Patients webinar. Before I begin, I'd like to acknowledge the Gadigal people of the Eora Nation, the traditional custodians of this land we meet on Sydney, and I pay my respects to both elders, both past, present, and emerging. I'm really delighted to be joined today in person by renowned fund manager, David Paradice, who founded Paradice Investment Management in 1999, and he manages funds for both Future Generation Global and Future Generation Australia. He does that pro bono, so with no management fees and no performance fees. We have Geoff Wilson, who helped co-found Giant Steps, one of Future Generation Australia's social impact partners. For those that don't know, Giant Steps specializes in working together to develop high quality education and support for students with autism spectrum disorder and complex needs. Today's webinar, we're going to speak to our guests, Dave and Steve, and then Marty is going to come into the room, and we're going to give you an update afterwards on Future Generation. If you have questions for Steve and for David, please enter them into the Q&A box, and we're going to monitor that throughout. Any questions for Future Generation as well, and then I will answer those afterwards. Thank you to everybody who's already submitted, there's some really great questions there that I will summarize. To our guests. As most of you do know, David Paradice, one of Australia's most respected stock pickers and the founder of Paradice Investments. He started as an investor in Australian small cap stocks in December 1999 for a funds management business. They're experts in Australian and global equities, and David is also on the board of Future Generation Australia. He manages our money pro bono while his portfolio managers do. Thank you, David. Thank you very much for that, and thank you very much for being on the webinar today. No problem. It's good to be here. Thank you. Thank you. Steve, who is also there in the other room. He co-founded Giant Steps, as I mentioned, but also he worked for Citibank in Sydney from 1992, and he was head of investment management in Japan. Then he was head of financial markets in Australia till 1996. He helped co-found Giant Steps in 1995, and in 2016, he established SILC, which is Supporting Independent Living Co-operative, to help other groups of families really establish cooperatives to operate similar homes under the NDIS system. He's recently retired as the pro bono CEO. You guys don't need any introduction to each other. You first met in the seventies at Sydney Uni. You played rugby together. I suppose just one quick question, who was the better player? No. He was also the coach, and I should have been, but he never picked me. You know, David. Their lives. No, I shouldn't have been in first grade. Their lives have been firmly intertwined ever since. In fact, we were just talking about how David contributed to Steve in terms of Giant Steps when they were at a lunch that was organized by, Michael Hawker, who many of you might know, who was that sort of rugby great. Is it worth, Steve, to just quickly going through that story? Because I think it really shows how you've worked together over the years, and David's been a very generous supporter of Giant Steps. Now, obviously, you've been a consultant to, Paradice Investments as well. Sure. David had forgotten this, but I hadn't. In 2003, Mike Hawker organized a lunch to raise money for Giant Steps and invited David, and he also invited Dick Davis, who was the inaugural CEO of a company called InvoCare, which had just been listed, and David was an investor. David very generously said that he would donate $ 1,000 to Giant Steps for every cent that the InvoCare share price went up in the next 12 months. It went from $ 2 to about $ 3, so he ended up donating $ 100,000. Ever since then, he's continued to be a very generous supporter of Giant Steps. Yeah. No, it was good. That's fabulous. They're a funeral parlor. In fact, a funeral parlor. In fact, in a way, I think it's not dissimilar to the idea of FGX that, you know, a fund, the fund managers are contributing a percentage of their gains to help charities. You know, we'll rather steal Geoff Wilson's thunder, but in a way it was, you know, Paradice was about 13 years ahead of him. It's a very unique vehicle in terms of what's Future Generation. Let's go to David in terms of markets, and we'd really like to get your view. I mean, obviously it's incredibly volatile at the moment and everybody's looking at Australia's economy. A lot of our shareholders have been basically talking about Australia being one of, you know, the better performing markets in the world. You know, one of the questions there is. How do you view the Australian market relative to opportunities overseas at the moment, David? No, I think Australia is in a reasonably good place. It's obviously got a lot of commodities and over the years there has been underinvestment in a lot of commodities, especially energy, Paladin and other particular commodities. Australia is proving to be a beneficiary of that, you know, on the commodity side of things. Also, if you look at Australia, it's very in the same Asian time zone. There's a number of things that benefit Australia over, say other countries up there. It's like, you know, it's a nice place to visit. You know, tourism is strong, healthcare is strong, technology, you know, technology. A lot of people come to. A lot of Asians come down here for to go to university as well. Education is a strong thing. You know, if Australia continues to focus on that as well as the commodity side, I think long term Australia is in a really good place to be. I mean, at the moment the currency, as you probably know, is being belted and that's just because people are really uncertain about where things are going and that's, as you said, inflation driven. You've had this up until beginning of this