ck0001145022-20230630
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Hotchkis
& Wiley Funds
Prospectus
AUGUST 29,
2023
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Diversified Value
Fund |
Global Value
Fund |
Class
I HWCIX |
Class
I HWGIX |
Class
A HWCAX |
Class
A HWGAX |
Class
C HWCCX |
Class
C (not currently offered) |
Class
Z (not currently offered) |
Class
Z (not currently offered) |
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Large Cap Value
Fund |
International Value
Fund |
Class
I HWLIX |
Class
I HWNIX |
Class
A HWLAX |
Class
A (not currently offered) |
Class
C HWLCX |
Class
C (not currently offered) |
Class
Z HWLZX |
Class
Z (not currently offered) |
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Mid-Cap Value
Fund |
International Small
Cap Diversified Value Fund |
Class
I HWMIX |
Class
I HWTIX |
Class
A HWMAX |
Class
A (not currently offered) |
Class
C HWMCX |
Class
Z (not currently offered) |
Class
Z HWMZX |
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Small Cap Value
Fund |
Value Opportunities
Fund |
Class
I HWSIX |
Class
I HWAIX |
Class
A HWSAX |
Class
A HWAAX |
Class
C HWSCX |
Class
C HWACX |
Class
Z HWSZX |
Class
Z HWAZX |
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Small Cap
Diversified Value Fund |
High Yield
Fund |
Class
I HWVIX |
Class
I HWHIX |
Class
A HWVAX |
Class
A HWHAX |
Class
C (not currently offered) |
Class
C HWHCX |
Class
Z HWVZX |
Class
Z HWHZX |
The
Securities and Exchange Commission has not approved or disapproved these
securities or the accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal
offense. |
Table
of Contents
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Fund
Summary: Hotchkis & Wiley Funds |
DIVERSIFIED
VALUE FUND |
Investment
Objective. The
Fund seeks capital appreciation.
Fees and Expenses of the
Fund. This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You may qualify for sales charge discounts
on Class A shares if you and your family invest, or agree to invest in the
future, at least $25,000 in the Hotchkis
& Wiley Funds. More information about these and other
discounts is available from your financial professional and in the sections
titled “About Class I, Class A, Class C and Class Z Shares” beginning on page 59
of the Prospectus, in Appendix A to the Prospectus, and in “Purchase of Shares”
beginning on page 58 of the Fund’s Statement of Additional Information.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, on your purchases and sales of Class Z shares of the Fund, which are
not reflected in the tables and examples below.
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SHAREHOLDER
FEES (fees
paid directly from your investment) |
| Class I |
Class A |
Class C |
Class
Z |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
None |
5.25% |
None |
None |
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase
price) |
None |
None⁽ᵃ⁾ |
1.00% |
None |
ANNUAL
FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class I |
Class A |
Class C |
Class
Z |
Management
Fees |
0.70% |
0.70% |
0.70% |
0.70% |
Distribution
and/or Service (12b-1) Fees |
None |
0.25% |
1.00% |
None |
Other
Expenses |
0.34% |
0.30% |
0.34% |
0.23⁽ᵇ⁾ |
Total
Annual Fund Operating Expenses |
1.04% |
1.25% |
2.04% |
0.93% |
Fee
Waiver and/or Expense Reimbursement |
-0.24% |
-0.20% |
-0.24% |
-0.13% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(c) |
0.80% |
1.05% |
1.80% |
0.80% |
(a)
You may be charged a
deferred sales charge of up to 0.75% if you did not pay an initial sales charge
on an investment of $1 million or more in Class A shares and you redeem your
shares within one year after
purchase.
(b)
Other Expenses for Class Z
shares, which are not currently offered, are based on estimated amounts for the
current fiscal year.
(c)
Hotchkis &
Wiley Capital Management, LLC has contractually agreed to waive management fees
and/or reimburse expenses (excluding sales loads, taxes, leverage interest,
brokerage commissions, acquired fund fees and expenses, if any, expenses
incurred in connection with any merger or reorganization and extraordinary
expenses) through August 29,
2024 to ensure that Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement do not exceed the following limits:
Class I – 0.80%, Class A – 1.05%, Class C -1.80%, and Class Z – 0.80%. The
agreement may only be terminated with the consent of the Board of
Trustees.
Example.
These examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
first example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods,
followed by an example that assumes you do not redeem your Class C shares at the
end of the periods. The examples also assume that your investment has a 5%
return each year and that the Fund’s operating expenses remain the same, taking
into account the fee waiver/expense reimbursement in effect for the first year
only. Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
I |
$82 |
$307 |
$551 |
$1,249 |
Class
A |
$626 |
$882 |
$1,157 |
$1,940 |
Class
C |
$283 |
$616 |
$1,076 |
$2,146 |
Class
Z |
$82 |
$283 |
$502 |
$1,131 |
You
would pay the following expenses if you did not redeem your Class C
shares:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
C |
$183 |
$616 |
$1,076 |
$2,146 |
Portfolio
Turnover.
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 26% of the average value of its
portfolio.
Principal Investment
Strategy. The
Fund normally invests in equity securities of large capitalization companies
that are considered by Hotchkis & Wiley Capital Management, LLC (the
“Advisor”) to be undervalued. The Advisor currently considers large cap
companies to be those with market capitalizations like those found in the
Russell 1000®
Index, although the Advisor will generally not purchase stock in a company with
a market capitalization of less than $3 billion. The market capitalization range
of the Index changes constantly, but as of June 30, 2023, the range was from
$1.3 billion to $3,050.9 billion. Market
Fund
Summary: Hotchkis & Wiley Funds
capitalization
is measured at the time of initial purchase. The Fund may invest in foreign
(non-U.S.) securities.
The
Fund seeks to invest in companies whose future prospects are misunderstood or
not fully recognized by the market. The Fund employs a fundamental value
investing approach which seeks to exploit market inefficiencies created by
irrational investor behavior. To identify these investment opportunities, the
Fund employs a disciplined, bottom-up investment process highlighted by
rigorous, internally-generated fundamental research. As part of the Advisor's
investment process, the investment team evaluates the general and
industry-specific Environmental, Social, and Governance (“ESG”) factors that the
Advisor believes to be the most financially material to a company's short-,
medium-, and long-term enterprise value. The Advisor believes this evaluation
contributes to its overall analysis of a company’s value creation for
shareholders and future financial performance. With the exception of
diversification guidelines, the Fund does not employ predetermined rules for
sales; rather, the Fund evaluates each sell candidate based on the candidate’s
specific risk and return characteristics which include: 1) relative valuation;
2) fundamental operating trends; 3) deterioration of fundamentals; and
4) portfolio diversification.
Principal Investment
Risks. As with any mutual fund, the value of the Fund’s
investments, and therefore the value of its shares, may go down and you could
lose all or a portion of your investment in the Fund. Many
factors can affect those values. The factors that are most likely to have a
material effect on the Fund’s portfolio as a whole are called “principal risks.”
The principal risks of investing in the Fund are described in this
section.
Market
Risk.
Market
risk is the risk that the market price of securities owned by the Fund may go
down, sometimes rapidly or unpredictably, due to factors affecting securities
markets generally or particular industries represented in the securities
markets. These factors include general economic, political or financial market
conditions, such as the general outlook for corporate earnings, rates of
economic growth and employment, and monetary policy, interest rates, inflation,
and currency rates. Adverse market events or investor sentiment may also lead to
increased shareholder redemptions, which could cause the Fund to experience a
loss or difficulty in selling investments to meet such redemptions. Local,
regional or global events such as war, acts of terrorism, the spread of
infectious illness or other public health issues, financial crises, recessions,
or other events may also lead to increased shareholder redemptions, which could
cause the Fund to experience a loss or difficulty in selling investments to meet
such redemptions.
Style
Risk.
The Advisor follows an investing style that favors value investments. Value
investing style may over time go in and out of favor in certain market cycles.
At times when the value investing style is out of favor the Fund's performance
may be negatively impacted. Investors should be prepared to tolerate volatility
in Fund returns.
Equity
Securities Risk.
