Vanguard Investor Funds

Annual Report Investor s Investments Australia Ltd ABN 72 072 881 086 AFSL 227263

funds covered in this annual report Index Australian Shares ARSN 090 995 770 ABN 38 931 692 506 High Yield Australian Shares ARSN 109 638 379 ABN 19 060 820 283 Index International Shares ARSN 090 995 583 ABN 42 389 448 403 Index Hedged International Shares ARSN 095 375 894 ABN 66 256 805 696 Index Australian Property Securities ARSN 090 995 494 ABN 99 571 736 269 Index Diversified Bond ARSN 090 995 841 ABN 96 491 646 070 Investor Cash Plus ARSN 090 995 887 ABN 64 380 598 371 Conservative ARSN 090 996 044 ABN 68 558 424 817 Balanced ARSN 103 186 607 ABN 31 948 445 348 Growth ARSN 090 996 099 ABN 73 804 372 624 High Growth ARSN 090 995 967 ABN 38 087 357 469 Responsible Entity Investments Australia Ltd ABN 72 072 881 086 AFSL 227263 Level 34 Freshwater Place 2 Southbank Boulevard Southbank Vic 3006 Telephone: (03) 8888 3888 Facsimile: 1300 765 712 vanguard.com.au 2 Annual Report

Contents About 4 Directors Report 5 Auditor s Independence Declaration 13 Statement of comprehensive income 14 Balance sheet 17 Statement of changes in equity 19 Statement of cash flows 20 Notes to the financial statements 23 Directors Declaration 68 Independent Auditor s Report 69 Investor s 3

About About Since our establishment in 1975, has strived to be the world s highest-value provider of investment products and services. We have an unwavering focus on our clients with a commitment to champion what s best for investors by offering outstanding service, while keeping costs low. Over the years has built a reputation as a global leader in client advocacy and earned the trust of millions of investors along the way. Our sole purpose has been to align our interest with those of our investors to ensure they have the best chance for investment success. With more than AUD $5.7 trillion in assets under management as of, including more than AUD $1 trillion in exchange traded funds, is one of the world s largest global investment management companies. In Australia, has been helping investors meet their long-term financial goals with low-cost investment solutions for over 20 years. Our unique structure putting investors interests first What sets apart and lets put investors first around the world is the ownership structure of The Group, Inc., in the United States. Rather than being publicly traded or owned by a small group of individuals, The Group is owned by s USdomiciled funds and ETFs. Those funds, in turn, are owned by their investors. This mutual structure aligns our interests with those of our investors and drives the culture, philosophy and policies throughout the organisation worldwide. As a result, Australian investors benefit from s stability and experience, low costs and client focus. Our investment expertise When you invest with, you have more than 40 years of investing experience behind you. So no matter which investment products suit your needs, you can feel confident that investments are built on a rigorous investment philosophy that stands the test of time. Low-cost investing We know we can t control the markets, but we can control the costs of investing. To that end, providing low-cost investments isn t a pricing strategy for us. It s how we do business. We can keep costs low because of our unique ownership structure in the United States, which allows us to return profits to investors through lower costs. 4 Annual Report

Directors' Report Directors Report The Responsible Entity of Investor s (the s ) for the year ended was Investments Australia Ltd (the Responsible Entity ). The directors of Investments Australia Ltd present their report together with the financial statements for the year ended. Principal activities The s invest in accordance with the investment policy of the s as set out in the current Product Disclosure Statement (PDS) and in accordance with the Constitutions. The s predominantly invest in the Wholesale s, a group of unlisted unit trusts which are also managed by the Responsible Entity. The s seek to track the weighted average return of each of the underlying Wholesale s in which they invest, before taking into account fees, expenses and tax. The weights used are the strategic asset allocations to each asset class, for each individual. The s did not have any employees during the year. There were no significant changes in the nature of the activities of the s during the year. Directors The following persons held office as directors of the Responsible Entity during the year or since the end of the year and up to the date of this report: J M Norris G W Reed (Resigned 31 July ) C R Comegys (Resigned 31 August ) C Kelton M Lovett (Resigned 6 December ) L Carr (Appointed 6 December ) C Lui (Appointed 31 August ) Investor s 5

Directors' Report Directors Report (continued) Review and results of operations The s invest in unlisted unit trusts and cash and cash equivalents. The investment policy of the s continues to be in accordance with the provisions of the Constitutions. Results The results of the operations of the s were as follows: Index Australian Shares High Yield Australian Shares Index International Shares Index Hedged International Shares Year ended Year ended Year ended Year ended Operating profit/(loss) before finance costs attributable to unitholders ($ 000) 59,556 222 18,849 (9,295) 35,196 706 23,080 (2,554) s paid and payable ($'000) 43,320 33,374 10,437 8,071 15,109 4,134 22,583 10,741 (cents per unit) 17.6888 13.9007 10.4331 8.1482 8.1582 2.1995 16.0401 7.8830 Index Australian Property Securities Index Diversified Bond Investor Cash Plus Year ended Year ended Year ended Operating profit/(loss) before finance costs attributable to unitholders ($ 000) (7,212) 23,075 (407) 6,152 293 393 s paid and payable ($'000) 3,260 4,630 5,946 3,510 287 388 (cents per unit) 2.7004 3.8777 9.4273 5.2698 1.6945 1.9765 Conservative Balanced Growth High Growth Year ended Year ended Year ended Year ended Operating profit/(loss) before finance costs attributable to unitholders ($ 000) 1,021 1,422 4,793 3,540 11,477 4,739 14,475 3,103 s paid and payable ($'000) 2,249 1,339 6,611 3,810 10,319 6,430 11,205 5,200 (cents per unit) 7.5394 6.1155 9.4985 6.8989 10.2464 7.3528 13.0115 6.8591 6 Annual Report