year. I mean, the year-on-year number for the beginning of this year was say 10%. That 10% inflation is concerning. If you look at some of the emerging markets, countries like Argentina, for example, inflation is about 60% or 70% and interest rates are about 80%. We obviously don't want to get into that particular area, but I do feel that we are beginning to see that the rate of increase is declining. You know, interest rates the other day, the Americans came out with some good labor numbers, strong labor numbers, and so they thought that interest rates are going to go up, so the equity market went down. Actually what's weird is that the market's looking for weak economic indicators coming out to go up. Now how does that work? Well, that's how the markets work. The markets look a fair way in advance. We have a view that yeah, things. Although there's a lot of people that are very nervous at the moment, but that always says to me it's probably not a bad time to start spinning around. In two years' time, I mean, I don't know, but in two years' time you would see that equities is not a bad place to be. We've talked, I mean obviously you've talked about Australia and a little bit globally there. You know, geopolitics, you know, what should people be looking out for? You know, what are the things that you look at? Look, it's a tough one because you've got China and Taiwan and North Korea and Japan and you've got Ukraine and Russia happening at the moment. There is some concern there. The thing that's driven part of this inflation has been, well, one, coming out of the pandemic and there's been massive demand. Two has been the kind of general lockdown in China because of COVID. And three, the Russian-Ukraine war has put a bit of a skid under the oil price and which has been inflationary and it's also caused energy issues in Europe. So that last one is obviously a bit of a geopolitical thing. Now who knows whether it's going to get sorted, but it does. Those things overshadowing the market, it can be an issue, you know. It's not like back many years ago in 2007, there was a fundamental problem with, you know, it was the GFC, global financial crisis. It's not like the economies are broken at the moment. You've got this inflation, but in a year's time you would hope that inflation has come back a bit and you are seeing it happening at the moment. Like I said before, you are seeing not so much declining, but the rate of increase is slowing down and you're seeing that labor shortages aren't as great. You're seeing the cost of transport, say shipping costs, is winding right down. You're seeing that the demand for labor from IT people is going down a bit. You know, there are signs that inflation is not going to keep on going 10% year on year. Next year, around about this time next year, or say at the end of this year, you know, you'll be looking at a lower number you would think, which then has ramifications for interest rates and equity markets. The IMF has just downgraded its growth outlook and 2023 is going to feel like a recession for, you know, for millions of people. I think, you know, people are fearful, but they're also quite hopeful. I mean, as you said, you've got surging inflation, you know, further interest rate hikes. You have also recently said, and you just said that, you know, maybe the time was to look at that stock picking. What do you actually mean by that? Is it really now or is it, you know, over the next quarter? No, I think it's over the next. If you've got a long-term view, which you should have in investing, that being a kind of contrarian investor, where you're investing in companies that are still growing, but there's been a deterioration in the valuation, say because of interest rates. The fundamentals of the business are still the same, it's just that there's been a move away from what they call growth stocks, which is these companies that, like technology stocks, which have got growth many years out. What happens is people apply. I'm going to try and get too technical here, but people apply an interest rate to those earnings to bring them back to current day, discounted cash flow and their present value. If rates go up, then the valuations of those goes down. There's a number of stocks in the Nasdaq and around the world that are still producing good cash, but the valuations have come down. Their growth, you can see their growth and they're entering new markets, and it's not like they're reliant on, let's say, the economy to turn. They're like Amazon that has grown from next to nothing over quite a few years. It's not like where you've got something like the Nasdaq companies back, Pfizer and Ford, you know, they went like that, and then they kind of went like that. The things are changing so much at the moment because of technology, and that is creating growth without relying on the economy. It's those kind of companies that have been marked down quite considerably over the last couple of months. Among all those companies, there are, you know, technology beginning to be good things to buy. Also not only going into technology, you know, we talked about a reduction in spend on some of the commodities. You know, people have said there hasn't been a lot of money spent on exploring for oil. Uranium is also another area, especially as the world moves into more of the green energy, things like uranium and Boss and Paladin and a few things like that. There has been an underspend on supply and a structural change on demand on a lot of these things, and that does create opportunity. Yeah, look, it's those. You know, people talk about copper, for example. I mean, I am not a big buyer. I mean, companies where you have to rely on outside forces whether it's currency, whether it's interest rates, whether it's commodity prices, things that you really don't know where they're going to, are always hard to pick because you can't pick