Equity securities, both common and preferred stocks, have greater price
volatility than fixed income securities. The
market
price of equity securities owned by the Fund may go down, sometimes rapidly or
unpredictably. Equity securities may decline in value due to factors affecting
equity securities markets generally or particular industries represented by
those markets.
Capitalization
Risk.
Large cap companies as a group could fall out of favor with the market, causing
the Fund to underperform investments that focus on small or mid-cap
companies.
The
Fund may also invest in the securities of mid-cap companies. Investment in
mid-cap companies may involve more risk than investing in larger, more
established companies. Mid-cap companies may have limited product lines or
markets. They may be less financially secure than larger, more established
companies. They may depend on a small number of key personnel. Should a product
fail, or if management changes, or if there are other adverse developments, the
Fund’s investment in a mid-cap company may lose substantial value. In addition,
mid-cap companies may be particularly affected by interest rate increases, as
they may find it more difficult to borrow money to continue or expand
operations, or may have difficulty in repaying any loans.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed
investment portfolio. The Advisor invests in securities that may not necessarily
be included in the Fund’s benchmark. To the extent that the Advisor invests the
Fund’s assets in securities that are not in the Fund’s applicable benchmark
index, there is a greater risk that the Fund’s performance will deviate from
that of the benchmark. The Advisor does not seek to replicate the performance of
any index.
Financial
Sector Risk.
The
Fund currently invests a significant portion of its assets in companies in the
financial sector, and therefore the performance of the Fund could be negatively
impacted by events affecting this sector. This sector can be significantly
affected by changes in interest rates, the rate of corporate and consumer debt
defaults, the availability and cost of borrowing and raising capital, reduced
credit market liquidity, regulatory changes, price competition, bank failures
and other financial crises, and general economic and market conditions. Changing
interest rates could reduce the profitability of certain types of companies in
the financial sector. Financial companies may have concentrated portfolios, such
as a high level of loans to one or more industries or sectors, which makes them
vulnerable to economic conditions that affect such industries or sectors.
Significant events may have a significant negative impact on economies and
financial markets worldwide, resulting in higher debt defaults, loan write-offs,
and government intervention, and potentially the failure of some financial
institutions, each of which would reduce investment performance of financial
sector companies held by the Fund.
Security
Selection Risk.
The Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to its benchmarks.
Issuer
Risk. The
value of a security may decline for a number of reasons which directly relate to
the issuer, such as management performance,
Fund
Summary: Hotchkis & Wiley Funds
financial
leverage and reduced demand for the issuer’s goods or services.
Foreign
(Non-U.S.) Investment Risk.
The Fund may invest in foreign (non-U.S.) securities and may experience more
rapid and extreme changes in value than a fund that invests exclusively in
securities of U.S. companies. The securities markets of many foreign countries
are relatively small, with a limited number of companies representing a small
number of industries. Additionally, issuers of foreign securities are usually
not subject to the same degree of regulation as U.S. issuers and investments in
securities of foreign issuers may be subject to foreign withholding and other
taxes. To the extent that the Fund invests a significant portion of its assets
in a specific geographic region or country, the Fund will have more exposure to
the investment risks associated with that region or country, although the
Advisor does not intend to focus on a specific geographic region or
country.
Adverse
political, economic or social developments, as well as U.S. and foreign
government actions such as the imposition of tariffs, economic and trade
sanctions or embargoes, could undermine the value of the Fund’s investments,
prevent the Fund from realizing the full value of its investments or prevent the
Fund from selling securities it holds.
Financial
reporting standards for companies based in foreign markets differ from those in
the U.S. Additionally, foreign securities markets generally are smaller and less
liquid than U.S. markets. To the extent that the Fund invests in non-U.S. dollar
denominated foreign securities, changes in currency exchange rates may affect
the U.S. dollar value of foreign securities or the income or gain received on
these securities.
ADR
and GDR Risk.
American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”)
may be subject to some of the same risks as direct investment in foreign
companies, which includes international trade, currency, political, regulatory
and diplomatic risks. In a sponsored ADR arrangement, the foreign issuer assumes
the obligation to pay some or all of the depositary's transaction fees. Under an
unsponsored ADR arrangement, the foreign issuer assumes no obligations and the
depositary's transaction fees are paid directly by the ADR holders. Because
unsponsored ADR arrangements are organized independently and without the
cooperation of the issuer of the underlying securities, available information
concerning the foreign issuer may not be as current as for sponsored ADRs and
voting rights with respect to the deposited securities are not passed through.
GDRs can involve currency risk since, unlike ADRs, they may not be U.S.
dollar-denominated.
Large
Shareholder Risk.
To the extent that a significant portion of the Fund’s shares are held by a
limited number of shareholders or their affiliates, there is a risk that the
share trading activities of these shareholders could disrupt the Fund’s
investment strategies, which could have adverse consequences for the Fund and
other shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
Please
see “Fund Facts” in the Fund’s Prospectus for a more detailed description of the
risks of investing in the Fund.
Performance
The following
performance information provides some indication of the risks of investing in
the Fund by illustrating the variability of the Fund’s returns.
The bar chart shows changes in the Fund’s performance from year to year for
Class I shares. However, the Fund’s Class A and Class C shares are subject to
sales loads. Sales loads are not reflected in the
bar chart and if these amounts were reflected, returns would be less than those
shown. The table, which includes all
applicable fees and sales charges, shows how the Fund’s average annual returns
for 1, 5 and 10 years compare with those of a broad measure of market
performance and an additional index that reflects the market sectors in which
the Fund invests. The Fund’s past performance,
before and after taxes, is not necessarily an indication of how the Fund will
perform in the future. Updated performance is available on the
Fund’s website at https://www.hwcm.com/mutual-funds/resources/literature
or by calling the Fund toll-free at 1-866-HW-FUNDS (1-866-493-8637).
The inception date for the Fund’s Class I, Class A and Class C shares
is August 30, 2004. Because Class Z shares of the Fund are not currently offered
to investors, performance information is not available. Class Z shares would
have similar annual returns as Class I shares because the shares are invested in
the same portfolio of securities, and the annual returns would differ only to
the extent that the classes do not have the same expenses.
Calendar Year Total Returns
as of December 31
The
calendar year-to-date return for
the Fund’s Class I shares as of June 30, 2023 was
7.39%. During the
period shown in the bar chart, the highest return for a calendar
quarter was 30.08% (quarter ended December 31,
2020) and the lowest return for a calendar
quarter was -36.40% (quarter ended March 31,
2020).
Fund
Summary: Hotchkis & Wiley Funds
Average
Annual Total Returns
(for
the periods ended December 31, 2022)
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| 1
Year |
5
Years |
10
Years |
Diversified
Value Fund |
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Return Before
Taxes – Class I |
-4.35 |
% |
6.99 |
% |
10.93 |
% |
Return After
Taxes on Distributions – Class I |
-4.60 |
% |
6.61 |
% |
10.42 |
% |
Return After
Taxes on Distributions and Sale of Fund Shares – Class
I |
-2.40 |
% |
5.44 |
% |
8.95 |
% |
Return Before
Taxes – Class A |
-9.60 |
% |
5.58 |
% |
10.06 |
% |
Return Before
Taxes – Class C |
-6.25 |
% |
5.93 |
% |
9.83 |
% |
Russell
1000®
Value Index(a)
(reflects
no deduction for fees, expenses or taxes) |
-7.54 |
% |
6.67 |
% |
10.29 |
% |
Russell
1000®
Index
(reflects
no deduction for fees, expenses or taxes) |
-19.13 |
% |
9.13 |
% |
12.37 |
% |
(a)
The Advisor believes
that the additional index reasonably represents the Fund’s investment
strategy.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown, and
after-tax returns shown are not relevant to investors who hold their Fund shares
through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (“IRAs”). After-tax
returns are shown for only Class I. After-tax returns for other classes will
vary.
In
certain cases, the figure representing “Return After Taxes on Distributions and
Sale of Fund Shares” may be higher than the other return figures for the same
period.
A
higher after-tax return results when a capital loss occurs upon redemption and
provides a tax deduction that benefits the
investor.
