What is a distribution, exactly

A distribution is your share of the income and realised gains the fund earned during the year, paid in proportion to the units you hold. It typically includes:

• Dividends from the companies we own
• Interest on cash holdings
• Net realised capital gains from holdings sold during the year

Realised gains are what vary most year to year, and prior-year losses can offset gains before they reach you.

FY26 final distributions

We are pleased to share the final distributions per unit (DPU) for each fund and unit class, as at 30 June 2026.

For all funds, the ex-distribution date was 30 June 2026 and the record date was 1 July 2026.

Key dates

Payments and statements will be processed by our unit registry, Automic Group, with statements made available in the Automic Investor Portal.

Dates are approximate; we endeavour to make payments and issue statements as soon as possible, however delays can occur.

Important: if you are invested via an investment platform, distribution payments and distribution reinvestments are subject to the platform’s own processing and operations. Please allow additional time for payments, or speak to your platform for more information.

What happens now

No action is required.

Unlisted fund payments will be made within the coming week as cash to your nominated bank account, or as new units under the DRP.

OPH’s payment will follow in mid-August once the buyback completes. Tax statements will be issued approximately 7 business days after distributions.

Distribution Reinvestment Plan (DRP)

If you elected to participate in the DRP, your new units will be issued at the 30 June 2026 ex-distribution price, with no transaction costs or buy/sell spreads.

Your distribution statement will outline the calculation of the new units issued, and the units will appear in the Automic Investor Portal. You can change your DRP election at any time for future distributions.

Ophir High Conviction Fund (ASX: OPH)

OPH is a listed investment trust, so its DRP works differently. Because OPH units trade on the ASX, reinvested distributions are used to buy units on-market through our broker, rather than issuing new units.

The purchase price is capped at the reported end-of-financial-year NAV per unit. This benefits investors, with OPH currently trading at a discount, DRP units are purchased for less than the value of their underlying assets.

As the on-market purchase takes time to complete and settle, OPH’s distribution and tax statements arrive later than the unlisted funds, typically mid-to-late August. See the ASX announcement and DRP terms and conditions.

Why your unit price falls on 30 June

The unit price drops on the ex-distribution date because the distribution is paid out of it, not because of negative fund performance.

A simplified example: a unit starts the year at $2.50 and rises to $3.00 by 30 June (the cum-price), of which $0.15 per unit must be distributed. The $0.15 is paid out, and the price falls to $2.85 (the ex-price).

That drop isn’t a loss; the $0.15 is now in your pocket. Your total return for the year is still 20% ($0.50 gain ÷ $2.50): $0.35 in the unit price plus the $0.15 distribution.

How to submit an additional application

If you received your distribution in cash and would like to make an additional investment in the fund, please follow the instructions below. Applications must be received by Tuesday 28 July 2026 to be included in the July application cycle.

1. Through the Automic Investor Portal

If you are already registered on the Automic Investor Portal, you can top up your investment through the Top-Up facility:

• A) Log in and locate your Ophir holding on the portfolio screen, where your Market Value and Units are displayed.
• B) Select the Details dropdown to the right of your holding.
• C) Choose $ Top-Up and follow the prompts to complete your additional application.

2. By additional application form

Alternatively, complete the relevant additional application form (linked in Resources below) and return it to ophir@automicgroup.com.au.

Resources

• Update Bank Account Details Form
• Ophir Global Opportunities Fund (Class A) Additional Application Form
• Ophir Global Opportunities Fund (Class H) Additional Application Form
• Ophir Global High Conviction Fund (Class A) Additional Application Form
• Automic Frequently Asked Questions

As always, if you’d like to chat to us about any of the Funds, please feel free to call us on (02) 8188 0397 or email us at ophir@ophiram.com.

Thank you for entrusting your capital with us.

Kindest regards,

Andrew Mitchell & Steven Ng

Co-Founders & Senior Portfolio Managers

Ophir Asset Management

This document has been prepared by Ophir Asset Management Pty Ltd (ABN 88 156 146 717, AFSL 420082) (“Ophir”) and contains information about one or more managed investment schemes managed by Ophir (the “Funds”) as at the date of this document. The Trust Company (RE Services) Limited ABN 45 003 278 831, the responsible entity of, and issuer of units in, the Ophir High Conviction Fund (ASX: OPH), the Ophir Global Opportunities Fund and the Ophir Global High Conviction Fund. Ophir is the trustee and issuer of the Ophir Opportunities Fund.

This is general information only and is not intended to provide you with financial advice and does not consider your investment objectives, financial situation or particular needs.  You should consider your own investment objectives, financial situation and particular needs before acting upon any information provided and consider seeking advice from a financial advisor if necessary. Before making an investment decision, you should read the relevant Product Disclosure Statement (“PDS”) and Target Market Determination (“TMD”) available at www.ophiram.com or by emailing Ophir at ophir@ophiram.com. The PDS does not constitute a direct or indirect offer of securities in the US to any US person as defined in Regulation S under the Securities Act of 1993 as amended (US Securities Act).

All Ophir Funds are deemed high risk within their respective Target Market Determination documentation.  Ophir does not guarantee the performance of the Funds or return of capital.  An investment may achieve a lower than expected return and investors risk losing some or all of their principal investment.  Past performance is not a reliable indicator of future performance.  Any opinions, forecasts, estimates or projections reflect our judgment at the date this was prepared, and are subject to change without notice.  Rates of return cannot be guaranteed and any forecasts, estimates or projections as to future returns should not be relied on, as they are based on assumptions which may or may not ultimately be correct.

Actual returns could differ significantly from any forecasts, estimates or projections provided.

The Trust Company (RE Services) Limited is a part of the Perpetual group of companies. No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital.

Reflections – Winners and a Loser

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A year of getting some right, and getting some wrong

We’ve closed out the financial year. So we thought we’d revisit three holdings we wrote about during the year. Two are standout winners; the other is yet to deliver the returns we were expecting.

The two winners are Marex (NASDAQ: MRX) and Silicon Motion (NASDAQ: SIMO). The loser is Artivion (NYSE: AORT).

Each has something to teach us.

Marex – When the market gets it structurally wrong

Clearing broker Marex, which we had started buying in October 2025, was our most recent Global stock write-up in May 2026 (link).

In May, the stock was trading at less than 10x earnings. The market was pricing Marex like a lower-PE-rating cyclical commodities broker. The shares had also been hurt by a short report from investigative research company, NINGI Research, that alleged accounting irregularities and off-balance-sheet entities.

We, however, had a different view.

Marex, as one of ~60 Futures Commission Merchants (FCMs) globally, sits in the middle of one of the most protected pieces of financial market infrastructure in the world: soliciting and accepting buy and sell orders for futures and options contracts and holding customer funds to facilitate the trade.

Rather than a questionable commodity, we saw a structurally protected compounder benefiting from three tailwinds, all working in the same direction:

• Growth in exchange-traded volumes, which have been growing at high single digits for years.
• Share gain from banks retreating after international banking regulations Basel III and IV made clearing structurally uneconomic for large bank incumbents.
• Consolidation of the fragmented non-bank tail, which is seeing larger specialists, such as Marex, consolidate the smaller end of the FCM market.

We met with the executive vice chair of one of their biggest peers. He personally explained why this is such an attractive market and why they would benefit. However, what was most instructive was how complimentary he was of Marex as a high quality peer that would also benefit.

This was the key reason why we did more work.

We then went through the short report ourselves and with sell-side analysts. On the day of Marex’s March investor day, we caught the red eye from Denver to New York. We arrived early enough to spend time one-on-one with senior management. From these conversations, we concluded the short thesis lacked substance.

Since we wrote about Marex in May, the stock has increased from around $58 to $63. Since we started buying in October last year, it has roughly doubled.

That’s been helped by strong recent financial results. Marex’s Q1 2026 revenue was up 48%, and adjusted profit before tax was up 59% year-on-year. That’s comfortably ahead of the guidance the company had provided at its investor day just six weeks earlier.

Why we still own it: At 10-11x forward earnings, we continue to see plenty of value in a business generating EBIT growth in the teens, and with a long runway for both organic and inorganic market share growth.

Peers like Interactive Brokers and CME are still trading at 20-30x. StoneX, the closest listed comparable to Marex, now trades at ~19x. The gap between those companies and Marex is closing, but it is still quite wide.

Marex also plays a unique role in our portfolio. It is one of the few positions that actively benefits from periods of elevated market volatility rather than being threatened by it.

What we take from this: Our ability to talk with industry leaders in global markets is a key edge. When the market is punishing a stock for something specific and testable – accounting allegations, a short thesis, a temporary earnings miss – the value in doing the work is high, but having our thesis supported and validated by trustworth and aligned industry leaders often limits our downside and ensures our efforts and energy is well directed. Structural business quality is the anchor. If the anchor is sound, the noise is an opportunity.

Silicon Motion – When conviction is rewarded, and then some

Silicon Motion was a name we highlighted in our SaaSpocalypse Now? strategy note in February 2026 (link).

Our core argument was that the AI dispersion between semiconductor stocks and software stocks was going to keep widening. That is, the market would continue to reward infrastructure stocks because of their earnings visibility. And it would continue to punish application-layer software companies because of the threat AI agents posed to their seat-based (per-user subscription fees) revenue.

We were expressing that view in the storage space by holding Silicon Motion, which we bought in June 2025.

Silicon Motion is a fabless designer of NAND flash controllers – the small processors that manage how data is stored, retrieved, and protected inside smartphones as well as the solid-state drives (SSDs) that are crucial for AI.

Our thesis was straightforward: as AI capex ballooned, memory and storage, of which Silicon Motion provides a vital component, were emerging as the next bottleneck. Nvidia’s Jensen Huang had said just as much at the Consumer Electronics Show (CES) on January 5 this year. Samsung and Micron were pushing through 40-50% price rises because demand was outstripping supply. And TSMC’s capex guidance, a bid to meet this relentless demand, was well above expectations.

We didn’t need to predict every twist in the AI cycle. We just needed exposure to the ‘picks-and-shovels’ (infrastructure layer) end of it, at reasonable multiples, with a business that stood to benefit from the memory upcycle.

Silicon Motion has since delivered.

The company’s Q1 2026 revenue was up 105% year-on-year; EPS beat consensus by nearly 25%; and the stock has been one of the best performers in the storage complex.

It is currently trading around $320, up from about $70 a year ago.

Why we still own it: The company’s underlying earnings growth is not a one-quarter phenomenon. Silicon Motion is riding a multi-year product-led growth cycle. Its expensive, high-performance chips – PCIe Gen5 controllers, enterprise SSD solutions, and new AI-optimised products – are all coming into a market where demand is outstripping supply on a structural basis.

We continue to see outsized earnings growth ahead for the company. While some of that is now in the price, we see further upside from current levels.

What we take from this: When you get a thematic call right we don’t want to let our sector exposure continue to grow aggressively. When the market is crowding into a thematic, discipline requires taking money off the table – but the key is to identify which stock has more to run compared with the one where more of the upside has been realised. The hardest trades to make are often the ones after you’ve been right.

Artivion – When the market derates faster than the earnings

We wrote up specialised aortic device business Artivion in April 2026 (link here).

Our thesis was that this was a high-quality medtech compounder. It is run by a management team we have known and trusted for years. And it has a product pipeline that could sustain double-digit growth to the end of the decade.

We bought it pre-COVID, sold at the 2025 highs, and re-entered in February 2026on a pullback that was overdone.

Since then, the stock has continued lower. It is now trading around $US22. It’s down from its November 2025 high of around $48 and down from ~$35 at the time of our write-up. A disappointing result in May contributed to the share price decline.

Here is the key point, though: Even though the stock has fallen close to 40%, the company only reduced its FY26 earnings expectations by mid-single digits. That multiple de-rating is difficult to reconcile with the fact that the issues driving the guidance softening were non-structural:

• Elevated capex in FY26 to fund the closing of the Endospan acquisition earn-out.
• Some conservatism on new product timing.
• A broader derating of medtech companies in an environment that has been driven by momentum rather than fundamentals.

