622) (674,180) Withholding tax paid (84,161) (66,978) (64,838) (74,823) (86,535) (57,931) Custody and transaction fees paid (12,026) (7,842) (9,820) (9,635) (17,986) (10,003) Other expenses paid her Exp (1,545) (389) (1,171) (1,751) (1,220) (289) Net cash inflow/(outflow) from operating activities 6(b) (426,816,540) (18,999,903) (158,785,248) (15,860,145) (431,327,981) (87,179,823) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from applications by unitholders 452,627,626 29,585, ,193,303 42,788, ,396, ,229,852 Payments for redemptions by unitholders (16,992,479) (6,897,314) (28,445,622) (24,620,057) (58,181,209) (21,785,176) Distributions paid (4,220,559) (1,149,670) (516,933) (310,187) (10,279,693) (5,562,694) Net cash inflow/(outflow) from financing activities 431,414,588 21,538, ,230,748 17,857, ,935,549 94,881,982 Net increase/(decrease) in cash and cash equivalents held 4,598,048 2,538, ,500 1,997,625 8,607,568 7,702,159 Cash and cash equivalents at the beginning of the financial year 3,113, ,472 2,739, ,176 9,235,911 1,533,752 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 6(a) 7,711,503 3,113,455 3,185,301 2,739,801 17,843,479 9,235,

15 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) (b) The significant accounting policies adopted in the preparation of the Financial Report are set out below. These policies have been consistently applied to the current financial year and the comparative period, unless otherwise stated. Where necessary, comparative information has been re-presented to be consistent with current period disclosures. Basis of Preparation This general purpose Financial Report has been prepared in accordance with the Schemes' Constitution and with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board ("AASB") and the Corporations Act. The Schemes are for-profit entities for the purposes of preparing Financial Statements. The Financial Report also complies with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The assets and liabilities are measured on a fair value basis, except where otherwise stated. The Statement of Financial Position presents assets and liabilities in decreasing order of liquidity and does not distinguish between current and non-current items. All of the Schemes' assets and liabilities are held for the purpose of being traded or are expected to be realised within 12 months, except for net assets attributable to unitholders which may not be settled within 12 months. Given the nature of the Schemes, a reasonable estimate cannot be made of the amount of the balances, if any, that are unlikely to be settled within 12 months. Changes in Australian Accounting Standards The Schemes have adopted all mandatory standards and amendments for the financial year beginning 1 January Adoption of these standards and amendments has not had any effect on the financial position or performance of the Schemes. Australian Accounting Standards issued but not yet effective Standards and amendments that have recently been issued or amended but are not yet effective have not been adopted for the financial year ended 31 December When applied in future periods, these recently issued or amended standards are not expected to have an impact on the Schemes' financial position or performance or the presentation and disclosures in the Financial Report, except where described below: AASB 9 "Financial Instruments" (effective from 1 January 2018) This standard addresses the classification, measurement and derecognition of financial assets and financial liabilities. The Schemes are currently assessing the impact of adopting this standard, which is not expected to have a significant impact on the Schemes' financial position or performance; however, it may impact the presentation and disclosures in the Financial Report. Financial Assets Measured at Fair Value Through Profit or Loss Financial assets measured at fair value through profit or loss of the Schemes have been classified as held for trading as they are part of a portfolio which is managed for short-term gains. Financial assets are initially recognised at fair value determined as the purchase cost of the financial asset, exclusive of any transaction costs. Transaction costs are expensed as incurred in the Statement of Comprehensive Income. Any realised and unrealised gains and losses arising from subsequent measurement to fair value are recognised in the Statement of Comprehensive Income as 'Net changes in the fair value of financial instruments measured at fair value through profit or loss' in the period in which they arise. Subsequent to initial recognition, the fair value of financial assets measured at fair value through profit or loss is determined as follows: Unlisted managed investment funds The fair value of unlisted managed investment funds is the redemption price of those securities at the balance date

