Commonwealth Investment Funds Financial Report › ... › Commonwealth_Investment_Fu… ·...

Year ended 30 June 2010

Commonwealth Investment Funds

Financial Report

Represented by:ARSN

Commonwealth Income Fund 089 461 343Commonwealth Balanced Fund 089 465 501Commonwealth Growth Fund 089 455 210Commonwealth Australian Share Fund 089 463 865Commonwealth Share Income Fund 089 455 185Commonwealth Property Securities Fund 089 463 383Commonwealth International Share Fund 089 456 431Commonwealth Bond Fund 089 462 813Commonwealth Cash Management Trust 089 453 449

COMMONWEALTH INVESTMENT FUNDS

Reporting Period Ended 30 June 2010

Financial Report for the

Responsible Entity of the Funds:

COLONIAL FIRST STATE INVESTMENTS LIMITED

ABN 98 002 348 352

Level 29, 52 Martin PlaceSYDNEY NSW 2000

Page

Directors' Report 1 - 6

Auditor's Independence Declaration 7

Statements of Comprehensive Income 8 - 10

Balance Sheets 11 - 13

Statements of Changes in Equity 14 - 16

Cash Flow Statements 17 - 19

Notes to the Financial Statements 20 - 78

Directors' Declaration 79

Independent Auditor's Report to the Unitholders 80 - 81


INDEX


DIRECTOR'S REPORT FOR THE REPORTING PERIOD ENDED 30 JUNE 2010

The Directors of Colonial First State Investments Limited (CFSIL), 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 2010.

Reporting Period

The current reporting period for the financial report is from 1 July 2009 to 30 June 2010. The comparative reporting periodis from 1 July 2008 to 30 June 2009.

Principal Activities

This financial report consists of nine 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 FundCommonwealth Cash Management Trust

The above Funds are closed to new investors. Existing investors in the Funds can, however, make additional lump suminvestments, commence or continue a Regular Savings Plan.

Page 1

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 Commonwealth Investment Funds provide investors access to a broad range of investments including money marketsecurities, fixed interest securities, listed property securities, Australian shares, international shares, and diversifiedinvestments.

The results of the Funds were as follows:

Net Profit Attributable to Unitholders

The following represent the net profit attributable to unitholders for the period ended 30 June 2010, together withcomparative figures as at 30 June 2009.

2010 2009$'000 $'000

Commonwealth Income Fund 20,287 8,979Commonwealth Balanced Fund 19,420 (49,531)

Page 1



Review of Operations (continued)Net Profit Attributable to Unitholders (continued)

2010 2009$'000 $'000

Commonwealth Growth Fund 17,008 (33,636)Commonwealth Australian Share Fund 6,431 (12,723)Commonwealth Share Income Fund 21,639 (43,604)Commonwealth Property Securities Fund 3,086 (16,865)Commonwealth International Share Fund 585 (4,522)Commonwealth Bond Fund 2,903 3,851Commonwealth Cash Management Trust 57,316 108,894

Income

The income distributions per unit for each of the Funds for the periods ended 30 June 2010 and 30 June 2009 are shownin Note 4 to the financial report.

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 takng 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 2010 together with comparative unit

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The following unit prices represent the ex-distribution exit unit prices as at 30 June 2010, together with comparative unitprices as at 30 June 2009.

2010 2009$ $

Commonwealth Income Fund 1.0500 1.0033Commonwealth Balanced Fund 1.3072 1.2849Commonwealth Growth Fund 1.3027 1.2430Commonwealth Australian Share Fund 1.2832 1.1802Commonwealth Share Income Fund 1.3937 1.2811Commonwealth Property Securities Fund 0.4636 0.4289Commonwealth International Share Fund 1.0179 0.9966Commonwealth Bond Fund 1.1748 1.1512Commonwealth Cash Management Trust 1.0000 1.0000

Management Costs and Indirect Cost Ratio (ICR)

Management costs include the investment expenses, custody fees and management fees paid or payable as providedunder the Constitution for thr Funds. These costs are not paid directly by the unitholders of a Fund and do not includetransactions costs and additional service fees.

The ICR of a Fund is expressed as a percentage of a Fund's management costs over the Fund's average net assets.

The ICR of the Funds for the period ended 30 June 2010 and 30 June 2009 are shown in the following table:

ICR ICR2010 2009

% %Commonwealth Income Fund 1.50 1.51Commonwealth Balanced Fund 2.01 1.96

Page 2



Review of Operations (continued)Management Costs and Indirect Cost Ratio (ICR) (continued)

ICR ICR2010 2009

% %Commonwealth Growth Fund 2.00 1.98Commonwealth Australian Share Fund 2.01 1.99Commonwealth Share Income Fund 2.00 1.99Commonwealth Property Securities Fund 2.01 1.97Commonwealth International Share Fund 2.01 1.97Commonwealth Bond Fund 1.50 1.50Commonwealth Cash Management Trust 1.00 0.98

Performance

The Funds' performances set out below assumes that all distributions of income have been reinvested in additional unitsin the Funds and are net of Responsible Entity fees and ongoing expenses. No allowance has been made for income tax.

1 3 5Year Years Years

% % %Commonwealth Income Fund 8.89 4.63 5.00Commonwealth Balanced Fund 4.55 (3.63) 2.88Commonwealth Growth Fund 7 66 (4 80) 3 03

Return % per annum

Page 3

Commonwealth Growth Fund 7.66 (4.80) 3.03Commonwealth Australian Share Fund 11.85 (5.87) 5.50Commonwealth Share Income Fund 12.08 (5.87) 5.51Commonwealth Property Securities Fund 16.66 (28.55) (11.56)Commonwealth International Share Fund 2.21 (12.60) (3.45)Commonwealth Bond Fund 7.57 6.60 4.92Commonwealth Cash Management Trust 3.49 5.10 5.13

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:

Grahame Anthony Petersen Lynette Elizabeth Cobley Appointed 11/11/2009Brian Vincent BissakerGregg Johnston Appointed 04/08/2009Peter Robert WinneyBradley Brian MasseyPaul Alexander Rayson Resigned 28/07/2009Michael John Venter Resigned 16/09/2009

The Responsible Entity is incorporated and domiciled in Australia and has its registered office at Level 29, 52 Martin Place, Sydney, New South Wales, 2000.

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Scheme Information

The Funds are registered managed investment schemes domiciled in Australia and have their principal place of businessat Level 29, 52 Martin Place, 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% (0.05% for acash investment option) 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.

Page 4

Matters Subsequent to the End of the Financial Period

No matters or circumstances have arisen since 30 June 2010 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.

Page 4



Indemnification and Insurance Premiums for Officers and auditors

No insurance premiums are paid for out of the assets of the Fund in relation to insurance cover provided to ColonialFirst State Investments Limited or the auditors of the Fund. So long as the officers of Colonial First State InvestmentsLimited act in accordance with the Constitution and the Corporations Act 2001, the officers remain indemnified out ofthe assets of the Fund against losses incurred while acting on behalf of the Funds. The auditors of the Funds are in noway indemnified out of the assets of the Fund.

The Commonwealth Bank of Australia has paid insurance premiums for the benefit of the officers of the ResponsibleEntity and the Compliance Committee members. Details of the nature of the liabilities covered or the amount of thepremium paid has 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.

Interests in the Funds

The units issued and redeemed in the Funds during the period and the number of units on issue at the end of thefinancial period are set out in Note 8 to the financial statements. The value of the Funds' assets at the end of the financialperiod are set out in the Balance Sheets.

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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 scheme 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 Australian Securities &Investments Commission and in accordance with that Class Order, Funds with a common Responsible Entity caninclude the financial statements in adjacent columns in a single financial report.

Proceeds from redeeming units in Commonwealth Cash Management Trust can be applied to acquire units in all theother Funds. Proceeds from redeeming units in the other Funds can be applied to acquire units in the CommonwealthCash Management Trust only.

Page 5



Auditor's Independence Declaration

A copy of the Auditor's Independence Declaration as required under Section 307C of the Corporations Act 2001 is set outon Page 7.

