Manager Commentary as of 6/30/2010 

• The second quarter of 2010 proved to be challenging with many equity indexes suffering double digit declines.  The Westcore Blue Chip Fund’s results for the quarter were a disappointing -13.54%, compared to its benchmark, the S&P 500 which returned -11.42%.  Previously, we have written about the length of the low-quality, low share-price “junk” rally that began in March 2009 and the fact that it was getting “long in the tooth” by historical standards.  The duration of such rallies has typically been 10 months.  During the second quarter this rally came to an end and the market began to reward companies with better fundamentals.  Early in that process the Fund’s performance relative to the benchmark began to improve.  However, as economic indicators peaked and the recovery appeared to be slowing, the Fund’s exposure to economically sensitive companies was significant which led the Fund to underperform.  During the second quarter we did shift the portfolio somewhat towards less economically sensitive companies.   We believe that slow economic recovery and modest job growth through 2011 are most likely due to uncertainties in Europe, risks from state and local budget deficits and strained consumer confidence.

• The Fund’s weakest sectors relative to the benchmark in the second quarter were communications, consumer cyclicals and technology.  Fund holding Qualcomm Inc. a designer, manufacturer and marketer of digital wireless telecommunications, continued to struggle in the second quarter.  This communications sector company has not grown as fast as projected this year as a result of phone providers selling phones for lower than expected prices to end users.  A large amount of Qualcomm’s cash flow comes from royalty payments that are calculated as a percentage of a phone’s realized price.  We feel that the diffusion of 3G technology around the globe, which drives higher priced smart phone usage, together with an improving economy over time, will bring more predictability to Qualcomm’s business.  Dell Inc., a PC and software peripherals provider was among the Fund’s bottom performers in the second quarter.  Its stock remained one of the most out-of-favor technology sector stocks in the market.  We do not share this view and believe that Dell’s exposure to the current corporate PC upgrade cycle is underappreciated.  During the quarter, the stock saw a large downward move soon after the CEO announced that his focus is on growing cash flows rather than on achieving short-term profit margin targets.  We applaud this focus and feel that if the company executes on this plan, the market will properly value the stock over time. 

• The Fund’s best sectors relative to the benchmark were transportation, commercial services and consumer staples.  Quanta Services Inc., a provider of specialty contract services to electric power, gas, and telecommunications customers, was the Fund’s top performer within the commercial services sector.  It announced quarterly results that were better than the market expected.  More importantly, we believe that data indicates new business awards will pick-up, supporting our view that slower spending was only temporary.  Campbell Soup Co. was also up for the quarter, helping consumer staples to outperform.  Merchandising improvements and increasing demand given the economic environment, continued to drive improving results.

• As noted above, investors have become increasingly skeptical of the U.S./global recovery as a number of economic indicators have flashed caution signals.  Challenges remain, among them car and housing sales have contracted after government stimulus programs expired, job creation remains anemic, and persistently high unemployment rates continue to point to a consumer that cannot be expected to be the engine that will drive strong GDP growth.  While we believe this may prove to be a typical correction from both a market and economic standpoint, we are monitoring the situation closely.  We believe that over the next year, companies with strong fundamentals will be rewarded by investors.

• As always, we want to thank our shareholders 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)