Westcore Micro-Cap Opportunity Fund

Quantitative Equity

Style: Micro-Cap Core Retail Class: WTMIX

Investment Strategy

The Westcore Micro-Cap Opportunity Fund invests primarily in the stocks of micro-cap companies that appear to be undervalued.

We use a mathematically driven approach to construct a diversified micro-cap portfolio. Our proprietary multi-factor quantitative investment model is designed to help us identify attractively valued micro-cap companies based on various financial measures and ratios. Our disciplined process emphasizes risk controls and repeatability.

This Fund is available in the retail class only.

Management Team

We employ a quantitative approach to investing, one that utilizes fundamental factors, which we believe are predictive of long-term stock price performance. – Paul A. Kuppinger, CFA

Paul A. Kuppinger, CFA

Paul A. Kuppinger, CFA

Vice President, Portfolio Manager, Quantitative Analyst

Fund Information & Investment Minimums

Retail Class
Ticker WTMIX
CUSIP 957904477
Inception Date 6/23/2008
Distribution Frequency Annually
Minimum to open a new regular account: $2,500
Minimum to open a new retirement, education1 or UGMA/UTMA account: $1,000
Minimum to open an Automatic Investment Plan Account: $1,000
Automatic Investments: $25/month per Fund
Minimum to add to any type of account: $25
Retail Class
Ticker WTMIX
CUSIP 957904477
Inception Date 6/23/2008
Minimum to open a new regular account: $2,500
Minimum to open a new retirement, education1 or UGMA/UTMA account: $1,000
Minimum to open an Automatic Investment Plan Account: $1,000
Automatic Investments: $25/month per Fund
Minimum to add to any type of account: $25
Investing in micro-cap funds generally will be more volatile and loss of principal could be greater than investing in large-cap funds.

The risk profile spectrum provides an approximate illustration of the relative volatility of the Westcore Family of Funds determined by using each fund’s 5-year annualized standard deviation as of 12/31/16. If the fund’s retail class has less than five years of operations as of that date, the standard deviation of the fund’s Morningstar category is used instead. Standard deviation is a statistical measure of the historical volatility of a fund, which we believe can assist in classifying a fund within a risk spectrum. The placement on the risk spectrum (Low to High) is based on the comparison of each Fund’s standard deviation measure, as described above, in relation to the universe of funds with a 5-year standard deviation measure as obtained from a third-party fund database. We believe those measures are accurate but have not independently verified them. Please refer to the prospectus for each fund’s specific risks. Also a fund’s measure of volatility is subject to change without notice as market or economic conditions change, and such changes may include significant and nonrecurring volatility events. Historical volatility is not necessarily indicative of future volatility and there is no guarantee that in any time period any one fund will be more or less volatile than any other fund.

CFA is a trademark owned by CFA Institute.
Please see the prospectus for more detailed information regarding investment minimums. The Funds reserve the right to change the amount of these minimums from time to time or to waive them in whole or in part, including the right to waive the Institutional Class minimums, if in the Advisor’s sole opinion, the investor has adequate intent and availability of assets to reach a future level of investment in the Fund that is equal to or greater than the minimum.
1 A description of the retirement and education accounts available for investment in the Westcore Funds may be found in the SAI for the Funds. Please call 800.392.CORE (2673) to request a free copy of the SAI or click here to download.

Investment Team

Paul A. Kuppinger, CFA
Paul A. Kuppinger, CFA

Vice President, Portfolio Manager, Quantitative Analyst

2006 to Present: Denver Investments
2003 to 2006: Rocky Mountain Wealth Advisors, Principal
2002 to 2003: Curian Capital, Vice President of Research
1998 to 2002: Prima Capital, Director of Research
1997 to 1998: KPMG, Research Analyst
1993 to 1995: Westcap Investors, Trader
1990 to 1993: Wilshire Associates, Supervisor of Performance Measurement
Education:

BA – The Colorado College; MBA – University of Colorado
Member of CFA Institute and CFA Society Colorado