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

Bradley Brian MasseyDirectorSydney6 September 2010

Page 6Page 6

Note 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

$'000 $'000 $'000 $'000 $'000 $'000Investment incomeInterest income 3 2,662 10,169 194 306 535 2,184 Dividend Income 324 1,260 6 - 1,246 4,852 Distribution income 9,394 5,259 17,491 36,764 6,150 2,413 Changes in fair value of financialinstruments held for trading 10,344 (4,062) 7,587 (79,602) 12,036 (38,590) Other income 5 10 69 19 19 9 Responsible Entity fees rebate 10(c) 127 382 439 1,464 210 622

Total investment income/(loss) 22,856 13,018 25,786 (41,049) 20,196 (28,510)

ExpensesResponsible Entity's management fees 10(c) 2,545 3,966 6,360 8,471 3,114 4,690 Brokerage costs 19 56 - - 71 418 Other expenses 5 17 6 11 3 18

Total operating expenses 2,569 4,039 6,366 8,482 3,188 5,126

Operating profit/(loss) attributableto unitholders 20,287 8,979 19,420 (49,531) 17,008 (33,636)

Distributions to unitholders 4 (8,970) (13,536) (10,280) (13,566) (5,788) (7,089)

Change in net assetsattributable to unitholders from operations 8 (11,317) 4,557 (9,140) 63,097 (11,220) 40,725

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 2010

Commonwealth Commonwealth Commonwealth

Page 8

Note 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

$'000 $'000 $'000 $'000 $'000 $'000Investment incomeInterest income 3 42 188 96 647 17 31 Dividend Income 699 2,404 2,361 8,123 365 1,942 Distribution income 1,271 101 4,206 343 803 - Changes in fair value of financialinstruments held for trading 5,116 (14,251) 17,384 (48,794) 2,152 (18,326) Other income 8 2 24 13 32 5 Responsible Entity fees rebate 10(c) 11 27 39 91 - -

Total investment income/(loss) 7,147 (11,529) 24,110 (39,577) 3,369 (16,348)

ExpensesAudit fees (32) - - - - - Responsible Entity's management fees 10(c) 716 1,077 2,359 3,643 277 485 Brokerage costs 31 113 109 377 5 30 Other expenses 1 4 3 7 1 2

Total operating expenses 716 1,194 2,471 4,027 283 517

Operating profit/(loss) attributableto unitholders 6,431 (12,723) 21,639 (43,604) 3,086 (16,865)

Distributions to unitholders 4 (1,637) (1,247) (5,579) (3,365) (1,559) (1,301)

Change in net assetsattributable to unitholders from operations 8 (4,794) 13,970 (16,060) 46,969 (1,527) 18,166


Other comprehensive income for the period




STATEMENTS OF COMPREHENSIVE INCOMEFOR THE REPORTING PERIOD ENDED 30 JUNE 2010

Commonwealth Commonwealth Share CommonwealthAustralian Share Fund Income Fund Property Securities

Fund

Page 9

Note 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

$'000 $'000 $'000 $'000 $'000 $'000Investment incomeInterest income 3 32 33 661 2,681 70,690 122,899 Dividend Income - - - - - - Distribution income 230 413 1,765 - - - Changes in fair value of financialinstruments held for trading 558 (4,658) 916 1,836 2,985 5,777 Other income - 3 3 1 1 137 Responsible Entity fees rebate 10(c) 45 152 - - - -

Total investment income/(loss) 865 (4,057) 3,345 4,518 73,676 128,813

ExpensesAudit fees - - (31) - - - Responsible Entity's management fees 10(c) 280 464 471 662 16,332 19,847 Responsible Entity'sBrokerage costs - - 1 1 4 7 Other expenses - 1 1 4 24 65

Total operating expenses 280 465 442 667 16,360 19,919

Operating profit/(loss) attributableto unitholders 585 (4,522) 2,903 3,851 57,316 108,894

Distributions to unitholders 4 (13) (189) (2,090) (2,400) (55,182) (107,924)

Change in net assetsattributable to unitholders from operations 8 (572) 4,711 (813) (1,451) (2,134) (970)


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



Fund

FOR THE REPORTING PERIOD ENDED 30 JUNE 2010

Commonwealth Commonwealth Bond Commonwealth CashInternational Share Fund Management Trust


STATEMENTS OF COMPREHENSIVE INCOME

Page 10

Note 30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009$'000 $'000 $'000 $'000 $'000 $'000

AssetsCash and cash equivalents 3,708 12,108 5,801 6,626 3,634 7,803 Trade and other receivables: - outstanding sales settlement - 100 - - - 336 - application monies 1 18 34 32 3 31 - dividends - 129 309 1,022 49 662 - interests 11 71 20 41 13 37 - others 123 231 339 126 154 363 Financial assets held for trading 5,7 207,592 238,433 335,861 395,750 194,672 207,024

Total assets 211,435 251,090 342,364 403,597 198,525 216,256

LiabilitiesTrade and other payables: - outstanding purchase settlements - 9,946 - - - 990 - redemptions - - - - - - - interest on loans - - - - - - - others 42 72 341 370 (63) 32 Distribution payable 2,796 1,861 3,952 3,512 2,795 3,282 Fees due to Responsible Entity 10(c) 192 332 509 622 232 377 Financial liabilities held fortrading 6,7 - 56 - - - 233

Total liabilities (excluding netassets attributable to unitholders) 3,030 12,267 4,802 4,504 2,964 4,914 Net assets attributable to unitholders - liability 8(a) 208,405 238,823 337,562 399,093 195,561 211,342

Represented by:Fair value of outstanding unitsbased on redemption value 208,412 239,049 337,569 399,087 195,569 211,241 Adjustments arising from differentunit pricing and AIFRS valuationprinciples - (154) - - - (276) Buy and sell spread - 120 - - - 317 Adjustment to periodend accruals (7) (192) (7) 6 (8) 60 Net assets attributable to unitholders 208,405 238,823 337,562 399,093 195,561 211,342

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


BALANCE SHEETSAS AT 30 JUNE 2010

Commonwealth Commonwealth CommonwealthBalanced Fund Growth FundIncome Fund

Page 11

Note 30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009$'000 $'000 $'000 $'000 $'000 $'000

AssetsCash and cash equivalents 984 3,319 2,224 6,703 403 341 Trade and other receivables: - outstanding sales settlement - 268 - 1,274 - 111 - application monies - 2 - 6 - 1 - dividends - 270 - 938 - 312 - interests 3 18 7 69 2 4 - others 34 28 108 240 13 32 Financial assets held for trading 5,7 47,603 46,842 158,567 160,892 17,382 17,382

Total assets 48,624 50,747 160,906 170,122 17,800 18,183

LiabilitiesTrade and other payables: - outstanding purchase settlements - 326 - 435 - 220 - others 72 104 87 120 18 60 Distribution payable 285 1,118 1,250 2,356 - 452 Fees due to Responsible Entity 10(c) 49 90 160 318 21 32 Financial liabilities held fortrading 6,7 - 99 - 247 - -

Total liabilities (excluding netassets attributable to unitholders) 406 1,737 1,497 3,476 39 764 Net assets attributable to unitholders - liability 8(a) 48,218 49,010 159,409 166,646 17,761 17,419

Represented by:Fair value of outstanding unitsbased on redemption value 48,220 49,047 159,418 166,688 17,762 17,458 Adjustments arising from differentunit pricing and AIFRS valuationprinciples - (110) - (379) - (44) Buy and sell spread - 172 - 585 - 44 Adjustment to periodend accruals (2) (99) (9) (248) (1) (39) Net assets attributable to unitholders 48,218 49,010 159,409 166,646 17,761 17,419


Australian Share Fund Income Fund Property SecuritiesFund



Commonwealth Commonwealth Share Commonwealth

Page 12

Note 30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009$'000 $'000 $'000 $'000 $'000 $'000

AssetsCash and cash equivalents 540 701 826 7,224 21,861 21,879 Trade and other receivables: - outstanding sales settlement - - - - 4,008 - - application monies - 2 - - 1,272 3,605 - interests 2 4 3 46 85 54 - others 14 27 23 17 438 803 Financial assets held for trading 5,7 16,231 18,928 36,782 39,402 1,345,028 1,879,469

Total assets 16,787 19,662 37,634 46,689 1,372,692 1,905,810

LiabilitiesTrade and other payables: - outstanding purchase settlements - - - 4,508 - - - redemptions - - - - 3,084 5,610 - others 4 37 1 34 360 262 Distribution payable 13 181 581 495 13,878 12,660 Fees due to Responsible Entity 10(c) 21 19 37 62 1,219 1,692 Financial liabilities held fortrading 6,7 - - - - - 299

Total liabilities (excluding netassets attributable to unitholders) 38 237 619 5,099 18,541 20,523 Net assets attributable to unitholders - liability 8(a) 16,749 19,425 37,015 41,590 1,354,151 1,885,287

Represented by:Fair value of outstanding unitsbased on redemption value 16,751 19,449 37,020 41,573 1,355,173 1,888,356 Adjustments arising from differentunit pricing and AIFRS valuationprinciples - - - (23) (617) (159) Buy and sell spread - - - - - - Under or (over) distributions - - (405) (2,910) Adjustment to periodend accruals (2) (24) (5) 40 - - Net assets attributable to unitholders 16,749 19,425 37,015 41,590 1,354,151 1,885,287





Fund

Page 13

01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

$'000 $'000 $'000 $'000 $'000 $'000Total equity at the beginning ofthe financial period - - - - - -

Total comprehensive income for the financial period - - - - - -

Transactions with equity holdersin their capacity as equity holders - - - - - -

Total equity at the end ofthe financial period - - - - - -

Under AIFRS, 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 period.

The above Statements of Changes in Equity should be read in conjunction with Note 8.