16 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (c) (d) (e) (f) Significant Accounting Judgements, Estimates and Assumptions The making of judgements, estimates and assumptions is a necessary part of the financial reporting process and these judgements, estimates and assumptions can have a significant effect on the reported amounts in the Financial Report. Estimates and assumptions are determined based on information available at the time of preparing the Financial Report and actual results may differ from these estimates and assumptions. Had different estimates and assumptions been adopted, this may have had a significant impact on the Financial Report. Significant accounting judgements, estimates and assumptions are re-evaluated at each balance date in the light of historical experience and changes to reasonable expectations of future events. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Significant accounting judgements, estimates and assumptions include but are not limited to: Fair value measurement of investments in financial instruments The majority of the Schemes' investments are financial instruments held for trading and are measured at fair value through profit or loss. Where available, quoted market prices for the same or similar instrument are used to determine fair value. Where there is no market price available for an instrument, a valuation technique is used. Judgement is applied in selecting valuation techniques and setting valuation assumptions and inputs. Further details on the determination of fair value of financial assets is set out in Note 1(b). Assessment of Schemes' investments as structured entities The Schemes have assessed whether the managed investment funds in which they invest should be classified as structured entities. The Schemes have considered the voting rights and other similar rights afforded to investors in these funds, including the rights to remove the fund manager or redeem holdings. The Schemes have concluded on whether these rights are the dominant factor in controlling the funds, or whether the contractual agreement with the fund manager is the dominant factor in controlling these funds. The Schemes have concluded that the managed investment funds in which they invest in are not structured entities. Investment Income Income is recognised to the extent that it is probable that the economic benefits will flow to the Schemes and the income can be reliably measured. The following specific recognition criteria must also be met before income is recognised: Distribution income Distributions from unlisted managed investment funds are recognised as income on the date the unit is quoted ex-distribution with any related foreign withholding tax recognised as a tax expense. Interest income Interest income earned on cash and cash equivalents is recognised on an accruals basis. Net changes in the fair value of financial instruments measured at fair value through profit or loss Net changes in the fair value of financial instruments are recognised as income and are determined as the difference between the fair value at the balance date or consideration received (if sold during the financial year) and the fair value as at the prior balance date or initial fair value (if acquired during the financial year). Responsible Entity Fee Rebates Fees may be reimbursed to the Schemes by the Responsible Entity for certain expenditure incurred in the administration of the Schemes. These are recognised in the Statement of Comprehensive Income on an accrual basis. Expenses Expenses are recognised in the Statement of Comprehensive Income on an accruals basis

17 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (g) (h) (i) (j) (k) (l) (m) Recognition and Derecognition of Financial Assets and Liabilities Financial assets and financial liabilities are recognised at the date the Schemes become a party to the contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire or are transferred. A transfer occurs when substantially all the risks and rewards of ownership of the financial asset are passed to a third party. Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expired. Cash and Cash Equivalents For the purposes of the Statement of Cash Flows, cash and cash equivalents include deposits held at call with a bank or financial institution with an original maturity date of three months or less. Cash and cash equivalents also include highly liquid investments which are readily convertible to cash on hand at the Responsible Entity's option and which the Responsible Entity uses in its day to day management of the Schemes' cash requirements. Receivables Receivables are recognised for amounts where settlement has not yet occurred. Receivables are measured at their nominal amounts. An allowance for doubtful debts is made when there is objective evidence that the Schemes will not be able to collect the debts. Bad debts are written off when identified less any allowance for doubtful debts. Amounts are generally received within 30 days of being recognised as receivables. Given the short-term nature of most receivables, their nominal amounts approximate their fair value. Payables Payables are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Schemes. Payables are measured at their nominal amounts. Amounts are generally paid within 30 days of being recognised as payables. Given the short-term nature of most payables, the nominal amount approximates fair value. Net Assets Attributable to Unitholders Net assets attributable to unitholders comprise units on issue and undistributed reserves. Net assets attributable to unitholders are classified as financial liabilities and not as equity because the Responsible Entity has a contractual obligation to pay distributable income of the Schemes to unitholders and units are redeemable at the unitholders' option (subject to the provisions of the Schemes' Constitution). As there are no equityholders, total comprehensive income attributable to unitholders and equity for the Schemes is nil. Non-distributable income is transferred directly to net assets attributable to unitholders and may consist of unrealised changes in the fair value of financial assets and derivative financial instruments. The fair value of redeemable units is measured at the redemption amount that is payable (based on the redemption unit price) at the balance date if unitholders exercised their right to redeem their units. The Schemes' redemption unit price is based on different valuation principles to that applied in financial reporting, resulting in a valuation difference which is treated as a component of net assets attributable to unitholders. Taxation Under current legislation, the Schemes are not liable to pay income tax since, under the terms of the Schemes' Constitution, the unitholders are presently entitled to the income of the Schemes. The Schemes currently incur withholding tax imposed by certain countries on investment income. and the withholding tax is recognised as a tax expense. Distributable Income Such income is recognised gross of withholding tax in the Statement of Comprehensive Income In accordance with the Schemes' Constitution, the Schemes fully distribute their distributable income to unitholders each tax year. Such distributions are determined by reference to the taxable income of the Schemes. Distributions are recognised in the Statement of Comprehensive Income as finance costs attributable to unitholders. Distributable income includes capital gains arising from the disposal of assets. Distributable income does not include unrealised gains and losses arising from net changes in the fair value of financial assets and derivative financial instruments, accrued income not yet assessable, expenses provided for or accrued but not yet deductible, tax free or deferred income and realised capital losses which are retained to offset future realised capital gains