Georgene L.A. Pedrie
Georgene L.A. Pedrie

Vice President, Senior Equity Trader

2002 to Present: Denver Investments
1987 to 2002: NDB Capital Market, Sales Trader
Education:

BA and MA – University of Northern Colorado

Tara Stacy
Tara Stacy

Equity Trader

2009 to Present: Denver Investments
1999 to 2009: LGC Management, Accountant
Education:

BA – University of Colorado Denver; CFA Institute Claritas certificate

CFA is a trademark owned by CFA Institute.
Georgene L.A. Pedrie is a registered representative of ALPS Distributors, Inc.

The risk profile spectrum provides an approximate illustration of the relative volatility of the Westcore Family of Funds determined by using each fund’s 5-year annualized standard deviation as of 12/31/16. If the fund’s retail class has less than five years of operations as of that date, the standard deviation of the fund’s Morningstar category is used instead. Standard deviation is a statistical measure of the historical volatility of a fund, which we believe can assist in classifying a fund within a risk spectrum. The placement on the risk spectrum (Low to High) is based on the comparison of each Fund’s standard deviation measure, as described above, in relation to the universe of funds with a 5-year standard deviation measure as obtained from a third-party fund database. We believe those measures are accurate but have not independently verified them. Please refer to the prospectus for each fund’s specific risks. Also a fund’s measure of volatility is subject to change without notice as market or economic conditions change, and such changes may include significant and nonrecurring volatility events. Historical volatility is not necessarily indicative of future volatility and there is no guarantee that in any time period any one fund will be more or less volatile than any other fund.

View Performance as of:
Month-End   Quarter-End
  Monthly Returns (%)
Periods Ended: 3/31/2017
Annualized Returns (%)
Periods Ended: 3/31/2017
1 Month 3 Months YTD 1 Year 3 Years 5 Years 10 Years Since Inception
Westcore Micro-Cap Opportunity Fund -0.16 -3.54 -3.54 23.29 5.34 11.93 - 9.54
Russell Microcap® Index 0.87 0.38 0.38 27.77 4.86 12.43 - 8.75
  Monthly Returns (%)
Periods Ended: 3/31/2017
Annualized Returns (%)
Periods Ended: 3/31/2017
1 Month 3 Months YTD 1 Year 3 Years 5 Years 10 Years Since Inception
Westcore Micro-Cap Opportunity Fund -0.16 -3.54 -3.54 23.29 5.34 11.93 - 9.54
Russell Microcap® Index 0.87 0.38 0.38 27.77 4.86 12.43 - 8.75
Westcore Micro-Cap Opportunity Fund
Monthly Returns(%) as of 3/31/2017
1 Month -0.16
3 Months -3.54
YTD -3.54
Annualized Returns(%) as of 3/31/2017
1 Year 23.29
3 Years 5.34
5 Years 11.93
10 Years -
Since Inception 9.54
Russell Microcap® Index
Monthly Returns(%) as of3/31/2017
1 Month 0.87
3 Months 0.38
YTD 0.38
Annualized Returns(%) as of 3/31/2017
1 Year 27.77
3 Years 4.86
5 Years 12.43
10 Years -
Since Inception 8.75
Westcore Micro-Cap Opportunity Fund
Monthly Returns(%) as of 3/31/2017
1 Month -0.16
3 Months -3.54
YTD -3.54
Annualized Returns(%) as of3/31/2017
1 Year 23.29
3 Years 5.34
5 Years 11.93
10 Years -
Since Inception 9.54
Russell Microcap® Index
Monthly Returns(%) as of 3/31/2017
1 Month 0.87
3 Months 0.38
YTD 0.38
Annualized Returns(%) as of 3/31/2017
1 Year 27.77
3 Years 4.86
5 Years 12.43
10 Years -
Since Inception 8.75
Retail Class Annual Expense Ratio -- Gross: 1.67%, Net: 1.31%

Calendar Year Returns (%)

