During the second quarter, small cap stocks globally outperformed their large cap peers. The MSCI All Country Small Cap Index was up 5% (in US dollars) versus the MSCI All Country Large Cap Index which was up 3% (in US dollars). Investors continue to rotate into small cap stocks in anticipation of higher domestic and global growth over the next year as life starts to normalize after COVID. Canadian and U.S. economies remain in ‘Goldilocks’ mode – ‘not too hot, not too cold’ – meaning despite the strong economic recovery interest rates remain low for now. Small cap stocks remain in the ‘sweet spot’ of investing, benefiting from pricing power, strong pent-up consumer demand, relatively low valuations, and most importantly faster earnings growth than larger companies. Recent headlines about inflation have on some days spooked investors to hit the sell button. We believe that in the short-term, inflation remains well contained to a few select industries. So far there has been no evidence of wage inflation, which is the key indicator of sustaining and rising inflation. We believe that the Matco Small Cap Fund is well-positioned to benefit from the ‘Goldilocks’ economy. If inflation does increase, small cap companies have the pricing power to push through higher costs, increasing their profit margins in the process. The Fund’s underlying investment characteristics remain very attractive. As of June 30th, the Fund had a dividend yield at 4.1%, high return on equity at 28% and a low valuation with a trailing price to earnings ratio of 9.8 times.