Good afternoon, thank you all for joining us today for the Future Generation Investment webinar. As you'd be aware, this is your company or both the Future Gen, FGX, being Future Generation Investment Company, the Australian investment opportunity, and FGG, Future Generation Global, the global investment opportunity. These are both your companies. We're here today to report to you on the last six and 12-month period and also to answer any questions you have. If we don't end up answering your questions today, we will come back to you, and we'll definitely be answering your questions by email. First of all, thank you. In terms of looking at the six-month period, why don't I talk about Future Generation Investment Company, that's FGX is the code first, and then I'll talk about Future Generation Global, FGG. The highlights of the last six months for FGX, and I suppose FGG, but focusing on FGX to start off, was a significant increase in dividend payment. The dividend for the six months just finished increased from AUD 0.026 to AUD 0.03. That's a little over a 15% increase. The annualized fully franked dividend now is running at AUD 0.06. Also you would've seen in the announcement that we're able to significantly increase our profit reserve. That was due to a new way or just conversations with the auditors about how we should look at investments and how they should be categorized. We've been able to increase the profit reserve, and that is incredibly important. At the end of August, the profit reserve was a little over AUD 0.33. That's the ability. You need a profit to pay fully franked dividends to shareholders. That increase in profit reserve really gives the directors a lot of confidence in terms of being able to continue to pay a growing stream of fully franked dividends to shareholders. That is why the board decided on the sizable increase in dividend for the period. That is another reason why the board decided on using some capital management initiatives. That was the announcement of the bonus option issue. It's another piece of paper you get. Shareholders get it at no cost. It gives the shareholder the option, or not the obligation, but the option if they want to buy another share at AUD 1.48. Some people are saying, "Look, what about giving us the shares more cheaply than that? Or the option to buy those shares more cheaply?" The logic was, at the end of the previous month, the NTA that we had, the live NTA, was around that AUD 1.48 level, the pre-tax one. The directors didn't want it to be dilutionary. Since then, the numbers have come in for the fund managers. They really had a good month last month. The current NTA, which you would've seen announced the other day, is a little over AUD 1.54. It was a very good month last month. Those options are there. If you buy shares now, you get the options. If you own shares, of course, you'll get them. The ex-date for that option issue is the 30th of September. If you buy shares in FGX at the moment, you will also get that option entitlement. Of course, it's on a cum dividend basis. In terms of the actual performance of the portfolio, and probably now's a good time to talk about, we've got Ben Griffiths, who's the brains, and some people say the brawn as well behind one of probably Australia's preeminent mid and small-cap investment fund managers, and that's Eley Griffiths. He's Managing Director and Senior Portfolio Manager. He's joining us, and he'll be giving us his views of the market and talking about a couple of stocks that he likes at the moment. Ben will be available for Q&A. Ben is one of the fund managers for FGX, but also we've got one of the fund managers for FGG, and that is Ryan Quinn. He's one of the senior members of the team, again, one of the other pro bono fund managers of WCM Investment Management. It's well into late evening for him over in the U.S., but he's joining us, and he will be open to talk about his view of the market in Q&A, available for questions and answers as well. While we're talking about the fund managers, on behalf of all the shareholders, we'd like to thank both Ben and Ryan and all the fund managers that manage the money on behalf of ourselves on a pro bono basis. In terms of the performance of FGX, the portfolio over the last 12 months, outperformed the market again. It was up 33.6%. One of the pleasing things, that's how the portfolio has performed, but one of the pleasing things is the total shareholder return. That's the share price plus dividends was 51%. That's over the 12-month period. It's a very solid performance from FGX. Turning to FGG. The board there was delighted with the increase in profit reserve. FGG historically had been paying out less in the way of dividends, the actual profit reserve increase was actually a lot greater than FGX. The profit reserve now in FGG is a little over AUD 0.50. Historically, you'd seen with FGG that the dividend 12 months ago was AUD 0.02. It was AUD 0.02 paid for the full year. You would've seen the most recent result for the six-month period. The dividend that's been announced has been a 50% increase, from AUD 0.02 to AUD 0.03. Now with that large profit reserve, there's nearly 17 years of profit reserve there at this rate. You would assume that the board in six months' time will look very closely at paying a dividend, and you'd assume it would be of a similar magnitude. All of a sudden, FGG, which had been mainly a growth stock, with not much yield, is really, I would say over the next six to 12 months will come into its own, and be providing shareholders with a very nice growing stream of fully franked dividends. In terms of the NTA, both FGX and FGG, from my perspective, look good value because they are trading below NTA. In terms of my investing, I love buying AUD 1 of assets