STATEMENTS OF CHANGES IN EQUITYFOR THE REPORTING PERIOD ENDED 30 JUNE 2010

Commonwealth Commonwealth CommonwealthIncome Fund Balanced Fund Growth Fund

Page 14

01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009







Australian Share Fund Income Fund Property SecuritiesFund



Commonwealth Commonwealth Share Commonwealth

Page 15

01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009



Net income/(expense) recogniseddirectly in equity - - - - - -





International Share Fund Management TrustFund



Commonwealth Commonwealth Bond Commonwealth Cash

Page 16

Note 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

Cash flows from $'000 $'000 $'000 $'000 $'000 $'000operating activitiesProceeds from sale of financialinstruments held for trading 345,330 359,856 114,252 224,950 235,484 387,838 Payments for purchase of financial instruments held fortrading (306,612) (286,779) (29,285) (87,810) (205,768) (330,471) Net repayment or (payment)of mortgage assetsInterest received 4,793 10,806 215 291 900 2,419 Dividends received 339 6,143 719 (227) 1,454 3,285 Other income received 5 9 68 19 19 7 Responsible Entityfee paid (2,451) (4,183) (6,247) (8,501) (2,841) (5,001) Interest paid - - - - - - Other expenses paid (31) (119) (36) (196) (34) (115) Payment for brokerage costs (19) (56) - - (71) (418) Net cash fromoperating activities 9(a) 41,354 85,677 79,686 128,526 29,143 57,544

Cash flows from financing activitiesReceipts from issue of units 2,788 3,293 4,297 5,636 4,654 5,269 Payment for redemption of units (48,686) (74,131) (82,404) (128,749) (37,123) (56,589) Distributions paid (3,856) (7,883) (2,404) (4,337) (843) (964)

Net cash used infinancing activities (49,754) (78,721) (80,511) (127,450) (33,312) (52,284)

Net movement in cash andcash equivalents (8,400) 6,956 (825) 1,076 (4,169) 5,260

Add opening cash and cash equivalents brought forward 12,108 5,152 6,626 5,550 7,803 2,543 Closing cash and cashequivalents carried forward 3,708 12,108 5,801 6,626 3,634 7,803

See Note 9 (b) for non-cash financing activities.

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


CASH FLOW STATEMENTSFOR THE REPORTING PERIOD ENDED 30 JUNE 2010


Page 17

Note 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

Cash flows from $'000 $'000 $'000 $'000 $'000 $'000operating activitiesProceeds from sale of financialinstruments held for trading 79,317 53,625 263,122 175,428 29,159 17,783 Payments for purchase of financial instruments held fortrading (73,616) (43,461) (237,861) (146,234) (26,312) (13,290) Net repayment or (payment)of mortgage assetsInterest received 57 194 158 665 19 31 Dividends received 738 1,740 2,545 5,917 676 2,279 Other income received 7 2 23 13 32 5 Responsible Entityfee paid (752) (1,157) (2,345) (4,411) (271) (637) Other expenses paid - (29) (35) (88) (31) (17) Payment for brokerage costs (31) (113) (109) (377) (5) (30) Net cash fromoperating activities 9(a) 5,720 10,801 25,498 30,913 3,267 6,124

Cash flows from financing activitiesReceipts from issue of units 764 422 999 1,532 202 232 Payment for redemption of units (8,447) (12,714) (28,237) (40,633) (2,755) (6,911) Distributions paid (372) (103) (2,739) (1,362) (652) (1,471)


Net movement in cash andcash equivalents (2,335) (1,594) (4,479) (9,550) 62 (2,026)

Add opening cash and cash equivalents brought forward 3,319 4,913 6,703 16,253 341 2,367 Closing cash and cashequivalents carried forward 984 3,319 2,224 6,703 403 341



FOR THE REPORTING PERIOD ENDED 30 JUNE 2010


CASH FLOW STATEMENTS


Fund

Page 18

Note 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

Cash flows from $'000 $'000 $'000 $'000 $'000 $'000operating activitiesProceeds from sale of financialinstruments held for trading 3,510 5,168 49,008 40,300 8,216,432 10,663,757 Payments for purchase of financial instruments held fortrading (25) (545) (48,767) (28,791) (7,689,999) (10,326,641)Net repayment or (payment)of mortgage assetsInterest received 34 34 1,255 2,751 77,346 132,089 Other income received - 3 2 1 - 137 Responsible Entityfee paid (219) (380) (503) (726) (16,442) (22,967) Other expenses paid (31) (13) - (19) (56) (1,069) Payment for brokerage costs - - (1) (1) (4) (7) Net cash fromoperating activities 9(a) 3,269 4,267 994 13,515 587,277 445,299

Cash flows from financing activitiesReceipts from issue of units 306 357 332 823 426,395 456,604 Payment for redemption of units (3,686) (4,647) (6,512) (7,286) (1,012,305) (895,570) Distributions paid (50) (59) (1,212) (1,542) (1,385) (13,897)


Net movement in cash andcash equivalents (161) (82) (6,398) 5,510 (18) (7,564)

Add opening cash and cash equivalents brought forward 701 783 7,224 1,714 21,879 29,443 Closing cash and cashequivalents carried forward 540 701 826 7,224 21,861 21,879




CASH FLOW STATEMENTSFOR THE REPORTING PERIOD ENDED 30 JUNE 2010

Fund


Page 19


NOTES TO THE FINANCIAL STATEMENTSFOR THE REPORTING PERIOD ENDED 30 JUNE 2010

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 withintwelve months, except for financial assets held for trading, loans and net assets attributable to unitholders. Theamounts expected to be recovered or settled after more than twelve months in relation to these balances cannot bereliably determined, except as otherwise stated.

The financial report was authorised for issue by the Directors of the Responsible Entity on 27 August 2010.

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

The current reporting period for the financial report is from 1 July 2009 to 30 June 2010. The comparative reporting period isfrom 1 July 2008 to 30 June 2009.

(b) 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').

(c) 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 Statement 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.

For financial assets held for trading that are actively traded in organised financial markets, fair value is determined byreference to Exchange quoted market bid prices at the close of business on the balance date.

Page 20



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(c) Investments in Financial Assets and Liabilities Held for Trading (continued)

Measurement (continued)

Share price index (SPI) futures contracts are marked to market according to the bid price on the relevant futuresexchange.

Convertible notes have been recognised as fixed interest securities in the Balance Sheet. Upon expiry of the note, if it isconverted to shares, the fair value is recognised as listed equity.

For investments where there is no quoted market price, fair value is determined by reference to the current marketvalue of another instrument which is substantively the same or is calculated based on the expected cash flows of theunderlying net asset base of the investment. The fair value of units in unlisted Managed Investment Schemes isdetermined by reference to published bid prices at the close of business on the Balance Sheet date being theredemption price as established by the underlying Fund's Responsible Entity.

Gains or losses on investments held for trading are recognised in the Statement of Comprehensive Income. Investments ofthe Funds which are considered to be held for trading are equity securities, fixed interest and money market securities,derivatives and investments in Managed Investment Schemes.

(d) 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

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 held for trading

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

(e) Cash and cash equivalents

Cash and cash equivalents in the Balance Sheets comprise cash at bank, deposits at call in a futures and/or optionscash account and short-term 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.

Page 21




(f) 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.

(g) 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 goodsand services 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.

(h) 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.

(i) Distributions

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 referenceto the taxable income of the Funds. Distributable income includes capital gains arising from the disposal of financialassets and liabilities held for trading. Unrealised gains and losses on financial assets and liabilities held for trading thatare recognised as income are transferred to net assets attributable to unitholders and are not assessable anddistributable until realised. Capital losses are not distributed to unitholders but are retained to be offset against anyrealised capital gains.

(j) Net Assets Attributable to Unitholders

Under the terms of the Funds' constitutions, unitholders have a present entitlement to the distributable income of theFunds and therefore all net assets attributable to unitholders have been recognised as liabilities of the Funds, rather thanas equity. The classification of net assets attributable to unitholders does not alter the underlying economic interest of theunitholders in the net assets and net profit attributable to unitholders of the Funds.

(k) Unit Prices

Unit prices are determined in accordance with the Fund's Constitution 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.

Page 22




(l) 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.

(m) 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.

(n) Expense Recognition

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

(o) Use of estimates

The Funds make estimates and assumptions that affect the reported amounts of assets and liabilities within the nextfinancial reporting period. 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 Funds' financial instruments, quoted market prices are readily available. However, certainfinancial instruments, for example, over-the-counter derivatives or unquoted securities are fair valued using valuationtechniques. Where valuation techniques (for example, pricing models) are used to determine fair values, they arevalidated and periodically reviewed by experienced personnel of the Responsible Entity, independent of the area thatcreated them. Pricing models are calibrated by back-testing to actual transactions to ensure that outputs are reliable.

Pricing models use observable data, to the extent practicable. However, areas such as credit risk (both own andcounterparty), volatilities and correlations require management to make estimates. Changes in assumptions aboutthese factors could affect the reported fair value of financial instruments.

Page 23




(p) New Application of Accounting Standards

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2010reporting periods. The impact of these new standards and interpretations is set below:

- AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising fromAASB 9

AASB 9, the standard is not applicable until 1 January 2013. The Funds have not yet decided when to adopt thisstandard. The standard only permits the recognition of fair value gains and losses in other comprehensive incomeif they relate to equity investments that are not traded - available-for-sale debt investments. Application of thisstandard will not have a significant impact on the Fund’s financial statements as the Funds does not hold anyavailable-for-sale investments.

- AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual ImprovementsProject [AASB 5, 8, 101, 107, 117, 118, 136 and 139]

The Funds will apply the revised Standards from 1 July 2010. The Funds does not expect that any adjustments willbe necessary as a result of applying the revised rules.

- Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards

AASB 124 (Revised) is effective for accounting periods beginning on or after 1 January 2011 and must be appliedretrospectively. The Funds will apply the amended standard from 1 July 2011. The Funds already disclosing alltransactions between its subsidiaries and its associates. The revised standard will not have significant effect on theFunds' financial statements.

(q) Comparatives

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

2. AUDITOR'S REMUNERATION

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

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.