Directors' Report Directors Report (continued) Review and results of operations (continued) Performance The table below details the performance of the s as represented by the total return, net of fees, which is calculated as the aggregation of the percentage capital growth and percentage distribution of income. The total return is shown for the past five years to and assumes that all distributions were re-invested during that period. These are calculated in accordance with FSC Standard 6.0 Product Performance calculation and presentation of returns. The directors assess the performance of the s by comparing each s total return with the corresponding Index (the Benchmark) gross of fees. 2015 2014 2013 % % % % % Index Australian Shares Capital growth 3.47 (6.91) 0.67 12.09 16.44 of income 9.58 6.98 4.19 4.33 4.61 Total return 13.05 0.07 4.86 16.42 21.05 Benchmark return S&P/ASX 300 Index 13.82 0.87 5.61 17.25 21.90 2015 2014 2013 % % % % % High Yield Australian Shares Capital growth 7.15 (13.15) (7.64) 10.86 23.17 of income 9.08 6.02 10.34 6.37 5.42 Total return 16.23 (7.13) 2.70 17.23 28.59 Benchmark return FTSE ASFA Australia High Dividend Yield Index 17.61 (6.59) 3.50 17.98 29.45 2015 2014 2013 % % % % % Index International Shares Capital growth 7.99 (1.69) 23.05 16.92 30.16 of income 6.02 1.57 1.38 2.74 2.21 Total return 14.01 (0.12) 24.43 19.66 32.37 Benchmark return MSCI World ex-australia Index (with net dividends reinvested) in AUD 14.73 0.40 25.18 20.41 33.10 2015 2014 2013 % % % % % Index Hedged International Shares Capital growth 0.23 (10.52) 10.25 23.85 20.48 of income 19.52 8.58 3.38 Total return 19.75 (1.94) 10.25 23.85 23.86 Benchmark return MSCI World ex-australia Index (with net dividends reinvested) Hedged into AUD 20.53 (1.43) 10.94 24.64 24.56 Investor s 7

Directors' Report Directors Report (continued) Review and results of operations (continued) Performance (continued) 2015 2014 2013 % % % % % Index Australian Property Securities Capital growth (8.85) 18.56 15.12 4.45 18.66 of income 2.70 5.02 4.22 5.79 4.38 Total return (6.15) 23.58 19.34 10.24 23.04 Benchmark return S&P/ASX 300 A-REIT Index (5.64) 24.59 20.20 11.08 23.98 2015 2014 2013 % % % % % Index Diversified Bond Capital growth (8.14) 3.41 3.81 4.18 (0.87) of income 7.76 4.53 1.15 2.12 4.08 Total return (0.38) 7.94 4.96 6.30 3.21 Benchmark return Diversified Bond Composite Index - Retail (1) 0.33 8.73 5.69 7.13 3.95 (1) Diversified Bond Composite Index - Retail comprises of (weight/index): 40% Bloomberg AusBond Composite 0+ Yr Index, 60% Bloomberg Barclays Global Aggregate ex Securitised Index (hedged to AUD). 2015 2014 2013 % % % % % Investor Cash Plus Capital growth 0.05 (0.08) 0.09 (0.06) (0.26) of income 1.70 1.99 2.13 2.30 2.92 Total return 1.75 1.91 2.22 2.24 2.66 Benchmark return Bloomberg AusBond Bank Bill Index 1.82 2.24 2.60 2.70 3.27 8 Annual Report

Directors' Report Directors Report (continued) Review and results of operations (continued) Performance (continued) Conservative 2015 2014 2013 % % % % % Capital growth (2.72) 0.63 5.41 6.32 5.79 of income 6.03 4.95 1.94 2.58 3.30 Total return 3.31 5.58 7.35 8.90 9.09 Benchmark return Conservative Composite Index - Retail (2) 4.03 6.44 8.09 9.73 9.91 (2) Conservative Composite Index - Retail comprises of (weight/index): 13% S&P/ASX 300 Index, 10% MSCI World ex-australia Index (with net dividends reinvested) in Australian dollars, 2% S&P/ASX 300 A-REIT Index, 2% FTSE EPRA/NAREIT developed ex Australia rental index, Australian Dollar Hedged, 1.5% MSCI World ex-australia Small Cap Index (with net dividends reinvested) in Australian dollars, 1.5% MSCI Emerging Markets Index (with net dividends reinvested) in Australian dollars, 24% Bloomberg AusBond Composite 0+ Yr Index, 23% Bloomberg Barclays Global Treasury Index hedged into Australian dollars, 13% Bloomberg Barclays Global Aggregate Government-Related and Corporate Index hedged into Australian dollars, 10% Bloomberg AusBond Bank Bill Index. 2015 2014 2013 % % % % % Balanced Capital growth (1.30) (0.13) 5.69 8.71 10.01 of income 6.90 5.03 3.82 2.83 3.47 Total return 5.60 4.90 9.51 11.54 13.48 Benchmark return Balanced Composite Index - Retail (3) 6.40 5.79 10.23 12.45 14.35 (3) Balanced Composite Index - Retail comprises of (weight/index): 22% S&P/ASX 300 Index, 17% MSCI World ex-australia Index (with net dividends reinvested) in Australian dollars, 3% S&P/ASX 300 A-REIT Index, 3% FTSE EPRA/NAREIT developed ex Australia rental index, Australian Dollar Hedged, 2.5% MSCI World ex-australia Small Cap Index (with net dividends reinvested) in Australian dollars, 2.5% MSCI Emerging Markets Index (with net dividends reinvested) in Australian dollars, 20% Bloomberg AusBond Composite 0+ Yr Index, 19% Bloomberg Barclays Global Treasury Index hedged into Australian dollars, 11% Bloomberg Barclays Global Aggregate Government-Related and Corporate Index hedged into Australian dollars. 2015 2014 2013 % % % % % Growth Capital growth 1.30 (1.23) 6.95 10.86 14.31 of income 6.83 4.85 4.24 2.97 3.64 Total return 8.13 3.62 11.19 13.83 17.95 Benchmark return Growth Composite Index - Retail (4) 8.91 4.47 12.07 14.75 18.84 (4) Growth Composite Index - Retail comprises of (weight/index): 31% S&P/ASX 300 Index, 24% MSCI World ex-australia Index (with net dividends reinvested) in Australian dollars, 4% S&P/ASX 300 A-REIT Index, 4% FTSE EPRA/NAREIT developed ex Australia rental index, Australian Dollar Hedged, 3.5% MSCI World ex-australia Small Cap Index (with net dividends reinvested) in Australian dollars, 3.5% MSCI Emerging Markets Index (with net dividends reinvested) in Australian dollars, 12% Bloomberg AusBond Composite 0+ Yr Index, 12% Bloomberg Barclays Global Treasury Index hedged into Australian dollars, 6% Bloomberg Barclays Global Aggregate Government-Related and Corporate Index hedged into Australian dollars. Investor s 9