for AUD 0.80 if I can, or AUD 0.50 if I can, but let's say AUD 0.80 or AUD 0.90, but buying them cheaply. FGG, the NTA at the end of last month was nearly AUD 1.84, and you see the share price. It's come dividend with additional dividends to come. In terms of the portfolio performance for the last 12 months, solid portfolio performance of 25%, total shareholder return was better than that was a little over 36%, which again, was a very solid result. Just looking at, I mentioned before the incredible generosity of the fund managers, really everyone that's involved in FGG, the service providers, the ASX, our share register, Boardroom, the accounting staff. There's been incredible amount of generosity there, in terms of, as I said, the fund managers managing this money on a pro bono basis, we're going into the best funds. It's the best boutique fund managers that are focused on Australian equities and the best boutique fund managers that are focused on global equities. Just looking at both of them, in terms of the great deal that shareholders have received in the last 12 months. Not only the performance, the increased dividends, but broadly with FGX, the total cost. If FGX had charged normal management and performance fees, and the boards and the investment committees had been paid what they normally would get for a listed investment company, the total cost of that would've been AUD 12.7 million. In terms of, you'd all be aware that 1% of the assets of the company are invested with charities. With FGX, it's children at risk, with FGG, it's youth mental health, which obviously incredibly important at this point in time. The actual FGX money, the 1% of those assets was AUD 5.3 million. Effectively, it was a significant saving for all the FGX shareholders. With FGG, the annualized savings in terms of the cost that we would've paid to fund managers, et cetera, was AUD 9.1 million, and 1% of the assets in FGG was AUD 6.4 million. Just in terms of rounding it out, that's a little over AUD 11 million that was given to or invested with charities that focus on children at risk and youth mental health. Since both these vehicles were set up, it's AUD 52.9 million has gone to support those charities. On behalf of all the people involved, I just can't thank shareholders enough, and the fund managers enough for their incredible generosity to allow this to occur. What I'd like to do is, I'd like to really move over to the brains of this show. I'd like to ask both Ben and Ryan a couple of questions. Why don't I start off with our local boy, Ben Griffiths. Ben, do you want to give us a little bit of an idea of what you're seeing in terms of the market, how you're positioning your portfolio? Maybe, if you can let us have one or two stock picks. I know you're always quite cheeky when we're talking, and I will have my pen ready to take a note of what they are. Ben, if I can pass over to you now. Thanks. Thank you. Thank you, Geoffrey. Always good to see you. Always good to catch up. We don't normally catch up virtually. We normally do it in the street when times are normal. Geoff, I feel, or Eley Griffiths Group feels pretty constructive on equities. I'd acknowledge that with interest rates at record lows, you might expect to see PEs on the wrong side of long-term averages. That's fine. I like to look at valuations through two lenses. I like to think about whether the market's cheap or expensive through two lenses. One is what is the health of the credit market and what are we seeing in terms of credit spreads and how does the credit impulse look? I look at that to see whether in fact equities are a place I should even be contemplating. Looking at credit markets, I see benign conditions. I see no great stresses or strains in the system. That makes me quite upbeat about equities. Then I say, well, okay, knowing that the backdrop is satisfactory and constructive, what about that valuation question? Are stocks cheap? Should we be looking at them? I normally revert to my tried and true tool, which is the equity risk premium. Geoff, that's basically the trade-off between cost of equity and fixed interest markets or bond markets. Are you being paid enough to risk an equity exposure versus a fixed interest exposure? In Australia, the equity risk premium is currently about 8.3%. In the United States, it's about 5.6%. These are incredible margins for safety for investors to contemplate. They're almost telling you that a risk-on position is safe and should be contemplated. I think equity risk premiums are at a very generous position, and that makes me feel pretty good about equities right now. The fundamental backdrop is good apart from having your valuation indicators right. We just had a very constructive reporting season, and a number of economic indicators as well coming in behind that would suggest that consumers and businesses are looking through the current state of lockdown and talking about recovery and economic revival. I feel pretty good about things, to be honest. As always, there's a few things on the horizon that an equity manager should be concerned about. Right now, I feel valuations are snug. I feel liquidity is strong, which is the other key driver of equity markets. Did you know, Geoff, I'm sure this point won't have been lost on you because I know you have somewhat of a focus and fascination for dividends, as probably all of our viewers do. In the next nine weeks, we would expect to see something like AUD 40 billion worth of dividends paid from about 350 companies. About AUD 30 million of that AUD 40 million will be paid in the last two weeks of September. That's an extraordinary fill-up for equity market interest. I think that should hold the market in good stead. Now look, thank you for that, Ben. I don't know if that