Page 3 - Private Wealth Specialist Growth Moderate

In contrast, leading economic indicators continued to flash red pointing to looming recessions, with Australia joining the party in the quarter as the
government bond yield curve finally inverted (ie. shorter-dated bond yields higher than longer-dated yields). Retail sales data continued to weaken.
Manufacturing production and services remained in contractionary territory and weakened further. Consumer and business confidence & sentiment
remain well below their covid peaks, whilst continuing to weaken in some countries. Bad debts are beginning to rise but off a very a low base.
Economic growth continues to contract globally with Germany and NZ entering technical recessions in the quarter, and others expected to follow over
the next 6-9 months.

Around the grounds, the US finally patched over their US debt ceiling debacle with a last minute and very odd agreement to extend the ceiling until
after the 2024 elections with no upper limit. US banking system stress seemed to stabilise during the quarter, but regional banks are not out of the
woods just yet.

China growth continued to disappoint with weak export data, elevated levels of youth unemployment, soft manufacturing data, with consumers and
domestic investors remaining overly cautious. Foreign investors grew more impatient with the China reopening efforts, wanting to see significantly
more stimulus from Chinese authorities with only minor stimulus provided in the quarter.

Europe remained under pressure from a cost-of-living perspective as energy and food costs remained high given the ongoing impacts of the Russia/
Ukraine conflict and central banks obliged on the inflation fighting front with more rate rises. China’s slow reopening also heavily impacted Europe
given demand and export/import headwinds.

Japan performed well in the quarter with the country finally having what looks to be a more sustainable inflation and economic growth outlook.

Closer to home, we saw a surprise Federal Budget surplus, higher than expected increase in award and minimum wages, and Australian residential
property prices moving higher yet again as “fear of missing out” crept back in following the RBA’s April rate pause and the misguided talk early in the
quarter that the rate hiking cycle may be done.

Geopolitical risks rose as China and the West continued with trade and economic sanctions / restrictions whilst Taiwan, semiconductors (chips), and
military exercises in the South China sea risked further escalation in tensions. The Russia / Ukraine conflict continued with still no end in sight, whilst
social unrest in France worsened with violent street protests.

US equities were the highlight in the quarter, as technology stocks performed exceptionally well with a very narrow seven stocks doing all the heavy
lifting. This came after US March quarter company reporting season was better than expected and US headline inflation fell faster than expected
providing a boost that the US central bank may be close done on the rate hiking front. In contrast, bonds struggled in the quarter as yields rose
strongly (prices fell) with investors turning their attention to a “higher for longer” mantra on rates.

Portfolio update
The Portfolio return for the June quarter was strong in the absolute sense, but the return fell a little short of the benchmark given the very narrow rally
from a handful of US technology names and bonds coming under pressure again as yields rose strongly (prices down).

Drivers of positive relative performance included our selection within both large and small Australian equities and our positioning and investment
selection within bonds. In contrast, drivers of negative relative performance included positioning within global equities and our positioning in
infrastructure over property.

On the asset allocation side, our overweight to global equities versus Australian equities assisted. Our positioning in infrastructure over property also
detracted as property outperformed infrastructure for the first time in a while, assisted by falling US inflation and investors finding some value in
property following a tough 12-18 months. Our overweight to bonds versus cash also detracted from returns as bond yields rose (prices fell) whilst cash
rates continued to increase. However, our positioning to lower interest rate duration did provide some downside protection in bonds.

On the investment selection side, Australian equity stock selection contributed to relative returns as a handful of stocks had a very strong quarter
whilst Vanguard outperformed the small company benchmark. Our selection within global equities held its own, with US and quality-biased equities
performing well, whilst our exposure to Europe and Asia detracted. Magellan Core Infrastructure provided some downside protection as the broader
infrastructure market fell. Our selection within bonds added some value as hybrid securities held up well in the quarter, as did Ardea, versus
government bonds.

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

Top 3:
1. James Hardie Industries
2. NextDC
3. Downer EDI
Bottom 3:

1. Treasury Wine Estates
2. South32