those particular data points. Over the long term, if you're a believer that there's this massive change to electric vehicles and away from the carbon side of things, then, you know, things like copper or things like Paladin or are going to be a beneficiary of that. You know have to take a long-term view, and you have to do a lot of work on the particular companies because there's a number of companies that I've invested in over the year, over many, many years, which I remember there was one, it had this massive amount of oil under the ground and, you know, they're able to show it all there. The only problem is it was miles down, kilometers down, and it was in the ocean. The only problem is it was like splat spaghetti, right? So if you were trying to drill it, you couldn't. The oil body was very ordinary. There are a number of examples of like that, of companies that, you know, have been worth $1 billion, $ 2 billion, but have got a really bad asset, you know. But they've gone up on the back of a dream. I give it to people like Andrew Forrest and those kind of guys that iron ore is a lot easier because it's on the surface, and you can read the iron ore body a lot better. But for every one of those Fortescue, there's probably about 20,000 ones that don't do very well. It's all about my job or the people that work with me's job is to go and pick the good investments. I think I might just draw you back on investment styles. You just mentioned then that, you know, it's been that sort of growth investors have been the really big winners. Where does that style of investment sit in the current market? And who do you expect to be the winners going forward as we continue into that sort of high inflation market? You know, what kind of investment style is going to work for the foreseeable future? Look, over the long term, you know, buying good quality companies that are growing, or conversely buying cyclical stocks that are super cheap and the economy's going to pick up, are the stocks that will benefit. The guys that are buying blue sky, you know, pipe dreams and, you know, they have these short term blips, but long term, they do get the bandits end up getting you. I've seen, you know, over the years, masses of situations where, and I'll give you an example. I think back in 2000, I had a company that came in and saw me. It was a technology company. I think it was, they had about $ 1 billion. I was looking at some broker reports, and it was towards the end of the end of the reporting season. A broker said it was going to make 100 million, another broker said it was going to make 200 million, another broker said it was going to make 300 million. For the market to be, I've got this really, really inconsistent message, you know, said to me, "There's problems here," because the company was just, you know, telling the community, the investment community, changes their tune and, you know, it's massive divergence too. You know, that company ended up going broke. There's a lot of companies back in 2000, 'cause I think I started in 2000. March 2000, the first three months were horrible for me because we underperformed, and I just started, and we only had 30 million, but then in About June, July 2014, I think it was, market started turning down and all the speculative stuff came out of the marketplace and we started doing really well because we based our investments on fundamentals and not on speculation. The gravy guys that speculate won't do well over long term. They might do the short term stuff, but buying quality companies is obviously always the way to go. Yeah. I might turn to Geoff Wilson now. I mean, obviously, you know, Giant Steps is one of our key partners, and when Giant Steps was founded, it was experiencing autism and to alleviate the associated stress and to guide the achievements of measurable results. Geoff Wilson, I'm really actually interested, you know, how did it come about? You know, what or who inspired you to start this pretty amazing school at a time when there really wasn't that much else at all? Well, actually, a man called Rob Llewellyn-Jones heard about Giant Steps, which was a school for children with autism based in Montreal, Canada, and he got a group of six families, all with children with autism together and said, you know, "Let's work out what we need to do to establish a school in Australia." That's really how it started. Why did that model appeal to you? Why did you decide to do a school? Because what Darlene Berringer and her school in Montreal did was to include on the one side, not just teachers, but one-to-one support for the students and a whole range of therapies. They had, as we have, you know, speech therapists and occupational therapists and music therapists working collaboratively as a team. The benefits of that to children with severe autism is massive. You know, we said, "Well, that's the you know state-of-the-art. Let's bring it to Australia. You started in 1995 and you had what? 12 kids and you ran the school out of a small administration block. How's the school evolved over time and I mean, obviously now you've got school in Melbourne. Tell us more about that and what you're doing in terms of the programs. Sure. Look, in 27 years it's grown beyond our wildest dreams. As you say, we started school in Melbourne I think about seven years ago. We started a adult program. My son Patrick was five when Giant Steps started. He's now 33. We started adult program in 2009, and then two years ago started adult program in Melbourne as well. We've established the Rob Llewellyn-Jones Clinic so that the children and adults with autism don't have to go and visit a doctor or go to a hospital, which is very difficult for them. The doctors come to the school and see them in a familiar setting and meet with the whole team, so the families and the staff that work with them as well. You know, yeah, it's gone beyond our wildest