None of this changes the shape of Artivion’s earnings power in 2027 and beyond, which should be accelerated by the launch of new products, AMDS and NEXUS.

We tested our thesis directly.

After the pullback, we met with two separate US cardiologists and a European competitor to check whether anything had changed at the customer, clinical, or competitive level. It hadn’t. Product adoption remained strong. Cardiologist sentiment toward Artivion continued to be positive. There was no material change in the competitive landscape.

Why we still own it: Our valuation of the business has not changed. Our confidence in Pat Mackin and the management team remains. The earnings power we are confident in for 2027 and beyond is still in front of us, and the channel checks confirm the recent issues are not structural.

What we take from this: When a stock derates by 30-40% on a mid-single-digit earnings revision, the market is expressing a view about the business’s long-term earnings power, not just the current year’s number.

The discipline in those moments is to check whether the market is right – to test the thesis with the customers, the competitors, and the clinical data – rather than either doubling down reflexively or capitulating. When the channel checks come back clean, as they did with Artivion, that gives us the confidence to stay invested.

Looking forward: Three vital characteristics of our holdings

We enter the second half of 2026 with the portfolio positioned around businesses we believe combine three characteristics:

1. Structural tailwinds that don’t depend on any single macro outcome.
2. Valuations that leave room for re-rating as well as earnings growth.
3. And management teams we have known through multiple cycles.

Marex remains one of our largest positions. Silicon Motion has been trimmed, but we retain meaningful exposure. And we continue to hold Artivion hold with conviction – its earnings power has not changed, and the recent share price weakness has made it more attractive on our numbers, not less.

Financial Year 2026: Breadth arrives and stock picking does the talking

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In this Letter to Investors, we look at:

• How the Ophir Funds fared in FY2026 – including a +31.8% after fees return from our Ophir Global Opportunities Fund.
• Our win at the Money Management/ Lonsec Fund of the Year Awards.
• Why stock picking, not AI, drove our outperformance, again, this year.
• The long-awaited arrival of breadth, why that’s good for our small-cap space, and the key factors that indicate it can continue.
• Why the Fed Chair is talking hawkish, but markets are dovish.
• Our views on the AI theme including bubble talk & how we are thinking about it.

We’re writing this month’s Letter from our US office. We’re at the end of a couple of weeks on the road with the investment team, meeting companies, their customers and their competitors.

We’re now extremely knowledgeable – or as they say, ‘full bottle’ – on what’s happening on the ground here in the US. (More on that below.)

But first, to the financial year just ended.

Importantly, and excitingly, the thing we’ve been calling for, and patiently waiting for, finally arrived: breadth. (Breadth is basically the number of stocks participating in a move.)

After years of a handful of mega caps doing all the heavy lifting, returns started spreading across the market, including our areas of small caps, with the spread accelerating right into 30 June.

For small-cap stock pickers, breadth is rocket fuel. And it showed in our Fund performance for the financial year just gone.

Ophir Fund Performance: FY2026

The Ophir Opportunities Fund significantly outperformed its benchmark  (ASX Small Ordinaries Accumulation Index, which returned +8.1%) with a +22.4% return net of fees.

Another cracking year for our original Fund!

Over the last 14 years, while its benchmark has compounded at +6.6% per annum after fees, our Opportunities Fund has compounded at +23.1%.

The Ophir High Conviction Fund, however, had a disappointing year, down -4.9% for its net asset value.

The Fund faced stiff headwinds. As a growth-style manager, we tend to be underweight cyclical sectors like materials. Unfortunately, in FY26 the gap between the ASX200’s best-performing sector (materials +47.5%) and the worst (health care -37.4%) was the largest ever.

The High Conviction Fund was also overweight quality software names, that were ‘hit for six’ in late 2025 and early 2026 on fears of AI disruption.

We cut that weight quickly, but it still hurt. We’re not sugar-coating it, and we’re working our butts off to fix it.

Global Equities Small & Mid Caps ‘Fund of the Year’ for 2026

The stars of FY2026 were our Global Funds.

While its benchmark (MSCI World SMID Cap Index NR, AUD) returned +16.0%, the Ophir Global Opportunities Fund returned +31.8% net of fees.

It has now delivered around +19.8% per annum after fees – over almost eight years – roughly +10% per annum ahead of its benchmark.

That makes it the best-performing global small-cap fund available in Australia over that period (Morningstar data).

The Ophir Global High Conviction Fund enjoyed a similarly stellar year, up +28.5%.

This performance was recognised with our Global High Conviction Fund (Class A) winning the Money Management/Lonsec Global Equities Small & Mid Caps Fund of the Year, a fantastic reward for all the team’s hard work.

From stock picking … again

So where did those global returns come from?

Were we just lucky enough to ride the AI boom?

Let’s look at the Global Opportunities Fund multi-factor performance attribution to find out.

Source: Bloomberg. Data as of 30 June 2026. Benchmark: MSCI World SMID Index NR (AUD). Performance is net of fees. Past performance is not a reliable indicator of future performance. Performance figures are net of fees.

If you read the chart from left to right, you can see the benchmark was up 16.0%, and the Fund was up 31.8%.

In between sit the factors that explain the gap in performance between the benchmark and Fund, and almost all of them are noise:

• Industry effects barely registered, which is important because it shows we weren’t just riding the AI tidal wave.
• Country was actually a drag.
• Size and beta? Small change.

What was the most important factor?

It was the Selection Effect (i.e., pure stock picking) which added +29.0%.

So stock picking represented more than 100% of the Fund’s outperformance.

That’s right, our outperformance came from stock picking again.

Stock picking is the kind of outperformance that endures because it is based on replicable skill and not just luck.

And it’s the kind of outperformance you should demand of any small-cap manager you own, whether Australian, global or otherwise.

Twenty-one stocks did the talking

Global Opportunities Fund Stock Contributors:

Source: Bloomberg. Data as of 30 June 2026.

Just as important is how widely our stock picking was spread in our Global Funds. Twenty-one stocks did most of the talking for the year in our Global Opportunities Fund, with the biggest single contributor adding 5.3%. See this month’s Stock in Focus report for some recent winners and losers (link)

This is important because if a fund manager’s year hinges on one stock going up 10x, it’s hard to be confident they can repeat that performance the following year.

A broad spread of winners – as we had in 2026 – is another fingerprint of a repeatable process.

Our returns aren’t riding on AI

And here’s further evidence that our strong recent performance isn’t because of a correlation with AI stocks.

The chart below shows the Global Opportunities Fund’s daily outperformance in June against the daily returns of semiconductor and momentum stocks.

Source: Bloomberg. Data as of 30 June 2026.

On the days the AI complex was body slammed (circled in red), we still did just fine. In short:

• We hold roughly the index weight in the AI complex. We are not making hero bets either for an AI bubble or against … because we don’t pretend to know the answer.
• Our outperformance has come on AI up days and AI down days alike.
• Our returns are coming from idiosyncratic small caps marching to the beat of their own performance; not from stocks trading at 100 times revenue with a lot of expectations to deliver into.

That’s how we think about risk and portfolio construction today for our Global Funds.

A Deep Breadth, part two

Regular readers know we’ve been banging on about breadth for a while.

That is, we argued that the market’s rise would spread from a narrow number of stocks, most notably the Magnificent 7, to a broader range of stocks, including small caps, where we focus.

Well, here we are.

Source: Bloomberg. Data as of 30 June 2026.

After years of underperformance against the S&P 500, US small caps have finally turned the corner.

That continued in June, with the Russell 2000 index (small caps) up +3.7%. The S&P 500 index was actually down -1.0%, weighed down by the once-poster-child Magnificent 7, which fell -8.8%.

Last week in New York, we had lunch with Michael Kantrowitz of leading investment bank Piper Sandler. If he’s not the number one US equity strategist, he’s top three.

Michael’s big call: breadth is going to keep coming.

Hawkish Fed speak, dovish market speak

A key question that will help determine the likely persistence of breadth is: what will the new Fed Chair, Kevin Warsh, do next?

Warsh chaired his first meeting in June and struck a notably hawkish tone. Indeed, the Fed’s projections pencilled in one rate RISE this year.

You can blame the Iran war-induced inflation: oil, fertiliser and shipping costs all spiked as the Strait of Hormuz was choked off.

Source: Piper Sandler, June 2026.

Yet look at what markets are saying (the grey line above): inflation expectations are actually falling! Oil is now back near pre-war levels, and ships are getting through the Strait again.

Like Kantrowitz, we expect that the hike currently priced for late 2026 will likely not eventuate, which is positive for breadth and small caps.

Alongside falling inflation (and likely no rate rises), we also have other important conditions for breadth to continue:

• A US consumer who is looking stronger on the ground from all our recent company meetings.
• 75% of easings from the Fed over the last 18 months are still making their way through the economy.
• And Trump’s One Big Beautiful Bill household and business tax cuts.

Breadth is manna from heaven for small caps!

Is AI a bubble?

The big question we’re getting asked everywhere we go is whether AI is a bubble.

Sadly, if we are being honest, no one really knows with any high degree of confidence, including us.

What we do know is that this year not all ‘AI’ returns are the same.

We mapped the AI stack from top to bottom. Then, to see each layer’s return weighted by market cap, we looked at what key players have actually returned so far in calendar 2026.

As you can see, in terms of returns, the cream is at the bottom of the cake:

• Energy and electrification names are up about a third, led by companies like GE Vernova at +70%.
• Chips and memory are up roughly 80%, with Micron nearly tripling, Intel up 263% and AMD up 151%.

The top of the cake – the shiny software companies now incorporating AI tools – is where money went to die. This Applications group is down 5%, but some members fared much worse – Adobe down 44%, Salesforce down 42% and ServiceNow down 38%.

There are some winners, but lots of potentially disrupted losers. Why? Well, it comes back to a simple idea: this year, companies are getting paid to sell what’s scarce, not buy it.

The cloud giants and software firms are the buyers. Their capex is revenue for the sellers – the chip, memory and power providers. (When there is a genuine shortage of something, the seller sets the price and keeps the margin. The buyer just keeps spending.)

The question investors need to ask is: does the cream stay at the bottom of the cake? Or does 2027 finally reward the layers doing the buying? In other words, will there be a ‘return on investment’ (ROI) from all that capex for the Application, Model and Infrastructure layers?

Our take is that there better be an ROI or this cake will crumble under its own weight.

Should I dump equities to avoid potential bubble trouble?

What if it is a bubble? Does that mean you should sell your equities?

Not necessarily. History suggests you shouldn’t abandon the share market.

Source: BCA Research.

When the dot-com bubble burst, tech stocks fell 55% and the S&P 500 lost 13%. Yet over the following twelve months, the rest of the market rose around 11%.

Even in the textbook bubble, the one everyone points to, owning the rest of the market was a completely different experience to owning the thing that popped.

The bubble and the market are not the same animal. You don’t need to pick the top. You just need to avoid being overexposed to the froth when it pops.

To be clear: we don’t know that we are in an AI bubble.

The earnings sitting underneath these companies are tangible in a way that a lot of 1999 simply wasn’t. It might deflate. It might not. If Micron’s recent result is any indication, the AI theme doesn’t look to be slowing down today. Regardless, as we showed above, we’ve been able to outperform recently even on days when things like semiconductors at the heart of AI theme have been sold off.

Come see us: Meet the Managers is back

Finally, a date for your diary: Our annual Meet the Manager presentations run from late July into early August in every capital city around Australia. Seats are limited and we are near capacity for many of the events already.

If you’d like to hear how the Funds are positioned and grill us in person, email ophir@ophiram.com and we’ll save you a seat and a bite/drink.

As always, if you’d like to chat to us about any of the Funds, please feel free to call us on (02) 8188 0397 or email us at ophir@ophiram.com.

Thank you for entrusting your capital with us.

