2020 Annual Reports and Annual General Meeting Materials

31 August 2020



The Manager
ASX Market Announcements
Australian Securities Exchange
Exchange Centre
Level 4
20 Bridge Street
Sydney NSW 2000



Electronic Lodgement


Australian Foundation Investment Company Limited
2020 Annual Reports and Annual General Meeting Materials


Dear Sir / Madam

Please find attached the 2020 Statutory Annual Report, Annual Shareholder
Review and Annual General Meeting Materials being sent to shareholders.


Yours faithfully


Matthew Rowe
Company Secretary

Authorised by the Company Secretary

Annual
Report
20
20

Contents
2 DIRECTORS’
REPORT
2 5 Year Summary
3 About the Company
4 Review of Operations
and Activities
10 Top 25 Investments
11 Company Position
12 Board Members
15 Senior Executives
16 Remuneration Report
34 Non-audit Services
35 Auditor’s Independence
Declaration

36 FINANCIAL
STATEMENTS
37 Consolidated Income Statement
38 Consolidated Statement of
Comprehensive Income
39 Consolidated Balance Sheet
40 Consolidated Statement
of Changes in Equity
42 Consolidated Cash Flow
Statement
43 NOTES TO
THE FINANCIAL
STATEMENTS
43 A. Understanding AFIC’s
Financial Performance
47 B. Costs, Tax and Risk
50 C. Unrecognised Items
51 D. Balance Sheet
Reconciliations
53 E. Income Statement
Reconciliations
54 F. Further Information
60 DIRECTORS’
DECLARATION
61 INDEPENDENT
AUDIT REPORT
66 OTHER
INFORMATION
66 Information About Shareholders
66 Major Shareholders
67 Sub-underwriting
67 Substantial Shareholders
67 Transactions in Securities
68 Major Transactions in the
Investment Portfolio
69 Holdings of Securities
71 Issues of Securities
72 Company Particulars
73 Shareholder Meetings
Australian Foundation Investment Company Limited ABN 56 004 147 120
AUSTRALIAN FOUNDATION
INVESTMENT COMPANY
IS A LISTED INVESTMENT
COMPANY INVESTING
IN AUSTRALIAN AND
NEW ZEALAND EQUITIES.

Year in Summary
* Assumes a shareholder can take full advantage of the franking credits.
Profit for
the Year
$240.4m
$406.4m in 2019.
Down 40.8%, excluding
one-off items in 2019
down 12 %
Total
Shareholder
Return
2.9%
Share price plus
dividend, including
franking*
Management
Expense
Ratio
0.13%
0.13%
in 2019
Total
Portfolio
Return
- 3 .1%
Including franking*
S&P/ASX 200
Accumulation Index
including franking*
-6.6%
Fully
Franked
Dividend
14
¢
Final
24
¢
Total
32 cents total
in 2019 including
8 cent special dividend
2020
Total
Portfolio
$7.2b
Including cash at
30 June $7.8 billion
in 2019
1Australian Foundation Investment Company Limited Annual Report 2020

DIRECTORS’ REPORT
5 Year Summary
Net Profit After Tax
($ Million)
2019
2018
2017
2016
Net Profit Per Share
(Cents)
Dividends Per Share
(Cents)
(b)
Investments at Market Value
($ Million)
(e)
Net Asset Backing Per Share
($)
(d)
Number of Shareholders
(30 June)
265.8
272.2134.2
(a)
279.0
245.3
2020
240.4
2019
2018
2017
2016
5.50
6.49
6.27
5.89
2020
5.96
2019
2018
2017
2016
113,482
138,671
129,948
119,463
2020
153,588
2019
2018
2017
2016
24
32
(c)
24
24
24
2020
24
2019
2018
2017
2016
23.8
34.0
23.6
21.3
2020
19.9
2019
2018
2017
2016
6,250
7,566
7,274
6,790
2020
7,122
8
(c)
Notes
(a) Participation in the Rio Tinto and BHP off-market share buy backs, special dividends and the receipt of a dividend because of the Coles demerger
from Wesfarmers.
(b) All dividends were fully franked. The LIC attributable gain attached to the dividend was 2020: 7.14 cents, 2019: 7.14 cents, 2018: 2.86 cents, 2017: nil,
2016: 2.1 cents.
(c) 8 cents fully franked special dividend paid with the interim dividend.
(d) Net asset backing per share based on year-end data before the provision for the final dividend. The figures do not include a provision for capital gains
tax that would apply if all securities held as non-current investments had been sold at balance date as Directors do not intend to dispose of the portfolio.
(e) Excludes cash.
2Australian Foundation Investment Company Limited Annual Report 2020

About the Company
Australian Foundation Investment Company (AFIC)
is a listed investment company investing in Australian
and New Zealand equities.
Investment Objectives
The Company aims to provide shareholders with attractive
investment returns through access to a growing stream
of fully franked dividends and growth in capital invested.
The Company’s primary investment goals are:
• to pay dividends which, over time, grow faster than
the rate of inflation; and
• to provide attractive total returns over the medium
to long term.
How AFIC Invests – What We Look For in Companies
A portfolio that
is managed to
achieve long term
capital and dividend
growth
Quality FirstGrowth
Including dividends
Value
Approach to Investing
The investment philosophy is built
on taking a medium to long term view
on companies in a diversified portfolio
with an emphasis on identifying quality
companies that are likely to sustainably
grow their earnings and dividends over
this time frame.
Quality in this context is an outcome
of our assessment of the board and
management as well as some key
financial metrics. These include
return on
capital employed, return on equity, the level
of gearing in the balance sheet, margins
and free cash flow. The structure of the
industry and a company’s competitive
position in this industry is also an
important indicator of quality. Linked to
this assessment of quality is the ability
of companies to grow earnings over time,
which ultimately should produce good
dividend growth.
As a long term investor, Environmental,
Social and Governance (ESG) analysis
is integrated into AFIC’s investment
framework:
• AFIC will seek to invest in companies
that have strong governance and risk
management processes that include
environmental and social risks.
• The remuneration structures proposed
and used by the Boards of the
companies in which AFIC invests
are assessed as we are seeking
remuneration plans and outcomes
that align with AFIC’s (and AFIC’s
own investors) interests as long term
shareholders.
• AFIC supports engagement with
its investee companies on these
issues, and will vote as shareholders
accordingly.
Recognising value is also an important
aspect of sound long term investing.
Short term measures such as the price
earnings ratio, price to book or price to
sales may be of some value, but aren’t
necessarily strong predictors of future
performance. Our assessment of value
tries to capture the opportunity a business
has to prosper and thrive over the
medium to long term.
In building the investment portfolio in this
way, we believe we can offer investors a
well-diversified portfolio of high-quality
companies that is intended to deliver total
returns ahead of the Australian equity
market and with less volatility over
the long term.
The Company also uses options
written against a small proportion of its
investments and a small trading portfolio
to generate additional income.
From time to time, some borrowings
may be used where potential investment
returns justify the use of debt. This is
managed within very conservative limits,
as determined by the Board.
AFIC is managed for the benefit of its
shareholders with fees based on the
recovery of costs rather than as a fixed
percentage of the portfolio. There are no
performance fees. As a result, the benefit
of scale over time results in a very low
expense ratio for investors. For the
12 months to 30 June 2020 this was
0.13 per cent, or 13 cents for each
$100 invested.
3Australian Foundation Investment Company Limited Annual Report 2020

Review of Operations and Activities
Profit and Dividend
The full year profit was $240.4 million.
The profit for the corresponding period
last year was $406.4 million. Investment
income was down, as a number of one-
off items were not repeated this year.
This included participation in the Rio Tinto
and BHP off-market share buy-backs,
special dividends and the receipt of a
dividend because of the Coles demerger
from Wesfarmers ($134.2 million in total).
In addition, several companies reduced
or deferred dividends in the second half
of the year, which also meant a fall in
dividend income.
The trading portfolio recorded a profit
of $9.7 million as some placements,
where the Company was satisfied with
its existing holding, were sold for a profit
and there was an increased contribution
from option activity. In the corresponding
period, last year, this portfolio recorded
a loss of $4.7 million.
Earnings per share were 19.9 cents,
down from 34.0 cents (22.7 cents
excluding one off items last year). AFIC,
as a long-standing listed investment
company, has reserves that can be used
in more difficult conditions. Drawing upon
these reserves, the final dividend was
maintained at 14 cents per share fully
franked despite the fall in income in the
second half. Total fully franked dividends
applicable for the year are 24 cents per
share. Last financial year total dividends
were 32 cents per share. This included
a special interim dividend of 8 cents
per share. No special dividend has
been paid this year.
Five cents of the final dividend are
sourced from taxable capital gains,
on which the Company has paid or
will pay tax. The amount of the pre-tax
attributable gain on this portion of the
dividend, known as an ‘LIC capital gain’,
is therefore 7.14 cents. The enables some
shareholders to claim a tax deduction in
their tax return.
Market and Portfolio
Performance
Economic conditions have been
extremely challenging for many
businesses, as the fallout from the
COVID-19 outbreak negatively impacts
many Australians. Equity markets have
also been very volatile following the all-
time highs reached in late February, as
governments and central banks try and
respond to deteriorating conditions and
control of the virus remains uncertain.
The Australian share market was on track
for a very strong year until the world was
unexpectedly hit with the COVID-19 virus
in the early part of the 2020 calendar
year. From the market peak in February
through to the low point for the year in late
March, the S&P/ASX 200 price index was
down 36.5 per cent. Surprisingly, despite
the significant decline in economic
conditions, the S&P/ASX 200 price index
increased 29.7 per cent from this
4Australian Foundation Investment Company Limited Annual Report 2020

7,000
6,500
6,000
5,500
5,000
4,500
Jul 19
Aug 19
Sep 19
Oct 19
Nov 19
Dec 19
Jan 20
Feb 20
Mar 20
Apr 20
May 20
Jun 20
low point until the end of the financial
year (Figure 1), driven primarily by
an expansion in market valuations.
In these volatile market conditions, the
positioning of the portfolio to ensure
quality companies with strong industry
positions formed the core of the portfolio
has lessened the impact of the negative
market. Portfolio return for the year,
including franking, was negative 3.1 per
cent. Including franking, the S&P/ASX 200
Accumulation Index was down 6.6 per cent
(Figure 2).
Companies in the portfolio that
contributed strongly to relative returns
through the 12-month period were CSL,
Wesfarmers, Fisher & Paykel Healthcare,
ResMed, James Hardie Industries, Xero,
NEXTDC and Carsales.com. In contrast,
the major banks and energy exposures
through Oil Search and Woodside
Petroleum significantly underperformed.
Figure 1: Performance of the S&P/ASX 200 Price Index for the Financial Year
5Australian Foundation Investment Company Limited Annual Report 2020

Within the negative return from the market
for the year, Healthcare continued to hold
its ground given the strong performance
of companies such as CSL, ResMed and
Fisher & Paykel Healthcare. Information
Technology rebounded strongly, driven
largely by the uplift in the share price
of Afterpay (which AFIC does not hold),
and the performance of Xero and
NEXTDC. In contrast, financials were
down because of the significant pressure
on the major banks and energy was
impacted by the large fall in the oil price
(Figure 3).
The long term performance of the
portfolio, which is more aligned with
the Company’s investment timeframes,
was 9.3 per cent per annum for the 10
years to 30 June 2020. This is in line with
the Index return over the same period
of 9.4 per cent. Both of these figures
include the benefit of franking. AFIC’s
performance numbers are after costs.
Review of Operations and Activities
continued
Figure 3: Performance of Selected Sectors of the Market
Financials Healthcare EnergyInformation Technology
Jul 19
Aug 19
Sep 19
Oct 19
Nov 19
Dec 19
Jan 20
Feb 20
Mar 20
Apr 20
May 20
Jun 20
160
140
120
100
80
60
40
10 year return5 year return1 year return
-3.1%
-6.6%
7.5%
6.7%
9.3%
9.4%
Net asset per share growth plus
dividends, including franking
S&P/ASX 200 Accumulation
Index, including franking
Figure 2: Portfolio Performance* – Per Annum Returns to 30 June 2020
* Assumes an investor can take full advantage of the franking credits.
6Australian Foundation Investment Company Limited Annual Report 2020

7Australian Foundation Investment Company Limited Annual Report 2020

Positioning the Portfolio
During the period, AFIC continued to
adjust the portfolio and took advantage
of the decline in share prices to increase
holdings in companies it wanted to own
more of. This included participation in
the recent deeply discounted capital
raisings that have occurred.
As a result, a number of purchases were
undertaken during the year. This included
placements in National Australia Bank,
Cochlear, Auckland International Airport,
Oil Search, NEXTDC, Ramsay Health
Care, Reece and Qube Holdings. Major
additions included Goodman Group,
Telstra (to bring some income into the
portfolio), Macquarie Group, Cleanaway
and Sydney Airport. While there has been
a reduction in the number of holdings
in the portfolio over the year from 76 to
61, three new companies (listed below)
were added, given we consider the
long term opportunity for each
business to be attractive:
• Altium is an American domiciled,
Australian owned software company
that provides PC-based electronics
design software for engineers who
design printed circuit boards.
• Netwealth provides independent
investment platform services to
institutional, corporate and retail clients.
• Ryman Health Care engages in the
provision of integrated retirement
villages for the elderly. It offers
independent living, serviced apartment,
rest home, hospital, dementia, and
short term care. It operates throughout
New Zealand and Australia.
Major sales included the complete
disposal of holdings in Treasury Wine
Estates, Suncorp Group, Scentre Group,
Adelaide Brighton and Perpetual, as
these funds were deployed elsewhere in
the portfolio. There was also some small
trimming of the position in James Hardie
Industries, although it remains a major
holding in the portfolio.
Figure 4 highlights the profile of AFIC’s
portfolio by the various sectors of the
market at the end of the financial year
and how it differs from the Index.
Share Price Return
The share price return, including
reinvestment of dividends and franking
credits, over the 12 months to 30 June
2020 was 2.9 per cent, which is ahead
of the portfolio return for the year. The
share price was trading at a premium
of 2.2 per cent to the net asset backing
(before tax on unrealised gains) at the
end of June 2020, whereas at 30 June
2019 the discount was 3.7 per cent
(Figure 5). During this period the net
asset backing figure, including franking,
fell 3.1 per cent.
Whilst the share price can often fluctuate
between a premium and discount to net
asset backing, over the long term the
share price return normally aligns with
the portfolio return.
Review of Operations and Activities
continued
Figure 5: Share Price Premium/Discount to Net Asset Backing
15%
-10%
-5%
0%
5%
10%
Jun 09
Jun 10
Jun 11
Jun 12
Jun 13
Jun 14
Jun 15
Jun 16
Jun 17
Jun 18
Jun 19
Jun 20
AFIC portfolio weightS&P/ASX 200 Index weight
17.2%16.6%15.9%15.8%8.3%6.0%1.0%4.6%3.0%4.4%1.5%1.7%4.0%
20%
15%
10%
5%
0%
Banks
Healthcare
Industrials
Materials
Energy
Real
Estate
Cash
Utilities
Other
Financials
Consumer
Discretionary
Consumer
Staples
Communication
Services
Information
Technology
Figure 4: AFIC Investment by Sector Versus the S&P/ASX 200 Index
as at 30 June 2020
8Australian Foundation Investment Company Limited Annual Report 2020

Times
Source: FactSet
20
19
18
17
16
15
14
13
2015
2016201720182019
2020
5-year average 15.9
Figure 6: Valuation of the Market – Price Earnings Ratio of the S&P/ASX 200 Index
Outlook
As we move into the new financial year,
the outlook remains unclear as companies
face an extremely difficult operating
environment. While recent fiscal and
monetary support has provided some
breathing space for the economy, the
environment moving forward is going to
be largely dictated by the progress made
on suppressing COVID-19 in Australia
and across the globe.
In this environment, despite very low
interest rates and the significant income
support provided by governments,
it is difficult to reconcile the expansion
of market valuations (Figure 6) with the
pressure company profits and dividends
are likely to remain under. Given the
strength of the market since the lows
recorded in March and the further
adjustments that have been made to the
portfolio during this market weakness,
we are content to be patient. We believe
the portfolio is well positioned to withstand
further volatility given the high quality of
companies in the portfolio.
9Australian Foundation Investment Company Limited Annual Report 2020

Includes investments held in both the investment and trading portfolios.