Management
Advisor.
Hotchkis & Wiley Capital Management, LLC.
Portfolio
Managers.
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Investment
team member |
Primary
title with Advisor |
Started
with the Fund |
George
H. Davis, Jr. |
Executive
Chairman and Portfolio Manager |
2004 |
Patricia
McKenna, CFA |
Portfolio
Manager |
2004 |
Judd
Peters, CFA |
Portfolio
Manager |
2004 |
Scott
McBride, CFA |
Chief
Executive Officer and Portfolio Manager |
2004 |
Purchase
and Sale of Fund Shares.
You may purchase, exchange or redeem Fund shares on any day the New York Stock
Exchange (“NYSE”) is open for trading by written request via mail (Hotchkis
& Wiley Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701) or through a broker-dealer or other financial
intermediary. You may also purchase Fund shares by wire transfer. You
may
exchange or redeem Fund shares by telephone at 1-866-HW-FUNDS
(1-866-493-8637).
The
minimum initial investment for Class I shares is $250,000. For Class A and Class
C shares, the minimum initial investment in the Fund is $2,500 for regular
accounts and $1,000 for IRAs. The minimum initial investment for Class Z shares
will vary depending on the type of qualifying investor. The minimum subsequent
investment in the Fund for all share classes is generally $100. The Fund is
currently not offering Class Z shares to investors.
Tax
Information. The
Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an IRA. Such tax-advantaged arrangements may be taxed
later upon a withdrawal from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries.
If you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank or financial advisor), the Fund and/or its Advisor may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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Fund
Summary: Hotchkis & Wiley Funds |
LARGE
CAP VALUE FUND |
Investment
Objectives. The
Fund seeks current income and long-term growth of income, as well as capital
appreciation.
Fees and Expenses of the
Fund. This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You may qualify for sales charge discounts
on Class A shares if you and your family invest, or agree to invest in the
future, at least $25,000 in the Hotchkis & Wiley
Funds. More information about these and other discounts is
available from your financial professional and in the sections titled “About
Class I, Class A, Class C and Class Z Shares” beginning on page 59 of the
Prospectus, in Appendix A to the Prospectus, and in “Purchase of Shares”
beginning on page 58
of the Fund’s Statement of Additional Information. You may pay other fees, such as brokerage commissions and other fees
to financial intermediaries, on your purchases and sales of Class Z shares of
the Fund, which are not reflected in the tables and examples
below.
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SHAREHOLDER
FEES (fees
paid directly from your investment) |
| Class I |
Class A |
Class C |
Class
Z |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
None |
5.25% |
None |
None |
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase
price) |
None |
None⁽ᵃ⁾ |
1.00% |
None |
ANNUAL
FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class I |
Class A |
Class C |
Class
Z |
Management
Fees |
0.70% |
0.70% |
0.70% |
0.70% |
Distribution
and/or Service (12b-1) Fees |
None |
0.25% |
1.00% |
None |
Other
Expenses |
0.29% |
0.25% |
0.26% |
0.17% |
Total
Annual Fund Operating Expenses |
0.99% |
1.20% |
1.96% |
0.87% |
Fee
Waiver and/or Expense Reimbursement |
-0.04% |
0.00% |
-0.01% |
0.00% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(b) |
0.95% |
1.20% |
1.95% |
0.87% |
(a)
You may be charged a
deferred sales charge of up to 0.75% if you did not pay an initial sales charge
on an investment of $1 million or more in Class A shares and you redeem your
shares within one year after
purchase.
(b)
Hotchkis & Wiley
Capital Management, LLC has contractually agreed to waive management fees and/or
reimburse expenses (excluding sales loads, taxes, leverage interest, brokerage
commissions, acquired fund fees and expenses, if any, expenses incurred in
connection with any merger or reorganization and extraordinary expenses) through
August 29,
2024 to ensure that Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement do not exceed the following
limits: Class I – 0.95%, Class A – 1.20%, Class C -1.95%, and Class Z – 0.95%.
The agreement may only be terminated with the consent of the Board of
Trustees.
Example. These examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
first example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods,
followed by an example that assumes you do not redeem your Class C shares at the
end of the periods. The examples also assume that your investment has a 5%
return each year and that the Fund’s operating expenses remain the same, taking
into account the fee waiver/expense reimbursement in effect for the first year
only. Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
I |
$97 |
$311 |
$543 |
$1,209 |
Class
A |
$641 |
$886 |
$1,150 |
$1,903 |
Class
C |
$298 |
$614 |
$1,056 |
$2,088 |
Class
Z |
$89 |
$278 |
$482 |
$1,073 |
You
would pay the following expenses if you did not redeem your Class C
shares:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
C |
$198 |
$614 |
$1,056 |
$2,088 |
Portfolio
Turnover.
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the Fund’s performance.
During the most recent fiscal year, the Fund’s portfolio turnover rate was
26% of the average
value of its portfolio.
Principal Investment
Strategy. The
Fund normally invests at least 80% of its net assets plus borrowings for
investment purposes in equity securities of large capitalization companies.
Hotchkis & Wiley Capital Management, LLC (the “Advisor”) currently considers
large cap companies to be those with market capitalizations like those found in
the Russell 1000®
Index. The market capitalization range of the Index changes constantly, but as
of June 30, 2023, the range was from $1.3 billion to $3,050.9 billion, although
the Advisor will generally not purchase stock in a company with a market
capitalization of less than $3 billion. Market capitalization is measured at the
time of initial purchase. The Fund also invests in stocks with high cash
dividends or payout yields relative to the market. The Fund may invest in
foreign (non-U.S.) securities.
Fund
Summary: Hotchkis & Wiley Funds
The Fund seeks to invest in companies whose future prospects are
misunderstood or not fully recognized by the market. The Fund employs a
fundamental value investing approach which seeks to exploit market
inefficiencies created by irrational investor behavior. To identify these
investment opportunities, the Fund employs a disciplined, bottom-up investment
process highlighted by rigorous, internally-generated fundamental research. As
part of the Advisor's investment process, the investment team evaluates the
general and industry-specific Environmental, Social, and Governance (“ESG”)
factors that the Advisor believes to be the most financially material to a
company's short-, medium-, and long-term enterprise value. The Advisor believes
this evaluation contributes to its overall analysis of a company’s value
creation for shareholders and future financial performance. With the exception
of diversification guidelines, the Fund does not employ predetermined rules for
sales; rather, the Fund evaluates each sell candidate based on the candidate’s
specific risk and return characteristics which include: 1) relative valuation;
2) fundamental operating trends; 3) deterioration of fundamentals; and 4)
portfolio diversification.
Principal Investment
Risks. As with any mutual fund, the value of the Fund’s
investments, and therefore the value of its shares, may go down and you could
lose all or a portion of your investment in the Fund. Many
factors can affect those values. The factors that are most likely to have a
material effect on the Fund’s portfolio as a whole are called “principal risks.”
The principal risks of investing in the Fund are described in this section.
Market
Risk.
Market
risk is the risk that the market price of securities owned by the Fund may go
down, sometimes rapidly or unpredictably, due to factors affecting securities
markets generally or particular industries represented in the securities
markets. These factors include general economic, political or financial market
conditions, such as the general outlook for corporate earnings, rates of
economic growth and employment, and monetary policy, interest rates, inflation,
and currency rates. Adverse market events or investor sentiment may also lead to
increased shareholder redemptions, which could cause the Fund to experience a
loss or difficulty in selling investments to meet such redemptions. Local,
regional or global events such as war, acts of terrorism, the spread of
infectious illness or other public health issues, financial crises, recessions,
or other events may also lead to increased shareholder redemptions, which could
cause the Fund to experience a loss or difficulty in selling investments to meet
such redemptions.
Style
Risk. The
Advisor follows an investing style that favors value investments. Value
investing style may over time go in and out of favor in certain market cycles.
At times when the value investing style is out of favor the Fund's performance
may be negatively impacted. Investors should be prepared to tolerate volatility
in Fund returns.