Directors' Report Directors Report (continued) Review and results of operations (continued) Performance (continued) High Growth 2015 2014 2013 % % % % % Capital growth 2.97 (1.72) 10.03 12.89 18.93 of income 7.75 4.01 2.93 3.22 3.56 Total return 10.72 2.29 12.96 16.11 22.49 Benchmark return High Growth Composite Index - Retail (5) 11.50 3.08 13.90 16.97 23.34 (5) High Growth Composite Index - Retail comprises of (weight/index): 40% S&P/ASX 300 Index, 31% MSCI World ex-australia Index (with net dividends reinvested) in Australian dollars, 5% S&P/ASX 300 A-REIT Index, 5% FTSE EPRA/NAREIT developed ex Australia rental index, Australian Dollar Hedged, 4.5% MSCI World ex-australia Small Cap Index (with net dividends reinvested) in Australian dollars, 4.5% MSCI Emerging Markets Index (with net dividends reinvested) in Australian dollars, 4% Bloomberg AusBond Composite 0+ Yr Index, 4% Bloomberg Barclays Global Treasury Index hedged into Australian dollars, 2% Bloomberg Barclays Global Aggregate Government-Related and Corporate Index hedged into Australian dollars. Investors should be aware that past performance is not necessarily an indicator of future performance. Unit redemption prices Unit redemption prices (quoted including distribution) are shown as follows: At Period high Period low $ $ $ $ $ $ Index Australian Shares 2.0513 1.9482 2.1177 2.0848 1.8476 1.7398 High Yield Australian Shares 1.3204 1.2205 1.3467 1.3971 1.1644 1.1038 Index International Shares 1.5414 1.3744 1.6069 1.4951 1.3310 1.2744 Index Hedged International Shares 0.9832 0.8996 0.9972 0.9529 0.8164 0.7901 Index Australian Property Securities 0.9030 1.0005 1.0393 1.0005 0.8433 0.8087 Index Diversified Bond 1.1705 1.2561 1.2293 1.2561 1.1614 1.1779 Investor Cash Plus 1.0030 1.0044 1.0065 1.0044 0.9982 0.9975 Conservative 1.2839 1.3004 1.2975 1.3004 1.2410 1.2301 Balanced 1.4433 1.4319 1.4650 1.4401 1.3647 1.3345 Growth 1.6105 1.5599 1.6412 1.5836 1.4871 1.4363 High Growth 1.8433 1.7308 1.8855 1.7951 1.6619 1.5736 10 Annual Report

Directors' Report Directors Report (continued) Significant changes in state of affairs In the opinion of the directors, there were no significant changes in the state of affairs of the s that occurred during the financial year. Matters subsequent to the end of the financial year Glenn Reed resigned as a Director of Investments Australia Ltd on 31 July. Rodney Comegys resigned as a Director of Investments Australia Ltd on 31 August. Cynthia Lui was appointed as a Director of Investments Australia Ltd on 31 August. No other matter or circumstance has arisen since that has significantly affected, or may significantly affect: (i) the operations of the s in future financial years, or (ii) the results of those operations in future financial years, or (iii) the state of affairs of the s in future financial years. Likely developments and expected results of operations The s will continue to be managed in accordance with the investment objectives and guidelines as set out in the governing documents of the s and in accordance with the provisions of the Constitutions. The results of the s operations will be affected by a number of factors, including the performance of investment markets in which the s invest. Investment performance is not guaranteed and future returns may differ from past returns. As investment conditions change over time, past returns should not be used to predict future returns. Indemnity and insurance of officers and auditors No insurance premiums were paid for out of the assets of the s in regards to insurance cover provided to either the officers of Investments Australia Ltd or the auditors of the s. So long as the officers of Investments Australia Ltd act in accordance with the Constitutions and the Law, the officers remain indemnified out of the assets of the s against losses incurred while acting on behalf of the s. The auditors of the s are in no way indemnified out of the assets of the s. Fees paid to and interests held in the s by the Responsible Entity or its associates Fees paid to the Responsible Entity and its associates out of the s property during the year are disclosed in note 12 of the financial statements. No fees were paid out of the s property to the directors of the Responsible Entity during the year. The number of interests in the s held by the Responsible Entity or its associates as at the end of the financial year are disclosed in note 12 of the financial statements. Investor s 11