Kindest regards,

Andrew Mitchell & Steven Ng

Co-Founders & Senior Portfolio Managers

Ophir Asset Management

This document has been prepared by Ophir Asset Management Pty Ltd (ABN 88 156 146 717, AFSL 420082) (“Ophir”) and contains information about one or more managed investment schemes managed by Ophir (the “Funds”) as at the date of this document. The Trust Company (RE Services) Limited ABN 45 003 278 831, the responsible entity of, and issuer of units in, the Ophir High Conviction Fund (ASX: OPH), the Ophir Global Opportunities Fund and the Ophir Global High Conviction Fund. Ophir is the trustee and issuer of the Ophir Opportunities Fund.

This is general information only and is not intended to provide you with financial advice and does not consider your investment objectives, financial situation or particular needs.  You should consider your own investment objectives, financial situation and particular needs before acting upon any information provided and consider seeking advice from a financial advisor if necessary. Before making an investment decision, you should read the relevant Product Disclosure Statement (“PDS”) and Target Market Determination (“TMD”) available at www.ophiram.com or by emailing Ophir at ophir@ophiram.com. The PDS does not constitute a direct or indirect offer of securities in the US to any US person as defined in Regulation S under the Securities Act of 1993 as amended (US Securities Act).

All Ophir Funds are deemed high risk within their respective Target Market Determination documentation.  Ophir does not guarantee the performance of the Funds or return of capital.  An investment may achieve a lower than expected return and investors risk losing some or all of their principal investment.  Past performance is not a reliable indicator of future performance.  Any opinions, forecasts, estimates or projections reflect our judgment at the date this was prepared, and are subject to change without notice.  Rates of return cannot be guaranteed and any forecasts, estimates or projections as to future returns should not be relied on, as they are based on assumptions which may or may not ultimately be correct.

Actual returns could differ significantly from any forecasts, estimates or projections provided.

The Trust Company (RE Services) Limited is a part of the Perpetual group of companies. No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital.

1For small-cap investors, broader market participation may support investment returns; however, outcomes
remain uncertain and are subject to prevailing market conditions.

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Backing up April’s record month in May + Distributions: your time to decide.

In this Letter to Investors, we look at

• How our Funds backed up April’s record returns in May – and why stock picking, not the red-hot AI trade, did the heavy lifting.
• Momentum, AI, semiconductors and memory stocks are going vertical. Should investors worry?
• Micron joining the US$1 trillion club, and the new memory ETF hoovering up money faster than the Mag 7.
• The heroic expectations baked into SpaceX’s record-breaking IPO valuation.
• Ophir Fund distributions are coming. To maximise compounding and wealth building, we reinvest ours – should you? You have until 30 June to decide.

After April’s big returns across our Funds – including the best month ever for our Global Opportunities Fund, up +12.3% (see last month’s Letter) – it was pleasing to back that performance up in May. Every Ophir Fund rose circa 5-6% in absolute terms and outperformed their benchmarks by around 2-4%.

Importantly for us, it was stock picking that again delivered outperformance in May, not some big overweight to the red-hot AI thematic in semiconductor and memory stocks. (More on that below.)

But AI certainly contributed to share markets across the world almost universally rising for the month:

• The S&P 500 led, putting on another +5.3% to hit fresh all-time highs – in the process notching up its ninth straight weekly gain.
• Tech again did the heavy lifting. The S&P 500 IT index rose a whopping +16.0%, following April’s 17.5%.
• In US small caps, the Russell 2000 IT sector put on a combined 52.6% over April-May. Insane!

Domestically, however, the story was much more muted. The ASX 200 rose +1.3% with the RBA’s hiking cycle and the fallout from the Federal Budget weighing on local shares.

Backing it up

As mentioned, all our Funds backed up strong results in April and posted pleasing performances in May:

• Our original Aussie Fund, the Ophir Opportunities Fund, kept up its strong track record. It beat its benchmark by +2.7% in May. Since its inception in August 2012 – almost 14 years ago – it has now returned +23.0% per annum after fees.
• The Ophir High Conviction Fund (ASX: OPH) was back on the leaderboard too after a tougher 12 months, with its investment performance rising +6.2% for the month and outperforming its benchmark by just over 4%.
• And our Global Opportunities Fund backed up its record April with a +5.1% gain in May, against a +3.1% return for its benchmark (MSCI World SMID Cap Index NR AUD), an outperformance of +2.0%.

After April, prospective investors naturally asked us: “Is this a good time to invest? Have I missed it?”

Our answer then was that April’s surge was our companies’ share prices catching up with their strong February/March earnings results.

But just as importantly, we were also cycling out of companies whose share prices had run hard and putting that money into fresh ideas. Those additions started contributing in May. That, to us, is especially encouraging.

AI trade explodes higher in May

There is no polite way to describe what semiconductor and memory stocks did in May. They went vertical!

Exhibit A: Micron.

On 26 May, the memory maker jumped 19% in a single session – after broker UBS more than tripled its price target to US$1,625 – and crossed US$1 trillion in market value for the first time. Its entire 2026 output of high-bandwidth memory (the chips that feed AI data centres) is already sold out.

How hot is the money chasing this trade?

A brand-new ETF dedicated to memory (DRAM) stocks has gone vertical – its inflows are already double what the flagship Magnificent 7 ETF gathered over the last three years.

It’s a measure of the optimism, and perhaps speculation, now built into these share prices.

Source: Bloomberg, Roundhill Memory ETF, Roundhill Magnificent Seven ETF

The good news?

The rally – as narrow as it is, led by AI, energy and memory – has been driven by corporate earnings expectations being revised upwards. That gives some confidence it’s standing on reasonable foundations rather than hot air.

It’s also showing up in the economic data. The US economy has been rock solid on the back of the AI infrastructure build-out. Though our conversations with European cyclical companies have been decidedly downbeat – a big part of why we’ve reduced our weight to European cyclicals in recent months. It’s no coincidence that Europe, a net importer of energy, has struggled versus the U.S., a net exporter, during the worst energy crisis in history courtesy of the Iran war. Fortunately at writing it looks like the Strait of Hormuz is reopening for seaborne oil transit.

Source: Bloomberg. Data as of 31 May 2026.

A US$1.75 trillion moonshot

Speaking of optimism: the most topical listing on the planet (and off it) is SpaceX’s IPO, which Aussie investors are being offered through local brokers. We don’t invest in large caps, so we own none. But the valuation expectations caught our eye.

Source: Ophir, Bloomberg.

SpaceX grew revenue 33% last year, to around US$18.7 billion. It listed at roughly US$1.75 trillion – close to 100 times sales. Amazon listed at 28 times revenue while growing around 1,700%; Meta at 28 times growing 87%. SpaceX investors are getting a fraction of that growth for a multiple several times higher.

Now, betting against Elon Musk has historically been dangerous. And we can only hope, for humanity’s sake, that he delivers. BUT – those are the loftiest growth expectations, at scale, the world has ever asked anyone to live up to! And the market seems happy to oblige. SpaceX has since jumped +20% in its first days of trading.

Not a one-trick pony

So how are we positioned for all this frothiness?

Our weighting to semiconductors is around 10% in our Global Funds – roughly the index weight. We are not chasing momentum, or the leverage that hedge funds are piling into the trade.

Maybe some funds can read the memory supply cycle perfectly and will pivot right before any crash. Good luck to them. Our performance is built differently. We spread investments across many companies that have their own idiosyncratic earnings drivers and march to their own beat.

You can see it in our multi-factor attribution for May in our Global Opportunities Fund below.

Source: Ophir, Bloomberg. Data as at 31 May 2026. MSCI World SMID Index NR (AUD), performance is net of fees. Past performance is not a reliable indicator of future performance. Performance figures are net of fees.

The benchmark was up +3.1% and we were up +5.1%. Industry positioning – the factor that’s been driving the market’s narrow leaders – was actually a small negative for us. The gold bar is where our outperformance came from: +3.2% from stock selection; i.e. finding hidden gems before the market discovers them!

Fund distributions are coming – we reinvest ours, should you?

While many investors are focused on price appreciation, it’s also vital to be across distributions if you’re seeking to maximise your wealth creation and realise important financial goals.

At Ophir, we seek to compound investors’ capital. Over the long run, we’ve done exactly that, returning:

• +23.0% per annum in the Ophir Opportunities Fund (since August 2012)
• +12.1% per annum in the Ophir High Conviction Fund (since August 2015)
• +18.7% per annum in the Ophir Global Opportunities Fund (since October 2018)
• +14.3% per annum in the Ophir Global High Conviction Fund (since September 2020)

(The returns are all net of fees and assume reinvestment of distributions.^[1])

But under Australian managed-fund rules, we’re required to pass through net realised gains and income to unitholders each year. Some years it’s a meaningful distribution, some a modest one, and occasionally none at all.

When there is a distribution, however, the mechanics can confuse some investors. And what you do with the cash is often one of the most consequential investment decisions you’ll make all year.

What is a distribution?

A distribution is your share of the year’s profits – the dividends, interest and net realised capital gains your fund has earned, paid out in proportion to how many units you hold.

Realised gains – i.e. when we sell a stock for a profit – are what swing most year to year. Some years we crystallise a lot, and some years prior-year losses are still absorbing gains before they reach you.

FY26 distribution estimates

Below are our estimated distributions per unit (DPU) for each Fund and unit class, based on portfolio data, as of 30 April 2026:

Estimates only, based on portfolio data as of 30 April 2026. Final distributions are calculated after 30 June 2026 and may differ materially. Do not rely on these figures for tax purposes.

Why your unit price falls on 30 June

Like clockwork, after each distribution, we get an influx of concerned investors asking: what on earth happened to the Fund in June for the unit price to drop?

The reassuring answer is usually: nothing!

We just paid you a distribution.

You can see this in the following example:

• Imagine your unit price starts FY26 at $2.50.
• Through the year, the Fund earns $0.50 per unit that must be distributed.
• By 30 June 2026, the unit price is $3.00: your original $2.50, plus the $0.50 waiting to be paid out.
• On 30 June, that $0.50 gets paid out as a cash distribution, and the unit price retreats to $2.50, exactly where it started.

If you looked at the price alone, you’d swear you made nothing all year. But the $0.50 is in your pocket. Add it back and your total return is 20% ($0.50 ÷ $2.50). (We’ve simplified here – generally not all of a year’s unit-price rise is paid out.)

That $3.00 is the cum-price – the unit with the income still inside it. The $2.50 is the ex-price – after the cash has been handed out.

The gap between them isn’t a loss. It’s your distribution.

The price didn’t fall. It just stopped carrying cash, which is now yours.

The cost of cash

Everyone loves a bonus – and to be clear, the cash is your real profit from the stocks we hold. The only question is what taking the distribution costs you, compared to leaving it in the Fund.

Here’s the answer in dollars.

Assume you invested $100,000 into the Ophir Opportunities Fund at inception in August 2012. The chart below shows what you’d have as of 31 May 2026, depending on what you did with each distribution along the way.

Source: Ophir. Index Return = the ASX Small Ordinaries Total Return Index. Note: investors in the Fund have not been / will not be able to reinvest the FY25 and FY26 distributions, to constrain the capacity of the Fund and help optimise our ability to generate performance. Past performance is not a reliable indicator of future performance.

If you had ticked the dividend reinvestment plan (DRP) box at inception, then your $100,000 is worth $1.76 million today (after fees and before tax).

But if you took every distribution as cash and let it sit earning the cash rate,  you’d have $801,000. That’s around $960,000 of difference.

What if you’d instead put every cash distribution into the Australian small-cap index along the way? You’d have $953,000 – better, but still over $800,000 short of the DRP investor.

Both numbers tell the same story: cash rarely gets a plan. After the distribution lands in your bank account, it’s easy to sit on your hands waiting to ‘buy the dip’. The problem is that the market, more often than not, keeps rising, leaving you and your cash behind.

These figures are illustrative only, based on the fund’s actual past returns and a calculated cash rate over the period shown. Outcomes will depend on how distributions are used. Holding cash or reinvesting into different assets may lead to different results. Past performance is not a reliable indicator of future performance.