Equity
Securities Risk. Equity
securities, both common and preferred stocks, have greater price volatility than
fixed income securities. The market price of equity securities owned by the Fund
may go down, sometimes rapidly or unpredictably. Equity securities may decline
in
value
due to factors affecting equity securities markets generally or particular
industries represented by those markets.
Capitalization
Risk. Large
cap companies as a group could fall out of favor with the market, causing the
Fund to underperform investments that focus on small or mid-cap
companies.
The
Fund may also invest in the securities of mid-cap companies. Investment in
mid-cap companies may involve more risk than investing in larger, more
established companies. Mid-cap companies may have limited product lines or
markets. They may be less financially secure than larger, more established
companies. They may depend on a small number of key personnel. Should a product
fail, or if management changes, or if there are other adverse developments, the
Fund’s investment in a mid-cap company may lose substantial value. In addition,
mid-cap companies may be particularly affected by interest rate increases, as
they may find it more difficult to borrow money to continue or expand
operations, or may have difficulty in repaying any loans.
Active
Management Risk. The
Fund is subject to management risk because it is an actively managed investment
portfolio. The Advisor invests in securities that may not necessarily be
included in the Fund’s benchmark. To the extent that the Advisor invests the
Fund’s assets in securities that are not in the Fund’s applicable benchmark
index, there is a greater risk that the Fund’s performance will deviate from
that of the benchmark. The Advisor does not seek to replicate the performance of
any index.
Financial
Sector Risk.
The
Fund currently invests a significant portion of its assets in companies in the
financial sector, and therefore the performance of the Fund could be negatively
impacted by events affecting this sector. This sector can be significantly
affected by changes in interest rates, the rate of corporate and consumer debt
defaults, the availability and cost of borrowing and raising capital, reduced
credit market liquidity, regulatory changes, price competition, bank failures
and other financial crises, and general economic and market conditions. Changing
interest rates could reduce the profitability of certain types of companies in
the financial sector. Financial companies may have concentrated portfolios, such
as a high level of loans to one or more industries or sectors, which makes them
vulnerable to economic conditions that affect such industries or sectors.
Significant events may have a significant negative impact on economies and
financial markets worldwide, resulting in higher debt defaults, loan write-offs,
and government intervention, and potentially the failure of some financial
institutions, each of which would reduce investment performance of financial
sector companies held by the Fund.
Security
Selection Risk. The
Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to its benchmarks.
Issuer
Risk. The
value of a security may decline for a number of reasons which directly relate to
the issuer, such as management performance, financial leverage and reduced
demand for the issuer’s goods or
services.
Fund
Summary: Hotchkis & Wiley Funds
Foreign
(Non-U.S.) Investment Risk. The
Fund may invest in foreign (non-U.S.) securities and may experience more rapid
and extreme changes in value than a fund that invests exclusively in securities
of U.S. companies. The securities markets of many foreign countries are
relatively small, with a limited number of companies representing a small number
of industries. Additionally, issuers of foreign securities are usually not
subject to the same degree of regulation as U.S. issuers and investments in
securities of foreign issuers may be subject to foreign withholding and other
taxes. To the extent that the Fund invests a significant portion of its assets
in a specific geographic region or country, the Fund will have more exposure to
the investment risks associated with that region or country, although the
Advisor does not intend to focus on a specific geographic region or
country.
Adverse
political, economic or social developments, as well as U.S. and foreign
government actions such as the imposition of tariffs, economic and trade
sanctions or embargoes, could undermine the value of the Fund’s investments,
prevent the Fund from realizing the full value of its investments or prevent the
Fund from selling securities it holds.
Financial
reporting standards for companies based in foreign markets differ from those in
the U.S. Additionally, foreign securities markets generally are smaller and less
liquid than U.S. markets. To the extent that the Fund invests in non-U.S. dollar
denominated foreign securities, changes in currency exchange rates may affect
the U.S. dollar value of foreign securities or the income or gain received on
these securities.
ADR
and GDR Risk.
American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”)
may be subject to some of the same risks as direct investment in foreign
companies, which includes international trade, currency, political, regulatory
and diplomatic risks. In a sponsored ADR arrangement, the foreign issuer assumes
the obligation to pay some or all of the depositary's transaction fees. Under an
unsponsored ADR arrangement, the foreign issuer assumes no obligations and the
depositary's transaction fees are paid directly by the ADR holders. Because
unsponsored ADR arrangements are organized independently and without the
cooperation of the issuer of the underlying securities, available information
concerning the foreign issuer may not be as current as for sponsored ADRs and
voting rights with respect to the deposited securities are not passed through.
GDRs can involve currency risk since, unlike ADRs, they may not be U.S.
dollar-denominated.
Large
Shareholder Risk.
To the extent that a significant portion of the Fund’s shares are held by a
limited number of shareholders or their affiliates, there is a risk that the
share trading activities of these shareholders could disrupt the Fund’s
investment strategies, which could have adverse consequences for the Fund and
other shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
Please
see “Fund Facts” in the Fund’s Prospectus for a more detailed description of the
risks of investing in the Fund.
Performance
The following
performance information provides some indication of the risks of investing in
the Fund by illustrating the variability of the Fund’s returns.
The bar chart shows changes in the Fund’s performance from year to year for
Class I shares (the class with the longest period of annual returns). However,
the Fund’s Class A and Class C shares are subject to sales loads. Sales loads
are not reflected in the bar chart and if these amounts were reflected, returns
would be less than those shown. The table,
which includes all applicable fees and sales charges, shows how the Fund’s
average annual returns for 1, 5 and 10 years compare with those of a broad
measure of market performance and an additional index that reflects the market
sectors in which the Fund invests. The Fund’s past
performance, before and after taxes, is not necessarily an indication of how the
Fund will perform in the future. Updated performance is
available on the Fund’s website at https://www.hwcm.com/mutual-funds/resources/literature
or by calling the Fund toll-free at 1-866-HW-FUNDS (1-866-493-8637).
The
inception dates for the Fund’s Class I, Class A, Class C and Class Z shares are
June 24, 1987, October 26, 2001, February 4, 2002 and September 30, 2019,
respectively. Performance of Class Z shares prior to September 30, 2019 reflects
the historical performance of the Fund’s original share class (Class
I).
Calendar Year Total Returns
as of December 31
The
calendar year-to-date return for
the Fund’s Class I shares as of June 30, 2023 was
5.91%.
During the period of time shown in the bar chart, the highest return for a
calendar quarter was 29.88% (quarter ended December 31, 2020)
and the lowest return for a calendar
quarter was -36.65% (quarter ended March 31,
2020).
Fund
Summary: Hotchkis & Wiley Funds
Average
Annual Total Returns
(for
the periods ended December 31, 2022)
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| |
| 1
Year |
5
Years |
10
Years |
Large
Cap Value Fund |
|
| |
Return
Before Taxes – Class I |
-5.31 |
% |
6.14 |
% |
10.88 |
% |
Return
After Taxes on Distributions –
Class
I |
-7.05 |
% |
5.37 |
% |
10.23 |
% |
Return After
Taxes on Distributions and Sale of Fund Shares – Class
I |
-1.87 |
% |
4.74 |
% |
8.92 |
% |
Return
Before Taxes – Class A |
-10.46 |
% |
4.74 |
% |
10.00 |
% |
Return
Before Taxes – Class C |
-7.11 |
% |
5.11 |
% |
9.78 |
% |
Return
Before Taxes – Class Z |
-5.22 |
% |
6.22 |
% |
10.92 |
% |
Russell
1000®
Value Index(a)
(reflects
no deduction for fees, expenses or taxes) |
-7.54 |
% |
6.67 |
% |
10.29 |
% |
Russell
1000®
Index
(reflects
no deduction for fees, expenses or taxes) |
-19.13 |
% |
9.13 |
% |
12.37 |
% |
(a)
The Advisor believes that
the additional index reasonably represents the Fund’s investment
strategy.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown, and
after-tax returns shown are not relevant to investors who hold their Fund shares
through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (“IRAs”). After-tax
returns are shown for only Class I. After-tax returns for other classes will
vary.