Page 24



3. INTEREST INCOME

The interest income of the Funds are summarised as follows:

01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

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

Cash and cash equivalents 163 269 194 306 46 258 Money market securities - - - - - - Fixed interest securities 2,499 9,900 - - 489 1,926

Total Interest Income 2,662 10,169 194 306 535 2,184

01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

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

Cash and cash equivalents 42 188 96 647 17 31

Total Interest Income 42 188 96 647 17 31

01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

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

Cash and cash equivalents 32 33 34 322 862 1,289 Money market securities - - - - 45,902 121,610 Fixed interest securities - - 627 2,359 23,926 -

Total Interest Income 32 33 661 2,681 70,690 122,899


Fund


CommonwealthAustralian Share Fund

FundIncome Fund Property Securities

Commonwealth Commonwealth Share

Page 25



4. DISTRIBUTIONS TO UNITHOLDERS

The Responsible Entity adopts the policy of distributing as a minimum the net income for tax purposes. The amountsshown as "Distribution payable" in the Balance Sheets represents the component of the final distribution for theperiod which had not been paid at balance 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 0.20 467 0.30 878 0.90 2,725 0.91 3,467 - 31 December 1.62 3,552 3.13 8,391 0.76 2,200 1.51 5,414 - 31 March 1.02 2,128 0.90 2,346 0.51 1,387 0.30 1,019 - 30 June 1.41 2,823 0.78 1,921 1.53 3,968 1.13 3,666

Distributions to unitholders 8,970 13,536 10,280 13,566

Period ended: cpu $'000 cpu $'000 cpu $'000 cpu $'000- 31 December 1.82 2,957 1.92 3,651 3.29 1,345 0.20 94 - 30 June 1.87 2,831 1.94 3,438 0.76 292 2.70 1,153


Period ended: cpu $'000 cpu $'000 cpu $'000 cpu $'000- 30 September 1.81 2,313 - - n/a n/a n/a n/a- 31 December 1.61 1,999 0.20 296 3.93 1,559 1.92 849 - 31 March - - 0.45 630 n/a n/a n/a n/a- 30 June 1.09 1,267 1.81 2,439 - - 1.11 452


01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009 01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009Commonwealth Income Fund Commonwealth Balanced Fund

01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009 01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009Commonwealth Growth Fund Commonwealth Australian Share Fund

01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009 01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Commonwealth Share Income Fund Commonwealth Property SecuritiesFund

Page 26



4. DISTRIBUTIONS TO UNITHOLDERS (continued)

Period ended: cpu* $'000 cpu* $'000 cpu $'000 cpu $'000- 30 September n/a n/a n/a n/a 0.80 284 2.02 787 - 31 December - - - - 2.37 816 1.31 501 - 31 March n/a n/a n/a n/a 1.21 404 1.60 607 - 30 June 0.08 13 0.81 188 1.84 586 1.37 505

Distributions to unitholders 13 188 2,090 2,400

* Cents per unit (cpu) is calculated based on the unit days distribution rate multiplied by the number of days in thedistribution period. The amount to be distributed does not include income paid on redemption.

Period ended: rate*** $'000 rate*** $'000- 30 September 2.66% 12,408 7.11% 39,061 - 31 December 3.03% 13,015 7.24% 36,958 - 31 March 3.94% 15,135 3.80% 18,796 - 30 June 4.08% 14,624 2.68% 13,109

Distributions to unitholders 55,182 107,924

** The Commonwealth Cash Management Trust calculates and accrues income on a daily basis on account balances.Income is distributed at the end of each quarter.*** Annualised rate.

01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009 01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Commonwealth International Share Commonwealth Bond FundFund

01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Commonwealth Cash ManagementTrust**

Page 27



5. FINANCIAL ASSETS HELD FOR TRADING

30/06/2010 30/06/2009 30/06/2010 30/06/2009$'000 $'000 $'000 $'000

Listed Equities - Australian stock exchange - 19,857 - 44,676 - International stock exchanges - 722 - -

Fixed Interest Securities- Australian Fixed Interest - 145,988 - -

Managed Investment Schemes- Related Managed Investment Schemes 207,592 71,866 335,861 351,074

Total Financial Assets Held for Trading 207,592 238,433 335,861 395,750

30/06/2010 30/06/2009 30/06/2010 30/06/2009$'000 $'000 $'000 $'000

Listed Equities - Australian stock exchange - 84,773 - 42,125 - International stock exchanges - 2,779 - 1,536

Fixed Interest Securities- Australian Fixed Interest - 26,988 - - - International Fixed Interest - - - -

Managed Investment Schemes- Related Managed Investment Schemes 194,672 92,484 47,603 3,181


Growth Fund Australian Share FundCommonwealth Commonwealth

Commonwealth CommonwealthIncome Fund Balanced Fund

Page 28



5. FINANCIAL ASSETS HELD FOR TRADING (continued)

30/06/2010 30/06/2009 30/06/2010 30/06/2009$'000 $'000 $'000 $'000

Listed Equities - Australian stock exchange - 144,865 - 17,382 - International stock exchanges - 5,220 - -

Managed Investment Schemes- Related Managed Investment Schemes 158,567 10,807 17,382 -


30/06/2010 30/06/2009 30/06/2010 30/06/2009$'000 $'000 $'000 $'000

Fixed Interest Securities- Australian Fixed Interest - - - 39,401

Managed Investment Schemes- Related Managed Investment Schemes 16,231 18,928 36,782 -

Australian Derivatives- Futures - - - 1


30/06/2010 30/06/2009$'000 $'000

Money Market Securities- Australian Money Market 1,345,028 1,879,469

Total Financial Assets Held for Trading 1,345,028 1,879,469

Commonwealth Commonwealth BondInternational Share Fund

Commonwealth Share CommonwealthIncome Fund Property Securities

Management TrustCommonwealth Cash

Fund

Page 29



6. FINANCIAL LIABILITIES HELD FOR TRADING

30/06/2010 30/06/2009$'000 $'000

Australian Derivatives- Futures - 56

Total Financial Liabilities Held for Trading - 56

30/06/2010 30/06/2009 30/06/2010 30/06/2009$'000 $'000 $'000 $'000

Australian Derivatives- Futures - 233 - 99

Total Financial Liabilities Held for Trading - 233 - 99

30/06/2010 30/06/2009$'000 $'000



30/06/2010 30/06/2009$'000 $'000



Commonwealth CommonwealthGrowth Fund Australian Share Fund

CommonwealthIncome Fund

Management TrustCommonwealth Cash

Commonwealth ShareIncome Fund

Page 30



7. FAIR VALUE HIERARCHY OF FINANCIAL 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.

The fair value of financial instruments traded in active markets (such as shares in listed companies and publiclytraded derivatives) is based on quoted market prices at the end of the reporting period. The quoted market priceused for financial assets held by the Fund is the last sale price. These instruments are included in Level 1.Investments in unlisted managed investment schemes which have daily liquidity are also 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 asover-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 and certain corporate bonds. As observableinputs are not available for these instruments, valuation techniques such as discounted cash flows are used to derive fairvalue.

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

The table below presents the Funds' financial instruments recorded at fair value, analysed between those whose fair valueis based on quoted market prices (Level 1), those involving valuation techniques where all the model inputs are observablein the market (Level 2) and those where the valuation technique involves the use of non-market observable inputs (Level3).

Financial Assets Held for Level 1 Level 2 Level 3 TotalTrading: $'000 $'000 $'000 $'000

Managed Investment Schemes- Related Managed Investment Schemes 207,592 - - 207,592

Total Assets Held forTrading 207,592 - - 207,592




Commonwealth Balanced Fund30/06/2010

Commonwealth Income Fund30/06/2010

Page 31



7. FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES (continued)













30/06/2010

Commonwealth Australian Share Fund30/06/2010

Commonwealth Growth Fund30/06/2010

Commonwealth Share Income Fund

Commonwealth Property SecuritiesFund

30/06/2010

Page 32



7. FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES (continued)








Money Market Securities- Australian Money Market - 1,345,028 - 1,345,028

Total Assets Held forTrading - 1,345,028 - 1,345,028

Commonwealth International ShareFund

30/06/2010

Commonwealth Cash ManagementTrust

30/06/2010

Commonwealth Bond Fund30/06/2010

Page 33



8. 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 during the periods were as follows:

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

Opening balance 238,262 238,823 300,304 305,919 Applications 2,616 2,771 3,185 3,309 Redemptions (46,369) (48,686) (73,373) (74,024) Units issued upon reinvestment ofdistributions 3,989 4,180 8,146 8,176 Change in net assets attributableto unitholders from operations 11,317 (4,557)

Closing Balance 198,498 208,405 238,262 238,823

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


Closing Balance 258,139 337,562 310,605 399,093

Commonwealth Income Fund01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Commonwealth Balanced Fund01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Page 34



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

(a) Movements in number of units and net assets attributable to unitholders during the period were as follows:(continued)

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


Closing Balance 150,127 195,561 169,938 211,342

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

Opening balance 41,558 49,010 51,154 74,694 Applications 553 762 302 418 Redemptions (6,177) (8,447) (10,215) (12,554) Units issued upon reinvestment ofdistributions 1,644 2,099 317 422 Change in net assets attributableto unitholders from operations 4,794 (13,970)

Closing Balance 37,578 48,218 41,558 49,010

Commonwealth Australian Share Fund

Commonwealth Growth Fund01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Page 35