Value at Closing Prices at 30 June 2020
Total Value
$ Million
% of the
Portfolio
1CSL 608.58.5
2Commonwealth Bank of Australia548.47.7
3BHP Group*498.87.0
4Wesfarmers 330.54.6
5Transurban Group326.94.6
6Westpac Banking Corporation286.94.0
7Macquarie Group 257.33.6
8National Australia Bank 235.33.3
9Woolworths Group 211.33.0
10Rio Tinto*195.82.7
11Amcor174.62.5
12Australia and New Zealand Banking Group 171.32.4
13Telstra Corporation*170.62.4
14James Hardie Industries 142.82.0
15Ramsay Health Care 134.41.9
16Brambles131.91.9
17Sonic Healthcare123.41.7
18Sydney Airport 121.61.7
19Coles Group121.31.7
20Mainfreight120.41.7
21Fisher & Paykel Healthcare Corporation114.41.6
22ResMed108.41.5
23Qube Holdings102.71.4
24Goodman Group99.31.4
25Woodside Petroleum96.61.4
Total5,433.4
As percentage of total portfolio value (excludes cash)76.3%
* Indicates that options were outstanding against part of the holding.
Top 25 Investments
As at 30 June 2020
10Australian Foundation Investment Company Limited Annual Report 2020

Capital Changes
The following changes occurred to the
Company’ share capital during the year:
• Under the Company’s Dividend
Substitution Share Plan, 622,283 new
shares were issued at nil cost in August
2019 and 468,445 new shares were issued
at nil cost in February 2020.
• Under the Company’s Dividend
Reinvestment Plan, 5,540,584 new shares
were issued at a price of $6.21 in August
2019 and 3,584,713 new shares were
issued at a price of $6.93 in February 2020.
The Company’s buy-back facility remains
open although no shares were bought back
during the year.
The Company’s contributed equity, net
of share issue costs, rose $59.1 million
to $2.9 billion. At the close of the year the
Company had 1,210 million shares on issue.
Dividends
Directors have declared a fully franked final
dividend of 14 cents per share, the same as
last year.
The dividends paid during the year ended
30 June 2020 were as follows:
$’000
Final dividend for the year
ended 30 June 2019 of 14
cents fully franked at 30% paid
29 August 2019
164,150
Interim dividend for the year
ended 30 June 2020 of 10
cents per share fully franked at
30%, paid 24 February 2020
117,377
281,527
Dividend Substitution Share
Plan (‘DSSP’)
The Company has in place a Dividend
Substitution Share Plan.
This enables shareholders to elect to receive
shares in the Company instead of dividends,
forgoing any franking credit & LIC gains that
would otherwise be attached to the dividend
but deferring any tax due on the receipt
of such shares (for Australian tax-payers)
until such time as the shareholding is sold.
Shareholders will need to seek their own
taxation advice in determining if this Plan
is suitable for them.
Further details are available on the
Company’s website or by request from
the Company’s Share Registrar.
Financial Condition
The Company’s primary source of funds
consists of its shareholders’ funds. The
Company also had agreements with
Commonwealth Bank of Australia for loan
facilities totalling $250 million (see Note D2).
At various points during the year, some of
these facilities were drawn down. The Board
takes a prudent and conservative approach
to the use of borrowed funds. Currently, when
used, they are maintained within a limit of
10 per cent of total assets. As at 30 June
2020, the facilities are undrawn.
Listed Investment Company
Capital Gains
Listed Investment Companies (LIC) which
make capital gains on the sale of investments
held for more than one year are able to attach
to their dividends an LIC capital gains amount
which some shareholders are able to use to
claim a tax deduction. This is called an ‘LIC
capital gain attributable part’. The purpose of
this is to put shareholders in Listed Investment
Companies on a similar footing with holders
of managed investment trusts with respect to
Capital Gains Tax on the sale of underlying
investments.
Tax legislation sets out the definition of a
‘Listed Investment Company’ which AFIC
satisfies. Furthermore, from time to time
the Company sells securities out of the
investment portfolio held for more than one
year which may result in capital gains being
made and tax being paid. The Company
is therefore on occasion in a position to be
able to make available to shareholders a
LIC capital gain attributable part with our
dividends.
In respect of this year’s final dividend of
14.0 cents per share for the year ended
30 June 2020, it carries with it a 7.14 cents
per share LIC capital gain attributable part
(2019: 7.14 cents). The amount which
shareholders may be able to claim as a
tax deduction depends on their individual
situation. Further details are provided in
the dividend statements.
Likely Developments
The Company intends to continue investing
on behalf of its shareholders as it has been
doing since 1928. The results of these
investment activities will depend upon the
performance of the companies and securities
in which we invest. Their performance in
turn depends on many economic factors
(macro, which include economic growth
rates, inflation, interest rates, exchange
rates and taxation levels and micro which
includes industry economics and competitive
behaviour) and their approach to, and
management of, material Environmental,
Social and Governance (‘ESG’) risks.
We do not believe it is possible or appropriate
to make a prediction on the future course
of markets or the performance of our
investments. Accordingly, we do not provide
a forecast of the likely results of our activities.
However, the Company’s focus is on
results over the medium to long term and
its twin objectives are to grow dividends at
a rate faster than inflation and to provide
shareholders with attractive capital growth.
Significant Changes in the
State of Affairs
Directors are not aware of any other
significant changes in the operations of
the Company, or the environment in which
it operates, that will adversely affect the
results in subsequent years.
Events Since Balance Date
The Directors are not aware of any matter or
circumstance not otherwise disclosed in the
financial statements or the Directors’ Report
which has arisen since the end of the financial
year that has affected or may affect the
operations, or the results of those operations,
or the state of affairs of the Company in
subsequent financial years.
Environmental Regulations
The Company’s operations are such that
they are not directly materially affected by
environmental regulations.
Rounding of Amounts
The Company is of the kind referred to in the
ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191,
relating to the ‘rounding off’ of amounts in
the financial report. Amounts in the financial
report have been rounded off in accordance
with that Instrument, to the nearest thousand
dollars, or in certain cases, to the nearest
dollar.
Corporate Governance
Statement
The Company’s Corporate Governance
Statement for the financial year ended
30 June 2020 will be found on the
Company’s website at:
www.afi.com.au/corporate-governance
As an overseas listed issuer on the New
Zealand Stock Exchange (NZX), the Company
is generally deemed to comply with the NZX
Listing Rules provided that the Company
remains listed on the ASX, complies with the
ASX Listing Rules and provides the NZX with
all the information and notices that it provides
to the ASX.
Company Position
11Australian Foundation Investment Company Limited Annual Report 2020

Chairman of the Investment and Nomination Committees. Member of
the Remuneration and Audit Committees. Director of the Company’s
subsidiary, Australian Investment Company Services Limited (AICS).
Mr Paterson is a company Director who was appointed to the Board in
June 2005 and Chairman in 2018. He was a former Alternate Director
of the Company for Mr Campbell from April 1987 to June 2005. He is
Chairman of Djerriwarrh Investments Limited. He was formerly a Director
of Goldman Sachs JBWere and is a former member of the Board of
Guardians of Australia’s Future Fund.
Member of the Investment Committee. Director of the Company’s
subsidiary, Australian Investment Company Services Limited (AICS).
Mr Barker transitioned to a Non-Executive Director in January 2018
having been appointed Chief Executive Officer of the Company in February
2001 and Managing Director in October 2001 and prior to that he was an
Alternate Director of the Company since April 1987. He is a Non-Executive
Director of AMCIL Limited, Mirrabooka Investments Limited and AICS
(Australian Investment Company Services Limited), Chairman of Melbourne
Business School Ltd and an Advisory Board member of the Faculty of
Business and Economics at the University of Melbourne.
Managing Director of the Company’s subsidiary, Australian Investment
Company Services Limited (AICS). Member of the Investment Committee.
Mr Freeman became Chief Executive Officer and Managing Director
in January 2018 having been Chief Investment Officer since joining the
Company in February 2007. Prior to this he was a Partner with Goldman
Sachs JBWere where he spent 12 years advising the Investment
Companies on their investment and dealing activities. He has a deep
knowledge and experience of investments markets and the Company’s
approaches, policies and processes. He is also Managing Director
of Djerriwarrh Investments Limited, AMCIL Limited and Mirrabooka
Investments Limited.
Member of the Investment and Nomination Committees.
Ms Dee-Bradbury was previously Chief Executive Officer/President of
Developed Markets (Asia Pacific and ANZ) for Mondelez from 2010 to
2014. Before joining Mondelez Ms Dee-Bradbury was Group CEO of the
global Barbeques Galore group, and has held other senior executive roles
in organisations including Maxxium, Burger King Corporation and Lion
Nathan/Pepsi Cola Bottlers. Ms Dee-Bradbury is a Non-Executive Director
of BlueScope Steel Limited (appointed April 2014), a Director of Energy
Australia Holdings following her appointment in April 2017, an inaugural
member of the Business Advisory Board at Monash Business School
and a member of Chief Executive Women and of the Women Corporate
Directors Foundation. Ms Dee-Bradbury was formerly a Non-Executive
Director of Grain Corp Limited (from 2014 to 2020) and Tower Limited
(NZ) until her resignation in 2016 and a former member of the Federal
Government’s Asian Century Strategic Advisory Board.
John Paterson
Chairman and
Independent
Non-Executive
Director
BCom (Hons) (Melb),
CPA, F Fin
Ross E Barker
Non-Executive
Director
BSc (Hons) (Melb),
MBA (Melb), F Fin
Mark Freeman
Managing Director
BE, MBA, Grad Dip
App Fin (Sec Inst),
AMP (INSEAD)
Rebecca
Dee-Bradbury
Independent
Non-Executive
Director
BBus, GAICD
Board Members
12Australian Foundation Investment Company Limited Annual Report 2020

Chairman of the Remuneration Committee.

Mr Liebelt was appointed to the Board in June 2012. He is Chairman of
Amcor Limited, a Director of Australia and New Zealand Banking Group
Limited, and a Director of Carey Baptist Grammar School. He is a Fellow
of the Australian Academy of Technological Sciences and Engineering and
a Fellow of the Australian Institute of Company Directors. He was formerly
Chairman and Director of DuluxGroup Limited, Chairman and Director of
the Global Foundation, Deputy Chairman of Melbourne Business School
and Managing Director and CEO of Orica Limited.
Member of the Investment, Remuneration and Audit Committees.
Chairman of the Nomination Committee.
Mrs Walter is an Australian lawyer and company Director. She was
appointed to the Board in August 2002. Mrs Walter is Chair of Melbourne
Genomics Health Alliance and the Financial Adviser Standards and Ethics
Authority (FASEA). Mrs Walter is a Director of the RBA’s Payments System
Board and a Trustee of the Helen Macpherson Smith Trust. She was
formerly Chair of Federation Square Pty Ltd and Australian Synchrotron
Company Ltd, Deputy Chair of Victorian Funds Management Corporation
and a Director of ASX, National Australia Bank Ltd, Orica Ltd and
Melbourne Business School.
Member of the Audit Committee.
Mr Peever was appointed to the Board in November 2013. He was Managing
Director of Rio Tinto Australia from 2009 to 2014. He is Chairman of Brisbane
Airport Group Pty Ltd. Mr Peever is a member of the Foreign Investment
Review Board. He chaired the Minister of Defence’s First Principles Review
of Defence and following the acceptance of the review by Government
was Chair of the Oversight Board which helped guide implementation (with
Defence) of the Review’s recommendations. David is also a Non-Executive
Director of Naval Group Australia and a former Director of the Stars
Foundation, a not for profit body which promotes education of Indigenous
girls. He was also a former Vice Chairman of the Minerals Council of
Australia and was a Director of the Business Council of Australia.
Chairman of the Audit Committee. Member of the Investment and
Nomination Committees. Chairman of the Company’s subsidiary,
Australian Investment Company Services Limited (AICS).
Mr Williams was appointed to the Board in February 2010. He is Chairman
of NAB Trustees Services Limited (NAB Subsidiary), Director of Cricket
Victoria Ltd and ARUMA (formerly House with No Steps), an Advisory
Board Member of TLC Aged Care Limited and Chairman MIPS Advisory
Committee for Fiig Securities Limited. Mr Williams was formerly Managing
Director of Equity Trustees Limited, Director and Treasurer of Foundation
for Young Australians, Chairman of Olympic Park Sports Medical Centre
Pty Ltd, a Director of the Trustee Corporations Association of Australia,
a Director of the Australian Baseball Federation Inc and a General Manager
with AXA/National Mutual in Australia and Hong Kong.
Graeme R Liebelt
Independent
Non-Executive
Director
B Ec (Hons),
FAICD FTSE
Catherine
M Walter AM
Independent
Non-Executive
Director
LLB (Hons), LLM,
MBA (Melb), FAICD
David A Peever
Independent
Non-Executive
Director
BEc, MSC (Mineral
Economics)
Peter J Williams
Independent
Non-Executive
Director
Dip.All, MAICD, FAIM
13Australian Foundation Investment Company Limited Annual Report 2020

Board Members
continued
Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 30 June 2020
and the numbers of meetings attended by each Director were:
BoardInvestmentAuditRemunerationNomination
Eligible
to AttendAttended
Eligible
to AttendAttended
Eligible
to AttendAttended
Eligible
to AttendAttended
Eligible
to AttendAttended
J Paterson13132020446633
M Freeman13132020-4
#
-6
#
--
RE Barker13132019-4
#
-1
#
--
R Dee-Bradbury*1311215
#
-2
#
---3
#
GR Liebelt 1313-17
#
-1
#
66--
DA Peever 1313-18
#
44----
CM Walter13132020446633
PJ Williams1313202044-4
#
33
# Attended meetings by invitation.
* Ms R Dee-Bradbury was appointed to Nomination and Investment Committees on 20 May 2020.
Insurance of Directors and Officers
During the financial year, the Company paid insurance premiums to insure the Directors and Officers named in this report to the extent
allowable by law. The terms of the insurance contract preclude disclosure of further details.
14Australian Foundation Investment Company Limited Annual Report 2020

Senior Executives
Mr Driver joined the Company in January 2003. Previously, he was
with National Australia Bank Ltd for 18 years in various roles covering
business strategy, marketing, distribution, investor relations and business
operations. Mr Driver was formerly Chairman of Trust for Nature (Victoria).
Mr Rowe joined the Company in July 2016. He is a Chartered Secretary
with over 15 years of experience in corporate governance with a
particular focus in listed investment companies. He was previously
a corporate governance advisor at a professional services firm which
included acting as Company Secretary for three ASX listed companies.
Prior to that Mr Rowe was the Company Secretarial Manager for a funds
management company based in the UK.
Mr Porter joined the Company in January 2005. He is a Chartered
Accountant and has had over 24 years’ experience in accounting
and financial management both in the United Kingdom with Andersen
Consulting and Credit Suisse First Boston, and in Australia where he was
Regional Chief Operating Officer for the Corporate and Investment Banking
Division of CSFB. He is the immediate former Chair of The Group of 100
(G100), the peak body for CFOs and remains on the Board, is a Director
of the Auditing and Assurance Standards Board (AUASB) and a Director
of the Anglican Foundation.
Geoffrey N Driver
General Manager,
Business Development
and Investor Relations
B Ec, Grad Dip
Finance, MAICD
Matthew Rowe
Company Secretary
BA (Hons), MSc Corp
Gov, FGIA, FCIS
Andrew JB Porter
Chief Financial Officer
MA (Hons) (St And),
FCA, MAICD
15Australian Foundation Investment Company Limited Annual Report 2020

Contents
The Directors present AFIC’s 2020 Remuneration Report which outlines key aspects of our remuneration policy and remuneration
awarded this year.
The Company’s returns were impacted, as was the entire economy, by the COVID-19 virus pandemic. As has occasionally been the
case in the past, whilst returns were negative losses were lower than that experienced by the market as a whole. More details can
be found later on in this report and in the Directors’ Report.
The Remuneration Committee regularly reviews the structure and composition of Executive Incentive Plans seeking to ensure that
they continue to meet their objectives. As a result, the Committee has agreed to some minor adjustments in the metrics to be used
next year and going forward. These are outlined in a separate section.
Shareholders should be aware that AFIC does not bear the total cost of remuneration alone. Due to agreements that the Group’s
subsidiary, Australian Investment Company Services Limited (AICS) also has with Djerriwarrh Investments Limited, Mirrabooka
Investments Limited and AMCIL Limited, a substantial proportion of the total remuneration cost (usually 30 per cent to 40 per cent,
depending on the individual), is borne by these other companies (collectively, the ‘LICs’). AICS expenses the total amount and recovers
the proportion borne by the investment companies through the fees that it charges. This report, therefore, shows the total expense that
is borne by AICS and that an individual receives. From next year, each investment company will bear the cost directly of any incentive
paid due to that company’s outperformance of the relevant benchmarks. This will be accomplished by adjusting the amounts payable
by each Company in the following year, and these adjustments will therefore show up on a lagging basis.
It is likely that the current review will result in some minor changes to the Incentive plan, particularly with regard to the allocation
between the LICs, during the financial year ended 30 June 2021.
The report is structured as follows:
1. Remuneration Policy and Link to Performance
2. Structure of Remuneration
3. Executive Remuneration Expense
4. Contract Terms
5. Non-Executive Director Remuneration
Appendix
A. Remuneration Governance
B. Annual Incentives: Details of Outcomes and Conditions
C. Long Term Incentives: Details of Outcomes and Conditions
D. Directors and Executives: Equity Holdings and Other Transactions
E. Changes in Remuneration Metrics and Allocations With Effect From the Financial Year Ended 30 June 2021
F. Detailed Performance Measures by Investment Company
1. Remuneration Policy and Link to Performance
1.1 What is Our Remuneration Policy?
AFIC is an investor in securities listed primarily in Australia and New Zealand. Our primary objectives are to grow dividends at a faster
rate than inflation and provide shareholders with capital growth over the medium to long term. To achieve this, we need to attract and
retain professional, competent and highly motivated Executives and staff through offering attractive remuneration arrangements which:
• reflect market conditions;
• recognise the skills, experience, roles and responsibilities of the individuals;
• align with shareholder interests; and
• align with the risk management strategies.
Generally, we seek to set total remuneration at the upper or second quartile of the sectors in which we operate.
Periodically, we review our remuneration policies and plans seeking to ensure that they continue to meet these objectives.
Remuneration Report
16Australian Foundation Investment Company Limited Annual Report 2020

Remuneration for the Group’s Executives has two main elements:
• fixed annual remuneration (FAR), and
• performance-related pay, being annual incentives and long term incentives (LTI).
FAR is determined with reference to levels necessary to recruit and retain staff with the relevant skills and experience in the industry in
which the Group operates. We utilise external input, seeking to ensure that the FAR meets these conditions. This includes industry data
provided by the Financial Institutions Remuneration Group Inc. (FIRG) and McLagan for the financial services industry.
Through performance-related pay, the remuneration is adjusted to reflect the risks that the Company and its shareholders face and how
the Company has responded to those risks. In particular:
• the key performance indicators chosen to determine performance-related pay are those that the Company considers most relevant
to its objectives of improving shareholder wealth over the medium to long term, whilst also considering the relative levels of risk;
• the focus is on performance over the medium to long term, with only a small proportion of both annual incentives and LTI being
dependent on a single year’s performance; and
• Executives agree to invest 50 per cent of the annual cash incentive (after tax) in AFIC shares and shares of the other investment
companies (AMCIL Limited, Djerriwarrh Investments Limited and Mirrabooka Investments Limited) and to hold these shares
for a minimum of two years.
The Board may, at its discretion, direct that any performance rights that are yet to vest or to be tested be cancelled in the event
of negative issues that may arise, including material misstatement of the Company’s financial statements.
1.2 What is Our Target Remuneration Mix?
The target remuneration mix for Executives is as follows:
Managing Director’s Target
Remuneration Mix
Annual incentive 29%
Long term incentive 12%
Fixed annual remuneration 59%
Other Executives’ Target
Remuneration Mix
Annual incentive 21%
Long term incentive 10%
Fixed annual remuneration 69%
1.3 How is the Remuneration Paid in 2020 Linked to Performance?
Table 1 discloses the actual remuneration outcomes received by the Company’s Executives during the year and the LTI that may
vest in future years. These amounts are different to the statutory remuneration expense disclosed in Table 7. The Board considers the
information about remuneration outcomes in Table 1 relevant for users because the statutory remuneration expense includes accounting
charges for long term incentives that may or may not be received in future years. See below for details of the differences.
17Australian Foundation Investment Company Limited Annual Report 2020