In
certain cases, the figure representing “Return After Taxes on Distributions and
Sale of Fund Shares” may be higher than the other return figures for the same
period.
A
higher after-tax return results when a capital loss occurs upon redemption and
provides a tax deduction that benefits the
investor.
Management
Advisor.
Hotchkis
& Wiley Capital Management, LLC.
Portfolio
Managers.
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Investment
team member |
Primary
title with Advisor |
Started
with the Fund |
George
H. Davis, Jr. |
Executive
Chairman and Portfolio Manager |
1988 |
Patricia
McKenna, CFA |
Portfolio
Manager |
1995 |
Judd
Peters, CFA |
Portfolio
Manager |
1999 |
Scott
McBride, CFA |
Chief
Executive Officer and Portfolio Manager |
2001 |
Purchase
and Sale of Fund Shares. You
may purchase, exchange or redeem Fund shares on any day the New York Stock
Exchange (“NYSE”) is open for trading by written request via mail (Hotchkis
& Wiley Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701) or through a broker-dealer or other financial
intermediary.
You may also purchase Fund shares by wire transfer. You may exchange or redeem
Fund shares by telephone at 1-866-HW-FUNDS (1-866-493-8637).
The
minimum initial investment for Class I shares is $250,000. For Class A and Class
C shares, the minimum initial investment in the Fund is $2,500 for regular
accounts and $1,000 for IRAs. The minimum initial investment for Class Z shares
will vary depending on the type of qualifying investor. The minimum subsequent
investment in the Fund for all share classes is generally $100.
Tax
Information. The
Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an IRA. Such tax-advantaged arrangements may be taxed
later upon a withdrawal from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries. If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank or financial advisor), the Fund and/or its Advisor may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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Fund
Summary: Hotchkis & Wiley Funds |
MID-CAP
VALUE FUND |
Investment
Objective.
The Fund seeks capital appreciation.
Fees and Expenses of the
Fund. This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You may qualify for sales charge discounts
on Class A shares if you and your family invest, or agree to invest in the
future, at least $25,000 in the Hotchkis
& Wiley Funds. More information about these and other
discounts is available from your financial professional and in the sections
titled “About Class I, Class A, Class C and Class Z Shares” beginning on page 59
of the Prospectus, in Appendix A to the Prospectus, and in “Purchase of Shares”
beginning on page 58 of the Fund’s Statement of Additional Information.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, on your purchases and sales of Class Z shares of the Fund, which
are not reflected in the tables and examples below.
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SHAREHOLDER
FEES (fees
paid directly from your investment) |
| Class I |
Class A |
Class C |
Class
Z |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
None |
5.25% |
None |
None |
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase
price) |
None |
None⁽ᵃ⁾ |
1.00% |
None |
ANNUAL
FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class I |
Class A |
Class C |
Class Z |
Management
Fees |
0.75% |
0.75% |
0.75% |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
0.25% |
1.00% |
None |
Other
Expenses |
0.25% |
0.21% |
0.23% |
0.13% |
Total
Annual Fund Operating Expenses |
1.00% |
1.21% |
1.98% |
0.88% |
(a)You may be charged a
deferred sales charge of up to 0.75% if you did not pay an initial sales charge
on an investment of $1 million or more in Class A shares and you redeem your
shares within one year after
purchase.
Example.
These examples are
intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The first example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods, followed by an example that assumes you do
not redeem your Class C shares at the end of the periods. The examples also
assume that your investment has a 5% return each year and that the Fund’s
operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would be as
shown.
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| |
| 1
Year |
3
Years |
5
Years |
10
Years |
Class
I |
$102 |
$318 |
$552 |
$1,225 |
Class
A |
$642 |
$889 |
$1,155 |
$1,914 |
Class
C |
$301 |
$621 |
$1,068 |
$2,107 |
Class
Z |
$90 |
$281 |
$488 |
$1,084 |
You
would pay the following expenses if you did not redeem your Class C
shares:
|
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|
| |
| 1
Year |
3
Years |
5
Years |
10
Years |
Class
C |
$201 |
$621 |
$1,068 |
$2,107 |
Portfolio
Turnover.
The Fund pays transaction costs, such as commissions, when it buys
and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund shares are held in a taxable account. These costs, which are not
reflected in annual fund operating expenses or in the example, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 35% of the average value of its
portfolio.
Principal Investment
Strategy. The
Fund normally invests at least 80% of its net assets plus borrowings for
investment purposes in equity securities of mid-capitalization companies.
Hotchkis & Wiley Capital Management, LLC (the “Advisor”) currently considers
mid-cap companies to be those with market capitalizations like those found in
the Russell Midcap®
Index. The market capitalization range of the Index changes constantly, but as
of June 30, 2023, the range was from $1.3 billion to $51.4 billion. Market
capitalization is measured at the time of initial purchase. The Fund may invest
in the securities of small capitalization companies and in foreign (non-U.S.)
securities.
The Fund seeks to invest in companies whose
future prospects are misunderstood or not fully recognized by the market. The
Fund employs a fundamental value investing approach which seeks to exploit
market inefficiencies created by irrational investor behavior. To identify these
investment opportunities, the Fund employs a disciplined, bottom-up investment
process highlighted by rigorous, internally-generated fundamental research. As
part of the Advisor's investment process, the investment team evaluates the
general and industry-specific Environmental, Social, and Governance (“ESG”)
factors that the Advisor believes to be the most financially material to a
company's short-, medium-, and long-term enterprise value. The Advisor believes
this evaluation contributes to its overall analysis of a company’s value
creation for shareholders and future financial performance. With the exception
of diversification guidelines, the Fund does not employ predetermined rules for
sales; rather, the Fund evaluates each sell candidate based on the candidate’s
specific risk and return characteristics which include: 1) relative valuation;
2 fundamental
Fund
Summary: Hotchkis & Wiley Funds
operating trends; 3) deterioration of fundamentals; and
4) portfolio diversification.
Principal Investment
Risks.
As with any mutual fund, the value of the Fund’s
investments, and therefore the value of its shares, may go down and you could
lose all or a portion of your investment in the Fund. Many
factors can affect those values. The factors that are most likely to have a
material effect on the Fund’s portfolio as a whole are called “principal risks.”
The principal risks of investing in the Fund are described in this section.
Market
Risk.
Market
risk is the risk that the market price of securities owned by the Fund may go
down, sometimes rapidly or unpredictably, due to factors affecting securities
markets generally or particular industries represented in the securities
markets. These factors include general economic, political or financial market
conditions, such as the general outlook for corporate earnings, rates of
economic growth and employment, and monetary policy, interest rates, inflation,
and currency rates. Adverse market events or investor sentiment may also lead to
increased shareholder redemptions, which could cause the Fund to experience a
loss or difficulty in selling investments to meet such redemptions. Local,
regional or global events such as war, acts of terrorism, the spread of
infectious illness or other public health issues, financial crises, recessions,
or other events may also lead to increased shareholder redemptions, which could
cause the Fund to experience a loss or difficulty in selling investments to meet
such redemptions.
Style
Risk.
The Advisor follows an investing style that favors value investments. Value
investing style may over time go in and out of favor in certain market cycles.
At times when the value investing style is out of favor the Fund's performance
may be negatively impacted. Investors should be prepared to tolerate volatility
in Fund returns.
Equity
Securities Risk.
Equity securities, both common and preferred stocks, have greater price
volatility than fixed income securities. The market price of equity securities
owned by the Fund may go down, sometimes rapidly or unpredictably. Equity
securities may decline in value due to factors affecting equity securities
markets generally or particular industries represented by those
markets.
Capitalization
Risk.
Investment in small and mid-cap companies may involve more risk than investing
in larger, more established companies. Small and mid-cap companies may have
limited product lines or markets. They may be less financially secure than
larger, more established companies. They may depend on a small number of key
personnel. Should a product fail, or if management changes, or if there are
other adverse developments, the Fund’s investment in a small or mid-cap company
may lose substantial value. In addition, small and mid-cap companies may be
particularly affected by interest rate increases, as they may find it more
difficult to borrow money to continue or expand operations, or may have
difficulty in repaying any loans.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed
investment portfolio. The Advisor invests in securities that may not necessarily
be included in the Fund’s
benchmark.