was that when you said you want to look at things at two lenses. I know I haven't seen you in the street for a while. You've got a new pair of glasses. Thank you for your big picture thoughts. Yeah. In terms of looking at a couple of stocks. Sure What have you already bought that you said in that you're happy to tell us about? There's a couple of stocks, Geoff. As you can imagine, we've been busy through reporting season. We've been moving the portfolio around. There's a couple of stocks that we're particularly fond of, and I'd be happy to talk to today. The first one is an IPO counter that came to market only so many months ago called DGL Group. DGL Group is a chemical formulator, manufacturer, storage of chemicals, transport of chemicals, and ultimately recycling of waste materials. This business has performed particularly strongly, certainly in terms of the share market reaction. What we like about it is, Simon Henry, who's the founder of the business, when he brought the business to market, he didn't sell a single share. He actually only raised capital, and he raised capital for the purposes of business expansion. The company reported its result the other day, and it reported a result that was nicely above prospectus. He articulated his argument that he is keen to acquire businesses, and he'll acquire businesses in the fields that he's involved in at the moment, but he'll be disciplined on what he pays and the metrics that he adheres to. He's going to take advantage of the process of reshoring, and we're seeing more and more Australian companies and New Zealand companies, because DGL, after all, is a Kiwi company. More and more companies are going to be reshoring their supply chains back to Australia. He sees himself playing a crucial role in assisting companies with the whole reshoring trend. We see a great story there in DGL. It's had a spectacular debut, but we like the management. We like Simon's energy. We like the runway that he's got ahead of him, which is long and extensive. The stock has a fair way to go. The other stock that I would like to talk to, and I'll give you two today, Geoff, because it's you, and that's another Kiwi stock. This one actually isn't listed in Australia. It's only available on the New Zealand market. Sorry, I should say liquidity is greater in the New Zealand market, and that's Serko. Serko is a travel technology platform which essentially aggregates the myriad of buyers and consumers of travel products. It aggregates that into a central marketplace where the providers of various travel services can also meet. It has technology that's quite extraordinary. It operates in 35 countries. It has 6,000 corporate customers and has some AUD 4.5 billion worth of travel booked through its site every year. Quite an extraordinary number. We see it's a great high beta sort of reopener stock to be on as travel and travel bookings reopen, and we start seeing travel become a bigger part of people's lives again, having had a period of abstinence there. We see a great growth plan articulated for where Serko will take their business through Australia, Europe, and through North America. There's enormous growth there in that stock. Both stocks look good to us, and you're right, Geoff, both stocks are well represented in the Eley Griffiths Group portfolio house. Perfect. Look, thank you very much, Ben, and we'll come back to you when we get into our question and answers from shareholders a little later. Sure. Now, thanks for that. Now, Ryan, first of all, thank you for, well, I suppose we all know being fund managers that when you're investing in the market, you're working 24 hours a day anyway. Thank you for being up late tonight to talk to us. Ryan, do you just want to give us a little bit of an idea of what you think about the market and maybe a couple of stocks that you're interested in? Absolutely. First of all, I'd like to say thank you for having us here and including us in the Future Generation portfolio. It's an incredible mission that you all have, and we're very proud to work hard to grow your capital. WCM as a whole, we tend to do things a little bit differently. It's led to some good results, but at the end of the day, we're not going to be like every other money manager. We don't tend to have very succinct macroeconomic outlook. We don't tend to predict or try to predict what's going to happen in the marketplace at any given time. We do manage a concentrated portfolio of 30 - 40 stocks, and the globe is our marketplace. We're trying to find the best names we can find that are supported by long-term tailwinds with long runaways in front of them. It's led us to traditional growth sectors in the marketplace, specifically tech, technology and healthcare being our largest two overweights. What we try to do is find businesses that we can act as equity owners. We want to be business owners of these companies, and that extends our time horizon out to 5 years and longer. When you're investing with a company in that kind of a timeframe, quarter to quarter or month to month changes or headlines that impact the overall market don't tend to impact the holdings that you have or the view you have on those holdings. It will bring volatility to the market, and we tend to try to use that volatility in our favor so that we can manipulate our portfolio, trim names that have won for some time, add to names that might have a better outlook in the forward three to five year period. The economy right now, on a global basis, feels good to us. The long-term trends that we're betting on are the growth of the middle class, the increase of disposable income of that group. What that leads to is a higher consumption into higher quality healthcare. That demand expands across the globe. It also leads to increased