Welcome to the Future Generation webinar. Thank you very much for joining us today. I'm Caroline Gurney, the CEO. I would like to acknowledge the Gadigal people of the Eora Nation, the traditional custodians of this land where I sit today. I pay my respects to elders, past and present. I'm delighted to be joined today by two of our leading pro bono fund managers. We have Tom Richardson, who is the lead portfolio manager at Paradice Investment Management, and Nicholas Markiewicz, portfolio manager at Lanyon Asset Management, both of whom manage funds pro bono on behalf of Future Generation shareholders. We also have Geoff Wilson, founder of Future Generation, founder of Wilson Asset Management, who will be joining in the second half of the webinar to discuss our half-year results. I'm just going to acknowledge the disclaimer, and obviously, we cannot give advice. I'm not going to read it in full. As you know, the Future Generation companies are unique. They're Australia's first listed investment companies that provide investment and social returns, offering a very unique opportunity for shareholders to invest with leading Australian and global fund managers while supporting high-impact, youth-focused, not-for-profit organizations. In order to achieve these dual objectives, all of our pro bono fund managers, including Tom and Nick, waive their usual management and performance fees, and this allows us to donate 1% of our average net assets to not-for-profits. Thank you, Nick. Thank you, Tom. I've asked them both to discuss their market outlooks, highlight some investment opportunities they're identifying, as well as answer some shareholder questions, which I'm going to incorporate in the Q&A. Please continue to submit questions in the question box as we go, and thank you to everyone who's already submitted, and we have a fair few. If we don't get to them today, we will definitely ring you and answer them. So let's get down to it. Tom, Nick, thank you. I might kick off with my first question. So we're nearing the end of 2023, and it's been definitely a ride. So I'm interested in how the end of the year is shaping up, but also, what's gonna happen in 2024. Perhaps each of you could give a very brief market outlook and tell us how you're actually positioning your portfolios to cope with these challenges. Perhaps, Nick, if I can start with you, with globally and perhaps for three minutes, please. Yeah, no worries. Thanks for having me, Caroline. Yeah, so I think maybe just to summarize our view of the markets right now, it's a very confusing outlook, I would say. There's lots of mixed economic variables out there that are showing different things. Some are pointing to recession, some variables are pointing to quite robust conditions. So there's confusion on the ground, but then also a lot of confusing signals from markets and price action as well. You know, if I was to summarize what we're seeing at the moment, it is the real economy, both globally, in Australia and mostly outside the U.S., is slowing, and it's slowing quite quickly. We're seeing that in manufacturing data, trade data, commodity prices, things like that. At the same time, the consumer has been broadly robust in most markets. We're at record low unemployment levels. But that is slowly starting to change, and consumers have run down a lot of their savings that they've built up through COVID. So certainly a few obvious question marks for the outlooks of a lot of companies. And probably the thing that snuck up on us recently that is causing some confusion, or at least, a few more question marks around asset prices, is the rise in bond yields. And what we're seeing right now is U.S., debt is now selling off. That is, the yields on that debt are rising, and they're rising because I think we're now starting to see question marks over the U.S., government's fiscal position and their ability to fund their deficits and pay their debt. And why that's really important is that, the U.S., Treasury, Ten-Year Treasury, is considered the risk-free rate. That is the, the lowest, risk needed to generate an adequate return, and most assets globally price off that. And when you start to see U.S., bonds selling off, it typically leads a lot of other asset classes. But as people probably know, we haven't seen that yet in property. Property prices have stayed robust. We haven't seen that more broadly in, in equity indices. So there is a big what I would call a disconnect now growing between what we're seeing in the bond market and what we're seeing in other asset classes. So, you know, I'm always a bit cautious in throwing predictions out there, but I would say that we are cautiously positioned. We've got relatively high cash levels in the companies that we're invested in reflect our cautious views there. Excellent businesses don't carry much debt. They generate a lot of profit, and they return a lot of that profit to shareholders. Excellent. Thank you, Nick. And maybe, Tom, if we can go to you and talk about sort of your outlook, especially for the Australian market, and maybe reflecting on what some of Nick said and how that impacts Australia. Yeah, I entirely agree with Nick. The U.S., ten-year is hard to get away from. It's the risk-free rate for global pricing of every risk asset. So, the key things for us at the moment is interest rates at the front end have gone up a lot. Everyone's seeing that. Now, they haven't had the impact on the economy in a nominal perspective that we may have expected going back 12 months, and nominal economy has remained pretty strong, and we might even touch on the reporting season here in Australia a bit later. But the risk-free rate is obviously dramatically rising as we speak, and Nick has touched on that, and that has a dramatic impact on the valuation that you're willing to pay for assets and especially long-duration companies. And the third is the earnings. You know, what the earnings will be for these companies going forward, and that's really gonna be on the economic outlook that we can touch on and has been stronger than we expected today, but also the strength of the individual companies that we're investing in. So with that backdrop, the three key elements for us in investments at the moment are a strong balance sheet, 'cause the cost of money has gone up. Secondly, you wanna be careful with valuation, 'cause our expectation is that long duration and high PE stocks are gonna derate. Some are going to grow their earnings strong enough to offset that, but many won't. And the last one is earnings. You know, make sure you get the earnings right. You know, 'cause we saw through our reporting season a number didn't have hiccups, but a number of companies were able to reach expectations. So if we can find companies that tick all those three boxes, we're very happy. It's just not that easy at the moment. Thank you. Thank you, Tom. So you, I mean, you've both obviously talked about reporting season, you know, Australia and globally. You've, you know, you're speaking to many, many CEOs and CFOs. Now, what do you see as the trends that are emerging from these conversations? Perhaps if I can go to you, Tom, first. Well, probably three key takeaways, I'd say. First is that the top line was actually pretty strong. So the consumer, in particular, has been more resilient than many people expected. That's helped the retailers. So if we go back 12 months, a lot of them built inventory on these supply chain issues, and the fear was that demand would weaken and those inventories would cause them problems. Now, the reality is, 12 months later, consumption has remained pretty robust, so that surprised many. Secondly, cost