dreams. I mean, we've had obviously the pandemic and that's been incredibly tough for many, many people. Can you give us some insight into what was it like for the families with autistic children and how did you at Giant Steps get through in terms of, you know, how did you manage to stay open and funding? Well, the credit to the staff, the program ran pretty much at full capacity for the whole of the pandemic. Mm-hmm. What they did was the parents, one or two parents, would draw their children to the family home. Nearly all the parents, including us, said, "We actually can't manage," particularly, you know, during lockdown with Patrick at home twenty-four seven. They organized the school in bubbles so that there were, fortunately, we've got quite a lot of space at the site, and pretty much one staff member worked all day with one student, and they didn't come in contact with anybody else. The risk of spreading infection was very low. From a fundraising point of view, the pandemic was a problem because when we started in 1995, we received a half million dollars funding and had to raise a half million dollars. Pretty much the formula hasn't changed. We need to raise because we have the therapies and the high ratio of staff to students, it costs us a lot more than the government provides, and so we have a substantial fundraising task. Right, that was $500 million dollars in 1995, it's now $6 million a year. You know, we've relied very heavily on, you know, generous donors like Paradice and FGX has been amazing. But we raise about $2 million a year from events. We have a ball every year which raises AUD half a million dollars and organize a bike ride and have for 18 years, which David has participated in with Mike Hawker and Dick Davis actually. Mm-hmm. Mm-hmm. Mm-hmm. That raises a couple of hundred grand a year. During the pandemic, all those events were canceled, and we had quite a big hole. People have been remarkably generous and, you know, we managed to get through. Of course, the donations like the money that comes from FGX continued during the pandemic. You know, we managed to stay financially viable and, you know, to give a fantastic student service to our students and to our families. How great is the need for this type of school? It's substantial. I mean, Giant Steps caters for very high support needs people. Autism is a spectrum, and there's, you know, a lot of people in the financial markets are probably on the spectrum, including myself. The group of students that Giant Steps support are at the very high end of support needs and which is why they require a very lot of resources to, you know, make things work best for them. You know, look, there's, you know, there's plenty of demand. Fortunately, the NDIS has done a lot of good for people with disabilities. It means that, you know, many people in the NDIS now have access to therapies that they previously didn't. Fortunately, the general awareness in the community of disabilities like autism has changed massively in the last 30 years. You know, people with disabilities like autism are much better off. Still, I don't know, Giant Steps has a waiting list with, I think, 400 people on it, and we have 130 students, right? Mm-hmm. There is a, you know, massive increase of demand over supply in terms of such services. I think the work that, you know, Giant Steps do, you know, the teachers, all of the people that are involved is really impressive in terms of the results as well. We've just got a few questions coming in, but I just wanted to ask you, David, what is the question you ask Steve, and Steve, what is the question you would ask David? 'Cause I mean, you obviously know each other very well. Like, what is the... What do you talk about on a regular basis, and what's important? Well, he comes and helps me with my business, so our discussion revolves around that all the time, doesn't it? Yeah, yeah. It's joking around. No, but. My question for Steve, just listening to that, was how do you fill up the 400? How do you take into account? What happens to the people outside the 130 that aren't getting there? Yeah. Well, a lot of them go to local schools with different levels of support. Some of them are home-schooled. Right. You know, some of them miss out. You know, it's like anything where the need exceeds the available services that- Mm. You know, some people have to survive with less than optimal support. You guys must save the government quite a bit of money by taking them into. Well, that depends how you look at it. Yeah. Right. You know. Why wouldn't the government support you more? Well, it does, but it's. Well, you know, we get the funding which the government provides to special schools. Special needs. Right. Right? Our attitude has always been that we need that, you know, that without that we couldn't operate, absolutely. But you get so much extra value from the additional resources that we've, you know, our model depends on that. Mm-hmm. You know, we've, to some people's surprise, we've gone for 27 years and grown, you know, every year and managed to even through COVID, you know, managed to stay financially viable. Basically because people are amazingly generous, actually. You know, even during the pandemic, we had almost no drop-off in donations, which is incredible. Yeah. Right? We had a big drop-off in terms of events fundraising, but almost no drop-off in donations. Mm-hmm. Mm. One of the things which happened during the pandemic. FGX has enabled Giant Steps to do is establish a learning hub, which is incredibly important because not only. We've got 130 students and nearly about 120 staff, and they require a lot of training, so the learning hub facilitates that. They also do training for the families and people who aren't at Giant Steps. You mentioned SILC, you know, that I've been involved with, and SILC has 130 employees also in our 12 houses, and almost all of