Westcore Small-Cap Growth Fund II

Growth Equity

Style: Small-Cap Growth Institutional Class: WTSLX

Investment Strategy

The Westcore Small-Cap Growth Fund II* follows the same investment strategy as the Westcore Small-Cap Growth Fund by investing in a diversified portfolio of equity securities of primarily small-sized companies with growth potential. The Small-Cap Growth Fund II, however, was repositioned from the Westcore Select Fund on December 27, 2016, and maintains certain tax loss carryforwards that may be beneficial in taxable accounts.

Our approach is grounded in independent fundamental research with the goal of uncovering what we believe are the next great growth companies. Using rigorous stock-by-stock research, we analyze a company’s financial information and the industry and markets in which it competes. We also have conversations with its management, competitors, customers and suppliers to evaluate its business. We build a diversified small-cap growth portfolio with what we believe are high-quality companies with enduring competitive advantages that are attractively-valued relative to their future growth potential.

*This Fund is available in the institutional class only.

Management Team

We seek to invest in growth companies with disruptive products or services, large market opportunities and strong competitive positions that are less sensitive to macroeconomic factors. – Brian C. Fitzsimons, CFA

Brian C. Fitzsimons, CFA

Brian C. Fitzsimons, CFA

Partner, Director of Small-Cap Growth Research, Portfolio Manager

Mitch S. Begun, CFA

Mitch S. Begun, CFA

Partner, Portfolio Manager, Analyst

Adam C. Bliss

Adam C. Bliss

Partner, Portfolio Manager, Analyst

Fund Information & Investment Minimums

Institutional Class
Ticker WTSLX
CUSIP 957904576
Inception Date 10/1/1999
Distribution Frequency Annually
Minimum to open a new regular account: $250,000
Minimum to open a new retirement, education1 or UGMA/UTMA account: $250,000
Minimum to open an Automatic Investment Plan Account: $250,000
Institutional Class
Ticker WTSLX
CUSIP 957904576
Inception Date 10/1/1999
Minimum to open a new regular account: $250,000
Minimum to open a new retirement, education1 or UGMA/UTMA account: $250,000
Minimum to open an Automatic Investment Plan Account: $250,000
Effective 12/27/2016, the Westcore Select Fund has been renamed the Westcore Small-Cap Growth Fund II.
Investing in small-cap funds generally will be more volatile and loss of principal could be greater than investing in large-cap funds.
Investing in foreign securities entails special risks, such as currency fluctuations and political uncertainties.

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 3/31/17. 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.
2 The minimum investment in the Institutional Class shares is $250,000. Investors generally may meet the minimum investment amount by aggregating multiple accounts with common ownership within the Fund. Common ownership includes individual and joint accounts as well as accounts where an investor has beneficial ownership through acting as a custodian for a minor account or as a beneficiary to a trust account. In addition, Institutional Class accounts offered through a financial intermediary may meet the $250,000 minimum investment amount by aggregating multiple accounts within the Fund, however each separate account must meet a minimum investment requirement of $10,000. Exceptions to the Institutional Class minimums may apply for qualified requirement plans and other account types with lower or no networking and/or omnibus fees charged to the Funds.

Investment Team

Brian C. Fitzsimons, CFA
Brian C. Fitzsimons, CFA

Partner, Director of Small-Cap Growth Research, Portfolio Manager

2005 to Present: Denver Investments
2004 to 2005: Newmont Capital Ltd., Finance Manager
2002 to 2004: A.G. Edwards & Sons, Inc., Equity Analyst
2002: Berger Financial Group, Equity Analyst
1999 to 2002: Women’s Pro Softball League, Director of Finance/Controller
2000 to 2001: Marsico Endowment Fund, Portfolio Manager
Education:

BS – Metropolitan State College of Denver; MBA – University of Denver
Member of CFA Institute and CFA Society Colorado

Mitch S. Begun, CFA
Mitch S. Begun, CFA

Partner, Portfolio Manager, Analyst

2003 to Present: Denver Investments
2000 to 2002: Raymond James & Associates, Equity Research Associate
Education:

BSBA – University of North Carolina at Chapel Hill
Member of CFA Institute and CFA Society Colorado