consumption of technology across the board, from the very low-tech items to the very high-tech items. There leads to a lot of excellent trends that we're going to try and get in front of over time. The extension of internet penetration across emerging markets as well as developed countries that may be behind some of the other developed countries of the world. We want to find companies that can benefit from those long-term tailwinds, and then in that interim volatility, use that volatility from a competitive advantage standpoint to get better, to separate themselves from their peer group. The fundamental thing that makes us different in the way we invest is that we're focused on the trajectory of a business's moat. Is their competitive advantage growing over time? Are they getting better? If we can point to drivers that say that their moat trajectory is positive and their competitive advantage is growing, then that's a company that we'll hold in our portfolio, our very selective portfolio of global businesses. The second piece of the puzzle is corporate culture. We spend a significant amount of time analyzing and interviewing businesses on their corporate culture because we believe that corporate culture drives employee behavior, whether things are going well or things are going poorly, and that corporate culture is going to be the thing that enables the competitive advantage to expand. In that light, I'll talk about a couple of different companies. The first one being in the healthcare sector, one of our largest overweights, a company called WuXi Biologics. WuXi Biologics is a Contract Development and Manufacturing Organization, or CDMO, based in China. The company basically acts as an outsource developer for the biologics in healthcare industry. They can do everything from formulation, analytics, processing, even down to shipment of these biologics. What's attractive about CDMOs is they bring depth and breadth to the process through their expertise, their equipment, facilities, and their scale. WuXi Biologics has customers from around the globe, but they have an 80% market share in China, and that is driven by a number of factors. They're known for being the best in China. The reputation in this industry is paramount, because quality really matters. It also will attract the top scientists in the country to join the company. This reputation has led to a backlog of drugs in development, which really provides us a long-term runway of visibility into top-line growth. WuXi Biologics is what we like to call a picks and shovels play, because we're not betting on the individual drugs that are being developed. We're betting on WuXi being utilized as an outsourced developer or manufacturer of those drugs. There's a booming demand coming from China. In addition to globally as we've just lived through a pandemic, we expect that demand to grow, and at the very least, be high for quite some time. WuXi, we find, has the experience, the ability, and the technology, to assist at any stage of the drug development process, which makes it a premier player in the space. The other business that I'm going to highlight or holding we have is something we've owned since the inception of our strategy, called Taiwan Semiconductor. Anyone who's paying attention to the headlines knows that there's a huge demand imbalance in the semiconductor space. The dearth of supply of chips in the world really has impacted everything from automobile sector to the highest of high tech. We've also viewed Taiwan Semi as a picks and shovels play. They're a picks and shovels play on advanced chip-making logic. As long as there's demand for these semiconductor chips that go into everything from low tech items to things that are involved in artificial intelligence or 5G networks or even the increases in technology in our cars and handsets, Taiwan Semi is the independent foundry that will be utilized to produce these chips for companies like Apple, Qualcomm, Huawei, and others. Their moat trajectory grows as the complexity of chip making increases. We are now at the bleeding edge of technology. We're producing chips at the 7 nm and 5 nm node. Taiwan Semi has, with more than 20 years of R&D and CapEx in the ground, proven itself to be the leading provider of manufacturing in this space. They've recently also announced more than AUD 100 billion CapEx program that will be expanding their footprint, that will be reinvested into their processes, that should sustain their number one position in the chip-making space. Thank you very much, Ryan. The tough thing is when you've got something on mute, I was just quickly trying to find my unmute. Yes. No, thank you very much. As an investor, I love the way you guys think. I love how you've really focused on culture, and we've all worked for organizations, and we understand that is a big driver. From an investment perspective, I think yourselves, you're a sort of a shining light from a global perspective in terms of really, really focusing in on that. Congratulations and well done. I'm sure Ben's the same as me. We always love the picks and shovels investments, too. That's right. You don't necessarily go for the one that's pulling the gold out of the ground. You're better off buying the guy that's making the tools to get it out. You find over the long term, they're great investments. Thank you, and thank you for being a more recent joining the family at Future Generation. On behalf of all shareholders, thank you for, again, doing that on a pro bono basis. Just before we move over to questions and answers from shareholders, both at Future Generation, both entities, we understand yourselves as shareholders. You own the company. We're here to report to you. Please do go onto the Future Generation website and sign up for