Alternative Investment Trust Reports 2.1% NTA Growth in June 2026 Amid USD Fund Gains and FX Hedging Expansion

WSS Master Fund Drives Monthly Performance and Portfolio Composition

The WSS Master Fund, which represents AIQ's largest holding at AUD 54.2 million or approximately 60% of total assets, generated the primary source of positive returns during June 2026. The fund increased 2.54% in USD terms, directly supporting the trust's monthly NTA growth to AUD 1.5212 per unit. This performance underscores the significance of the lending fund strategy within AIQ's broader portfolio construction, which emphasises exposure to illiquid assets acquired at discounts to their estimated recovery value.

Beyond the WSS Master Fund, AIQ maintains diversified exposure across secondary market funds, primary market funds, and direct assets. The secondary market funds portfolio, valued at AUD 28.3 million on an Adjusted NTA basis, includes the Warana 2023 Fund (AUD 11.7 million), Warana 2021 Fund (AUD 9.7 million), Warana 2019 Fund (AUD 4.4 million), and King Street Special Investments (AUD 2.4 million). Primary market funds total AUD 2.9 million, comprising the King Street Real Estate Fund and legacy AIQ allocations. Direct assets, including the Alternative Liquidity Fund listed on the London Stock Exchange, net foreign exchange hedging value, and net cash equivalents, account for AUD 5.4 million of the portfolio.

Geographic Diversification and North America Concentration Strategy

AIQ's portfolio maintains substantial exposure to North American investments, representing 67% of the trust's geographic allocation on a look-through basis. This concentration reflects Warana Capital's investment thesis favouring developed market absolute return funds, particularly those operating in the United States and Canada. The remaining portfolio allocation includes Europe at 22%, emerging markets at 9%, and other developed markets at less than 1%, with net cash and hedging positions comprising an additional 2% of the portfolio structure.

The geographic breakdown is estimated by Warana Capital based on available information and remains indicative in nature, as the underlying funds held by AIQ operate across multiple markets and may rebalance their own exposures independently. This diversification approach aligns with AIQ's stated investment objective to generate attractive pre-tax risk-adjusted absolute returns over the medium to long term while maintaining a focus on capital preservation. The trust's exposure to illiquid fund interests in secondary market transactions typically requires extended holding periods, making geographic diversification a relevant risk management mechanism.

Currency Hedging Program Expansion Reflects USD Exposure Management

In early June 2026, Alternative Investment Trust entered into an additional foreign exchange hedge program designed to mitigate volatility in the AUD/USD exchange rate. This expansion brought the total USD hedging position to approximately AUD 71 million when combined with existing hedges, positioning the trust close to full hedging relative to its Adjusted NTA backing. The decision to expand hedging reflects management's approach to managing currency risk, particularly given the trust's substantial exposure to USD-denominated assets and the volatility inherent in the Australian dollar exchange rate.

During June, the AUD/USD exchange rate declined 3.7%, moving from approximately USD 0.7160 in May to USD 0.6920 at month-end. Despite this currency headwind, the hedging program limited the negative impact on AIQ's unit price to approximately 0.7%, demonstrating the protective effect of the currency overlay strategy. The trust's currency exposure profile shows 97% of the investment portfolio and 86% of cash balances denominated in USD, with 92% of total currency exposures subject to AUD/USD hedging arrangements. This structured approach ensures that investors' returns are not unduly influenced by short-term fluctuations in the Australian dollar relative to the US currency.

Secondary Market Fund Acquisitions and Capital Deployment Activities

During June 2026, Alternative Investment Trust completed two significant investment transactions as part of its capital deployment strategy. The trust invested an additional USD 2.5 million into the WSS Master Fund, reinforcing its commitment to the trust's largest holding and the primary driver of recent performance. Simultaneously, AIQ acquired additional fund interests in the Warana 2019 Fund and Warana 2021 Fund at a combined cost of approximately USD 274,000 and USD 2.0 million respectively, demonstrating ongoing investment activity within secondary market opportunities.

These transactions occurred following a placement in May 2026 that provided capital for deployment and reflect Warana Capital's core competency in acquiring and managing funds sourced through the secondary market. The underlying funds and assets acquired through these transactions are generally illiquid with uncertain holding periods to ultimate recovery, requiring specialised expertise in valuation, portfolio management, and recovery planning. The timing and sizing of these investments suggests management confidence in the relative value available in secondary market fund acquisitions and the potential for recovery at discount entry valuations.

Distribution Policy and Tax Loss Utilisation for Income-Focused Investors

Alternative Investment Trust announced a quarterly distribution of approximately AUD 0.03578 per unit, scheduled for payment on 18 August 2026, representing 2.5% of the June Adjusted NTA per unit. This distribution is consistent with the trust's stated policy of distributing 10% per annum of AIQ's Adjusted NTA in quarterly instalments, subject to sufficient cash reserves. The distribution policy provides regular income to unitholders while maintaining capital deployment flexibility for secondary market investment opportunities as they arise.

A significant advantage for AIQ unitholders relates to the trust's accumulated tax loss position. As at the end of the 2024 tax year, Alternative Investment Trust held in excess of AUD 400 million in accumulated tax losses and in excess of AUD 20 million in accumulated capital losses. Under certain circumstances and provided that relevant legislative conditions are satisfied, these losses may be applied against future taxable income to reduce the amount of taxable income and therefore the amount of any income distribution. This tax loss position has material implications for the tax efficiency of distributions to investors, particularly those subject to Australian taxation, as future distributions may be reduced or eliminated by the application of these losses against taxable income.