To the extent that the Advisor invests the Fund’s assets in securities that are
not in the Fund’s applicable benchmark index, there is a greater risk that the
Fund’s performance will deviate from that of the benchmark. The Advisor does not
seek to replicate the performance of any index.
Financial
Sector Risk.
The
Fund currently invests a significant portion of its assets in companies in the
financial sector, and therefore the performance of the Fund could be negatively
impacted by events affecting this sector. This sector can be significantly
affected by changes in interest rates, the rate of corporate and consumer debt
defaults, the availability and cost of borrowing and raising capital, reduced
credit market liquidity, regulatory changes, price competition, bank failures
and other financial crises, and general economic and market conditions. Changing
interest rates could reduce the profitability of certain types of companies in
the financial sector. Financial companies may have concentrated portfolios, such
as a high level of loans to one or more industries or sectors, which makes them
vulnerable to economic conditions that affect such industries or sectors.
Significant events may have a significant negative impact on economies and
financial markets worldwide, resulting in higher debt defaults, loan write-offs,
and government intervention, and potentially the failure of some financial
institutions, each of which would reduce investment performance of financial
sector companies held by the Fund.
Security
Selection Risk.
The Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to its benchmarks.
Issuer
Risk.
The value of a security may decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer’s goods or services.
Foreign
(Non-U.S.) Investment Risk.
The Fund may invest in foreign (non-U.S.) securities and may experience more
rapid and extreme changes in value than a fund that invests exclusively in
securities of U.S. companies. The securities markets of many foreign countries
are relatively small, with a limited number of companies representing a small
number of industries. Additionally, issuers of foreign securities are usually
not subject to the same degree of regulation as U.S. issuers and investments in
securities of foreign issuers may be subject to foreign withholding and other
taxes. To the extent that the Fund invests a significant portion of its assets
in a specific geographic region or country, the Fund will have more exposure to
the investment risks associated with that region or country, although the
Advisor does not intend to focus on a specific geographic region or
country.
Adverse
political, economic or social developments, as well as U.S. and foreign
government actions such as the imposition of tariffs, economic and trade
sanctions or embargoes, could undermine the value of the Fund’s investments,
prevent the Fund from realizing the full value of its investments or prevent the
Fund from selling securities it holds.
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10 |
HOTCHKIS
& WILEY FUNDS |
|
Fund
Summary: Hotchkis & Wiley Funds
Financial
reporting standards for companies based in foreign markets differ from those in
the U.S. Additionally, foreign securities markets generally are smaller and less
liquid than U.S. markets. To the extent that the Fund invests in non-U.S. dollar
denominated foreign securities, changes in currency exchange rates may affect
the U.S. dollar value of foreign securities or the income or gain received on
these securities.
Large
Shareholder Risk.
To the extent that a significant portion of the Fund’s shares are held by a
limited number of shareholders or their affiliates, there is a risk that the
share trading activities of these shareholders could disrupt the Fund’s
investment strategies, which could have adverse consequences for the Fund and
other shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
Please
see “Fund Facts” in the Fund’s Prospectus for a more detailed description of the
risks of investing in the Fund.
Performance
The following
performance information provides some indication of the risks of investing in
the Fund by illustrating the variability of the Fund’s returns.
The bar chart shows changes in the Fund’s performance from year to year for
Class I shares (the class with the longest period of annual returns). However,
the Fund’s Class A and Class C shares are subject to sales loads. Sales
loads are not reflected in the bar chart and if these amounts were reflected,
returns would be less than those shown. The table,
which includes all applicable fees and sales charges, shows how the Fund’s
average annual returns for 1, 5 and 10 years compare with those of a broad
measure of market performance and an additional index that reflects the market
sectors in which the Fund invests. The Fund’s past
performance, before and after taxes, is not necessarily an indication of how the
Fund will perform in the future. Updated performance is
available on the Fund’s website at https://www.hwcm.com/mutual-funds/resources/literature
or by calling the Fund toll-free at 1-866-HW-FUNDS (1-866-493-8637).
The
inception dates for the Fund’s Class I, Class A, Class C and Class Z shares are
January 2, 1997, January 2, 2001, January 2, 2001 and September 30, 2019,
respectively. Performance of Class Z shares prior to September 30, 2019 reflects
the historical performance of the Fund’s original share class (Class
I).
Calendar Year Total Returns
as of December 31
The
calendar year-to-date return for
the Fund’s Class I shares as of June 30, 2023 was
3.57%.
During the period shown in the bar chart, the highest return for a
quarter was 43.41% (quarter ended December 31,
2020) and the lowest return for a quarter
was -47.74% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2022)
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| |
| 1
Year |
5
Years |
10
Years |
Mid-Cap
Value Fund |
|
| |
Return
Before Taxes – Class I |
1.63 |
% |
5.31 |
% |
8.98 |
% |
Return After
Taxes on Distributions – Class I |
1.51 |
% |
4.88 |
% |
7.92 |
% |
Return After
Taxes on Distributions and Sale of Fund Shares – Class
I |
1.05 |
% |
4.04 |
% |
7.06 |
% |
Return
Before Taxes – Class A |
-3.90 |
% |
3.96 |
% |
8.15 |
% |
Return
Before Taxes – Class C |
-0.37 |
% |
4.29 |
% |
7.91 |
% |
Return
Before Taxes – Class Z |
1.78 |
% |
5.41 |
% |
9.03 |
% |
Russell
Midcap®
Value
Index(a)
(reflects no deduction for
fees, expenses or taxes) |
-12.03 |
% |
5.72 |
% |
10.11 |
% |
Russell
Midcap®
Index
(reflects
no deduction for fees, expenses or taxes) |
-17.32 |
% |
7.10 |
% |
10.96 |
% |
(a)
The Advisor believes that
the additional index reasonably represents the Fund’s investment
strategy.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown, and
after-tax returns shown are not relevant to investors who hold their Fund shares
through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (“IRAs”). After-tax
returns are shown for only Class I. After-tax returns for other classes will
vary.
In
certain cases, the figure representing “Return After Taxes on Distributions and
Sale of Fund Shares” may be higher than the other return figures for the same
period.
A
higher after-tax return results when
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HOTCHKIS
& WILEY FUNDS |
11 |
Fund
Summary: Hotchkis & Wiley Funds
a capital loss occurs upon redemption and
provides a tax deduction that benefits the
investor.
Management
Advisor.
Hotchkis
& Wiley Capital Management, LLC.
Portfolio
Managers.
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| |
Investment
team member |
Primary
title with Advisor |
Started
with the Fund |
George
H. Davis, Jr. |
Executive
Chairman and Portfolio Manager |
1997 |
Stan
Majcher, CFA |
Portfolio
Manager |
1997 |
Hunter
Doble, CFA |
Portfolio
Manager |
2019 |
Purchase
and Sale of Fund Shares. You
may purchase, exchange or redeem Fund shares on any day the New York Stock
Exchange (“NYSE”) is open for trading by written request via mail (Hotchkis
& Wiley Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701) or through a broker-dealer or other financial
intermediary. You may also purchase Fund shares by wire transfer. You may
exchange or redeem Fund shares by telephone at 1-866-HW-FUNDS (1-866-493-8637).
The
minimum initial investment for Class I shares is $250,000. For Class A and Class
C shares, the minimum initial investment in the Fund is $2,500 for regular
accounts and $1,000 for IRAs.
The
minimum initial investment for Class Z shares will vary depending on the type of
qualifying investor. The minimum subsequent investment in the Fund for all share
classes is generally $100.
Tax
Information. The
Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an IRA. Such tax-advantaged arrangements may be taxed
later upon a withdrawal from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries. If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank or financial advisor), the Fund and/or its Advisor may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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12 |
HOTCHKIS
& WILEY FUNDS |
|
|
| |
Fund
Summary: Hotchkis & Wiley Funds |
SMALL
CAP VALUE FUND |
Investment
Objective.
The Fund seeks capital appreciation.
