Manager Commentary as of 6/30/2010 
 

• While we are never happy to deliver negative returns, we are pleased that the Westcore Small-Cap Opportunity Fund meaningfully outperformed the Russell 2000 Index in the second quarter and provided some downside protection for our shareholders.  In the quarter, the Fund returned -7.88% compared to a -9.92% return by its benchmark, the Russell 2000 Index.  Previously, we have talked 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.  This rally came to an end in late April/early May as the market began rewarding companies that have what we believe are higher-quality characteristics.  Our focus on companies with these characteristics helped contribute to our relative outperformance during the second quarter.

• The interest rate sensitive, medical/healthcare and consumer cyclical sectors provided the largest contributions to the Fund’s outperformance in the quarter.  Within the interest rate sensitive sector, Anworth Mortgage Asset Corporation provided a solid return.  Anworth invests primarily in U.S. agency mortgage-backed securities, which are securities guaranteed by the U.S. government.  Continued low interest-rates and a steep yield curve provided an ideal environment for Anworth in the quarter.  Lincare Holdings Inc. was the Fund’s leading contributor within the medical/healthcare sector.  This in-home provider of oxygen and other respiratory therapy services saw solid share-price appreciation driven by better-than-expected quarterly results.  Our underweight in the medical/healtcare sector also proved to be beneficial this quarter.

• The technology, basic materials and energy sectors were the most significant underperformers relative to the benchmark in the second quarter.  Concerns over the sustainability of the global recovery caused Belden Inc., an industrial cable products provider, to experience stock price weakness in the quarter.  We believe prospects for this technology sector holding remain strong, as demand for its products is showing improvement and the markets in which it competes appear to have remained rational.  Energy holding Cal Dive International Inc. performed poorly in the quarter as investors reduced exposure to any company that conducts business in the Gulf of Mexico.  Cal Dive, a marine contractor providing services to the oil and natural gas industry, operates mostly in shallow water.  We believe the deepwater Macondo oil spill won’t have a significant negative impact on Cal-Dive’s business.  In fact, we feel that renewed scrutiny of the Minerals Management Service, as a result of the Macondo situation, could be a catalyst to drive more decommissioning work for Cal Dive over the next few years.

• Investors appear increasingly skeptical of the vibrancy of the U.S. and global economic recovery as a number of economic indicators have flashed caution signals.  Car and housing sales declined 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 and patience in these difficult market conditions.