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

Opening balance 130,109 166,646 158,964 250,879 Applications 670 994 1,043 1,538 Redemptions (19,192) (28,237) (31,194) (40,633) Units issued upon reinvestment ofdistributions 2,795 3,946 1,296 1,831 Change in net assets attributableto unitholders from operations 16,060 (46,969)

Closing Balance 114,382 159,409 130,109 166,646

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

Opening balance 40,701 17,419 47,782 39,137 Applications 391 201 464 220 Redemptions (5,670) (2,755) (15,323) (6,900) Units issued upon reinvestment ofdistributions 2,895 1,369 7,778 3,128 Change in net assets attributableto unitholders from operations 1,527 (18,166)

Closing Balance 38,317 17,761 40,701 17,419

01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Commonwealth Share Income Fund01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Commonwealth Property Securities Fund

Page 36





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

Opening balance 19,514 19,425 23,199 28,274 Applications 276 305 312 358 Redemptions (3,466) (3,687) (4,112) (4,633) Units issued upon reinvestment ofdistributions 132 134 115 137 Change in net assets attributableto unitholders from operations 572 (4,711)

Closing Balance 16,456 16,749 19,514 19,425

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

Opening balance 36,113 41,590 40,920 45,687 Applications 280 332 689 801 Redemptions (5,553) (6,513) (6,299) (7,288) Units issued upon reinvestment ofdistributions 672 793 803 939 Change in net assets attributableto unitholders from operations 813 1,451

Closing Balance 31,512 37,015 36,113 41,590

Commonwealth International Share Fund01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Commonwealth Bond Fund01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Page 37





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

Opening balance 1,888,356 1,885,287 2,205,969 2,202,150 Applications 425,485 424,062 455,178 455,178 Redemptions (1,011,206) (1,009,780) (893,283) (893,503) Units issued upon reinvestment ofdistributions 52,448 52,448 120,492 120,492 Change in net assets attributableto unitholders from operations 2,134 970

Closing Balance 1,355,083 1,354,151 1,888,356 1,885,287

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 listed equities.

Commonwealth Cash Management Trust01/07/2009 - 30/06/2010 01/07/2008 - 30/06/2009

Page 38



9. CASH AND CASH EQUIVALENTS

(a) Reconciliation of net profit/(loss) attributable to unitholders to net cash from operating activities

01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

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

Net profit/(Net loss) attributableto unitholders 20,287 8,979 19,420 (49,531) 17,008 (33,636) Proceeds from sale of financial instruments held for trading 345,330 353,797 114,254 219,950 235,484 385,018 Payments for purchase of financial instruments held for trading (306,612) (296,445) (29,285) (87,810) (205,768) (329,658) Changes in fair value of financial instruments held for trading (10,344) 4,062 (7,587) 79,602 (12,036) 38,590 Distribution income reinvested (9,508) (415) (17,491) (36,764) (6,556) (4,256) Changes in assets andliabilities: Outstanding sales settlements - 6,060 - 5,000 - 2,820 Dividends receivable 129 39 713 (227) 613 276 Interest receivable 2,131 637 21 (15) 365 234 Other receivables 108 (91) (212) 170 207 (99) Outstanding purchase settlements - 9,666 - - - (813) Responsible Entity fees (141) (508) (113) (1,664) (144) (835) Loan interest payables - - - - - - Other payables (26) (104) (32) (185) (30) (97)

Net Cash FromOperating Activities 41,354 85,677 79,688 128,526 29,143 57,544


Page 39



9. CASH AND CASH EQUIVALENTS (continued)


01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

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

Net (loss)/profit attributable to unitholders 6,431 (12,723) 21,639 (43,604) 3,086 (16,865) Proceeds from sale of financial instruments held for trading 79,317 53,259 263,122 174,284 29,159 17,765 Payments for purchase of financial instruments held for trading (73,616) (43,431) (237,861) (145,746) (26,312) (13,509) Changes in fair value of financial instruments held for trading (5,116) 14,251 (17,384) 48,794 (2,152) 18,326 Distribution income reinvested (1,502) (927) (4,960) (3,059) (804) (248) Changes in assets andliabilities: Outstanding sales settlements - 366 - 1,144 - 18 Dividends receivable 270 161 938 510 312 585 Interest receivable 15 7 62 18 2 - Other receivables (6) 130 132 (66) 18 24 Outstanding purchase settlements - (31) - (488) - 220 Responsible Entity fees (41) (236) (157) (792) (12) (177) Loan interest payables - - - - - - Other payables (32) (25) (33) (82) (30) (15)

Net Cash (Used In)/FromOperating Activities 5,720 10,801 25,498 30,913 3,267 6,124


Fund

Page 40





01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 - 01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009 30/06/2010 30/06/2009 30/06/2010 30/06/2009

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

Net (loss)/profit attributable to unitholders 585 (4,522) 2,903 3,851 57,316 108,894 Proceeds from sale of financial instruments held for trading 3,510 5,100 49,008 40,300 8,216,432 10,663,757 Payments for purchase of financial instruments held for trading (25) (545) (48,767) (33,299) (7,689,999) (10,326,641) Changes in fair value of financial instruments held for trading (558) 4,658 (916) (1,836) (2,985) (5,777) Distribution income reinvested (230) (413) (1,765) - - - Changes in assets andliabilities: Outstanding sales settlements - 68 - - - - Interest receivable 2 1 594 70 6,656 9,191 Other receivables 13 (8) (7) 3 364 (22) Outstanding purchase settlements - - - 4,508 - - Responsible Entity fees 3 (60) (25) (67) (473) (3,098) Loan interest payables - - - - - - Other payables (31) (12) (31) (15) (34) (1,005)

Net Cash (Used In)/FromOperating Activities 3,269 4,267 994 13,515 587,277 445,299


Fund

Page 41




(b) Non-cash financing activities carried out during the period on normal commercial terms andconditions included:

- Reinvestment of unitholders distributions as disclosed in Statements of Changes in Net Asset Attributable to Unitholders and Note 8(a) under "Units issued upon reinvestment of distributions".

(c) Terms and conditions on cash

Cash at bank and in hand, cash held in collateral and deposits at call in a futures and/or options cash account,earn interest at floating rate as determined by the financial institutions.

(d) Derivative cash accounts

Included in the cash and cash equivalents are derivative cash accounts which comprise of cash held as collateral forderivative transactions.

The balance of the derivative cash accounts at the end of the reporting periods are as follows:

2010 2009$'000 $'000

Commonwealth Income Fund - 445 Commonwealth Balanced Fund - - Commonwealth Growth Fund - 1,105 Commonwealth Australian Share Fund - 732 Commonwealth Share Income Fund - 1,194 Commonwealth Property Securities Fund - - Commonwealth International Share Fund - - Commonwealth Bond Fund - 175 Commonwealth Cash Management Trust - 1,356

Page 42



10. 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 Level 29, 52 MartinPlace, 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 reporting period and up to the date of the report are:

Grahame Anthony Petersen Lynette Elizabeth Cobley Appointed 11/11/2009Brian Vincent BissakerGregg Johnston Appointed 04/08/2009Peter Robert WinneyBradley Brian MasseyPaul Alexander Rayson Resigned 28/07/2009Michael John Venter Resigned 16/09/2009

(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 table below shows the current fee rates charged.

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

Page 43



10. RELATED PARTIES DISCLOSURES (continued)

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

The management fees rate charged for the reporting period are as follows:

1/7/2009 - 01/08/2008 - 01/07/2008 -30/6/2010 30/06/2009 31/07/2008

Management Management ManagementFees Fees Fees

% % %Commonwealth Income Fund 1.50 1.50 1.00 Commonwealth Balanced Fund 2.00 2.00 1.50 Commonwealth Growth Fund 2.00 2.00 1.50 Commonwealth Australian Share Fund 2.00 2.00 1.50 Commonwealth Share Income Fund 2.00 2.00 1.50 Commonwealth Property Securities Fund 2.00 2.00 1.50 Commonwealth International Share Fund 2.00 2.00 1.50 Commonwealth Bond Fund 1.50 1.50 1.00 Commonwealth Cash Management Trust 1.00 1.00 0.75

The Responsible Entity's management fees charged for the reporting period ended 30 June 2010 and 30June 2009 are as follows:

01/07/2009 - 01/07/2008 -30/06/2010 30/06/2009

$ $Commonwealth Income Fund 2,417,795 3,583,679 Commonwealth Balanced Fund 5,921,081 7,007,275 Commonwealth Growth Fund 2,904,136 4,067,662 Commonwealth Australian Share Fund 704,908 1,050,271 Commonwealth Share Income Fund 2,319,685 3,551,762 Commonwealth Property Securities Fund 277,330 484,641 Commonwealth International Share Fund 234,741 311,835 Commonwealth Bond Fund 471,325 662,359 Commonwealth Cash Management Trust 16,332,383 19,847,441

Page 44




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

Fees due to/(refund from) the Responsible Entity as at 30 June 2010 and 30 June 2009 are as follows:

2010 2009$ $

Commonwealth Income Fund 191,560 332,289 Commonwealth Balanced Fund 508,607 622,242 Commonwealth Growth Fund 231,508 376,187 Commonwealth Australian Share Fund 48,787 89,514 Commonwealth Share Income Fund 159,556 317,740 Commonwealth Property Securities Fund 20,585 32,145 Commonwealth International Share Fund 21,009 18,502 Commonwealth Bond Fund 36,986 61,758 Commonwealth Cash Management Trust 1,218,741 1,691,691

(d) Bank and Deposit Accounts

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

(e) Related Party Transactions

Related parties

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

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.