Don’t Retire your Profits (DRP)

The case for reinvesting is the oldest one in investing: compounding. As Warren Buffett put it: “Life is like a snowball. The important thing is finding wet snow and a really long hill.”

Here’s how it rolls:

• When you reinvest your distribution, you receive new units issued at the post-distribution net asset value (NAV), with no transaction costs.
• Those units earn next year’s distribution, which buys more units, which earn the year after … Gentle at first, quietly remarkable by year ten, and genuinely transformative by year twenty (based on historical returns).

Four things you should know about the DRP:

• Free. No transaction costs or buy/sell spreads.
• Flexible. You can reinvest fully, partially, or not at all … or change your mind any time.
• Tax-neutral. Your distribution is assessable in the year it’s earned regardless of whether you take cash or reinvest. Reinvesting doesn’t defer or reduce the tax.
• Set-and-forget. You can choose to elect once. Reinvestment runs in the background until you stop it.

The DRP isn’t for everyone. If you rely on your distribution for income, take the cash. But if you don’t need it right now and you’re investing for the long term, reinvestment is the simplest decision you can make to compound your position.

The above is general information only, not personal financial advice. Market conditions, cash flow needs and tax outcomes may affect long-term results, and outcomes are not guaranteed. Consider seeking licensed financial or tax advice for your circumstances.

What to do now

There are two things you should do between now and 30 June:

• Check your DRP preference. If you want to reinvest your FY26 distribution, or change your existing election, log in to the Automic Investor Portal (link), follow Automic’s step-by-step DRP guide (link), or use the paper DRP form (link) and email a copy to ophir@automicgroup.com.au. Elections close at the close of business on 30 June 2026 for the unlisted funds, and 2 July 2026 for OPH in line with the ASX timetable.
• Check your bank account details. Important: missing or out-of-date details mean you may be deemed to have elected DRP by default.

Final figures of distributions and statement timing will be confirmed in our late-July follow-up communication

[1]Past performance is not a reliable indicator of future performance.

As always, if you’d like to chat to us about any of the Funds, please feel free to call us on (02) 8188 0397 or email us at ophir@ophiram.com.

Thank you for entrusting your capital with us.

Kindest regards,

Andrew Mitchell & Steven Ng

Co-Founders & Senior Portfolio Managers

Ophir Asset Management

This document has been prepared by Ophir Asset Management Pty Ltd (ABN 88 156 146 717, AFSL 420082) (“Ophir”) and contains information about one or more managed investment schemes managed by Ophir (the “Funds”) as at the date of this document. The Trust Company (RE Services) Limited ABN 45 003 278 831, the responsible entity of, and issuer of units in, the Ophir High Conviction Fund (ASX: OPH), the Ophir Global Opportunities Fund and the Ophir Global High Conviction Fund. Ophir is the trustee and issuer of the Ophir Opportunities Fund.

This is general information only and is not intended to provide you with financial advice and does not consider your investment objectives, financial situation or particular needs.  You should consider your own investment objectives, financial situation and particular needs before acting upon any information provided and consider seeking advice from a financial advisor if necessary. Before making an investment decision, you should read the relevant Product Disclosure Statement (“PDS”) and Target Market Determination (“TMD”) available at www.ophiram.com or by emailing Ophir at ophir@ophiram.com. The PDS does not constitute a direct or indirect offer of securities in the US to any US person as defined in Regulation S under the Securities Act of 1993 as amended (US Securities Act).

All Ophir Funds are deemed high risk within their respective Target Market Determination documentation.  Ophir does not guarantee the performance of the Funds or return of capital.  An investment may achieve a lower than expected return and investors risk losing some or all of their principal investment.  Past performance is not a reliable indicator of future performance.  Any opinions, forecasts, estimates or projections reflect our judgment at the date of this was prepared, and are subject to change without notice.  Rates of return cannot be guaranteed and any forecasts, estimates or projections as to future returns should not be relied on, as they are based on assumptions which may or may not ultimately be correct.

Actual returns could differ significantly from any forecasts, estimates or projections provided.

The Trust Company (RE Services) Limited is a part of the Perpetual group of companies. No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital.

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The quiet half of the infrastructure trade

When investors think about infrastructure, they usually think about the building of it – the cranes, the ribbon cuttings, the multi-billion-dollar contracts to construct new highways, fibre networks, and water treatment plants.

What is often overlooked is the quieter, less glamorous component: maintenance. Someone has to inspect the pipes, fix the leaks, upgrade the substations and respond when a storm takes down a network. None of it is headline-grabbing. All of it keeps the country running.

Service Stream (ASX: SSM) is one of Australia’s largest essential network services companies, delivering operations and maintenance work across telecommunications, utilities, transport, and (as of February 2026) defence.

We have owned Service Stream at various points of different cycles. Today, Service Stream is in an absolute sweet spot. It has significant earnings upside over the next three years, a valuation that does not appropriately reflect this, and, on top of this, a net cash balance sheet that gives it optionality to take acquisition opportunities that arise.

Not just another ‘bad contractor’

We initially bought into Service Stream in 2023. At the time, the company had taken on several utilities contracts that were poorly priced and poorly risk-managed. Margins collapsed, the stock derated heavily, and the market wrote the business off as a typical ‘bad contractor’ story.

Source: Ophir, Bloomberg. Data as at 31 May 2026.

However, we could see the opposite was true. The contracts in question were finite. The management team had evolved. Pricing discipline was being restored. And the underlying franchise, multi-year operations and maintenance (O&M) contracts with blue-chip utilities and telcos, was inherently a high-quality annuity business once the legacy issues were worked through.

The share price has obviously increased a long way since then. But we believe the market is still underestimating the upside of the company.

There are three reasons we have been adding to the position over the past year, and all point to the same thing: earnings upside.

1. The utilities margin recovery has further to run

Service Stream’s utilities division was the heart of the original problem back in 2022. Over the past 24 months, the team has methodically restructured pricing, exited unprofitable scopes, and rebuilt the discipline around contract risk.

The result is now becoming visible in the numbers. The 1H26 result showed a step-change in utility EBITDA margins to 5.5%, up 130 basis points on the prior corresponding period and ahead of the segment repositioning target of 5.0%. Management has indicated that it is targeting further incremental margin expansion.

We think this is achievable. The company is now in a position to selectively pursue minor capital works at higher margins, and the broader contracting environment is supportive. As a result, utilities can continue to grow organically at high single digits, with EBITDA margins expanding towards 6.5% over the next two years.

Source: Service Stream FY26 Half Year Results Presentation.

2. Defence is a genuine step-change in the addressable market

In FY26, Service Stream achieved a long-term strategic objective when it was appointed as a Tier 1 Defence contractor. The win was a six-year Property & Asset Services agreement with the Department of Defence covering the Northern Territory and South Australia, with two 1- to 3-year extension options. Initial contract value is $1.6 billion over the first six years.

Source: Service Stream FY26 Half Year Results Presentation.

This is genuinely significant for two reasons. First, it represents a major expansion of the Group’s addressable market – Defence facilities maintenance has historically been a duopoly dominated by Ventia and Downer. Service Stream is now part of that conversation. Second, the contract mobilised on 1 February 2026 and is expected to contribute meaningfully to earnings from FY27 onwards.

The market is currently using a ~5% margin assumption for this work, which we think is conservative. In time, the team will scale, optimise operations, and start winning the minor capital works that typically accompany the incumbent facilities maintenance contractor. We believe Defence could generate over $250 million of annual revenue for Service Stream at margins north of 5%.

Source: Service Stream FY26 Half Year Results Presentation.

3. Telecommunications remains a steady earner with embedded growth

The telco segment has cycled off a strong period (the 1H25 comparable was inflated by programs that have since rolled off), but the underlying franchise is in good shape. Most notably, Service Stream has:

• Successfully transitioned to a new NBN Field Services contract with exclusive coverage of VIC, SA, WA & NT.
• Commenced initial mobilisation on the new NBN fibre upgrade in QLD, NSW and ACT.
• Signed a new five-year strategic partnership with Telstra.
• Secured a new program supporting Optus HFC decommissioning.

These are all multi-year, annuity-style contracts that underpin the segment for the next 3-5 years. We believe Service Stream’s telco segment can grow revenue 3-5% next year at margins of around 9%.

Source: Service Stream FY26 Half Year Results Presentation.

A hidden order book

What gives us particular confidence in the company’s earnings trajectory is the rate at which Service Stream has been securing new work.

In 1H26 alone, the company secured $2.2 billion of new multi-year operations and maintenance (O&M) agreements and strategically renewed 93% of existing contracts that proceeded to market. Total Work in Hand (WIH) has grown 55% on the prior corresponding period to $9.2 billion, with an additional $6 billion in extension options on top.

Source: Service Stream FY26 Half Year Results Presentation.

Average contract tenure is now 17.5 years.

Since the 1H result, Service Stream has continued to add to that order book. Recent announcements include:

• A nine-year, $405 million contract with Yarra Valley Water under its Maintenance Services Delivery Partners program (mobilisation October 2026),
• Two contracts with Millmerran Operating Company at its Queensland power station worth a combined ~$50 million over three years.

These wins illustrate exactly what a diversification strategy is designed to deliver: more water, more industrial, more power.

In a contractor, Work in Hand growth of this magnitude doesn’t show up in the P&L immediately. It shows up over the following 2-3 years as new contracts mobilise and existing ones extend at improved margins.

Source: Service Stream FY26 Half Year Results Presentation.

The market is treating Service Stream’s headline FY26 numbers (revenue down 5.8% on previous corresponding period due to the 1H25 telco skew) without giving credit for the order book that sits behind them.

Optionality on top

Management has indicated they continue to actively assess M&A opportunities to expand service offerings, capabilities, and addressable markets.

Past acquisitions have focused on quality and have been bedded down well. With ~$100 million of net cash expected to be available outside of leases by FY27, a sensibly priced bolt-on at ~8x EV/EBIT would add another ~9% to earnings on top of the organic upgrade we already see.

The offshore lens

It is worth stepping back and putting Service Stream in the context of its global peers, because the Australian market does not always price contractors the way the US market does.

In the US, the listed network and infrastructure services contractors – Dycom Industries (NYSE: DY), MasTec (NYSE: MTZ), EMCOR (NYSE: EME), and Quanta Services (NYSE: PWR) – trade on materially higher multiples than their Australian counterparts.

Dycom, for example, has just reported FY26 revenue of US$5.5 billion at 13.3% adjusted EBITDA margins, with a backlog of more than US$8 billion, and trades on more than 25x forward earnings. MasTec sits even higher at around 35x.

Source: Ophir, Bloomberg.

The drivers are not identical to Service Stream, US peers benefit more directly from fibre-to-the-home buildouts, data centre construction, and the AI-driven power infrastructure cycle. But the structural features investors are paying premium multiples for, long-dated O&M contracts with blue-chip customers, recurring revenue, net cash balance sheets, and operating leverage from incremental volume, are exactly the features Service Stream now has. And who knows … maybe data centres are next for Service Stream!

The US private market reinforces the point. ITG Communications, a private US network services provider, has been on an aggressive acquisition spree (Quasar in December 2025, Advantage Utilities in November 2025, and others), backed by global alternatives firm Oaktree Capital. Private capital is paying up to consolidate this category, even as Australian listed peers in the same category trade at material discounts to global comps.

Looking ahead: arguably a higher-quality earnings stream

Service Stream’s management has guided earnings growth in FY26, with a traditional 2H bias driven by the mobilisation and scaling of new operations including Defence.

We believe consensus FY27 EBITDA of ~$180 million is too low. We see upside risk to earnings as utilities margins continue to expand, telco grows modestly, and Defence begins to contribute meaningfully.

Service Stream is currently trading on around 18x consensus FY27 earnings, which, given our earnings expectations, is overstated and should be closer to ~14x.