pressures continue to bite. So electricity, labor costs. Pretty much across the board, we're not seeing respite within Australian companies in particular. Some of those cost pressures are easing more dramatically offshore, and I'm sure Nick will be better placed to see that. But domestically, we're still seeing a lot of cost pressures. And then, and that's also flowing through to CapEx. And then lastly, is the cost of money. You know, we saw interest rates were higher than people expected, and that flowed through to interest costs that were higher than expected and, and, tripped up a lot of companies through reporting season. So what that means is margins are really important going forward. Our companies need to continue to deliver the, the top line because they're getting chipped away at, from an earnings perspective, by both the cost escalation, which continues, as well as interest rates. So those are really the key take, takeaways, and, and all the CEOs are really trying to manage those elements of their business. To you, Nick? Yeah, I mean, I suppose a lot of the global companies are echoing what Tom mentioned about the Australian companies down here. I think one of the big themes that has surprised us globally is the amount of pricing power that a lot of these companies have managed to push through. And I guess the question today, and what we've seen at the most recent results season is whether that pricing can continue. Up until now, you know, there has been no problem pushing through price, but more recently, we've seen a lot of companies now talk about the end of super normal pricing, if you will. And as a corollary to that, we're now starting to see, you know, what I would call the canary in the coal mine type stocks. That is the U.S., discretionary sector. You know, I would say there were some fairly large downgrades in the most recent results and some fairly conservative outlook statements. And so, you know, for my money, the big question going forward is we've seen this incredibly robust consumer, which Tom mentioned, and consumers have had a huge savings balance that they've accrued through COVID. That has now been run down, and it's an open question of how long that can continue. You know, the final point I'd make is we're now starting to see a two-speed consumer. Most of the consumer downgrades that we saw in the U.S., were in that low-income bucket, where maybe there have been fewer wage increases and maybe the savings accrued through COVID were perhaps less than the higher end consumer. Certainly, the low-end consumer is now doing it tough, particularly in the U.S., and other markets. You know, we've started to see, as I said, the U.S., discretionary names, which are generally the canary in the coal mine, have started to downgrade numbers or pull back numbers, and maybe that's an omen for the rest of the sector. You know, why that's important more broadly is consumer companies are around 70%... or consumer spend is around 70% of the U.S., economy, and that's why maybe nominal growth has been so strong, is because the consumer's held up. But if the consumer doesn't hold up, or begins to crack, then maybe we'll start to see a slowdown in that growth. But, you know, by and large, the results that have been reported have been quite good. But the outlook statements that have been given have been quite measured and, have been tempered somewhat recently. Excellent. Thank you. So on the back of that, I mean, I think now is a really good time to ask you, you know, what are the opportunities you're seeing? What would be the stocks that are exciting you at the moment? I mean, maybe Nick, if you would carry on, please. Yeah, sure. You know, so our framework at the moment, I mean, Tom mentioned it before, his framework and ours isn't too dissimilar. There's lots of question marks around the growth outlook. There's question marks around the cost of capital and what we should be paying for assets at the moment. In that environment, we are looking for a couple of things. We're looking for inexpensive assets, or inexpensive valuations. We're looking for robust balance sheets, typically net cash balance sheets, but we're also looking for growth as well, and we think that growth is going to be rewarded in this market. So a couple of stocks we're quite interested in at the moment, they're three of the largest stocks in the fund, but the first one would be Universal Music. I think I've mentioned that. We did a podcast on that the other week, and so- Thank you. If anyone wants more detail on that, they can listen to the podcast. But Universal Music is just a wonderful business, high margin, capital light. They have unique assets. They monetize those assets through Spotify. Spotify subscriptions are growing, and they're likely to grow whether we have a recession or not. The company is, I wouldn't call it particularly cheap optically, but it's certainly cheap relative to the cash flow that they're going to produce over the next decades, hopefully. The second company that we really like at the moment would be Airbus. Now, Airbus is typically classified as a more cyclical business, and maybe it's not one that you would typically own into a questionable economic outlook. But why we like Airbus at the moment is they actually have a ten-year waiting list for their aircraft. So over the last 3 or 4 years through COVID, all airlines around the world canceled their orders, and we've seen that with Qantas at the moment, with their record CapEx spend in their fleet growth at the moment, or their fleet replacement at the moment. And businesses like Airbus are perfectly well-placed to benefit from that. So, you know, regardless of whether we go into a recession or not, Airbus are going to grow for the next 10 years by just filling orders that they've already taken on their books. And they have a net cash position, a balance sheet position, and they're likely to return a lot of capital to shareholders in the coming years. And then finally, a stock that I've mentioned, I think a long while ago on here, but Lamb Weston is probably a bit more of an obscure name. Lamb Weston is a French fry manufacturer. It's one of only three in the U.S. They supply... Just three players supply all of the French fries to the big fast food restaurants in the U.S. French fry demand is remarkably resilient. I think in the GFC, fry demand fell 2%. It actually grew through COVID, despite half the restaurants in the U.S., being shut down. So it's a very resilient category. Lamb Weston has a lot of pricing power, and the company is likely to keep growing, and it's incredibly cheap relative to that growth as well. You know, the common traits in all three companies that I've mentioned are those three things I mentioned at the start there. We think they're inexpensive, they've got great valuations, great balance sheets. They're likely to keep growing earnings and return a lot of capital to shareholders. Thank you, Nick. Actually, you gave that stock pick, Lamb Weston, what, two years ago when we did our roadshow in Adelaide? So, all three of those are long term, which I think is really what investing is all about. So thank you. So maybe for Tom, if you could give us your opportunities, please. Yeah, sure, Caroline. So the biggest active position in the fund at the moment is ResMed, which is very topical from, your shareholders might be familiar. The stock's down close to 40%, more recent times, and really, that's around an emerging issue, which is, a GLP-1 drug. So this is obesity-treating drugs. They're a wonderful drug. I'm sure some of you may be familiar with. Some of you may be taking it, where you can lose 15% without having to do