Directors' Report Directors Report (continued) Interests in the The movement in units on issue in the s during the year is disclosed in note 7 of the financial statements. The value of the s assets and liabilities are disclosed on the balance sheet and derived using the basis set out in note 2 of the financial statements. Environmental regulation The operations of the s are not subject to any particular or significant environmental regulations under either Commonwealth, State or Territory law. Rounding of amounts to the nearest thousand dollars Amounts in the directors report have been rounded to the nearest thousand dollars in accordance with ASIC Corporations (Rounding in Financial/Directors Report) Instrument /191 unless otherwise indicated. Auditor s independence declaration A copy of the auditor s independence declaration as required under Section 307C of the Corporations Act 2001 is set out on page 13. This report is made in accordance with a resolution of the directors. C Kelton Managing Director Melbourne 31 August 12 Annual Report

Auditor s Independence Declaration Investor s 13

Statement of comprehensive income Statement of comprehensive income For the year ended Investment income Index Australian Shares High Yield Australian Shares Index International Shares Index Hedged International Shares Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 income 25,602 23,510 9,368 6,578 17,907 8,768 24,151 10,741 Net gains/(losses) on financial instruments held at fair value through profit or loss 5 36,774 (20,630) 10,146 (15,262) 19,253 (6,103) (173) (12,431) Other operating income 5 7 1 1 5 6 1 1 Total net investment income/(loss) 62,381 2,887 19,515 (8,683) 37,165 2,671 23,979 (1,689) Expenses Responsible Entity's fees 12 2,792 2,645 651 610 1,938 1,948 888 862 Other operating expenses 33 20 15 2 31 17 11 3 Total operating expenses 2,825 2,665 666 612 1,969 1,965 899 865 Operating profit/(loss) 59,556 222 18,849 (9,295) 35,196 706 23,080 (2,554) Financing costs attributable to unitholders s to unitholders 8 (43,320) (33,374) (10,437) (8,071) (15,109) (4,134) (22,583) (10,741) (Increase)/decrease in net assets attributable to unitholders 7 (16,236) 33,152 (8,412) 17,366 (20,087) 3,428 (497) 13,295 Profit/(loss) for the year Other comprehensive income Total comprehensive income for the year The above statement of comprehensive income should be read in conjunction with the accompanying notes. 14 Annual Report

Statement of comprehensive income Statement of comprehensive income (continued) For the year ended Investment income Index Australian Property Securities Index Diversified Bond Investor Cash Plus Notes $'000 $'000 $'000 $'000 $'000 $'000 income 5,039 5,333 3,958 2,802 359 473 Net gains/(losses) on financial instruments held at fair value through profit or loss 5 (11,484) 18,445 (3,973) 3,738 8 5 Other operating income 1 2 1 4 1 Total net investment income/(loss) (6,444) 23,780 (14) 6,544 368 478 Expenses Responsible Entity's fees 12 758 699 378 386 71 85 Other operating expenses 10 6 15 6 4 Total operating expenses 768 705 393 392 75 85 Operating profit/(loss) (7,212) 23,075 (407) 6,152 293 393 Financing costs attributable to unitholders s to unitholders 8 (3,260) (4,630) (5,946) (3,510) (287) (388) (Increase)/decrease in net assets attributable to unitholders 7 10,472 (18,445) 6,353 (2,642) (6) (5) Profit/(loss) for the year Other comprehensive income Total comprehensive income for the year The above statement of comprehensive income should be read in conjunction with the accompanying notes. Investor s 15

Statement of comprehensive income Statement of comprehensive income (continued) For the year ended Investment income Conservative Balanced Growth High Growth Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 income 1,856 1,008 5,658 3,052 9,609 5,674 9,750 5,746 Net gains/(losses) on financial instruments held at fair value through profit or loss 5 (623) 579 (265) 957 2,871 (72) 5,712 (1,802) Other operating income 1 1 2 1 2 4 2 2 Total net investment income/(loss) 1,234 1,588 5,395 4,010 12,482 5,606 15,464 3,946 Expenses Responsible Entity's fees 12 209 164 589 466 987 862 971 837 Other operating expenses 4 2 13 4 18 5 18 6 Total operating expenses 213 166 602 470 1,005 867 989 843 Operating profit/(loss) 1,021 1,422 4,793 3,540 11,477 4,739 14,475 3,103 Financing costs attributable to unitholders s to unitholders 8 (2,249) (1,339) (6,611) (3,810) (10,319) (6,430) (11,205) (5,200) (Increase)/decrease in net assets attributable to unitholders 7 1,228 (83) 1,818 270 (1,158) 1,691 (3,270) 2,097 Profit/(loss) for the year Other comprehensive income Total comprehensive income for the year The above statement of comprehensive income should be read in conjunction with the accompanying notes. 16 Annual Report