2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Westcore Micro-Cap Opportunity Fund 24.49 -4.92 2.49 46.20 15.60 -3.55 33.49 15.55 -24.43* -
Russell Microcap® Index 20.37 -5.16 3.65 45.62 19.75 -9.27 28.89 27.48 -35.16* -
Westcore Micro-Cap Opportunity Fund
2016 24.49
2015 -4.92
2014 2.49
2013 46.20
2012 15.60
2011 -3.55
2010 33.49
2009 15.55
2008 -24.43*
2007 -
Russell Microcap® Index
2016 20.37
2015 -5.16
2014 3.65
2013 45.62
2012 19.75
2011 -9.27
2010 28.89
2009 27.48
2008 -35.16*
2007 -
*2008 calendar year returns for the Fund and benchmark are for the period 6/28/2008 through 12/31/2008.
Investing in micro-cap funds generally will be more volatile and loss of principal could be greater than investing in large-cap funds.
Performance data quoted represents past performance and does not guarantee future results. Performance information for the institutional class shares prior to their inception is based on the performance of the retail class. Current performance may be lower or higher than the performance quoted. To obtain current performance as of the most recent month-end, please call 800.392.CORE(2673). Average annual total returns reflect the reinvestment of dividends, capital gains distributions, all fee waivers and expense reimbursements. If imposed, the fee would reduce the performance quoted. Investment return and principal value will vary, and shares, when redeemed, may be worth more or less than their original cost. Westcore fund shares are not insured by the FDIC, the Federal Reserve Board or any other agency and are subject to investment risk.
Denver Investments (the “Adviser”) has contractually agreed to waive certain investment advisory and/or administration fees and/or to reimburse other expenses from April 30, 2016 until at least April 30, 2017. The first waiver/reimbursement applies so that the ratio of expenses to average net assets, as reported in the Fund’s financial statements, will be no more than a fixed percentage for the Fund’s Retail Class for such period. Please see the Fund’s Prospectus for more information. The second waiver/reimbursement applies so that Fund level Other Expenses (as defined in the Fund’s financial statements) for the Institutional Class will be in the same proportion as the Retail Class waivers/reimbursements. The third waiver/reimbursement applies so that the institutional class-specific Other Expenses are reimbursed. The Adviser has contractually agreed to waive/reimburse all of these class-specific Other Expenses, but only to the extent that the difference between the net Institutional Class and net Retail Class expense ratios, after applying the waiver/reimbursement, does not exceed 25 basis points. These agreements may not be terminated or modified prior to April 30, 2017 without the approval of the Board of Trustees.
All indices are unmanaged and investors cannot invest directly in an index. View index descriptions.
FTSE Russell is the source and owner of the Russell Index data. See Terms of Use for additional disclosure.

The risk profile spectrum provides an approximate illustration of the relative volatility of the Westcore Family of Funds determined by using each fund’s 5-year annualized standard deviation as of 12/31/16. If the fund’s retail class has less than five years of operations as of that date, the standard deviation of the fund’s Morningstar category is used instead. Standard deviation is a statistical measure of the historical volatility of a fund, which we believe can assist in classifying a fund within a risk spectrum. The placement on the risk spectrum (Low to High) is based on the comparison of each Fund’s standard deviation measure, as described above, in relation to the universe of funds with a 5-year standard deviation measure as obtained from a third-party fund database. We believe those measures are accurate but have not independently verified them. Please refer to the prospectus for each fund’s specific risks. Also a fund’s measure of volatility is subject to change without notice as market or economic conditions change, and such changes may include significant and nonrecurring volatility events. Historical volatility is not necessarily indicative of future volatility and there is no guarantee that in any time period any one fund will be more or less volatile than any other fund.

