FUTURE GENERATION AUSTRALIA LIMITED — Net Asset Value 2017

Aug 13, 2017

Investment Update & Net Tangible Assets Report

As at 31 July 2017

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Net Tangible Assets (NTA) figures

Future Generation Investment Company Limited

Net Tangible Assets (NTA) figures
NTA before tax 115.40c
NTA after tax and before tax on unrealised gains 114.35c
NTA after tax 114.70c

Company Limited
ASX Code Established	FGX Sept 2014
Gross assets	$407.7m
Market cap	$381.1m
Share price	$1.09
Net assets per share (before tax)	$1.154
Shares on issue	349,663,801
Management fees	0.0%
Performance fees	0.0%
Annual donation (% of NTA) Annualised fully franked dividends (FY2017) Fully franked dividend yield	1.0% 4.2c 3.9%

Portfolio

In July, the FGX investment portfolio closed flat while the S&P/ASX All Ordinaries Accumulation index increased 0.2%.

Since inception, the investment portfolio has increased 8.5% per annum, outperforming the benchmark by 3.1%. The investment portfolio's outperformance has been achieved with less volatility as measured by standard deviation, 7.0% versus the market’s 12.0%.

The spread between the three broad equities is 43.3% long equities, 36.6% absolute bias, 14.3% market neutral and 5.8% cash.

Investment objectives

• Provide a rising stream of fully franked dividends

Fund manager Investment Strategy	% of portfolio 10.9% 6.1% 4.8% 10.3% 9.0% 8.7% 7.5% 6.9% 5.9% 5.1% 0.8% 5.6% 3.1% 2.5% 5.2% 4.3% 3.4% 2.9% 2.4% 2.4% 2.1% 1.8% 1.7% 1.6% 1.1% 0.5% 5.8% • Provide a rising strea franked dividends • Achieve capital growth • Preserve shareholder Company overview Future Generation Invest Company Limited gives i opportunity to gain unpre access to a group of pro Australian fund manager investment vehicle and a Australian charities, with children and youth at risk Chairman Jonathan Trollip Founder and Director Geoff Wilson Directors David Leeton David Paradice Gabriel Radzyminski Kate Thorley Scott Malcolm Investment Committee Bruce Tomlinson David Smythe Gabriel Radzyminski Geoff Wilson Matthew Kidman Chief Executive Officer Louise Walsh
Large/Mid Cap Funds (split out below) Paradice Investment Paradice Mid Cap Fund – B Class Long equities Paradice Large Cap Fund Long equities
Bennelong Australian Equities Partners Bennelong Australian Equities Fund Long equities
Regal Funds Management Regal Australian Long Short Equity Fund Absolute bias
Wilson Asset Management Wilson Asset Management Equity Fund Absolute bias
Watermark Funds Management Watermark Market Neutral Trust Market neutral
Tribeca Investment Partners Tribeca Alpha Plus Fund Absolute bias
Eley Griffiths Group Small/Emerging Companies Funds (split out below) Eley Griffiths Group Small Companies Fund Long equities Eley Griffiths Group Emerging Companies Fund Long equities
L1 Capital Long short/Aus Equities Funds (split out below) L1 Capital Long Short Fund – Retail Class Absolute bias L1 Capital Australian Equities Fund Long equities
Cooper Investors Cooper Investors Australian Equities Fund Long equities
Sandon Capital Sandon Capital Activist Fund Absolute bias
Bennelong Long Short Equity Management Bennelong Long Short Equity Fund Market neutral
ARCO Investment Management Optimal Australia Absolute Trust Market neutral
CBG Asset Management CBG Asset Australian Equities Fund Long equities
Vinva Investment Management Limited Vinva Australian Equities Fund Long equities
Discovery Asset Management Discovery Australian Small Companies Fund Long equities
LHC Capital LHC Capital Australia High Conviction Fund Absolute bias
Centennial Asset Management The Level 18 Fund Absolute bias
Smallco Investment Manager Smallco Broadcap Fund Long equities
Lanyon Asset Management Lanyon Australian Value Fund Absolute bias
Qato Capital Qato Capital Market Neutral L/S Fund Market neutral
Cash and Term Deposits

• Achieve capital growth

• Preserve shareholder capital

Future Generation Investment Company Limited gives investors the opportunity to gain unprecedented access to a group of prominent Australian fund managers in a single investment vehicle and also support Australian charities, with a focus on children and youth at risk.