much. Now, there is a fear that this drug will, clearly, go broader than just treating obesity and may even treat, help treat sleep apnea. And there's a study that's underway that will be, finalized in March next year to, show some results from that. That's ultimately weighed on ResMed dramatically here, and the stock's down 40%. So we're now getting compensated dramatically for the possible risk that we see out there. The work that we've done suggests that it could shave off a 1%-2% from the top line from ResMed in the medium to longer term, but time will tell. And so we're getting this company for sub-20x, ticks all those boxes that we touched on at the start of the call. It's a good balance sheet, very good valuation now, which we've been waiting for, and the earnings growth is going to be supported by a very important fact. So the other element with ResMed is that its key competitor has been out of the market for two years, on a recall product issue. So ResMed put 60% increase of product into the market. Now, what that generates is an annuity stream of masks. So we expect to see an acceleration in mask revenue for this company on a 3- to 5-year view, which is higher gross margin. You know, it's a 30% or 40% higher gross margin for that product versus the machine. So we think that business is ticking those boxes and not without risk for the reasons that I've articulated. But as we know, there's no reward without risk. So ResMed's the one for us. Just the one from you. Luckily, we have three from Nick, so we're doing our fourth stock picks, which is fantastic. Thank you. He asked me to give me one of his, actually, in hindsight. Thank you very much, both of you. So I wouldn't mind moving to small caps, because obviously, in terms of Future Generation, that's very important for us. You know, we've just reported our half-year results, and I'm really keen to get your view on a couple of things. So, Tom, you're one of our pro bono managers, and your portfolio has a very strong bias towards small to mid-cap stocks. These types of stocks have underperformed, you know, the market pretty significantly, especially in the last couple of years. You know, and I know that you still feel this is a very good space to be in, and you've had some success, so I'm really interested in your thoughts there. Yeah, I think it's a great observation, Caroline. I mean, the reality is the top 100 has outperformed the Small Ords by close to 30% over the last 12-18 months. It's been a dramatic move. And really, that's the fear around the economic cycle. So as we know, the larger businesses are generally stronger businesses. They're less vulnerable through an economic downturn, so there's a bit of a fear that small caps are gonna get touched up in an economic cycle that we have all been calling for, for some time. So the starting point is that you're getting compensated in terms of the price that you're paying for these small caps. The other reason we think small caps look interesting is a lot of the small caps are more domestically exposed versus the larger company, which is generally more global businesses. And if you think about what's happened more recently, we've had the currencies being whacked into the low 60s, which has been a supportive valuations for global companies, less so for domestic companies, which are less impacted. But also, ultimately, we think the domestic economy is gonna hang together better than the global economy. We've got immigration at record levels. We've got an RBA that seems willing to not push the interest rates as far as some of the global central banks have. So as we sit here today, the domestic economy looks in a reasonably strong position. So you should see that earnings growth come through from small caps, despite some of the fears about the economic cycle, which will inevitably play out, but at some stage will come out the other side. That's great. Thank you. Thank you very much, Tom. So, Nick, I mean, you're a Future Generation Global fund manager, and that's also skewed towards small to mid caps. Small caps globally hasn't been particularly good in many areas, especially compared with that sort of the runaway performance of The Magnificent Seven. So do you feel this is a long term, or are you expecting a resurgence in small caps globally? What are your thoughts there? Yeah, good question. I mean, predicting a recovery in small caps is always difficult or any part of the market, really. But just to echo Tom's points, I mean, the movements we've seen in small caps are approaching some fairly extreme levels. I mean, during the GFC, the Russell 3000 fell 60%. During COVID, it fell 40%, and peak to trough recently, we've had a 30% drawdown. So this is the third biggest drawdown we've had in the last 25 years for U.S. small caps and global small caps more broadly. And the dispersion that we've seen between those large cap stocks that you mentioned, particularly the Magnificent Seven, as they're called, relative to the small cap end of the market, it's a one in 50-year event. So you know, typically, you don't get too many one-in-50-year events in the market. So certainly there is a lot of value out there. And if you just look at the absolute valuations, a lot of small cap companies are trading at the same valuations where they were during the GFC, when we thought the world was going to end. So there is significant opportunity out there, both within the U.S., and also within Europe and some Asian markets as well. So I completely agree with the sentiment that smaller companies are providing a really, really good opportunity right now. You know, the only caveat I would put on that is we're looking at smaller companies that can fund themselves, don't have any debt, and won't require access to capital markets if things do actually go pear-shaped. But that aside, you know, there is, there's a lot of opportunity. So I, I would wholeheartedly agree with Tom. Excellent. That's some really good points there. Thank you very much. So, Nick, we've we've had a question, 'cause obviously you were talking about U.S. Treasury bonds, and obviously, that's in the news at the moment. So, what does U.S. Treasury, the movement in U.S. Treasury bonds mean for markets? Yeah, great, great question. And I suppose it's why are U.S. Treasury bonds falling or why are yields going up? And one of the reasons Treasury bonds would fall and yields would rise is that you would expect inflation to be higher, but actually, inflation expectations have been falling. So that means that the other reason you would expect yields to be rising is simply that there are more and more Treasuries hitting the market. That is, the U.S., government is issuing more and more debt, and there are fewer and fewer willing buyers for that debt. And the reason we're seeing more and more Treasuries hit the market is very simply because the U.S., is running a 7%-8% deficit right now, and that is quite extraordinary. So if you think about Australia's finances, we've just announced that we're going to run a budget surplus. There's a lot of reasons for that outside of our control, but the U.S., is in completely the opposite camp. They're running a 7-8% deficit, which is the highest deficit outside of World War II and the GFC, and it's with record low unemployment. So the market is potentially questioning how much more debt is going to be sold and potentially questioning whether the U.S., can service that debt or not. So that is that's what's happening. But what does it mean for asset prices? As Tom said before, the U.S. Ten-Year Treasury is effectively the risk-free rate for the world, and you're potentially taking the lowest risk in the market by