Table 1: Actual Executive Remuneration Outcomes
Total FAR
$
Annual
Incentive
$
Prior
Years’ LTI
Received*
$
Total
Remune-
ration^
$
Annual
Incentive
Forfeited
$
LTI
Forfeited
$
Possible
Future LTI
(To Vest Over
Next 4 Years)
#
$
Mark Freeman – Managing Director
2020867,000232,44325,3761,124,819(199,584)(141,024)549,116
2019850,000230,987-1,080,987(194,013)(160,000)533,500
Andrew Porter – Chief Financial Officer
2020680,000108,344-788,344(96,492)(112,238)454,773
2019666,507106,814-773,321(93,138)(110,554)457,421
Geoff Driver – General Manager – Business Development and Investor Relations
2020560,00087,881-647,881(80,808)(92,484)374,684
2019549,20188,015-637,216(76,745)(91,027)376,914
Matthew Rowe – Company Secretary
2020275,00043,238-318,238(39,600)-164,608
2019252,00040,310-292,310(35,290)-120,551
For Mark Freeman, the amount forfeited is the difference between the target amount that would have been paid if all targets were met and the amount
paid, under the investment team LTI. The amount shown for the other Executives is the amount that would have been paid to them with respect to the
2015 LTIP in the event that all targets had been achieved (2019: 2014 LTIP – note Matthew Rowe was not eligible). See Table 4.
The value of Annual Incentive forfeited is the difference between the target amount and the amount awarded. See Table 10.
The differences between the amounts disclosed in Table 1 and the amounts in Table 7 are as follows:
* Prior year’s LTI received in Table 1 shows the value of performance shares that vested during the year, measured at the closing price on the day that
they were received. In respect of Mark Freeman, it shows the cash payment received in respect of LTIP vesting from his time as Chief Investment
Officer. In contrast, Table 7 shows the accounting expense recognised in relation to the LTI plans during the year.
# The future LTI in Table 1 reflects potential future remuneration that may be received by the Executives over the next four years if the performance
conditions are satisfied. This includes the estimated amounts payable under the two LTIP plans assuming the performance conditions will be
satisfied at the time of vesting. For accounting purposes, these amounts are recognised as expense over the vesting period.
Ross Barker, who retired on 31 December 2017 as Managing Director, is not included in the above table or in Table 7 as he ceased
to be an Executive. However, he is still entitled to ELTIP for the years in which he was employed (see Table 12). As with the other
Executives, all ELTIP for the 2015–16 year was forfeited during the year, and Mr Barker thus forfeited $218,279 worth of ELTIP.
At the end of 30 June 2020, the total value of the ELTIP yet to vest for Mr Barker was $351,019.
Information about Non-Executive Director remuneration is provided in Section 5 Non-Executive Director Remuneration.
1.3.1 Fixed Remuneration
Most Executives received modest inflationary increases in their fixed annual remuneration this year. AFIC continues to operate in a highly
competitive market, and salary levels are reviewed at least annually with the aim of remunerating its Executives to the extent required
to attract and retain Executives who are leaders in their field.
Remuneration Report
continued
18Australian Foundation Investment Company Limited Annual Report 2020

1.3.2 Performance-related Pay
This section shows:
• How annual incentive measurements are split between AFIC and the other investment companies:
%Result
AFIC investment performance24.5Table 3
AFIC other metrics 28.5Table 2
AFIC qualitative assessment -n/a
Percentage of annual incentive determined by AFIC performance53
Other LIC investment performance12.5Table 15
Other LIC other metrics14.5Table 15
Other LIC qualitative assessment-n/a
Percentage of annual incentive determined by other LICs performance27
Total percentage of annual incentive determined by AFIC/other LIC performance80
Personal metrics20n/a
100
See Table 5 for more details on what the measures are.
• The outcomes for the two long term incentive awards (LTI) that were tested for vesting during the year (Table 4).
Refer to Sections 2.2 and 2.3 for explanations of the measures used.
AFIC’s investment performance outperformed the benchmark over the short term (1 and 3 years) but remained marginally below
over the longer term (8 and 10 years). In addition, as the share price moved from a discount to a small premium, the share price
outperformed the Index over the 1, 3 and 8 year periods, but was still below the benchmark for the 5 and 10 year periods.
It should be noted that AFIC’s returns are after taxes and expenses and represent the ‘net’ return to the shareholders, whereas Index
returns do not include either. Furthermore, many returns quoted by managed funds exclude either tax or expenses, or both. The use
of ‘gross returns’ mitigates the tax disparity to some extent, as it adds back franking credits to the nominal dividend that the Index pays,
and also that AFIC pays.
The Management Expense Ratio (MER – see Table 11) continues to be of importance to the Board, and this continues to be better than
the benchmark set. The inclusion in earnings last year of the Coles demerger dividend and the share buy-backs from BHP and Rio
Tinto meant that the earnings per share figure was always likely to decline from last year. The cancellation or deferral of dividends from
many companies as a result of the COVID-19 pandemic also contributed to this underperformance.
With regard to the other investment companies, Djerriwarrh did not meet any of its benchmarks with regards to investment or share
performance. Mirrabooka’s investment performance outperformed its relevant benchmark for all periods under review, as did AMCIL’s.

The 2016 award under Executive Long Term Incentive Plan was available for vesting as of 30 June 2020. However, the calculations
needed to determine how much actually vests are not performed until after the date of the Annual Report. Therefore, the full amount
that may vest is shown, and the actual settlement of the 2016 award will take place in the year ended 30 June 2021. The actual amount
settled will be reported in the relevant year. The 2015 award was available for vesting but was forfeited in its entirety due to the hurdles
not having been met. It is this forfeiture which is reflected in Table 1 above.
For the investment team whose LTIP encompasses all of the investment companies (unlike Executives, for which only the AFIC
performance is counted) the outperformance for Mirrabooka and AMCIL was reflected in the figures which are measured over
4 years for all of the investment companies, whilst AFIC and Djerriwarrh underperformed. Consequently, 15.25 per cent of the
available LTIP was deemed to have vested. Detailed information about the performance of each investment company is provided
in Section E of the Appendix (Table 15).
19Australian Foundation Investment Company Limited Annual Report 2020

Table 2: Non-investment Return Performance Measures
Performance Measure
Benchmark
Result
AFIC
Result
Comparison
to Benchmark
Total shareholder return (14.6 per cent)
Share price return – 1 year-7.68%1.22%Favourable
Share price return – 3 years5.19%6.07%Favourable
Share price return – 5 years5.95%4.25%Unfavourable
Share price return – 8 years9.28%9.32%Favourable
Share price return – 10 years7.80%7.01%Unfavourable
Growth in net operating result per share (8.3 per cent)2.2%-41.5%Unfavourable
Management expense ratio compared to base of 0.19 per cent (5.6 per cent)0.19%0.13%Favourable
Outcome
Achieved
Partially achieved
Not achieved
Table 3: Investment Return Performance Measures
Measure
Benchmark
Result
AFIC
Result
Comparison
to Benchmark
Investment return – 1 year-7.68%-4.06%Favourable
Investment return – 3 years5.19%5.42%Favourable
Investment return – 5 years5.95%5.41%Unfavourable
Investment return – 8 years9.28%8.93%Unfavourable
Investment return – 10 years7.80%7.75%Unfavourable
Gross return – 1 year-6.62%-3.13%Favourable
Gross return – 3 years6.67%6.73%Favourable
Gross return – 5 years7.49%6.73%Unfavourable
Gross return – 8 years10.90%10.41%Unfavourable
Gross return – 10 years9.41%9.31%Unfavourable
Reward to risk – 1 year1
st
qtr2
nd
/qtrUnfavourable
Reward to risk – 3 years1
st
qtr2
nd
/qtrUnfavourable
Reward to risk – 5 years 1
st
qtr3
rd
/qtrUnfavourable
Reward to risk – 8 years1
st
qtr2
nd
/qtrUnfavourable
Reward to risk – 10 years1
st
qtr2
nd
/qtrUnfavourable
Outcome
Achieved
Partially achieved
Not achieved
Remuneration Report
continued
20Australian Foundation Investment Company Limited Annual Report 2020

Table 4: Vesting and Forfeiture of Long Term Incentives During The Year*
Award Date
Assessment
DatesMeasure Tested
Benchmark
ResultAFIC Result% Vested % Forfeited
ELTIP – Performance rights*
1 July 201530 June 2019Total gross shareholder return10.1%6.2%0%50%
Total portfolio return9.01%7.31%0%50%
Investment team LTI
1 July 201630 June 2020Gross return8.86%8.42%15.25%84.75%
* Of the rights awarded on 1 July 2015, 100 per cent were forfeited as the targets were not achieved. For the Investment Team LTI, outperformance
by Mirrabooka and AMCIL mean that some vesting occurred. See Table 15.
2. Structure of Remuneration
2.1 Fixed Annual Remuneration (FAR)
The FAR component of an Executive’s remuneration comprises base salary, superannuation guarantee contributions and fringe
benefits. Executives can elect to receive a portion of their FAR in form of additional superannuation contributions or fringe benefits.
This will not affect the gross amount payable by the Group.
2.2 Annual Incentive
Table 5 below outlines the key terms and conditions of the annual incentive plan.
Table 5: Annual Incentives – Key Terms and Conditions
Managing DirectorOther Executives
Targeted % of FAR 50%30%
ObjectivesAlign remuneration with the creation of shareholder wealth over the past year and over a longer period.
Measures reflect the management of the Group and the other investment companies, as well as the
key investment returns that reflect the creation of shareholder wealth.
Performance measures• Company performance (43 per cent)
• Investment performance (37 per cent):
• Personal objectives (20 per cent)
• See Table 11 for details
Relative weightings of
investment companies
for investment related
performance
AFIC: 53 per cent
Djerriwarrh Investments Limited: 16 per cent
AMCIL Limited: 4 per cent
Mirrabooka Investments Limited: 7 per cent
Personal objectives: 20 per cent
Delivery of awardIncentive is paid in cash, but 50 per cent of the after-tax amount received is used by recipients
to acquire shares in AFIC and the other investment companies which they agree to hold for
minimum of 2 years.
Performance measured in 2020Some shorter term investment measures achieved but some longer term ones not. MER achieved
but earnings per share down (see Tables 2 and 3 above).
Outcomes for 2020
(see Table 10 for details)
54 per centAverage 52 per cent
The performance measures of each annual incentive plan are reviewed by the Remuneration Committee. The Committee may,
from time to time, revise the performance conditions and weightings in order to better meet the objectives of the annual incentive
policies. They may also change or suspend any part of the incentive payment arrangements. If relevant targets are not achieved but
performance is close to the target, some of the incentive may be paid. This is noted as ‘partially achieved’ in Table 3. Where stretch levels
of performance are achieved above target, then higher amounts may be paid. To date, total annual incentives paid to each Executive
have never exceeded target.
For more detailed information about the annual incentive performance conditions and outcomes for 2020 please refer to Section B
Annual Incentives: details of outcomes and conditions in the Appendix.
21Australian Foundation Investment Company Limited Annual Report 2020

2.3 Long Term Incentive Plans (LTIP)
There are two LTI plans, one for the Executives (excluding the CIO) which is called the ELTIP, and one for the investment team, including
the CIO. Mr Freeman continues to be eligible for awards made to him whilst he was CIO until 2021, the last grant having been made for
the year ended 30 June 2018. Table 6 outlines the purpose and the key terms and conditions
of each plan.
Table 6: Long Term Incentives – Key Terms and Conditions
Executive ELTIP
(Performance Rights)Investment Team LTI Plan
Target 50 per cent of targeted Annual Incentive 20 per cent of FAR
ObjectivesAlign remuneration with growth in shareholder wealth over a forward looking period of four years.
Reward outperformance.
Performance measures See Table 15 in the Appendix for details. See Table 15 in the Appendix for details.
Performance for awards
tested in 2020 (Table 4)
July 2015: 0 per cent vested (see Table 4).July 2016: 15.25 per cent vested (see Table 4).
For more detailed information about the LTI plans and their performance conditions, including vesting schedules and outcomes
for 2020, please refer to Section C Long Term Incentives: details of outcomes and conditions in the Appendix.
3. Executive Remuneration Expense
This section discloses the remuneration expense recognised under accounting standards for each executive (Table 7). These amounts
are different to the remuneration outcomes disclosed in Table 1 as noted in that table.
Table 7: Remuneration Expense
Short Term
Post-
employment
Total Fixed
Remuneration
$
Short Term
Long Term
Share-based
Payments
Other
Long Term
Payments*
$
Total
Remuneration
$
%
Fixed/
Performance
Related
Base
Salary
$
Super-
annuation
$
Annual
Incentives
$
LTI Cash-
settled*
$
Mark Freeman – Managing Director
2020842,00025,000867,000232,443117,747(100,800)1,116,39078%/22%
2019825,00025,000850,000230,98775,114(57,025)1,099,07677%/23%
Andrew Porter – Chief Financial Officer
2020655,00025,000680,000108,3443,818-792,16286%/14%
2019641,50725,000666,507106,81414,168-787,48985%/15%
Geoff Driver – General Manager – Business Development and Investor Relations
2020535,00025,000560,00087,8813,134-651,01586%/14%
2019524,20125,000549,20188,01511,744-648,96085%/15%
Matthew Rowe – Company Secretary
2020251,14223,858275,00043,23841,951-360,18976%/24%
2019230,10121,899252,00040,31031,898-324,20878%/22%
* Includes amounts credited for non-vesting.
Remuneration Report
continued
22Australian Foundation Investment Company Limited Annual Report 2020

4. Contract Terms
Each Executive is employed under an open-ended contract, the terms of which can be varied by mutual agreement. There are no
contractual provisions for cessation of employment other than statutory requirements. Either the Company or the Executive can give
notice in accordance with statutory requirements. There are no specific payments to be made as a consequence of termination
beyond those required by statute. Should there be any payments, these will be at the Board’s discretion.
Material breaches of the terms of employment will normally result in the termination of an Executive’s employment.
5. Non-Executive Director Remuneration
Shareholders approve the maximum aggregate amount of remuneration per year available to be allocated between Non-Executive
Directors (NEDs) as they see fit. In proposing the amount for consideration by shareholders, the Remuneration Committee takes into
account the time demands made on Directors together with such factors as the general level of fees paid to Australian corporate directors.
For NEDs, who are charged with the responsibility of oversight of the Company’s activities, a fixed annual fee is paid with no element
of performance-related pay.
The amount approved at the AGM in October 2019 was $1,250,000 per annum, which is the maximum amount that may be paid in total
to all NEDs. Retirement allowances for Directors were frozen at 30 June 2004.
On appointment, the Company enters into a deed of access and indemnity with each NED. There are no termination payments due
at the cessation of office, and any Director may retire or resign from the Board, or be removed by a resolution of shareholders.
The amounts paid to each NED, and the figures for the corresponding period, are set out in Table 8.
23Australian Foundation Investment Company Limited Annual Report 2020

Table 8: Non-Executive Director Remuneration
Primary
(Fee/Base
Salary)
$
Post
Employment
(Superannuation)
$
Total
Remuneration
$
J Paterson – Chairman from 9 October 2018
2020178,08016,920195,000
2019149,94014,244164,184
TA Campbell AO – Chairman (retired 9 October 2018)
201947,6794,53052,209
RE Barker – Non-Executive Director
202089,0408,46097,500
201986,7588,24295,000
RP Dee-Bradbury – Non-Executive Director (appointed 6 May 2019)
202093,2704,23097,500
201913,3471,26814,615
JC Hey – Non-Executive Director (retired 18 January 2019)
201947,6234,52452,147
GR Liebelt – Non-Executive Director
202089,0408,46097,500
201986,7588,24295,000
DA Peever – Non-Executive Director
202089,0408,46097,500
201986,7588,24295,000
CM Walter AM – Non-Executive Director
202089,0408,46097,500
201986,7588,24295,000
PJ Williams– Non-Executive Director
202089,0408,46097,500
201986,7588,24295,000
Total remuneration of Non-Executive Directors
2020716,55063,450780,000
2019692,37965,776758,155
Amounts Payable on Retirement
The amounts payable to the current NEDs who were in office at 30 June 2004, which will be paid when they retire, are set out in Table 9.
These amounts were expensed in prior years as the retirement allowances accrued.
Table 9: Non-Executive Director Retirement Allowance
Amount Payable on Retirement $
CM Walter AM 42,385
Total42,385
Remuneration Report
continued
24Australian Foundation Investment Company Limited Annual Report 2020

Appendix
A. Remuneration Governance
Responsibilities of the Board and the Remuneration Committee
It is the Board’s responsibility to review and approve the recommendations of the Remuneration Committee.
For more information, the Charter of the Board is available on the Company’s website.
The Remuneration Committee’s primary responsibilities include:
• reviewing the level of fees for NEDs and the Chairman;
• reviewing the Managing Director’s remuneration arrangements;
• evaluating the Managing Director’s performance;
• reviewing the remuneration arrangements for other Senior Executives;
• monitoring legislative developments with regards to Executive remuneration; and
• monitoring the Group’s compliance with requirements in this area.
For more information, the Charter of the Remuneration Committee is available on the Company’s website.
The Remuneration Committee is composed of three NEDs (GR Liebelt (Chairman), J Paterson and CM Walter AM) and meets at least
twice per year.
Policy on Hedging
The Company provides no lending or leveraging arrangements to its Executives, who are prohibited by Company policy from entering
into hedging arrangements that mitigate the possibility that ‘at risk’ incentive payments may not vest.
Use of Remuneration Consultants
The Remuneration Committee has appointed Ernst & Young to provide it with advice about Executive remuneration.
The Remuneration Committee uses Ernst & Young from time to time, as it sees fit, to independently test management’s
recommendations.
Specifically, Ernst & Young would provide advice on:
(a) proposed remuneration levels and remuneration structure for the Managing Director;
(b) proposed remuneration levels and remuneration structure for the Managing Director’s direct reports; and
(c) proposed remuneration levels of NEDs.
No reports or recommendations were requested by the Committee or the Board for the year ended 30 June 2020 other
than a review of benchmarking for Non-Executive Directors, which is not considered by Ernst & Young as a remuneration
recommendation under the Corporations Act. The Board is satisfied that these arrangements seek to ensure that any remuneration
recommendations made by remuneration consultants are free from influence by management.
The use of the remuneration advisers by management is limited to specific areas to seek to ensure that the independent advice that
the Remuneration Committee receives is not perceived as having been compromised by management.
Ernst & Young are separately engaged by management to report on the following:
(a) trends in remuneration for the sectors in which the Group operates (provision of market practice data);
(b) the relative positioning of the remuneration of the Group’s employees (including Executives) within those sectors;
(c) proposed remuneration levels for employees other than designated Senior Executives; and
(d) advice on the operation of the incentive plans (e.g., tax and accounting advice).
25Australian Foundation Investment Company Limited Annual Report 2020