Company Secretary Mark Licciardo

Level 11, 139 Macquarie Street, Sydney NSW 2000 I GPO Box 4658 Sydney NSW 2001 I ABN: 97 063 935 553 Phone 02 9247 9202 I Fax 02 9247 6855 I info@futuregeninvest.com.au I www.futuregeninvest.com.au

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Investment Update & Net Tangible Assets Report

As at 31 July 2017

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Investment strategy allocation (% of assets)

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Cash
5.8%
Long equities
Absolute bias 43.3%
36.6%
Long equities
Market neutral
Absolute bias
Cash
Market neutral
14.3%
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Long equities – investing in a portfolio of equities based on the expectation that the underlying equities will increase in value within a certain time horizon. Each equity represents an ownership claim in an underlying company which is generally listed on a public stock exchange. Market neutral – an investment strategy that generally involves the simultaneous purchase and sale of equities, to generate returns that are not linked to the performance of underlying equity markets.

Absolute bias – an investment strategy that seeks to generate returns, irrespective of the performance of traditional asset classes. These strategies use innovative investment techniques (including but not limited to short selling and leveraging) to profit from rising and falling markets, providing portfolio protection in the event an equity market experiences a significant fall.

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Fund Managers
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Level 11, 139 Macquarie Street, Sydney NSW 2000 I GPO Box 4658 Sydney NSW 2001 I ABN: 97 063 935 553 Phone 02 9247 9202 I Fax 02 9247 6855 I info@futuregeninvest.com.au I www.futuregeninvest.com.au

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As at 31 July 2017

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Charities

Service Providers

Fund manager in focus: Paradice Investment Management

Paradice Investment Management is a privately owned Australian boutique funds management business established in 1999.

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Our investment style

We adopt a long term “bottom–up” approach to investment. This involves assessing how a company will perform over a given period. If its potential performance appears strong, we then assess the outlook for its industry and finally the overall economy.

We believe that equity markets are inefficient and therefore offer excellent investment opportunities. The inefficiencies arise due to excesses in investor emotion, a focus on the short term and consistent focus on one of the least important aspects of a company’s financial health – the market’s insistence upon focusing on the profit and loss statement, which can be easily manipulated, as opposed to the real measure of a company’s health, its underlying cashflow.

In our view, one of the most important aspects of investing is objectivity. It is possible to benefit from changes in market inefficiencies by focusing on logical, ordered and objective investment decisions based on known facts.

We aim to buy shares which we believe are underpriced and expect to grow at rates greater than the market. Our strategy is to favour well-managed, good value companies that have significant growth opportunities through their comparative advantage.

Level 11, 139 Macquarie Street, Sydney NSW 2000 I GPO Box 4658 Sydney NSW 2001 I ABN: 97 063 935 553 Phone 02 9247 9202 I Fax 02 9247 6855 I info@futuregeninvest.com.au I www.futuregeninvest.com.au

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As at 31 July 2017

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This comparative advantage can be via a combination of a better product or service, a more efficient organisational model, a favourable niche or a commanding leadership position within their industry. In our view, a good business requires good products and services and good execution.

The key to identifying these investment opportunities lies in our extensive insight and analysis of companies and the industries to which they belong. We achieve this through an intense company visitation program and experienced investment professionals using proven valuation techniques and models.

Market outlook

The August reporting season is fascinating as many companies have lofty multiple expectations to live up to. Reactions can be aggressive and this will provide opportunities. Whilst we have a bottom up focus, the larger top-down down macro factors will continue to play a big role in the direction of markets.

China will continue to be a major focus as it heads towards the year end Party Congress. China has shown a serious intent with supply side reform initiatives to stamp out excess and dirty industrial activities, in particular with coal and steel production. This has been supportive for the markets. China has also shown a real intent on managing capital flows, with some repercussions for our housing market. Other areas of importance from an Australian perspective include flourishing inbound tourism.

In Australia, the economy continues to appear in reasonable shape. Exports remain strong following commodity price rebounds, employment has held up and housing has not collapsed. Our medium term view is more cautious. With the exception of infrastructure spending, we worry about the sources of economic growth. The consumer has held up remarkably well given benign wage inflation, primarily due to low interest rates and the property wealth effect. With banks squeezing rates and tightening lending practices and power prices rocketing, we struggle to see where the tailwinds for consumer spending are going forward.

