Commonwealth Investment Funds Financial Report€¦ · The current reporting period for the financial report is from 1 July 2011 to 30 June 2012. The comparative reporting period

Year ended 30 June 2012

Commonwealth Investment Funds

Financial Report

Commonwealth Financial Services is a registered business name of Colonial First State Investments Limited ABN 98 002 348 352 AFSL 232468 (CFSIL).

COMMONWEALTH INVESTMENT FUNDS

FINANCIAL REPORTFOR THE REPORTING PERIOD ENDED 30 JUNE 2012

Responsible Entity of the Fund

COLONIAL FIRST STATE INVESTMENTS LIMITED

ABN: 98 002 348 352

Ground Floor Tower 1, Sussex StreetSYDNEY NSW 2000

Represented by:ARSN

Commonwealth Income Fund 89 461 343Commonwealth Balanced Fund 89 465 501Commonwealth Growth Fund 89 455 210Commonwealth Australian Share Fund 89 463 865Commonwealth Share Income Fund 89 455 185Commonwealth Property Securities Fund 89 463 383Commonwealth International Share Fund 89 456 431Commonwealth Bond Fund 89 462 813


Page

Directors' Report 1 - 5

Auditor's Independence Declaration 6

Statements of Comprehensive Income 7 - 9

Balance Sheets 10 - 12

Statements of Changes in Equity 13

Cash Flow Statements 14 - 16

Notes to the Financial Statements 17 - 44

Directors' Declaration 45

Independent Audit Report to the Unitholders 46 - 47


INDEX


DIRECTOR'S REPORT FOR THE REPORTING PERIOD ENDED 30 JUNE 2012

The Directors of Colonial First State Investments Limited, the Responsible Entity of the CommonwealthInvestment Funds ("the Funds"), present their report together with the financial report of the Funds for the reporting periodended 30 June 2012.

Reporting Period

The current reporting period for the financial report is from 1 July 2011 to 30 June 2012. The comparative reportingperiod is from 1 July 2010 to 30 June 2011.

Principal Activities

This financial report consists of eight managed funds belonging to the family of funds known as the CommonwealthInvestment Funds. The Funds in this financial report are presented as follows:

Commonwealth Income FundCommonwealth Balanced FundCommonwealth Growth FundCommonwealth Australian Share FundCommonwealth Share Income FundCommonwealth Property Securities FundCommonwealth International Share FundCommonwealth Bond Fund

The above Funds are closed to new investors. Existing investors in the Funds can, however, make additional lump suminvestments.

The principal activities of the Funds are to invest in accordance with the investment objectives and guidelines as set outin the Product Disclosure Statement and in accordance with the provisions of the Funds' Constitutions.

Date of Constitution and Registration of Funds

The dates of the Constitutions and registration of the Funds with the Australian Securities & Investments Commissionare 24 May 1988 and 7 October 1999 respectively.

Review of Operations The principle activities of the Funds are to invest in accordance with the investment objectives and guidelines of as setout in the current Product Disclosure Statement and in accordance with the provision of the Funds' Constitution.

The results of the Funds were as follows:

Distribution

The distributions per unit for each of the Funds for the reporting periods ended 30 June 2012 and 30 June 2011are disclosed in the "Distributions to Unitholders" note to the financial statements.

Page 1



Review of Operations (continued)

Exit Prices

The exit price is the price at which unitholders realise an entitlement in a Fund and is calculated by deducting apredetermined cost of selling (commonly known as the "sell spread), if applicable, from the net asset value per unit("NAV unit price") of a Fund. NAV unit price is calculated by taking the total fair value of all of a fund's assets on aparticular day, adjusting for any liabilities and then dividing the net fund value by the total number of units held byunitholders on that day.

The following unit prices represent the ex-distribution exit unit prices as at 30 June 2012, together with comparativeunit prices as at 30 June 2011:

2012 2011$ $

Commonwealth Income Fund 1.0747 1.0662Commonwealth Balanced Fund 1.3144 1.3467Commonwealth Growth Fund 1.3171 1.3522Commonwealth Australian Share Fund 1.2622 1.3845Commonwealth Share Income Fund 1.3712 1.5045Commonwealth Property Securities Fund 0.4862 0.4637Commonwealth International Share Fund 1.0164 1.0292Commonwealth Bond Fund 1.2071 1.1736

Performance

The performance figures below have been calculated on an annual compound basis using exit prices and with no allowance made for the taxation of these returns. Distributions paid have been treated as being reinvested and havebeen recognised in the period of entitlement.

2012 2011Annualised Annualised

% %Commonwealth Income Fund 5.70 6.24 Commonwealth Balanced Fund 2.54 6.12 Commonwealth Growth Fund 1.19 6.67 Commonwealth Australian Share Fund (4.41) 10.25 Commonwealth Share Income Fund (4.49) 10.18 Commonwealth Property Securities Fund 10.09 4.17 Commonwealth International Share Fund 0.95 1.38 Commonwealth Bond Fund 8.23 4.83

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Responsible Entity and Directors

The Responsible Entity of the Funds is Colonial First State Investments Limited. The ultimate holding company is theCommonwealth Bank of Australia (ABN 48 123 123 124).

The Directors of the Responsible Entity in office during the period and up to the date of the report are:

Annabel Fitzgerald Spring Appointed on 14 October 2011.Lynette Elizabeth CobleyMichael John Venter Appointed on 4 July 2011.Peter Robert WinneyBradley Brian MasseyPeter John Taylor (Alternateto Annabel Fitzgerald Spring) Appointed 7 November 2011.Gregg Johnston Resigned on 4 July 2011.Grahame Anthony Petersen Resigned on 14 October 2011.Brian Vincent Bissaker Resigned on 8 May 2012.

The Responsible Entity is incorporated and domiciled in Australia and has its registered office at Ground Floor Tower 1, 201 Sussex Street, Sydney, New South Wales, 2000.

Scheme Information

The Funds are registered managed investment schemes domiciled in Australia and have their principal place of businessat Ground Floor Tower 1, 201 Sussex Street, Sydney, New South Wales, 2000.

Unit Pricing Adjustments Policy

There are a number of factors used to calculate unit prices. The key factors include asset valuations, liabilities, debtors,the number of units on issue and where relevant, transaction costs. When the factors used to calculate the unit price areincorrect an adjustment to the unit price may be required. The Responsible Entity uses a variance of 0.30%in the unit price before correcting the unit price.

If a unit pricing error is greater than these tolerance levels the Responsible Entity will:

- compensate unitholders' accounts balance if they have transacted on the incorrect unit price or make other adjustments as the Responsible Entity may consider appropriate, or- where unitholders' accounts are closed we will send them a payment if the amount of the adjustment is more than $20.

These tolerance levels are consistent with regulatory practice guidelines and industry standards. In some cases we maycompensate where the unit pricing error is less than the tolerance levels.

Significant Changes in State of Affairs

There were no significant changes in the nature of the Funds activities during the period.

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Matters Subsequent to the End of the Financial Period

No matters or circumstances have arisen since 30 June 2012 that have significantly affected, or may significantlyaffect:

(i) the operations of the Funds in future financial periods, or

(ii) the results of those operations in future financial periods, or

(iii) the state of affairs of the Funds in future financial periods.

Likely Developments and Expected Results of Operations

The Funds are expected to continue to operate in terms of their Constitutions, and will remain invested in accordancewith their investment objectives and guidelines.

At the time of preparing this report the Responsible Entity is not aware of any likely developments which would impactupon the future operations of the Funds.

Indemnification and Insurance Premiums for Officers and Auditors

No insurance premiums are paid for out of the assets of the Funds in relation to insurance cover provided to the officers ofColonial First State Investments Limited or the auditors of the Funds. So long as the officers of Colonial First StateInvestments Limited act in accordance with the Constitutions and the Corporations Act 2001, the officers remain indemnifiedout of the assets of the Funds against losses incurred while acting on behalf of the Funds. The auditors of the Funds are inno way indemnified out of the assets of the Funds.