The Managing Director then makes recommendations to the Remuneration Committee with regards to the remuneration levels
and structure of the KMP.
Ernst & Young also reviews the calculations used in determining the vesting of awards and certifies them as being correct and
in accordance with the terms and conditions of the ELTIP.
Ernst & Young were paid $14,729 (inclusive of GST) during the year ended 30 June 2020 for other general remuneration advice which
consisted of a report on the benchmarking of fees for Non-Executive Directors in the Australian marketplace (2019: $0) and during
the year the Group also paid $111,210 for other professional advice received which included acting as the internal auditor for AICS
and general taxation and accountancy advice (2018: $183,464)(all including GST).
Ernst & Young were remunerated on an invoiced basis, based on work performed.
The Company also participates in the annual McLagan and FIRG surveys of fund managers to understand current remuneration
levels and practices.
B. Annual Incentives: Details of Outcomes and Conditions
Table 10 below shows the annual incentives paid to individual Executives as a result of AFIC’s and the other investment companies’
performance on financial metrics and the individual’s achievement of their own personal objectives. Table 11 sets out the detailed
terms and conditions of the annual incentives. For a high-level summary see Section 2.2 and Table 5 of the main part of the
Remuneration Report.
Table 10: Annual Incentive Outcomes
Executive% of Target Paid$ Paid% of Target Forfeited$ Forfeited
Mark Freeman54%$232,44346%$201,057
Andrew Porter53%$108,34447%$95,656
Geoff Driver52%$87,88148%$80,109
Matthew Rowe52%$43,23848%$39,262
Table 11: Executive Annual Incentive Performance Conditions
Performance Areas
and Relative WeightingPerformance MeasuresObjectives These Measures Aim to Achieve
Company performance (43 per cent)
The relevant weightings of the
investment companies are:
• AFIC: 66.25 per cent
• Djerriwarrh Investments Limited:
20 per cent
• AMCIL Limited: 5 per cent
• Mirrabooka Investments Limited:
8.75 per cent
• Relative total shareholder return (TSR):
TSR is the movement in share price plus the
dividends paid by the Company assumed to
be reinvested. TSR performance is measured
against the S&P/ASX 200 Accumulation
Index over 1, 3, 5, 8 and 10 year periods
(Combined Mid Cap 50 and Small Ordinaries
for Mirrabooka).
• Growth in net profit per share: measured
against CPI.
• Management expense ratio (MER): measured
against prior years’ results or, in the case
of AFIC, measured against a base of
0.19 per cent.
• TSR: This is a direct measure of the
increase in shareholder’s wealth against
the performance of the Index.
• Growth in net profit per share reflects the
ability of the Company to meet its stated
aim of ‘paying out dividends which, over
time, grow faster than the rate of inflation.’
• MER reflects the costs of running
the Company.
Remuneration Report
continued
26Australian Foundation Investment Company Limited Annual Report 2020

Performance Areas
and Relative WeightingPerformance MeasuresObjectives These Measures Aim to Achieve
Investment performance (37 per cent)
The relevant weightings of the
investment companies are:
• AFIC: 66.25 per cent
• Djerriwarrh Investments Limited:
20 per cent
• AMCIL Limited: 5 per cent
• Mirrabooka Investments Limited:
8.75 per cent
• Relative investment return: measure of the
return on the portfolio invested (including
cash) over the previous 1, 3, 5, 8 and
10 years, relative to the S&P/ASX 200
Accumulation Index (Combined Mid Cap 50
and Small Ordinaries for Mirrabooka).
• Gross return (GR): measure of the movement
in the net asset backing of the Company
(per share) plus the dividends assumed to
be reinvested grossed up for franking credits
over the previous 1, 3, 5, 8 and 10 years.
This return is compared to the S&P/ASX 200
Accumulation Index grossed up for franking
credits (Combined Mid Cap 50 and Small
Ordinaries for Mirrabooka).
• Risk/reward return: This is a measure
over 1, 3, 5, 8 and 10 years of the past
performance of the Company, compared to
the performance of the Company’s peers
(i.e. investment funds) as reported by Mercer.
(Note: this measure is used for AFIC’s
performance only, reflecting that Company’s
focus on producing stable returns over the
medium to long term).
The NEDs consider that the metrics used
equate, over the medium to long term, with
the stated objectives of the Company, namely
‘to provide attractive total returns and pay
dividends, which, over time, grow faster than
the rate of inflation’.
• Investment return: reflects the returns
generated by the mix of the investments
that the Company has invested in.
These reflect the value added to
shareholders wealth by the investment
decisions of the Company.
• Gross return (GR): reflects the movement
in the value of the underlying portfolio over
the period with the additional recognition
of the importance of franking credits.
• Risk/reward return: best reflects the
return of the portfolio against the risks
to shareholders of investing in the
companies selected.
Note: The Remuneration Committee has discretion
to determine, at the time of the review, what it
considers to be the appropriate level of return
to be used.
Personal objectives (20 per cent)Includes:
• advice to the Board;
• succession planning;
• management of staff;
• risk management;
• promotion of the corporate culture; and
• satisfaction of key internal stakeholders.
These measures all contribute to the efficient
running of the Group, and the other investment
companies, enhancing investment outcomes.
Personal objectives are included in incentive
calculations to encourage out-performance
on non-financial metrics. These metrics
can be important determinants of business
success in the medium term. The Managing
Director reviews the performance of each
Executive with the Remuneration Committee,
and the Remuneration Committee alone
determines how the Managing Director
is performing against these objectives.
27Australian Foundation Investment Company Limited Annual Report 2020

C. Long Term Incentives: Details of Outcomes and Conditions
This section shows the outstanding cash bonuses under the ELTIP and the investment team LTI schemes (Table 12). It also explains
the detailed terms and conditions of the two LTIs that are currently in operation (Table 13). For a high-level overview see Section 2.3
of the main body of the Remuneration Report.
Table 12: Vesting of ELTIP and Investment Team LTI
ELTIP
Award Date
Vesting Date Subject to
Performance Hurdles
Value at
Award Date
$
Number
of Rights
Awarded
Value Per
Right
$
Award Vested
for the Year
Number of
Rights/%
Value Yet
to Vest
30 June 2020
$
Ross Barker – Managing Director (until 31 December 2017)
1 July 201530 June 2019$182,32529,459$6.1890/0%-
1 July 201630 June 2020$185,97533,205$5.601-$239,350
1 July 201730 June 2021$92,88816,153$5.757-$111,669
$351,019
Mark Freeman – Managing Director (from 1 January 2018)
1 Jan 201830 June 2021$85,00014,765$5.757-$102,077
1 July 201830 June 2022$170,00027,974$6.077-$185,844
1 July 201930 June 2023$173,40028,217$6.145-$177,995
$465,916
Andrew Porter – Chief Financial Officer
1 July 201530 June 2019$93,75015,148$6.1890/0%-
1 July 201630 June 2020$95,62517,074$5.601-$123,069
1 July 201730 June 2021$98,01617,026$5.757-$117,707
1 July 201830 June 2022$99,97616,451$6.077-$109,294
1 July 201930 June 2023$102,00016,598$6.145-$104,703
$454,773
Geoff Driver – General Manager – Business Development and Investor Relations
1 July 201530 June 2019$77,25012,482$6.1890/0%-
1 July 201630 June 2020$78,79514,069$5.601-$101,409
1 July 201730 June 2021$80,76514,030$5.757-$96,991
1 July 201830 June 2022$82,38013,556$6.077-$90,058
1 July 201930 June 2023$84,00013,669$6.145-$86,226
$374,684
Matthew Rowe – Company Secretary (joined 11 July 2016)
11 July 201630 June 2020$30,0005,356$5.601-$38,610
1 July 201730 June 2021$35,2506,123$5.757-$42,332
1 July 201830 June 2022$37,8006,220$6.077-$41,323
1 July 201930 June 2023$41,2506,713$6.145$42,343
$164,608
Investment Team
LTI Award Date
Vesting Date Subject to
Performance Hurdles
Target
Amount
$
Award Vested for the Year
Value Yet
to Vest
30 June 2020
$$%
Mark Freeman – Chief Investment Officer (Investment team LTI) – until 31 December 2017
1 July 201630 June 2020$166,400$25,37615.25%-
1 July 201730 June 2021$83,200--$83,200
$83,200
The total value of the two LTIP plans for Mr Freeman that are yet to vest is $549,116.
See Table 1 for actual amounts vested and Table 4 for details of vesting calculations.
Remuneration Report
continued
28Australian Foundation Investment Company Limited Annual Report 2020

The value of the outstanding ELTIP performance rights as in the table above was estimated at 30 June 2020 using the Total Share
Return (TSR – which includes dividends reinvested) based on a closing price on 30 June 2020 of AFI shares of $6.09 (the TSR for AFI
at 30 June 2020 was 6.54 per cent p.a. for four years, 6.07 per cent p.a. for three years, 4.00 per cent for two years and 1.22 per cent
for one year). The value of the investment team LTI that is yet to vest is the target amount. Actual amounts awarded may exceed this
amount, depending on performance over the four-year vesting period.
No vesting of the 2019 Investment Team Long Term Incentive Plan was made during the year due to underperformance. 100 per cent
was forfeited. 15.25 per cent of the 2020 LTIP will be paid in the year ended 30 June 2021.
Table 13: Long Term Incentive Plans
ELTIP (Performance Rights)
Nature of grantRights to receive cash that must then be used by the Executives to acquire AFIC shares on market.
Performance conditions1. Total gross shareholder return (50 per cent): the movement in the AFIC share price and the Index price,
grossed up to reflect the value of franking credits. This is compared to that of the market such that only
outperformance is rewarded. Outperformance of this index over time should be an indicator of the value
added by the Company to shareholders’ wealth. Both the Company’s return and the Index return are
smoothed over 30 days to remove excess volatility.
2. Total portfolio return (50 per cent): the movement in the net asset backing of the Company (per share)
plus the dividends paid by the Company reinvested. This compares AFIC’s investment performance
against that of other fund managers (based on the Mercer Investment Consulting Survey of Australian
Retail Fund Managers which provides the industry benchmark of funds management performance over
the relevant period), so that only outperformance relative to its peers is rewarded.
Vesting schedule:
total gross
shareholder return
Company performance relative to gross
accumulation indexPercentage of rights vesting
Underperformance 0 per cent
< or = 20 per cent outperformanceStraight line between 25 per cent and 50 per cent
> 20 per cent outperformance50 per cent
Vesting schedule:
total portfolio return
Company performance Percentage of rights vesting
Less than median performance0 per cent
Median to < or = 75th percentileStraight line between 25 per cent and 50 per cent
> 75 per cent percentile50 per cent
Valuation of
performance rights
At 1 July each year, the 30-day volume weighted average price of AFIC shares up to, but not including
1 July will be calculated. The amount of ELTIP available will then be divided by this average price to
determine the number of performance rights that may vest in four years’ time.
The value of the performance rights will be adjusted each year by the total shareholder return for the year,
calculated based on the 30-day volume weighted average price of AFIC shares up to 1 July. At vesting
time, the value of the performance rights that will vest is converted to cash, based on the value of the
rights at that time.
Accounting treatmentUnder current accounting standards, the ELTIP scheme is classified as a cash-settled scheme.
The expected amount payable upon vesting must therefore be estimated each year and adjusted not
only for the likelihood of vesting but also for changes in the value of the performance rights. In the first
year, 25 per cent of the expected amount payable will be booked as an expense. At the end of the second
year, 50 per cent of the new expected final value less the amount booked in the previous year will be
booked. At the end of the third year, 75 per cent of the total, estimated final value less amounts previously
expensed will be booked. At the end of the fourth year, the actual liability will be calculated and a balancing
adjustment made.
29Australian Foundation Investment Company Limited Annual Report 2020

Investment Team LTI Plan
Nature of grantCash or shares, at discretion of the Company.
Performance conditionGross return which measures the movement in the net asset backing of the Company (per share) plus the
dividends assumed to be reinvested grossed up for franking credits. This return is compared to the relevant
accumulating index as set out below.
Indices which
investment portfolios
are assessed against
Investment portfolioRelevant accumulation index
AFIC (60 per cent)S&P/ASX 200 Accumulation Index,
grossed up for franking credits
Djerriwarrh Investments Limited (25 per cent)S&P/ASX 200 Accumulation Index,
grossed up for franking credits
Mirrabooka Investments Limited (10 per cent)S&P/ASX Mid Cap 50 Accumulation Index and
the S&P/ASX Small Ordinaries Accumulation
Index, grossed up for franking credits
AMCIL Limited (5 per cent)S&P/ASX 200 Accumulation Index, grossed
up for franking credits
Vesting schedule:
Company gross return
Company performance relative to
the relevant accumulation indexPercentage of rights vesting
< 90 per cent performance0 per cent
90 – 99 per cent performanceBoard discretion
> 100 per cent up to 110 per cent performanceStraight line between 50 per cent and 100 per cent
> 110 per cent up to 120 per cent performanceStraight line between 100 per cent and 150 per cent
120 per cent + performance150 per cent
D. Directors and Executives: Equity Holdings and Other Transactions
Tables 14 sets out reconciliations of shares and convertible notes issued by the Group and held directly, indirectly or beneficially
by Non-Executive Directors and Executives of the Group, or by entities to which they were related.
Table 14: Shareholdings of Directors and Executives
Opening
Balance
Changes
During Year
Closing
Balance
J Paterson606,9435,184612,127
RM Freeman147,7506,325154,075
RE Barker904,8623,911908,773
RP Dee-Bradbury014,21314,213
GR Liebelt463,46364,245527,708
DA Peever30,3091,13031,439
CM Walter341,12412,724353,848
PJ Williams69,42217,00086,422
GN Driver136,0473,070139,117
MJ Rowe2,2401,5843,824
AJB Porter182,920(12,164)170,756
Remuneration Report
continued
30Australian Foundation Investment Company Limited Annual Report 2020

Other Arrangements with Non-Executive Directors
Non-Executive Directors Ross Barker, John Paterson and Catherine Walter have rented office space and, for Ross Barker and
John Paterson, a parking space from the Group at commercial rates during the year. Sub-lease rental income (included in revenue)
received or receivable, excluding GST, by the Group during the year was:
Rental Income
Received/Receivable
$
RE Barker20,852
J Paterson26,921
CM Walter14,492
E. Changes to Remuneration Metrics and Allocations With Effect From the Financial Year Ended
30 June 2021
The structure of the split between fixed, annual incentive and long term will remain consistent. There will be some minor variation
to the cost of the FAR charged to each LIC.
20 per cent of the annual incentive will remain based on personal objectives and will be charged to the LICs on the basis of the fixed
annual remuneration.
The remaining 80 per cent of the annual incentive will be based on the performance of the LICs. Total share return will no longer
be used as a metric for the annual incentive. However, the long term incentive will move from being 50 per cent grossed up TSR
and 50 per cent NTA accumulation vs peer group to 100 per cent grossed up TSR.
For the annual incentive, investment return, NTA gross return and the MER will remain as key components. For AFIC and DJW only,
operating EPS growth will remain as a measure, as they are more directly related to the amount of dividend that is paid, whereas the
operating EPS for MIR and AMH is less reflective of their objectives. The actual growth of the dividend paid will also be considered for
AFI and DJW. Reward/risk will no longer be utilised as the results of this are effectively included in the investment and NTA returns over
the longer periods. Dividend yield will be a measure for the DJW portion of the annual incentive.
The proportion of annual incentive borne by MIR and AMH will increase and consequently that borne by AFI will decrease.
The proportion of annual incentive that vests due to the results of each LIC will be charged directly to that LIC in the year following
the year for which the award is made – i.e. on a lagging basis. The effects of this will therefore be noted in the following year’s MER.
31Australian Foundation Investment Company Limited Annual Report 2020

F. Detailed Performance Measures by Investment Company
Table 15 shows the performance of AFIC and the other investment companies over the past five years, including details of total
shareholder return (TSR), total portfolio return (TPR) and gross return (GR). These measures, which represent growth in shareholder
wealth, determine the vesting of AFIC’s LTI plans to Executives and the investment team.
Table 15: Detailed Performance Measures for AFIC and the Other Investment Companies
Year Ending 30 June
10-year
Return
8-year
Return
5-year
Return
4-year
Return
3-year
Return 20202019201820172016
Comparative returns
S&P/ASX 200 Accumulation
Return7.8%9.3%6.0%7.4%5.2%-7.7%11.6%13.0%14.1%0.6%
Gross S&P/ASX 200
Accumulation Return9.4%10.9%7.5%8.9%6.7%-6.6%13.4%14.6%15.7%2.2%
Combined Midcap 50
and Small Ordinaries
Accumulation Return
(used for Mirrabooka
Investments Limited)7.3%9.2%9.3%7.7%6.1%-2.6%2.8%19.3%12.7%16.1%
Gross Combined Midcap
50 and Small Ordinaries
Accumulation Return
(used for Mirrabooka
Investments Limited)8.3%10.2%10.4%8.7%7.1%-1.9%3.8%20.4%13.8%17.2%
AFIC
Total shareholder return7.0%9.3%4.3%6.5%6.1%1.2%6.9%10.3%8.0%-4.4%
Total portfolio return7.4%8.5%4.8%6.5%4.8%-4.7%9.0%10.8%11.7%-1.6%
Growth in net operating
result per share0.9%-0.1%-6.1%-4.4%-2.7%-41.5%44.1%9.6%-9.6%-12.4%
Management expense ration/an/an/an/an/a0.13%0.13%0.14%0.14%0.16%
Risk/reward return
1
41
st
/10561
st
/11970
th
/13059
th
/13046
th
/13042
nd
/13033
rd
/133105
th
/156119
th
/169n/a
2
Gross return9.3%10.4%6.7%8.4%6.7%-3.1%11.4%12.7%13.7%0.2%
Investment return7.8%8.9%5.4%7.1%5.4%-4.1%9.8%11.3%12.3%-1.0%
Djerriwarrh Investments Limited
Total shareholder return1.7%1.1%-6.1%-5.7%-6.4%-22.0%8.4%-2.8%-3.8%-7.7%
Total portfolio return4.7%5.1%1.5%3.1%0.0%-13.6%6.3%8.8%13.0%-4.5%
Growth in net operating
profit per share-4.9%-4.1%-10.2%-10.2%-7.2%-26.0%3.7%5.7%-19.9%-10.0%
Management expense ration/an/an/an/an/a0.45%0.43%0.44%0.46%0.46%
Gross return7.8%8.2%4.5%5.9%2.6%-11.5%9.1%11.7%16.6%-1.1%
Investment return6.2%6.6%2.9%4.3%1.6%-10.0%6.8%9.7%13.0%-2.7%
Operating earnings as a
percentage of available
investable assetsn/an/an/an/an/a6.1%7.0%7.1%7.1%8.7%
1. This represents the Company’s ranking in the Mercer IDPS Australian Share Universe – i.e. 10th out of 71 funds. The period used is Year to May.
2. n/a as cannot be calculated when return is negative.
Remuneration Report
continued
32Australian Foundation Investment Company Limited Annual Report 2020