18 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (n) (o) (p) (q) Foreign Currency Transactions (i) Functional and presentation currency Items included in the Financial Report are measured using the currency of the primary economic environment in which it operates (the "functional currency"). The presentation currency of this Financial Report, and the functional currency of the Schemes, is the Australian dollar. (ii) Transactions and balances Income and expense items denominated in a currency other than the functional currency are translated at the spot exchange rate at the date of the transaction. All monetary items denominated in foreign currencies are translated to Australian dollars using the exchange rate at the balance date, with exchange gains and losses recognised in the Statement of Comprehensive Income. Non-monetary items measured at fair value in foreign currencies are translated to Australian dollars using the exchange rate at the date when the fair value was determined. Unit Classes The Schemes contain multiple unit classes reflecting the different servicing requirements of various unitholders. Due to the additional services required by some unitholder classes, different management fees apply to different unit classes. These fees are detailed in the Product Disclosure Statements of the Schemes. Terms and Conditions of Units on Issue Issued and paid up units are initially recognised at the fair value of the consideration received by the Schemes. Each unit, within a unit class, confers upon the unitholder an equal interest in the Schemes (subject to income entitlements), and is of equal value. A unit does not confer an interest in any particular asset or investment of the Schemes. Unitholders have various rights under the Schemes' Constitution and the Corporations Act, which, subject to certain terms and conditions, include the right to: have their units redeemed receive income distributions attend and vote at meetings of unitholders participate in the termination and winding up of the Schemes. The rights, obligations and restrictions attached to each unitholder class are identical in all respects other than the minimum investment requirements and/or fee structures applicable to each class. Applications received for units in the Schemes are recognised net of any transaction costs arising on the issue of units in the Schemes. Redemptions from the Schemes are recognised gross of any transaction costs payable after the cancellation of units redeemed. Unit entry and exit prices are determined in accordance with the Schemes' Constitution. Goods and Services Tax ("GST") All income, expenses and assets are recognised net of any GST paid, except where they relate to products and services which are input taxed for GST purposes or the GST incurred is not recoverable from the relevant tax authorities. In such circumstances, the GST paid is recognised as part of the cost of acquisition of the assets or as part of the relevant expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from or payable to the tax authorities is included as a receivable or payable in the Statement of Financial Position. Cash flows are disclosed on a gross basis reflecting any GST paid or collected. The GST component of cash flows arising from investing or financial activities which are recoverable from, or payable to, local tax authorities are classified as operating cash flows

19 NOTE 2: AUDITOR'S REMUNERATION Strategy No. 1 Strategy No. 4 Strategy No. 2 Strategy No. 3 Strategy No December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December $ $ $ $ $ $ $ $ $ $ Amounts paid or payable to Ernst & Young, the auditor of the Schemes, for: Audit of the Financial Statements of the Schemes 5,500 1,120 16,000 10,314 5,500 3,304 5,500 1,281 5,500 5,785 Other service - audit of compliance plan 1, ,770 1,486 1, , , ,270 1,281 17,770 11,800 7,270 3,780 7,270 1,466 7,270 6,618 Strategy No December 31 December $ $ Amounts paid or payable to Ernst & Young, the auditor of the Schemes, for: Audit of the Financial Statements of the Schemes 16, Other service - audit of compliance plan 1, , Auditor's remuneration for the financial year ended 31 December 2015 has been paid by ipac Asset Management Limited (31 December 2014: ipac Asset Management Limited)

