REPORT TO THE UNIT HOLDERS IN THE ASPIRING FUND FOR THE MONTH AUGUST 2021

All returns are in NZ$ Returns Return volatility Since Since August 2021 3 months 12 months inception pai inception pai

Aspiring Fund 1.54% 2.79% 23.35% 11.60% 9.25%

New Zealand Equitiesii 4.96% 7.29% 10.73% 9.21% 11.76%

Australian Equitiesiii 1.16% 3.85% 22.42% 7.00% 16.35%

World Equitiesiv 1.63% 9.51% 24.61% 7.66% 12.72%

I February 2006, iiNZX50 Gross, iii ASX All Ordinaries Accumulated, iv MSCI World Equities Total Return

Unit Price $5.1719

Asset Allocation (approximately):

New Zealand Equities 30.6% Australian Equities 14.3% International Equities 36.2% Bonds 2.1% Commodities 0.8% Total Cash 16.0% Short Equities -2.3%

Net Asset Value of the Fund (approximately): $528.6m

The fund's main direct currency exposures at month end were - NZD 47%, AUD 16%, USD 27%

Performance

Aspiring Fund returns include all charges but are before tax expense, and exclude New Zealand tax credits. The returns of market indices shown above include capital returns and cash distributions, but reflect no deductions for trading and transaction costs, applicable tax, and other expenses. All return data is shown in NZD.

The Fund returned 1.54% in August.

The NZ50 Index cracked positive territory for the year, with a 5% gain in August. Despite strong recent performance, the NZ equities benchmark has been a major under-performer year to date when compared to offshore equities markets. A key headwind for the highly bond yield sensitive NZ market has been the yield on the NZ 10yr bond increasing from 1.0% to 1.8%.

The Fund’s NZ Equities Portfolio is up ~14% year to date, benefitting primarily from index unaware positions working well. In August, The Fund’s NZ stocks were up 3.9%, on a lack of company specifics, and broadly just rising with the overall tide of the market.

While the August reporting season was very solid, guidance and consensus forecast revisions for FY22 were notably muted. Considering starting valuations, we saw very little in the NZ reporting season to explain strong August share price performance.

A few alarm bells rang for us during the month with a number of surprising share price moves as NZ entered COVID-Delta lockdown.

Fund holding, Summerset, was up 17% to $15. We reopened an investment position in the middle of last year below $6 when we saw misguided concerns over their debt levels and the housing market. While NZ house prices have risen strongly since, this is largely reflected in Summerset’s June-21 NTA of $7.07 (vs Jun- 20 $4.91). The company reported a good result in August. However, considering the inadequate capacity of the NZ health system, the onset of the delta outbreak in August was a clear (and ignored) risk for the aged- care sector.

If you were purely a share price watcher, you wouldn’t have recognised the COVID lockdown from the performance of NZ tourism/leisure stocks. Since the lock-down announcement, shares in (+1.0%), (+1.7%), Millennium & Copthorne Hotels (+2.1%), City (+1.9%), and Tourism Holdings (+0.4%) all ended the month higher.

No doubt, investors searching for yield could have been compelled by the offer of NZ equities as the RBNZ deferred a rate rise. However, in the commentary they made it crystal clear this was purely a temporary decision due to the lockdown. Inflationary pressures and how this translates to higher NZ long bond yields is a risk we are very conscious of.

The key contributors in the NZ portfolio were (+14.6%), EBOS (+15.9%) and Precinct Properties (+6.9%), with no material headwinds. Mainfreight's rise was supported by the announcement it would be included in the FTSE All World Index in September.

EBOS delivered a strong result with 14% earnings growth, and a record return on capital employed of 18%. While EBOS did not provide guidance due to COVID uncertainty, it has plenty of room for acquisitive growth with leverage falling below 1x net debt to EBITDA, in addition to its ability to consistently generate organic growth.

Precinct’s result met expectations with solid earnings and dividend growth, which management expect to continue into 2022. Following the internalisation of the management company, Precinct showed their intention to explore new capital light ventures including build-to-sell residential CBD development and funds management. We remain attracted to Precinct’s premium office portfolio, with long weighted average lease term, a strong management team and a stable dividend yield.

We had a reasonable win in (+19%) after it received a $3.78 non-binding, indicative acquisition proposal from Australian oil company Ampol, with the two companies entering four weeks of exclusive talks. We were pleased to see some reward for what has been a serial underperformer over the past few years. There is some water to go under the bridge for the deal to conclude, including the potential requirement that Ampol sell its holding of Gull to receive Commerce Commission clearance.

The Australian Equities market was up 2.6% in local currency, continuing an extraordinary sequence of 11 positive months in a row, something which has not been achieved for at least 30 years.

The Fund’s Australian Portfolio was up a very strong 5.3%, but our unhedged position reduced this to 3.8% in NZ$.