The Commonwealth Bank of Australia has paid insurance premiums for the benefit of the officers of the Responsible Entityand the compliance committee members. Details of the nature of the liabilities covered or the amount of the premium paidhas not been included as such disclosure is prohibited under the terms of the insurance contracts.

Fees Paid to and Interest Held in the Funds by the Responsible Entity or its Associates

Fees paid to the Responsible Entity and its associates out of the Funds' assets during the period are disclosed in theStatements of Comprehensive Income.

No fees were paid to the Directors of the Responsible Entity during the period out of the Funds' assets.

There are no interests in the Funds held by the Responsible Entity or its associates at the end of the financial period.

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Interests in the Funds

Units are redeemable at the unitholders' option and are classified as financial liabilities as the fund is required todistribute its taxable income. The units can be put back to the Fund at any time for cash based on the redemption price.The fair value of redeemable units is measured at the redemption amount that is payable (based on the redemption unitprice) at the end of the reporting period if unitholders exercised their right to redeem units in the Fund.

Environmental Regulation

The Funds' operations are not subject to any particular or significant environmental regulations under a Commonwealth,State or Territory law. There have been no known significant breaches of any other environmental requirements applicableto the Funds.

Rounding of Amounts To The Nearest Thousand Dollars

The Funds are registered schemes of a kind referred to in Class Order 98/0100 (as amended) issued by the AustralianSecurities & Investments Commission relating to the "rounding off" of amounts in the Directors' Report and theFinancial Report. Amounts in the Director's Report and the Financial Report have been rounded to the nearestthousand dollars in accordance with that Class Order, unless otherwise indicated.

Single Financial Report

The Funds are of the kind referred to in Class Order 06/0441 dated 29 June 2006 issued by the Australian Securities &Investments Commission and in accordance with that Class Order, Funds with a common Responsible Entity can includethe financial statements in adjacent columns in a single financial report.

Proceeds from redeeming units in a Fund can be applied to acquire units in other Funds included in this financialreport.

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 the following page.

Signed in accordance with a resolution of the Directors of Colonial First State Investments Limited.

Bradley Brian MasseyDirectorSydney31 August 2012

Page 5

Page 6

Note 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 -30/06/2012 30/06/2011 30/06/2012 30/06/2011 30/06/2012 30/06/2011

Investment income $'000 $'000 $'000 $'000 $'000 $'000Interest income 3 149 118 269 187 214 136 Distribution income 6,044 9,920 10,441 18,156 4,185 7,423 Changes in fair value of financialinstruments held for trading 1,042 3,670 (7,094) 5,963 (4,732) 7,517 Other income - 1 2 14 2 83

Total investment income/(loss) 7,235 13,709 3,618 24,320 (331) 15,159 ExpensesResponsible Entity's management fees 8(c) 1,349 1,814 3,426 4,869 1,679 2,253 Expenses recharged 8(d) 9 - 14 - 9 - Other expenses 2 9 5 2 1 2

Total operating expenses 1,360 1,823 3,445 4,871 1,689 2,255 Operating profit/(loss) attributableto unitholders 5,875 11,886 173 19,449 (2,020) 12,904

Distributions to unitholders 4 (4,707) (8,407) (6,404) (9,153) (2,452) (4,883)

Change in net assetsattributable to unitholders from operations 6(a) (1,168) (3,479) 6,231 (10,296) 4,472 (8,021)

Profit/(Loss) for the period - - - - - -

Other comprehensive income for the period - - - - - - Total comprehensive income for the period - - - - - -

The above Statements of Comprehensive Income should be read in conjunction with the accompanying notes.

Income Fund Balanced Fund Growth Fund


STATEMENTS OF COMPREHENSIVE INCOMEFOR THE REPORTING PERIOD ENDED 30 JUNE 2012

Commonwealth Commonwealth Commonwealth

Page 7

Note 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 -30/06/2012 30/06/2011 30/06/2012 30/06/2011 30/06/2012 30/06/2011

Investment income $'000 $'000 $'000 $'000 $'000 $'000Interest income 3 45 36 87 84 23 17 Distribution income 1,353 1,386 4,252 4,634 550 840 Changes in fair value of financialinstruments held for trading (3,657) 3,884 (11,723) 12,966 335 61 Other income - - 1 1 - 1

Total investment (loss)/income (2,259) 5,306 (7,383) 17,685 908 919 ExpensesResponsible Entity's management fees 8(c) 382 496 1,201 1,641 145 196 Expenses recharged 8(d) 2 - 7 - 1 - Other expenses - 1 2 2 - -

Total operating expenses 384 497 1,210 1,643 146 196 Operating (loss)/profit attributableto unitholders (2,643) 4,809 (8,593) 16,042 762 723

Distributions to unitholders 4 (987) (1,006) (3,032) (3,207) (360) (675)

Change in net assetsattributable to unitholders from operations 6(a) 3,630 (3,803) 11,625 (12,835) (402) (48)

Profit/(Loss) for the period - - - - - -

Other comprehensive income for the period - - - - - - Total comprehensive income for the period - - - - - -


Fund



Commonwealth Commonwealth Share CommonwealthAustralian Share Fund Income Fund Property Securities

Page 8

Note 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 -30/06/2012 30/06/2011 30/06/2012 30/06/2011

Investment income $'000 $'000 $'000 $'000Interest income 3 27 19 33 26 Distribution income 141 192 1,141 1,814 Changes in fair value of financialinstruments held for trading (242) 222 1,046 132 Other income - 2 1 8

Total investment (loss)/income (74) 435 2,221 1,980 ExpensesResponsible Entity's management fees 8(c) 140 184 299 357 Expenses recharged 8(d) 1 - 2 - Other expenses - - - 1

Total operating expenses 141 184 301 358 Operating (loss)/profit attributableto unitholders (215) 251 1,920 1,622

Distributions to unitholders 4 (22) (38) (1,064) (1,623)

Change in net assetsattributable to unitholders from operations 6(a) 237 (213) (856) 1

Profit/(Loss) for the period - - - -

Other comprehensive income for the period - - - - Total comprehensive income for the period - - - -




Commonwealth Commonwealth BondInternational Share Fund

Fund

Page 9

Note 30/06/2012 30/6/2011 30/06/2012 30/6/2011 30/06/2012 30/6/2011Assets $'000 $'000 $'000 $'000 $'000 $'000Cash and cash equivalents 7 2,327 2,599 3,484 3,992 2,780 2,930 Trade and other receivables: - application monies - 6 - 62 - 32 - dividends - - 132 145 24 18 - interests 8 10 14 15 11 15 - others 49 42 120 125 61 60 Financial assets held for trading 5 128,908 163,379 198,199 266,609 125,855 164,894

Total assets 131,292 166,036 201,949 270,948 128,731 167,949 LiabilitiesTrade and other payables: - others 7 - 10 - 7 - Distribution payable 1,556 2,660 2,932 2,932 1,199 2,982 Fees due to Responsible Entity 8(c) 128 151 329 426 161 202

Total liabilities (excluding netassets attributable to unitholders) 1,691 2,811 3,271 3,358 1,367 3,184 Net assets attributable to unitholders - liability 6(a) 129,601 163,225 198,678 267,590 127,364 164,765

Represented by:Fair value of outstanding unitsbased on redemption value 129,601 163,232 198,677 267,593 127,375 164,769 Adjustment to periodend accruals - (7) 1 (3) (11) (4) Net assets attributable to unitholders 129,601 163,225 198,678 267,590 127,364 164,765

The above Balance Sheets should be read in conjunction with the accompanying notes.