buying a U.S., bond. And so, you know, the way that I look at it is, right now, you can buy 10-year bonds that yield almost 5% that carry inherently no risk, whereas the S&P 500 is yielding just above 4%. So for the first time in a long while, you can get a higher return owning government bonds than you can owning equities. Now, the reason equities may be priced like that, one reason historically is that you expect more growth from equities. So equities, companies can grow earnings, they can distribute capital to shareholders. Bonds don't grow. They don't grow their, their coupon payments. But we're not seeing that with equities right now in that most sectors and most countries are come downgrade. That is probably, in my mind, the biggest risk for equities is if you look at just the simple yields right now, bonds are paying a higher yield than equities are, and that is a risk for markets more broadly, and it's a risk for asset prices more broadly when you can get a higher return at potentially lower risk. Excellent. Thank you. That's a very comprehensive answer, because, I mean, it is in the news at the moment, so that's what people are talking about. But the other topic that a lot of people are still talking about and always will do is China. You know, the China post-COVID hangover, it's been harder to shake. And what does its economic weakness mean in a global context? And realistically, interested in your view, Nick, and then perhaps if we go to Tom to see what the impact for Australia, you know, is in Australia for that. ... Yeah, big, lots of questions about China. So China, the Chinese economy obviously has underwhelmed expectations post-COVID. Part of that is simply they followed a different pathway out of COVID than the Western economies. So, you know, if you think about Western economies, we put in a lot of stimulus into the market and then basically reopened all at the same time. And that caused a lot of the problems that you're seeing in supply chains today, in inflation, and so forth. Whereas China went down the opposite path of completely reopening, but not stimulating. And they haven't stimulated for a few reasons, but one is that they have tried-- There's a lot of debt in the system there, then they're trying to, I guess, muddle their way out. So, you know, certainly growth has been underwhelming, and it's been compounded by the fact that there's a concurrent housing crisis there as well, or I should say, property developer crisis. And that's put a lot of fear into consumers, and particularly those that own investment properties, where maybe the prices have been falling, or maybe they have a deposit with a developer that they're worried about. So lots of concerns there, and I guess the concern going forward is that the Chinese government has only put forward piecemeal solutions and stimulus. There hasn't been a, you know, a broad silver bullet, so to speak, in terms of stimulus. And again, part of that is because previously they used to do infrastructure spending and, you know, big-ticket items. Whereas now, it's quite clear that infrastructure spending is not going to have the same benefit to the economy as maybe it had in the past. So you know, right now, the Chinese economy is treading water. But having said that, consumer spending more recently has picked up a little bit. The manufacturing indices show they're back in expansion, and we've gone from outright deflation to some inflation again in the economy, which might suggest that things are really stabilizing more recently. But whether they grow strongly or not, that's another question. You know, is the economy investable? I mean, China is a quarter of the world's economy, so you would have to think that there is some investment opportunity there, both within China, but also companies that service China. And certainly we're finding some very interesting opportunities. Generally, the way that we would invest in China is through Western companies. And so, you know, again, going back to the Airbus example, Airbus is one of two companies that can produce a certified commercial aircraft or... And China is a huge market for them, and Boeing has been being given less of a hearing in China, given the trade and political issues, but that means that's where Airbus is taking. And, you know, we talk about China being in the doldrums around growth, but the reality is that air traffic is back to pre-COVID levels already in China and still growing really strongly. So, you know, like I said, with a business like Airbus, you've got a 10-year customer backlog. It's one of only two suppliers in the world, and they're going to benefit from markets like China for decades ahead. Similar for BMW, similar for Shiseido, another portfolio company of ours. So China, you know, I think, is investable. And I think there are a lot of ways to do that. You just don't necessarily need to own Chinese companies themselves. There's a lot of Western companies that still have tremendous leverage to China. They're cheap, and they're likely to still grow regardless of what the Chinese economy does. Very quickly, Nick, one of our shareholders, Dan, asked if Airbus would be your highest conviction business on a five-year outlook. Geez! Well, the biggest stock in the portfolio is Universal Music Group. You know. That would probably be my highest conviction stock right now. Why is that? It's because Universal Music is a capital light business, has very little debt, and people are still going to have their Spotify service subscriptions in 10, 20, 30 years, regardless of what happens. So, you know, it's always nice to have- Let's not go through that because people can listen to the Taking Stock. Sure, sure. So UMG is my highest... So UMG is my highest... Universal is my highest conviction stock at the moment, but Airbus is up there. Brilliant. Thank you. Tom, now, maybe if I could talk to you about China and, you know, what impact is that weakness gonna have for Australian investors? The biggest one for China is clearly commodity demand. Pretty much steel market. If we can work that out, we're gonna do pretty well in terms of working out where the Australian market goes, which is probably oversimplifying it, but in some ways not. Look, we just had analysts who just spent two weeks in China, just got back, and it was really the message was stabilization. So we're not seeing any acceleration, and we're not seeing a degradation, we're seeing stabilization. And that might be good enough for commodity prices. Iron ore price is $115, which is a very healthy price for our major producers. So, you know, we were a bit more cautious going back six months, but the reality is this market is ticking along. The property market, which looked diabolical, is sort of ticking along. They've been able to put steel elsewhere, and that's been into export markets and into infrastructure and utilities. So stabilization, not an exciting story, Caroline, unfortunately, but, that's the one we're watching. We're running out of time, unfortunately, but Tom, I just wanted to ask you about Qantas. I mean, obviously, you've been a fan of the company. It's in the press on a very regular basis. I mean, are there any observations you can make for our shareholders? Thanks, Caroline. I really appreciate it, that you managed to squeeze that one in. You know, full disclosure, I think we had a briefing about a year ago, in similar format, and I put this as my top, top pick for 2023. Your shareholders should be aware before they race off and give their stockbrokers their resume buy order. But I think the point that I would make is that, and there's clearly issues we, we can touch on the brand. But the