For reference, Ventia trades on ~18x, Downer on ~17x, and smaller specialist contractor SRG well above 24x. It could be argued that Service Stream has a higher-quality earnings stream than some of these. More annuity, less Design & Construct, with a net cash balance sheet and clearer earnings upgrades ahead.

Source: Ophir, Bloomberg.

Why it fits this environment

In a market consumed by the AI debate, where every software business is being asked whether its cash flows are durable at all, Service Stream is the other side of the coin.

Its earnings are tied to ageing infrastructure that has to be maintained, telecommunications networks that have to be operated, water assets that have to keep flowing, and defence sites that have to stay functional. None of this changes if AI model capability doubles next year. None of it changes if the macro slows. The work simply has to happen.

It is, in short, the kind of compounder that doesn’t need a benign macro to work. It just needs the infrastructure of modern Australia to keep running – and that, increasingly, runs through Service Stream.

Your Distribution Guide – the decision that compounds.

PDF    |    OPH ASX Announcement

At Ophir, we seek to compound investor capital.

Over the long run, we’ve done exactly that, returning (as at 31 May 2026):

• +23.0% p.a. in the Ophir Opportunities Fund (since August 2012)
• +12.1% per annum in the Ophir High Conviction Fund (since August 2015)
• +18.7% per annum in the Ophir Global Opportunities Fund (since October 2018)
• +14.3% per annum in the Ophir Global High Conviction Fund (since September 2020)

all net of fees and assuming reinvestment of distributions. Past performance is not a reliable indicator of future performance.

Under Australian managed-fund rules, we’re required to pass through net realised gains and income to unitholders each year.

Some years that means a meaningful distribution, some a modest one, and occasionally none at all. When there is one though, the mechanics can confuse some investors. The choice of what to do with the cash is often one of the most consequential investment decisions they’ll make all year.

This piece covers three things:

• How a distribution actually works: what you’ll see, and why.
• The cost of taking cash: the long-term impact on your investment.
• The practical bits: FY26 distribution estimates for the Ophir Funds, key payment and statement dates, and what to do before 1 July.

What is a distribution, exactly

A distribution is your share of the year’s profits: the income and realised gains your fund has earned, paid out in proportion to how many units you hold. For our funds, that typically includes:

• Dividends from the companies we own
• Interest on any cash holdings
• Net realised capital gains from holdings we’ve sold during the year

That last one is what swings most year to year. Some years we crystallise a lot of gains, some years we don’t, and some years prior-year losses are still absorbing gains before they reach you.

Why your unit price falls on 30 June

In the weeks after a distribution, like clockwork, we get an influx of concerned investors asking what on earth happened to the fund in June for the unit price to drop. And the reassuring answer is usually, nothing! We just paid you a distribution.

Imagine your unit price starts FY26 at $2.50, and through the year the fund earns $0.50 per unit that must be distributed. That money doesn’t sit in a separate pot; it increases your unit price over the year. By 30 June 2026, the unit price is $3.00: your original $2.50, plus the $0.50 waiting to be paid out. On 30 June, that $0.50 gets paid out as a cash distribution, and the unit price retreats to $2.50, exactly where it started.

Look at the price alone and you’d swear you made nothing all year, a 0% price return. But the $0.50 is in your pocket. Add it back and your total return is 20% ($0.50 ÷ $2.50). Note: generally it’s not 100% of any rise in the unit price throughout the year that is paid out as a distribution – we have just simplified the example here.

But, this is where the jargon trips people up. That $3.00 is the cum-price, the unit with the income still inside it. The $2.50 is the ex-price, after the cash has been handed out. The gap between them isn’t a loss. It’s your distribution.

The price didn’t fall. It just stopped carrying cash that’s now yours.

The cost of cash

Everyone loves a Brucey bonus. There’s something satisfying about seeing cash hit the bank from an investment, and to be clear, it’s your real profit from the stocks we hold.

The only question is: what taking it as cash costs you, compared to leaving it in the fund.

Here’s the answer in dollars. Put $100,000 into the Ophir Opportunities Fund at inception in August 2012. The chart below shows what you’d have as at 31 May 2026: the value of your holding, plus whatever you did with each distribution along the way.

Source: Ophir, Bloomberg. Note: Index refers to ASX Small Ordinaries Index Total Return.

Tick the DRP box at inception and your $100,000 is worth $1.76 million today (after fees and before tax). Take every distribution as cash and let it sit earning the cash rate, and you have $801,000. That’s around $960,000 difference.

But what if you’d got around to reinvesting it yourself, putting every cash distribution into the Australian small cap index along the way? You’d have $953,000. Better, but still over $800,000 short of the DRP investor.

Both numbers tell the same story, and it isn’t about the index, the cash rate, or the maths. It’s that cash rarely gets a plan. The first distribution lands, you ponder what to do with it, you sit on your hands waiting to “buy the dip”, while the market it came from has continued compounding without it.

These figures are illustrative only, based on the fund’s actual past returns and a calculated cash rate over the period shown. Outcomes will depend on how distributions are used. Holding cash or reinvesting into different assets may lead to different results. Past performance is not a reliable indicator of future performance.

Don’t Retire your Profits (DRP)

But officially? The Distribution Reinvestment Plan.

The case for reinvesting is the oldest one in investing: compounding. As Warren Buffett put it, “Life is like a snowball. The important thing is finding wet snow and a really long hill.”

The DRP hands you both. The wet snow is a fund with strong long-term returns. The long hill is the time horizon that lets compounding do its work.

Here’s how it rolls. Reinvest your distribution and you receive new units, issued at the ex-price, with no transaction costs. Those units earn next year’s distribution, which buys more units, which earn the year after. Each year your slice gets a little bigger. Gentle at first, quietly remarkable by year ten, genuinely transformative by year twenty (based on the historical returns).

That’s the snowball. The DRP is how you keep it rolling.

Four things to know about the DRP

• Free: No transaction costs or buy/sell spreads.
• Flexible: Reinvest fully, partially, or not at all. Change your mind any time.
• Tax-neutral. Same tax either way. Your distribution is assessable in the year it’s earned regardless of whether you take cash or reinvest. Reinvesting doesn’t defer or reduce the tax.
• Set-and-forget. Elect once. It runs in the background until you stop it.

The DRP isn’t for everyone. If you rely on your distribution for income, take the cash. But if you don’t need the cash right now and you’re investing for the long term, reinvestment is the simplest decision you can make to compound your position.

Based on their own circumstances, the investors in our funds who’ve quietly reinvested for the last decade didn’t make a difficult decision once. They made an easy decision once and left the snowball alone.

The above is general information only, not personal financial advice. Market conditions, cash flow needs and tax outcomes may affect long-term results, and outcomes are not guaranteed. Consider seeking licensed financial or tax advice for your circumstances.

FY26 distribution estimates

Below are our estimated distributions per unit (DPU) for each fund and unit class, based on portfolio data as at 30 April 2026:

Please note: for all Ophir funds, the ex-distribution date is 30 June 2026, and the record date is 1 July 2026.

Estimates only, based on portfolio data as at 30 April 2026. Final distributions are calculated after 30 June 2026 and may differ materially. Do not rely on these figures for tax purposes.

Why OPH works differently

The Ophir High Conviction Fund (OPH) is our listed investment trust (LIT), so its Distribution Reinvestment Plan works differently to our unlisted funds.

In the unlisted funds, your reinvested distribution simply becomes new units, created at the ex-price. Because OPH units trade on the ASX, our current DRP policy is to use your distribution to buy OPH units on-market through our broker, rather than issuing new units. In plain terms, an on-market buyback.

That’s good news for you. The buyback can never pay more than the end of financial year reported NAV per unit, and when OPH trades at a discount, as it does today, you pay less.

Note: because the buyback takes time to complete and settle, OPH’s distribution and tax statements arrive a few weeks later than the unlisted funds, typically mid-to-late August. For more details please refer to the ASX announcement (link) and the terms and conditions of the DRP (link here).

A note for Global High Conviction Fund holders

Our Global High Conviction Fund (Class A and Class B units), based on current estimates, may not pay a distribution this year.

The fund had built up carry-forward losses from prior years. This financial year to date, the fund has produced strong returns, and those carry-forward losses have done exactly what they’re designed to do: absorb the realised gains the fund made so far during FY26. The capital losses have been fully recouped, and the remaining gains have been offset by some leftover carried-forward revenue losses.

Based on current estimates, the expected outcome is a $0 distribution, with the value the fund has generated staying in your unit price rather than being paid out.

If that estimate holds, GHCF holders won’t receive a distribution statement or an AMMA tax statement (the document you’d normally use at tax time) for FY26.

Your 30 June statement will arrive later

Because the final ex-distribution unit price can’t be confirmed until after the distribution is calculated and audited, your 30 June 2026 holding statement arrives once everything is finalised. It comes bundled with your distribution and AMMA tax statements: late July to early August for the unlisted funds, and the second half of August for OPH.

Dates are estimates only. All statements will be sent via our unit registry Automic Group and will be made available in the Automic Investor Portal.

Withdrawing?

Unitholders who lodged a redemption request during the June cycle remain entitled to their FY26 distribution. As the final distribution calculation is still being completed, payment of redemption proceeds will be delayed and is expected to be made at approximately the same time as distribution payments. We appreciate your patience while this process is finalised.

What to do now

Three things between now and 30 June:

• Check your DRP preference. If you want to reinvest your FY26 distribution, or change your existing election, log in to the Automic Investor Portal (link), follow Automic’s step-by-step DRP guide (link), or use the paper DRP form (link) and email a copy to ophir@automicgroup.com.au. For the unlisted funds, elections must be received by close of business 30 June 2026. For OPH, in line with the ASX timetable, DRP elections close on 2 July 2026 (the first business day after the record date).
• Check your bank account details. Important: missing or out-of-date details means you may be deemed to have elected DRP by default.
• Final figures and statement timing will be confirmed in our late-July follow-up.

As always, if you’d like to chat to us about any of the Funds, please feel free to call us on (02) 8188 0397 or email us at ophir@ophiram.com.

Thank you for entrusting your capital with us.

Kindest regards,

Andrew Mitchell & Steven Ng

Co-Founders & Senior Portfolio Managers

Ophir Asset Management

This document has been prepared by Ophir Asset Management Pty Ltd (ABN 88 156 146 717, AFSL 420082) (“Ophir”) and contains information about one or more managed investment schemes managed by Ophir (the “Funds”) as at the date of this document. The Trust Company (RE Services) Limited ABN 45 003 278 831, the responsible entity of, and issuer of units in, the Ophir High Conviction Fund (ASX: OPH), the Ophir Global Opportunities Fund and the Ophir Global High Conviction Fund. Ophir is the trustee and issuer of the Ophir Opportunities Fund.

This is general information only and is not intended to provide you with financial advice and does not consider your investment objectives, financial situation or particular needs.  You should consider your own investment objectives, financial situation and particular needs before acting upon any information provided and consider seeking advice from a financial advisor if necessary. Before making an investment decision, you should read the relevant Product Disclosure Statement (“PDS”) and Target Market Determination (“TMD”) available at www.ophiram.com or by emailing Ophir at ophir@ophiram.com. The PDS does not constitute a direct or indirect offer of securities in the US to any US person as defined in Regulation S under the Securities Act of 1993 as amended (US Securities Act).

All Ophir Funds are deemed high risk within their respective Target Market Determination documentation.  Ophir does not guarantee the performance of the Funds or return of capital.  An investment may achieve a lower than expected return and investors risk losing some or all of their principal investment.  Past performance is not a reliable indicator of future performance.  Any opinions, forecasts, estimates or projections reflect our judgment at the date of this was prepared, and are subject to change without notice.  Rates of return cannot be guaranteed and any forecasts, estimates or projections as to future returns should not be relied on, as they are based on assumptions which may or may not ultimately be correct.

Actual returns could differ significantly from any forecasts, estimates or projections provided.

The Trust Company (RE Services) Limited is a part of the Perpetual group of companies. No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital.