those have been trained by Giant Steps in terms of how you support somebody with autism. During COVID, there was no ability to do face-to-face training. Chris and Rachel, who run the learning hub, developed a whole suite of online training programs. Right. which, you know, thanks again to FGX, but which has meant that, you know, people were able to continue to learn about autism and how to work with people with autism most effectively, even during the pandemic. Excellent. Thank you. We've just got some questions coming in, and one of them is to David in terms of, you know, you talked about, the tech companies, tech sector or described as the profitless tech sector, not performing, and obviously it's been hit, hard recently. What value or potential do you see in that sector? I think there's potentially massive value there, but because, you know, taking a contrarian view, you know, there are things out there that get thrown out, you know, the baby with the bathwater, so to speak, and there's, you know, great value. It happened back in 2007 when SEEK and carsales.com and realestate.com got turfed out, and they turned out to be massive buying opportunities, and they're multibillion-dollar companies now. Those opportunities are out there. It's just a case of finding the buggers. Mm-hmm. You know? That's what the stock pickers, that's what you guys do. You know, it's important. Correct. Yep. Another question was, you have seen many economic cycles, you know, what are your thoughts on this one, and how do you think it's going to pan out? Is it going to be the same? How long do you think it will last? I don't know, but I do. I think that in the short term, interest rates probably will start going up, and as I said before, inflation is still moving up, but the rate of change is diminishing. I do think that if that was the case, say, some of the companies that we've invested in at the moment are Computershare, which is a share registry, which has a lot of cash on its balance sheet, and it benefits from interest rates going up in the short term. Long-term rates, you know, will start rolling over, and when that happens, financials are a place to probably be. But I do. In these situations, it happened in the bottom of the pandemic where people were saying, "Oh, you know, you've got to get rid of staff and you've got to do this and you've got to do that." I feel these times create great opportunities and within the next six months to a year, you know, I think we'll have some better clarity and I think it's a good opportunity to start sniffing around, you know. If you're a contrarian. For example, there's lots of little opportunities. Someone was explaining to me today that 'cause the Aussie dollar is quite low, that gold prices in Aussie dollar terms are near their highest, but the share prices of gold companies, for example, are near their lowest, you know. Probably 98% of the companies probably aren't worth a great deal, but there's a few out there that have been where the baby's been thrown out with the bathwater. Look, it's not like there's. It's the whole system is broken. I think that in six months to a year, things will be, you know, a lot more clarity. It'll be better. Carolyn, you invited me to ask David a question. Can I do that? Yes, please do. Please. As a naive, you know, person, everybody seems to think that interest rates going up is a massive problem. You know, if interest rates go to 5% or 6% and stay there, is that really excessive? That's a really good point, Steve, because you might have been alive in 1987. No, we remember when interest rates were, you know, 15, 18%. 13.5%, I think. Yeah. Yeah. Yeah. Yeah. The highest level. You know, that was not obviously good for the market, right? For profitability. Mm-hmm. I, you know, think that this everybody's got used to near zero interest rates. Mm-hmm. Everybody's getting very distressed at the moment that, you know, the poor people who have just bought a home for the first time won't be able to pay their mortgage payments. I would've thought that in the long run, we've got to get used to interest rates around 5% or 6%. Mm-hmm. as a sort of moderate level. No, that's a good point. They're still low relative- Mm. No, absolutely. You know, that and quite a big retailer in the country said the same thing. We think things are pretty good out there. Rates are not like they were many, many years ago. Unemployment is quite low. You know, it's Mm. people are getting paid and, you know, I mean, yeah, sure, I think you're right, there are some individual balance sheets. Mm. Where people have bought houses at the top and, you know, 1% increase in interest rates is quite significant to them. Generally, a lot of the small to medium enterprises and people's balance sheets are okay, so. Yeah, no, I think you're right. Rates are low. Right. I'm just going to ask you the final question from a shareholder. David, you mentioned the next quarter it might be time to start stock picking again. What is the main thing you look for before going all in? Sustainability of earnings and cash flow relative to, say, the size of the company, you know, like business strength moats and all that kind of stuff are very important. What's good at the moment is, like, a year ago when the equity market was 25%-30% higher and there was a massive amount of speculation in the market, it was really hard to find those particular companies because the valuations were so high. You knew it was a good quality company, but the valuation was really high. What's happened over the last nine months to a year, that a lot of stuff has fallen and so you can find good quality companies that have those attributes and those, you know, asset. strong cash flow, strong balance sheet, strong margins, you know, defensive positioning, and significant growth runway. They're out there. Yeah, it's hard, they're hard to find, but they're a lot easier