Balance sheet Balance Sheet As at Assets Index Australian Shares High Yield Australian Shares Index International Shares Index Hedged International Shares Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Cash and cash equivalents 9 32 (4) 4 5 (57) 2 (1) Receivables 199 160 14 88 129 104 55 33 Accrued income 8,669 4,494 3,555 1,668 13,916 5,043 17,767 10,741 Due from brokers for securities sold 14 2 - Financial assets held at fair value through profit or loss 6 495,012 463,482 128,498 121,062 271,577 253,361 120,859 112,045 Total assets 503,926 468,132 132,067 122,822 285,627 258,451 138,685 122,818 Liabilities payable 8 31,433 21,591 5,099 3,614 13,263 2,540 22,583 10,741 Payables 422 249 57 53 177 181 88 80 Due to brokers payable for securities purchased 90 9 75 94 52 34 8 Total liabilities (excluding net assets attributable to unitholders) 31,855 21,930 5,165 3,742 13,534 2,773 22,705 10,829 Net assets attributable to unitholders (liability) 7 472,071 446,202 126,902 119,080 272,093 255,678 115,980 111,989 The above balance sheet should be read in conjunction with the accompanying notes. Assets Index Australian Property Securities Index Diversified Bond Investor Cash Plus Notes $'000 $'000 $'000 $'000 $'000 $'000 Cash and cash equivalents 9 7 1 (3) (1) Receivables 61 57 10 85 2 Accrued income 1,309 2,058 952 1,904 25 42 Due from brokers for securities sold 34 1 208 Financial assets held at fair value through profit or loss 6 106,515 117,223 72,118 81,942 15,402 17,549 Total assets 107,892 119,372 73,081 83,928 15,428 17,800 Liabilities payable 8 1,186 2,512 3,227 2,543 65 100 Payables 70 144 30 35 7 214 Due to brokers payable for securities purchased 47 12 77 Total liabilities (excluding net assets attributable to unitholders) 1,303 2,656 3,269 2,655 72 314 Net assets attributable to unitholders (liability) 7 106,589 116,716 69,812 81,273 15,356 17,486 The above balance sheet should be read in conjunction with the accompanying notes. Investor s 17

Balance Sheet Balance Sheet (continued) As at Assets Conservative Balanced Growth High Growth Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Cash and cash equivalents 9 (1) 2 5 3 1 (1) Receivables 57 9 84 152 104 71 164 64 Accrued income 761 576 2,680 1,725 5,141 2,875 5,866 2,701 Due from brokers for securities sold 103 Financial assets held at fair value through profit or loss 6 38,318 28,193 99,126 78,982 159,055 134,690 155,308 131,101 Total assets 39,239 28,778 101,889 80,861 164,305 137,639 161,339 133,865 Liabilities payable 8 2,025 1,083 5,820 3,005 8,671 4,779 9,290 3,423 Payables 177 16 55 47 112 87 94 117 Due to brokers payable for securities purchased 5 77 141 68 45 149 7 Total liabilities (excluding net assets attributable to unitholders) 2,202 1,104 5,952 3,193 8,851 4,911 9,533 3,547 Net assets attributable to unitholders (liability) 7 37,037 27,674 95,937 77,668 155,454 132,728 151,806 130,318 The above balance sheet should be read in conjunction with the accompanying notes. 18 Annual Report

Statement of changes in equity Statement of changes in equity For the year ended Total equity at the beginning of the financial year Index Australian Shares High Yield Australian Shares Index International Shares Index Hedged International Shares $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Profit/(loss) for the year Other comprehensive income for the year Total comprehensive income Transactions with owners in their capacity as owners Total equity at the end of the financial year Total equity at the beginning of the financial year Index Australian Property Securities Index Diversified Bond Investor Cash Plus $'000 $'000 $'000 $'000 $'000 $'000 Profit/(loss) for the year Other comprehensive income for the year Total comprehensive income Transactions with owners in their capacity as owners Total equity at the end of the financial year Total equity at the beginning of the financial year Conservative Balanced Growth High Growth $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Profit/(loss) for the year Other comprehensive income for the year Total comprehensive income Transactions with owners in their capacity as owners Total equity at the end of the financial year The above statements of changes in equity should be read in conjunction with the accompanying notes. Under Australian Accounting Standards, net assets attributable to unitholders are classified as a liability rather than equity. As a result there was no equity at the start or end of the year. Investor s 19

Statement of cash flows Statement of cash flows For the year ended Cash flows from operating activities Index Australian Shares High Yield Australian Shares Index International Shares Index Hedged International Shares Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Proceeds from sale of financial instruments held at fair value through profit or loss 45,002 34,030 18,476 12,747 23,100 40,669 15,793 14,051 Purchases of financial instruments held at fair value through profit or loss (18,435) (18,922) (8,351) (12,144) (12,985) (18,657) (7,631) (6,120) Other income received 34 5 10 15 4 5 1 Responsible Entity's fees paid (2,787) (2,650) (648) (614) (1,929) (1,959) (882) (868) Operating expenses paid (37) (16) (15) (2) (36) (13) (11) (3) Net cash inflow/(outflow) from operating activities 10(a) 23,777 12,447 9,472 (13) 8,165 20,044 7,274 7,061 Cash flows from financing activities Proceeds from applications by unitholders 46,848 39,493 14,273 17,458 28,443 35,296 13,383 10,351 Payments for redemptions by unitholders (60,502) (45,592) (20,061) (11,530) (34,458) (53,674) (16,568) (17,419) s paid from operating activities (10,087) (6,358) (3,688) (5,913) (2,088) (1,728) (4,086) Net cash inflow/(outflow) from financing activities (23,741) (12,457) (9,476) 15 (8,103) (20,106) (7,271) (7,068) Net increase/(decrease) in cash and cash equivalents 36 (10) (4) 2 62 (62) 3 (7) Cash and cash equivalents at the beginning of the year (4) 6 4 2 (57) 5 (1) 6 Cash and cash equivalents at the end of the year 9 32 (4) 4 5 (57) 2 (1) Non-cash financing activities 10(b) 23,391 14,280 5,264 7,626 2,299 1,650 6,655 The above statement of cash flows should be read in conjunction with the accompanying notes. 20 Annual Report