An all-time month for Ophir’s flagship Funds in April

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In this Letter to Investors, we look at:

• The big reason the U.S. market keeps charging higher despite the Iran war remaining unresolved.
• The pleasing explanation for why our Global Opportunities Fund had its best month ever.
• Our flagship Global and Aussie small-cap Funds topping the leaderboards in April.
• The potential for a ‘soft close’ of our Global Opportunities Fund to help optimise our ability to generate returns.
• The hot industry sector in the AI thematic that has killed it over the last year, including a stock up a massive 2,939%.
• Why we don’t need big skews to risky ‘hot themes’ to drive our strong performance.

The outbreak of the Iran war triggered an ‘every equity market down month’ in March. But then in April we saw an almost universal relief rally in markets as investors got more comfortable that there was likely to be a de-escalation in military hostilities.

During the month, the S&P 500 ripped +10.5% to new all-time highs. Domestically, however, the RBA’s continued hiking led to a relatively muted +2.2% gain for the ASX 200.

A hawkish RBA also saw the Australian dollar jump +4.4% versus the U.S. dollar, which trimmed offshore gains for unhedged Aussie investors. Global equities (MSCI World Index) were up +9.6% in U.S. dollar terms in April. But in Australian dollar terms gains were almost cut in half to +5.1%.[1]

It’s earnings, stupid

Understandably, investors have been scratching their heads and wondering why the US share market is back at all-time highs when the Iran war and the global oil supply situation remain unresolved.

The answer likely lies in the chart below.

It’s earnings!

Normally in the first few months of the year (as shown by the grey line), corporate earnings expectations in the U.S. get downgraded.

But this year, earnings expectations have been going bananas.

They’ve been juiced up by stellar growth from AI-related businesses.

But expectations for earnings growth have also been strong outside the Magnificent 7, including in small-cap land where we fish.

How Ophir’s stock picking drove April outperformance

Our Ophir Funds in April collectively had one of their best months ever.

In fact, measured by the collective increase in our Funds Under Management due to investment returns, we added more to our investors’ back pockets in April than any month before!

Of course, in our view, investing in shares is a long-term endeavour and that is what’s most important, but it’s nonetheless pleasing to have had a good month.

Leading the way was our Global Opportunities Fund (global small caps), which in April was up +12.3%.

As you can see in the chart below, over the 91 months since it started in October 2018, this was its best month ever.

Importantly, most of this return was outperformance.

While the Fund was up 12.3 per cent in April, its benchmark (MSCI World SMID Cap Index NR AUD) rose +3.2% — an outperformance of 9.1%.

Just as important, the vast majority of that 9.1% outperformance came, not from a big factor or thematic tailwind, but from stock picking (a point we’ll elaborate on later).

The April outperformance was essentially the stock prices of our companies catching up with the Feb/March reporting season.

While they handed down strong earnings back then, they weren’t fully rewarded at the time because the Iran war had stolen the market’s attention.

Ophir Flagship Funds top leaderboards

Not only was April the best month for our Global Opportunities Fund in its history. But it was also the best performance in April of any global small/mid-cap fund available in Australia (see chart below).

For prospective investors in the Fund, a natural question might be: “Have I missed out? Have all the returns already been squeezed from the current portfolio?”

Well, we’d note that the competition for stocks to get into our Global Opportunities Fund remains amongst the highest it’s ever been.

Many great ideas have been relegated to ‘bench’ stocks, so we can keep the Fund full of just our very best ideas.  Given this, we have been personally allocating significant amounts to the Fund at the start of May.

Market leading performance

But it wasn’t just our flagship Global Fund that had a good April.

Our original Aussie small-cap fund, the Ophir Opportunities Fund, also outperformed all other Aussie small/mid-cap funds during April, rising +8.4%.

It wasn’t the Ophir Opportunities Fund’s best month ever in absolute terms. But after beating its benchmark (the ASX Small Ordinaries Index +3.3%) by 5.1% in April, it was a top-10 outperformance month. Not bad for a fund that’s been going 165 months (almost 14 years).

Since its 2012 inception, that original Ophir Opportunities Fund has now returned +22.8% per annum after all fees.

That puts it a long way ahead of the other Australian small/mid-cap funds that have been going since 2012. And way ahead of the ASX Small Ordinaries total return index which has returned 6.7% per annum – see chart below.

Why the Global Opportunities Fund may follow in the footsteps of the Ophir Opportunities Fund with a ‘soft close’

Relative to other global small/mid-cap funds available in Australia that have been going since at least the Fund’s inception in 2018, our Global Opportunities Fund also has a significant outperformance gap (see below).

For those unfamiliar, the Global Opportunities Fund has the same investment process and is run in a similar fashion to our Ophir Opportunities Fund, just in global small caps not Aussie small caps.

It also shares many of the same investment analysts and portfolio managers who have worked on the Ophir Opportunities Fund.

But while the Australian Ophir Opportunities Fund remains closed to new money at capacity, as it has been since 2015, the Ophir Global Opportunities Fund remains open.

However, to give ourselves the best chance of outperforming over the long term, in the not-too-distant future the Global Opportunities Fund may ‘soft close’ to new investors and advice groups. The reality is a month like April does chew through capacity and brings forward the date we’ll have to close the fund to those new investors.

The fund remains open and any decision regarding ‘soft close’ will be communicated in advance.

How Ophir is generating outperformance with no big skew to ‘hot’ themes or sectors

There is no getting around the fact that when it comes to investing, the hottest ticket in town is Artificial Intelligence (AI).

We use it in our business, and it can do wonderful things. Almost all the CEOs we talk to have a plan to implement it across their businesses.

The capex cycle behind this new technology is literally unprecedented. The current data centre build out eclipses the inflation-adjusted spend of every other megaproject in U.S. history, from the railroads, interstate highways, the Apollo Program, and the Manhattan Project.

Below, we have aggregated the 5,000-odd global small and mid-cap stocks in the MSCI World SMID Cap Index (our Global Opportunities Fund’s benchmark) into 60 industry groups.

We then show the share price performance of each industry group over the year to the end of April from best (‘Technology Hardware up 148%’) to worst (‘Advertising and Marketing down -32.1%’).

Source:Bloomberg.

Why has the technology hardware industry sector killed it over the last year?

Because it’s the picks and shovels of the AI boom. Two major sub-sectors of Technology Hardware are:

• Memory stocks, like SanDisk, Seagate and Western Digital.
• AI networking stocks, including Lumentum, Applied Optoelectronics and Ciena.

Each of these stocks is up 5x or more over the last year.

SanDisk is up a crazy 2,939%. That means a $100 investment a year ago would be worth $3,039 today.

To put that in perspective, if you had a 30-stock portfolio with $100 in each and 29 didn’t go anywhere and were worth $100 still at the end of the year but the 30^th stock was SanDisk, your portfolio return for the year would be 98%! That can hide a lot of sins in the rest of your portfolio![2]

Semiconductor stocks are also on a tear.

As measured by the SOX Index, semiconductors gained for 18 days straight in April. That’s the longest streak ever.

The ratio of the SOX Index to the S&P 500 is now well past the highs seen during the early-2000s dot-com bubble.

We are content as stock pickers

The problem with the ‘just buy big AI beneficiaries’ stocks is that while they have a lot of momentum, we can’t completely write off the possibility of an overbuild. And at some point, the popping of an AI bubble.

At Ophir we are not trying to ride big thematics with big overweight positions to them. If you are good at doing that, then play in large caps or run a macro hedge fund running tens of billions of dollars where you are not constrained by the capacity and liquidity issues that feature in small caps.

We are picking stocks with idiosyncratic drivers of their earnings.

We do have some exposure to the AI thematic, but we are not massively over-indexed to it.  You can see this in the red line of the chart above, which shows our over- or underweight position compared to the benchmark weight in each of the 60 industries.

None of our over- or underweight positions is that big.

Our Global Opportunities Fund has returned a strong 32.9% over the year to the end of April … without having any big overweight position in the industries (most of them AI-related) that have shot the lights out over the last year.

We like that.

We think it means we don’t have to rely on trying to time a certain thematic that has a lot more eyeballs on it.

We’re content picking stocks, not themes, because it means we will have lots of diverse drivers of earnings growth in our Funds. And it means we’re not putting performance at risk if the share prices of stocks exposed to a big thematic reverse at some point, as we’ve seen time and again throughout history.

[1] For those investors worried about any further appreciation in the Australian dollar our Global Opportunities Fund also has a currency-hedged version available (here).

[2] Admittedly SanDisk would have gone from 3.33% of your portfolio to over 50% of it by the end of the year and unless you had a cast-iron stomach would have sold down the holding before it reached half of your portfolio.

As always, if you’d like to chat to us about any of the Funds, please feel free to call us on (02) 8188 0397 or email us at ophir@ophiram.com.

Thank you for entrusting your capital with us.

Kindest regards,

Andrew Mitchell & Steven Ng

Co-Founders & Senior Portfolio Managers

Ophir Asset Management

This document has been prepared by Ophir Asset Management Pty Ltd (ABN 88 156 146 717, AFSL 420082) (“Ophir”) and contains information about one or more managed investment schemes managed by Ophir (the “Funds”) as at the date of this document. The Trust Company (RE Services) Limited ABN 45 003 278 831, the responsible entity of, and issuer of units in, the Ophir High Conviction Fund (ASX: OPH), the Ophir Global Opportunities Fund and the Ophir Global High Conviction Fund. Ophir is the trustee and issuer of the Ophir Opportunities Fund.

This is general information only and is not intended to provide you with financial advice and does not consider your investment objectives, financial situation or particular needs.  You should consider your own investment objectives, financial situation and particular needs before acting upon any information provided and consider seeking advice from a financial advisor if necessary. Before making an investment decision, you should read the relevant Product Disclosure Statement (“PDS”) and Target Market Determination (“TMD”) available at www.ophiram.com or by emailing Ophir at ophir@ophiram.com. The PDS does not constitute a direct or indirect offer of securities in the US to any US person as defined in Regulation S under the Securities Act of 1993 as amended (US Securities Act).

All Ophir Funds are deemed high risk within their respective Target Market Determination documentation.  Ophir does not guarantee the performance of the Funds or return of capital.  An investment may achieve a lower than expected return and investors risk losing some or all of their principal investment.  Past performance is not a reliable indicator of future performance.  Any opinions, forecasts, estimates or projections reflect our judgment at the date of this was prepared, and are subject to change without notice.  Rates of return cannot be guaranteed and any forecasts, estimates or projections as to future returns should not be relied on, as they are based on assumptions which may or may not ultimately be correct.

Actual returns could differ significantly from any forecasts, estimates or projections provided.

The Trust Company (RE Services) Limited is a part of the Perpetual group of companies. No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital.

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The plumbing of global markets

Some of the best businesses in the world are the ones nobody talks about at dinner parties. Toll roads. Pipelines. Stock exchanges. Payment networks.

The common thread is that they sit in the middle of something essential, charge a small fee for every transaction that flows through, and are extremely difficult to dislodge.

They tend to be regulated. They tend to compound quietly. And they tend to be valued accordingly – on premium multiples that reflect the durability of the cash flows.

But every now and then, the market hands you one of these businesses at a fraction of the multiple it deserves.

One is clearing broker Marex (NASDAQ: MRX).

Its shares are trading at a discount to its closest peers simply because the market is failing to appreciate that it is, in essence, a structurally protected, infrastructure-style compounder.

A great business

Marex is one of the largest clearing brokers in the world. One of only ~60 Futures Commission Merchants (FCM) globally, it sits in the middle of one of the most essential pieces of financial infrastructure in modern markets.

To understand why Marex is a great business, you need to understand what clearing actually is.

When a hedge fund or an airline trades a futures contract, they don’t trade directly with the exchange. The exchange uses a central counterparty clearing house (CCP) – a regulated utility that becomes the buyer to every seller and the seller to every buyer, mutualising risk across the system. CCPs like Chicago Mercantile Exchange (CME) and Intercontinental Exchange (ICE) charge a fee for this service and trade on premium multiples (around 20x earnings) as they are some of the most prized financial infrastructure in the world.