Balanced Fund Growth FundIncome Fund


BALANCE SHEETSAS AT 30 JUNE 2012


Page 10

Note 30/06/2012 30/6/2011 30/06/2012 30/6/2011 30/06/2012 30/6/2011Assets $'000 $'000 $'000 $'000 $'000 $'000Cash and cash equivalents 7 692 694 1,666 2,078 330 456 Trade and other receivables: - application monies - 2 - 5 - - - interests 3 3 4 7 1 1 - others 14 13 42 42 7 6 Financial assets held for trading 5 33,036 42,485 102,271 139,902 11,903 14,124

Total assets 33,745 43,197 103,983 142,034 12,241 14,587 LiabilitiesTrade and other payables: - others 2 1 5 - 1 1 Distribution payable 310 298 938 827 77 3 Fees due to Responsible Entity 8(c) 36 43 110 144 15 17

Total liabilities (excluding netassets attributable to unitholders) 348 342 1,053 971 93 21 Net assets attributable to unitholders - liability 6(a) 33,397 42,855 102,930 141,063 12,148 14,566

Represented by:Fair value of outstanding unitsbased on redemption value 33,398 42,858 102,934 141,069 12,148 14,566 Adjustment to periodend accruals (1) (3) (4) (6) - - Net assets attributable to unitholders 33,397 42,855 102,930 141,063 12,148 14,566


Fund

AS AT 30 JUNE 2012

Australian Share Fund Income Fund Property SecuritiesCommonwealth Commonwealth Share Commonwealth


BALANCE SHEETS

Page 11

Note 30/06/2012 30/6/2011 30/06/2012 30/6/2011Assets $'000 $'000 $'000 $'000Cash and cash equivalents 7 357 387 532 719 Trade and other receivables: - application monies - 1 - - - interests 1 1 2 2 - others 7 5 11 9 Financial assets held for trading 5 11,002 13,391 27,382 31,399

Total assets 11,367 13,785 27,927 32,129 LiabilitiesTrade and other payables: - others 1 1 3 1 Distribution payable 22 37 364 480 Fees due to Responsible Entity 8(c) 14 12 29 32

Total liabilities (excluding netassets attributable to unitholders) 37 50 396 513 Net assets attributable to unitholders - liability 6(a) 11,330 13,735 27,531 31,616

Represented by:Fair value of outstanding unitsbased on redemption value 11,329 13,732 27,531 31,619 Adjustment to periodend accruals 1 3 - (3) Net assets attributable to unitholders 11,330 13,735 27,531 31,616


International Share FundFund

Commonwealth Bond


BALANCE SHEETSAS AT 30 JUNE 2012

Commonwealth

Page 12

The Funds' net assets attributable to unitholders are classified as a liability under AASB 132 Financial InstrumentsPresentation. As such the Funds have no equity, and no items of changes in equity have been presented for the currentand comparative reporting periods.


STATEMENTS OF CHANGES IN EQUITYFOR THE REPORTING PERIOD ENDED 30 JUNE 2012

Page 13

Note 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 -30/06/2012 30/06/2011 30/06/2012 30/06/2011 30/06/2012 30/06/2011

Cash flows from $'000 $'000 $'000 $'000 $'000 $'000operating activitiesProceeds from sale of financialinstruments held for trading 41,556 57,803 69,375 107,443 38,039 46,765 Payments for purchase of financial instruments held fortrading - - - (14,072) - (2,047) Interest received 150 120 270 192 219 134 Dividends received - - 2,395 164 447 31 Other income received 1 1 2 14 2 82 Responsible Entityfee paid (1,377) (1,774) (3,519) (4,738) (1,721) (2,189) Other expenses paid (4) (9) (8) (2) (4) (2) Net cash fromoperating activities 7(a) 40,326 56,141 68,515 89,001 36,982 42,774

Cash flows from financing activitiesReceipts from issue of units 2,512 1,752 2,856 3,291 2,314 3,385 Payment for redemption of units (40,484) (54,985) (70,399) (91,210) (38,977) (46,347) Distributions paid (2,626) (4,017) (1,480) (2,891) (469) (516) Net cash used infinancing activities (40,598) (57,250) (69,023) (90,810) (37,132) (43,478)

Net movement in cash andcash equivalents (272) (1,109) (508) (1,809) (150) (704)

Add opening cash and cash equivalents brought forward 2,599 3,708 3,992 5,801 2,930 3,634 Closing cash and cashequivalents carried forward 2,327 2,599 3,484 3,992 2,780 2,930

Non-cash financing activities are disclosed in part (b) under "Cash and Cash Equivalent" note the the financial statements.

The above Cash Flow Statements should be read in conjunction with the accompanying notes.

Income Fund Balanced Fund Growth Fund


CASH FLOW STATEMENTSFOR THE REPORTING PERIOD ENDED 30 JUNE 2012


Page 14

Note 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 -30/06/2012 30/06/2011 30/06/2012 30/06/2011 30/06/2012 30/06/2011

Cash flows from $'000 $'000 $'000 $'000 $'000 $'000operating activitiesProceeds from sale of financialinstruments held for trading 7,146 10,387 30,160 36,265 3,285 4,160 Payments for purchase of financial instruments held fortrading - - - - (180) - Interest received 45 37 89 84 23 17 Other income received (1) 2 1 - (1) - Responsible Entityfee paid (390) (482) (1,234) (1,591) (148) (191) Other expenses paid (1) (1) (3) (2) - - Net cash fromoperating activities 7(a) 6,799 9,943 29,013 34,756 2,979 3,986

Cash flows from financing activitiesReceipts from issue of units 321 635 978 804 92 89 Payment for redemption of units (7,008) (10,669) (29,292) (34,183) (3,106) (3,816) Distributions paid (114) (199) (1,111) (1,523) (91) (206) Net cash used infinancing activities (6,801) (10,233) (29,425) (34,902) (3,105) (3,933)

Net movement in cash andcash equivalents (2) (290) (412) (146) (126) 53

Add opening cash and cash equivalents brought forward 694 984 2,078 2,224 456 403 Closing cash and cashequivalents carried forward 692 694 1,666 2,078 330 456






Fund

Page 15

Note 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 -30/06/2012 30/06/2011 30/06/2012 30/06/2011

Cash flows from $'000 $'000 $'000 $'000operating activitiesProceeds from sale of financialinstruments held for trading 2,438 3,255 6,205 7,330 Payments for purchase of financial instruments held fortrading (150) - - - Interest received 28 19 34 26 Other income received (2) 1 - 8 Responsible Entityfee paid (139) (184) (303) (348) Other expenses paid - - (1) - Net cash fromoperating activities 7(a) 2,175 3,091 5,935 7,016

Cash flows from financing activitiesReceipts from issue of units 175 247 368 188 Payment for redemption of units (2,371) (3,484) (5,842) (6,327) Distributions paid (9) (7) (647) (984) Net cash used infinancing activities (2,205) (3,244) (6,121) (7,123)

Net movement in cash andcash equivalents (30) (153) (186) (107)

Add opening cash and cash equivalents brought forward 387 540 719 826 Closing cash and cashequivalents carried forward 357 387 533 719





Commonwealth Commonwealth BondInternational Share Fund

Fund

Page 16


NOTES TO THE FINANCIAL STATEMENTSFOR THE REPORTING PERIOD ENDED 30 JUNE 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

The financial report is a general purpose financial report, which has been prepared in accordance with the Funds'Constitutions and the requirements of the Corporations Act 2001, which includes Accounting Standards. Othermandatory professional reporting requirements have also been complied with.

The financial report is prepared on the basis of fair value measurement of assets and liabilities except where otherwisestated.

The Balance Sheets are presented on a liquidity basis. Assets and liabilities are presented in decreasing order ofliquidity and are not distinguished between current and non-current. All balances are expected to be settled within twelvemonths, except for financial assets held for trading, loans and net assets attributable to unitholders. The amountsexpected to be recovered or settled after more than twelve months in relation to these balances cannot be reliablydetermined, except as otherwise stated. The Funds' are for-profit unit trusts for the purpose of preparing the financialstatements.

The financial report was authorised for issue by the Directors of the Responsible Entity on 24 August 2012.The directors of the Responsible Entity have the power to amend and reissue the financial statements.

The current reporting period for the financial report is from 1 July 2011 to 30 June 2012. The comparative reportingperiod is from 1 July 2010 to 30 June 2011.

Both the functional and presentation currency of the Funds are Australian dollars.