Fees and Expenses of the
Fund. This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You may qualify for sales charge discounts
on Class A shares if you and your family invest, or agree to invest in the
future, at least $25,000 in the Hotchkis
& Wiley Funds. More information about these and other
discounts is available from your financial professional and in the sections
titled “About Class I, Class A, Class C and Class Z Shares” beginning on page 59
of the Prospectus, in Appendix A to the Prospectus, and in “Purchase of Shares”
beginning on page 58 of the Fund’s Statement of Additional Information.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, on your purchases and sales of Class Z shares of the Fund, which
are not reflected in the tables and examples below.
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| |
SHAREHOLDER
FEES (fees
paid directly from your investment) |
| Class I |
Class A |
Class C |
Class
Z |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
None |
5.25% |
None |
None |
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase
price) |
None |
None⁽ᵃ⁾ |
1.00% |
None |
ANNUAL
FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class I |
Class A |
Class C |
Class
Z |
Management
Fees |
0.75% |
0.75% |
0.75% |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
0.25% |
1.00% |
None |
Other
Expenses |
0.31% |
0.21% |
0.21% |
0.12% |
Total
Annual Fund Operating Expenses |
1.06% |
1.21% |
1.96% |
0.87% |
Fee
Waiver and/or Expense Reimbursement |
-0.09% |
0.00% |
0.00% |
0.00% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(b) |
0.97% |
1.21% |
1.96% |
0.87% |
(a)You may be charged a deferred sales charge of up to 0.75% if you
did not pay an initial sales charge on an investment of $1 million or more in
Class A shares and you redeem your shares within one year after
purchase.
(b)Hotchkis & Wiley
Capital Management, LLC has contractually agreed to waive management fees and/or
reimburse expenses (excluding sales loads, taxes, leverage interest, brokerage
commissions, acquired fund fees and expenses, if any, expenses incurred in
connection with any merger or reorganization and extraordinary expenses) through
August 29,
2024 to ensure that Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement do not exceed 0.97% for Class I. The
agreement may only be terminated with the consent of the Board of Trustees. The
Total
Annual Fund Operating Expenses After Fee Waiver and/ or Expense
Reimbursement for Class I does not match the Ratio of “Expenses, net of
reimbursement/waiver” to “Average Net Assets” provided in the Financial
Highlights section of the Fund’s audited financial statements for the fiscal
year ended December 31, 2022 due to a reductions in the expense cap that was
effective December 31, 2022.
Example.
These examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
first example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods,
followed by an example that assumes you do not redeem your Class C shares at the
end of the periods. The examples also assume that your investment has a 5%
return each year and that the Fund’s operating expenses remain the same, taking
into account the fee waiver/expense reimbursement in effect for the first year
only. Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
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| |
| 1
Year |
3
Years |
5
Years |
10
Years |
Class
I |
$99 |
$328 |
$576 |
$1,286 |
Class
A |
$642 |
$889 |
$1,155 |
$1,914 |
Class
C |
$299 |
$615 |
$1,057 |
$2,091 |
Class
Z |
$89 |
$278 |
$482 |
$1,073 |
You
would pay the following expenses if you did not redeem your Class C
shares:
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|
|
|
| |
| 1
Year |
3
Years |
5
Years |
10
Years |
Class
C |
$199 |
$615 |
$1,057 |
$2,091 |
Portfolio
Turnover.
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 42% of the average value of its
portfolio.
Principal Investment
Strategy. The
Fund normally invests at least 80% of its net assets plus borrowings for
investment purposes in equity securities of small capitalization companies.
Hotchkis & Wiley Capital Management, LLC (the “Advisor”) currently considers
small cap companies to be those with market capitalizations like those found in
the Russell 2000®
Index. The market capitalization range of the Index changes constantly, but as
of June 30, 2023, the range was from $2 million to $13.1 billion. Market
capitalization is measured at the time of initial purchase. The Fund may invest
in foreign (non-U.S.) securities.
The Fund seeks to invest in companies whose
future prospects are misunderstood or not fully recognized by the market. The
Fund employs
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|
HOTCHKIS
& WILEY FUNDS |
13 |
Fund
Summary: Hotchkis & Wiley Funds
a fundamental value investing approach which seeks to exploit market
inefficiencies created by irrational investor behavior. To identify these
investment opportunities, the Fund employs a disciplined, bottom-up investment
process that relies on rigorous, internally-generated fundamental research. The
Fund focuses exposure on these investment opportunities by holding approximately
50-100 securities. As part of the Advisor's investment process, the investment
team evaluates the general and industry-specific Environmental, Social, and
Governance (“ESG”) factors that the Advisor believes to be the most financially
material to a company's short-, medium-, and long-term enterprise value. The
Advisor believes this evaluation contributes to its overall analysis of a
company’s value creation for shareholders and future financial performance. With
the exception of diversification guidelines, the Fund does not employ
predetermined rules for sales; rather, the Fund evaluates each sell candidate
based on the candidate’s specific risk and return characteristics which include:
1) relative valuation; 2) fundamental operating trends; 3) deterioration of
fundamentals; and 4) portfolio diversification.
Principal Investment
Risks.
As with any mutual fund, the value of the Fund’s
investments, and therefore the value of its shares, may go down and you could
lose all or a portion of your investment in the Fund. Many
factors can affect those values. The factors that are most likely to have a
material effect on the Fund’s portfolio as a whole are called “principal risks.”
The principal risks of investing in the Fund are described in this section.
Market
Risk.
Market
risk is the risk that the market price of securities owned by the Fund may go
down, sometimes rapidly or unpredictably, due to factors affecting securities
markets generally or particular industries represented in the securities
markets. These factors include general economic, political or financial market
conditions, such as the general outlook for corporate earnings, rates of
economic growth and employment, and monetary policy, interest rates, inflation
and currency rates. Adverse market events or investor sentiment may also lead to
increased shareholder redemptions, which could cause the Fund to experience a
loss or difficulty in selling investments to meet such redemptions. Local,
regional or global events such as war, acts of terrorism, the spread of
infectious illness or other public health issues, financial crises, recessions,
or other events may also lead to increased shareholder redemptions, which could
cause the Fund to experience a loss or difficulty in selling investments to meet
such redemptions.
Style
Risk.
The Advisor follows an investing style that favors value investments. Value
investing style may over time go in and out of favor in certain market cycles.
At times when the value investing style is out of favor the Fund's performance
may be negatively impacted. Investors should be prepared to tolerate volatility
in Fund returns.
Equity
Securities Risk.
Equity securities, both common and preferred stocks, have greater price
volatility than fixed income securities. The market price of equity securities
owned by the Fund may go down, sometimes rapidly or unpredictably. Equity
securities may decline in value due to factors affecting equity securities
markets generally or particular industries represented by those
markets.
Capitalization
Risk.
Investment in small and mid-cap companies may involve more risk than investing
in larger, more established companies. Small and mid-cap companies may have
limited product lines or markets. They may be less financially secure than
larger, more established companies. They may depend on a small number of key
personnel. Should a product fail, or if management changes, or if there are
other adverse developments, the Fund’s investment in a small or mid-cap company
may lose substantial value. In addition, small and mid-cap companies may be
particularly affected by interest rate increases, as they may find it more
difficult to borrow money to continue or expand operations, or may have
difficulty in repaying any loans.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed
investment portfolio. The Advisor invests in securities that may not necessarily
be included in the Fund’s benchmark. To the extent that the Advisor invests the
Fund’s assets in securities that are not in the Fund’s applicable benchmark
index, there is a greater risk that the Fund’s performance will deviate from
that of the benchmark. The Advisor does not seek to replicate the performance of
any index.
Industrial
Sector Risk.
The Fund may invest a significant portion of its assets in companies in the
industrial sector. The industrial sector can be significantly affected by, among
other things, worldwide economic growth, supply and demand for specific products
and services, rapid technological developments, and government
regulation.
Financial
Sector Risk.