With most companies in Australia having June 30 balance dates, August was full on with company earnings announcements. It is often a white-knuckle ride for investors, however this year, expectations were mostly met as many had provided recently updated guidance in response to COVID influences.

Our largest position, Cleanaway (+4.3%), reported a 4% increase in earnings (EBITDA) to $535m which was largely as expected, but was cautious on the outlook due to the ongoing lockdown's impact on landfill volumes, particularly in NSW. We remain attracted to the long-term growth prospects of recycling and waste to energy projects and the company remains one of our highest conviction positions.

Australian Vintage (+9%), a medium sized South Australian wine company has been one of our best stocks and it confirmed its growth profile with a very good result and a solid outlook. Interestingly, it is very positive on the growth in sales of its zero and low alcohol range which is growing fast off a low base. Trading at around 10 times 2022 earnings, the investment proposition looks very sensible to us.

The Australian market continues to reward high growth companies, resulting in eye watering valuations. Consider Domino's Pizza. A great success story as it continues its rapid expansion in Australasia and further abroad, but who would have thought that a company specialising in $4 delivered pizzas would trade on ~60x future earnings, and even more tellingly, be capitalised at $13.4b with sales of $2.2b! The stock was up 35% in August on a small earnings beat, and 94% in the last 12 months. Unfortunately, this happened without us benefiting but it is a good example of the love affair with growth stocks, which in our view carry’s very high levels of risk should sentiment change.

A strong international equities results season and more dovish words from Fed Chairman, J Powell, trumped investors’ concerns about increased global spread of the delta variant, ongoing supply chain disruptions, widespread shortages of skilled labour, rising input costs and signs of a slowing Chinese economy.

International equity markets climbed higher for the month with the MSCI World index gaining +2.5% in US$ terms in August, resulting in a year-to-date return of 17.9%. The star performer was once again the US market with the S&P 500 index climbing 3% in US$ terms contributing to an impressive 21.6% gain for the first 8 months of the year.

The performance of the Fund’s International Portfolio was less impressive with a flat return, failing to keep up with the blistering pace of the major indices. Despite a late run in our US technology stocks, led by Google (+7.6%), Amazon (+4.3%) and Microsoft (+6%), performance was held back by the underperformance of the Value/Cyclical component of the portfolio, including our two largest positions, Freeport McMoRan (-4.5%) and Volkswagen (-2%). Volkswagen, along with the rest of the OEM auto manufacturers, continues to be impacted by ongoing semi-conductor shortages which are likely to persist into next year.

Our two credit card payment system providers (Mastercard (-10.3%) and Visa (-7%)) also detracted from performance as a number of totemic deals in the “buy-now, pay later” fintech sector raised some concerns about possible disruption to the incumbent companies' business models, concerns which we believe to be largely overdone.

The “transitory inflation” narrative seems to be holding sway in both bond and equity markets for the time being, but our concern is that the arguments (and data) remain quite finely balanced, and the narrative could quite easily switch to a less benign outlook for inflation and interest rates. To borrow a well-worn phrase of the pandemic, an abundance of caution is warranted, particularly considering the extraordinarily strong returns equity investors have enjoyed in the past 15 months.

New appointment:

We are very pleased to announce David Lane will be joining the team at Aspiring Asset Management Ltd in October as a Director, Shareholder, and Investor in the Fund.

David has been involved in Financial markets since 1992 in London, New York, and New Zealand. Prior to joining Aspiring, he was Head of Research, and subsequently Head of Equities for UBS. David holds an Honours Degree from the University of Greenwich in London, majoring in Econometrics. David also held the role of Deputy Chairperson of the New Zealand Markets Disciplinary Tribunal.

We are very pleased to welcome David to the investment team at Aspiring and look forward to his contribution in the coming months and years.

Top 10 Holdings

Infratil 4.0% Freeport McMoRan 3.9% Volkswagen 3.8% Google 3.1% Amazon 2.8% Contact 2.4% Spark 2.2% Precinct Properties 2.0% ABB 2.0% Mainfreight 1.8%

If you have any questions or feedback in relation to the newsletter, please email the team.

Disclaimer : The information contained in this newsletter reflects the views and opinions of the issuer of the Aspiring Fund, Aspiring Asset Management Limited. The content of this newsletter is not intended as a substitute for specific professional advice on investments, financial planning or any other matter, and does not take into account any particular investor’s objectives, financial situation or needs. Investors should seek the advice of an authorised financial adviser before making any investment decisions. Although the information provided in the newsletter is, to the best of our knowledge and belief correct, Aspiring Asset Management, its directors, employees and related parties accept no liability or responsibility for any loss, damage, claim or expense suffered or incurred by any party as a result of reliance on the information provided and opinions expressed in this newsletter, except as required by law. Please also note that past performance is not necessarily an indication of future returns. For further information please read/request a copy of the Product Disclosure Statement for the Aspiring Fund (available at www.aaml.co.nz) or contact Aspiring Asset Management.