Year Ending 30 June
10-year
Return
8-year
Return
5-year
Return
4-year
Return
3-year
Return 20202019201820172016
Mirrabooka Investments Limited
Total shareholder return9.5%9.5%3.6%1.4%0.8%-0.3%-1.9%4.9%3.0%13.1%
Total portfolio return10.3%10.5%8.1%7.1%7.1%5.3%1.8%14.7%7.1%12.0%
Growth in net operating
result per share-2.8%-5.3%-4.8%-9.5%-6.9%-29.2%-14.9%35.7%-17.8%16.6%
Management expense ration/an/an/an/an/a0.63%0.61%0.60%0.62%0.65%
Gross return13.3%13.6%11.1%10.0%10.1%7.1%5.9%17.3%9.9%15.4%
Investment return12.7%13.1%10.1%9.0%8.9%6.3%4.8%16.0%9.3%14.8%
AMCIL Limited
Total shareholder return9.7%9.1%5.9%4.5%6.4%11.2%-0.7%9.1%-1.2%11.8%
Total portfolio return8.9%8.9%6.9%6.7%7.2%6.0%3.5%12.3%5.3%7.6%
Growth in net operating
result per share-2.0%-2.9%-6.1%-8.8%0.9%-17.5%8.8%14.4%-32.6%4.8%
Management expense ration/an/an/an/an/a0.66%0.72%0.69%0.68%0.65%
Gross return11.2%11.4%9.1%8.9%9.6%7.6%7.0%13.9%7.0%9.7%
Investment return11.0%11.1%8.6%8.5%8.9%7.2%5.8%14.0%7.1%9.3%
33Australian Foundation Investment Company Limited Annual Report 2020

Details of non-audit services performed by the auditors may be found in Note F2 of the Financial Report.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit Committee,
is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set
out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity
of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in the Corporations Act 2001
including reviewing or auditing the auditor’s own work, acting in a management or a decision-making capacity for the Company,
acting as advocate for the Company, or jointly sharing economic risk and rewards.
A copy of the Auditor’s Independence Declaration is set out on page 35.
This report is made in accordance with a resolution of the Directors.

John Paterson
Chairman
27 July 2020
Non-audit Services
34Australian Foundation Investment Company Limited Annual Report 2020

Auditor’s Independence Declaration
35Australian Foundation Investment Company Limited Annual Report 2020

FINANCIAL STATEMENTS
36 FINANCIAL
STATEMENTS
37 Consolidated Income Statement
38 Consolidated Statement of
Comprehensive Income
39 Consolidated Balance Sheet
40 Consolidated Statement of
Changes in Equity
42 Consolidated Cash
Flow Statement

43 NOTES TO
THE FINANCIAL
STATEMENTS
43 A. Understanding AFIC’s
Financial Performance
43 A1. How AFIC Manages its
Capital
43 A2. Investments Held and How
They Are Measured
44 A3. Operating Income
45 A4. Dividends Paid
46 A5. Earnings Per Share
47 B. Costs, Tax and Risk
47 B1. Management Costs
47 B2. Tax
48 B3. Risk
50 C. Unrecognised Items
50 C1. Contingencies
51 D. Balance Sheet
Reconciliations
51 D1. Current Assets – Cash
51 D2. Credit Facilities
51 D3. Revaluation Reserve
52 D4. Realised Capital
Gains Reserve
52 D5. Retained Profits
52 D6. Shared Capital
53 E. Income Statement
Reconciliations
53 E1. Reconciliation of Net Cash
Flows From Operating
Activities to Profit
53 E2. Tax Reconciliations
54 F. Further Information
54 F1. Related Parties
54 F2. Remuneration of Auditors
54 F3. Segment Reporting
55 F4. Summary of Other
Accounting Policies
57 F5. Performance Bond
57 F6. Share-based Payments
58 F7. Principles of Consolidation
58 F8. Subsidiaries
59 F9. Parent Entity Financial
Information
36Australian Foundation Investment Company Limited Annual Report 2020

Note
2020
$’000
2019
$’000
Dividends and distributionsA3257,858433,009
Interest income from depositsA31,5543,615
Other revenueA34,8954,729
Total revenue264,307441,353
Net gains/(losses) on trading portfolioA39,740(4,686)
Income from operating activities274,047436,667
Finance costs(1,047)(826)
Administration expensesB1(14,759)(14,312)
Profit before income tax expense258,241421,529
Income tax expenseB2, E2(17,846)(15,156)
Profit for the year240,395406,373
Profit is attributable to:
Equity holders of Australian Foundation Investment Company Ltd239,931405,932
Minority interest464441
240,395406,373
CentsCents
Basic earnings per shareA519.8834.00
This Income Statement should be read in conjunction with the accompanying notes.
Consolidated Income Statement
For the Year Ended 30 June 2020
37Australian Foundation Investment Company Limited Annual Report 2020

Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2020
Year to 30 June 2020Year to 30 June 2019
Revenue
1
$’000
Capital
1
$’000
Total
$’000
Revenue
$’000
Capital
$’000
Total
$’000
Profit for the year240,395-240,395406,373-406,373
Other comprehensive income
Items that will not be recycled through
the Income Statement
Gains/(losses) for the period -(568,806)(568,806)-261,984261,984
Tax on above-167,602167,602-(86,616)(86,616)
Total other comprehensive income-(401,204)(401,204)-175,368175,368
Total comprehensive income 240,395(401,204)(160,809)406,373175,368581,741
1. ‘Capital’ includes realised or unrealised gains or losses (and the tax on those) on securities in the investment portfolio, including non-equity
investments held in the investment portfolio. Income in the form of distributions and dividends is recorded as ‘revenue’. All other items,
including expenses, are included in Profit for the year, which is categorised under ‘revenue’.
Year to 30 June 2020Year to 30 June 2019
Revenue
$’000
Capital
$’000
Total
$’000
Revenue
$’000
Capital
$’000
Total
$’000
Total comprehensive income
is attributable to:
Equity holders of Australian Foundation
Investment Company Ltd239,931(401,204)(161,273)405,932175,368581,300
Minority interests464-464441-441
240,395(401,204)(160,809)406,373175,368581,741
This Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
38Australian Foundation Investment Company Limited Annual Report 2020

Consolidated Balance Sheet
As at 30 June 2020
Note
2020
$’000
2019
$’000
Current assets
Cash D1111,318206,429
Receivables17,34740,128
Trading portfolio4,304-
Total current assets132,969246,557
Non-current assets
Investment portfolioA27,117,9707,572,640
Deferred tax assets872-
Total non-current assets7,118,8427,572,640
Total assets7,251,8117,819,197
Current liabilities
Payables884932
Tax payable30,77117,052
Trading portfolio-7,033
Provisions4,7654,114
Total current liabilities36,42029,131
Non-current liabilities
Provisions1,3751,471
Deferred tax liabilities-100
Deferred tax liabilities – investment portfolioB2973,4991,163,749
Total non-current liabilities974,8741,165,320
Total liabilities1,011,2941,194,451
Net assets6,240,5176,624,746
Shareholders’ equity
Share capitalA1, D62,947,2432,888,136
Revaluation reserveA1, D32,166,0302,561,314
Realised capital gains reserveA1, D4397,712462,257
General reserveA123,63723,637
Retained profitsA1, D5705,273688,244
Parent entity interest6,239,8956,623,588
Minority interest6221,158
Total equity6,240,5176,624,746
This Balance Sheet should be read in conjunction with the accompanying notes.
39Australian Foundation Investment Company Limited Annual Report 2020

Year Ended 30 June 2020Note
Share
Capital
$’000
Revaluation
Reserve
$’000
Realised
Capital Gains
$’000
General
Reserve
$’000
Retained
Profits
$’000
Total
Parent Entity
$’000
Minority
Interest
$’000
Total
$’000
Total equity at the beginning of the year2,888,1362,561,314462,25723,637688,2446,623,5881,1586,624,746
Dividends paid to shareholdersA4--(58,625)-(222,902)(281,527)-(281,527)
– Dividend Reinvestment PlanD659,249----59,249-59,249
Other share capital adjustments(142)----(142)-(142)
Total transactions with shareholders59,107-(58,625)-(222,902)(222,420)-(222,420)
Profit for the year----239,931239,931464240,395
Other comprehensive income (net of tax)
Net losses for the period-(401,204)
---(401,204)-(401,204)
Other comprehensive income for the year-(401,204)---(401,204)-(401,204)
Transfer to realised capital gains of cumulative losses on investments sold-5,920(5,920)-----
Dividend paid to minority interests by AICS------(1,000)(1,000)
Total equity at the end of the year2,947,2432,166,030397,71223,637705,2736,239,8956226,240,517
Year Ended 30 June 2019Note
Share
Capital
$’000
Revaluation
Reserve
$’000
Realised
Capital Gains
$’000
General
Reserve
$’000
Retained
Profits
$’000
Total
Parent Entity
$’000
Minority
Interest
$’000
Total
$’000
Total equity at the beginning of the year2,811,7212,422,568448,89223,637631,7256,338,5437176,339,260
Dividends paid to shareholdersA4--(23,257)-(349,413)(372,670)-(372,670)
– Dividend Reinvestment PlanD676,556----76,556-76,556
Other share capital adjustments(141)----(141)-(141)
Total transactions with shareholders76,415-(23,257)-(349,413)(296,255)-(296,255)
Profit for the year----405,932405,932441406,373
Other comprehensive income (net of tax)
Net gains for the period-175,368
---175,368-175,368
Other comprehensive income for the year-175,368---175,368-175,368
Transfer to realised capital gains of cumulative gains on investments sold-(36,622)36,622-----
Total equity at the end of the year2,888,1362,561,314462,25723,637688,2446,623,5881,1586,624,746
This Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2020
40Australian Foundation Investment Company Limited Annual Report 2020

Year Ended 30 June 2020Note
Share
Capital
$’000
Revaluation
Reserve
$’000
Realised
Capital Gains
$’000
General
Reserve
$’000
Retained
Profits
$’000
Total
Parent Entity
$’000
Minority
Interest
$’000
Total
$’000
Total equity at the beginning of the year2,888,1362,561,314462,25723,637688,2446,623,5881,1586,624,746
Dividends paid to shareholdersA4--(58,625)-(222,902)(281,527)-(281,527)
– Dividend Reinvestment PlanD659,249----59,249-59,249
Other share capital adjustments(142)----(142)-(142)
Total transactions with shareholders59,107-(58,625)-(222,902)(222,420)-(222,420)
Profit for the year----239,931239,931464240,395
Other comprehensive income (net of tax)
Net losses for the period-(401,204)
---(401,204)-(401,204)
Other comprehensive income for the year-(401,204)---(401,204)-(401,204)
Transfer to realised capital gains of cumulative losses on investments sold-5,920(5,920)-----
Dividend paid to minority interests by AICS------(1,000)(1,000)
Total equity at the end of the year2,947,2432,166,030397,71223,637705,2736,239,8956226,240,517
Year Ended 30 June 2019Note
Share
Capital
$’000
Revaluation
Reserve
$’000
Realised
Capital Gains
$’000
General
Reserve
$’000
Retained
Profits
$’000
Total
Parent Entity
$’000
Minority
Interest
$’000
Total
$’000
Total equity at the beginning of the year2,811,7212,422,568448,89223,637631,7256,338,5437176,339,260
Dividends paid to shareholdersA4--(23,257)-(349,413)(372,670)-(372,670)
– Dividend Reinvestment PlanD676,556----76,556-76,556
Other share capital adjustments(141)----(141)-(141)
Total transactions with shareholders76,415-(23,257)-(349,413)(296,255)-(296,255)
Profit for the year----405,932405,932441406,373
Other comprehensive income (net of tax)
Net gains for the period-175,368
---175,368-175,368
Other comprehensive income for the year-175,368---175,368-175,368
Transfer to realised capital gains of cumulative gains on investments sold-(36,622)36,622-----
Total equity at the end of the year2,888,1362,561,314462,25723,637688,2446,623,5881,1586,624,746
This Statement of Changes in Equity should be read in conjunction with the accompanying notes.
41Australian Foundation Investment Company Limited Annual Report 2020

Note
2020
$’000
Inflows/
(Outflows)
2019
$’000
Inflows/
(Outflow)
Cash flows from operating activities
Sales from trading portfolio 39,66339,599
Purchases for trading portfolio (25,160)(28,964)
Interest received1,5733,663
Dividends and distributions received255,492366,436
271,568380,734
Other receipts5,0955,117
Administration expenses(14,403)(14,875)
Finance costs paid(1,047)(826)
Taxes paid(6,578)(18,388)
Net cash inflow/(outflow) from operating activitiesE1254,635351,762
Cash flows from investing activities
Sales from investment portfolio589,059810,462
Purchases for investment portfolio (694,841)(752,440)
Taxes paid on capital gains(20,394)(6,406)
Net cash inflow/(outflow) from investing activities(126,176)51,616
Cash flows from financing activities
Net bank borrowings-(100)
Share issue transaction costs(142)(141)
Dividends paid(223,428)(295,891)
Net cash inflow/(outflow) from financing activities(223,570)(296,132)
Net increase/(decrease) in cash held(95,111)107,246
Cash at the beginning of the year206,42999,183
Cash at the end of the yearD1111,318206,429
For the purpose of the Cash Flow Statement, ‘cash’ includes cash and deposits held at call.
This Cash Flow Statement should be read in conjunction with the accompanying notes.
Consolidated Cash Flow Statement
For the Year Ended 30 June 2020
42Australian Foundation Investment Company Limited Annual Report 2020

A. Understanding AFIC’s Financial Performance
A1. How AFIC Manages its Capital
AFIC’s objective is to provide shareholders with attractive investment returns through access to a growing stream of fully franked
dividends and enhancement of capital invested.
AFIC recognises that its capital will fluctuate with market conditions. In order to manage those fluctuations, the Board may adjust
the amount of dividends paid, issue new shares, buy back the Company’s shares or sell assets.
AFIC’s capital consists of its shareholders’ equity plus any net borrowings. A summary of the balances in equity is provided below:
2020
$’000
2019
$’000
Share capital2,947,2432,888,136
Revaluation reserve2,166,0302,561,314
Realised capital gains reserve397,712462,257
General reserve23,63723,637
Retained profits705,273688,244
6,239,8956,623,588
Refer to Notes D3–D6 for a reconciliation of movement from period to period for each equity account (except the general reserve,
which is historical, relates to past profits which can be distributed and has had no movement).
A2. Investments Held and How They Are Measured
AFIC has two portfolios of securities: the investment portfolio and the trading portfolio.
The investment portfolio holds securities which the Company intends to retain on a long term basis, and includes a small sub-component
over which options may be written. The trading portfolio consist of securities that are held for short term trading only, including call
option contracts written over securities that are held in the specific sub-component of the investment portfolio and on occasion put
options and is relatively small in size. The Board has therefore focused the information in this section on the investment portfolio. Details
of all holdings (except for the specific option holdings) as at the end of the reporting period can be found at the end of the Annual Report.
The balance and composition of the investment portfolio was:
2020
$’000
2019
$’000
Equity instruments (excluding below) at market value6,661,7207,072,586
Equity instruments (over which options may be written)456,250500,054
7,117,9707,572,640
How Investments Are Shown in the Financial Statements
The accounting standards set out the following hierarchy for fair value measurement:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices, which can be observed either directly (as prices) or indirectly (derived from prices).
Level 3: Inputs for the asset or liabilities that are not based on observable market data.
All financial instruments held by AFIC are classified as Level 1 (other than the options sold by the Company which are Level 2).
Their fair values are initially measured at the costs of acquisition and then remeasured based on quoted market prices at the
end of the reporting period.
NOTES TO THE FINANCIAL STATEMENTS
43Australian Foundation Investment Company Limited Annual Report 2020

Net Tangible Asset Backing Per Share
The Board regularly reviews the net asset backing per share both before and after provision for deferred tax on the unrealised gains
in AFIC’s long term investment portfolio. Deferred tax is calculated as set out in Note B2. The relevant amounts as at 30 June 2020
and 30 June 2019 were as follows:
30 June 2020
$
30 June 2019
$
Net tangible asset backing per share
Before tax5.966.49
After tax5.165.52
Equity Investments
The shares in the investment portfolio are designated under the accounting standards as financial assets measured at fair value
through ‘other comprehensive income’ (OCI), because they are equity instruments held for long term capital growth and dividend
income, rather than to make a profit from their sale. This means that changes in the value of these shares during the reporting period
are included in OCI in the Consolidated Statement of Comprehensive Income. The cumulative change in value of the shares over time
is then recorded in the revaluation reserve. On disposal, the amounts recorded in the revaluation reserve are transferred to the
realisation reserve.
Securities Sold and How They Are Measured
Where securities are sold, any difference between the sale price and the cost is transferred from the revaluation reserve to the
realisation reserve and the amounts noted in the Consolidated Statement of Changes in Equity. This means the Company is able to
identify the realised gains out of which it can pay a ‘Listed Investment Company’ (LIC) gain as part of the dividend, which conveys
certain taxation benefits to many of AFIC’s shareholders.
During the period $584.6 million (2019: $782.0 million) of equity securities were sold. The cumulative loss on the sale of securities was
$5.9 million for the period after tax (2019: $36.6 million gain). This has been transferred from the revaluation reserve to the realisation
reserve (see Consolidated Statement of Changes in Equity). These sales were accounted for at the date of trade.
A3. Operating Income
The total income received from AFIC’s investments in 2020 is set out below.
Dividends and Distributions
2020
$’000
2019
$’000
Income from securities held in investment portfolio at 30 June242,790368,629
Income from investment securities sold during the year15,06864,269
Income from securities held in trading portfolio at 30 June--
Income from trading securities sold during the year-111
257,858433,009
Interest income
Revenue from deposits and cash management trusts1,5543,615
Other revenue
Administration fees4,8534,729
Other income 42-
4,8954,729
Notes to the Financial Statements
continued
44Australian Foundation Investment Company Limited Annual Report 2020

