January Report

• Israeli equities had a strong start to 2026, with the TA-125 Index rising 9% in January, outperforming global markets as foreign investor participation and trading volumes increased materially.
• Macroeconomic conditions remained supportive, with solid fourth quarter growth, continued strength in high-tech exports, contained inflation and a stronger shekel reinforcing confidence in the domestic outlook.
• The Fund returned 6.1% (Class A, AUD) and 6.1% (Class B, USD), with strong contributions from Camtek, Azrieli Group, Teva and Nayax, partly offset by weakness in ICL and an underweight position in the banking sector.

The team will be visiting Australia in March for a series of investor meetings. Investors interested in arranging a discussion are welcome to Contact Us for more details.

Top Holdings (alphabetically)

Alony Hetz Properties & Investments Ltd.

Israel

Real Estate Operating Companies

Alony Hetz Properties & Investments Ltd. engages in holding of companies operating in the income-producing real estate sectors in Israel and in Western countries. It operates through the Income-Generating Property and Energy segments. The Income-Generating Property segment is involved in the long-term investments in cash-generating real estate companies in Israel and in other western countries, which includes its investments in Amot, Carr, and BE. The Energy segment focuses on the investment in renewable energy, which consists of its investment in Energix. The company was founded by Nathan Zvi Hetz Haitchook on December 20, 1989 and is headquartered in Ramat-Gan, Israel.

Bank Hapoalim BM

Israel

Diversified Banks

Bank Hapoalim B.M. attracts deposits and offers personal, corporate and institutional banking services. The Bank offers corporate finance, cash management, foreign exchange, investment advice, loans, securities brokerage, custody services, investment banking, foreign trade financing, and treasury services. Bank Hapoalim operats in Israel, the Americas, and Europe.

Bank Leumi Le-Israel B.M.

Israel

Diversified Banks

Bank Leumi Le-Israel attracts deposits and offers banking and financial services. The Bank offers consumer loans, mortgages, lease financing, insurance, mutual funds, and merchant banking services. Bank Leumi holds significant equity stakes in a number of non-financial corporations in Israel.

Camtek Ltd

Israel

Semiconductor Materials & Equipment

Camtek Ltd designs, develops, manufactures, and markets automated optical inspection and metrology systems. The Company provides software solutions for the semiconductor industries, enabling manufacturers to improve yield and lower their production costs. Camtek serves semiconductors industry worldwide.

Fattal Holdings (1998) Ltd.

Israel

Hotels, Resorts & Cruise Lines

Fattal Holdings (1998) Ltd. engages in the management and operation of hotels in Israel and Europe. It operates through the following geographical segments: Israel, Europe, United Kingdom & Ireland, and Other. The firm managers the hotels Leonardo Plaza Ashdod, Leonardo Palza Jerusalem, Leonardo Palaza Haifa, Leonardo Club Tiberias, Harrods Tel Aviv, Becher House JHotel Tel Aviv, and Harrods Vitalis Eilat. The company was founded by David Fattal in March 4, 1998 and is headquartered in Tel Aviv, Israel.

Market Review

Israeli equities began 2026 strongly, with the TA-125 Index rising 9% in January, materially outperforming global equity markets, which delivered more moderate gains over the same period. The rally was accompanied by further appreciation of the shekel against the US dollar, reflecting renewed foreign participation and improving confidence in Israeli financial assets.

Trading activity increased sharply during the month. Average daily turnover reached approximately US$2 billion, around 40% higher than the 2025 average. The uplift was supported by the transition to a Monday to Friday trading schedule, which has better aligned Israel with global markets and facilitated greater participation from foreign investors, particularly on Fridays. The sustained rise in liquidity suggests a structural improvement in market accessibility rather than purely cyclical strength.

Macroeconomic indicators remained supportive. Fourth quarter data pointed to continued expansion in exports, particularly high-tech services, alongside persistent growth in private consumption. Strong technology exports and ongoing investment activity, including Apple’s US$1.5 billion acquisition of Q.ai, reinforced Israel’s role as a global innovation hub and contributed to currency strength.

Inflation expectations remain contained, with forecasts suggesting price growth will stay within the central bank’s target range over the coming months. While the policy rate currently stands at 4.0% and is expected to remain unchanged in the near term, continued shekel appreciation has led markets to price in a meaningful probability of an additional rate cut should currency strength persist.

Geopolitical developments remained a focus, with an increased US military presence in the Gulf and ongoing regional uncertainty. Separately, privatisation efforts for Israel Aerospace Industries and Rafael Advanced Defence Systems advanced, with minority IPOs targeted as early as the second quarter, highlighting confidence in domestic capital markets and long-term demand for defence capabilities.

Portfolio Commentary

The Fund delivered a strong return in January, supported by gains across several core holdings in technology, real estate and healthcare. Market leadership favoured growth-oriented companies, while financials continued to outperform, which detracted from relative returns given the Fund’s underweight position to the banking sector.

The largest contributor during the month was Camtek, a provider of inspection and metrology equipment used in advanced semiconductor manufacturing. The share price rose 39%, reflecting renewed optimism toward the semiconductor cycle and continued structural demand linked to artificial intelligence and advanced packaging technologies.

Azrieli Group, a leading Israeli real estate developer and owner of income-producing commercial properties and data centres, gained 16%. Performance was supported by improving investor appetite for high-quality real estate platforms and continued confidence in the long-term growth of its data centre operations.

Teva Pharmaceutical Industries, the world’s largest generic drug manufacturer with a growing portfolio of branded medicines, rose 9% following fourth-quarter results in line with expectations and the issuance of 2026 guidance. Management characterised 2026 as a transitional year ahead of stronger growth from 2027, reiterating its outlook for earnings expansion and ongoing balance sheet repair.

Nayax, a global fintech platform providing payment and management solutions for unattended retail and automated machines, gained 8%, supported by continued growth in cashless payments and recurring software revenues.

The main detractor during the month was ICL, the specialty minerals and chemicals group, which declined 8% amid weakness in commodity-related segments. In addition, the Fund’s underweight exposure to the banking sector detracted from relative returns as banks continued to outperform.

The Fund also holds Silicom, a provider of connectivity and data infrastructure solutions. The company reported strong revenue growth and guided to continued double-digit expansion, marking a potential inflection point following two challenging years driven by customer inventory adjustments. While not yet profitable, losses are narrowing, and management expects profitability to return as revenues scale. In our view, the operating business continues to be valued conservatively relative to its improving growth trajectory, creating attractive upside if execution remains on track.