Manager Commentary as of 12/31/2016

 

Market Overview

The fourth quarter was kind to micro-cap stocks as the Russell Microcap® Index rose 10.05% for the period. Inexpensive stocks ruled as companies with high cash flow to price and other positive valuation metrics outperformed. Stocks with high return on equity and higher quality (as measured by the Piotroski score) also outperformed. Stocks with high volatility and higher historical trading volume underperformed less-volatile and less-liquid stocks.

Fund Performance

For the fourth quarter, the Westcore Micro-Cap Opportunity Fund returned 15.67%, outperforming its benchmark, the Russell Microcap® Index, which returned 10.05%. The models used to help manage and select stocks for the Fund did well across the investment spectrum for the quarter. On an absolute basis, Fund provided positive returns in all eleven sectors for the quarter, led by financials and consumer discretionary. The benchmark’s returns were positive in 10 out of 11 sectors on an absolute basis. The Fund outperformed the benchmark in 9 out the 11 sectors.

Contributors to Return

The Fund’s best-performing sectors, relative to the benchmark, were health care, consumer discretionary, and information technology. Among the Fund’s best-performing holdings this quarter was National Western Life Group., a global provider of insurance products. The company’s life insurance business has been outperforming expectations and the company made adjustments to its financial statements to reflect the better-than-expected results. Harsco Corp., a diversified, worldwide industrial services company, was another significant contributor to the Fund’s performance in the quarter. The company reported cash flow that was significantly higher than expectations. This was driven by its metals and minerals segment, along with improving market conditions. Another strong performer was Michigan-based Macatawa Bank Corp. Its third quarter earnings topped expectations driven by lower expenses and a more favorable tax rate.

Detractors from Return

The Fund’s weakest sectors relative to the benchmark were financials, utilities, and materials. Among the Fund’s detractors in the quarter was VASCO Data Security International Inc., which provides security with two-factor authentication, transaction data signing, and identity management. The stock struggled after the company reported lower-than-expected earnings during the quarter. Further hurting the stock, VASCO reduced its full year earnings estimates as the firm’s largest customers in Europe have been holding back orders for security tools. American Outdoor Brands Corp. (formerly Smith & Wesson Holding Corp.), one of the world’s leading providers of firearms, also hampered performance in the quarter. The stock struggled as expectations of stricter gun-control measures dissipated after the election. Another underperformer in the quarter was Healthways Inc., a well-being and wellness provider for employers, health plans, and health systems. Its stock underperformed after the company reported third quarter earnings that fell short of expectations.

Outlook and Positioning

The results of the U.S. elections surprised most, but the overall the effect on micro-cap stocks was positive. As pessimism was replaced by optimism, the market was able to leverage off the improving fundamentals we had started to see over the last few quarters. While certainly the long-term outlook may appear a bit murky, and global markets could once again slip back into the same story of stagnant global growth, there are signs that stocks, especially small- and micro-cap stocks, could be poised for a strong 2017. Should the government pass some form of fiscal stimulus, it would likely have a positive effect on small companies, who are also poised to benefit from better credit availability. Relative to their large-cap brethren, we believe micro-cap stocks still remain undervalued based on long-term valuation spreads.