Adam C. Bliss
Adam C. Bliss

Partner, Portfolio Manager, Analyst

2004 to Present: Denver Investments
1997 to 2003: Berger Funds, Co-Portfolio Manager and Equity Analyst
Education:

BSBA – Saint Mary’s College of California; MBA – University of Denver

Mark S. Truelsen, CFA
Mark S. Truelsen, CFA

Vice President, Analyst

2001 to Present: Denver Investments
2000 to 2001: RJ Falkner & Co., Junior Research Analyst
1999: Skyline Asset Management, Marketing Assistant
1998 to 1999 Scudder Kemper Investments, Investment Representative
Education:

BA – University of Illinois at Urbana-Champaign
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.
Mark Truelsen, CFA and Georgene L.A. Pedrie are registered representatives 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 3/31/17. 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: 6/30/2017
Annualized Returns (%)
Periods Ended: 6/30/2017
1 Month 3 Months YTD 1 Year 3 Years 5 Years 10 Years Since Inception
Westcore Small-Cap Growth Fund II Institutional 2.00 4.74 16.33 12.86 -1.99 6.29 3.21 9.58
Russell 2000® Growth Index 3.44 4.39 9.97 24.40 7.64 13.98 7.82 6.47
Westcore Small-Cap Growth Fund II Custom Index 3.44 4.39 9.97 15.55 7.37 13.90 7.73 7.15
Russell Midcap® Growth Index 0.30 4.21 11.40 17.05 7.83 14.19 7.87 7.23
  Monthly Returns (%)
Periods Ended: 6/30/2017
Annualized Returns (%)
Periods Ended: 6/30/2017
1 Month 3 Months YTD 1 Year 3 Years 5 Years 10 Years Since Inception
Westcore Small-Cap Growth Fund II Institutional 2.00 4.74 16.33 12.86 -1.99 6.29 3.21 9.58
Russell 2000® Growth Index 3.44 4.39 9.97 24.40 7.64 13.98 7.82 6.47
Westcore Small-Cap Growth Fund II Custom Index 3.44 4.39 9.97 15.55 7.37 13.90 7.73 7.15
Russell Midcap® Growth Index 0.30 4.21 11.40 17.05 7.83 14.19 7.87 7.23
Westcore Small-Cap Growth Fund II Institutional
Monthly Returns(%) as of 6/30/2017
1 Month 2.00
3 Months 4.74
YTD 16.33
Annualized Returns(%) as of 6/30/2017
1 Year 12.86
3 Years -1.99
5 Years 6.29
10 Years 3.21
Since Inception 9.58
Russell 2000® Growth Index
Monthly Returns(%) as of6/30/2017
1 Month 3.44
3 Months 4.39
YTD 9.97
Annualized Returns(%) as of 6/30/2017
1 Year 24.40
3 Years 7.64
5 Years 13.98
10 Years 7.82
Since Inception 6.47
Westcore Small-Cap Growth Fund II Custom Index
Monthly Returns(%) as of6/30/2017
1 Month 3.44
3 Months 4.39
YTD 9.97
Annualized Returns(%) as of 6/30/2017
1 Year 15.55
3 Years 7.37
5 Years 13.90
10 Years 7.73
Since Inception 7.15
Russell Midcap® Growth Index
Monthly Returns(%) as of6/30/2017
1 Month 0.30
3 Months 4.21
YTD 11.40
Annualized Returns(%) as of 6/30/2017
1 Year 17.05
3 Years 7.83
5 Years 14.19
10 Years 7.87
Since Inception 7.23
Westcore Small-Cap Growth Fund II Institutional
Monthly Returns(%) as of 6/30/2017
1 Month 2.00
3 Months 4.74
YTD 16.33
Annualized Returns(%) as of 6/30/2017
1 Year 12.86
3 Years -1.99
5 Years 6.29
10 Years 3.21
Since Inception 9.58
Russell 2000® Growth Index
Monthly Returns(%) as of 6/30/2017
1 Month 3.44
3 Months 4.39
YTD 9.97
Annualized Returns(%) as of 6/30/2017
1 Year 24.40
3 Years 7.64
5 Years 13.98
10 Years 7.82
Since Inception 6.47
Westcore Small-Cap Growth Fund II Custom Index
Monthly Returns(%) as of 6/30/2017
1 Month 3.44
3 Months 4.39
YTD 9.97
Annualized Returns(%) as of 6/30/2017
1 Year 15.55
3 Years 7.37
5 Years 13.90
10 Years 7.73
Since Inception 7.15
Russell Midcap® Growth Index
Monthly Returns(%) as of 6/30/2017
1 Month 0.30
3 Months 4.21
YTD 11.40
Annualized Returns(%) as of 6/30/2017
1 Year 17.05
3 Years 7.83
5 Years 14.19
10 Years 7.87
Since Inception 7.23
Institutional Class Annual Expense Ratio -- Gross: 1.24%, Net: 1.15%