the emails, because you'll get the updated newsletter, the NTA, any insights we're seeing from a philanthropic perspective, but also any insights we're seeing from the managers that are managing your money. That's really good. Also, exciting news that the new CEO of Future Generation, Caroline Gurney, she starts next week. You'll see a new level of enthusiasm in terms of, obviously things will change for the better. Caroline's one of the senior executives at UBS, and has been there for a long time, has global experience, and we think will really bring significant value. One of the fortunate things is we brought Caroline on to the board of FGX a number of years ago because we were always impressed with her while she was at UBS. When we went on an extensive search for a new CEO, we really had some high-quality people, global people looking to come back to Australia to do this, and both boards in the end decided that really Caroline, we were very excited that she was now prepared to accept the opportunity, and we're very happy about that and excited. What I'd like to do now is Olivia Harris, who really is one of the Wilson Asset Management senior comms executives. She'll run the Q&A. Let me pass over to Olivia, who'll take us through the next part of the presentation. Thank you. Thanks very much, Geoff. Thank you to everybody who is sending in questions through the webinar platform. We'll try to get through as many as possible, and we'll give you a call if we don't get to your question during today's webinar. Geoff, the first one is for you from David Nichol. In view of the reserves indicated for FGX and FGG, can you just discuss a little bit about the prospect or the likelihood of an increase in future dividends? Yes, and good question, David. I'm a board member on both FGX and FGG. There are a lot of other board members. On a six-monthly basis, the boards look at the profit reserve, the amount of tax being paid, the franking credits that are there, and then they decide the dividend. You've seen in the last six months the change in accounting policy, which has significantly increased those profit reserves. Now both companies are in fantastic positions. Now, I would expect that you'll see a growing stream of fully franked dividends for both companies over the medium to long term. Really both companies can pay dividends, and that profit reserve gets topped up on an annual basis in terms of assuming that FGX or FGG is assuming their NTAs go up. To me, the expectation for a growing stream of fully franked dividends from both companies is, it's the most confident I've ever been because historically, if you'd look at our profit reserves historically, we only had one or two years' profit reserves at the max. Now we've got a significant cushion. Yeah, you'd expect that there will be growing dividends. Thanks, Geoff. We do have a number of questions coming through on the options issue, I'll just ask you a couple on that. This one is from Rebecca: How will the Future Generation Australia bonus issue of options benefit shareholders? What's the benefit to shareholders of having an options issue? Yeah. What it's doing, the option issue. Well, first of all, if you buy shares now before it goes ex the option issue on the 3rd of September, you will end up owning, say you bought one share. Well, say you bought 10,000. You bought 10,000 shares in FGX, you'd end up getting 10,000 options. Those options give you the opportunity, if you want to buy more shares at AUD 1.48. Actually, I noticed during the break that the share price has gone up a little bit today, so it is trading around that AUD 1.46 level. If the share price was trading above AUD 1.48, you could exercise that option and pay AUD 1.48 and get another share. It really gives you exposure to the company. There was a significant debate at board level about what price we should issue them at. We thought the last reported NTA was the fair price. If people end up buying after their ex-option issue, if someone buys shares, they don't get the option. The price the options are exercised by was the most recent NTA. We think that was a fair price. Effectively what we've done is, those options will trade on the market. Some people might actually buy more options because they want to get more exposure. Some people might sell their shares and take some cash, if they're worried about the market, take some cash off the table, and then use some of that money to buy more options. They get the upside. The company's doing a massive buy and ride on behalf of all shareholders. Also if someone does want to commit capital to the company as it performs and grows, then they can do that over time because those options will be trading for about a year and a half. It really gives you a lot of flexibility. The other strategies could have been to raise capital to do a share purchase plan, to do a placement, to do an entitlement offer, a rights issue. That means you've got to put the money in straight away. We just thought the FGX, as I mentioned, the total share of return was a little over 50% for the period. We thought a very equitable and fair way of growing the company was to have that option issued. Thanks, Geoff. Just following on from that, you did touch on this a little bit. Terry has asked, do the options themselves trade on the ASX? Could you maybe talk through the mechanics of that a little bit? What happens is, if you buy FGX shares now until they go ex on the 30th September, then for every share you own, you'll get a free option. Early October, the options will be starting to trade on the stock market. What will they be worth? Obviously, it depends what the share price is trading at. Usually there's some time value of money in the options and some leverage in the options. The options