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

Page 45




(f) Investing Activities

(i) Managed investment schemes

The following Funds held investments in the following schemes which were managed by Colonial First StateInvestments Limited. 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 of During Received

Period End at Period End Period

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

Commonwealth IncomeFundUnits held in ColonialFirst StateWholesale Australian Bond Fund

- 2010 117,992 127,773 18.43 139,434 21,442 6,107 - 2009 - - - - - -

Units held in ColonialFirst StateWholesale Cash Fund

- 2010 10,615 10,708 0.16 12,793 11,390 421 - 2009 9,212 9,283 0.14 48,791 64,361 1,199

Units held in ColonialFirst StateWholesale Australian Share Fund - Core

- 2010 15,193 19,371 1.14 17,904 2,710 526 - 2009 - - - - - -

Units held in ColonialFirst StateWholesale Global Corporate Debt Fund

- 2010 52,673 49,739 1.41 2,486 18,866 2,339 - 2009 69,053 61,070 1.73 4,645 - 4,012

Units held in ColonialFirst StateWholesale Small Companies Fund - Core

- 2010 - - - 63 - - - 2009 1,549 1,513 0.47 1,067 893 48

Page 46




(f) Investing Activities (continued)

(i) Managed investment schemes (continued)



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

Commonwealth BalancedFundUnits held in ColonialFirst StateWholesale Australian Inflation-Linked Bond Fund

- 2010 18,333 17,990 7.98 1,079 2,977 1,053 - 2009 20,232 19,052 10.92 602 9,004 595


- 2010 33,201 33,493 0.50 19,800 21,771 1,499 - 2009 35,172 35,443 0.55 60,653 71,565 2,359

Units held in ColonialFirst StateWholesale Indexed Australian Share Fund

- 2010 100,415 112,897 13.19 9,735 34,875 6,256 - 2009 125,555 131,645 21.33 41,921 45,015 23,388

Units held in ColonialFirst StateWholesale Indexed Australian Bond Fund

- 2010 71,035 68,684 4.40 4,321 17,651 4,129 - 2009 84,366 80,148 6.41 5,677 45,094 5,477

Units held in ColonialFirst StateWholesale Indexed Global Share Fund

- 2010 38,882 50,181 3.37 5,764 5,391 849 - 2009 38,509 48,286 3.33 4,753 20,056 1,331

Units held in ColonialFirst StateWholesale Indexed Global Bond Fund

- 2010 14,175 17,528 1.92 910 1,827 1,130 - 2009 15,092 18,088 2.49 2,572 12,203 -

Page 47








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

Commonwealth BalancedFund

Units held in ColonialFirst StateWholesale Global Property Securities Fund

- 2010 555 501 0.12 144 - - - 2009 411 270 0.08 - 438 -

Units held in ColonialFirst StateWholesale Property Securities Fund

- 2010 927 520 0.04 377 - 20 - 2009 549 278 0.03 42 497 24

Units held in DiversifiedProperty InvestmentFund

- 2010 16,045 17,372 5.57 - 18,447 1,612 - 2009 34,493 45,020 5.57 - - 2,712

Units held in DirectProperty InvestmentFund - Retail Sector

- 2010 14,181 16,695 2.16 - - 988 - 2009 14,181 17,865 2.16 - - 1,330

Page 48








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

Commonwealth GrowthFundUnits held in ColonialFirst StateWholesale Australian Bond Fund

- 2010 28,088 30,417 4.39 32,977 4,889 1,468 - 2009 - - - - - -


- 2010 4,510 4,549 0.07 11,161 17,027 236 - 2009 10,376 10,456 0.16 75,462 70,838 336

Units held in ColonialFirst StateWholesale Australian Share Fund - Core

- 2010 65,020 82,900 4.86 70,733 5,713 2,169 - 2009 - - - - - -

Units held in ColonialFirst StateWholesale Indexed Global Share Fund

- 2010 19,147 24,711 1.66 346 4,539 458 - 2009 23,339 29,265 2.02 2,164 12,547 784

Units held in ColonialFirst StateWholesale Indexed Global Bond Fund

- 2010 12,268 15,170 1.66 787 1,048 978 - 2009 12,529 15,016 2.07 3,005 9,831 -

Units held in ColonialFirst StateWholesale Global Property Securities Fund

- 2010 4,212 3,804 0.94 613 - - - 2009 3,599 2,360 0.71 1,924 2,649 -

Page 49








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

Commonwealth GrowthFundUnits held in ColonialFirst StateWholesale Global Share Fund

- 2010 23,346 23,570 1.85 1,529 373 151 - 2009 22,190 22,267 1.94 5,017 - 124

Units held in ColonialFirst StateWholesale Property Securities Fund

- 2010 7,152 4,014 0.34 2,865 - 153 - 2009 4,287 2,168 0.21 2,360 3,205 116

Units held in DiversifiedProperty Investment Fund

- 2010 2,993 3,241 - - 3,436 300 - 2009 6,429 8,392 1.04 - - 506

Units held in DirectProperty InvestmentFund - Retail Sector

- 2010 1,949 2,295 - - - 135 - 2009 1,949 2,455 0.30 - - 183

Units held in ColonialFirst StateWholesale Global Corporate Debt Enhanced Fund

- 2010 - - - 58 3,034 54 - 2009 2,976 2,642 0.26 281 1,133 243


- 2010 - - - 291 6,282 - - 2009 5,992 5,854 1.83 6,177 5,622 198

Page 50








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

Commonwealth AustralianShare FundUnits held in ColonialFirst StateWholesale Australian Share Fund - Core

- 2010 37,336 47,603 2.79 42,084 4,749 1,271 - 2009 - - - - - -


- 2010 - - - 188 3,443 - - 2009 3,256 3,181 0.99 1,241 1,567 101

Commonwealth ShareIncome FundUnits held in ColonialFirst StateWholesale Australian Share Fund - Core

- 2010 124,367 158,567 9.29 139,833 15,466 4,206 - 2009 - - - - - -


- 2010 - - - 20 11,080 - - 2009 11,060 10,807 3.37 3,925 4,895 343

Commonwealth PropertySecurities FundUnits held in ColonialFirst StateWholesale Property Securities Fund

- 2010 30,967 17,382 1.48 36,526 5,559 803 - 2009 - - - - - -

Page 51








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

Commonwealth InternationalShare FundUnits held in ColonialFirst StateWholesale Indexed Global Share Fund

- 2010 8,132 10,495 0.71 146 2,609 193 - 2009 10,595 13,285 0.92 288 3,641 382

Units held in ColonialFirst StateWholesale Global Share Fund

- 2010 5,682 5,736 0.45 58 - 37 - 2009 5,623 5,643 0.49 490 - 31

Commonwealth BondFundUnits held in ColonialFirst StateWholesale Australian Bond Fund

- 2010 33,966 36,782 5.31 39,207 5,241 1,765 - 2009 - - - - - -

Page 52





(ii) Listed Securities

The following Funds had listed securities with the Bank and its related parties as follows:

Shares/ Value of Interest Shares/ Shares/ Dividend/Units Held Investment held in Units Units Distribution

Securities name at at Investment acquired disposed receivedPeriod End Period End at Period During During

End Period PeriodNo.'000 $'000 % No.'000 No.'000 $'000

Commonwealth Income Fund

Commonwealth Bank of Australia

- 2010 - - 0.00 8 52 52 - 2009 44 1,703 0.00 58 58 129

CFS Retail Property Trust

- 2010 - - 0.00 - 27 - - 2009 27 45 0.00 77 78 6

Page 53

Commonwealth Growth Fund


- 2010 - - 0.00 32 201 199 - 2009 169 6,569 0.01 405 449 567


- 2010 - - 0.00 6 106 - - 2009 100 165 0.00 436 502 22



- 2010 - - 0.00 17 110 107 - 2009 93 3,625 0.01 90 112 285


- 2010 - - 0.00 - 58 - - 2009 58 95 0.00 144 165 12

Page 53





(ii) Listed Securities (continued)

The following Funds had listed securities with the Bank and its related parties:

Shares/ Value of Interest Shares/ Shares/ Dividend/Units Held Investment held in Units Units Distribution

Securities name at at Investment acquired disposed receivedPeriod End Period End at Period During During

End Period PeriodNo.'000 $'000 % No.'000 No.'000 $'000



- 2010 - - 0.00 41 362 370 - 2009 321 12,495 0.03 290 358 953


- 2010 - - 0.00 - 202 - - 2009 202 333 0.01 484 539 41

Page 54


Commonwealth Property Office Fund

- 2010 - - 0.00 - 322 - - 2009 322 267 0.02 530 208 14


- 2010 - - 0.00 22 846 - - 2009 824 1,360 0.04 267 915 130

Page 54





(iii) Fixed Interests

The following Funds had fixed interest securities with the Bank and its related parties:

MarketValue

Counterparty$'000



- 2010 - - 2009 488

Commonwealth Bond Fund


- 2010 - - 2009 488

Commonwealth Cash Management Trust


- 2010 305,433 - 2009 367,822

11. 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 fromdividends, distributions, interest, gains on the sale of investments, and unrealised changes in the value ofinvestments.