Dividend Income
Distributions from listed securities are recognised as income when those securities are quoted in the market on an ex-distribution basis.
Capital returns on ordinary shares are treated as an adjustment to the carrying value of the shares.
Trading Income
Net gains on the trading and options portfolio are set out below.
2020
$’000
2019
$’000
Net gains
Net realised gains/(losses) from trading portfolio – shares1,038140
– options8,428(4,055)
Unrealised gains/(losses) from trading portfolio – shares243-
– options31(771)
9,740(4,686)
$108.4 million of shares are lodged with the ASX Clear Pty Ltd as collateral for sold option positions written by the Group (2019:
$131.0 million). These shares are lodged with ASX Clear under the terms of ASX Clear Pty Ltd which require participants in the
Exchange Traded Option market to lodge collateral, and are recorded as part of the Group’s investment portfolio. If all call options
were exercised, this would lead to the sale of $32.0 million worth of securities at an agreed price – the ‘exposure’ (2019: $218.4 million).
There were no put options in the portfolio at 30 June (2019: $4.0 million exposure).
A4. Dividends Paid
The dividends paid and payable for the year ended 30 June 2020 are shown below:
2020
$’000
2019
$’000
(a) Dividends Paid During the Year
Final dividend for the year ended 30 June 2019 of 14 cents fully franked at 30 per cent paid
29 August 2019 (2019: 14 cents fully franked at 30 per cent paid on 31 August 2018).164,150162,800
Interim dividend for the year ended 30 June 2020 of 10 cents per share fully franked
at 30 per cent paid 24 February 2020 (2019: 10 cents fully franked at 30 per cent paid
25 February 2019)117,377116,594
Special dividend of 8 cents per share fully franked at 30 per cent paid 25 February 2019-93,276
281,527372,670
Dividends paid in cash222,278296,114
Dividends reinvested in shares59,24976,556
281,527372,670
Dividends forgone via DSSP7,1117,946
(b) Franking Credits
Opening balance of franking account at 1 July182,607156,187
Franking credits on dividends received88,920165,325
Tax paid during the year26,23424,221
Franking credits paid on ordinary dividends paid(120,654)(159,716)
Franking credits deducted on DSSP shares issued(3,054)(3,410)
Closing balance of franking account174,053182,607
Adjustments for tax payable in respect of the current year’s profits and the receipt
of dividends recognised as receivables33,80325,702
Adjusted closing balance207,856208,309
Impact on the franking account of dividends declared but not recognised as a liability
at the end of the financial year:(72,622)(72,009)
Net available135,234136,300
These franking account balances would allow AFIC to frank additional dividend payments
up to an amount of:315,546318,033
AFIC’s ability to continue to pay franked dividends is dependent upon the receipt of franked dividends from the trading and investment
portfolios and on AFIC paying tax.
45Australian Foundation Investment Company Limited Annual Report 2020

2020
$’000
2019
$’000
(c) New Zealand Imputation Account
(Figures in A$ at year-end exchange rate: 2020: $NZ1.071:$A1; 2019: $NZ1.045:$A1)
Opening balance14,3817,356
Imputation credits on dividends received7,1877,384
Imputation credits on dividends paid(13,074)-
Closing balance8,49414,740
There will be no NZ imputation credit attached to the proposed dividend payable
on 1 September 2020.
(d) Dividends Declared After Balance Date
Since the end of the year Directors have declared a final dividend of 14 cents per share
fully franked at 30 per cent. The aggregate amount of the final dividend for the year to
30 June 2020 to be paid on 1 September 2020, but not recognised as a liability at the
end of the financial year is: 169,451
(e) Listed Investment Company Capital Gain Account
Balance of the listed investment company (LIC) capital gain account:62,91263,335
This equates to an attributable gain of:89,87490,478
Distributed LIC capital gains may entitle certain shareholders to a deduction in their tax return, as set out in the dividend statement.
LIC capital gains available for distribution are dependent on the disposal of investment portfolio holdings that qualify for LIC capital
gains, or the receipt of LIC distributions from LIC securities held in the portfolios. $86.5 million attributable gain is attached to the final
dividend to be paid on 1 September 2020.
A5. Earnings Per Share
The table below shows the earnings per share based on the profit for the year:
Basic Earnings Per Share
2020
Number
2019
Number
Weighted average number of ordinary shares used as the denominator1,206,707,3941,193,810,502
$’000$’000
Profit for the year 239,931405,932
CentsCents
Basic earnings per share19.8834.00
Notes to the Financial Statements
continued
46Australian Foundation Investment Company Limited Annual Report 2020

B. Costs, Tax and Risk
B1. Management Costs
The total management expenses for the period are as follows:
2020
$’000
2019
$’000
Rental expense relating to non-cancellable leases (699)(698)
Employee benefit expenses(8,587)(8,039)
Depreciation charge--
Other administration expenses(5,473)(5,575)
(14,759)(14,312)
Employee Benefit Expenses
A major component of employee benefit expenses is Directors’ and Executives’ remuneration. This has been summarised below:
Short term
Benefits
$
Other
Long term
Benefits
$
Post-
employment
Benefits
$
Share
Based
Payments
$
Total
$
2020
Non-Executive Directors 716,550-63,450-780,000
Executives2,755,048(100,800)98,858166,6502,919,756
Total3,471,598(100,800)162,308166,6503,699,756
2019
Non-Executive Directors692,379-65,776-758,155
Executives2,686,935(57,025)96,89977,6622,804,471
Total3,379,314(57,025)162,67577,6623,562,626
Detailed remuneration disclosures are provided in the Remuneration Report.
The above figures include share-based expenses incurred in respect of Ross Barker, former Managing Director, who is still eligible
for vesting under these plans.
The Group (i.e. AFIC and its subsidiary, Australian Investment Company Services (AICS) – see Note F8) does not make loans
to Directors or Executives.
B2. Tax
AFIC’s tax position, and how it accounts for tax, is explained here. Detailed reconciliations of tax accounting to the financial statements
can be found in Note E2.
The income tax expense for the period is the tax payable on this financial year’s taxable income, adjusted for any changes in deferred
tax assets and liabilities attributable to temporary differences and for any unused tax losses. Deferred tax assets and liabilities (except
for those related to the unrealised gains or losses in the investment portfolio) are offset, as all current and deferred taxes relate to the
Australian Taxation Office and can legally be settled on a net basis.
A provision has been made for taxes on any unrealised gains or losses on securities valued at fair value through the Income Statement
– i.e. the trading portfolio, puttable instruments and convertible notes that are classified as debt.
A provision also has to be made for any taxes that could arise on sale of securities in the investment portfolio, even though there is no
intention to dispose of them. Where AFIC disposes of such securities, tax is calculated according to the particular parcels allocated to
the sale for tax purposes, offset against any capital losses carried forward.
47Australian Foundation Investment Company Limited Annual Report 2020

Tax Expense
The income tax expense for the period is shown below:
(a) Reconciliation of Income Tax Expense to Prima Facie Tax Payable
2020
$’000
2019
$’000
Profit before income tax expense 258,241421,529
Tax at the Australian tax rate of 30 per cent (2019: 30 per cent)77,472126,459
Tax offset for franked dividends received(61,344)(115,510)
Off-market buy-back income not included in profit-15,097
Demerger dividend non-taxable-(13,089)
Sundry items whose tax treatment differs from accounting treatment4,1714,331
20,29917,288
Over provision in prior years(2,453)(2,132)
Total tax expense17,84615,156
Deferred Tax Liabilities – Investment Portfolio
The accounting standards require us to recognise a deferred tax liability for the potential capital gains tax on the unrealised gain in the
investment portfolio. This amount is shown in the Balance Sheet. However, the Board does not intend to sell the investment portfolio,
so this tax liability is unlikely to arise at this amount. Any sale of securities would also be affected by any changes in capital gains tax
legislation or tax rate applicable to such gains when they are sold.
2020
$’000
2019
$’000
Deferred tax liabilities on unrealised gains in the investment portfolio973,4991,163,749
Opening balance at 1 July1,163,7491,097,527
Tax on realised gains(22,648)(20,394)
Charged to OCI for ordinary securities on gains or losses for the period(167,602)86,616
973,4991,163,749
B3. Risk
Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
As a LIC that invests in tradeable securities, AFIC can never be free of market risk as it invests its capital in securities which are not risk
free – the market price of these securities will fluctuate.
A general fall in market prices of 5 per cent and 10 per cent, if spread equally over all assets in the investment portfolio, would have
led to a reduction in AFIC’s comprehensive income of $249.1 million and $498.3 million respectively, at a tax rate of 30 per cent
(2019: $265.0 million and $530.1 million).
AFIC seeks to reduce market risk at the investment portfolio level by ensuring that it is not, in the opinion of the Investment Committee,
overly exposed to one company or one particular sector of the market. The relative weightings of the individual securities and the
relevant market sectors are reviewed by the Investment Committee and risk can be managed by reducing exposure where necessary.
AFIC does not have a minimum or maximum amount of the portfolio that can be invested in a single company or sector.
Notes to the Financial Statements
continued
48Australian Foundation Investment Company Limited Annual Report 2020

AFIC’s total investment exposure by sector is as below:
2020
%
2019
%
Energy3.014.28
Materials15.7617.50
Industrials15.8815.17
Consumer Discretionary5.984.37
Consumer Staples 4.605.06
Banks 17.1621.80
Other Financials8.269.73
Property Trusts1.740.71
Telecommunications4.423.61
Healthcare16.6210.86
Information Technology4.003.01
Utilities1.031.25
Cash1.542.65
Securities representing over 5 per cent of the investment portfolio at 30 June were
CSL8.55.8
Commonwealth Bank7.78.6
BHP7.07.3
AFIC is also not directly exposed to material currency risk as most of its investments are quoted in Australian dollars.
The writing of call options provides some protection against a fall in market prices as it generates income to partially compensate
for a fall in capital values. Options are only written against securities that are held in the trading or the specific sub-section of the
investment portfolio.
Interest Rate Risk
The Group is not currently materially exposed to interest rate risk as all its cash investments and borrowings are short term for a fixed
interest rate.
Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an
obligation. AFIC is exposed to credit risk from cash, receivables, securities in the trading portfolio and securities in the investment
portfolio respectively. None of these assets are overdue. The risk in relation to each of these items is set out below.
Cash
All cash investments not held in a transactional account are invested in short term deposits with Australia’s ‘big four’ commercial banks
or in cash management trusts which invest predominantly in short term securities with an A1+ rating. In the unlikely event of a bank
default or default on the underlying securities in the cash trust, there is a risk of losing the cash deposits and any accrued unpaid interest.
Receivables
Outstanding settlements are on the terms operating in the securities industry, which usually require settlement within two days of the
date of a transaction. Receivables are non-interest bearing and unsecured. In the event of a payment default, there is a risk of losing
any difference between the price of the securities sold and the price of the recovered securities from the discontinued sale. Receivables
also include dividends from securities that have passed the record date for the distribution but have not paid as at the current date.

Trading and Investment Portfolios
Converting and convertible notes or other interest-bearing securities that are not equity securities carry credit risk to the extent of their
carrying value. This risk will be realised in the event of a shortfall on winding-up of the issuing companies.
49Australian Foundation Investment Company Limited Annual Report 2020

Liquidity Risk
Liquidity risk is the risk that an entity will not be able to meet its financial liabilities.
AFIC monitors its cash-flow requirements daily. The Investment Committee also monitors the level of contingent payments on a regular
basis by reference to known sales and purchases of securities, dividends and distributions to be paid or received, put options that may
require AFIC to purchase securities, and facilities that need to be repaid. AFIC ensures that it has either cash or access to short term
borrowing facilities sufficient to meet these contingent payments.
AFIC’s inward cash-flows depend upon the dividends received. Should these drop by a material amount, AFIC would amend its
outward cash-flows accordingly. AFIC’s major cash outflows are the purchase of securities and dividends paid to shareholders,
and both of these can be adjusted by the Board and management. Furthermore, the assets of AFIC are largely in the form of readily
tradeable securities which can be sold on-market if necessary.
The table below analyses AFIC’s financial liabilities into relevant maturity groupings. The amounts disclosed in the table are the
contractual undiscounted cash-flows. Balances due within 12 months equal their carrying amounts as the impact of discounting
is not significant.
30 June 2020
Less Than
6 Months
$’000
6–12 Months
$’000
Greater
Than 1 Year
$’000
Total
Contractual
Cash Flows
$’000
Carrying
Amount
$’000
Non-derivatives
Payables884--884884
884--884884
Derivatives
Options in trading portfolio*-----
-----
30 June 2019
Less Than
6 Months
$’000
6–12 Months
$’000
Greater
Than 1 Year
$’000
Total
Contractual
Cash Flows
$’000
Carrying
Amount
$’000
Non-derivatives
Payables932--932932
932--932932
Derivatives
Options in trading portfolio*3,963--3,9637,033
3,963--3,9637,033
* In the case of call options, there are no contractual cash flows as if the option is exercised the contract will be settled in the securities over which the
option is written. The contractual cash flows for put options written are the cash sums the Company will pay to acquire securities over which the options
have been written, and it is assumed for purpose of the above disclosure that all options will be exercised (i.e. maximum cash outflow).
C. Unrecognised Items
Unrecognised items, such as contingencies, do not appear in the financial statements, usually because they don’t meet the requirements
for recognition. However, they have the potential to have a significant impact on the Group’s financial position and performance.
C1. Contingencies
Directors are not aware of any material contingent liabilities or contingent assets other than those already disclosed elsewhere in the
Financial Report.
Notes to the Financial Statements
continued
50Australian Foundation Investment Company Limited Annual Report 2020

Further information that shareholder may find useful is included here. It is grouped into three sections:
D. Balance Sheet Reconciliations
E. Income Statement Reconciliations
F. Further Information
D. Balance Sheet Reconciliations
This section provides further information about the basis of calculation of line items in the financial statements.
D1. Current Assets – Cash
2020
$’000
2019
$’000
Cash at bank and in hand (including on-call)111,318201,429
Fixed term deposits -5,000
111,318206,429
Cash holdings yielded an average floating interest rate of 1.02 per cent (2019: 2.07 per cent). All cash investments are held in a
transactional account or an over-night ‘at call’ account invested in cash management trusts which invest predominantly in short term
securities with an A1+ rating.
D2. Credit Facilities
2020
$’000
2019
$’000
Commonwealth Bank of Australia – cash advance facilities250,000140,000
Amount drawn down --
Undrawn facilities250,000140,000
The above borrowings are unsecured. Repayment of facilities is done either through the use of cash received from distributions or the
sale of securities, or by rolling existing facilities into new ones. Facilities are usually drawn down for no more than three months.
D3. Revaluation Reserve
2020
$’000
2019
$’000
Opening balance at 1 July2,561,3142,422,568
Gains/(losses) on investment portfolio
– Equity instruments(568,806)261,984
Provision for tax on above167,602(86,616)
Cumulative taxable realised (gains)/losses (net of tax)5,920(36,622)
2,166,0302,561,314
This reserve is used to record increments and decrements on the revaluation of the investment portfolio as described in accounting
policy Note A2.
51Australian Foundation Investment Company Limited Annual Report 2020

D4. Realised Capital Gains Reserve
2020
$’000
2019
$’000
Opening balance at 1 July462,257448,892
Dividends paid(58,625)(23,257)
Cumulative taxable realised gains/(losses) for period through OCI (net of tax)(5,920)36,622
397,712462,257
This reserve records gains or losses after applicable taxation arising from disposal of securities in the investment portfolio as
described in A2.
D5. Retained Profits
2020
$’000
2019
$’000
Opening balance at 1 July688,244631,725
Dividends paid(222,902)(349,413)
Profit for the year239,931405,932
705,273688,244
This reserve relates to past profits.
D6. Share Capital
Movements in Share Capital
DateDetailsNotes
Number
of Shares
’000
Issue Price
$
Paid-up
Capital
$’000
1/07/2018Balance1,186,1472,811,721
31/08/2018Dividend Reinvestment Plani5,3566.1833,100
31/08/2018Dividend Substitution Share Planii5266.18n/a
25/02/2019Dividend Reinvestment Plani7,3285.9343,456
25/02/2019Dividend Substitution Share Planii7915.93n/a
VariousCosts of issue--(141)
30/06/2019Balance1,200,1482,888,136
29/08/2019Dividend Reinvestment Plani5,5416.2134,407
29/08/2019Dividend Substitution Share Planii6226.21n/a
24/02/2020Dividend Reinvestment Plani3,5856.9324,842
24/02/2020Dividend Substitution Share Planii4686.93n/a
VariousCosts of issue--(142)
30/06/2020Balance1,210,3642,947,243
(i) Shareholders elect to have all or part of their dividend payment reinvested in new ordinary shares under the Dividend Reinvestment Plan (DRP).
The price of the new DRP shares is based on the average selling price of shares traded on the Australian Securities Exchange and Chi-X in the
five days after the shares begin trading on an ex-dividend basis.
(ii) The Group has a Dividend Substitution Share Plan (DSSP) whereby shareholders may elect to forgo a dividend and receive shares instead.
Pricing for the DSSP shares is done as per the DRP shares.
(iii) The Group has an on-market share buy-back program. During the financial year, no shares were bought back (2019: Nil).
All shares have been fully paid, rank pari passu and have no par value.
Notes to the Financial Statements
continued
52Australian Foundation Investment Company Limited Annual Report 2020