reality is the market is fading all of these property stocks, sorry, travel stocks. So if you look at corporate travel is down 15% for the month. Flight Centre is down 10%, Webjet's down 10%, and I'm pretty sure it's the same offshore as Nick would be more attuned to. But the reality is the market is telling us this is as good as it gets for travel. Now, time will tell whether that's true or not. I have a sneaky suspicion that they're right, and this is what happens in cyclicals. You know, the market will derate these companies until ultimately they have a downgrade, and then you want to wait until the cycle turns to own them again. I think from Qantas's perspective, clearly, they've got to pick up their operational issues and change in management, and I think they've recognized that, and they're going to take a hit to short-term earnings, and people might get compensated for baggage losses and the like, going forward. So that will help in the longer term. In the shorter term, there'll be a bit of a profit hit, and the ACCC investigation and the decision in the High Court are not helpful from a brand damage, and the company's got to work through and earn this trust again. Look, thank you both very much. I mean, we're incredibly lucky to have, you know, such fantastic fund managers, in, you know, managing our shareholders' money. And, so thank you very much. Thank you a lot. And, I'm gonna say goodbye to you guys now, and we're gonna go to the Future Generation part of it. Thank you very much, Tom. Thank you very much, Nick. All right. I'm gonna welcome Geoff Wilson into the room now. Everybody knows Geoff. He's the founder of Wilson Asset Management and Future Generation, and one of our, you know, leading fund managers in Australia. I mean, not only is he incredibly philanthropic with Future Generation, but he's also built an incredible funds management business through the listed investment company structure. And there's really nobody better placed to talk about LICs. After all, you know, managing more than AUD 5 billion on behalf of more than 130,000 shareholders. We've actually got a couple of questions for you, Geoff. So maybe before we go through our half-year results, you know, we've had a lot of questions, and I thought we're gonna talk about the discount, we're gonna talk various other things as well. We have questions on that. One of the questions was, "Geoff, in July 2023, you said you were cautious on shares, but investors should take a long-term view. Are you still cautious on shares now? Have we seen the worst of the reaction to the interest rate hikes?" Geoff, are you there? Yeah. No, I'm there, Caroline. I just... I'm just trying to polish my crystal ball to tell me exactly what—what, yeah, what the answer is. Unfortunately, it's not a simple yes or no answer. And a good question. You're back, yeah, well, nearly, yeah. When, you know, when I was sort of making those comments previously, that was before the long bond has backed up as it is in the U.S. So. And that was, you know, I, I was probably a little bit, you know, wary of the market, and that was assuming, you know, then the market was anticipating that interest rates would drop, probably 1.5% plus in the next 12 months. That's next year in the U.S. Now, with, you know, with sort of the economy, you know, being a bit stronger, with what we've seen with, you know, the bonds backing up to, you know, to levels that we haven't seen since 2007, you know, that, you know, to me, it's- it makes you a little bit more nervous. You know, to me, the, the probability of this one being significant pain, is still very low, but it's probably increased from, say, six months ago, 10% chance of there being some significant pain, to probably 20%. You know, the odds are the market will, you know, it'll sort of make it through, and the, and there won't be a, a significant adjustment. But, but obviously, the risk, has increased with, bonds increasing. And, and normally you see... You know, we've seen it a number of times before where the bond market goes up, and normally the equity market comes down. And we've seen a little bit of adjustment in the equity market, but it hasn't been significant. So to me, it's nervous. I'm still, you know, maybe probably a little bit more nervous than when I made that comment last time. In terms of, you know, is now a good time to buy? The difficult part, and you know, you look at, you know, performance over time, and I think, you know, you look at it the last 20 years, say, in the U.S., if you just missed 1 day, the best performing day in each year for the last 20 years, your performance is virtually... You virtually get no performance versus the market doing sort of 7% or 8%. So, you know, time in the market is important. You know, so to me, but at the moment, I just... I'd have some money on the, you know, definitely have some money on the sidelines, you know, just in case things do get really rocky. One more question, and then we'll go straight to our update in terms of results. But we know that most of the rise in the S&P 500 this year has come from a handful of large tech stocks exposed to the AI theme. I mean, obviously, Nick talked about that as well. How important is the U.S., quarterly earnings season this month in terms of validating the current levels of the S&P 500? Yeah, and just, you know, the Magnificent Seven, it's just been- Yeah ... exceptional, you know, the performance. And when we talk about the Future Gen result, it's relevant there because most of our managers, you know, they have very little exposure to those Magnificent Seven, which pretty much given all the performance or a significant percentage of the performance in the U.S. And, you know, obviously, this reporting period for the S&P is very important because it's showing you exactly how the broader economy is going. In terms of, you know, talking about crystal balls, it's really not the crystal ball. Next, in 6 months' time or in 12 months' time, that's when you wanna know, you know, the performance of the S&P over that, you know, the future performance, 'cause that's what the market does. It anticipates, you know, what's gonna happen, you know, in the economy. To me, it's really in six months' time, or the next quarterly, not necessarily these quarterly numbers. That'd be very interesting to see where the stress is in the economy and who's not performing. But really, it's the quarter after and the quarter after that. Because I would've thought, now, looking at the Australian economy, you know, it looked like sort of April, May, the consumer discretionary spending really took a hit. Mm. And it's been tough. You know, you speak to the people in the real world, and it's been tough since then. And then the question is probably: When will things improve? Or, you know, will they, you know, will they get a little bit worse? And that's, you know, that's the sort of the million-dollar question. So... And we know the market moves in anticipation of the economy, both ways. You know, it falls before the economy bottoms, and it usually, I think, you know, the guys earlier, you know, Tom and Nick were talking about, you know, when the sort of the worst is there, that's probably when-- that's when you wanna be buying. You know, it's nearly too late to buy. I think Tom was talking about that. Yep. I think they're really valid points. But we should go through, just in terms of time, in terms of our, you know... Let's look at the investment portfolio performance, the Future Generation Australia first. I mean, this chart is obviously 31st of August, 2023. The Future Generation Australia portfolio has always had a bias, as we've just discussed, towards