(b) Investments in Financial Assets and Liabilities Held for Trading

Classification

The Funds' investments are classified as held for trading and initially recognised at fair value not including transactioncosts, which are expensed in the Statements of Comprehensive Income.

Recognition/Derecognition

The Funds recognise financial assets and financial liabilities on the date it becomes party to the contractual agreement(trade date) and recognises changes in fair value of the financial assets or financial liabilities from this date.

The derecognition of a financial instrument takes place when the Funds no longer control the contractual rights thatcomprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flowsattributable to the instrument are passed through to an independent third party.

Measurement

After initial recognition, the financial assets held for trading are revalued to fair value at each reporting date.

The fair value of units in unlisted Managed Investment Schemes is determined by reference to published bid prices at theclose of business on the Balance Sheet date being the redemption price as established by the underlying Fund'sResponsible Entity.

Gains or losses on investments held for trading are recognised in the Statements of Comprehensive Income. Investmentsof the Funds which are considered to be held for trading are Managed Investment Schemes.

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(c) Investment Income

Income is recognised to the extent that it is probable that the economic benefits will flow to the Funds and the incomecan be reliably measured. The following specific recognition criteria must also be met before income is recognised:

Distribution

Income is recognised when the right to receive the payment is established.

Interest income

Income is recognised as the interest accrues (using the effective interest rate method, which is the rate that exactlydiscounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amountof the financial asset.

Changes in fair value of financial assets and liabilities held for trading

Gains or losses on investments held for trading are calculated as the difference between the fair value at sale, or at yearend, and the fair value at the previous valuation point. This includes both realised and unrealised gains and losses.

(d) Cash and cash equivalents

Cash and cash equivalents in the Balance Sheets comprise cash at bank, deposits at call with futures clearing houseand short-term bank deposits with an original maturity of three months or less.

For the purposes of the Cash Flow Statements, cash and cash equivalents are as defined above, net of outstanding bankoverdrafts.

(e) Trade and Other Receivables

Receivables are recognised and carried at the original invoice amount, less a provision for any uncollectible debts. Anestimate for doubtful debts is made when collection of an amount is no longer probable. Bad debts are written off whenidentified.

Amounts are generally received within 30 days of being recorded as receivables.

(f) Trade and Other Payables

Liabilities for creditors are carried at cost, which is the fair value of the consideration to be paid in the future for goods andservices received, whether or not billed to the Funds.

Payables include outstanding settlements on the purchase of financial assets and liabilities held for trading anddistributions payable. The carrying period is dictated by market conditions and is generally less than 30 days.

(g) Taxation

Under current legislation, the Funds are not subject to income tax provided the unitholders are presently entitled to theincome of the Funds and the Funds fully distribute their taxable income.

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(h) Distributions to unitholders

In accordance with the Funds' Constitutions, the Funds fully distribute their distributable income to unitholders.Distributions are payable at the end of each quarter or half-year. Such distributions are determined by reference to thetaxable income of the Funds. Distributable income includes capital gains arising from the disposal of financial assets andliabilities held for trading. Unrealised gains and losses on financial assets and liabilities held for trading that arerecognised as income are transferred to net assets attributable to unitholders and are not assessable and distributableuntil realised. Capital losses are not distributed to unitholders but are retained to be offset against any realised capitalgains.

(i) Net Assets Attributable to Unitholders

Units are redeemable at the unitholders' option and are classified as financial liabilities as the funds are required todistribute their taxable income. The units can be put back to the Fund at any time for cash based on the redemptionprice. The fair value of redeemable units is measured at the redemption amount that is payable (based on the redemptionunit price) at the end of the reporting period if unitholders exercised their right to redeem units in the Funds.

(j) Terms and Conditions on Units

Each unit issued confers upon the unitholder an equal interest in the Fund, and is of equal value. A unit does not conferany interest in any particular asset or investment of the Fund. Unitholders have various rights under the Constitution andthe Corporations Act 2001, including the right to:

- have their units redeemed;- receive income distributions;- attend and vote at meetings of unitholders; and- participate in the termination and winding up of the Fund.

The rights, obligations and restrictions attached to each unit are identical in all respects.

(k) Goods and Services Tax (GST)

Income, expenses and assets, with the exception of receivables and payables, are recognised net of the amount of GSTto the extent that the GST is recoverable from the taxation authority. Where GST is not recoverable, it is recognised aspart of the cost of acquisition of the asset or as part of the expense item as applicable.

Receivables and payables are stated inclusive of GST.

Reduced input tax credits (RITC) recoverable by the Funds from the Australian Taxation Office are recognised asreceivables in the Balance Sheets.

Cash flows are included in the Cash Flow Statements on a gross basis. The GST component of cash flows, which isrecoverable from, or payable to, the taxation authority is classified as operating cash flows.

Page 19




(l) Expense Recognition

Expenses are recognised in the Statements of Comprehensive Income when the Funds have a present obligation (legalor constructive) as a result of a past event that can be reliably measured. Expenses are recognised in the Statements ofComprehensive Income if expenditure does not produce future economic benefits that qualify for recognition in theBalance Sheets.

(m) New Application of Accounting Standards

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2012reporting periods. The impact of these new standards and interpretations (to the extent relevant to the Funds) are setout below:

- AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising fromAASB 9 and AASB 2010 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)(effective from 1 January 2013*)

AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assetsand financial liabilities. The standard is not applicable until 1 January 2013 but is available for early adoption. AASB 9 permits the recognition of fair value gains and losses in other comprehensive income if they relate toequity investments that are not traded such as available-for-sale investments. The Funds will adopt AASB 9 from1 January 2015. Management does not expect this will have a significant impact on the Funds' financialstatements as the Funds do not hold any available-for-sale investments.

- AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arisingfrom AASB 13 (effective from 1 January 2013)

AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair valuedisclosures. Application of the new standard will impact the type of information disclosed in the notes to thefinancial statements. The Funds do not intend to adopt the new standard before its operative date, which meansthat it would be first applied in the annual reporting period ending 30 June 2014.

* In December 2011, the IASB delayed the application date of IFRS 9 to 1 January 2015. The AASB is expected tomake an equivalent amendment to AASB 9.

(n) Comparatives

Comparative figures are, where appropriate, reclassified so as to be comparable with the figures and presentation in thecurrent reporting period.

(o) Use of estimates

The Funds make estimates and assumptions that affect the reported amounts of assets and liabilities within the nextfinancial year. Estimates are continually evaluated and based on historical experience and other factors, includingexpectations of future events that are believed to be reasonable under the circumstances.

For the majority of the Funds' financial instruments, quoted market prices are readily available. However, certain financialinstruments, 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 andperiodically reviewed by experienced personnel of the Responsible Entity, independent of the area that created them.Models are calibrated by back-testing to actual transactions to ensure that outputs are reliable.

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 couldaffect the reported fair value of financial instruments.

Page 20




(p) Unit Prices

Unit prices are determined in accordance with the Funds' Constitutions and are calculated as the net assets attributableto unitholders, divided by the number of units on issue. Financial assets and liabilities held for trading for unit pricingpurposes are valued on a "last sale" price basis.

(q) Statement of Compliance

The financial report complies with Australian Accounting Standards, which include Australian equivalents to InternationalFinancial Reporting Standards ('AIFRS'). Compliance with AIFRS ensures that the financial report, comprising thefinancial statements and notes thereto, complies with International Financial Reporting Standards ('IFRS').

(r) Rounding of amounts to the nearest thousand dollars

The Funds are registered schemes of a kind referred to in Class Order 98/0100 (as amended) issued by the AustralianSecurities & Investments Commission relating to the "rounding off" of amounts in the Directors' Report and theFinancial Report. Amounts in the Directors' Report and the Financial Report have been rounded to the nearestthousand dollars in accordance with that Class Order, unless otherwise indicated.

(s) Applications and redemptions

Applications received for units in the Funds are recorded net of any entry fees payable prior to the issue of units in theFunds. Redemptions from the Funds are recorded gross of any exit fees payable after the cancellation of units redeemed.