20 NOTE 3: RECEIVABLES Strategy No. 1 Strategy No. 2 Strategy No. 3 Strategy No. 4 Strategy No December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December $ $ $ $ $ $ $ $ $ $ Distributions receivable 4,828, ,827 34,049,342 6,327,500 20,718,803 2,682,144 5,883, ,062 2,345,577 1,210,592 Interest receivable GST receivable 10,240 4, ,570 63,160 43,038 30,513 18,472 11,769 20,670 12,316 Applications receivable 38, , ,983-51, , Responsible entity fee rebates receivable 73, , ,768-76,040-41,722 - Other receivables ,077 36,329 4,951, ,441 35,540,215 6,390,660 21,309,010 2,712,657 6,079, ,831 2,454,087 1,259,237 Strategy No December 31 December $ $ Distributions receivable 5,458,914 2,016,869 Interest receivable - - GST receivable 26,195 16,044 Applications receivable 220,368 - Responsible entity fee rebates receivable 70,088 - Other receivable - - 5,775,565 2,032,

21 NOTE 4: PAYABLES Strategy No. 1 Strategy No. 2 Strategy No. 3 Strategy No. 4 Strategy No December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December $ $ $ $ $ $ $ $ $ $ Responsible entity fees payable 42,165 20, , , , ,583 78,115 59,344 66,807 57,429 Custody and transaction fees payable 9,153 2,451 77,131 11,545 48,744 5,618 14,255 3,102 5,361 2,812 Outstanding settlements payable - 1,000, , Redemptions payable 70,260 94, ,907-77,060-7, Other expenses payable ,050-1, ,578 1,118, , , , ,530 99,994 63,196 72,168 60,241 Strategy No December 31 December $ $ Responsible entity fees payable 115,648 81,816 Custody and transaction fees payable 11,965 4,714 Outstanding settlements payable - 600,000 Redemptions payable 217,879 - Other expenses payable , ,

22 NOTE 5: NET ASSETS ATTRIBUTABLE TO UNITHOLDERS The movement in the number of units on issue during the financial year was as follows: Strategy No. 1 Strategy No. 2 Strategy No. 3 Strategy No December 31 December 31 December 31 December 31 December 31 December 31 December 31 December Units Units Units Units Units Units Units Units Units on issue Opening balance 48,564,401 23,051, ,419, ,549, ,685, ,437,171 65,129,574 45,119,907 Applications 644,401,946 32,050,848 3,199,835, ,428,169 1,949,047,704 76,294, ,314,344 25,559,375 Distributions reinvested 2,122, ,317 12,350,326 2,665,808 7,084,548 1,772,281 2,960, ,310 Redemptions (36,424,056) (6,720,138) (165,164,767) (107,223,836) (100,463,481) (16,818,081) (16,291,923) (6,438,018) Closing balance 658,665,130 48,564,401 3,496,440, ,419,563 2,047,354, ,685, ,112,754 65,129,574 Represented by: K Class Opening balance 47,505,286 23,051, ,248, ,110,188 88,158,664 75,659,641 32,580,041 29,052,856 Applications 27,414,092 30,741,768 72,783,352 67,474,970 27,291,809 21,559,147 10,953,998 6,875,590 Distributions reinvested 2,063, ,317 11,899,851 2,608,146 6,879,540 1,746,381 2,916, ,668 Redemptions (14,251,988) (6,470,173) (51,653,020) (81,944,935) (49,912,346) (10,806,505) (7,543,841) (4,235,073) Closing balance 62,730,651 47,505, ,278, ,248,369 72,417,667 88,158,664 38,906,626 32,580,041 L Class Opening balance ,490, ,439, ,093,878 54,777,530 32,208,261 16,067,051 Applications 11,365, ,567, ,981,668 41,499,772 54,267,787 16,573,704 18,335,416 Distributions reinvested ,301 57,662 91,825 25, ,642 Redemptions (1,604,370) - (32,363,578) (24,987,813) (9,426,686) (5,977,339) (2,882,544) (2,195,848) Closing balance 9,760, ,846, ,490, ,258, ,093,878 45,899,596 32,208,261 Explicit Pricing Class Opening balance 1,059,115-1,680, , ,272 - Applications 1,350,277 1,309,080 4,612,493 1,971,531 1,626, ,519 1,308, ,369 Distributions reinvested 59, , ,183-44,156 - Redemptions (537,502) (249,965) (1,018,949) (291,088) (499,626) (34,237) (160,007) (7,097) Closing balance 1,931,468 1,059,115 5,573,161 1,680,443 1,673, ,282 1,533, ,272 No Fee Class Opening balance Applications 604,272,429-2,988,871,904-1,878,629, ,478,168 - Distributions reinvested Redemptions (20,030,196) - (80,129,220) - (40,624,823) - (5,705,531) - Closing balance 584,242,233-2,908,742,684-1,838,004, ,772,