Unit Buyback Program and Capital Management Framework

Consistent with its established buyback policy, Alternative Investment Trust repurchased 478,757 units during June 2026 at an average cost of approximately AUD 1.3924 per unit. This buyback activity represents a capital management tool designed to benefit remaining unitholders by reducing the total number of units on issue and offsetting dilution from previous capital raises. As of 30 June 2026, the trust had 59,640,749 units on issue, reflecting the cumulative impact of prior placements, rights issues, and distribution reinvestment plan offerings completed since the recommencement of the investment strategy in February 2018.

The buyback execution at prices below the NTA per unit value enhances the per-unit backing for continuing investors by repurchasing units at a discount to net asset value. Prior capital raises, which included rights issues, unit placements, and distribution reinvestment plan offerings, resulted in new units issued at discounts to NTA in certain instances, creating dilution effects. AIQ's performance returns distinguish between "Diluted" columns that incorporate the impact of such capital movements and "Undiluted" columns adjusted for dilution effects, providing transparency regarding returns under different capital management scenarios.

Adjusted NTA Valuation Framework and Secondary Market Fund Valuation Adjustments

Alternative Investment Trust reports both a standard Net Tangible Asset measure and an Adjusted NTA per unit, reflecting a valuation methodology that accounts for the recovery prospects of secondary market fund holdings. The Adjusted NTA framework adjusts the value of funds purchased on the secondary market to reflect Warana's estimated projected recovery cash flows discounted at 10% per annum, diverging from the standard NTA which reflects underlying fund valuations provided by third-party administrators and auditors. As at 30 June 2026, the NTA per unit was AUD 1.5212 compared to an Adjusted NTA per unit of AUD 1.4311, representing a difference of approximately 5.9% attributable to the secondary market valuation adjustments.

This dual-reporting approach reflects the illiquid nature of AIQ's portfolio and the inherent uncertainty regarding the timing and amount of ultimate recovery from secondary market fund investments. The Adjusted NTA calculation incorporates Warana Capital's assessment of projected cash flows from underlying funds, applying a 10% annual discount rate to reflect the time value of money and recovery uncertainty. The Investment Manager first produced an Adjusted NTA for the period ending 31 October 2019, establishing a baseline for assessing performance using this alternative valuation framework. During June 2026, the Adjusted NTA per unit increased 2.2% compared to 2.1% for the standard NTA, reflecting the proportional impact of WSS Master Fund gains across both valuation methodologies.

Performance Tracking, Capital Raise Dilution Effects, and Historical Returns Context

Alternative Investment Trust's performance measurement incorporates several distinct timeframes and methodologies to provide comprehensive context for investor returns. The trust distinguishes between "1 Year", "2 Year", "3 Year", "4 Year", and "5 Year" returns, all presented on an annualised basis, as well as "Since Investment Strategy Restart (p.a.)" returns measured from the 12 February 2018 recommencement date and "Since Investment Manager Appointment (p.a.)" returns from Warana Capital's appointment on 9 October 2017. This multi-period approach enables investors to assess performance consistency across market cycles and relative to the specific operational history of the trust under its current management structure.

Performance returns explicitly note that dilution effects from new units issued at discounts to NTA in certain capital raises have reduced per-unit backing for existing investors. The trust conducted multiple capital raises since recommencement of its investment strategy, including rights issues, unit placements, and distribution reinvestment plan offerings, with units issued at various prices. Returns under the "Diluted" columns reflect the movement including the impact of dilution, while "Undiluted" columns show movement adjusted for dilution effects. The disclosure that "past performance is not indicative of future performance" provides important context for investors evaluating the trust's track record against its stated investment objective of generating attractive pre-tax risk-adjusted absolute returns over the medium to long term.

Responsible Entity and Investment Manager Operational Infrastructure

One Managed Investment Funds Limited, operating as One Investment Group, serves as the Responsible Entity for Alternative Investment Trust under AFSL 297042 and holds ABN 47 117 400 987. One Investment Group is an independent funds management business specialising in providing Responsible Entity, Trustee, Custody, and Administration services across multiple licensed entities. The group operates approximately 680 registered and unregistered managed investment schemes with total assets under administration exceeding AUD 80 billion across a wide range of underlying asset classes. This scale and infrastructure underpins the operational support for AIQ's portfolio management and unit holder administration activities.

Warana Capital Pty Limited, the Investment Manager, focuses specifically on managing portfolios invested in third-party funds with core expertise in acquiring and managing funds sourced through the secondary market. Warana Capital holds AFSL 493579 and demonstrates significant experience acquiring illiquid fund interests at sufficient discounts to deliver absolute and annualised returns despite uncertain holding periods and recovery timeframes. The appointment of Warana Capital as Investment Manager on 9 October 2017 established the foundation for AIQ's pivot toward secondary market fund acquisition strategy, differentiating the trust from conventional diversified portfolio managers. Warana's specialisation in this niche asset class, combined with One Investment Group's back-office infrastructure, creates the operational foundation for AIQ's stated investment strategy and execution.