to find nowadays. Yeah. Thank you. Thank you very much, David. Thank you very much, Steve. You know, you are incredibly important to us, Steve, in terms of Giant Steps and the funding that we've given you since inception. David, thank you very much for your support to Future Generation Australia and Future Generation Global, with both of the funds that manage our shareholders' money, so we can give that 1%. Thank you very much, both of you. Thank you very much. No problem. Thank you. I'm going to give you an update on FGX and FGG, and just briefly go through what we've actually just seen in terms of the last quarter. One of the things I actually wanted to talk to you as well about is the IC. We have two investment committees for both companies, and they're responsible for selecting and monitoring the mix of fund managers and our investment styles. I'm going to ask Marty and Cathy to come in and actually talk to you a little bit about the investment committee and how we're actually making sure we have that diversified investment portfolio, and we try to outperform through the market cycles with reduced volatility and downside protection. As you know, in FGX, we have 18 leading Australian pro bono fund managers, and obviously you've just spoken to one of them. We have 24 funds there. You know, the managers include Regal, Paradice, Cooper, L1, Firetrail, to name a few. On a look-through basis, the investment portfolio now has a skew towards small and mid-cap companies, and that did weigh on the Future Generation Australia investment performance during the year. As you can see from this slide, for FGX, we have increased our fully franked interim dividend. I hope you can actually see that. We've increased our fully franked interim dividend by 8.3%. We have profit reserve of AUD 0.29 per share, and the dividend yield is 5.5%. That's based on Future Generation Australia's 11 October 2022 share price of AUD 1.175 per share. The annual year 2022 fully franked interim dividend of 0.065 per share. Our grossed up dividend yield is 7.9%, which I think is very strong. Our dividend coverage there is 4.5 years. If you look on the other side in terms of Future Generation Global, that's our global investment portfolio, and it's made up of 13 leading global pro bono fund managers. We've got Munro, Antipodes, Cooper Investors, and obviously Paradice, to name just a few. For FGG, we've increased our fully franked interim dividend by 16.7%, and obviously that's now twice a year. The profits reserve is AUD 0.452 per share. The dividend yield is 6%, and that's based also on Future Generation Global's 11 October share price of 1.165 per share. The annualized full year 2022 fully franked interim dividend is AUD 0.07 per share. The grossed up dividend yield there is 8.6%, and dividend coverage is 6.5%. The investment portfolio remains exposed to absolute return managers and traditional long equities managers, and that did weigh on Future Generation Global's investment performance during the period, especially given the volatility in global equity markets throughout the year. I mean, you know, we're very well across in terms of what's been happening in Ukraine, inflation, supply chain issues, as David was talking. The Future Generation Global Investment Committee reviews the individual fund managers within the portfolio continually, especially during these volatile times. We have made changes to the investment portfolio and welcome new fund managers, which I will ask Marty to talk about. The slide here, which is our fully franked dividend since inception, you can see really there where we've got that stream of fully franked dividends. You can see how it's increased since inception to the benefit of our shareholders. That's really, that's what we're all working towards, to making sure we increase that fully franked dividends for both of the companies. You can see there that the fully franked interim dividend is up 8.3%, 0.0325 per share. For FGX, it's at 0.0325 per share, which is up at 8.3%, as I said on the previous slide. I think these slides are worth looking for because for both companies, it's very consistent with what we're trying to do and is pay that stream of fully franked dividends to shareholders. That's something that we really hope that will give you long-term certainty, especially when we have the profits there. Now I'm going to ask Marty to join us and to go through a few questions. I think, Marty- There we go. Are you here? I am. We're getting some questions in from shareholders, and I think they're really important. A lot of them are about the IC, and what we're actually doing in terms of that portfolio construction, the diversification and also the fund managers. One of the main questions we've got is how do we choose the fund managers? Marty, who is on the IC, is the perfect person to answer that. Sure. Thank you, Marty. Thanks, Carolyn. Look, how do we choose the fund managers and I guess what's probably interesting is how we identify the fund managers and how the opportunities to invest in these managers come along. And then capital and the due diligence process that we go through. On the identification of fund managers, you know, we're extremely lucky across both investment committees to have- Yeah. representation from JANA, Lonsec, you know, the co-founder of Zenith, Morningstar, and AMP Capital. We're able to leverage- Fund managers that really know what's happening in the market as well, which I think is really important. I think so. I was going to get on to that. I think, you know, with the research side of it, obviously we're able to leverage them and their teams, you know, the meetings that they're conducting annually with the fund managers, and we can leverage the output from those meetings. As you said, you know, the fund managers themselves, you know, fund managers are a competitive bunch. They tend to know their peers, who's