Calendar Year Returns (%)

2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Westcore Small-Cap Growth Fund II Institutional -9.72 -11.81 4.54 45.84 -11.28 -10.61 30.55 41.08 -34.35 15.25
Russell 2000® Growth Index 11.32 -1.38 5.60 43.30 14.59 -2.91 29.09 34.47 -38.54 7.05
Westcore Small-Cap Growth Fund II Custom Index - - - - - - - - - -
Russell Midcap® Growth Index - - - - - - - - - -
Westcore Small-Cap Growth Fund II Institutional
2016 -9.72
2015 -11.81
2014 4.54
2013 45.84
2012 -11.28
2011 -10.61
2010 30.55
2009 41.08
2008 -34.35
2007 15.25
Russell 2000® Growth Index
2016 11.32
2015 -1.38
2014 5.60
2013 43.30
2012 14.59
2011 -2.91
2010 29.09
2009 34.47
2008 -38.54
2007 7.05
Westcore Small-Cap Growth Fund II Custom Index
2016 -
2015 -
2014 -
2013 -
2012 -
2011 -
2010 -
2009 -
2008 -
2007 -
Russell Midcap® Growth Index
2016 -
2015 -
2014 -
2013 -
2012 -
2011 -
2010 -
2009 -
2008 -
2007 -

 

Effective 12/27/2016, the Westcore Select Fund has been renamed the Westcore Small-Cap Growth Fund II.
Effective January 1, 2017, the benchmark for the Westcore Small-Cap Growth Fund II is the Russell 2000® Growth Index.
Investing in small-cap funds generally will be more volatile and loss of principal could be greater than investing in large-cap funds.
Investing in foreign securities entails special risks, such as currency fluctuations and political uncertainties.
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 the investment advisory and/or administration fees and/or to reimburse other expenses from April 30, 2017 until at least April 30, 2018, so that the ratio of expenses to average net assets as reported in the Fund’s Financial Highlights will be no more than a fixed percentage for the Fund’s Institutional Class (formerly known as the Retail Class prior to December 27, 2016) for such period. This agreement may not be terminated or modified by the Adviser prior to April 30, 2018 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 3/31/17. 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 6/30/2017

 

Market Overview

In the second quarter of 2017, growth stocks continued to bounce back relative to value stocks following a significant divergence in 2016. For the three months ended June 30, 2017, the Russell 2000® Growth Index was up 4.39% compared to the 0.67% return of the Russell 2000® Value Index. The last twelve months have been quite a stylistic roller coaster and, interestingly, after the Russell 2000® Value Index’s post-election rally in the fourth quarter of 2016, followed by the Russell 2000® Growth Index’s rally in 2017, the two indexes have performed nearly identically for the last twelve months, returning approximately 25% each. Taking a step back, this has been a remarkable bull market for equities.    

Fund Performance

For the second quarter of 2017, the Westcore Small-Cap Growth Fund II outperformed its benchmark, returning 4.74% compared to the Russell 2000® Growth Index’s 4.39% return.   

Contributors to Return

The three sectors that contributed most to the Fund’s performance relative to its benchmark in the quarter were information technology, industrials, and health care. The Fund’s best-performing stock in the quarter was Intersect ENT Inc., a medical device company focused on therapies for patients suffering from chronic sinusitis. The stock outperformed during the second quarter as near-term reimbursement concerns abated, evidenced by solid near-term results. As the market for chronic sinusitis therapies continues to expand, we are excited about the potential for Intersect’s currently available and pipeline products. Another strong contributor was Medidata Solutions Inc., a provider of cloud-based software solutions to clinical development programs within the biopharmaceutical industry. The company outperformed during the second quarter as revenue estimates continued to improve following the announcement of another significant new client win, pharmaceutical company Novartis. We believe there are ample opportunities for innovation within clinical trial development that Medidata will have the potential to capitalize on in the coming years. Another top contributor was LendingTree Inc., the premier lead-generation company for the lending industry. LendingTree continued to gain market share in the industry and expand its product set.