Statement of cash flows Statement of cash flows (continued) For the year ended Cash flows from operating activities Index Australian Property Securities Index Diversified Bond Investor Cash Plus Notes $'000 $'000 $'000 $'000 $'000 $'000 Proceeds from sale of financial instruments held at fair value through profit or loss 15,471 11,950 17,745 9,119 9,900 10,942 Purchases of financial instruments held at fair value through profit or loss (10,378) (8,366) (7,049) (8,522) (7,163) (8,364) Other income received 11 2 11 4 3 Responsible Entity's fees paid (762) (692) (384) (384) (72) (86) Operating expenses paid (12) (4) (15) (5) (4) Net cash inflow/(outflow) from operating activities 10(a) 4,330 2,890 10,308 212 2,664 2,492 Cash flows from financing activities Proceeds from applications by unitholders 19,152 13,465 12,113 12,919 7,862 8,775 Payments for redemptions by unitholders (21,208) (14,112) (20,217) (12,629) (10,472) (11,171) s paid from operating activities (2,267) (2,243) (2,200) (505) (53) (97) Net cash inflow/(outflow) from financing activities (4,323) (2,890) (10,304) (215) (2,663) (2,493) Net increase/(decrease) in cash and cash equivalents 7 4 (3) 1 (1) Cash and cash equivalents at the beginning of the year (3) (1) Cash and cash equivalents at the end of the year 9 7 1 (3) (1) Non-cash financing activities 10(b) 2,319 2,033 3,061 661 269 286 The above statement of cash flows should be read in conjunction with the accompanying notes. Investor s 21

Statement of cash flows Statement of cash flows (continued) For the year ended Cash flows from operating activities Conservative Balanced Growth High Growth Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Proceeds from sale of financial instruments held at fair value through profit or loss 3,906 2,660 9,439 5,549 9,432 7,855 10,344 7,091 Purchases of financial instruments held at fair value through profit or loss (13,091) (8,161) (25,209) (20,592) (23,560) (15,161) (22,113) (18,046) Other income received 2 1 6 1 7 4 11 2 Responsible Entity's fees paid (204) (161) (579) (457) (976) (856) (960) (830) Operating expenses paid (4) (2) (15) (3) (19) (6) (18) (6) Net cash inflow/(outflow) from operating activities 10(a) (9,391) (5,663) (16,358) (15,502) (15,116) (8,164) (12,736) (11,789) Cash flows from financing activities Proceeds from applications by unitholders 14,785 9,240 30,921 26,057 33,542 21,527 29,650 24,682 Payments for redemptions by unitholders (5,066) (3,452) (13,568) (9,911) (17,245) (12,312) (16,092) (12,363) s paid from financing activities (328) (125) (998) (642) (1,179) (1,048) (820) (531) Net cash inflow/(outflow) from financing activities 9,391 5,663 16,355 15,504 15,118 8,167 12,738 11,788 Net increase/(decrease) in cash and cash equivalents (3) 2 2 3 2 (1) Cash and cash equivalents at the beginning of the year 2 3 (1) Cash and cash equivalents at the end of the year 9 (1) 2 5 3 1 (1) Non-cash financing activities 10(b) 979 365 2,798 1,787 5,248 4,160 4,518 3,015 The above statement of cash flows should be read in conjunction with the accompanying notes. 22 Annual Report

Notes to the financial statements For the year ended 1. General information These financial statements cover the Investor s (the s ) as registered managed investment schemes. The respective constitution dates are as follows: Index Australian Shares 16 June 1998 High Yield Australian Shares 21 June 2004 Index International Shares 16 June 1998 Index Hedged International Shares 12 December 2000 Index Australian Property Securities 16 June 1998 Index Diversified Bond 10 December 1999 Investor Cash Plus 10 December 1999 Conservative 16 June 1998 Balanced 16 December 2002 Growth 16 June 1998 High Growth 16 June 1998 The Responsible Entity of the Investor s is Investments Australia Ltd (the Responsible Entity ). The Responsible Entity s registered office is Level 34, Freshwater Place, 2 Southbank Boulevard, Southbank Vic 3006. The s invest in accordance with the investment policy of the s as set out in the current Product Disclosure Statement (PDSs) and in accordance with the Constitutions. The s seek to match the weighted average return of each of the underlying Wholesale s in which they invest, before taking into account fees, expenses and tax. The financial statements were authorised for issue by the directors on 31 August. The directors of the Responsible Entity have the power to amend and reissue the financial statements. Investor s 23

For the year ended 2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated in the following text. (a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Accounting Standards Board and the Corporations Act 2001 in Australia. The s are for-profit unit trusts for the purpose of preparing the financial statements. The financial statements are prepared on the basis of fair value measurement of assets and liabilities except where otherwise stated. The balance sheet is presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and do not distinguish between current and non current. All material balances are expected to be recovered or settled within twelve, except for investments in financial assets and net assets attributable to unitholders. The amount expected to be recovered or settled within twelve after the end of each reporting period cannot be reliably determined. The s manage financial assets at fair value through profit or loss based on the economic circumstances at any given point in time, as well as to meet any liquidity requirements. As such it is expected that a portion of the portfolio will be realised within 12, however, an estimate of that amount cannot be determined as at balance date. In the case of net assets attributable to unitholders, the units are redeemed on demand at the unitholder s option. However, holders of these instruments typically retain them for the medium to long term. As such, the amount expected to be settled within 12 cannot be reliably determined. (i) Compliance with International Financial Reporting Standards The financial statements of the s also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. (ii) New and amended standards adopted by the s There are no standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1 July that have a material impact on the s. 24 Annual Report

