The purpose of the current study was to examine whether morphological awareness measured before children are taught to read (Kindergarten in Israel) predicts reading accuracy and fluency in the middle of first grade, at the very beginning of the process of learning to read pointed Hebrew -- a highly transparent orthography, and whether this contribution remains after controlling for phonemic awareness. In a longitudinal design, 680 Hebrew-speaking children were administered morphological and phonemic awareness measures at the end of the preschool year (before they were taught to read) then followed up into first grade when reading was tested in mid-year. The results indicated that even at this early point in learning to read a transparent orthography, preschool morphological awareness contributes significantly to both reading accuracy and reading fluency, even after partialling out age, non-verbal general ability, and phonemic awareness. The current results extend the Functional Opacity argument (Share, 2008) which proposes that at the initial stages of reading acquisition, when children still have incomplete mastery of some aspects of the spelling-sound system, non-phonological sources of information about word identity such as morphology can assist in the decoding process. The practical implications of these results with regard to early reading instruction are discussed.