Manager Commentary as of 12/31/2011

• The fourth quarter closed with a flurry with the Westcore Mid-Cap Value Fund underperforming the benchmark Russell Midcap^® Value Index, 11.05% versus 13.37% respectively. The fourth quarter rally was partly attributable to investor optimism tied to the strong beginning of the retail holiday shopping season and, after a brief lull, holiday sales finished strong. During the quarter there was also a mix of encouraging economic news, including a positive trend in unemployment claims and job creation.  Last, but not least, the potential unraveling of the Euro market got some relief as credit spreads narrowed slightly and Greece and Italy were able to successfully place debt offerings and obtain needed credit relief. 

• The sectors that were the leading contributors to performance during the quarter relative to the index were consumer cyclical, communications, and interest rate sensitive. DISH Network Corp was not only the leading consumer cyclical contributor during the quarter but the Fund’s top overall performer during the period. It announced it was returning a meaningful amount of cash flow to shareholders through a $2.00 per share special dividend.  In addition, spectrum sales within the industry have highlighted the value of the company’s assets. Plantronics Inc. was the driver of performance within the communication sector. The company is well positioned to benefit from unified communication systems as more businesses are moving to Voice Over Internet Protocol (VoIP) phone systems which incorporate a layer of software that helps increase productivity and reduce call costs.  AXIS Capital Holdings Ltd. was the top financial performer this quarter. The company provides specialty insurance and treaty reinsurance on a worldwide basis through operating subsidiaries and branch networks. We believe that property casualty insurers provide both a good measure of defense with their strong balance sheets and reduced risks, but also provide opportunities for fundamental improvement. With the 2011 hurricane season ending without major losses and the prospect of increased insurance rates, the stock price rose.  We continue to like the company’s mix of business, and believe its experienced management team will perform well in this environment.

• From a relative contribution standpoint, our biggest disappointments were in the technology, energy, and basic materials sectors.  Within the technology sector, Avago (analog semiconductor devices) had performed very strongly across the board for the past couple of years and its silicone chips were used in the iPhone 4s, providing a fresh revenue source. During the quarter, however, customers reduced inventories to guard against having too much product on hand if positive sales forecasts did not materialize. We believe Avago is well positioned and is selling at an extremely attractive valuation when compared to the cash its business generates. HollyFrontier was our largest underperformer within the energy sector.  During the fourth quarter, the company lost some of its cost advantage as competitors were able to benefit from a low price, short-term supply glut of West Texas Intermediate crude oil.  Longer term, we believe the company has a true structural competitive advantage due to its asset base and geographic location. Its management seems to also believe this as they recently initiated a large share buyback. Although the basic materials sector was among the bottom performers relative to the benchmark, no single stock was among the individual bottom performers.

• As we look toward 2012 many of the issues we believe face investors remain from 2011. First, a common issue that permeates both domestic and global economies is lack of credibility.  Questions of credibility surround our political structure (the debt ceiling, payroll tax extension, etc.); the Euro structure (Greece, Italy, etc.); Federal Reserve monetary policy (seemingly endless quantitative easing).  The lack of credible solutions and the confusion associated with erratic actions by the players in these dramas has been a very large contributor to the elevated market volatility seen in 2011 which may continue into 2012.  Europe has been in the headlines for quite some time, but the threats of a worse than expected slowdown in China and the high debt to gross domestic product situation in Japan also lurk in the background.  It appears likely that several European countries are on the verge of recession if they are not already there.  We do not believe the U.S. economy can continue to show positive economic growth if other areas of the world, particularly Europe, slip into recession. 

• There are, however, potential bright spots in 2012.  First, the U.S. economy appears to have weathered the turbulence of 2011 and is still growing at a moderate pace.  The trends in unemployment claims and job creation have also been more encouraging, which gives some support for consumer spending trends in the near-term.  The housing market has also shown signs of life, although this has largely been centered on multi-family housing.  The rise in rental rates, coupled with historically low borrowing costs, may ultimately breathe some life into the single family housing industry as well. 

• We remain excited by the holdings of the Fund and the new ideas that we are exploring.  While corporate profits have come under increased pressure, we continue to look for companies with good fundamentals to weather this environment.  We appreciate the opportunity to work on behalf of our shareholders and will work hard to make 2012 successful. We wish everyone a healthy, happy and prosperous New Year.   

The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. 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 12/31/2011)