will trade. You as a shareholder, you might decide, they might be trading like at AUD 0.01 or AUD 0.02 and you thought, "Well, geez, that's very cheap. I'll buy some." If FGX does well, I can make a multiple on my money. I can exercise them and get some more FGX shares. If the options are expensive, so they're trading at a high price, then you might think, "Oh, well, actually I'll sell my options," it's like getting another little dividend. They will trade on the stock market till a week before the options expire, and that's in a year and a half's time. Thanks very much for that, Geoff. We do have quite a few people asking this question, still on options issue. Are there any considerations or has the board discussed anything about an options plan for FGG? It sounds like someone was on the FGG board meeting. There are many people asking that. Well, the interesting thing is, FGX, the share price was trading very close to NTA. The share price, I think it was AUD 1.45, and the NTA was AUD 1.48. The board decided, let's do the option issue. With FGG, the NTA is around AUD 1.84 and the share price is at quite a big discount. Now, my view is when people really digest how big the profit reserve is, look at what the board did in terms of increasing the dividend from AUD 0.02 to AUD 0.03. Also, look at that profit reserve and think, well, in six months' time, wouldn't the board think of paying another dividend of a similar magnitude? With Caroline coming on board and probably really accelerating the shareholder communication, that you'd assume that FGG's share price would move a lot closer to NTA, and as I said, NTA is around AUD 1.84. If the share price was trading a lot closer to that AUD 1.84, then the FGG board could well look at an option issue. I would say that would probably be six months down the track. Thanks very much, Geoff. I think that was all of them on the options issue. I will let you know if any other questions come up on that. Thanks. Geoff, the next question is from James. Can you explain the benefits of the diversification in the portfolios and how the investment committee applies that? Yeah. Just on that is what both investment committees, FGX has an investment committee and FGG has an investment committee. I sit on both. Also John Coombe, who's probably in Australia, sort of he's thought of as the godfather of effectively selecting fund managers. He's a great resource. He sits on both of them as well, and the other members are totally separate. What both FGX and FGG are looking for, first of all, they're looking for the best boutique fund managers they can find to manage money in Australia and also manage money globally. That's the real focus. Also, both investment committees are trying to find managers that work together. That's trying to find managers that are long equities, but also some that have some more defensive characteristics. We talk about absolute return managers, they are managers that might, if they think the market's a bit expensive, they might significantly increase the amount of cash. Some of them actually might short sell some shares they own. Really what both investment committees are trying to do is they're trying to give the market, if not better performance than the market, with less volatility than the market. Less risk. That's why there's a combination of managers. That gives you good diversity. Also gives you some asset protection. One of the interesting things is, FGG, I know the numbers there, over the last 12 months, incredibly, there's only been two months that the index is down. On both those periods, FGG outperformed the market. We're trying to capture as much of the upside as we can, but also protect people on the downside. That's why we have the combination of managers. Thanks very much, Geoff. We'll flip back to the pro bono fund managers now. There's quite a few questions coming through for them. Ben, I think we'll go to you for this first question. This is from Christopher: Why is the yield curve important in the current value cyclical market cycle? Thanks, Olivia. Yeah, the yield curve is very important, and it's important because it's somewhat of a lead indicator on where the economy's going. Yield curves kind of work the same way, whether it's here or whether it's in the U.S., but the most commonly watched yield curve, of course, is that of the U.S. It's important because the slope tells you a lot about the economic predicament for a given economy. When the yield curve inverts or goes negative, it tends to presage a recession or a slowdown in activity. When it turns positive, as it is now, then it points to economic expansion. The steeper it gets, it generally dictates that an economy's fortunes are improving and rallying and widening. It also hints that inflation is returning. The steeper the yield curve gets, the stronger the growth and the more implicit, or it becomes implicit that inflation will visit you. It's important for cyclical stocks and resource stocks because it is exactly that. It's the barometer of where the levels of demand are and where consumer activity is and where investment activity is at. It absolutely dictates the interest levels in cyclical stocks. You can look at a map or a chart of where the yield curve has gone over the money and it'll tell you possibly how much steeper the yield curve should get. At the moment, if you look at the U.S. three-month to 10-year section of the curve, it's about 130 basis points of steepness, having steepened to about 170 basis points in March quarter of this year. In previous cycles of economic expansion, the yield curve has steepened beyond 170 basis points. It's gone out to almost 300 basis points of steepness in that part of the curve. That should tell investors, as it in fact informs us, that there's