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economy faced increasing headwinds, already reeling from a property crash, with a continuation of COVID-zero policies significantly hampering
economic growth with rising unemployment falling industrial production, and not enough government stimulus to right the ship. We did see signs in
the quarter of stimulus from both the government and the central, though relatively minor at this stage given the significance of the issued at hand,
whilst we also saw a significant relaxation of COVID policies in Hong Kong and Macau.

Geopolitically, tensions between China and the USA soared again regarding Taiwan’s sovereignty as the 3rd most powerful US government official flew
into Taiwan as a show of both support and strength, not helping already heightened tensions regarding technology security and global semi-conductor
supply. Chinese and Indian buying of Russian oil and gas also put these countries in the crosshairs of the allies, with both countries taking advantage
of significantly reduced prices and constrained global supply whilst touting the need for their own energy security.

The US economy moved into bi-polar territory in the quarter with current data remaining relatively strong whilst leading indicators turned more and
more negative, putting the central bank between a rock and hard place. This meant an increasing risk of over-shooting, and hence more painful
recession, versus a hopeful soft-landing. The central bank made clear in the quarter that whilst inflation remained high, they would need to continue
hiking rates with added emphasis and rhetoric around higher rates “for longer”. This took the wind out of any hope investors had regarding a pause
and/or a pivot back to policy loosening. However, investors continued to try and read the tea leaves which put them front and centre of the central
bank’s ire multiple times during the quarter.

The US labour market remained strong, and whilst headline inflation started to abate given falling commodity and food prices, core inflation widened
much to the chagrin of the central bank and President Biden’s administration, particularly leading into the Mid-Term elections where it’s looking
increasingly likely that the US will move back to policy stagnation if Democrats lose power in the House. The Biden administration’s election policy
promises didn’t help the inflation dynamic, with fiscal expansion making the central bank’s job even harder. The rapid pace of rate increases versus the
rest of the world saw the US dollar surge, putting pressure externally (i.e. import prices) whilst impacting US company revenues and earnings,
particularly multi-national companies. More to come on this front in the period ahead.

Closer to home, we were once again reminded of our lucky country status, which still holds given the abundance of natural resources under our feet
and our physical proximity (or lack thereof) to the rest of the world. This has meant that we’re approximately 6-8 months behind other parts of the
world from an economic perspective but assisted by a commodities floor and a natural benefit in the falling of the Aussie dollar which makes our
exports that much more competitive. Mixed data was also a feature of the Australian economy in the quarter, with rising business confidence, weak
consumer confidence, and retail sales which increased at a slower pace but remained very healthy versus pre-COVID levels.

Like the USA, our labour market remained strong, with household and corporate balance sheets in excellent shape. However, labour shortages started
to hit home, and property market weakness from the peak has begun, but has yet to feel the full brunt of the 2.50% of rate increases we’ve seen in a
short period of time. Inflation continued to push higher in the quarter forcing the central bank’s hand on outsized rate hikes, whilst the new Albanese
government pushed ahead with their Jobs Summit and climate agenda.

Portfolio update
Portfolio returns for the September quarter were an improvement on the previous quarter but were still negative. The main detractors were
investment selection within global equities and the allocation to both property and infrastructure. The main contributors were investment selection
within Australian equities and bonds, whilst being unhedged from a currency perspective also assisted returns given the large fall in the Australian
dollar.

On absolute basis, the best and worst performing investments were as follows:

Top 3:
• T. Rowe Price Global Equity
• Solaris Core Australian Equity
• Flinders Emerging Companies

Bottom 3:• MFG Core Infrastructure
• Martin Currie Emerging Markets
• Western Asset Global Bond
Portfolio Changes
Within the Bond portion of the portfolio, we lifted the exposure to government bonds (i.e. duration) given rising recession risks and given the
increased yield now on offer following a back-up in yields. A policy misstep (i.e. overshoot) by central bankers is increasingly likely as they hike rates in
larger increments at consecutive meetings without waiting to see the impacts of these rate rises.

In addition, market pricing for Australian and US rates currently looks more favourable to Australia given the RBA is highly unlikely to shift rates to the
levels market pricing is currently expecting. As such, we also increased the exposure to Australian bonds within the portfolio.

This resulted in an increase to Western Asset Australian Bond and a reduction in Western Asset Global Bond, Franklin Australian Absolute Return
Bond, Brandywine Global Income Optimiser, and Ardea Real Outcome.

Market Outlook
Given the above, the outlook clearly remains mixed with risks to the downside in the very short term, but with increasing risks to the upside over the
medium term. Not all downturns or recessions are created equal and worth noting that a recession and the GFC are not the same thing. We need to