Westcore Small-Cap Growth Fund

Growth Equity

Style: Small-Cap Growth Retail Class: WTSGX Institutional Class: WISGX

Investment Strategy

The Westcore Small-Cap Growth Fund invests in a diversified portfolio of equity securities of primarily small-sized companies with growth potential.

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 both the retail and institutional class.

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

Retail Class Institutional Class2
Ticker WTSGX WISGX
CUSIP 957904469 957904451
Inception Date 12/20/2013 12/20/2013
Distribution Frequency Annually Annually
Minimum to open a new regular account: $2,500 $250,000
Minimum to open a new retirement, education1 or UGMA/UTMA account: $1,000 $250,000
Minimum to open an Automatic Investment Plan Account: $1,000 $250,000
Automatic Investments: $25/month per Fund -
Minimum to add to any type of account: $25 -
Retail Class
Ticker WTSGX
CUSIP 957904469
Inception Date 12/20/2013
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
Institutional Class2
Ticker WISGX
CUSIP 957904451
Inception Date 12/20/2013
To open a new regular account: $250,000
To open a new retirement, education1 or UGMA/UTMA account: $250,000
To open an Automatic Investment Plan Account: $250,000
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 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.
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 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: 2/28/2017
Annualized Returns (%)
Periods Ended: 2/28/2017
1 Month 3 Months YTD 1 Year 3 Years 5 Years 10 Years Since Inception
Westcore Small-Cap Growth Fund 2.98 6.14 7.90 34.44 2.56 - - 5.21
Westcore Small-Cap Growth Fund Institutional 3.04 6.17 7.80 34.85 2.94 - - 5.57
Russell 2000® Growth Index 2.45 5.54 4.12 30.91 5.42 - - 6.62
  Monthly Returns (%)
Periods Ended: 12/31/2016
Annualized Returns (%)
Periods Ended: 12/31/2016
1 Month 3 Months YTD 1 Year 3 Years 5 Years 10 Years Since Inception
Westcore Small-Cap Growth Fund -1.63 0.55 8.79 8.79 2.47 - - 2.88
Westcore Small-Cap Growth Fund Institutional -1.52 0.64 9.22 9.22 2.88 - - 3.29
Russell 2000® Growth Index 1.36 3.57 11.32 11.32 5.05 - - 5.58
Westcore Small-Cap Growth Fund
Monthly Returns(%) as of 2/28/2017
1 Month 2.98
3 Months 6.14
YTD 7.90
Annualized Returns(%) as of 2/28/2017
1 Year 34.44
3 Years 2.56
5 Years -
10 Years -
Since Inception 5.21
Westcore Small-Cap Growth Fund Institutional
Monthly Returns(%) as of 2/28/2017
1 Month 3.04
3 Months 6.17
YTD 7.80
Annualized Returns(%) as of 2/28/2017
1 Year 34.85
3 Years 2.94
5 Years -
10 Years -
Since Inception 5.57
Russell 2000® Growth Index
Monthly Returns(%) as of2/28/2017
1 Month 2.45
3 Months 5.54
YTD 4.12
Annualized Returns(%) as of 2/28/2017
1 Year 30.91
3 Years 5.42
5 Years -
10 Years -
Since Inception 6.62
Westcore Small-Cap Growth Fund
Monthly Returns(%) as of 12/31/2016
1 Month -1.63
3 Months 0.55
YTD 8.79
Annualized Returns(%) as of12/31/2016
1 Year 8.79
3 Years 2.47
5 Years -
10 Years -
Since Inception 2.88
Westcore Small-Cap Growth Fund Institutional
Monthly Returns(%) as of 12/31/2016
1 Month -1.52
3 Months 0.64
YTD 9.22
Annualized Returns(%) as of 12/31/2016
1 Year 9.22
3 Years 2.88
5 Years -
10 Years -
Since Inception 3.29
Russell 2000® Growth Index
Monthly Returns(%) as of 12/31/2016
1 Month 1.36
3 Months 3.57
YTD 11.32
Annualized Returns(%) as of 12/31/2016
1 Year 11.32
3 Years 5.05
5 Years -
10 Years -
Since Inception 5.58
Retail Class Annual Expense Ratio -- Gross: 4.96%, Net: 1.30%
Institutional Class Annual Expense Ratio -- Gross: 2.21%, Net: 1.05%

Calendar Year Returns (%)

2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Westcore Small-Cap Growth Fund 8.79 -4.77 3.85 1.30* - - - - - -
Westcore Small-Cap Growth Fund Institutional 9.22 -4.37 4.24 1.30* - - - - - -
Russell 2000® Growth Index 11.32 -1.38 5.60 1.67* - - - - - -
Westcore Small-Cap Growth Fund
2016 8.79
2015 -4.77
2014 3.85
2013 1.30*
2012 -
2011 -
2010 -
2009 -
2008 -
2007 -
Westcore Small-Cap Growth Fund Institutional
2016 9.22
2015 -4.37
2014 4.24
2013 1.30*
2012 -
2011 -
2010 -
2009 -
2008 -
2007 -
Russell 2000® Growth Index
2016 11.32
2015 -1.38
2014 5.60
2013 1.67*
2012 -
2011 -
2010 -
2009 -
2008 -
2007 -
*2013 calendar year returns for the Fund and benchmark are for the period 12/20/2013 through 12/31/2013.
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 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

Equities continued the march higher in the fourth quarter with a strong post-election rally. However, peeling back the layers of the onion, there was wide dispersion in returns. More specifically value stocks, led by financials, staged a significant advance with the Russell 2000® Value Index, finishing the quarter up 14.07% and the year up 31.74%. In comparison, the Russell 2000® Growth Index returned just 3.57% for the quarter and 11.32% for the year.

