• 2025 was a year of divergence: Geopolitical tension, trade fragmentation, and persistent inflation drove increased market dispersion, with investors favouring quality and resilience across asset classes.
• Private credit demonstrated strength: PCX delivered stable, above-target income with low correlation, highlighting the value of disciplined underwriting, manager selection, and diversification.
• Well positioned for 2026: With volatility likely to persist, PCX enters the year defensively positioned, diversified, and focused on sustainable income and capital protection.

A Year in Review

As we enter 2026, it is worth pausing to reflect on a complex and eventful 2025. The past year’s major economic, financial and geopolitical events were shaped by a new US administration and its focus on tariffs, leading to escalating US-China trade friction; intensified geopolitical conflicts (Ukraine, Middle East); explosive growth in Artificial Intelligence (AI) investment and integration; and shifting global trade dynamics. These developments contributed to persistent inflation in key economies, policy divergence across central banks, volatile energy markets, and increased focus on supply chain resilience and economic nationalism.

Economic & Financial Themes

• Fixed Income Market Bifurcation: While headline credit spreads remained relatively tight throughout 2025, underlying dispersion grew more pronounced. High-quality issuers continued to attract strong demand, while lower-rated borrowers and more complex structures experienced widening spreads and inconsistent liquidity conditions. This bifurcation reflects a growing premium on credit quality, structural protections and underwriting discipline, with investors rewarding certainty and penalising riskier credits despite broadly stable macro indicators.
• AI Investment Boom: Rapid advances in AI fuelled significant capital spending in large markets. However, the benefits remained unevenly distributed across sectors and geographies.
• Inflation & Interest Rates: Persistent inflation pressures eased across most developed markets, though remained sticky in services. Central banks navigated this tension with a mix of caution and gradual normalisation.
• Monetary & Fiscal Challenges: Rising debt levels challenged governments, complicating fiscal sustainability, while selective fiscal support and cautious rate adjustments provided limited relief.
• Commodity Market Volatility: Energy security remained a key concern, with oil prices fluctuating, while gold prices surged as a safe haven amid stagflation fears.
• Equity Market Bifurcation: Equity markets, particularly in the US, performed strongly, driven by technology (the “Magnificent 7”), financials, gold and defence stocks. However, interest-sensitive sectors such as real estate and small caps continued to underperform.
• Trade & Supply Chains: Global trade showed surprising resilience but faced headwinds from policy uncertainty and rising tariffs, leading to greater geoeconomic fragmentation.

Geopolitical Themes & Risks

• US-China Rivalry: Escalating trade barriers, especially new US tariffs (the “Liberation Day” tariffs), reshaped the global trade map and corporate supply chains.
• Ongoing Conflicts: Continued fighting in Ukraine and the Middle East, alongside broader geopolitical fractures, increased global instability and affected risk sentiment.
• Economic Nationalism: Widespread use of trade barriers, sanctions and investment screening became more institutionalised,  challenging traditional globalisation.

Implications for Global Private Credit

Throughout this year of volatility and uncertainty, PCX continued to deliver stable returns with an above-target yield, and low correlation to other major asset classes, reinforcing the value of Global Private Credit in a well-diversified portfolio.

The past year also reinforced several structural themes relevant to global private credit.

• Manager Selection Remains Critical: As dispersion widened across credit strategies, proven manager discipline and underwriting quality became key differentiators;
• Diversification Enhances Resilience: Diversification across geographies, strategies and managers reduced exposure to localised risks and improved portfolio balance; and
• Structure and Discipline Drive Outcomes: A small number of high-profile credit issues this year reflected failures of governance and oversight by some market participants, not failures of the global private credit asset class. While risks cannot be eliminated, selective origination, thoughtful structuring and underwriting, and active monitoring materially improve resilience.

The Road Ahead

What can we expect from 2026? Predicting the future, particularly in such uncertain times, is impossible. However, many of the drivers of 2025’s volatility are likely to persist into this year. Geopolitical tensions across the globe remain high, inflation remains sticky, the impact of tariffs continue to work their way through the financial system, and the US mid-term elections in November are likely to precipitate further political stress.

Diversification is a critical tool when it comes to investing, and this is especially true in volatile and unpredictable markets. Global Private Credit has demonstrated a long track record of strong risk-adjusted returns and low correlation through economic cycles. PCX provides investors with diversified exposure to institutional Global Private Credit, supported by strong monthly yield liquidity either daily via trading on the ASX and quarterly via our off-market buyback mechanism.§

Portfolio Update³

Continued focus on capital deployment, diversification and downside protection.

The December cum-NAV per unit increased from $2.01 to $2.02, supported by the receipt of most of the outstanding Q3 investor statements from our underlying managers. The Trust declared a 1.3c dividend for December, in excess of our target minimum and in line with the recent trend.

During December, we committed to one new US structured credit fund in the Total Return category. Our main focus for 2026, in conjunction with Mercer, will be the ongoing identification and onboarding of new closed-end funds to ensure the Trust remains near fully invested as existing closed-end funds move into their harvest periods.

At 31 December, the Trust has maintained its target allocation mix, with capital diversified across fund types and managers as follows:

• Income: $130.1m invested across 9 managers
• Balanced: $40.8m invested across 5 managers
• Total Return: $41.8m invested across 12 managers

The portfolio remains within stated limits across geography, seniority and investment strategy. Diversification by vintage, style and manager continues to underpin downside protection and liquidity planning.

The Trust’s underlying sector exposure remains well diversified and focused on defensive, non-cyclical industries such as Financials, Industrials, Information Technology and Health Care. These 4 sectors account for 65% of the total Trust exposure. Exposure to the Real Estate sector accounts for less than 3% of the total Trust exposure.