Page 55



12. FINANCIAL RISK MANAGEMENT

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

The Funds' overall risk management programme focuses on ensuring compliance with the Fund's Product DisclosureStatement/Information Memorandum and seeks to maximise the returns derived for the level of risk to which the Funds areexposed. Certain Funds use derivative financial instruments to alter certain risk exposures. Financial risk management iscarried out by the 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, foreign exchange and other price risks and ratings analysis for credit risk.

(a) Market Risk

(i) Price risk

The Funds' financial assets are either directly or indirectly exposed to price risk. This arises from investments held by theFunds for which prices in the future are uncertain. They are classified on the balance sheet at fair value through profit orloss. All securities investments present a risk of loss of capital. The maximum risk resulting from financial instruments isdetermined by the fair value of the financial instruments.

Where non-monetary financial instruments are denominated in currencies other than the Australian dollar, the price in thefuture will also fluctuate because of changes in foreign exchange rates. Paragraph (ii) below sets out how this componentof price risk is managed and measured.

The Investment Managers mitigate price risk through diversification and a careful selection of securities and other financialinstruments within specified limits and guidelines in accordance with the Product Disclosure Statement/InformationMemorandum or Constitutions and are regularly monitored by the Compliance Department of the Responsible Entity.

The table in Note 12 (b) summarises the impact of an increase/decrease of the Australian and global indexes on theFunds' net assets attributable to unitholders at 30 June 2010 and 30 June 2009. The analysis is based on theassumptions that the relevant indexes increased or decreased as tabled in Note 12 (b) with all other variables heldconstant and that the fair value of the Funds' which have indirect exposures to equity securities and derivatives movedaccording to the historical correlation with the indexes. Funds that invest in various asset classes, such as multi-sectorFunds, will have a weighted average movement calculated based on the proportion of their investments in the thoseclasses.

Page 56



12. FINANCIAL RISK MANAGEMENT (continued)

(a) Market Risk (continued)

(ii) Interest rate risk

The Funds which have investments in interest bearing financial assets are exposed to the risks associated with theeffects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. TheFunds are exposed to cash flow interest rate risk on financial instruments at variable rates. Financial instruments atfixed rates expose the Funds to fair value interest rate risk. The risk is measured using sensitivity analysis.

Certain Funds may also enter into derivatives financial instruments to mitigate the risk of future interest rate changesin accordance with the risk policies and guidelines of the Investment Managers. These transactions are regularlymonitored by the Compliance Department of the Responsible Entity.

The table below summarises the Funds' exposure to interest rate risks. It includes the Funds' assets and liabilities atfair values.

Floating Fixed Non-interest Totalinterest rate interest rate bearing

30/06/2010$'000 $'000 $'000 $'000

Financial assetsCash and cash equivalents 3,708 - - 3,708 Receivables - - 135 135 Financial assets held for trading - - 207,592 207,592

Financial liabilitiesPayables - - (3,030) (3,030)

3,708 - 204,697 208,405

Net increase/(decrease) in exposurefrom interest rate swaps (notionalprincipal) - - - -

Net exposure 3,708 - 204,697 208,405


Page 57





(ii) Interest rate risk (continued)


30/06/2009$'000 $'000 $'000 $'000

Financial assetsCash and cash equivalents 12,108 - - 12,108 Receivables - - 549 549 Financial assets held for trading - 145,988 92,445 238,433

Financial liabilitiesPayables - - (12,211) (12,211) Financial liabilities held for trading - Derivatives - - (56) (56)

12,108 145,988 80,727 238,823


Net exposure 12,108 145,988 80,727 238,823


Page 58







30/06/2010$'000 $'000 $'000 $'000



5,801 - 331,761 337,562


Net exposure 5,801 - 331,761 337,562


30/06/2009$'000 $'000 $'000 $'000

Financial assetsCash and cash equivalents 6,626 - - 6,626 Receivables - - 1,221 1,221 Financial assets held for trading - - 395,750 395,750


6,626 - 392,467 399,093


Net exposure 6,626 - 392,467 399,093

Commonwealth Balanced Fund

Commonwealth Balanced Fund

Page 59







30/06/2010$'000 $'000 $'000 $'000



3,634 - 191,927 195,561


Net exposure 3,634 - 191,927 195,561


30/06/2009$'000 $'000 $'000 $'000

Financial assetsCash and cash equivalents 7,803 - - 7,803 Receivables - - 1,429 1,429 Financial assets held for trading - 26,987 180,037 207,024


7,803 26,987 176,552 211,342


Net exposure 7,803 26,987 176,552 211,342



Page 60







30/06/2010$'000 $'000 $'000 $'000

Financial assetsCash and cash equivalents 984 - - 984 Receivables - - 37 37 Financial assets held for trading - - 47,603 47,603

Financial liabilitiesPayables - - (406) (406)

984 - 47,234 48,218


Net exposure 984 - 47,234 48,218


30/06/2009$'000 $'000 $'000 $'000



3,319 - 45,691 49,010


Net exposure 3,319 - 45,691 49,010



Page 61







30/06/2010$'000 $'000 $'000 $'000



2,224 - 157,185 159,409


Net exposure 2,224 - 157,185 159,409


30/06/2009$'000 $'000 $'000 $'000

Financial assetsCash and cash equivalents 6,703 - - 6,703 Receivables - - 2,527 2,527 Financial assets held for trading - - 160,892 160,892


6,703 - 159,943 166,646


Net exposure 6,703 - 159,943 166,646



Page 62







30/06/2010$'000 $'000 $'000 $'000



403 - 17,358 17,761


Net exposure 403 - 17,358 17,761


30/06/2009$'000 $'000 $'000 $'000



341 - 17,078 17,419


Net exposure 341 - 17,078 17,419



Page 63







30/06/2010$'000 $'000 $'000 $'000



540 - 16,209 16,749


Net exposure 540 - 16,209 16,749


30/06/2009$'000 $'000 $'000 $'000



701 - 18,724 19,425


Net exposure 701 - 18,724 19,425

Commonwealth International Share Fund

Commonwealth International Share Fund

Page 64







30/06/2010$'000 $'000 $'000 $'000



826 - 36,189 37,015


Net exposure 826 - 36,189 37,015


30/06/2009$'000 $'000 $'000 $'000

Financial assetsCash and cash equivalents 7,224 - - 7,224 Receivables - - 63 63 Financial assets held for trading - 39,401 - 39,401 Derivatives - 1 - 1


7,224 39,402 (5,036) 41,590


Net exposure 7,224 39,402 (5,036) 41,590



Page 65







30/06/2010$'000 $'000 $'000 $'000

Financial assetsCash and cash equivalents 21,861 - - 21,861 Receivables - - 5,803 5,803 Financial assets held for trading 183,108 1,161,920 - 1,345,028


204,969 1,161,920 (12,738) 1,354,151


Net exposure 204,969 1,161,920 (12,738) 1,354,151


30/06/2009$'000 $'000 $'000 $'000

Financial assetsCash and cash equivalents 21,879 - - 21,879 Receivables - - 4,462 4,462 Financial assets held for trading 397,894 1,481,575 - 1,879,469

Financial liabilitiesPayables - - (20,224) (20,224) Financial liabilities held for trading - Derivatives - (299) - (299)

419,773 1,481,276 (15,762) 1,885,287


Net exposure 419,773 1,481,276 (15,762) 1,885,287



Page 66






An analysis of financial liabilities by maturities is provided in paragraph (d) below.

The table in Note 12 (b) summarises the impact of an increase/decrease of interest rates on the Funds' operating profitand net assets attributable to unitholders through changes in fair value or changes in future cash flows. The analysis isbased on the assumption that interest rates changed by +/- 60 basis points (2009: +/- 50 basis points) from the periodend rates with all other variables held constant. The impact mainly arises from changes in the fair value of debtsecurities.

(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, foreign exchange risk and other price risk. The reasonably possible movements in therisk variables have been determined based on management's best estimate, having regard to a number of factors,including historical levels of changes in interest rates and foreign exchange rates, historical correlation of the Funds'investments with the relevant benchmark and market volatility. However, actual movements in the risk variables may begreater than anticipated due to a number of factors, including unusually large market shocks resulting from changes inthe performance of and/or correlation between the performance of the economies, markets and securities in which theFunds invest. As a result, historic variations in risk variables should not be used to predict future variations in the riskvariables.

-60 basis +60 basis -10.60% 10.60% -3.93% 3.93%points points$'000 $'000 $'000 $'000 $'000 $'000

30/06/2010 ( 22) 22 - - ( 8,158) 8,158


30/06/2009 1,735 ( 1,924) - - ( 7,870) 7,950

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

Commonwealth Income FundInterest rate risk Foreign exchange risk Price risk

Page 67




(b) Summarised Sensitivity Analysis (continued)


30/06/2010 ( 35) 35 - - ( 54,410) 54,410


30/06/2009 ( 33) 33 - - ( 72,848) 73,076


30/06/2010 ( 22) 22 - - ( 33,289) 33,289


30/06/2009 293 ( 328) 6 ( 6) ( 46,992) 47,028

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

Commonwealth Balanced FundInterest rate risk Foreign exchange risk Price risk



Page 68






30/06/2010 ( 6) 6 - - ( 14,804) 14,804


30/06/2009 ( 17) 17 - - ( 15,057) 15,057


30/06/2010 ( 13) 13 - - ( 49,314) 49,314


30/06/2009 ( 34) 34 - - ( 51,746) 51,746

Commonwealth Australian Share FundInterest rate risk Foreign exchange risk Price risk


Commonwealth Share Income FundInterest rate risk Foreign exchange risk Price risk


Page 69





-60 basis +60 basis -10.60% 10.60% 0.00% 0.00%points points$'000 $'000 $'000 $'000 $'000 $'000

30/06/2010 ( 2) 2 - - - -


30/06/2009 ( 2) 2 - - ( 5,580) 5,580


30/06/2010 ( 3) 3 - - ( 3,701) 3,701


30/06/2009 ( 4) 4 - - ( 5,470) 5,470

Commonwealth Property Securities FundInterest rate risk Foreign exchange risk Price risk


Commonwealth International Share FundInterest rate risk Foreign exchange risk Price risk


Page 70






30/06/2010 ( 5) 5 - - - -


30/06/2009 449 ( 500) - - - -


30/06/2010 ( 8,201) 8,201 ( 425) 425 - -


30/06/2009 ( 9,511) 9,511 - - - -

Commonwealth Bond FundInterest rate risk Foreign exchange risk Price risk


Commonwealth Cash Management TrustInterest rate risk Foreign exchange risk Price risk


Page 71




(c) Credit risk

Credit risk primarily arises from investments in debt securities and derivative products. Other credit risk arises from cashand cash equivalents, deposits with banks and other financial institutions and amounts due from brokers.