Detractors from Return

The three sectors that detracted most from the Fund’s performance relative to its benchmark in the quarter were energy, consumer discretionary, and telecommunication services. The Fund’s worst-performing stock in the quarter was IMAX Corp, a leader in film technologies. Despite a strong growth rate for new IMAX installations, the company suffered as global box office sales for films has been consistently weak. We believe the growth opportunity for IMAX screens remains robust, particularly in China. Recent cost reductions and stock buyback authorization should, in our opinion, help support the stock at its current valuation. PDC Energy Inc., an exploration and production company focused on operations in the Niobrara Formation and Permian Basin, was a significant detractor in the quarter. Regulatory concerns in Colorado drove the stock’s underperformance in the quarter, however, we believe the issues will prove transitory and have limited impact on the company’s long-term growth prospects. PDC has, in our opinion, continued to execute well and grow production. Glaukos Corp., a developer of micro-invasive glaucoma surgery products designed to reduce fluid pressure in the eye, underperformed in the second quarter. This was due to suboptimal sales of its flagship iStent product following a recent price increase. Ultimately, we believe physician acceptance of iStent will be driven by quality clinical outcomes, a lack of alternative treatment options, and beneficial reimbursement changes.

Outlook and Positioning

As of the end of the second quarter of 2017, the Fund was overweighted in the consumer discretionary and financial sectors and underweighted primarily in the health care and industrials sectors.

The current economic recovery remains one of the longest on record, now sitting at 96 months. We still believe that we are in the later innings of an economic cycle. Despite this, the economy has continued to chug along at a relatively low-growth rate and we believe this favors strong growth companies that are less dependent on economic growth or cyclical trends. However, in our opinion, valuations have become increasingly difficult to justify in some of the higher-growth areas of the market. As a result, we have been actively executing our risk management disciplines by trimming or exiting positions in some of the more expensive areas of the market, as they achieve our price targets.

Stock Performance (3 months ended 6/30/2017)
Top 5 Stocks Average Weight Contribution to Return
Intersect ENT Inc 1.07% 0.61%
Medidata Solutions Inc 1.63 0.52
LendingTree Inc 1.48 0.50
Take-Two Interactive Software Inc 0.96 0.50
Albany Molecular Research Inc 0.66 0.43
Bottom 5 Stocks Average Weight Contribution to Return
National CineMedia Inc 0.73% -0.38%
Glaukos Corp 1.76 -0.38
Nevro Corp 1.64 -0.40
PDC Energy Inc 1.35 -0.50
IMAX Corp 1.46 -0.63
Top 5 Stocks
Intersect ENT Inc
Average Weight 1.07%
Contribution to Return 0.61%
Medidata Solutions Inc
Average Weight 1.63
Contribution to Return 0.52
LendingTree Inc
Average Weight 1.48
Contribution to Return 0.50
Take-Two Interactive Software Inc
Average Weight 0.96
Contribution to Return 0.50
Albany Molecular Research Inc
Average Weight 0.66
Contribution to Return 0.43
Bottom 5 Stocks
National CineMedia Inc
Average Weight 0.73%
Contribution to Return -0.38%
Glaukos Corp
Average Weight 1.76
Contribution to Return -0.38
Nevro Corp
Average Weight 1.64
Contribution to Return -0.40
PDC Energy Inc
Average Weight 1.35
Contribution to Return -0.50
IMAX Corp
Average Weight 1.46
Contribution to Return -0.63
Investing in small-cap funds generally will be more volatile and loss of principal could be greater than investing in large-cap funds.
Investing in foreign securities entails special risks, such as currency fluctuations and political uncertainties.
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 9/30/16. 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 Small-Cap Growth Fund II 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 3/31/17. 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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