Page 21



2. AUDITOR'S REMUNERATION

Auditors' remuneration in respect of auditing the financial reports is fully paid by the Responsible Entity.

The Responsible Entity may recharge a portion of the Auditors' remuneration to the Funds. See the note under"Management Expenses Recharged" in the "Related Parties Disclosures" note to the Financial Statements.

Other services provided by the auditors are the audit of the compliance plan of the Funds and tax compliance services.The auditors' non-audit remuneration is not paid by the Funds.

3. INTEREST INCOME

Interest income of the Funds is derived mainly from interest earned on bank accounts.

Page 22



4. DISTRIBUTIONS TO UNITHOLDERS

The Responsible Entity adopts the policy of distributing as a minimum the net income for tax purposes. Theamounts shown as "Distribution payable" in the Balance Sheets represents the component of the final distributionfor the reporting period which had not been paid at balance sheet date.

Quarterly and half-yearly distributing Funds:

The amounts distributed or proposed to be distributed to unitholders in cents per unit (cpu) during the periods were:

Period ended: cpu $'000 cpu $'000 cpu $'000 cpu $'000- 30 September 0.63 875 0.61 1,151 0.45 803 0.91 2,267 - 31 December 1.11 1,477 1.45 2,588 1.02 1,692 0.77 1,831 - 31 March 0.61 773 1.17 1,998 0.61 960 0.91 2,059 - 30 June 1.31 1,582 1.74 2,670 1.96 2,949 1.48 2,996

Distributions to unitholders 4,707 8,407 6,404 9,153

Period ended: cpu $'000 cpu $'000 cpu $'000 cpu $'000- 31 December 1.17 1,243 1.35 1,861 2.39 672 2.10 708 - 30 June 1.25 1,209 2.46 3,022 1.17 315 0.97 298

Distributions to unitholders 2,452 4,883 987 1,006

Period ended: cpu $'000 cpu $'000 cpu $'000 cpu $'000- 31 December 2.52 2,084 2.28 2,378 1.02 274 1.90 671 - 30 June 2.50 948 0.88 829 0.31 86 0.01 4

Distributions to unitholders 3,032 3,207 360 675

Period ended: cpu $'000 cpu $'000 cpu $'000 cpu $'000- 30 September n/a n/a n/a n/a 0.96 240 0.50 153 - 31 December - - - - 1.01 245 1.74 514 - 31 March n/a n/a n/a n/a 0.90 212 1.68 476 - 30 June 0.20 22 0.28 38 1.62 367 1.79 480

Distributions to unitholders 22 38 1,064 1,623

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011 1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth International Share Commonwealth Bond FundFund

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011 1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth Share Income Fund Commonwealth Property SecuritiesFund

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011 1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth Income Fund Commonwealth Balanced Fund

Commonwealth Growth Fund Commonwealth Australian Share Fund

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011 1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Page 23



5. FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES

The financial assets and liabilities held for trading of the Funds are classified using a fair value hierarchy that reflects thesubjectivity of the inputs used in measuring fair value of these assets and liabilities.

The level in which instruments are classified in the hierarchy is based on the lowest level input that is significant tothe fair value measurement in its entirety. Assessment of the significance of an input requires judgement afterconsidering factors specific to the instrument.

Investments in unlisted managed investment schemes which have daily liquidity are classified as Level 1.

The fair value of financial instruments that trade in markets that are not considered to be active but are valuedbased on quoted market prices or alternative pricing sources supported by observable inputs (such as over-the-counter derivatives) are classified within Level 2.

Investments classified within Level 3 have significant unobservable inputs, as they are infrequently traded. Level 3instruments include shares in unlisted companies, certain unlisted unit trusts without daily redemptions and certaincorporate bonds. As observable inputs are not available for these instruments, valuation techniques such as discountedcash flows are used to derive fair value.

The various methods adopted in determining the fair value of the Fund's financial instruments are further explainedin Note 1.

The Funds' financial assets held for trading are unlisted managed investment schemes also managed by theResponsible Entity. These Funds are priced daily and offer daily applications and redemptions. The fair value of theseinvestments are therefore classified as Level 1.

Page 24



6. CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS

As stipulated within the Funds' Constitution, each unit represents a right to an individual share in the Funds anddoes not extend to a right to the underlying assets of the Funds. There are no separate classes of units and eachunit has the same rights attaching to it as all other units of the Funds.

(a) Movements in number of units and net assets attributable to unitholders:

No.'000 $'000 No.'000 $'000

Opening balance 153,097 163,225 198,499 208,405 Applications 2,339 2,507 1,623 1,759 Redemptions (37,813) (40,484) (51,297) (54,985) Units issued upon reinvestment ofdistributions 2,971 3,185 4,272 4,567 Change in net assets attributableto unitholders from operations 1,168 3,479

Closing Balance 120,594 129,601 153,097 163,225

No.'000 $'000 No.'000 $'000

Opening balance 198,715 267,590 258,138 337,562 Applications 2,074 2,794 2,820 3,320 Redemptions (53,297) (70,400) (67,863) (91,210) Units issued upon reinvestment ofdistributions 3,666 4,925 5,620 7,622 Change in net assets attributableto unitholders from operations (6,231) 10,296

Closing Balance 151,158 198,678 198,715 267,590

No.'000 $'000 No.'000 $'000

Opening balance 121,852 164,765 150,128 195,561 Applications 1,682 2,283 2,476 3,414 Redemptions (29,611) (38,978) (33,798) (46,347) Units issued upon reinvestment ofdistributions 2,786 3,766 3,046 4,116 Change in net assets attributableto unitholders from operations (4,472) 8,021

Closing Balance 96,709 127,364 121,852 164,765

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth Growth Fund

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth Income Fund

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth Balanced Fund

Page 25



6. CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (continued)

No.'000 $'000 No.'000 $'000

Opening balance 30,955 42,855 37,579 48,218 Applications 245 319 456 637 Redemptions (5,400) (7,009) (7,706) (10,669) Units issued upon reinvestment ofdistributions 659 862 626 866 Change in net assets attributableto unitholders from operations (3,630) 3,803

Closing Balance 26,459 33,397 30,955 42,855

No.'000 $'000 No.'000 $'000

Opening balance 93,768 141,063 114,382 159,409 Applications 682 974 601 809 Redemptions (20,653) (29,292) (22,679) (34,183) Units issued upon reinvestment ofdistributions 1,272 1,810 1,464 2,193 Change in net assets attributableto unitholders from operations (11,625) 12,835

Closing Balance 75,069 102,930 93,768 141,063

No.'000 $'000 No.'000 $'000

Opening balance 31,414 14,566 38,317 17,761 Applications 203 92 259 90 Redemptions (7,069) (3,107) (8,210) (3,816) Units issued upon reinvestment ofdistributions 438 195 1,048 483 Change in net assets attributableto unitholders from operations 402 48

Closing Balance 24,986 12,148 31,414 14,566

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth Property Securities Fund

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth Australian Share Fund

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth Share Income Fund

Page 26



6. CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (continued)

No.'000 $'000 No.'000 $'000

Opening balance 13,343 13,735 16,456 16,749 Applications 205 175 247 248 Redemptions (2,427) (2,371) (3,370) (3,485) Units issued upon reinvestment ofdistributions 27 28 10 10 Change in net assets attributableto unitholders from operations (237) 213

Closing Balance 11,148 11,330 13,343 13,735

No.'000 $'000 No.'000 $'000

Opening balance 26,942 31,616 31,513 37,015 Applications 301 368 165 188 Redemptions (4,875) (5,842) (5,360) (6,327) Units issued upon reinvestment ofdistributions 441 533 624 741 Change in net assets attributableto unitholders from operations 856 (1)

Closing Balance 22,809 27,531 26,942 31,616

(b) Capital Risk Management

The Funds manage their net assets attributable to unitholders as capital, notwithstanding net assets attributable tounitholders are classified as a liability. The amount of net assets attributable to unitholders can change significantlyon a daily basis as the Funds are subject to daily applications and redemptions at the discretion of unitholders.