Stock Performance (3 months ended 12/31/2016)
Top 5 Stocks Average Weight Contribution to Return
Harsco Corp 1.48% 0.55%
Macatawa Bank Corp 1.32 0.39
National Western Life Group Inc 0.78 0.35
First Busey Corp 1.00 0.35
CenterState Banks Inc 0.91 0.35
Bottom 5 Stocks Average Weight Contribution to Return
Inovio Pharmaceuticals Inc 0.12% -0.15%
VASCO Data Security International Inc 0.50 -0.16
American Outdoor Brands Corp 0.65 -0.16
DHI Group Inc 0.21 -0.27
Healthways Inc 1.50 -0.32
Top 5 Stocks
Harsco Corp
Average Weight 1.48%
Contribution to Return 0.55%
Macatawa Bank Corp
Average Weight 1.32
Contribution to Return 0.39
National Western Life Group Inc
Average Weight 0.78
Contribution to Return 0.35
First Busey Corp
Average Weight 1.00
Contribution to Return 0.35
CenterState Banks Inc
Average Weight 0.91
Contribution to Return 0.35
Bottom 5 Stocks
Inovio Pharmaceuticals Inc
Average Weight 0.12%
Contribution to Return -0.15%
VASCO Data Security International Inc
Average Weight 0.50
Contribution to Return -0.16
American Outdoor Brands Corp
Average Weight 0.65
Contribution to Return -0.16
DHI Group Inc
Average Weight 0.21
Contribution to Return -0.27
Healthways Inc
Average Weight 1.50
Contribution to Return -0.32
Investing in micro-cap funds generally will be more volatile and loss of principal could be greater than investing in large-cap funds.
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.
The Top 5 and Bottom 5 performing stocks do not represent all of the securities purchased, sold or recommended by the Funds’ Adviser. The methodology used to construct this chart took into account the weighting of every holding in the Fund that contributed to the Fund’s performance during the measurement period. The contribution of each Fund holding was consistently determined by calculating the weight of each holding multiplied by the rate of return for that holding during the measurement period. To request a complete list of the contribution of each Fund holding to overall Fund performance, please call 800-392-CORE (2673) or visit the Performance tab.
The Manager Commentaries contain certain forward-looking statements about the factors that may affect the performance of the Funds in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Funds, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Funds. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
All indices are unmanaged and investors cannot invest directly in an index. View index descriptions.

The risk profile spectrum provides an approximate illustration of the relative volatility of the Westcore Family of Funds determined by using each fund’s 5-year annualized standard deviation as of 12/31/16. If the fund’s retail class has less than five years of operations as of that date, the standard deviation of the fund’s Morningstar category is used instead. Standard deviation is a statistical measure of the historical volatility of a fund, which we believe can assist in classifying a fund within a risk spectrum. The placement on the risk spectrum (Low to High) is based on the comparison of each Fund’s standard deviation measure, as described above, in relation to the universe of funds with a 5-year standard deviation measure as obtained from a third-party fund database. We believe those measures are accurate but have not independently verified them. Please refer to the prospectus for each fund’s specific risks. Also a fund’s measure of volatility is subject to change without notice as market or economic conditions change, and such changes may include significant and nonrecurring volatility events. Historical volatility is not necessarily indicative of future volatility and there is no guarantee that in any time period any one fund will be more or less volatile than any other fund.

Distributions

The Westcore Micro-Cap Opportunity Fund pays any income and capital gain distributions at least annually, generally in December.

To view the Fund’s most recent distributions click here.

To view historical distribution information for all of the Westcore Funds click here.

 

Past performance does not guarantee future results.
A fund’s income from dividends and interest and any net realized short-term capital gains are paid to shareholders as income dividends. A fund realizes capital gains whenever it sells securities for a higher price than it paid for them. Net realized long-term gains are paid to shareholders as capital gain dividends. A dividend will reduce the net asset value of a fund share by the amount of the dividend on the ex-dividend date. View the prospectus for more information.

The risk profile spectrum provides an approximate illustration of the relative volatility of the Westcore Family of Funds determined by using each fund’s 5-year annualized standard deviation as of 12/31/16. If the fund’s retail class has less than five years of operations as of that date, the standard deviation of the fund’s Morningstar category is used instead. Standard deviation is a statistical measure of the historical volatility of a fund, which we believe can assist in classifying a fund within a risk spectrum. The placement on the risk spectrum (Low to High) is based on the comparison of each Fund’s standard deviation measure, as described above, in relation to the universe of funds with a 5-year standard deviation measure as obtained from a third-party fund database. We believe those measures are accurate but have not independently verified them. Please refer to the prospectus for each fund’s specific risks. Also a fund’s measure of volatility is subject to change without notice as market or economic conditions change, and such changes may include significant and nonrecurring volatility events. Historical volatility is not necessarily indicative of future volatility and there is no guarantee that in any time period any one fund will be more or less volatile than any other fund.

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