Manager Commentary as of 12/31/2011  

• The fourth quarter closed with a flurry with the Westcore Small-Cap Value Fund underperforming the benchmark Russell 2000^® Value Index during the quarter, 14.74% versus 15.97 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 three sectors that provided the greatest contribution to return relative to the Fund’s benchmark index during the fourth quarter were interest rate sensitive, technology, and communication. Within the interest rate sensitive sector, Protective Life Corporation, a provider of insurance solutions and investment products, reported a strong quarter. The company’s underlying business momentum continued despite the waning market concerns regarding life insurers. In addition, it accelerated its share repurchases, and the board again authorized future share buybacks, validating our belief that excess capital generated would continue to be returned to shareholders. 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. None of the Fund’s holdings in technology were among the top performing stocks although overall the sector did perform well.

• Relative to the benchmark, the sectors with the greatest headwinds during the quarter came from the medical/healthcare, consumer cyclical, and REITs (real estate investment trust) sectors. Medicis Pharmaceutical Corporation, a specialty pharmaceutical company focusing on dermatological and aesthetic products, was the main detractor from performance within the medical/healthcare sector. During the quarter it announced a strategic initiative to gain greater reimbursement from managed care providers for its largest dermatological product. Although this initiative is designed to increase prescription volumes, investors seem to be more concerned about the potential impact to pricing for the product going forward. We believe that the potential for greater volumes outweighs the potential for slightly lower prices. This should allow the company to continue to generate long-term free cash flow. The Jones Group Incorporated, a designer and marketer of women’s apparel and footwear within the consumer cyclical sector, was a negative contributor during the quarter. Concerns over weak sales in women’s sportswear and handbags put downward pressure on the stock price during the quarter. We believe the company is taking the correct steps to turn around the business and improve profitability over the next couple of years. Within the REITs sector no specific holdings were among the bottom performing stocks.

• 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.