The Funds monitor the level of daily applications and redemptions relative to the liquid assets in the Funds. Liquidassets include cash and cash equivalents and financial assets classified as level 1 in the "Fair Value Hierarchy ofFinancial Assets and Liabilities" note to the financial statements.

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth International Share Fund

1/07/2011 - 30/06/2012 1/07/2010 - 30/06/2011

Commonwealth Bond Fund

Page 27



7. CASH AND CASH EQUIVALENTS

(a) Reconciliation of Net Profit/(Loss) Attributable to Unitholders to Net Cash from Operating Activities:

1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 -30/06/2012 30/06/2011 30/06/2012 30/06/2011 30/06/2012 30/06/2011

$'000 $'000 $'000 $'000 $'000 $'000

Net profit/(Net loss) attributableto unitholders 5,875 11,886 173 19,449 (2,020) 12,904 Proceeds from sale of financial instruments held for trading 41,556 57,803 69,375 107,443 38,039 46,765 Payments for purchase of financial instruments held for trading - - - (14,072) - (2,047) Changes in fair value of financial instruments held for trading (1,042) (3,670) 7,094 (5,963) 4,732 (7,517) Distribution or Dividend income reinvested (6,044) (9,920) (8,059) (18,156) (3,732) (7,423) Changes in assets andliabilities: Receivables and other assets (3) 83 18 382 (3) 123 Payables and other liabilities (16) (41) (86) (82) (34) (31)

Net Cash FromOperating Activities 40,326 56,141 68,515 89,001 36,982 42,774

1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 -30/06/2012 30/06/2011 30/06/2012 30/06/2011 30/06/2012 30/06/2011

$'000 $'000 $'000 $'000 $'000 $'000

Net (loss)/profit attributable to unitholders (2,643) 4,809 (8,593) 16,042 762 723 Proceeds from sale of financial instruments held for trading 7,146 10,387 30,160 36,265 3,285 4,160 Payments for purchase of financial instruments held for trading - - - - (180) - Changes in fair value of financial instruments held for trading 3,657 (3,884) 11,723 (12,966) (335) (61) Distribution or Dividend income reinvested (1,353) (1,386) (4,252) (4,634) (550) (840) Changes in assets andliabilities: Receivables and other assets - 21 2 66 (1) 9 Payables and other liabilities (8) (4) (27) (17) (2) (5)

Net Cash FromOperating Activities 6,799 9,943 29,013 34,756 2,979 3,986

Fund


Commonwealth Commonwealth CommonwealthIncome Fund Balanced Fund Growth Fund

Page 28



7. CASH AND CASH EQUIVALENTS (continued)

(a) Reconciliation of Net Profit/(Loss) Attributable to Unitholders to Net Cash from Operating Activities: (continued)

1/07/2011 - 1/07/2010 - 1/07/2011 - 1/07/2010 -30/06/2012 30/06/2011 30/06/2012 30/06/2011

$'000 $'000 $'000 $'000

Net (loss)/profit attributable to unitholders (215) 251 1,920 1,622 Proceeds from sale of financial instruments held for trading 2,438 3,255 6,205 7,330 Payments for purchase of financial instruments held for trading (150) - - - Changes in fair value of financial instruments held for trading 242 (222) (1,046) (132) Distribution or Dividend income reinvested (141) (192) (1,141) (1,814) Changes in assets andliabilities: Receivables and other assets - 9 (2) 14 Payables and other liabilities 1 (10) (1) (4)

Net Cash FromOperating Activities 2,175 3,091 5,935 7,016

(b) Non-cash Financing Activities Carried Out During the Reporting Period on Normal Commercial Terms andConditions include:

- Reinvestment of unitholders distributions as disclosed under "Units issued upon reinvestment of distibutions" in part (a) of the "Changes in Net Asset Attributable to Unitholders" note to the financial statements.

- Participation in dividend reinvestment plans as disclosed under "Distribution or Dividend Income Reinvested" in part (a)of the "Cash and Cash Equivalents" note to the financial statements.

(c) Terms and Conditions on Cash

Cash at bank and in hand, cash held in collateral and deposits at call with a futures clearing house, earn interest atfloating rate as determined by the financial institutions.

International Share FundFund

Commonwealth Commonwealth Bond

Page 29



8. RELATED PARTIES DISCLOSURES

(a) Responsible Entity

The Responsible Entity of the Funds is Colonial First State Investments Limited. The ultimate holding company is theCommonwealth Bank of Australia ("the Bank").

The Responsible Entity is incorporated and domiciled in Australia and has its registered office at Ground Floor Tower 1, 201 Sussex Street, Sydney, New South Wales, 2000.

(b) Details of Key Management Personnel

(i) Key Management Personnel

The Directors of Colonial First State Investments Limited are considered to be Key Management Personnel. TheDirectors of the Responsible Entity in office during the period and up to the date of the report are:

Annabel Fitzgerald Spring Appointed on 14 October 2011.Lynette Elizabeth CobleyMichael John Venter Appointed on 4 July 2011.Peter Robert WinneyBradley Brian MasseyPeter John Taylor (Alternateto Annabel Fitzgerald Spring) Appointed 7 November 2011.Gregg Johnston Resigned on 4 July 2011.Grahame Anthony Petersen Resigned on 14 October 2011.Brian Vincent Bissaker Resigned on 8 May 2012.

(ii) Compensation of Key Management Personnel

No amounts are paid by the Funds directly to the Directors of the Responsible Entity of the Funds.

The Directors of the Responsible Entity receive compensation in their capacity as Directors of the ResponsibleEntity. Directors are employed as executives of the Commonwealth Bank of Australia, and in that capacity, part oftheir role is to act as a Director of the Responsible Entity. Consequently, no compensation as defined in AASB 124:Related Parties is paid by the Funds to the Directors as Key Management Personnel.

(c) Responsible Entity's Management Fees

Under the terms of the Constitutions, the Responsible Entity is entitled to receive monthly management fees whichare expressed as a percentage of the total assets of each Fund (i.e. excluding liabilities). Management fees are paiddirectly by the Funds. The following table shows the current fee rates charged.

Where monies are invested into other funds managed by the Responsible Entity the management fees are calculated afterrebating fees charged in the underlying funds. As a consequence, the amounts shown in the Statements ofComprehensive Income reflect only the amount of fees charged directly to the respective Funds.

Page 30



8. RELATED PARTIES DISCLOSURES (continued)

(c) Responsible Entity's Management Fees (continued)

The management fees rate charged for the current and comparative reporting periods are as follows:

2012 June 2011Management Management

Fees Fees% %

Commonwealth Income Fund 1.50 1.50 Commonwealth Balanced Fund 2.00 2.00 Commonwealth Growth Fund 2.00 2.00 Commonwealth Australian Share Fund 2.00 2.00 Commonwealth Share Income Fund 2.00 2.00 Commonwealth Property Securities Fund 2.00 2.00 Commonwealth International Share Fund 2.00 2.00 Commonwealth Bond Fund 1.50 1.50

The Responsible Entity's management fees charged/(refunded) for the reporting periods ended 30 June 2012 and30 June 2011 are as follows.

1/07/2011 - 1/07/2010 -30/06/2012 30/06/2011

$ $Commonwealth Income Fund 1,349,045 1,813,587 Commonwealth Balanced Fund 3,426,193 4,868,703 Commonwealth Growth Fund 1,678,887 2,253,329 Commonwealth Australian Share Fund 382,491 495,843 Commonwealth Share Income Fund 1,201,015 1,640,630 Commonwealth Property Securities Fund 144,949 195,829 Commonwealth International Share Fund 140,004 183,667 Commonwealth Bond Fund 299,161 357,435

Fees due to the Responsible Entity as at the reporting period ended 30 June 2012 and 30 June 2011 are as follows:

2012 2011$ $

Commonwealth Income Fund 127,882 150,903 Commonwealth Balanced Fund 328,552 425,793 Commonwealth Growth Fund 160,696 201,837 Commonwealth Australian Share Fund 35,845 43,164 Commonwealth Share Income Fund 110,171 143,718 Commonwealth Property Securities Fund 14,797 17,095 Commonwealth International Share Fund 13,572 12,079 Commonwealth Bond Fund 29,483 32,245

Page 31




(d) Management Expenses Recharged

The Responsible Entity is responsible for paying the custody fees on behalf of the Funds. The amount paid isbased on the overall arrangement in place with the custodian. The Responsible Entity recharges the custody feesto the Funds. The amount recharged is disclosed as "Custody Fees" in the "Statements of ComprehensiveIncome".