performing well, and up-and-coming managers as well. Great opportunity for us to get access to up-and-coming managers. You know, the other point of that is, as Future Generation, as the profile of both companies has grown, you know, we've been going for almost eight years now in the case of FGX, and seven years for FGG. You know, the number of inbound inquiries we're getting has significantly increased. Mm. Managers approaching us, who want to be involved with the unique model that we provide and looking to give back to the community as well. On the onboarding and how we go through that next step once we've identified potential managers, you know, it's over to the investment committee to complete our due diligence framework, which includes scrutinizing the trust, the service providers, the security of capital, but also meeting with the managers in person and going through that process, understanding how they fit within our the construct of our portfolio to make sure that they'll add value to our shareholder base. The next question actually, which I'm summarizing because I think it does really follow on in terms of the portfolio diversification. Mm. Why are there more fund managers in FGX as compared to FGG? Yep. One of the questions that comes in is, like, if you could just briefly talk about the diversification in each portfolio, please. Looking at FGX, it does have a larger lineup of managers. There's 18 managers, 21 funds. In the case of FGX, sorry, FGG, it's 13 managers. Yes At the moment. With FGX, it's obviously a domestic product. The Australian market is a lot smaller than global markets. The capacity that Australian fund managers have compared to their global peers is, you know, significantly smaller. And therefore the capacity the managers are willing to give up on a pro bono basis, as a result of that, is smaller again. What we've got with the group of managers that we have in FGX, you know, the smaller managers that are there are managers that have given us maybe less capacity, but they've done so because they're, you know, either investing in a niche, investment process or investment philosophy, which we believe adds value, or they're investing in that small micro-cap scale of the market and they want to be able to remain nimble and active. Mm-hmm add performance to shareholders. Pleasingly, you know, the tail of managers have done so for us. You know, they've been out-performers, compared to some of the larger managers, which is why we've decided to retain them. On the second part of the question. Yeah. What was the diversification? Yeah. Yeah. Got it. On the diversification across both, I guess one of the criticisms often laid against fund of funds is that you end up with two managers in the portfolio competing, or opposing views. Their strong views are offset somewhat, and you end up with index or index style return. With the analysis that we've done with FGX and FGG, you know, and we go through this on a quarterly basis with all of our managers. We have a very, you know, from a portfolio construction point of view, we've got a very active share. Mm-hmm. We have an active share percentage, which means that we're not giving shareholders index style exposure or index style returns. You know, an investment in FGX or FGG can be really complementary to, you know, a broader investment strategy, and take you out of the ASX 200, 300 and really give you exposure to a, you know, an under-researched, under-covered sector. One of the next questions, I'm just reading it out, is FGG has underperformed the benchmark. What are the drivers for the underperformance and how are we addressing on it? I mean, firstly, I would very much like to say that it's something we're incredibly focused on. I mean, it is primarily. It is an investment vehicle, and it's really important that you have that performance. And that's something that the IC is working on. I mean, we have an extraordinary bench of fund managers, and they are exceptionally good at what they've done, and they have managed the money incredibly well over the long term, and we expect them to do the same again over the long term. I think. I mean, Marty, maybe you could speak a little bit to the IC process in terms of, you know, how we've, you know, we've recently changed the portfolio and in terms of that, the bias in terms of growth and what we're actually doing there. Yeah. Please. I think to start, I think it's important to note how active and busy the FGG investment committee has been. You know, we have been meeting on a very regular basis. You know, there was a period this year we were meeting more than monthly. You know, where we've got a scheduled meeting cycle of quarterly. You know, it's. We're really getting our pound of flesh from each of the IC managers as we look to navigate these extreme situations we're seeing in equity markets at the moment. Within FGG, you know, as I touched on earlier, we do conduct look-through analysis in the portfolio. It's part of our risk management framework. What that has given us is an understanding of the drivers for performance in the portfolio. We've long known that we've had a growth bias in the portfolio. We've long known that we've had a bias to small, mid, and micro-cap as well. You know, both are a function of the managers that we've got and a function of where they have been able to find value and believe they'll find long-term value within their respective funds. What that's resulted for FGG in our portfolio performance is, as we've seen a de-rating of growth companies and I guess a return to value, that's hampered performance. In addition to that, small mid cap stocks, globally and domestically, have underperformed, you know, large cap peers. That's hurt our performance, and there's been an element of idiosyncratic fund manager underperformance in there as well, which is compounded it and wrapped it all off. I guess we have had