But CCPs are not allowed to deal with end clients directly. Regulation requires them to be neutral risk utilities, insulated from credit risk. So between the client and the CCP sits a clearing broker – the FCM – that takes on the operational burden, fronts the margin, manages credit, and handles defaults when they occur.

This is what Marex does. They are the firm that absorbs everything the CCP cannot touch.

Source: Marex Investor Presentation, May 2026.

Marex went public in April 2024 when it was the fastest-growing FCM by client assets in the US, and we estimate the company now has more than 10% market share in clearing, up from around 3% in 2022.

Three Structural Tailwinds

But our path into Marex started with a peer and the incredibly strong tailwinds we found for clearing and execution businesses.

We had been doing initial work on StoneX (NASDAQ: SNEX), Marex’s closest listed peer in the US, after StoneX made a transformative acquisition.

We flew to New York to meet with the StoneX team in person and caught up with their management again when they passed through Denver.

Those conversations crystallised something for us: clearing and execution sit in a rare position in financial markets because of three structural tailwinds compounding on top of one another:

1. Growth in the underlying market.

Total exchange-traded contract volumes have been growing at a high-single-digit pace for years. That’s happening as more activity migrates from over-the-counter markets into centrally cleared venues, more asset classes get listed, and global hedging needs continue to expand.

2. Share gains from the banks.

International banking regulations, Basel III and Basel IV, have made clearing structurally uneconomic for large bank incumbents, compressing their returns and forcing them to retreat or exit entirely. But the clients haven’t gone anywhere. The activity hasn’t disappeared. It is simply migrating from the banks to a small group of specialist non-bank platforms – of which Marex and StoneX are the two largest listed examples. The result has been a long, slow exit by the banks. The number of FCMs globally has fallen from over 300 in the 1990s to around 60 today.

3. Consolidation of the fragmented non-bank tail.

The smaller end of the FCM market lacks the technology, capital, and regulatory expertise to compete at scale. The larger specialists – Marex chief among them – are consolidating these books inorganically, improving share, pricing power, and overall market quality in the process.

We usually work hard to find one structural tailwind in most investments. Finding three in the same business is rare.

Building conviction and dispelling doubts

But the more we worked on the sector, the more obvious it became that Marex was the best-positioned name in the space. For a start, it had the highest-quality earnings mix. In a normal quarter, around 80% of group profit comes from the most defensible parts of the value chain: clearing and execution. StoneX had a much smaller weighting to clearing and execution.

Marex also had the best technology platform and the most disciplined M&A track record. Ian Lowitt, the CEO, has built Marex over more than a decade through a combination of disciplined organic growth and a series of well-executed acquisitions. Each acquisition was made at attractive an valuation (often at or below tangible book value) and integrated onto the group’s single global technology platform.

Yet trading on less than 10x forward earnings, Marex had the lowest multiple of its peer group.

Why was Marex’s multiple so low?

One reason was a short-selling report published in August 2025 by short-selling research firm, NINGI Research. Titled ‘A Financial House of Cards’, the report alleged accounting irregularities, off-balance-sheet entities, and conflicts tied to the CEO’s prior career. Marex fell sharply when it was published.

If anything, however, the report helped us. It gave us a discounted entry point and a clear set of bear points to stress-test.

We concluded the short thesis lacked substance and started buying Marex in October 2025.

We went through every claim in the short report ourselves, then with sell-side analysts, then with the company directly. Marex publicly rebutted the report twice. S&P Global Ratings reviewed the allegations and affirmed Marex’s BBB- rating with a stable outlook.

Fantastic financial results

On the morning of their investor day in late March, we caught the red-eye from Denver to New York. Arriving early, we were the first non-Marex person in the conference room and were able to spend time one-on-one with the entire senior management team before the other investors and brokers arrived.

And, importantly, Marex continues to report record financial results.

Adjusted profit before tax has compounded from US$62 million in 2020 to US$418 million in 2025 – a compound annual growth rate of 47%. (Growth was 30% in 2025 alone.) Adjusted EPS came in at $3.99 for 2025, beating consensus by 4.4%.

Source: Marex Investor Presentation, May 2026.

Marex’s recent Q1 2026 result was another record:

• Revenue was $692 million, up 48% year-on-year.
• Adjusted profit before tax of $153 million, rose 59% year-on-year.
• The result was comfortably above the top end of the guidance the company had provided just six weeks earlier at its investor day.

This was achieved despite absorbing a $34 million loss from a single client default in natural gas trading in January – a useful, real-world demonstration that the business is built to take occasional shocks without breaking.

Source: Ophir. Bloomberg data as at 30 April 2026.

The big misunderstanding

Yet despite this strong financial performance and the debunking of the short report, Marex still trades on 10x earnings.

At the heart of this mispricing is an ongoing misunderstanding of what Marex does.

The market is treating Marex as a cyclical commodities broker – grouping it with low-multiple names like Virtu, TP ICAP and BGC.

But, as we saw above, a meaningful portion of Marex’s earnings behaves like infrastructure.

Those earnings are underpinned by sustained sequential growth in its clients’ clearing balances, as well as growth in the market volumes in total contracts cleared. What’s more, its Prime Services business continues to deliver outsized market growth.

CCPs, such as CME and ICE, trade on around 20x forward earnings. Interactive Brokers (which partly overlaps Marex) trades on 32x.

Given Marex sits between a clearing utility and a prime broker, we don’t think it deserves the premium multiples of the likes of CCPs and Interactive Brokers. But we don’t think it deserves to trade like a low-quality commission broker either. (Even StoneX, the closest direct comparison, trades on ~19x.)

Why Marex Fits This Environment

In a market consumed by the AI debate – where every software business is being asked whether its cash flows are durable at all – Marex is the opposite kind of investment.

It is a regulated, mission-critical piece of financial infrastructure. Its moat is created by Basel rules, CCP access caps, and post-2008 clearing mandates – not by software, brand, or distribution.

It benefits from volatility rather than being threatened by it. And the structural shift driving its growth (banks exiting clearing, activity migrating to non-banks) has years left to run.

It is, in short, the kind of compounder that doesn’t need a benign macro to work. It just needs the plumbing of global markets to keep flowing – and that, increasingly, runs through Marex.

Building with surgical precision

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Have you ever had a family member rushed into emergency surgery for an aortic dissection? Then you’ll know it’s one of medicine’s most terrifying experiences.

The aorta – the body’s largest artery – carries blood from the heart to the rest of the body. When it tears, every minute counts.

Treating these conditions requires some of cardiac medicine’s most complex and high-value surgical procedures. And behind many of those procedures sits a company most investors have never heard of: Artivion.

Artivion (NYSE: AORT) is a ~US$1.8 billion medical device company headquartered near Atlanta, Georgia, focused exclusively on aortic disease.

Their product portfolio spans four key areas: aortic stent grafts, the On-X mechanical heart valve, surgical sealants (BioGlue), and implantable human tissues. They sell into more than 100 countries worldwide.

We’ve been deeply engaged in Artivion for several years and believe the company is in the middle of a multi-year, product-led growth phase that will extend to the end of the decade.

The recent pullback in the stock – down roughly 25% from its November 2025 highs – has allowed us to re-enter (we first bought pre-COVID then sold at the 2025 highs) at a valuation that is deeply mispriced.

Finding Artivion … and Pat

We first discovered Artivion on a trip to Atlanta in early 2019 when visiting several companies. During that visit, we met with Artivion’s CEO, Pat Mackin.

Pat explained how he had spent over a decade at Medtronic, one of the largest medical device companies in the world. His last role was Senior Vice President presiding over the Cardiac Rhythm division – at the time, Medtronic’s largest business unit.

Pat joined what was then CryoLife (the company rebranded to Artivion in 2022) because he saw a big opportunity: building a company focused solely on the aorta.

By concentrating on the cardiac surgeon customer base, and with a single, focused sales force selling several product families to a large total addressable market (TAM), Artivion could gain significant operating leverage.

What we saw was a company with a market cap of sub-US$1 billion and revenues of sub-$250 million, run by an extremely high-quality manager who had left a $5 billion business segment because he believed he could not only compete with it, but beat it and take meaningful share.

At the time, the company had just two analysts covering it.

It was one of the clearest value creation stories we had encountered.

A Decade Assembling a Comprehensive Aortic Portfolio

When we first met Pat in early 2019, he had been at the company a little over four years and had already begun materially reshaping its portfolio.

He sold several non-core products and, through a series of acquisitions and partnerships that now form the backbone of Artivion’s product roadmap, he’d started realigning the business exclusively toward the aorta.

Between 2016 and 2020, there were four key strategic moves:

1. The first major move was the acquisition of On-X Life Technologies in January 2016 for ~$130 million. That brought the On-X mechanical heart valve into the portfolio and strengthened the company’s presence in aortic valve replacement.
2. The following year, in December 2017, came the pivotal deal. In a ~$250 million transaction, Artivion bought JOTEC, a German developer of advanced endovascular stent grafts (minimally invasive surgery to repair an aneurysm). This gave Artivion immediate access to the ~$2 billion global stent graft market and significantly expanded its minimally invasive aortic capabilities.
3. Then in 2019, Artivion entered a strategic partnership with Endospan for the NEXUS aortic arch stent graft system – a catheter-based solution for total endovascular repair of the aortic arch (which supplies blood to the brain, head and arms).
4. And in 2020, the company acquired Ascyrus Medical for up to $200 million, bringing into the portfolio the AMDS (Ascyrus Medical Dissection Stent) – a hybrid prosthesis designed to remodel the aortic arch in acute Type A aortic dissections.

Pat played a huge role in creating this value. These were competitive processes where he would personally fly out to close deals – including on public holidays and family vacations – to make sure Artivion was the successful bidder against larger, better-capitalised peers.

The result is a comprehensive aortic portfolio – spanning open surgical, endovascular, hybrid, and valve solutions – that now tracks from the heart down to the bottom of the aorta in the most complex, high-value areas of aortic surgery.

Source: Artivion Corporate Overview February 2026.

New Products Set to Accelerate Growth

Artivion is particularly compelling now because its new products are set to accelerate growth.

Nearly $500 million of new TAM is opening up in the next 12–18 months through key products, AMDS and NEXUS.

Source: Artivion Corporate Overview February 2026.

These are not speculative launches. Both products have already been used in Europe with CE Marking approval (which allows products to be sold in the European Economic Area). That gives us a high degree of confidence in their clinical profile. The risk here is regulatory timing, not clinical efficacy.

Meanwhile, On-X continues to compound. It has grown at double digits for over a decade and now represents almost 20% of the business. New clinical data has demonstrated a mortality and reoperation benefit in patients aged 65 and over compared to bioprosthetic valve (made from animal tissue) alternatives. That effectively opens a new $100 million annual US market that Artivion can pursue.

For the full-year 2025, Artivion delivered $444 million of revenue (13% adjusted constant currency growth), $90 million of adjusted EBITDA (26% growth). For 2026, the company has provided guidance of revenue of $486–504 million and adjusted EBITDA of $105–110 million.

Source: Artivion Corporate Overview February 2026.

Stent grafts represent approximately $200 million, or 40% of Artivion’s revenue today. This segment grew 44% year-on-year in Q4 2025 (36% on a constant currency basis).

We believe the upcoming product launches can facilitate a ~25% compound annual growth rate (CAGR) in revenue for stent grafts over the next three years, which in turn means the company can deliver double-digit growth at the group level through the end of the decade.

The Edge: Dozens of Conversations with Cardiologists

What has given us added confidence in Artivion is that we have spoken to dozens of cardiologists based in the US and Europe regularly over the past two years, as well as pre-COVID when we first invested.

This gave us a strong sense of new product adoption, competitive positioning against larger peers, and emerging technologies.

We’ve also spoken directly with ex-sales reps and competitors over the years.

The cardiologists are key.