23 NOTE 5: NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (continued) The movement in the number of units on issue during the financial year was as follows: Units on issue Strategy No. 5 Strategy No December 31 December 31 December 31 December Units Units Units Units Opening balance 147,688, ,292, ,479,226 65,046,465 Applications 192,001,704 44,840, ,195, ,206,490 Distributions reinvested 8,034,892 4,335,111 5,965, ,913 Redemptions (28,807,659) (25,779,778) (55,254,556) (20,177,642) Closing balance 318,917, ,688, ,385, ,479,226 Represented by: K Class Opening balance 147,688, ,292, ,998,586 65,046,465 Applications 19,510,215 44,840,322 56,069,234 60,684,119 Distributions reinvested 8,034,892 4,335,111 82, ,913 Redemptions (15,292,973) (25,779,778) (19,450,319) (13,135,911) Closing balance 159,940, ,688, ,699, ,998,586 L Class Opening balance Applications Distributions reinvested Redemptions Closing balance Explicit Pricing Class Opening balance - - 4,128,146 - Applications ,269,413 4,536,384 Distributions reinvested ,900 - Redemptions - - (7,648,526) (408,238) Closing balance ,379,933 4,128,146 No Fee Class Opening balance ,352,494 - Applications 172,491, ,856,881 48,985,987 Distributions reinvested - - 5,252,488 - Redemptions (13,514,686) - (28,155,711) (6,633,493) Closing balance 158,976, ,306,152 42,352,

24 NOTE 6: CASH AND CASH EQUIVALENTS (a) Components of cash and cash equivalents Strategy No. 1 Strategy No. 2 Strategy No. 3 Strategy No December 31 December 31 December 31 December 31 December 31 December 31 December 31 December $ $ $ $ $ $ $ $ Cash and cash equivalents at the end of the financial year as shown in the Statement of Cash Flows is linked to the related item in the Statement of Financial Position as follows: Cash at bank 15,760,315 2,853,603 29,132,144 18,239,670 35,214,733 12,809,676 7,711,503 3,113,455 15,760,315 2,853,603 29,132,144 18,239,670 35,214,733 12,809,676 7,711,503 3,113,455 (b) Reconciliation of net profit/(loss) attributable to unitholders after tax expense and before finance costs to net cash inflow/(outflow) from operating activities Net profit/(loss) attributable to unitholders after tax expense and before finance costs 10,032,764 1,968, ,186,859 35,628,377 72,761,969 15,999,033 20,028,115 5,551,847 Proceeds from sales of financial instruments measured at fair value through profit or loss 36,445,000 7,558, ,935, ,462, ,720,000 38,701,618 23,340,000 17,100,036 Payments for purchases of financial instruments measured at fair value through profit or loss (608,402,695) (28,055,719) (3,050,240,898) (315,392,295) (1,814,264,816) (92,861,618) (449,337,018) (35,570,036) Net changes in the fair value of financial instruments measured at fair value through profit or loss (3,169,151) (805,524) (29,527,950) (17,588,802) (32,416,934) (7,316,128) (5,974,834) (2,467,717) Investment income reinvested (2,876,790) (1,010,289) (52,059,685) (18,510,740) (23,744,903) (9,194,752) (9,912,879) (3,338,168) Changes in assets and liabilities: (Increase)/decrease in receivables (4,393,760) (334,224) (28,402,572) (2,524,809) (18,544,952) (900,817) (4,989,098) (301,146) Increase/(decrease) in payables 27,907 12, , ,180 53,358 61,551 29,174 25,281 Net cash inflow/(outflow) from operating activities (572,336,725) (20,667,048) (2,864,954,781) (145,788,794) (1,695,436,278) (55,511,113) (426,816,540) (18,999,903) (c) Non-cash financing and operating activities Non-cash financing and operating activities carried out during the financial year on normal commercial terms and conditions included: Reinvestment of unitholder distributions 2,027, ,686 12,936,572 2,756,013 6,954,328 1,733,786 2,992, ,119 Participation in reinvestment plans 2,876,790 1,010,289 52,059,685 18,510,740 23,744,903 9,194,752 9,912,879 3,338,