further economic expansion ahead, that all the liquidity and interest rate settings that we're enjoying will foster further activity, and therefore that underwrites, to some extent, interest in cyclical stocks and mining stocks. Thanks very much, Ben. We'll stick with you for the next question. This one's from Richard. What are some of the key things or the key indicators that you're looking at in the Australian economy right now, given that we're approaching some vaccination milestones? Yes, Richard, that's a good question. Clearly the fortunes of the Australian economy have been hinging heavily on lockdown and how quickly we get out of lockdown. Clearly, vaccination rates are a key focus. If we just look in terms of economic activity and markers and indicators, certainly I always look at the sentiment indicators. I always look at consumer sentiment indicators and surveys. I look at business surveys and indicators. In both cases, we're seeing prints that suggest that consumers and businesses are essentially looking through the lockdown and the lockdown-induced weakness. We are expecting, of course, to have a pretty soft third quarter GDP print in Australia. Interesting to see the National Australia Bank, the NAB Business Confidence Survey that came out for July printed above average readings. I would've thought, as we're in full-blown lockdown, that business confidence would've been ebbing, in fact it's been tracking quite strongly. It's your confidence surveys that you should be looking at and keeping an eye on those for a lead indication of where things are going. House prices provide another obvious level of confidence, they suggest that as house prices rise, clearly people are happy to become indebted and people are happy to expand their household balance sheets. That's a positive. Final thing is job ads. The labor market is performing quite strongly, the level of job ads is increasing each week. I think you should be looking at each of those indicators to take a temperature check on the strength of the economy and how forward-looking the economy is becoming. They're the few of the things in my toolbox. I can't share them all. They're just a couple of indicators that I would recommend to Richard. Thanks, Ben. That's great. Ryan, we'll turn to you now. We have a question from Adam. Adam says, "Economic data is continuing to show strong growth. Do you think that that will hit a peak soon? If I knew when the peak in growth was going to happen, I'd be a very valuable commodity. We are seeing signs of durable growth in the companies that we own. Growth in the overall economic situation, it might be finite, it may be infinite. It's hard to tell. Again, it's something that we don't try to predict because we're much more better off focusing on the qualities of the underlying companies that we own. When we look at the businesses we own, we tend to own very high-quality companies. Again, we look for those long-term tailwinds. One of the other defining characteristics of these very high-quality global businesses is the durability of their ability to grow their revenues. In the consumer space, we tend to favor luxury items. Think things like Louis Vuitton and Pernod Ricard and Ferrari. These companies have been incredibly resilient through multiple different types of market cycles looking back in history. They've been able to withstand growth ebbs and flows as they have been in the market because of the aspirational quality of the products that they put out. Many of our other businesses have pricing power. If growth does slow down or inflation does pick up, these companies can pass the prices through to the end consumer and continue to grow over time. You could argue that growth is at a peak today, but you could have probably argued that growth is at a peak a few years ago, and that's a bit of a fool's errand to predict when these things will happen. We're blessed to only have to focus on a very concentrated pool of businesses, to make sure that the economic drivers of those companies' competitive advantages continue to be healthy. We don't need the entire world to be being in a growth mode for our companies to perform well and have durable revenue growth. We very much look at the health of economies. We look at the health of the consumer. However, we tend not to pay too much attention to it because we're busy focused on not only our existing companies, but the companies that are on our watch list, that are competing for capital in our very concentrated portfolio. Thanks very much for that, Ryan. I think we'll stay with you for this next question. This one is from Sam. Are you optimistic about the equity market given uncertainty we're seeing right now around the U.S. Federal Reserve tapering talks? The Federal Reserve has been in the spotlight ever since the great financial crisis that occurred in 2008. The quantitative easing that has happened and the asset purchases that they've enacted to help steady our economy here in the U.S. have had global implications. We pay attention to those things, as another thing that goes under the list of things we pay attention to, but we really don't make decisions off of. However, we did see some examples of these moves in the past, right? There was a tapering that occurred around 2013, 2014, that had economic impact. There was a quantitative tightening that happened in and around 2017. That also had some implications to markets. The general comment around that is that it brought volatility, and as I said earlier, volatility allows us to really make offensive moves in our portfolio. We tend to be able to take advantage of that volatility to add businesses to the portfolio we've long waited to invest in, whether it was valuation or timing or portfolio construction. In general, when