The Responsible Entity is also responsible for paying certain expenses (such as audit fees, printing and postageetc) for the Funds. The amount recharged is based on the lower of the expenses paid or .02% of the net assets ofthe Funds. The amount recharged is disclosed under "Expenses Recharged" in the Statements of ComprehensiveIncome".

(e) Bank and Deposit Accounts

The bank accounts and 11am deposit accounts for the Funds may be held with the Commonwealth Bank of Australia.Fees and expenses are negotiated on an arm's length basis. Various short term money market, fixed interestsecurities and foreign currency transactions are from time to time transacted through the Commonwealth Bank ofAustralia which receives a fee which is negotiated on an arm's length basis.

(f) Related Party Transactions

Transactions between the Funds and other registered Funds, which are also managed by the Responsible Entity,consisted of the sale of units in the Funds to related Managed Investment Schemes, purchases of units in relatedManaged Investment Schemes, and receipt and payment of distributions on normal commercial terms and conditions.

The amounts outstanding payable or receivable at period end represent the value of the units (financial liability of theSchemes) issued or held and any amount of interest expense payable or receivable.

Terms and conditions of transactions with related parties

All related party transactions are made in arms length transactions on normal commercial terms and conditions.Outstanding balances at period end are unsecured and settlement occurs in cash.

Guarantees

There have been no guarantees provided or received for any related party receivables.

Page 32




(h) Investing Activities

(i) Managed Investment Schemes

The following Funds held investments in the following Funds which were managed by Colonial First State InvestmentsLimited. Distributions received are immediately reinvested into additional units.

Investment Units Held at Value of Interest held Units Acquired Units Disposed DistributionName Period End Investment at in Investment During Period During Period Received

Period End at Period EndNo.'000 $'000 % No.'000 No.'000 $'000

Commonwealth Income FundUnits held in:

Colonial First State Wholesale Australian Share Fund - Core- 2012 10,136 12,649 0.93 415 2,832 520 - 2011 12,553 17,247 0.91 401 3,041 559

Colonial First State Wholesale Cash Fund- 2012 7,099 7,161 0.10 358 1,878 361 - 2011 8,619 8,711 0.13 476 2,472 480

Colonial First State Wholesale Global Corporate Debt Fund- 2012 33,199 31,479 0.75 1,913 7,970 1,815 - 2011 39,256 38,063 0.86 2,961 16,377 2,883

Colonial First State Wholesale Australian Bond Fund- 2012 69,044 77,619 9.91 3,008 25,488 3,348 - 2011 91,524 99,358 13.29 5,548 32,016 5,998

Page 33




(h) Investing Activities (continued)

(i) Managed Investment Schemes (continued)



Commonwealth Balanced FundUnits held in:

Colonial First State Wholesale Australian Inflation-Linked Bond Fund- 2012 9,885 10,178 3.28 844 4,715 3,248 - 2011 13,756 31,378 4.67 1,267 5,844 4,644

Colonial First State Wholesale Indexed Australian Share Fund- 2012 65,259 69,037 7.27 3,059 17,910 3,223 - 2011 80,110 95,243 9.00 4,508 24,813 5,482

Colonial First State Wholesale Indexed Global Share Fund- 2012 23,752 30,122 2.22 452 8,076 569 - 2011 31,376 40,810 2.68 527 8,033 695

Colonial First State Wholesale Global Property Securities Fund- 2012 1,216 1,545 0.24 - 2,342 - - 2011 3,558 4,254 0.84 6,203 3,200 -

Colonial First State Wholesale Cash Fund- 2012 19,064 19,230 0.27 987 6,721 996 - 2011 24,798 25,063 0.38 4,447 12,850 1,499

Colonial First State Wholesale Property Securities Fund- 2012 2,561 1,499 0.18 164 5,128 86 - 2011 7,525 4,226 0.38 10,986 4,388 329

Page 34








Commonwealth Balanced Fund (continued)Units held in:

Colonial First State Wholesale Indexed Australian Bond Fund- 2012 38,960 39,821 1.80 2,277 17,920 2,284 - 2011 54,603 52,545 2.82 3,497 19,929 3,348

Colonial First State Wholesale Indexed Global Bond Fund- 2012 8,111 9,943 1.13 30 3,727 35 - 2011 11,809 13,090 1.73 1,877 4,243 2,159

Commonwealth Growth FundUnits held in:

Colonial First State Wholesale Australian Share Fund - Core- 2012 43,141 53,841 3.95 1,742 10,756 2,636 - 2011 52,155 75,050 3.79 1,684 14,549 2,960


Colonial First State Wholesale Global Property Securities Fund- 2012 2,474 3,145 0.49 - 1,268 - - 2011 3,742 4,474 0.89 775 1,245 -

Colonial First State Wholesale Global Share Fund- 2012 15,392 15,764 1.58 109 4,698 112 - 2011 19,981 20,517 1.63 204 3,569 210

Page 35








Commonwealth Growth Fund (continued)Units held in:

Colonial First State Wholesale Cash Fund- 2012 2,556 2,578 0.04 121 790 122 - 2011 3,225 3,260 0.05 990 2,275 202

Colonial First State Wholesale Property Securities Fund- 2012 5,427 3,177 0.39 315 2,718 166 - 2011 7,830 4,398 0.40 1,562 884 245

Colonial First State Wholesale Australian Bond Fund- 2012 16,752 18,832 2.41 732 6,477 815 - 2011 22,497 24,423 3.27 1,362 6,954 1,473

Colonial First State Wholesale Indexed Global Bond Fund- 2012 7,807 9,570 1.09 29 3,270 34 - 2011 11,049 12,247 1.62 1,725 2,944 1,983

Commonwealth Australian Share FundUnits held in:

Colonial First State Wholesale Australian Share Fund - Core- 2012 26,471 33,036 2.42 1,079 5,531 1,353 - 2011 30,923 42,485 2.25 995 7,408 1,386

Commonwealth Share Income FundUnits held in:

Colonial First State Wholesale Australian Share Fund - Core- 2012 81,948 102,271 7.50 3,391 23,271 4,252 - 2011 101,828 139,902 7.41 3,328 25,866 4,634

Page 36








Commonwealth Property Securities FundUnits held in:

Colonial First State Wholesale Property Securities Fund- 2012 20,330 11,903 1.45 1,366 6,185 550 - 2011 25,149 14,124 1.28 1,490 7,309 840

Commonwealth International Share FundUnits held in:


Colonial First State Wholesale Global Share Fund- 2012 5,393 5,523 0.56 184 531 39 - 2011 5,740 5,894 0.47 59 - 60

Commonwealth Bond FundUnits held in:

Colonial First State Wholesale Australian Bond Fund- 2012 24,356 27,382 3.50 1,026 5,592 1,141 - 2011 28,923 31,399 4.20 1,678 6,722 1,814

Page 37





(ii) Listed Securities

The following Funds invests in listed securities of the Bank and its related parties as follows:

Investment Units Held at Value of Interest held Units Acquired Units Disposed DividendName Period End Investment at in Investment During Period During Period Received



Commonwealth Property Office Fund

2012 16,045 16,824 0.68 - - 2,382 2011 16,045 18,163 0.80 - 14,181 3,367


Commonwealth Property Office Fund

- 2012 2,993 3,139 0.13 - - 444 - 2011 2,993 3,396 0.15 - 1,949 616

Page 38



9. FINANCIAL RISK MANAGEMENT

The Funds' activities expose them to a variety of financial risks: market risk (including price risk and interest rate risk),credit risk and liquidity risk.