Some Funds transact in derivatives in the over the counter (OTC) markets. OTC derivatives are entered into directly withthe counterparty as there is no Clearing House arrangement. Such transactions are only dealt through suitablycredit-worthy counterparties, whom have a minimum long term credit rating of BBB as rated by Standard and Poor’s oran equivalent agency. The maximum exposure to credit risk for these OTC derivatives is the contract/notional amount,as shown in Note 13.

Certain Funds invest in debt securities which have an investment grade as rated by the Standard & Poor’s rating agency.For unrated assets a rating is assigned by the Investment Manager using an approach that is consistent with theapproach used by rating agencies.

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

The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets and thecontract/notional amount of the OTC derivatives. An analysis of debt securities by rating is set out in the table below forthe Funds which have such securities.

30/06/2010 30/06/2009 30/06/2010 30/06/2009$'000 $'000 $'000 $'000

RatingAAA - 70,589 - 12,132 AA+ - 34,883 - 9,157 AA - - - - AA- - 6,468 - 497 A+ - 5,745 - 1,425 A - 9,604 - 1,881 A- - 4,511 - - Others - 9,122 - 1,896 Non rated - 5,066 - -

Total - 145,988 - 26,988

CommonwealthIncome Fund Growth Fund

Commonwealth

Page 72




(c) Credit risk (continued)

30/06/2010 30/06/2009 30/06/2010 30/06/2009$'000 $'000 $'000 $'000

RatingAAA - 17,137 106,112 157,057 AA+ - 14,376 - - AA - - 1,029,836 761,260 AA- - 2,535 76,996 76,822 A+ - 1,425 - 326,336 A - 1,641 31,950 25,136 A- - 488 - - Others - 1,400 100,134 16,563 Non rated - 399 - 516,296

Total - 39,401 1,345,028 1,879,470

Commonwealth CashManagement TrustFund

Commonwealth Bond

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(d) Liquidity risk

The Funds are exposed to daily cash redemptions of redeemable units.The Funds primarily hold investments in managedinvestment schemes which are managed by the Responsible Entity. These investments are readily disposable.

The Funds' listed securities are considered readily realisable, as they are listed on either the Australian Stock Exchangeor other recognised International Stock Exchanges.

Certain Funds may, from time to time, invest in derivative contracts traded over the counter, which are not traded in anorganised market and may be illiquid. As a result, these Funds may not be able to quickly liquidate its investments inthese instruments at an amount close to their fair value to meet its liquidity requirements or to respond to specific eventssuch as deterioration in the creditworthiness of any particular issuer or counterparty. No such investments were held atperiod end.

The Funds' financial liabilities, excluding derivative financial liabilities, comprise trade and other payables and arecontractually due within 30 days.

The table below analyses the Funds' derivative financial instruments into relevant maturity groupings based on theremaining period to the contractual maturity date at the period end date. The amounts disclosed in the table are thecontractual undiscounted gross cash flows expected to be paid or received, determined by reference to the conditionsexisting at the period end date. The contractual amounts can be settled on a gross or net basis. There were no derivativeinstruments held by the Funds at the current period end date.

Less than 1 - 3 3 - 12 1 - 2 2 - 3 More than Total30/06/2009 1 month months months years years 3 years

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

Australian share priceindex futures

Inflows - - - - - - - (Outflows) - (56) - - - - (56)


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





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(d) Liquidity risk (continued)


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




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




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

Australian interest ratefutures

Inflows - 1 - - - - 1 (Outflows) - - - - - - -


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

Australian interest ratefutures






Page 75




(e) Fair Value Estimation

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

The Funds value their investments in accordance with the accounting policies set out in Note 1. The fair value of financialinstruments traded in active markets (such as publicly traded derivatives and listed securities) is based on quoted marketprices at the reporting date. The quoted market price used for financial assets held by the Funds is the last bid price. Thequoted market price used for equity securities sold short by certain Funds is the current asking price. Derivative contractsclassified as held for trading are fair valued by comparing the contracted rate to the current market rate for a contract withthe same remaining period to maturity.

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

The fair value of financial instruments that are not traded in an active market (such as over the counter derivatives andinvestments in unlisted securities) is determined using valuation techniques. These Funds use a variety of methods andmake assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealerquotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimateddiscounted cash flows, are used to determine the fair value for the remaining financial instruments. The fair value ofinterest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forwardexchange contracts is determined using forward exchange market rates at the reporting date.

As a result of the developments in global markets, generally known as the global financial crisis, liquidity in someinvestment markets has decreased significantly. As a result, the volume of trading in some of the investments held by theFunds has decreased significantly, and accordingly the valuation of those investments is subject to a greater uncertaintyand requires greater judgement than would be the case in normal investment market conditions.

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13. DERIVATIVE FINANCIAL INSTRUMENTS

In the normal course of business certain Funds enter into transactions in various derivative financial instrumentswhich have certain risks. A derivative is a financial instrument or other contract which is settled at a future date andwhose value changes in response to the change in a specified interest rate, financial instrument price, commodityprice, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable.

Derivative financial instruments require no initial net investment or an initial net investment that is smaller thanwould be required for other types of contracts that would be expected to have a similar response to changes inmarket factors.

Derivative transactions include many different instruments such as forwards, futures and options. Derivatives areconsidered to be part of the investment process and the use of derivatives is an essential part of these Funds'portfolio management. Derivatives are not managed in isolation. Consequently, the use of derivatives ismultifaceted and includes:

- hedging to protect an asset or liability of these Funds against a fluctuation in market values or to reducevolatility

- a substitution for trading of physical securities- adjusting asset exposures within the parameters set in the investment strategy, and adjusting the duration of

fixed interest portfolios or the weighted average maturity of cash portfolios.

While derivatives are used for trading purposes, they are not used to gear (leverage) a portfolio. Gearing a portfoliowould occur if the level of exposure to the markets exceeds the underlying value of these Funds.

Certain Funds hold the following derivative instruments:

(a) Futures

Futures are contractual obligations to buy or sell financial instruments on a future date at a specified priceestablished in an organised market. The futures contracts are collateralised by cash or marketable securities.Changes in futures contracts' values are usually settled net daily with the exchange. Interest rate futures arecontractual obligations to receive or pay a net amount based on changes in interest rates at a future date at aspecified price, established in an organised market.

The Funds' derivative financial instruments at reporting period end are detailed below:

Contract/ Contract/Notional Assets Liabilities Notional Assets Liabilities

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

- Australian share price index futures - - - 1,658 - (56)

- - - 1,658 - (56) - - - -


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


- - - 6,924 - (233) - - - -

Commonwealth Income FundFair Values Fair Values

30/06/2010 30/06/2009

Commonwealth Growth FundFair Values Fair Values

30/06/2010 30/06/2009

Page 77



13. DERIVATIVE FINANCIAL INSTRUMENTS (continued)


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


- - - 2,926 - (99) - - - -


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


- - - 7,412 - (247) - - - -


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

- Australian interest rate futures - - - 953 1 -

- - - 953 1 - - - - -


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

- Australian interest rate futures - - - 633,007 - (299)

- - - 633,007 - (299) - - - -

14. CONTINGENT LIABILITIES AND COMMITMENTS

As at 30 June 2010 the Funds have no contingent liabilities and commitments (2009 - none).

15. EVENTS AFTER BALANCE SHEET DATE

Since the reporting date no significant events have occurred that required reporting (2009 - none).

Commonwealth Bond FundFair Values Fair Values

30/06/2010


30/06/2009

30/06/2010 30/06/2009

Fair Values Fair Values

30/06/2010 30/06/2009

30/06/2010 30/06/2009

Fair Values Fair Values


Commonwealth Cash Management TrustFair Values Fair Values

Page 78


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) giving a true and fair view of the Funds' financial positions as at 30 June 2010and of their performances for the reporting period ended on that date; and

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

Note 1(b) confirms that the financial statements also comply with International Financial ReportingStandards as issued by the International Accounting Standards Board.

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

Bradley Brian Massey

DIRECTORS' DECLARATIONFOR THE REPORTING PERIOD ENDED 30 JUNE 2010

Page 79

Bradley Brian MasseyDirectorSydney6 September 2010

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