Their sentiment toward Artivion continues to be very positive, and awareness is growing, which will facilitate higher product cross-selling in the future.

The concentrated nature of the cardiac surgeon customer base means that word-of-mouth and clinical evidence travel fast. That dynamic favours a company with differentiated products and a dedicated sales force.

Materially Mispriced

Despite this strong market position and mid-20% EBITDA CAGR outlook, Artivion currently trades on mid-teens EBITDA.

We think that is materially mispriced.

Additionally, trading at ~3.5x sales, the company will likely attract acquisition interest from a larger peer at 5–7x sales given the attractive and relatively low-risk growth rates, large TAMs, and high potential synergies from duplicative sales forces. That implies significant upside from current levels.

The stock has pulled back from its November 2025 highs on a combination of conservative management guidance into a year of elevated capex (~$50 million, up from $39 million) and outsized funding requirements for earn-outs.

Last year, the market did get ahead of itself and priced in an acceleration of product-led growth into 2026. But when the timeline reverted to the original 2027 trajectory, the share price gave back those gains.

Still, for us, this was the opportunity because the fundamental thesis hasn’t changed, and we have been able to buy a high-quality, accelerating growth story with over 20% three-year EBITDA CAGR at a ~50% discount to standard sector takeout multiples.

Source: Ophir. Bloomberg.

Exactly what we are looking for in this environment

Artivion is exactly the kind of name we’re drawn to right now: a medtech compounder with product-cycle driven growth, limited GDP sensitivity, and a valuation that reflects neither the clinical pipeline nor the margin expansion runway.

It doesn’t need a resolution to the AI debate to work. It doesn’t need rate cuts. It doesn’t need a benign tariff outcome.

It just needs its products to keep performing – and so far, they are.

The 5 Most Important Charts Defining Markets Today

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In this Letter to Investors, we look at

• How the bond market is causing Trump to Always Chicken Out (TACO) and what that means for the likely duration of the Iran War.
• Why small caps are in a much better position to weather the Iran oil price spike than the Russia/Ukraine spike of 2022.
• The curious case of Nvidia now being cheaper than a global oil giant.
• How the RBA’s rate hikes have put Aussie small caps on sale, and why that’s great news for future returns.

I must say, it’s been tough choosing when to sit down and write this Letter. With a new rolling deadline for the Iran war always “just hours away”, I kept putting it off.

A thought invariably rolled through my mind: “Before putting pen to paper, let’s wait for the arrival of the next big market-moving news.”

The reality, though, is in a one-variable market – with daily market moves almost solely dictated by war headlines – it’s best just to get on with it.

Why? Because the end of the war could be this week … or it could still be months away.

(HINT: As we’ll elaborate later, it’s more likely weeks than months. Polymarket has a 78% chance that Trump will announce the end of military operations against Iran by 30 June.)

But our edge is not trying to ‘outguess’ the millions of other investors about Trump’s next tweet; our edge is analysing small-cap companies, where few people are looking, through intensive research and travel.

So, while our Ophir Funds were down fairly in line with the market/their benchmarks in March, that’s ok with us.

Every one of the circa 80 global and regional share market indices we track were down in March due to the war, so it was hard to avoid!

(For us to have materially outperformed last month, we would have had to change our style from Growth to Value, and buy energy, financials, telcos and utilities! That’s not quite our core style.)

In this month’s Letter, we share five charts that have really caught our attention over the past month and helped shape our thinking about markets.

But first, thank the bond market for a happy TACO-versary

Trump Always Chickens Out, or TACO, has been used to describe President Trump’s tendency to escalate and threaten, then, when faced with pressure, to de-escalate and back down.

Just over a year ago, on his so-called ‘Liberation Day’, April 2, 2025, Trump tabled a broad package of reciprocal tariffs. Share markets plummeted. A few days later, Trump retreated and announced a 90-day grace period on tariffs.

What caused the about-face?

It’s widely speculated that he got a tap on the shoulder from his Treasury Secretary, Scott Bessent, who saw the 10-year bond yield shoot up to 4.5% and warned it would worsen the US’s already ballooning debt costs and fiscal deficit.

When you have US$39 trillion in government debt and are adding a US$2 trillion fiscal deficit to it every year, higher interest rates are like pouring kerosene on an already raging inferno.

Fast forward almost exactly a year, and on April 7, Trump warned he would obliterate Iran and a “whole civilisation will die” if Iran didn’t open the Strait of Hormuz. Then, a day later, he agreed to a last-minute two-week ceasefire.

As higher oil prices stoked inflation and rate rise worries, the 10-year bond yield rose from around 3.9% at the start of the war in late February to over 4.4% in late March.

Chart 1. TACOnomics

When the 10-year (or Bessent) speaks, Trump listens.

Source: Ophir. Bloomberg.

Again, it was the bond market and higher yields that caused Trump to TACO and not let the war go on too long.

It reminds us again of that famous quote by Bill Clinton’s political advisor, James Carville:

“I used to think that if there was reincarnation, I wanted to come back as the President or the Pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”

Everybody, including Donald Trump.

We think this is more likely to mean, like most geopolitical events, that the negative share market impact is relatively short lived before the recovery takes hold.

Charts 2 & 3. Margin of Safety

For small caps, this will not be a repeat of the 2022 oil spike.

While the war may not drag on too long, small-cap investors could be forgiven for having PTSD. The current oil price spike, after all, might remind them of 2022.

Almost exactly four years before the US and Israel launched coordinated military operations on Iran, Russia (the world’s third-largest oil producer) invaded Ukraine.

This led to a sequence of events you can see in the chart below. Oil (brown line) spiked and fuelled already-rising post-COVID inflation.

Source: Ophir. Bloomberg.

Both short-term interest rates (controlled by central banks) and long-term interest rates (controlled by the market) started rocketing higher. The gold line shows the US 10-year bond yield (the same one TACO’ing Trump in the first chart in this Letter).

Already sensing that rates would rise during the COVID recovery, equity markets had begun selling off in 2021, but the falls continued in 2022 on the back of the oil spike. You can see this for both US large caps (green line) and small caps (orange line) in the chart below, where we highlight the fall in their P/E ratios.

Source: Ophir. Bloomberg.

You can also clearly see that small-cap valuations fell much more – as we were painfully aware here at Ophir!

(All the while, the recession probability was rising in the US (inverted blue line) and peaked at over 60% in late 2022/2023.)

Which brings us to THE question.

Should we be afraid that today’s high oil prices are going to cause a replay sell-off of small caps?

If oil prices stay high enough for long enough, it’s certainly a possibility that central banks may have to raise interest rates to combat higher inflation, increasing the risk of recession and share market falls.

Markets today, however, are not really expecting that scenario for a couple of key reasons:

1. 2022 was an oil price spike on top of already high and rising inflation from COVID. By contrast, this time, prior to the Iran war, US inflation had been falling, and there were expectations of Fed rate cuts, not hikes.
2. Essentially, this current spike in oil is self-imposed by the US. It can wind down military operations and relieve pressure on the oil price.

In many ways, Trump will have to weigh a long, drawn-out war (if needed to reach objectives in Iran) against the economic cost to the US (higher inflation and interest rates and potential recession).

Most suspect that, because it will likely cost him dearly at the mid-term elections in November, Trump won’t think the cost of a long war is worth bearing.

That is likely why recession probabilities haven’t spiked and why the market is not yet pricing in rate hikes by the Federal Reserve.

Moreover, with a P/E of around 15x, US small-cap valuations are relatively cheap and well below the more expensive 22-23x before the sell-off in 2021.

Given that the lowest small caps have reached in the last three bear markets are around 11-12x, small caps today have a lot more downside protection and margin of safety.

Chart 4. Nvidia’s Crude Awakening

This next chart shows one of the craziest stats we came across in the last month.

Nvidia’s one-year forward PE: 18.7x.

ExxonMobil: 20.2x.

That’s right, Nvidia stock is now cheaper than ExxonMobil.

Let that sink in.

Source: Bloomberg. Data at 27 March 2026.

The company supplying the picks and shovels for the AI gold rush – the most important technology buildout of our lifetime – trades at a lower one-year forward P/E (price-to-earnings ratio) than an oil major that has roots back to the 1870s!

At Ophir, we watched Nvidia’s meteoric rise and kept asking ourselves: when does the valuation gravity eventually kick in?

Well, here we are.

Three years ago, the market was willing to pay almost anything for AI, and at a P/E of 60x had priced Nvidia to perfection and then some.

Today, despite expecting Nvidia’s earnings to almost double this financial year from US$113 billion to US$203 billion, the market is now pricing Nvidia more like a utility.

It’s not that Nvidia’s share price is down a lot that’s causing its valuation to fall – it’s only about 12% off its all-time highs.  The market is just having a hard time maintaining Nvidia’s P/E. If the market did maintain the P/E, Nvidia’s market cap would double to over USD$8 trillion!

Investors are clearly questioning the durability of the AI capex cycle and whether it has gotten ahead of itself.

On the flip side, ExxonMobil’s P/E averaged 11x over the last 5 years. Then oil shot up on the back of the Iran war, and Exxon is now trading at almost twice that P/E.

We’re not saying Exxon is overvalued. Oil is a critical business and Exxon is no doubt exceptionally well run. But the optics of this comparison say something important about how dramatically sentiment can swing.

Have these two companies’ fortunes really changed that much over the last six months – when Nvidia’s P/E was twice that of Exxon – or is this one of the great mispricings of the decade?

Chart 5. Aussie Small Caps Marked Down

For over a year now, we have been beating the drum about how cheap US and global small caps have been versus large caps.

But one of the great untold stories of the last couple of months is just how cheap Aussie small caps have become.

At a 13.9x price-to-earnings ratio (one-year forward earnings), the only two other times they have been this cheap in the last decade are:

1. March 2020, when the COVID sell-off hit.
2. Very briefly in June 2022, during the fastest global rate-hiking cycle in 40 years, when the consensus call from economists was recession.

Perhaps even more stark is Australian small caps’ valuation relative to Australian large caps.

Over the last 20 years, Aussie small caps have traded at an average P/E premium to large caps of +0.7x.

Today they are trading almost 4 P/E points lower – the LOWEST in the 20 years of data available.

Source: Ophir. Bloomberg. ASX Small Ordinaries vs ASX 50.

A big cause has been the RBA rate-hike cycle. It started in early February after a sticky inflation reading for the December 2025 quarter (released 28^th January 2026).

Since that late-January CPI report, the ASX Small Ordinaries index fell -16.6% to the end of March, while the ASX 50 index has fallen just -2.4%.

With Aussie small-cap valuations at 13.9x, they are now only marginally above the 13x they bottomed at after the 2022 sell-off, and the 12x they bottomed at in COVID.

So it appears much of the RBA hiking cycle and Iran war fears are priced in.

Are they at their lows?

Who knows.

But, absent any unforeseen events, they historically haven’t been much lower.

And as the research tells us: the single best predictor of an asset class’s return over the long term is its starting valuation.

And on that score, Aussie small caps have now started to look cheap, especially compared to Aussie large caps.

As Buffett said: “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down”.

We think that applies well to Aussie small caps today. It’s our job here at Ophir to find the quality merchandise within small caps.

As always, if you’d like to chat to us about any of the Funds, please feel free to call us on (02) 8188 0397 or email us at ophir@ophiram.com.

Thank you for entrusting your capital with us.

Kindest regards,

Andrew Mitchell & Steven Ng

Co-Founders & Senior Portfolio Managers

Ophir Asset Management

This document has been prepared by Ophir Asset Management Pty Ltd (ABN 88 156 146 717, AFSL 420082) (“Ophir”) and contains information about one or more managed investment schemes managed by Ophir (the “Funds”) as at the date of this document. The Trust Company (RE Services) Limited ABN 45 003 278 831, the responsible entity of, and issuer of units in, the Ophir High Conviction Fund (ASX: OPH), the Ophir Global Opportunities Fund and the Ophir Global High Conviction Fund. Ophir is the trustee and issuer of the Ophir Opportunities Fund.

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