The Funds' overall risk management programme focuses on ensuring compliance with the Fund's Product DisclosureStatement and seeks to maximise the returns derived for the level of risk to which the Funds are exposed. CertainFunds use derivative financial instruments to alter certain risk exposures. Financial risk management is carried out bythe respective investment management departments (Investment Managers) and regularly monitored by theCompliance Department of the Responsible Entity.

The Funds use different methods to measure different types of risk to which it is exposed. These methods includesensitivity analysis in the case of interest rate and other price risks and ratings analysis for credit risk.

(a) Market Risk

(i) Price risk

The Funds' financial assets are indirectly exposed to price risk. This arises from investments in unlisted managedinvestment schemes, which are also managed by the Responsible Entity, for which prices in the future are uncertain.They are classified on the balance sheet as held for trading. These investments present a risk of loss of capital.

The Investment Managers of the underlying unlisted managed investement schemes mitigate price risk throughdiversification and a careful selection of securities and other financial instruments within specified limits and guidelinesin accordance with the Product Disclosure Statement/Information Memorandum or Constitutions and are regularlymonitored by the Compliance Department of the Responsible Entity.

The table in part (b) under "Summarised Sensitivity Analysis" of the "Financial Risk Management" note to the financialstatements, summarises the impact of an increase/decrease of the Australian and global indexes on the Funds' netassets attributable to unitholders at 30 June 2012 and 30 June 2011. The analysis is based on the assumptions that therelevant indexes increased or decreased as tabled with all other variables held constant and that the fair value of theFunds' which have indirect exposures to equity securities and derivatives moved according to the historical correlation withthe indexes. Funds that invest in various asset classes, such as multi-sector Funds, will have a weighted averagemovement calculated based on the proportion of their investments in those classes.

(ii) Interest rate risk

The Funds' exposure to interest rate risk is limited to its cash and cash equivalents vice versa bank overdraft, whichearns/( charged) a floating rate of interest.

Certain Funds (through their investments in other managed investment schemes) are indirectly investing in interestbearing financial assets and are exposed to the risks associated with the effects of fluctuations in the prevailinglevels of market interest rates on its financial position and cash flows.

The table in part (b) under "Summarised Sensitivity Analysis" of the "Financial Risk Management" note to the financialstatements, summarises the impact of an increase/decrease of interest rates on the Funds' operating profit and netassets attributable to unitholders through changes in fair value or changes in future cash flows. The analysis is based onthe assumption that interest rates changed by +/- 60 basis points (2011: +/- 60 basis points) from the year end rates withall other variables held constant. The impact mainly arises from changes in the fair value of debt securities.

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9. FINANCIAL RISK MANAGEMENT (continued)

(b) Summarised Sensitivity Analysis

The following table summarises the sensitivity of the Funds' operating profit or loss and net assets attributable tounitholders to interest rate risk and other price risk. The reasonably possible movements in the risk variables have beendetermined based on management's best estimate, having regard to a number of factors, including historical levels ofchanges in interest rates and foreign exchange rates, historical correlation of the Funds' investments with the relevantbenchmark and market volatility. However, actual movements in the risk variables may be greater or less than anticipateddue to a number of factors, including unusually large market shocks resulting from changes in the performance of and/orcorrelation between the performance of the economies, markets and securities in which the Funds invest. As a result,historic variations in risk variables should not be used to predict future variations in the risk variables.

-60 basis +60 basis -3.74% 3.74%points points$'000 $'000 $'000 $'000

30/06/2012 ( 14) 14 ( 4,817) 4,817


30/06/2011 ( 16) 16 ( 6,071) 6,071


30/06/2012 ( 21) 21 ( 30,986) 30,986


30/06/2011 ( 24) 24 ( 39,592) 39,592

Interest rate risk Price risk

Commonwealth Income Fund

Impact on operating profit/(loss) and net assets attributable to unitholders


Interest rate risk Price riskImpact on operating profit/(loss) and net assets attributable to unitholders

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(b) Summarised Sensitivity Analysis (continued)


30/06/2012 ( 17) 17 ( 20,723) 20,723


30/06/2011 ( 18) 18 ( 26,713) 26,713


30/06/2012 ( 4) 4 ( 8,490) 8,490


30/06/2011 ( 4) 4 ( 12,278) 12,278


30/06/2012 ( 10) 10 ( 26,284) 26,284


30/06/2011 ( 12) 12 ( 40,432) 40,432



Interest rate risk


Commonwealth Share Income Fund

Price riskImpact on operating profit/(loss) and net assets attributable to unitholders

Commonwealth Australian Share Fund


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(b) Summarised Sensitivity Analysis (continued)


30/06/2012 ( 2) 2 ( 2,071) 2,071


30/06/2011 ( 3) 3 ( 2,486) 2,486


30/06/2012 ( 2) 2 ( 2,376) 2,376


30/06/2011 ( 2) 2 ( 2,893) 2,893


30/06/2012 ( 3) 3 ( 1,013) 1,013


30/06/2011 ( 4) 4 ( 1,130) 1,130

Commonwealth Bond Fund



Commonwealth International Share Fund



Commonwealth Property Securities Fund

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(c) Credit risk

The exposure to credit risk for cash and cash equivalents is low as all counterparties have a rating of AA or higher(as determined by the Standard and Poor’s or equivalent agency). The Funds' investment in managed investmentschemes are subject to credit risk at the point in time it renders its investment. However, as the ResponsibleEntity of the Funds are the same as the underlying investment, the credit risk is deemed to be insignificant.

(d) Liquidity risk

The Funds are exposed to daily cash redemptions of redeemable units. The Funds primarily hold investments inmanaged investment schemes which are managed by the Responsible Entity. These investments are readilydisposable.

The Fund’s financial liabilities primarily consist of trade payables which include redemptions payable to unitholdersat year end as well as other payables such as the accruals of management fees and distributions payable at yearend and in rare ocassion bank overdraft . All financial liabilities of the Funds are contractually due within 30 days.

(e) Fair Value Estimation

The carrying amounts of the Funds' assets and liabilities at the balance sheet date approximate their fair values.

Investments in unlisted managed investment schemes are recorded at the redemption value per unit as reported by theResponsible Entity.

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10. SEGMENT INFORMATION

The Funds operate in one business segment, being investment management. The Funds operate from onegeographic location being Australia, from where their investing activities are managed. Revenue is derived fromdistributions, interest, gains on the sale of investments, and unrealised changes in the value of investments.

11. CONTINGENT LIABILITIES AND COMMITMENTS

As at 30 June 2012, the Funds did not have any contingent liabilities or commitments (30 June 2011 - None).

12 EVENTS AFTER BALANCE SHEET DATE

No significant events have occurred since balance sheet date which would impact on the financial positions of theFunds disclosed in the Balance Sheets as at 30 June 2012 or on the results and cash flows of the Funds for thereporting period ended on that date.

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In the opinion of the Directors of Colonial First State Investments Limited:

a) the financial statements and notes to the financial statements of the Commonwealth InvestmentFunds ("the Funds") are in accordance with the Corporations Act 2001, including:

i) complying with Accounting Standards, the Corporations Regulations 2001and other mandatory professional reporting requirements; and

ii) giving a true and fair view of the Funds' financial positions as at 30 June 2012and of their performance for the reporting period ended on that date, and

b) there are reasonable grounds to believe that the Funds will be able to pay their debts asand when they become due and payable, and

c) the financial statements comply with International Financial Reporting Standards issuedby the International Accounting Standards Board as stated in Note 1.

This declaration is made in accordance with a resolution of the directors.

Bradley Brian MasseyDirectorSydney31 August 2012

FOR THE REPORTING PERIOD ENDED 30 JUNE 2012DIRECTORS' DECLARATION

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Commonwealth Investment Funds Financial Report€¦ · The current reporting period for the financial report is from 1 July 2011 to 30 June 2012. The comparative reporting period