small and mid-sized companies because, you know, we feel that they get real growth in investment terms. Tom and Nick, I mean, they just went through small, mid, and sort of companies, and they've been sold off more heavily than the large cap counterparts. And with the S&P/ASX All Ords outperforming the S&P/ASX Small Ords, by 20.3% in the period of September 2021 to August 2023, which, I think Nick, Tom also mentioned. I mean, the, our investment committee and all our shareholders, I'm sure, are aware that we have two, you know, great investment committees with, you know, the fantastic minds from JANA, Zenith, and Morningstar. And they really believe that this sell-off provides, you know, our boutique active managers with attractive investment opportunities in that sort of small and mid-cap sector. So I think despite this, and when we look at this chart, Future Generation Australia investment portfolio increased 8.8% this year, outperforming both the S&P/ASX All Ords, which rose 7%, and the S&P/ASX Small Ords, which increased 3.5%. Since inception, the investment portfolio has increased 8.8% per annum, outperforming the All Ords by 1.2% and the Small Ords by 3.2% per annum. And this is what we actually... It's the key aim of our portfolio. This outperformance has been achieved with less volatility than the market, as measured by standard deviation. The FGG, FGX volatility since inception, you can see there, 11.8%, and the index of 14.4%. Going on to the chart below, which is Future Generation Global. Until the 31st of August 2023, Future Generation Global investment portfolio increased 16.7%, while the MSCI World Index rose 21%. Nick, I mean, as we've just heard, he spoke about the main contributors to the MSCI World Index, and he talked about that Magnificent Seven. Similar to FGX, the FGG Investment Committee, they selected leading global, global fund managers, and they have a proven ability to outperform the market and their peers over the long term. This has resulted in the investment portfolio having an underweight exposure to mega-cap companies like the Magnificent Seven. The FGG investment portfolio exposure to those seven stocks, and this is a question we've been asked, and this is at December 31, 2022, was approximately 4.2%. The index weight for the Magnificent Seven rose from 11.7 to 16.6 during that six months to June 30, and that contributed to more than 41% of the index's performance during this period. That's really what echoing what Geoff was just saying, and that market rally was very narrow. In terms of what we do with this portfolio, the volatility since inception, 9.7%, compared to the index, which is 10.7. I think that's pretty clear from those charts. I think the next chart is one I really enjoy talking to, and I know Geoff does as well, and that's looking at our half-year results, because we're very pleased we've been able to deliver increased dividends for our shareholders, with FGX declaring increased interim fully franked dividend of AUD 0.0335 per share. And then, if you're looking at the chart there, the annualized interim fully franked dividend yield of 5.8% and grossed up dividend yield of 8.3%. The long-term portfolio performance and the profits reserve, which currently has a dividend coverage of 4.5 years, you can see there. And that really has enabled FGX to pay shareholders a stream of fully franked dividends since inception, which you can see from the graph. Since inception, FGX has paid AUD 0.398 per share in fully franked dividends to shareholders. Now if we turn to Future Generation Global.... FGG declared an interim fully franked dividend of AUD 0.036 per share. The increase in the interim fully franked dividend was possible because of the listed investment company structure and the profits reserve, which is currently 7.3 years of dividend coverage. The annualized interim fully franked dividend yield 6%, and grossed up dividend yield, 8.6%. Since inception, Future Generation Global has paid AUD 0.195 per share in fully franked dividends to shareholders. That briefly covers the investment side of the Future Generation business, and we're very happy to go into more detail. But the other side, we're equally passionate about, and I know that a number of our shareholders are very passionate about it, because I've just been talking to many of them about the donation voting, and where they want their 1% to go, is very much that social impact side. So if you look at this slide, in lieu of management performance fees, you know, we're announcing AUD 10.6 million to our social impact partners this year, and all of them work tirelessly with youth at risk, preventing mental ill health in young Australians. I think this amount is really an incredible, in a year when a lot of not-for-profits have really suffered, especially in terms of their fundraising, inflation, and the rising cost of living, which are impacting all of us. This year's social investment brings our total social investment to AUD 75.9 million, a number I know all of you are incredibly proud of, and we are as well. I think it's important to call out the amount of money in terms of the fees waived. So that's not just... That's basically our fund manager, as it's all of our other pro bono supporters from our lawyers, our governance, our media, et cetera, and that's AUD 131 million fees waived. And that's a net saving benefit to shareholders of AUD 55 million, which that goes to the NTA. So I think also, and one of the questions we've just been asked is, you know, these portfolios can't be replicated at the same cost because of our fund managers and our service providers working pro bono, and it's hard to ax them as well. So we have a lot of shareholder questions coming in, and we also have some that have been sent in. And, Geoff, is there anything you'd like to add before we go to the shareholder questions? I know that we- Well, let's go to the shareholder questions, and then- Okay. If we don't cover, you know, some of the things about how the portfolio is set up and how they've performed, then I can touch on that before we close. Okay, brilliant. So the first question we have is from Leslie Livingston: "What strategy will FGX management use to reduce or, better still, eliminate the share price discount to NTA?" I mean, that's a great question I think Geoff and I are answering on a regular basis. I might go to you, Geoff, to talk about, you know- Yeah ... the wider market, and then maybe we can talk about what we're doing. Yeah. When I talk to any people that have, you know, other fund managers that have just created listed investment companies or anyone who's interested in listed investment company space, I explain that it's very easy to explain in terms of how to get a share price to trade at NTA. It's incredibly difficult to then make that happen. So simply, it's supply, demand. You know, I remember first year economics, you know, they show you the supply/demand chart, and if you can have enough demand, you know, then you move to equilibrium. And that's pretty much what you need to do with the listed investment company. If you look at both FGX and FGG, you know, over time, they've traded at premiums a number of times. And more recently, they've been at a discount. You know, 2019, you know, so it's, you know, before COVID, was when both FGX and FGG were both trading at premiums. And our view is we'll get them back to premiums. In theory, what we're doing is, and how do you do that, is you really tighten up the share register. You know, the people that support what you're doing, you explain clearly what you're doing. The people that support what you're doing, obviously, become, you know, stay