Good morning, everyone, and I hope you're having a good summer, notwithstanding the smoke.

As you know, last year our Canadian portfolio lagged the market dramatically, primarily because we owned no gold stocks. This year, as of last night, we are a couple of percentage points ahead of the market. So we are starting to catch all that up. But let me get into my remarks.

If I had to summarize where the Canadian and U.S. stock markets are today in one sentence, it would be this: the market is no longer rewarding the promise of growth; it is rewarding the delivery of earnings. That distinction matters because it marks the transition from the first phase of this bull market into the next.

The past year belonged to one dominant theme in the United States, artificial intelligence, and one in Canada, the gold price. In the United States, investors rewarded companies building artificial intelligence and the infrastructure required to support it: semiconductor manufacturers, GPU designers, network companies, memory producers, and hyperscale cloud providers. Their businesses deserved much of the enthusiasm because earnings grew at extraordinary rates. But investors did what investors always do: they assumed exceptional growth would continue indefinitely. Valuations expanded faster than earnings, pushing many share prices well beyond the value of the underlying businesses. When expectations become accepted as fact, companies must produce miracles simply to avoid disappointing investors.

Artificial intelligence remains one of the most important technological developments of our generation, and demand for AI infrastructure remains exceptional. What is changing is not the technology; it is investor expectations. Leadership among semiconductor companies has become less uniform, and investors are increasingly asking a slightly different question: who actually makes money from artificial intelligence? That question is beginning to reshape market leadership.

Software went from the darling last year to a red zone in the first half of this year. Public software valuations fell nearly 30% in early 2026 as people became concerned about AI disrupting business models. We took advantage of this opportunity to purchase Constellation Software at roughly half of its 2025 peak valuation. The market saw a software company facing possible AI disruption. We saw the world's best acquirer of software businesses. Falling software valuations reduced the cost of its future acquisitions, the raw material of Constellation's business model.

Every technological revolution follows a remarkably similar pattern. Investors first reward the companies building the infrastructure. Later, they reward the companies using that infrastructure to improve productivity. Railroads, electricity, the internet, cloud computing: artificial intelligence is unlikely to be any different. History suggests that while transformational technologies create enormous value, the companies creating the technology rarely remain market leaders for long. Competition increases, returns normalize, and investor enthusiasm fades. The dot-com era remains the most vivid reminder. Leadership shifts toward businesses that use technology to become more productive, rather than simply selling the technology itself. Witness Apple Computer, which was practically bankrupt in 1990 and, as you are all well aware, today carries the largest valuation of any company in the world. They use technology rather than create it.

The list today includes industrial companies, financial services, engineering, healthcare, logistics, professional services, and selected software businesses.

Industrials have quietly become one of the strongest performing sectors this year. Many investors still think of industrial companies as traditional cyclical manufacturers, but increasingly they are providers of factory automation, robotics, electrical equipment, aerospace components, power management systems, and industrial software. These businesses are benefiting from the powerful long-term economic trends toward reshoring, defense spending, electrification, and the enormous infrastructure required to support artificial intelligence. Yet many continue to trade at valuations that remain reasonable relative to their improving earnings.

The alternative asset managers provide a simple illustration. Apollo, Blackstone, Brookfield, and KKR stocks have all been weak for a year. These businesses own and finance the critical infrastructure backbone of artificial intelligence. They are building data centers, financing electrical grids, and own many of the physical assets that artificial intelligence requires. These are huge projects, frequently 500 million dollars or more. That capital is invested under long-term contracts with investment-grade counterparties. The market reacted to short-term uncertainty. We see businesses collecting tolls on some of the economy's most durable growth engines.

GE Aerospace tells a similar story. Following the breakup of General Electric, the company was spun off. Roughly 70% of GE Aerospace's revenue comes from servicing the 70,000 aircraft engines they have put into the market, throughout their 30-year operating lives. These service contracts generate decades of recurring, high-margin cash flow. Replacing the installed base would require billions of dollars and many years before a competitor earned a first dollar of revenue. Larry Culp, the CEO of the old conglomerate, chose to stay with GE Aerospace and lead it. He owns over half a billion dollars worth of equity. The market priced an old conglomerate. We priced a business that will generate decades of high-margin service revenue.

Financials, both in Canada and the United States, have emerged as important market leaders. Higher interest rates have largely worked their way through the banking system. Credit quality has continued resilient, and loan-loss provisions have begun to decline. AI will cut operating costs dramatically over the next few years, and capital markets activity has strengthened. Wealth management businesses continue gathering assets, and insurance pricing remains favorable. Recent earnings have reinforced investor confidence, while valuations have become more demanding in parts of the bank sector. Improving profitability across financial services extends well beyond traditional lending. We continue to find attractive opportunities where business fundamentals are improving faster than market expectations.

Energy has quietly emerged as another source of leadership. Today's energy companies bear little resemblance to those of a decade ago. Capital discipline has replaced production growth. Companies are limiting capital spending, strengthening balance sheets, and returning excess cash to shareholders rather than pursuing unproductive expansion. Investors increasingly view these businesses as durable, cash-generating franchises rather than speculative commodity producers.

The Canadian stock market tells a similar story. Last year, the attention centered on gold. This year, leadership has broadened considerably. While investors warned that Canada lacked meaningful exposure to artificial intelligence, improving earnings have emerged across financials, infrastructure, engineering, transportation, industrials, and selected energy companies, all big users of AI. Industrials may be Canada's most underappreciated sector. Many of these businesses are benefiting from trends likely to persist for years: reshoring, electrification, infrastructure investment, and increasing industrial automation.

None of these developments represents a change to our investment process. Since founding Kingwest in 1982, we have looked for businesses whose economics are improving faster than investors recognize. Sometimes those opportunities appear in industrial companies. Sometimes they appear in software, infrastructure, financial services, or energy. We are not trying to predict the market's next narrative. We are simply trying to identify businesses becoming more valuable before the market fully recognizes that change.

The great banker J.P. Morgan, when asked what the market would do, replied simply, "It will fluctuate." There is no better response than that. Market leadership fluctuates too. The companies that made investors wealthy yesterday rarely produce the best returns tomorrow. The baton is passing from companies building artificial intelligence to companies using it to become more productive. It is passing from excitement to execution, from story to earnings. Business creates value, earnings reveal that value, and eventually stock prices follow. The next chapter of this bull market will be written right now.