The magnitude of this divergence is remarkable. Since 1995, growth stocks have underperformed value stocks more significantly in just two years, occurring consecutively with the dotcom crash of 2000 and 2001. The backdrop, in our opinion, is not remotely similar to that period. Thus, we view the disparity in relative performance as extreme and believe it is likely to revert meaningfully should the newly anticipated acceleration in economic prospects fail to meet rapidly growing expectations.

Fund Performance

For the fourth quarter of 2016, the Westcore Small-Cap Growth Fund underperformed its benchmark, returning 0.55% compared to the Russell 2000® Growth Index’s 3.57% return.

Contributors to Return

The three sectors that contributed most to the Fund’s performance relative to its benchmark in the quarter were financials, energy, and consumer staples. The Fund’s best-performing stock in the quarter was Saia Inc., a provider of less-than-truckload and logistics services across the United States. Its stock outperformed considerably during the fourth quarter due to a more positive freight environment, coupled with the announcement of a planned expansion into the Northeast, which may generate substantial value over time. Within financials, Evercore Partners Inc. was the Fund’s top contributor in the quarter. This boutique investment banking and securities research firm performed well amidst the market’s anticipation of a more conducive environment for merger and acquisition transactions from potential new U.S. administration initiatives. Microsemi Corp., a semiconductor manufacturer, was strong in the period after posting solid quarterly results, as well as being reported in the press as a potential acquisition target. The company, in our opinion, has attractive growth prospects across a multitude of end markets, such as aerospace/defense and data centers, in addition to an improving financial model with increasing margins and decreasing leverage.

Detractors from Return

The three sectors that detracted most from the Fund’s performance relative to its benchmark in the quarter were industrials, materials, and information technology. The Fund’s worst-performing stock in the quarter was Nevro Corp., a developer of innovative spinal cord stimulation devices for the treatment of chronic pain. The stock underperformed during the fourth quarter based on the general threat of competition into 2017 and beyond. We believe Nevro’s patent-protected Senza offering delivers a best-in-class clinical outcome with fewer side effects and creates the ability for the company to expand its market into modalities not typically treated with neuromodulation therapy. The Advisory Board Co., a provider of performance improvement software and solutions to the health care and higher education industries, was another significant detractor in the quarter. Faced with the prospect of a new presidential administration, and what that might mean for health care policy going forward, many health care providers reduced spending on consulting during the quarter. Our belief is that this slowdown is more transient in nature as health care providers, now more than ever, require access to best practices research with which to improve returns in this constantly changing environment. Flotek Industries Inc., a chemicals provider for the oilfield services industry, was also a meaningful drag on performance in the quarter. Its stock came under pressure due to a report questioning Flotek’s product efficacy. We have confidence in the long-term opportunity for Flotek and its Complex nano-Fluid product suite based on product quality verifications from third-party, well-regarded engineering firms as well as tier-one oilfield service companies and customers.

Outlook and Positioning

As of the end of 2016, the Fund was overweighted in the financials and consumer discretionary sectors and underweighted primarily in industrials and the recently formed real estate sector.

While economic prospects appear to have picked up for 2017 on the promise of a pro-growth policy agenda, in our opinion, we remain in the later stages of the business cycle. We believe that growth stocks represent significant value in the market today given the magnitude of outperformance from cyclical areas of the market. We have been actively adding to positions that, in our estimation, have strong, longer-term growth prospects, but have recently underperformed despite continued strong fundamentals. We believe this is a winning strategy over time and our focus remains on building a portfolio of the next-generation of great growth companies. 

 

Stock Performance (3 months ended 12/31/2016)
Top 5 Stocks Average Weight Contribution to Return
Saia Inc 1.56% 0.83%
Microsemi Corp 2.68 0.73
Evercore Partners Inc 2.11 0.62
Grand Canyon Education Inc 1.31 0.58
Customers Bancorp Inc 1.30 0.46
Bottom 5 Stocks Average Weight Contribution to Return
Flotek Industries Inc 1.15% -0.49%
Endologix Inc 0.74 -0.65
Zendesk Inc 1.71 -0.65
Advisory Board Co 2.07 -0.71
Nevro Corp 2.67 -1.00
Top 5 Stocks
Saia Inc
Average Weight 1.56%
Contribution to Return 0.83%
Microsemi Corp
Average Weight 2.68
Contribution to Return 0.73
Evercore Partners Inc
Average Weight 2.11
Contribution to Return 0.62
Grand Canyon Education Inc
Average Weight 1.31
Contribution to Return 0.58
Customers Bancorp Inc
Average Weight 1.30
Contribution to Return 0.46
Bottom 5 Stocks
Flotek Industries Inc
Average Weight 1.15%
Contribution to Return -0.49%
Endologix Inc
Average Weight 0.74
Contribution to Return -0.65
Zendesk Inc
Average Weight 1.71
Contribution to Return -0.65
Advisory Board Co
Average Weight 2.07
Contribution to Return -0.71
Nevro Corp
Average Weight 2.67
Contribution to Return -1.00
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 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 Small-Cap Growth 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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