as holders. If not, you find more, if there's sellers, you find more buyers. And then slowly, you tighten up the share register, where the selling declines and the share price moves to equilibrium. And that does happen. And, you know, probably in the listed investment company space, the one that took us the longest, this is in, you know, looking, you know, using the, you know, WAM, WAM entities, was WAM Research, where it took us 7 years to get it to NTA. And we did, unfortunately, we did such a good job in terms of tightening the register up, it actually, like a year or two ago, was trading at a 40% premium to NTA, which is as ridiculous as, you know, say FGG trading at an 18% discount at the moment or, or FGX trading at a 13, you know, odd%, discount. So to me, you know, we're totally focused on that. You know, we, we know what needs to be done, and unfortunately, there's no... You know, it, it takes time. That's the, unfortunately, it takes time. So, Caroline, do you want to add anything there or? I mean, I suppose in terms of what we're doing at the moment is, you know, we've significantly increased communication, shareholder engagement. You know, we are just about to do a regional tour to some, you know, various. We're going to the Gold Coast, et cetera. And we're out there talking about them all the time, and I think we also now have distribution, which is something we hadn't had, and that's very much thanks to Wilson Asset Management. So I really think, you know, we're doing the hard yards, and I think, as you said, Geoff, it is really, it's time, and it's challenging markets, and we're gonna narrow the discount. So yeah, I think you've pretty much said everything. Yeah, and eventually, and eventually get them back to a premium where... Without doubt. Now, when you talked about that statistic, so you're talking about both entities make up, it's a little over AUD 1 billion of assets. So investors that invested from the start, if they had invested with the various fund managers, it would have cost, you know, you talked about that AUD 55 million. Yeah, that's 5% of your assets. You know, so that's a big, that's an incredible saving. So you actually could argue that these entities, you know, they belong to trade at a premium. It just, it's just gonna take a bit of time to work through the, you know, the, unfortunately, you know, to get it back to equilibrium. Also, I think remembering the dividends that have been paid out, that, that's really important as well. Mm. The next question we have is from Girish Kumar. I hope I pronounced that correctly. Do you have any products for retirees, pensioners? I mean, obviously, I'm gonna say Future Generation is the most brilliant opportunity for self-managed super funds because people need a stable income. I mean, Geoff, you know, obviously, about listed investment companies, and I think it's a great opportunity if you're in accumulation stage or income phase. I mean, what do you have to that? Because I know that's a question you get asked a lot. Oh, no, I agree with you. I mean, the incredible thing is that you can buy a dollar of assets for, say, AUD 0.85 or AUD 0.82 in one instance and AUD 0.87 in the other. You know, so, you know, if you believe that those discounts they will stay around here, if not, become less. And as you said, you know, there's the profit reserves, so you know that the dividends you know for the next few years is gonna be maintained. You know, then they're quite an attractive product. Yeah. In terms of... like, that's, you know, in terms of my business, that's the bread and butter, you know, for us. Yeah. I mean, we're setting up a leaders trust at the moment. That's where you get in an NTA and get out at NTA. You know, that's just to add to our suite of products, but that really hasn't got any great characteristics for, you know, retirement income. You know, where listed investment companies do. Thank you. The next question we had was from Noel, and it was: What is the MER of FGG and FGX? I mean, for those who don't know what the MER is, the MER refers to the fund's management expense ratio, and, I mean, the MER for the company is, for us, is zero. I mean, it's technically correct because the fund managers, the board, our investment committees, as I mentioned earlier, they all work on a pro bono basis. But we do have some indirect costs, and these are completely unavoidable and they account for 0.1%. And if you include the 1.1% donation, the total indirect cost of the company would be 1.1, and that's actually in our annual reports, and that's under the NTA breakdown. If anybody else would like me to go through that, I'm very happy to do that offline. Question from Steve. Can you provide return and volatility results on share price as well as the portfolio Net Tangible Assets per share? I mean, we can. Yeah. Steve, look, we've got your details. We'll run them, and we'll send them to you. If anyone else wants them, please email in, and we can send them out. Yeah. And we provide the volatility of the underlying portfolio- Yeah 'cause we think this is probably a better reflection of the index. Dan, we have... We have the highest conviction company on a five-year outlook, and I think that Nick has answered that, but I, I will look into that and send you-- and see what we else we have to send you. From Dennis, this is on- Yeah, that was Nick's. Did we ask... We didn't ask Tom that question either, did we? No, we'll ask Tom the question. Yeah, I mean, I, I think after I then stumped him with Qantas, I was like, "Oh, okay." So regarding- To me, ResMed's a fascinating, It's brilliant ... fascinating call. To me, it reminds me a little bit of, you know, when videos came in, and everyone said it's gonna be the end of the cinemas. You know, these businesses, you know, ResMed's got a great business. You know, the fact that this drug is gonna reduce some people's weight doesn't mean... You know, the market tends to overreact when they see those negative expectations. The P/E contracts and ResMed, you know, great business, you know, might have a slight impact, but really, you know, it looks relatively cheap. Thank you. So from Dennis, we have: Regarding recent press commentary on the LIC performance on the ASX, particularly in relation to market discounts, many are deep and intransigent versus the NTA and the future of the LIC structure. He'd really like your perspectives on this because- Yes. -obviously, LIC- Yeah. Over to you, Geoff. Yeah, to me, the people get caught up with, you know, sort of short-term noise where, you know, the first listed investment company was created in the UK, you know, back in 1868, Foreign and Colonial, and, you know, and they've continued to, survive and grow since then. You know, in listed investment companies, I remember back in 2003, 2004, where, I think 30 listed investment companies floated in a very short period of time. And to me, the listed investment company sector is like any market. You know, when there's a lot of demand, then supply turns up. And then once supply turns up, you know, you go from that expansion phase to a contraction phase, and a lot of corporate activity occurs. I mean, we've been involved in that corporate activity at Wilson's, you know, at WAM, and I mean, we've taken over, I think, 10+ listed investment companies, so we've helped shrink the market. We don't want it. We don't want that to occur. But still, you know, there's 100-odd listed investment companies, and they make up, you know, the—they're valued at about AUD 50-odd billion. ETFs, which everyone, you know, thinks are, are the biggest sector, you know, they're, they're bigger, they're three times bigger, like AUD 