For the year ended 2. Summary of significant accounting policies (continued) (b) Financial instruments (i) Classification The s investments are classified as at fair value through profit or loss. They comprise: Financial instruments designated at fair value through profit or loss upon initial recognition These include financial assets that are not held for trading purposes and which may be sold. These are investments in unlisted trusts. Financial assets and financial liabilities designated at fair value through profit or loss upon initial recognition are those that are managed and their performance evaluated on a fair value basis in accordance with the s documented investment strategy. The s policy is for the Responsible Entity to evaluate the information about these financial instruments on a fair value basis together with other related financial information. (ii) Recognition/derecognition The s recognise financial assets and financial liabilities on the date they become party to the contractual agreement (trade date) and recognise changes in fair value of the financial assets or financial liabilities from this date. Investments are derecognised when the right to receive cash flows from the investments has expired or the s have transferred substantially all risks and rewards of ownership. (iii) Measurement Financial assets and liabilities held at fair value through profit or loss At initial recognition, the s measure a financial asset at its fair value. Transaction costs of financial assets carried at fair value through profit and loss are expensed in the statement of comprehensive income. Subsequent to initial recognition, all financial assets and financial liabilities at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of the financial assets or financial liabilities at fair value through profit or loss category are presented in the statement of comprehensive income within net gains/(losses) on financial instruments held at fair value through profit or loss in the period in which they arise. This also includes dividend expense on short sales of securities, which have been classified at fair value through profit or loss. For further details on how the fair value of the financial instruments is determined are disclosed in note 4. (iv) Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. Investor s 25

For the year ended 2. Summary of significant accounting policies (continued) (c) Net assets attributable to unitholders Units are redeemable at the unitholders option, however, applications and redemptions may be suspended by the Responsible Entity if it is in the best interests of the unitholders. The units are classified as financial liabilities as the s are required to distribute their distributable income, in accordance with the Constitutions. The units can be put back to the s at any time for cash based on the redemption price, which is equal to a proportionate share of the s net asset value attributable to the unitholders. The units are carried at the redemption amount that is payable at balance sheet date if the holder exercises the right to put the unit back to the s. (d) Cash and cash equivalents For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three or less from the date of acquisition that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Payments and receipts relating to the purchase and sale of investment securities are classified as cash flows from operating activities, as movements in the fair value of these securities represent the s main income generating activity. (e) Investment income Trust distributions are recognised on an entitlements basis as the s are presently entitled to the distributable income of their investee trusts. (f) Expenses All expenses, including Responsible Entity s fees, are recognised in the statement of comprehensive income on an accruals basis. (g) Income tax Under current legislation, the s are not subject to income tax as unitholders are presently entitled to the income of the s. The benefits of imputation credits and foreign tax paid are passed on to unitholders. (h) s In accordance with the Constitutions, the s distribute income adjusted for amounts determined by the Responsible Entity, to unitholders by cash or reinvestment. The distributions are recognised in the statement of comprehensive income as finance costs attributable to unitholders. (i) Increase/decrease in net assets attributable to unitholders Income not distributed is included in net assets attributable to unitholders. Movements in net assets attributable to unitholders are recognised in the statement of comprehensive income as finance costs. (j) Functional and presentation currency Items included in the s financial statements are measured using the currency of the primary economic environment in which it operates (the functional currency ). This is the Australian dollar, which reflects the currency of the economy in which the s compete for funds and is regulated. The Australian dollar is also the s presentation currency. 26 Annual Report

For the year ended 2. Summary of significant accounting policies (continued) (k) Receivables and accrued income Receivables may include amounts for trust distributions. Trust distributions are accrued when the right to receive payment is established. Amounts are generally received within 30 days of being recorded as s. (l) Payables Payables include liabilities and accrued expenses owing by the s which are unpaid as at the end of the reporting period. As the s have a contractual obligation to distribute their distributable income, a separate distribution payable is recognised in the balance sheet as at the end of each reporting period where this amount remains unpaid as at the end of the reporting period (m) Applications and redemptions Applications received for units in the s are recorded net of any entry fees payable prior to the issue in the s. Redemptions from the s are recorded gross of any exit fees payable after the cancellation redeemed. (n) Goods and Services Tax (GST) The GST incurred on the costs of various services provided to the Responsible Entity by third parties have been passed onto the s. The s qualify for Reduced Input Tax Credit recovery rate of between 55% and 75%, hence Responsible Entity s fees, custodial fees and other expenses have been recognised in the statement of comprehensive income net of the amount of GST recoverable from the Australian Taxation Office (ATO). Accounts payable are inclusive of GST. The net amount of GST recoverable from the ATO is included in s in the balance sheet. Cash flows relating to GST are included in the statement of cash flows on a gross basis. (o) Comparative revisions Comparative information has been revised where appropriate to enhance comparability. Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. (p) Use of estimates The s make estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. For the majority of the s financial instruments, quoted market prices are readily available. However, certain financial instruments, for example, over-the-counter derivatives or unquoted securities, are fair valued using valuation techniques. Where valuation techniques (for example, pricing models) are used to determine fair values, they are validated and periodically reviewed by experienced personnel of the Responsible Entity, independent of the area that created them. Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these factors could affect the reported fair value of financial instruments. For certain other financial instruments, including amounts due from/to brokers and payables, the carrying amounts approximate fair value due to the immediate or short term nature of these financial instruments. Investor s 27