E. Income Statement Reconciliations
E1. Reconciliation of Net Cash Flows From Operating Activities to Profit
2020
$’000
2019
$’000
Profit for the year240,395406,373
Net decrease/(increase) in trading portfolio(11,337)276
Dividends received as securities under DRP investments(8,355)(16,848)
Coles demerger dividend – non-cash item-(43,629)
Decrease/(increase) in current receivables22,78137,106
– Less increase/(decrease) in receivables for investment portfolio-(27,495)
Increase/(decrease) in deferred tax liabilities(191,222)67,579
– Less (increase)/decrease in deferred tax liability on investment portfolio190,250(66,222)
Increase/(decrease) in current payables(48)220
– Less increase/(decrease) in dividends payable151(223)
Increase/(decrease) in provision for tax payable13,7198,807
Capital gains tax charge taken through equity(22,648)(20,394)
Prior year taxes paid relating to capital gains20,3946,406
Increase/(decrease) in other provisions/non-cash items 555(194)
Net cash flows from operating activities254,635351,762
E2. Tax Reconciliations
Tax Expense Composition
2020
$’000
2019
$’000
Charge for tax payable relating to the current year21,27115,931
Over provision in prior years(2,453)(2,132)
(Increase)/Decrease in deferred tax assets(972)1,357
17,84615,156
Amounts Recognised Directly Through Other Comprehensive Income
Net movement in deferred tax liabilities relating to capital gains tax on the movement
in gains in the investment portfolio(167,602)86,616
(167,602)86,616
Deferred Tax Assets and Liabilities
The deferred tax balances are attributable to:
2020
$’000
2019
$’000
(a) Tax on unrealised gains or losses in the trading portfolio(82)231
(b) Provisions and expenses charged to the accounting profit which are not yet tax deductible1,8491,680
(c) Interest and dividend income receivable which is not assessable for tax until receipt(895)(2,011)
872(100)
Movements:
Opening balance at 1 July(100)1,257
Credited/(charged) to Income Statement972(1,357)
872(100)
Deferred tax assets arise when provisions and expenses have been charged but are not yet tax deductible. These assets are realised
when the relevant items become tax deductible, as long as enough taxable income has been generated to claim the assets against,
and as long as there are no changes to the tax legislation that affect AFIC’s ability to claim the deduction.
53Australian Foundation Investment Company Limited Annual Report 2020

F. Further Information
This section covers information that is not directly related to specific line items in the financial statements, including information
about related party transactions, share-based payments, assets pledged as security and other statutory information.
F1. Related Parties
All transactions with deemed related parties were made on normal commercial terms and conditions and approved by
independent Directors.
(a) Arrangements With Non-Executive Directors
Non-Executive Directors R Barker, J Paterson and C Walter have rented office space and, for R Barker and J Paterson, a parking space
from the Group at commercial rates during the year. Sub-lease rental income (included in revenue) received or receivable by the Group,
excluding GST, during the year was $62,265 (2019: $61,275).
(b) AICS Transactions With Minority Interests
The below transactions were with Djerriwarrh Investments Ltd as a minority interest holder in the Company’s subsidiary.
2020
$’000
2019
$’000
Administration expenses charged for the year2,6342,515
(c) AICS Transactions With Other Listed Investment Companies
AICS had the following transactions with other listed investment companies to which it provides services:
2020
$’000
2019
$’000
Administration expenses charged for the year to Mirrabooka Investments Ltd1,4541,382
Administration expenses charged for the year to AMCIL Ltd839906
F2. Remuneration of Auditors
For the year the auditor earned or will earn the following remuneration:
2020
$
2019
$
PricewaterhouseCoopers
Audit services
Audit or review of Financial Reports 202,815195,987
Audit related services
AFSL compliance audit and review8,1687,998
Non-audit services
Taxation compliance services32,29330,670
Total remuneration243,276234,655
F3. Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker.
The Board, through its sub-committees, has been identified as the chief operating decision-maker, as it is responsible for allocating
resources and assessing performance of the operating segments.
Description of Segments
The Board makes the strategic resource allocations for AFIC. AFIC has therefore determined the operating segments based on the
reports reviewed by the Board, which are used to make strategic decisions.
The Board is responsible for AFIC’s entire portfolio of investments and considers the business to have a single operating segment.
The Board’s asset allocation decisions are based on a single, integrated investment strategy, and AFIC’s performance is evaluated
on an overall basis.
Notes to the Financial Statements
continued
54Australian Foundation Investment Company Limited Annual Report 2020

Segment Information Provided to the Board
The internal reporting provided to the Board for AFIC’s assets, liabilities and performance is prepared on a consistent basis with the
measurement and recognition principles of Australian Accounting Standards, except that net assets are reviewed both before and
after the effects of capital gains tax on investments (as reported in AFIC’s Net Tangible Asset announcements to the ASX).
Other Segment Information
Revenues from external parties are derived from the receipt of dividend, distribution and interest income, and income arising on the
trading portfolio and realised income from the options portfolio.
AFIC is domiciled in Australia and most of AFIC’s income is derived from Australian entities or entities that maintain a listing in Australia.
AFIC has a diversified portfolio of investments, with only two investments comprising more than 10 per cent of AFIC’s income, including
realised income from the trading and options written portfolios – Commonwealth Bank (12.4 per cent) and BHP (10.5 per cent) (2019:
as a consequence of buy-backs and demerger dividends three investments: Wesfarmers (14.9 per cent), Rio Tinto (13.1 per cent) and
BHP (11.9 per cent)).
F4. Summary of Other Accounting Policies
This general purpose Financial Report has been prepared in accordance with Australian Accounting Standards, Interpretations issued
by the Australian Accounting Standards Board and the Corporations Act 2001. This Financial Report has been authorised for issue on
27 July 2020 in accordance with a resolution of the Board and is presented in the Australian currency. The Directors of the Company
have the power to amend and reissue the Financial Report.
AFIC has attempted to improve the transparency of its reporting by adopting ‘plain English’ where possible. Key ‘plain English’ phrases
and their equivalent AASB terminology are as follows:
PhraseAASB Terminology
Market ValueFair value for actively traded securities
CashCash and cash equivalents
Share CapitalContributed equity
OptionsDerivatives written over equity instruments that are valued at fair value through profit or loss
HybridsEquity instruments that have some of the characteristics of debt
AFIC complies with International Financial Reporting Standards (IFRS). AFIC is a ‘for profit’ entity.
AFIC has not applied any Australian Accounting Standards or AASB Interpretations that have been issued as at balance date but are
not yet operative for the year ended 30 June 2020 (‘the inoperative standards’). The impact of the inoperative standards has been
assessed and the impact has been identified as not being material. AFIC only intends to adopt other inoperative standards at the date
at which their adoption becomes mandatory.
Basis of Accounting
The financial statements are prepared using the valuation methods described in A2. All other items have been treated in accordance
with the historical cost convention.
Fair Value of Financial Assets and Liabilities
The fair value of cash and non-interest bearing monetary financial assets and liabilities of AFIC approximates their carrying value.
Convertible Notes
On the issue of convertible notes, the Group estimates the fair value of the liability component of the convertible notes, being the
obligation to make future payments of principal and interest to holders, using a market interest rate for a non-convertible note of similar
terms and conditions. The residual amount is included in equity as other equity securities with no recognition of any change in the value
of the option in subsequent periods. The liability component is then included in borrowings. Expenses incurred in connection with the
issue of the notes are deducted from the total face value and the expense is then incurred over the life of the notes.
The total liability is subsequently carried on an amortised cost basis with interest on the notes recognised as finance costs on an
effective yield basis until the liability is extinguished on conversion or maturity of the notes.
55Australian Foundation Investment Company Limited Annual Report 2020

Employee Benefits
(i) Wages, Salaries and Annual Leave
Liabilities for wages and salaries, including annual leave, expected to be settled within 12 months of balance date are recognised as
current provisions in respect of employees’ services up to balance date and are measured at the amounts expected to be paid when
the liabilities are settled.
(ii) Long Service Leave
In calculating the value of long service leave, consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at balance date on national
government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
(iii) Cash Incentives
Cash incentives are provided under the Executive Annual Incentive Plan and are dependent upon the performance of the Group.
A provision is made for the cost of unsettled cash incentives at balance date. The Investment Team Annual Incentive Plans are also
settled on a cash basis.
(iv) Share Incentives
Share incentives are provided under the Executive Annual Incentive Plan, Executive Long Term Incentive Plan, Investment Team Long
Term Incentive Plan and the Employee Share Acquisition Scheme.
For the Employee Share Acquisition Scheme and the Executive Annual Incentive Plan, the incentives are based on the performance
of the individual, the Group and investment companies to which the Group provides administration services, for the financial year.
For the Employee Share Acquisition Scheme and a portion of the Executive Annual Incentive, the recipient agrees to purchase
(or have purchased for them) shares on-market, but receives a cash amount. A provision for the amount payable under the Annual
Incentive Plans is recognised on the Balance Sheet.
For the Investment Team Long Term Incentive Plan, the incentives are based on the performance of the Group and investment companies
to which the group provides administration services over a four-year period. The incentives may be settled in shares (but based on a
cash amount) or cash. Historically, all awards have been cash. Expenses are recognised over the four year assessment period based
on the amount expected to be payable under this plan, resulting in a provision for incentive payable being built up on the Balance Sheet
over the assessment period.
Under the Executive Long Term Incentive Plan which was introduced for the year ended 30 June 2013, the amount awarded is represented
by performance shares. The 30-day Volume Weighted Average Price (VWAP) of AFIC shares up to but not including 1 July is calculated.
The amount of ELTIP available is then divided by this 30-day VWAP price to determine the number of performance shares that may vest
at the vesting point in four years’ time. The value of each performance shares will be adjusted by the accumulation return on the AFI
share price (being the movement in the share price assuming the reinvestment of any dividends) up to vesting date, based on a final
share price calculated on the 30-day VWAP price up to 30 June. No shares vested during the year ended 30 June 2020.
The expense will be charged directly through the Income Statement in the following manner – 25 per cent of the total estimated cost in Year
1, 50 per cent of the total estimated cost in Year 2 less the expense charged in Year 1, 75 per cent of the total estimated cost in Year 3 less
the expense charged in Years 1 and 2 and 100 per cent of the total estimated cost in Year 4 less the expense charged in Years 1, 2 and 3.
Directors’ Retirement Allowances
The Group recognises as ‘amounts payable’ Directors’ retirement allowances that have been crystallised. No further amounts will be
expensed as retirement allowances.
Administration Fees
The Group currently provides administrative services to other listed investment companies. The associated fees are recognised on
an accruals basis as income throughout the year. Any amounts outstanding at balance date are recognised as receivable, subject to
the assessment of recoverability by the Directors.
Operating Leases
The Group currently has an operating lease in respect of its premises. Payments made under operating leases are charged to the
Income Statement on a straight-line basis over the period of the lease.
Rounding of Amounts
AFIC is a company of the kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191,
relating to the ‘rounding off’ of amounts in the Financial Report. Amounts in the Financial Report have been rounded off in accordance
with that Instrument, to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Notes to the Financial Statements
continued
56Australian Foundation Investment Company Limited Annual Report 2020

F5. Performance Bond
The Group’s subsidiary, AICS, has under the terms of its Australian Financial Services Licence in place a performance bond to the sum
of $20,000 underwritten by the Commonwealth Bank of Australia in favour of the Australian Securities and Investments Commission
(ASIC), payable on demand to ASIC.

F6. Share-based Payments
Share-based Payments
The Group has a number of share incentive arrangements. These are accounted for in accordance with Note F4. Where shares are
issued to employees of AICS, AICS compensates AFIC for the fair value of the shares.
(a) Executive Incentive Plans
The Executives’ remuneration arrangements incorporate an ‘at risk’ component as set out in the Remuneration Report. Part of this
‘at risk’ component is paid in shares in the Group.
(i) Executive Annual Incentive Plan
Each financial year, the Remuneration Committee sets the target (cash) amount of remuneration that could be paid should all
performance targets and measures be achieved. If all are achieved, 100 per cent of the remuneration will be awarded. If stretch levels
of performance are achieved above target, then higher amounts may be paid. On the other hand there is no set minimum that will be
paid regardless of performance.
The performance measures are a combination of the performance of the Group, the investment companies to which the Group
provides administration services, and personal objectives.
All of the incentive remuneration awarded is paid in cash, with 50 per cent of the after-tax amount being used by the Executive
to purchase shares. All remuneration under the plan, is paid in the financial year following the year of assessment.
The Executive agrees to the shares being subject to being held for two years (holding term), during which they cannot be sold.
Dividends are paid to Executives on these shares prior to the expiry of the holding term. Should an Executive leave the Group
before the holding term expires, the restriction will be lifted.
9,609 shares (2019: 13,619 shares) were purchased by Executives in the year (in relation to the prior year) with a fair value
(being the acquisition price) of $81,835 (2019: $84,147).

(ii) Executive Long Term Incentive Plan
Under the Executive Long Term Incentive Plan, the amount awarded will be represented by Performance Rights. The 30-day Volume
Weighted Average Price (VWAP) of AFIC shares up to but not including 1 July will be calculated. The amount of ELTIP available will then
be divided by this 30-day VWAP price to determine the number of Performance Rights that may vest at the vesting point in four years’
time. The value of each Performance Right will be adjusted by the accumulation return on the AFI share price (being the movement in
the share price assuming the reinvestment of any dividends) up to vesting date, based on a final share price calculated on the 30-day
VWAP price up to 30 June.
The estimated fair value of the award will be calculated in accordance with AASB 2 – Share Based Payments at the end of each
year until the final year of vesting. The liability shown after the final year of vesting will represent the actual amount being paid
to eligible employees as a cash-settled share-based payment.
65,198 rights were awarded under the plan during the year ended 30 June 2020 (2019: 64,201). An expense of $462,267 (2019:
$494,042) was incurred for the 2016/17, 2017/18, 2018/19 and 2019/20 plans. 57,089 rights under the 2015/16 plan were forfeited
during the year (100 per cent).
(iii) Investment Team Long Term Incentive Plan
Similar to the Annual Incentive Plans, a target cash amount of long term incentive is set each year in respect of that year, which will
vest in four years’ time. The percentage of this target that ultimately vests four years after the award depends on the gross return
of the Group and the investment companies it provides administration services to.
The amount that vests will be paid in cash or shares (purchased on-market at that time, based on the cash amount that vests) at the
discretion of the Group.
No LTIP vested in the period (2019 $Nil).
57Australian Foundation Investment Company Limited Annual Report 2020

(b) Employee Share Acquisition Scheme
Under the current Employee Share Acquisition Scheme, each employee who is not a participant in the Executive or Investment Team
Incentive Plans is awarded $5,000 per annum. After PAYG is deducted, $2,500 is used to buy shares in the Company which need to
be held for three years. After three years, or the departure of the employee from employment with the Group, the shares come out
of the holding lock.
In addition, each employee is eligible for an additional award of up to $5,000. 50 per cent of the amount awarded is used to buy shares
in one of the other LICs that AICS provides services to. The amount that is awarded is dependent on the metrics used for the vesting
of the Investment Team’s Short Term Incentive (excluding personal measures). During the year, 28 per cent of the possible maximum
was awarded, and 50 per cent of this was used to buy shares in Mirrabooka Investments Limited.
(c) Expenses Arising from Share Based Payment Transactions
Total expenses arising from share based payment transactions recognised during the period as part of the employee benefit expense
(excluding any reversals and the Investment Team Long Term Incentive Plan) were as follows:
2020
$’000
2019
$’000
Share-based payment expense 507 542
(d) Liability
The total liability arising from share based payment transactions is included in the current and non-current liabilities for ‘provisions’.
F7. Principles of Consolidation
AFIC’s consolidated financial statements consist of the financial statements of AFIC, the parent, and its subsidiary, Australian
Investment Company Services Ltd (AICS). 25 per cent of AICS is owned by Djerriwarrh Investments Ltd, another investment
company for which AICS performs operational and investment administration services, and for which it is paid monthly.
No subsidiaries were acquired or disposed of during the year. Intercompany transactions and balances between AFIC and AICS
are eliminated on consolidation.
The financial information for the parent entity, disclosed in F9 on the following page, has been prepared on the same basis as the
consolidated financial statements. All notes are for the consolidated Group unless specifically noted otherwise.
F8. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Name of Entity
Country of
IncorporationClass of shares
Equity Holding
20202019
Australian Investment Company Services LtdAustralia Ordinary75%75%
The investment in AICS is accounted for at cost in the individual financial statements of AFIC.
Notes to the Financial Statements
continued
58Australian Foundation Investment Company Limited Annual Report 2020

F9. Parent Entity Financial Information
Summary Financial Information
The individual financial statements for the parent entity show the following aggregate amounts:
2020
$’000
2019
$’000
Balance Sheet
Current assets125,705230,698
Total assets7,243,6747,803,337
Current liabilities30,96517,487
Total liabilities1,005,4861,183,065
Shareholders’ equity
Issued capital2,947,2432,888,136
Reserves
Revaluation reserve2,166,0302,561,314
Realised capital gains reserve397,712462,257
General reserve23,63723,637
Retained earnings703,566684,928
3,290,945 3,732,136
Total shareholders’ equity6,238,1886,620,272
Profit or loss for the year238,539404,609
Total comprehensive income (162,665)579,977
59Australian Foundation Investment Company Limited Annual Report 2020

In the Directors’ opinion:
1) the financial statements and notes set out on pages 37 to 59 are in accordance with the Corporations Act 2001 including:
a) complying with the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
b) giving a true and fair view of the entity’s financial position as at 30 June 2020 and of its performance for the financial year
ended on that date; and
2) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
Note F4 to the financial statements confirms that the financial statements also comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board.
This declaration is made in accordance with a resolution of the Directors.
This declaration has been made after receiving the declarations required to be made to the Directors by the Managing Director and the
Chief Financial Officer regarding the financial statements in accordance with Section 295A of the Corporations Act 2001 for the financial
year ended 30 June 2020. The declarations received were that, in the opinion of the Managing Director and the Chief Financial Officer
to the best of their knowledge, the financial records of the Company have been properly maintained, that the financial statements
comply with accounting standards and that they give a true and fair view.