25 NOTE 6: CASH AND CASH EQUIVALENTS (Continued) (a) Components of cash and cash equivalents Strategy No. 5 Strategy No December 31 December 31 December 31 December $ $ $ $ Cash and cash equivalents at the end of the financial year as shown in the Statement of Cash Flows is linked to the related item in the Statement of Financial Position as follows: Cash at bank 3,185,301 2,739,801 17,843,479 9,235,911 3,185,301 2,739,801 17,843,479 9,235,911 (b) Reconciliation of net profit/(loss) attributable to unitholders after tax expense and before finance costs to net cash inflow/(outflow) from operating activities Net profit/(loss) attributable to unitholders after tax expense and before finance costs 8,011,363 11,221,531 13,728,999 9,242,066 Proceeds from sales of financial instruments measured at fair value through profit or loss 35,215,000 39,639,241 40,965,000 25,084,757 Payments for purchases of financial instruments measured at fair value through profit or loss (193,265,665) (54,967,389) (471,198,439) (111,618,250) Net changes in the fair value of financial instruments measured at fair value through profit or loss 3,428,246 (5,728,118) 3,094,151 (4,025,697) Investment income reinvested (10,991,269) (5,681,052) (14,436,491) (4,595,039) Changes in assets and liabilities: (Increase)/decrease in receivables (1,194,850) (356,435) (3,522,284) (1,309,964) Increase/(decrease) in payables 11,927 12,077 41,083 42,304 Net cash inflow/(outflow) from operating activities (158,785,248) (15,860,145) (431,327,981) (87,179,823) (c) Non-cash financing and operating activities Non-cash financing and operating activities carried out during the financial year on normal commercial terms and conditions included: Reinvestment of unitholder distributions 7,792,668 4,061,484 5,959, ,078 Participation in reinvestment plans 10,991,269 5,681,052 14,436,491 4,595,

26 NOTE 7: RELATED PARTY DISCLOSURES (a) General Information The Responsible Entity of the Schemes is ipac Asset Management Limited, a subsidiary of AMP Limited. (b) Investments (i) Related party holdings of the Schemes Details of the Schemes' holdings in related parties, including entities in the same group as the Responsible Entity and other Schemes managed by the Responsible Entity, are set out below: Distributions/interest received or receivable during the Fair value Interest held financial year $ % $ 31 December 31 December 31 December 31 December 31 December 31 December Strategy No. 1 ipac Alternative Growth Fund 12,725,601 88, ,738 6,584 ipac Specialist Investment Strategies - Australian Cash Strategy No.1 137,357,912 11,023, ,539, ,035 ipac Specialist Investment Strategies - Alternative Income Strategy No.1 197,850,346 14,742, , ,413 ipac Specialist Investment Strategies - International Fixed Interest Strategy No.2 76,612,738 5,497, ,806, ,960 ipac Specialist Investment Strategies - Australian Share Strategy No.1 61,010,997 4,299, ,908, ,358 ipac Specialist Investment Strategies - International Share Strategy No.1 33,114,082 2,229, ,722 39,590 ipac Specialist Investment Strategies - International Property Strategy No.1 38,633,765 2,873, , ,987 ipac Diversified Alpha Fund 21,644, , , Other related parties 59,226,280 5,490,872 N/A N/A 617, ,060 Strategy No. 2 ipac Specialist Investment Strategies - International Fixed Interest Strategy No.2 304,060,022 45,055, ,056,028 1,557,370 ipac Specialist Investment Strategies - Alternative Income Strategy No.1 505,778,374 76,488, ,494,102 3,195,135 ipac Specialist Investment Strategies - Australian Share Strategy No.1 824,804, ,256, ,811,085 6,474,311 ipac Specialist Investment Strategies - International Property Strategy No.1 281,282,456 41,747, ,092,304 2,152,142 ipac Specialist Investment Strategies - International Share Strategy No.2 221,631,647 29,494, ,061,238 - ipac Specialist Investment Strategies - International Smaller Companies Strategy No.1 208,667,019 33,601, ,846,122 3,993,530 ipac Specialist Investment Strategies - Australian Share Strategy No.3 178,118,185 30,545, ,205, ,735 ipac Specialist Investment Strategies - International Share Strategy No.1 500,017,318 67,660, ,333,456 1,388,832 ipac Alternative Growth Fund 100,468,200 8,093, ,247, ,992 ipac Diversified Alpha Fund 168,454,055 19,312, ,876 18,339 ipac Specialist Investment Strategy - Australian Cash Strategy No.1 66,598,979 11,903, , ,618 ipac Specialist Investment Strategies - International Share Strategy No.10 82,635,496 14,464, , ,719 Other related parties 29,132,144 4,539,670 N/A N/A 222,153 97,