a couple of exits in the investment portfolio for FGG. We are recycling that capital at the moment, and we're taking this time to, you know, make sure that we're bringing complementary managers into the fold. There's an opportunity at the moment to add strategies which are complementary. To that we've added quant strategies. We've added two managers in the quant space. We've also added a value manager to subtly downplay that. We'll be making a fourth investment imminently with another value manager, which will hopefully complete the rebalance of the portfolio. What we're looking to do there is set that portfolio up to perform over the next five to seven years. There will still be changes. I'm sure, you know, things will happen, managers will come in and out of favor. We do take that longer term view and think we've got the right mix of managers from a style perspective on a go-forward basis. We have another question, and I'm going to read this out to the panel. Our shareholder would like to really know about thoughts, targets, and trends around ethical types of investment in the portfolios, particularly clean energy, biodiversity, inclusion, circular economy, and this is with FGG. Do we have any plans to remove all fossil fuel-linked companies from the portfolios? This is Rebecca. She's actually hoping for that. Mm-hmm. I mean, I think it's really important. I mean, we have this huge social impact working, you know, with these amazing not-for-profit organizations to help sort of the youth of Australia. I mean, I look at the FGG portfolio and that's what 99.2% ESG aware. We're very lucky, we've actually just got the new Lonsec sector reporting on the eleventh of October. We have no exposure to weapons and some other sectors. Marty, you were just going through it yesterday, would you know, just as a high level, what sectors are we there and what are you looking at in that respect? Yeah, hot off the press. I guess from a sector and industries perspective, I know you talked about ESG aware there. You know, we've got a couple of sectors that we classify as non-ESG aware, and where we've got exposure there is gaming and casinos. We've got a small exposure there, you know, less than 0.5%. We've also got exposure to vineyards. Sorry, vineyards. Alcohol vineyards. Oh, okay. Breweries. Moderation. Less than 0.5%. Sorry. As you said, no ammunition, no tobacco- Yeah. Which is pleasing from the portfolio. We don't enforce negative screening on our managers. Our managers can hold any stock around the world, unless they have their own internal ESG framework and policy that they abide to. We don't enforce it upon them. We're seeing a number of them now sign up. Yeah. We are. You know, I've been involved with FGG and FGX almost since inception, and worked alongside the investment committee. What we have seen is that really pleasing transition. Yeah. You know, David is a great example of, you know, a fund manager that has brought in internal capabilities in relation to ESG, incorporated ESG principles within their investment process and the broader team. We're seeing that trend through other managers, especially in the global space. Mm-hmm. It's definitely more prevalent. We're seeing a lot of our fund managers, I mean, you sort of read about it in the newspapers, actually lobbying the companies to do better. Yeah. I suppose the argument is, if you don't lobby them to do better and get them to do better, then, you know, they just slip off the radar, and therefore they're all sort of allowed to sort of continue on their own devices. Exactly. It's that active ownership. Mm. Versus exclusion. You know, I don't have the answer for which one is the right way, but, you know, I definitely prefer the active ownership. You can make meaningful change by owning the shares instead of. Yeah. Simply excluding them. That's where we're at today. We've seen positive change, and then hope that continues into the future. Our last and final question, 'cause I'm very aware of time, is, and this probably wraps up what most people are asking about, is that sort of are we getting enough diversification through our fund managers? Are you comfortable where the portfolio is sitting from an IC perspective? Yeah, we are. You know, we've made a lot of changes with- Yeah. FGG. You know, there's one, as I said, that's imminent. You know, we're in discussions with a couple of managers. What's pleasing, and you know, joining the IC, we've got additional resource now. What we're able to do is really engage with the managers more regularly, not only existing managers but prospective managers. The plan there is to have a bench of managers that if for whatever reason we lose a manager, we've got a like-for-like replacement. Mm. If we lose a manager and we want to make a change to the portfolio construct, we can do because we've got you know an opposing manager or complementary manager that can come into the mix. From a diversification standpoint, I think we've covered a lot of it already. You know, it's you you're getting non-benchmark style returns. You know, definitely that small mid and micro-cap exposure as our managers are seeking value in under-researched Mm. Undercovered segments of the market. Excellent. Thank you. I think I'm going to wrap up now due to time, but I really wanted to thank, you know, David Paradice and obviously Geoff Wilson for speaking to us today and to Marty from our investment committee. You know, we are incredibly grateful to the support of our shareholders in what we're actually trying to do, and also to the fund managers that work pro bono with no performance fees or management fees, and also our service providers. We're looking forward to our next update. We released a podcast on Monday with Tim Minchin, talking about the business of giving. I really encourage you to listen to it. It's really very entertaining. Thank you very much again for joining us.