150 billion. But the whole managed fund sector—ETFs make up about 3%, unlisted investment companies make up about 1%. So there's 96% of the, fund management sector that isn't included in either of those. So to me, it's just a period of, you know, discounts. There'll be a bit of consolidation, opportunities for investors. To me, that's the, that's the Holy Grail of listed investment companies. The fact that they can trade at a discount, and they can trade at a premium. To me, it's nearly unbelievable that you can get access to these managers and, and you're not paying full price, and, you know, and that's what I, that's what I enjoy. So, yeah, so to me, it's just, you know, the, the LIC sector, you know, people might think, "Oh, well, that's the end of the LIC sector." It's never gonna grow like ETFs because ETFs are open-ended, LICs are closed-ended, and there'll always be a LIC sector, and there'll always be benefits of investing in a closed-end structure. Thank you, Geoff. This is a question for Tony: Are there any plans for a special dividend, seeing dividend reserves can currently be measured in years? I mean, obviously, I'm not on the board, but as far as I'm aware, it is a decision of the board. You are. Yeah, well, I mean- Can you explain your approach? Yeah, I mean, we talk about, you know, dividends all the time. The profit reserve is there. In theory, what the plan is, the franking... You might have a profit reserve, and you mightn't have paid any tax on that because it's realized and unrealized profit in the profit reserve. So therefore, you've really got to, you sort of manage the tax payment over time. And so that's when, you know, when we can, you know, pay out... When we pay out the fully franked dividends over time. And, you know, we think it's in shareholders' interest that we give them a reasonable, fully franked dividend. And I, you know, that helps support the share price. You know, I've been around the listed investment company space long enough. I remember Hunter Hall in the old days. They only paid out fully franked dividends when they had franking, and otherwise, they paid no dividends. And unfortunately, it doesn't help, you know, the share price trade at NTA, if not a premium. So to me, providing that growing stream of fully franked dividends or strong, you know, level of fully franked dividends will actually help us trade at NTA, if not a premium, rather than just paying it all out, if we could. And then, the problem is, as I said, if we paid out all the profit reserve, we wouldn't be able to pay a dividend next year unless we made a profit. If the market went down a little bit, we couldn't do that. And the odds are, it wouldn't be... You know, we don't have the franking, so if we paid it out, there would be only partially franked, and which is a waste, from a you know, maximizing your returns as investors, at most tax effectively. So I think we've got time for two more questions. The others that we have, I will call afterwards. We have a question for Brian. I'll read both of them, and then we can perhaps answer them both together. Where will the share price... When will the share price return to equal NTA? And the other question from James is: FGG is the manager group, is relatively settled. A wave of change happened in the last year. Would you care to talk about that? Okay, we just talked about FG- FGG. Yeah. And it would really... The look, as Caroline said in, you know, early on, you know, you've got investment committees that work pro bono on both those, and we've got the smartest guys in the, in Australia on these investment committees. And they live or die by, you know, live or die by their investment decisions, you know, in, in their main business, and they're doing all this pro bono. So, on FGG, you know, the... When the, you know, when COVID and the, you know, there was a, there was a bit... There was a changes, you know, personnel changes. You know, the, the portfolio positioning, we wanted to change. We wanted to make a little bit more defensive. And that's why you'll see, you know, both FG and FGG's underperformed more recently, and that's—it's had less volatility, and that's because it's got a more defensive portfolio. So even though the market's been very strong globally, in Australian dollar terms, it's a lot more defensive than the portfolio we had historically. And a number of the managers, you know, for personnel changes reasons, and performance reasons, were taken out of, you know, were redeemed from. And then we added other managers that we believe complemented the other managers we're managing money for. And, you know, so that's why, what, you know, what happened there. And what was the other part of the question, Caroline? When will the share price return to equal NTA? Yeah. I mean, I think we have answered that. Yeah, that's- Yeah. That, that is the tricky one, you know. Yeah. I would say it, it'll just take time. FGG being at a bigger discount, you know, what you tend to find, yeah, at an 18-odd% discount, people will buy it at 18% discount. And some of the ones that buying at an 18% discount are, are gonna hold it till it trades at NTA, if not a premium. Some of the people buying at 18% discount are buying it at 18% discount, and when it's trading at a 14% discount, they're gonna sell because they're just trying to make that dis- the discount up. So you get a bit of a rotation of, of, money, so it takes you a little bit longer to, to, you know, close these discounts. Where FGX, now, at a 13-odd% discount, you know, then, you know, people buying at a 13% discount, some will sell it at a 9% discount, so you'll get a little bit of rotation of. You just don't get everyone buying at that discount and holding it till it trades at a NTA, if not a premium. So, I would say, yeah, it will take a period of time. You know, it could take 12 months. You know, it could take longer, but the beautiful thing is we've got the foundations there. We've got great managers that have performed probably over this next 12-month period. You know, there's always an argument whether you should have an active manager or a passive manager. To me, if anyone's very interested in that, there's a book called The Intelligent Fund Investor by a guy, Joe Wiggins. He's a U.K. guy. I mean, he basically says, his conclusion, save you reading the whole book, is, say, have half your money in active managers and half your money in passive. Now, you'd say that's a cop-out, but he's done all the analysis. And there are times where the active managers do well, and there's times where the passive managers do well. Unfortunately, we don't know when they are, and we don't know what the signals are for these, these to occur. My guess is the next 12 months is gonna be a time for active managers, because, you know, it's, it's, it's a difficult period. So, you know, we've had the, you know, we talk about the Magnificent Seven. In the last period, you'd be better in the US just having, you know, exposure to the Magnificent Seven, which Caroline said gave you 41% of the performance of the index. You know, or being in the index fund. You know, going forward, that won't, that, that's not always the case. So, to me, it's, you know, we've got, you know, we've got all the right ingredients for a great performance. Thank you very much. And you're getting, and you're getting it cheaply. Thank you very much, Geoff. I think that's a very good note to end on. Thank you very much to our shareholders that are listening. As always, any questions, please put them through or email the info box, and we'll get back to you as soon as we possibly can. Thank you. Thanks, Caroline. Have a good rest of the day.