John Paterson
Chairman
Melbourne
27 July 2020
DIRECTORS’ DECLARATION
60Australian Foundation Investment Company Limited Annual Report 2020

INDEPENDENT AUDIT REPORT
61Australian Foundation Investment Company Limited Annual Report 2020

INDEPENDENT AUDIT REPORT
continued
62Australian Foundation Investment Company Limited Annual Report 2020

63Australian Foundation Investment Company Limited Annual Report 2020

INDEPENDENT AUDIT REPORT
continued
64Australian Foundation Investment Company Limited Annual Report 2020

65Australian Foundation Investment Company Limited Annual Report 2020

Information About Shareholders
At 21 July 2020 there were 153,966 holdings of ordinary shares. These holdings were distributed in the following categories:

Size of HoldingShareholdingsPercentage
1 to 1,00057,0011.97%
1,001 to 5,00049,73110.57%
5,001 to 10,00020,68012.41%
10,001 to 100,00025,51451.97%
100,000 and over1,04023.07%
Total153,966100%
Percentage held by the 20 largest holders6.40%
Average shareholding7,861
There were 3,900 shareholdings of less than a marketable parcel of $500 (82 shares).
Voting Rights of Ordinary Shares
The Constitution provides for votes to be cast:
(i) on a show of hands, one vote for each shareholder; and
(ii) on a poll, one vote for each fully paid ordinary share.
Major Shareholders
The 20 largest registered holdings of ordinary shares as at 21 July 2020 are listed below:
Ordinary Shares
RankNameUnits% Units
1HSBC Custody Nominees (Australia) Limited22,132,2431.83
2Citicorp Nominees Pty Limited7,950,8220.66
3Nulis Nominees (Australia) Limited <Navigator Mast Plan Sett A/C> 5,530,2700.46
4Australian Executor Trustees Limited <IPS Super A/C>5,415,4050.45
5Bougainville Copper Limited4,541,0000.38
6Netwealth Investments Limited <Wrap Services A/C>4,301,2200.36
7Navigator Australia Ltd <MLC Investment Sett A/C>3,980,4210.33
8Custodial Services Limited <Beneficiaries Holding A/C>2,629,2750.22
9Bushways Pty Ltd2,570,5920.21
10Investment Custodial Services Limited <C A/C>2,485,9450.21
11Investment Custodial Services Limited <C A/C>2,271,5620.19
12Netwealth Investments Limited <Super Services A/C>2,028,7950.17
13Kalymna Pty Ltd1,835,8860.15
14Australian Executor Trustees Limited <IPS IDPS A/C>1,669,8280.14
15Australian Executor Trustees Limited <No 1 Account>1,454,8450.12
16Twibill Pty Ltd1,443,2160.12
17HSBC Custody Nominees (Australia) Limited <Euroclear Bank SA NV A/C>1,395,4170.12
18BNP Paribas Nominees Pty Ltd <HUB24 Cust Serv Ltd Drp>1,334,1410.11
19Mr Bruce Teele <The Teele Family A/C>1,248,2900.10
20Resthaven Incorporated1,197,2310.10
OTHER INFORMATION
66Australian Foundation Investment Company Limited Annual Report 2020

Sub-underwriting

During the year the Company participated as a sub-underwriter in the following issues of securities:
CompanyUnderwritten byDescription
Amount
Underwritten
Qube Holdings LimitedUBS AG/Merrill Lynch Equities
1 for 6.35 pro-rata accelerated entitlement
offer for c. $500 million
$2,824,425
Substantial Shareholders
The Company has not been notified of any substantial shareholders.
Transactions in Securities
During the year ended 30 June 2020, the Company recorded 925 transactions in securities (including derivatives).
$3,202,652 in brokerage (including GST) was paid or accrued for the year.
67Australian Foundation Investment Company Limited Annual Report 2020

Acquisitions
Cost
($’000)
Goodman Group54,073
Telstra48,867
Sydney Airport35,890
Cochlear (includes participation in placement at $140 per share)31,822
Cleanaway Waste Management29,343
Macquarie Group26,588
Disposals
Proceeds
($’000)
Treasury Wine Estates
#
53,677
Suncorp Group
#
42,046
DuluxGroup (Taken over by Nippon Paint)
#
29,683
Scentre Group
#
26,855
Adelaide Brighton
#
23,689
Perpetual
#
23,212
# Complete disposal from the portfolio.
New Companies Added to the Portfolio
Altium
Netwealth
Ryman Health Care
Major Transactions in the Investment Portfolio
68Australian Foundation Investment Company Limited Annual Report 2020

Individual investments for the combined investment and trading portfolios as at 30 June 2020 are listed below. The list should not,
however, be used to evaluate portfolio performance or to determine the net asset backing per share at other dates. Net asset backing
is advised to the Australian Securities Exchange each month and is recorded on the toll free telephone service at 1800 780 784 and
posted to AFIC’s website (afi.com.au).
Individual holdings in the portfolios may change during the course of the year. In addition, holdings which are part of the trading
portfolio may be subject to call options or sale commitments by which they may be sold at a price significantly different from the
market price prevailing at the time of the exercise or sale.
CodeOrdinary Shares, Trust Units or Stapled Securities
Number
Held
2019
’000
Number
Held
2020
’000
Market
Value
2020
$’000
AIAAuckland International Airport1,7706,07337,412
ALQALS7,5427,54249,477
ALUAltium 03089,988
AMCAmcor12,52712,060174,629
ANNAnsell1,2841,07939,594
ANZAustralia and New Zealand Banking Group9,1889,188171,259
APAAPA Group6,5406,66574,181
APEAP Eagers1,1571,1577,807
ARBARB Corporation3,0813,50362,874
ASXASX7091,05489,993
AUBAUB Group2,0262,52637,130
AWCAlumina20,92319,15831,132
BHP*BHP Group13,48213,935498,770
BKWBrickworks1,8541,62925,781
BXBBrambles12,13912,139131,947
CARCarsales.com4,1915,03389,286
CBACommonwealth Bank of Australia7,9007,900548,418
COHCochlear14733463,049
COLColes Group7,2937,068121,349
CPUComputershare4,6604,38058,035
CSLCSL2,0482,120608,530
CWYCleanaway Waste Management11,27625,51656,135
DJWDjerriwarrh Investments7,5057,50519,139
DUIDiversified United Investment12,03012,03050,888
EQTEQT Holdings 1,3221,32232,710
FPHFisher & Paykel Healthcare Corporation3,8003,485114,447
GMGGoodman Group2,8006,68599,272
IAG*Insurance Australia Group5,4576,95539,984
IREIRESS5,0005,92964,925
IVCInvoCare1,3252,98431,273
JHXJames Hardie Industries6,0655,188142,784
LICLifestyle Communities5,2282,77626,265
MFTMainfreight (NZX listed)3,2093,268120,385
MIRMirrabooka Investments8,7288,72820,336
M LTMilton Corporation10,8419,77639,984
MQGMacquarie Group1,9632,170257,307
NABNational Australia Bank12,88512,917235,347
NWLNetwealth Group01,1009,867
NXTNEXTDC4,3257,86477,701
Holdings of Securities
At 30 June 2020
69Australian Foundation Investment Company Limited Annual Report 2020

CodeOrdinary Shares, Trust Units or Stapled Securities
Number
Held
2019
’000
Number
Held
2020
’000
Market
Value
2020
$’000
ORGOrigin Energy6,5006,50037,960
ORIOrica1,9702,22637,037
OSHOil Search18,03326,24483,195
QUBQube Holdings34,96235,302102,729
REAREA Group38455359,637
REHReece 5,9507,95173,073
RHCRamsay Health Care1,5852,020134,370
RIO*Rio Tinto1,9462,001195,793
RMDResMed3,9353,935108,370
RWCReliance Worldwide Corporation16,90213,13438,615
RYMRyman Health Care (NZX listed)088010,763
S32South3216,74116,74134,152
SEKSeek4,2704,16091,054
SHLSonic Healthcare3,7044,054123,370
SYDSydney Airport17,92421,443121,580
TCLTransurban Group22,59923,137326,922
TLS*Telstra Corporation40,17554,510170,602
WBCWestpac Banking Corporation15,54515,985286,931
WESWesfarmers6,7237,372330,487
WOWWoolworths Group5,6675,667211,255
WPLWoodside Petroleum4,3604,46096,551
XROXero74187178,441
Total7,122,274
* Part of the security was subject to call options written by the Company.
Holdings of Securities
At 30 June 2020 continued
70Australian Foundation Investment Company Limited Annual Report 2020

Date of IssueTypePriceRemarks
24 February 2020DRP/DSSP$6.932.5 per cent discount
29 August 2019DRP/DSSP$6.21
25 February 2019DRP/DSSP$5.932.5 per cent discount
31 August 2018DRP/DSSP$6.18
23 February 2018DRP/DSSP$6.11
30 August 2017DRP/DSSP*$5.92
24 February 2017DRP/DSSP*$5.84
30 August 2016DRP/DSSP*$5.582.5 per cent discount
19 February 2016DRP/DSSP*$5.432.5 per cent discount
25 November 2015SPP$5.515.0 per cent discount
28 August 2015DRP/DSSP*$6.032.5 per cent discount
20 February 2015DRP/DSSP*$5.972.5 per cent discount
6 October 2014 SPP$5.882.5 per cent discount
29 August 2014 DRP/DSSP*$5.932.5 per cent discount
21 February 2014DRP/DSSP*$5.862.5 per cent discount
30 August 2013DRP/DSSP*$5.642.5 per cent discount
DSSP: Dividend Substitution Share Plan
22 February 2013DRP$5.37
31 August 2012DRP$4.36
24 February 2012DRP$4.26
19 December 2011Convertible notes$100 face valueMature 28 February 2017. Interest rate 6.25 per cent
per annum. Conversion price: $5.0864
31 August 2011DRP$4.18
25 February 2011DRP$4.722.5 per cent discount
1 September 2010DRP$4.652.5 per cent discount
2 June 2010SPP$4.622.5 per cent discount
SPP=Share Purchase Plan
26 February 2010DRP$4.825 per cent discount
1 September 2009DRP$4.695 per cent discount
2 March 2009 DRP$3.725 per cent discount
25 August 2008 DRP$4.98
11 April 2008SAP$5.26
27 February 2008DRP$5.265 per cent discount
22 August 2007DRP$5.78
8 March 2007DRP $5.60
22 December 2006SAP$4.90
23 August 2006DRP $4.70
7 March 2006DRP $4.55
4 November 2005SAP $3.96
23 August 2005DRP $3.90
18 March 2005DRP $3.68
19 August 2004DRP $3.29
12 March 2004DRP $3.29
22 October 20031 for 8 rights issue $3.00
15 August 2003DRP $3.47
16 April 2003SAP $3.04
7 March 2003DRP $3.11
14 August 2002DRP $3.11
5 April 2002SAP$3.16
7 March 2002DRP$3.24
15 August 2001DRP$3.08
29 June 2001DRP $2.87
7 March 2001DRP $2.56
16 August 2000DRP$2.47
7 March 2000DRP $2.64
11 August 1999DRP $2.95
12 April 1999SAP$2.54 SAP = Share Acquisition Plan
15 March 1998DRP $2.79
4 September 1998DRP $2.43 DRP = Dividend Reinvestment Plan
Note for issues of securities in earlier years please consult the Company’s website, afi.com.au or via telephone (03) 9650 9911.
* Note that for the shares issued under the DSSP, the price shown is the indicative price used to determine the number of shares issued to participants.
Shares issued under the DSSP are issued at nil cost. Shareholders who sell shares issued under the DSSP should consult their tax adviser as to the
correct treatment of such sales for taxation purposes.
Issues of Securities
71Australian Foundation Investment Company Limited Annual Report 2020

Australian Foundation Investment
Company Limited (AFIC)
ABN 56 004 147 120
Directors
John Paterson, Chairman
Robert M Freeman, Managing Director
Ross E Barker
Rebecca P Dee-Bradbury
Graeme R Liebelt
David A Peever
Catherine M Walter AM
Peter J Williams
Company Secretaries
Matthew J Rowe
Andrew JB Porter
Auditor
PricewaterhouseCoopers
Chartered Accountants
Country of Incorporation
Australia
Registered Office and Mailing Address
Level 21, 101 Collins Street
Melbourne, Victoria, 3000
Contact Details
Telephone (03) 9650 9911
Facsimile (03) 9650 9100
Website afi.com.au
Email invest@afi.com.au
For enquiries regarding net asset backing (as advised
each month to the Australian Securities Exchange):
Telephone 1800 780 784 (toll free)
Company Particulars
72Australian Foundation Investment Company Limited Annual Report 2020

Shareholder Information
Share Registrar
Computershare Investor Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford Victoria 3067
New Zealand
Computershare Investor Services Limited
159 Hurstmere Road
Takapuna Auckland 0622
Shareholder
Enquiry Line 1300 662 270 (Australia)
0800 333 501 (New Zealand)
+61 3 9415 4373 (from overseas)
Facsimile (03) 9473 2500
Website investorcentre.com/contact
Share Registrar
For all inquiries relating to shareholdings, dividends and related
matters, please contact the share registrar as above.
Securities Exchange Codes
AFI Ordinary shares (ASX and NZX)
Annual General Meeting
Date Wednesday 14 October 2020
Time 10.00am
Note the AGM will be a virtual meeting conducted online and
via telephone. The subsequent interstate investor meetings will
not be held this year. The recorded webinar of the AGM will be
available on the Company’s website following the presentation.
73Australian Foundation Investment Company Limited Annual Report 2020

Design: MDM Investorcom
Printed on environmentally friendly paper

Annual
Review
20
20

2 5 Year Summary
4 About the Company
6 Review of Operations
and Activities
16 Top 25 Investments
17 Income Statement
18 Balance Sheet
19 Summarised Statement
of Changes in Equity
20 Holdings of Securities
23 Major Transactions in the
Investment Portfolio
24 Company Particulars
25 Shareholder Information
Contents
AUSTRALIAN FOUNDATION
INVESTMENT COMPANY
IS A LISTED INVESTMENT
COMPANY INVESTING
IN AUSTRALIAN AND
NEW ZEALAND EQUITIES.
Australian Foundation Investment Company Limited ABN 56 004 147 120

Year in Summary
Profit for
the Year
$240.4m
$406.4m in 2019.
Down 40.8%, excluding
one-off items in 2019
down 12%
Total
Shareholder
Return
2.9%
Share price plus
dividend, including
franking*
Fully
Franked
Dividend
14
¢
Final
24
¢
Total
32 cents total
in 2019 including
8 cent special dividend
* Assumes a shareholder can take full advantage of the franking credits.
2020
Total
Portfolio
$7.2b
Including cash at
30 June $7.8 billion
in 2019
Total
Portfolio
Return
-3.1%
Including franking*
S&P/ASX 200
Accumulation Index
including franking*
-6.6%
Management
Expense
Ratio
0.13%
0.13%
in 2019
1Australian Foundation Investment Company Limited Annual Review 2020

5 Year Summary
Net Profit After Tax
($ Million)
2019
2018
2017
2016
Net Profit Per Share
(Cents)
Dividends Per Share
(Cents)
(b)
Investments at Market Value
($ Million)
(e)
Net Asset Backing Per Share
($)
(d)
Number of Shareholders
(30 June)
265.8
272.2134.2
(a)
279.0
245.3
2020
240.4
2019
2018
2017
2016
5.50
6.49
6.27
5.89
2020
5.96
2019
2018
2017
2016
113,482
138,671
129,948
119,463
2020
153,588
2019
2018
2017
2016
24
32
(c)
24
24
24
2020
24
2019
2018
2017
2016
23.8
34.0
23.6
21.3
2020
19.9
2019
2018
2017
2016
6,250
7,566
7,274
6,790
2020
7,122
8
(c)
Net Profit After Tax
($ Million)
2019
2018
2017
2016
Net Profit Per Share
(Cents)
Dividends Per Share
(Cents)
(b)
Investments at Market Value
($ Million)
(e)
Net Asset Backing Per Share
($)
(d)
Number of Shareholders
(30 June)
265.8
272.2134.2
(a)
279.0
245.3
2020
240.4
2019
2018
2017
2016
5.50
6.49
6.27
5.89
2020
5.96
2019
2018
2017
2016
113,482
138,671
129,948
119,463
2020
153,588
2019
2018
2017
2016
24
32
(c)
24
24
24
2020
24
2019
2018
2017
2016
23.8
34.0
23.6
21.3
2020
19.9
2019
2018
2017
2016
6,250
7,566
7,274
6,790
2020
7,122
8
(c)
2Australian Foundation Investment Company Limited Annual Review 2020

Net Profit After Tax
($ Million)
2019
2018
2017
2016
Net Profit Per Share
(Cents)
Dividends Per Share
(Cents)
(b)
Investments at Market Value
($ Million)
(e)
Net Asset Backing Per Share
($)
(d)
Number of Shareholders
(30 June)
265.8
272.2134.2
(a)
279.0
245.3
2020
240.4
2019
2018
2017
2016
5.50
6.49
6.27
5.89
2020
5.96
2019
2018
2017
2016
113,482
138,671
129,948
119,463
2020
153,588
2019
2018
2017
2016
24
32
(c)
24
24
24
2020
24
2019
2018
2017
2016
23.8
34.0
23.6
21.3
2020
19.9
2019
2018
2017
2016
6,250
7,566
7,274
6,790
2020
7,122
8
(c)
Notes
(a) Participation in the Rio Tinto and BHP off-market
share buy backs, special dividends and the
receipt of a dividend because of the Coles
demerger from Wesfarmers.
(b) All dividends were fully franked. The LIC
attributable gain attached to the dividend was
2020: 7.14 cents, 2019: 7.14 cents, 2018:
2.86 cents, 2017: nil, 2016: 2.1 cents.
(c) 8 cents fully franked special dividend paid
with the interim dividend.
(d) Net asset backing per share based on year-end
data before the provision for the final dividend.
The figures do not include a provision for capital
gains tax that would apply if all securities held as
non-current investments had been sold at balance
date as Directors do not intend to dispose of
the portfolio.
(e) Excludes cash.
3Australian Foundation Investment Company Limited Annual Review 2020

About the Company
How AFIC Invests – What We Look For in Companies
Australian Foundation Investment Company (AFIC)
is a listed investment company investing in Australian
and New Zealand equities.
Investment Objectives
The Company aims to provide
shareholders with attractive investment
returns through access to a growing
stream of fully franked dividends and
growth in capital invested.
The Company’s primary investment
goals are:
• to pay dividends which, over time, grow
faster than the rate of inflation; and
• to provide attractive total returns over
the medium to long term.
4Australian Foundation Investment Company Limited Annual Review 2020
A portfolio that
is managed to
achieve long term
capital and dividend
growth
Quality FirstGrowth
Including dividends
Value