Manager Commentary as of 6/30/2010  

• Although it posted a return of -2.07% for the quarter, the Westcore International Frontier Fund outpaced its benchmark the MSCI EAFE Small-Cap Index which returned -11.33%.  Increased economic uncertainty amidst the deteriorating sovereign financial situation in southern Europe, slowing growth in China and moderating recovery expectations in the U.S. led markets to negative returns. Although it is difficult to deny the existence of these negative factors, we believe that the bearish sentiment is too focused on the near term.  Anecdotally, earnings in the Fund’s largest holdings have met or exceeded our expectations.  Focusing on operational performance of companies during declining markets rather than dwelling on falling stock prices is core to our process and has enabled us to invest in companies that we believe, have become more attractively priced.

• Strong contributors to the Fund’s performance during the second quarter included Simplex Technology Inc. and Aeon Delight Company Ltd.  Simplex Technology is a leader in software for the financial industry in Japan.  This information technology sector company focuses on user-friendly trading applications, which is a growing area.  We believe Simplex benefits from a combination of expertise in both IT and finance.  In May, the company reported strong revenue and operating profit growth for its March fiscal year-end.  Industrials sector holding Aeon Delight Company Ltd. is a Japanese facilities management company.  While the weak economic environment in Japan has caused growth to slow meaningfully, the market had priced in an extremely dire future for Aeon.  Our research indicated that profits would remain flat for several quarters, but that its long-term growth prospects and competitive advantage remained intact.  Aeon’s share price rallied significantly after it reported roughly flat earnings for the twelve months ended in February as well as for its first quarter ended in May.

• Detractors from the Fund’s performance included METKA SA and Mears Group PLC.  Athens-based METKA SA builds power plants in Europe and the Middle East.  Concerns that the sovereign debt crisis will force the governments to cancel power projects led to the decline in its share price in the quarter.  Our research indicates that although near-term negative sentiment may cause governments to curtail infrastructure spending in certain sectors, the overwhelming shortage of power in the regions that METKA serves should provide enough opportunity over the medium and long term for it to continue running a valuable business.  Mears Group PLC is a leader in repair and maintenance for the public housing market in the U.K.  Mears has reported over $500M in new contract awards in social housing since March 9, 2010, when its 2009 results were published.  In June, the company reiterated growth prospects and the strength of its order book.  Despite these factors, the company’s share price declined following a negative news announcement from Connaught, one of its competitors.

• Once again, markets are bracing for a meltdown, as headlines capture the worst of what the world is facing, namely, slowing global growth and stretched government balance sheets.  Periods such as these are characterized as “stock picker” markets as attention to company specific factors is expected to lead to outperformance relative to passive or indexing strategies.  We believe it is always beneficial to pay careful attention to fundamentals, regardless of what the headlines say.  With portfolio holdings appearing to perform well operationally, we are hopeful that the success of these companies will not be overlooked for long and that share prices will react accordingly. 

• As always, we want to thank our investors for their confidence in these volatile market conditions.

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.

Stock Performance (3 months ended 6/30/2010)