For the year ended 2. Summary of significant accounting policies (continued) (q) New accounting standards and interpretations Certain new accounting standards and interpretations have been published that are not mandatory for the reporting period and have not been early adopted by the s. The directors assessment of the impact of these new standards (to the extent relevant to the s) and interpretations is set out below: (i) AASB 9 Financial Instruments (and applicable amendments), (effective from 1 January 2018) AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. It has now also introduced revised rules around hedge accounting. The standard is not applicable until 1 January 2018 but is available for early adoption. The directors do not expect this to have a significant impact on the recognition and measurement of the s financial instruments as they are carried at fair value through profit or loss. The derecognition rules have not been changed from the previous requirements, and the s do not apply hedge accounting. AASB 9 introduces a new impairment model. However, as the s investments are all held at fair value through profit or loss, the change in impairment rules will not impact the s. The s have not yet decided when to adopt AASB 9. (ii) AASB 15 Revenue from Contracts with Customers (effective from 1 January 2018) The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers contracts for goods and services and AASB 111 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer so the notion of control replaces the existing notion of risks and rewards. The s main sources of income are interest, dividends and gains on financial instruments held at fair value. All of these are outside the scope of the new revenue standard. As a consequence, the directors do not expect the adoption of the new revenue recognition rules to have a significant impact on the s accounting policies or the amounts recognised in the financial statements. (r) Rounding of amounts The s are registered schemes of the kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument /191, relating to the rounding off amounts in the financial statements. Amounts in the financial statements have been rounded off to the nearest thousand dollars unless otherwise indicated. 28 Annual Report

For the year ended 3. Financial risk management The s activities expose them to a variety of financial risks: market risk (including price risk, foreign exchange risk and interest rate risk), credit risk and liquidity risk. The s overall risk management programme focuses on ensuring compliance with the s Product Disclosure Statement and seeks to maximise the returns derived for the level of risk to which the s are exposed. Financial risk management is carried out by the investment management department of the Responsible Entity under policies approved by the Board of Directors of the Responsible Entity (the Board ). The s use different methods to measure different types of risks to which they are exposed. These methods are explained below. (a) Market risk (i) Price risk The s are exposed to price risk whereby the future prices of the s securities are uncertain. Where non-monetary financial instruments are denominated in currencies other than the Australian dollar, the price in the future will also fluctuate because of changes in foreign exchange rates. Paragraph (ii) Foreign exchange risk below sets out how this component of price risk is managed and measured. In any asset sector the returns of individual securities are a combination of the market return and returns specific to each security. By diversifying their holdings across the market, index funds are generally well protected from the specific risk of individual securities. employs an indexing investment strategy in all asset classes in which the s invest. At, the fair value of equities and related derivatives exposed to price risk were as follows: Index Australian Shares High Yield Australian Shares Index International Shares Index Hedged International Shares $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Unlisted unit trusts designated at fair value through profit or loss 495,012 463,482 128,498 121,062 271,577 253,361 120,859 112,045 Net total 495,012 463,482 128,498 121,062 271,577 253,361 120,859 112,045 Index Australian Property Securities Index Diversified Bond Investor Cash Plus $'000 $'000 $'000 $'000 $'000 $'000 Unlisted unit trusts designated at fair value through profit or loss 106,515 117,223 72,118 81,942 15,402 17,549 Net total 106,515 117,223 72,118 81,942 15,402 17,549 Conservative Balanced Growth High Growth $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Unlisted unit trusts designated at fair value through profit or loss 38,318 28,193 99,126 78,982 159,055 134,690 155,308 131,101 Net total 38,318 28,193 99,126 78,982 159,055 134,690 155,308 131,101 The table presented in note 3(b) summarises the impact on operating profit before finance costs attributable to unitholders and liabilities attributable to unitholders from possible changes in market prices that were reasonably based on the risk that the s were exposed to at reporting date. Investor s 29

For the year ended 3. Financial risk management (continued) (a) Market risk (continued) (ii) Foreign exchange risk The Wholesale International s are exposed to foreign exchange risk as a result of investments in financial instruments denominated in foreign currencies. Fluctuations in the value of the Australian dollar and foreign currencies can affect the returns from overseas investments. This is because losses or gains must be converted back to Australian dollars. The s have no significant direct exposure to foreign exchange risk. However, the s are indirectly exposed to foreign exchange risk via their investment strategy of investing in the Wholesale s where those s may have a direct foreign exchange exposure. Of the Wholesale s, the International Shares Index, Emerging Markets Shares Index and the International Small Companies Index do not hedge any of their exposure to foreign currencies. Accordingly, these s are affected by currency fluctuations. The International Fixed Interest Index (Hedged), International Credit Securities Index (Hedged), International Property Securities Index (Hedged) and International Shares Index (Hedged) invest on a fully hedged basis (to Australian dollars), reducing their exposure to currency risk. (iii) Cash flow and fair value interest rate risk Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The s have insufficient direct exposure to interest rate risk to be material. The s are indirectly exposed to interest rate risk via their investment strategy of investing in the Wholesale s. All financial liabilities are non-interest bearing. 30 Annual Report