Performance as at 31 July 2017

Performance as at 31 July 2017
Paradice Mid Cap Fund Portfolio Composite Index Benchmark Outperformance	3 Year (p.a.) 5 Year (p.a.) Since inception (p.a.) 14.0% 16.2% 9.5% 10.9% 12.8% 4.7%
	3.1% 3.4% 4.8%

Composite Index: 70%: S&P/ASX Mid Cap 50 Accumulation Index and 30% S&P/ASX Small Ordinaries Accumulation Index. Performance is shown net of fees, and fund inception is 26 September 2006.

For more information on Paradice Investment Management, please visit: www.paradice.com.au .

Charity in focus: Youth Off the Streets

About Youth Off the Streets

Youth Off The Streets is a non-denominational organisation offering a full continuum of care through a range of more than 35 services. Since 1991, we have assisted youth aged 12-25 facing challenges such as homelessness, mental illness, abuse, poverty and isolation. We help vulnerable young people turn their lives around through education and rehabilitation services.

Youth Off the Streets and FGX

Youth Off The Streets is a proud partner of FGX, who are supporting the Aboriginal Cultural Connections program, which provides one-on-one Aboriginal mentoring, supported service referrals, individual advocacy and participation in traditional cultural learning programs that aim to strengthen cultural identity, pride and community connections. The

Level 11, 139 Macquarie Street, Sydney NSW 2000 I GPO Box 4658 Sydney NSW 2001 I ABN: 97 063 935 553 Phone 02 9247 9202 I Fax 02 9247 6855 I info@futuregeninvest.com.au I www.futuregeninvest.com.au

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Investment Update & Net Tangible Assets Report

As at 31 July 2017

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Aboriginal Connections program has recently launched an eight week music program in conjunction with the renowned performance troop Koomurri, working with eight young people that have been referred by the Family Court.

The group will reconnect with their traditional culture as participants make, and learn to play, their own didgeridoo. The program has connected over 150 youth to their culture since the program began. Through engaging the youth in cultural programs, with the support of mentoring and court support, we have seen a recidivism rate of just 29% among the group, as opposed to a rate of 79% among the local community of juvenile offenders. Cultural Connections utilises traditional cultural program in conjunction with one-on-one mentoring and practical support to help vulnerable Aboriginal youth in marginalised communities across NSW.

Q&A with Father Chris Riley, Founder and CEO

What is your driving motivation in your current role?

I started Youth Off The Streets in 1991 because I saw a gap in services for young homeless people. I decided to go directly to them and hand out food in the city. My first motivation has always been to help young people in need and that continues to be my driving motivation. It’s the reason we now offer over 35 services to young people that includes everything from a crisis refuge to a registered training organisation.

What is the most challenging aspect of your role?

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The most challenging aspect of my role is not being on the front line as much as I would like to be. As I’ve said above, my primary motivation is the young people that are most in need. Running an organisation with hundreds of employees and over 35 services takes up a lot of my time and I’m also constantly trying to learn. That means less time in the classroom, less time on the streets and less time with the young people we help.

What does it mean to Youth Off the Streets to have the support of FGX?

The support provided by FGX will ensure we can address one of the key issues facing one of the most marginalised communities in Australia. The Aboriginal and Torres Strait Islander population still suffer from a lower life expectancy gap, lower rates of literacy and general health and are over-represented in the justice system when compared to the non-indigenous population. With the backing of FGX, we will have the ability to effect meaningful change in these communities and restore a sense of hope.

For more information about Youth Off the Streets, visit www.youthoffthestreets.com.au .

Save the date for our November 2017 Shareholder Presentations

We look forward to seeing you at our Shareholder Presentations in November.

Investor conference call

Shareholders have the opportunity to take part in an investor conference call. FGX and FGG Founder and Director Geoff Wilson and CEO Louise Walsh will be joined by FGX fund manager Matthew Kidman from Centennial Asset Management and FGG fund manager Rob Luciano from VGI Partners to provide their views on the market and top stock picks.

Date: Tuesday 5 September 2017 Time: 11.00am – 12.00pm (AEST)

To register, please visit futuregenerationinvestorcall.eventbrite.com.au .

Level 11, 139 Macquarie Street, Sydney NSW 2000 I GPO Box 4658 Sydney NSW 2001 I ABN: 97 063 935 553 Phone 02 9247 9202 I Fax 02 9247 6855 I info@futuregeninvest.com.au I www.futuregeninvest.com.au

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