Fixed Income
Westcore Colorado Tax-Exempt Fund

Ticker: WTCOX | CUSIP: 957904782 | Style: Municipal Single State | Inception Date: 6/1/1991
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Manager Commentary as of 6/30/2010

  • The Westcore Colorado Tax-Exempt Fund returned 1.70% for the quarter ended June 30, 2010.  This compares to a 2.68% return by the Barclays Capital 10-Year Municipal Bond Index.  The Fund’s relative underperformance was due in large part to the fact that the effective average duration was shorter than the Index.

 

  • An early-June selloff due, in part, to sovereign debt concerns, stabilized by quarter-end.  Yet the municipal bond market is reminded daily of budget shortfalls and negative headlines regarding cities facing unsustainable deficits.

 

  • The State of Colorado for example, scraped by with a balanced budget for the fiscal year just ended June 30, but it will begin the fiscal 2011 year on July 1 with up to a $72 million shortfall.  Consensus among state legislators is that more spending cuts should ameliorate budget problems in the immediate short-term, but worries remain for the fiscal year 2011-2012, which begins July 2011.  This is due, in part, to uncertainty surrounding passage of the Tabor-related proposals on November’s ballot.

 

  • We believe the tax-exempt market should benefit from the expiration at the end of 2010 of the Bush tax cuts and the extension of the Build America Bonds program, which provides a federal subsidy to municipalities for issuing debt to improve infrastructure projects and to create jobs.  Because such debt is taxable at the federal level and offers incentives to municipalities, such issuance crowds out tax-exempt securities, shrinking availability.

 

  • Currently the majority of the Fund’s holdings bear an interest coupon of 4.5% or higher.  In our opinion, the Fund is well diversified between general obligation and revenue debt securities, none of which are subject to the Alternative Minimum Tax (AMT).  The Fund does not hold any Build America Bonds (BABS), a popular financing vehicle for state and local municipalities, because such securities are taxable to investors at the federal level.  At this time, we do not anticipate any major repositioning of the portfolio.  It is our intent to continue to seek out opportunities within the 10 to 20 year maturity range in “A” rated or above credits.



The performance data quoted represents past performance and does not guarantee future results. Investment return and principal value will vary, and shares, when redeemed, may be worth more or less than their original cost. To obtain current performance as of the most recent month-end, please call 800.392.CORE (2673) or visit the Performance tab.

The Manager Commentaries contain certain forward-looking statements about the factors that may affect the performance of the Funds in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Funds, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Funds. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.

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