nLIGHT, Inc. is a leading provider of high-power lasers serving the medical, industrial, and increasingly, defense markets. We initially invested in nLight as they transitioned to focus on laser defense applications that shield our troops from drones and enemy missiles. The use cases for the U.S. Department of War and allies continue to grow, including laser sensing applications enabling improved situational awareness and space-based communications. During the quarter, investors continued to re-rate the stock higher on the conflict in Iran and across the Middle East. We remain investors after trimming part of the position on strength as part of our disciplined risk management process.

nLIGHT (LASR) is a leading provider of high-power lasers for mission-critical directed energy and optical sensing applications. The U.S. Department of War has prioritized directed energy, leading to sustained investment in research and deployment. With over 450 patents and a U.S.-based semiconductor fabrication facility, nLIGHT has shifted its revenue mix significantly, with defense sales growing from 18% in FY2018 to 70% today. The defense segment achieved 60% year-over-year growth in FY2025, supported by limited competition due to the technical complexity of coherent beam combination technology. Directed energy systems offer compelling economics for the DoW, with costs per use significantly lower than traditional missile systems.

nLIGHT, Inc. is a leading provider of high-power lasers serving the medical, industrial, and increasingly, defense markets. We initially invested in nLight as they transitioned the company to focus on laser defense applications that shield our troops from drones and enemy missiles. This represented new high-value customers to offset commoditized applications in industrial markets overrun by Chinese-manufactured low-cost lasers. The stock contributed positively to fund performance last year, as demand stabilized and orders improved, supported in part by the company’s innovative product offerings and go-to-market strategies. We remain investors after trimming part of the position on strength as part of our disciplined risk management process.