"Your Board is committed to maintaining market leading standards in corporate governance and
maximising value for unitholders."

Richard Longes,
ILFML Chairman

Dear Unitholder,

My name is Richard Longes and together with John Fast, Geoff Kleeman and Bob Seidler AM we were appointed independent non-executive directors of ILFML to replace the previous independent non-executive directors on the Board who resigned following the unitholders meeting in April 2016.

In accordance with the constitution of ILFML and with agreement from IOM, we will stand for election at the coming Annual General Meeting. The experience and background of each Director is set out later in this report.

The Board is committed to ensure that the interests of IOF unitholders remain paramount. Part of this is to work with the Investa team to continue to realise the IOF portfolio's objectives and maximise the long term returns.

The Fund has appointed Penny Ransom as Fund Manager. Penny is a highly respected and qualified property executive who brings a lot of experience to this role. I would also like to thank Jason Leong who was Acting Fund Manager from April 2016 until Penny took over her role.

Results from the last financial year have provided strong returns to unitholders.

Funds From Operations, our preferred measure of operational performance, was up 3.4% to $175.6 million and the distribution to unitholders up 1.8% to 19.60 cents per unit. IOF's net tangible assets per unit increased by 16.9%, from $3.62 to $4.23, after $313 million of valuation uplifts.

We consider IOF's $3.6 billion Australian-only office portfolio as being one of the best in the country. By leveraging the skills and expertise of the Investa Management Platform, we have continued to generate attractive and stable risk-adjusted returns through the cycle, for our unitholders.

Our strategic focus on quality office buildings in Australia's major office markets, particularly the largest and most diversified CBDs of Sydney and Melbourne, is proving advantageous. Both markets have strong underlying fundamentals and continued investment demand, which is providing both income and capital growth. As a result of this and our strong leasing results, the overall portfolio value increased by an impressive 9% following revaluations during the year.

Nationally, the Investa team has achieved significant leasing success. In Brisbane, Investa's ability to understand the needs and drivers of our tenants delivered over 31,000sqm of value accretive leasing. Occupancy in the Brisbane portfolio increased from 78% to 90%, well above current market occupancy of 83%. Occupancy by income for the portfolio as a whole increased from 93% to 96%. In addition, post 30 June 2016, the Investa team renewed Telstra's occupancy of over 63,000sqm at 242 Exhibition Street, Melbourne to 2031. This is a major achievement which de-risked the Melbourne portfolio.

Construction of 567 Collins Street, Melbourne was completed in July 2015, bringing a new premium grade asset into the IOF portfolio. The re-development of 151 Clarence Street, Sydney is well underway and due for completion in late 2018, which is opportune timing, given we are forecasting Sydney office vacancy at that point to be less than 5%, well below long term averages.

The unlevered portfolio return for the year was robust at 16.2%. Given the continuing low interest rate environment and improving fundamentals in most markets, particularly Sydney, coupled with the ongoing performance of the Investa management team, we are confident in IOF's ability to continue delivering attractive risk - adjusted returns.

A review has been undertaken by the Honourable James Spigelman AC QC, former Chief Justice of the Supreme Court of NSW, of the governance arrangements in place to deal with conflicts with IOM management roles should these arise. The findings of the review are referred in the IOF Annual Financial Report and will be discussed with IOM and other interested parties.

On 12 August 2016, IOF received a certificate of valuation confirming the gross value of the commercial office assets of IOF was greater than $3.5 billion. As a result, IOF has the opportunity to acquire 50% of the Investa Management Platform for $45 million plus agreed working capital and other agreed reimbursement adjustments. The Board will review and consider this potential acquisition and will keep IOF unitholders informed of any material developments as they occur.

I would like to thank the IOF management team and the employees of the now stabilised Investa Management Platform for their continued commitment and performance. Their achievements and the high quality characteristics of the portfolio have underpinned another successful year for IOF. In a low-growth economic environment, the Fund is well positioned moving into financial year 2017.

Finally, I look forward to meeting with unitholders at the Annual General Meeting on 20 October 2016.

Yours sincerely,

Richard Longes
Chairman, Investa Listed Funds Management Limited