markets provide us volatility, we tend to be operating from a front foot, and taking advantage of that volatility rather than acting reactively and try to prognosticate what these new moves will do to the portfolio as a whole going forward. Thanks very much, Ryan. We'll just get through one more question, for each of you. Maybe we'll flip back to Ben first for this. Could each of you actually share some of your most notable contributors to your portfolios over this recent period? Ben, could you start? Sure. Happy to start there. Obviously, we have two portfolios represented in the FGX LIC. I'd be happy to share a couple of great contributors in each of them. I would suggest in our EGG Emerging Companies Fund that will shortly close, for those that are on looking. Mainfreight, which is the big New Zealand freight group, freight forwarding logistics group, has been an extraordinary contributor to our portfolio. Aussie Broadband, also new to the boards, has been a substantial contributor to our fund's performance in recent times. I mentioned DGL Group before, the chemical manufacturer and storage group has been a significant contributor, as has Capricorn Metals and AFG, the home loans originator. On the Small Companies Fund, we've enjoyed terrific performance in recent times from Iress, which is a shareholding we put in place at the beginning of this business, actually the inception, some 18 years ago, and it is being taken over. It is being in the midst of a takeover now. Iress has been a great contributor, as has Pinnacle Investments, which of course is a big investor and supporter of, and owner of investment and fund management boutiques. EBOS, Breville and IDP Education would also be up there as substantial contributors. In fact, I would say almost every stock has pulled its weight, but the ones I have mentioned are the ones that have pulled probably the heaviest. Thanks very much for that, Ben. Ryan, what about you? When we look at the construction of our portfolio, we tend to include a few different types of growth stocks. There are defensive growth, cyclical growth, and secular growth. Defensive growth businesses are the ones that are anchored to the wind in volatile periods. Those historically have carried performance. When we come out of those volatile periods, it's typically the secular growth businesses, the very fast-growing companies that dominate performance. Through periods of economic expansion or better periods, we look at the cyclical growth businesses that tend to carry performance. In general, the portfolio performance will be driven by any one of those few buckets. In the recent period, coming from the top performers, one of the best performers that we've had has been Shopify. This is an online business that allows companies to sell their products directly to consumers. It's been a real COVID winner because many businesses have had to pivot from their brick-and-mortar sales or their traditional ways to get to consumers, by increasing their online presence. Shopify competes directly with Amazon.com and provides a really terrific alternative for these businesses, both large and small. From the healthcare space, WuXi Biologics has been a great contributor to performance. We discussed that one a little bit earlier, but another one from healthcare space would be West Pharmaceuticals. West Pharmaceuticals is a business that's the dominant supplier of pharmaceutical packaging. You can think rubber stoppers used in vials and plungers that are in syringes. They've got a 70% global market share, and that business has done extremely well with the long-term tailwind of increase in biologics, as well as the need for inoculations specifically related to COVID. Obviously, not part of our investment thesis in the first place, but this is a business that's sitting right in that value chain that will benefit from the growth in biologics. From the consumer side, Louis Vuitton Moët Hennessy has been a great performer for us. Their fashion and leather area has grown significantly and quite strongly through what's been a very challenging period. That really points to the aspirational quality of their products, as well as the adept management team being able to get these products out to market and really maintain that demand in the marketplace. Thanks very much for that, Ryan. We're just down to the final minutes here. Geoff, I will pass back to you if you have any closing words you'd like to say. Well, thanks very much, Olivia, for doing the Q&A. Thank you very much for Ben for making yourself available. Ryan, thanks very much for staying up very late to communicate with the Future Generation shareholders. We all appreciate immensely your incredible generosity in both your organizations. On behalf of all shareholders, please thank everyone in your organization for what you're doing for us. The webinar is being recorded, so it'll be up on the website very soon. I'd like to, on behalf of the board, thank all the shareholders for your support. My view is the future is very bright for both these organizations. We've got the smartest and the best fund managers in Australia and globally managing money on our behalf. We are investing in and providing money to children at risk and youth mental health, in Australia, which really needs it at the moment. I suppose the icing on the cake is more recently, you've seen with the last results that the profit reserves are significantly higher than they have been historically. We should assume a nice growing stream of fully franked dividends as these companies continue to grow and prosper. Thank you very much. If there are any other questions, please come through to us. As I said, this is your company, and we're only here because you allow us to be here. Thank you very much.