The
Fund currently invests a significant portion of its assets in companies in the
financial sector, and therefore the performance of the Fund could be negatively
impacted by events affecting this sector. This sector can be significantly
affected by changes in interest rates, the rate of corporate and consumer debt
defaults, the availability and cost of borrowing and raising capital, reduced
credit market liquidity, regulatory changes, price competition, bank failures
and other financial crises, and general economic and market conditions. Changing
interest rates could reduce the profitability of certain types of companies in
the financial sector. Financial companies may have concentrated portfolios, such
as a high level of loans to one or more industries or sectors, which makes them
vulnerable to economic conditions that affect such industries or sectors.
Significant events may have a significant negative impact on economies and
financial markets worldwide, resulting in higher debt defaults, loan write-offs,
and government intervention, and potentially the failure of some financial
institutions, each of which would reduce investment performance of financial
sector companies held by the Fund.
Security
Selection Risk.
The Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to its benchmark.
Issuer
Risk.
The value of a security may decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer’s goods or
services.
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14 |
HOTCHKIS
& WILEY FUNDS |
|
Fund
Summary: Hotchkis & Wiley Funds
Foreign
(Non-U.S.) Investment Risk.
The Fund may invest in foreign (non-U.S.) securities and may experience more
rapid and extreme changes in value than a fund that invests exclusively in
securities of U.S. companies. The securities markets of many foreign countries
are relatively small, with a limited number of companies representing a small
number of industries. Additionally, issuers of foreign securities are usually
not subject to the same degree of regulation as U.S. issuers and investments in
securities of foreign issuers may be subject to foreign withholding and other
taxes. To the extent that the Fund invests a significant portion of its assets
in a specific geographic region or country, the Fund will have more exposure to
the investment risks associated with that region or country, although the
Advisor does not intend to focus on a specific geographic region or
country.
Adverse
political, economic or social developments, as well as U.S. and foreign
government actions such as the imposition of tariffs, economic and trade
sanctions or embargoes, could undermine the value of the Fund’s investments,
prevent the Fund from realizing the full value of its investments or prevent the
Fund from selling securities it holds.
Financial
reporting standards for companies based in foreign markets differ from those in
the U.S. Additionally, foreign securities markets generally are smaller and less
liquid than U.S. markets. To the extent that the Fund invests in non-U.S. dollar
denominated foreign securities, changes in currency exchange rates may affect
the U.S. dollar value of foreign securities or the income or gain received on
these securities.
Large
Shareholder Risk.
To the extent that a significant portion of the Fund’s shares are held by a
limited number of shareholders or their affiliates, there is a risk that the
share trading activities of these shareholders could disrupt the Fund’s
investment strategies, which could have adverse consequences for the Fund and
other shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
Please
see “Fund Facts” in the Fund’s Prospectus for a more detailed description of the
risks of investing in the Fund.
Performance
The following
performance information provides some indication of the risks of investing in
the Fund by illustrating the variability of the Fund’s returns.
The bar chart shows changes in the Fund’s performance from year to year for
Class I shares (the class with the longest period of annual returns). However,
the Fund’s Class A and Class C shares are subject to sales loads. Sales
loads are not reflected in the bar chart and if these amounts were reflected,
returns would be less than those shown. The table,
which includes all applicable fees and sales charges, shows how the Fund’s
average annual returns for 1, 5 and 10 years compare with those of a broad
measure of market performance and an additional index that reflects the market
sectors in which the Fund invests. The Fund’s past
performance, before and after taxes, is not necessarily an indication of how the
Fund will perform in the future. Updated performance is
available on the Fund’s website at https://
www.hwcm.com/mutual-funds/resources/literature or
by calling the Fund toll-free at 1-866-HW-FUNDS (1-866-493-8637).
The
inception dates for the Fund’s Class I, Class A, Class C and Class Z shares are
September 20, 1985, October 6, 2000, February 4, 2002 and September 30, 2019,
respectively. Performance of Class Z shares prior to September 30, 2019 reflects
the historical performance of the Fund’s original share class (Class
I).
Calendar Year Total Returns
as of December 31
The
calendar year-to-date return for
the Fund’s Class I shares as of June 30, 2023 was
6.35%.
During the period shown in the bar chart, the highest return for a
quarter was 38.31% (quarter ended December 31,
2020) and the lowest return for a quarter
was -42.26% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2022)
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| |
| 1
Year |
5
Years |
10
Years |
Small
Cap Value Fund |
|
| |
Return
Before Taxes – Class I |
3.03 |
% |
7.36 |
% |
10.61 |
% |
Return After
Taxes on Distributions – Class I |
0.15 |
% |
5.99 |
% |
8.90 |
% |
Return After
Taxes on Distributions and Sale of Fund Shares – Class
I |
3.88 |
% |
5.57 |
% |
8.28 |
% |
Return
Before Taxes – Class A |
-2.53 |
% |
6.00 |
% |
9.77 |
% |
Return
Before Taxes – Class C |
1.25 |
% |
6.37 |
% |
9.55 |
% |
Return
Before Taxes – Class Z |
3.24 |
% |
7.49 |
% |
10.68 |
% |
Russell
2000®
Value
Index(a)
(reflects
no deduction for fees, expenses or taxes) |
-14.48 |
% |
4.13 |
% |
8.48 |
% |
Russell
2000®
Index
(reflects no deduction for
fees, expenses or taxes) |
-20.44 |
% |
4.13 |
% |
9.01 |
% |
(a)
The Advisor
believes that the additional index reasonably represents the Fund’s investment
strategy.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual
after-tax returns depend on an investor’s tax
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|
HOTCHKIS
& WILEY FUNDS |
15 |
Fund
Summary: Hotchkis & Wiley Funds
situation and may differ from those shown, and after-tax returns
shown are not relevant to investors who hold their Fund shares through
tax-advantaged arrangements, such as 401(k) plans or individual retirement
accounts (“IRAs”). After-tax returns are shown
for only Class I. After-tax returns for other classes will
vary.
In
certain cases, the figure representing “Return After Taxes on Distributions and
Sale of Fund Shares” may be higher than the other return figures for the same
period.
A
higher after-tax return results when a capital loss occurs upon redemption and
provides a tax deduction that benefits the
investor.
Management
Advisor.
Hotchkis
& Wiley Capital Management, LLC.
Portfolio
Managers.
|
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|
|
|
|
|
| |
Investment
team member |
Primary
title with Advisor |
Started
with the Fund |
David
Green, CFA |
Portfolio
Manager |
1997 |
James
Miles |
Portfolio
Manager |
1995 |
Purchase
and Sale of Fund Shares. You
may purchase, exchange or redeem Fund shares on any day the New York Stock
Exchange (“NYSE”) is open for trading by written request via mail (Hotchkis
& Wiley Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701) or through a broker-dealer or other financial
intermediary. You may also purchase Fund shares by wire transfer. You may
exchange or redeem Fund shares by telephone at 1-866-HW-FUNDS
(1-866-493-8637).
The
minimum initial investment for Class I shares is $250,000. For Class A and Class
C shares, the minimum initial investment in the Fund is $2,500 for regular
accounts and $1,000 for IRAs. The minimum initial investment for Class Z shares
will vary depending on the type of qualifying investor. The minimum subsequent
investment in the Fund for all share classes is generally $100.
Tax
Information. The
Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an IRA. Such tax-advantaged arrangements may be taxed
later upon a withdrawal from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries. If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank or financial advisor), the Fund and/or its Advisor may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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16 |
HOTCHKIS
& WILEY FUNDS |
|
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| |
Fund
Summary: Hotchkis & Wiley Funds |
SMALL
CAP DIVERSIFIED VALUE FUND |
Investment
Objective.
The Fund seeks capital appreciation.
Fees and Expenses of the
Fund. This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You may qualify for sales charge discounts
on Class A shares if you and your family invest, or agree to invest in the
future, at least $25,000 in the Hotchkis
& Wiley Funds. More information about these and other
discounts is available from your financial professional and in the sections
titled “About Class I, Class A, Class C and Class Z Shares” beginning on page 59
of the Prospectus, in Appendix A to the Prospectus, and in “Purchase of Shares”
beginning on page 58 of the Fund’s Statement of Additional Information.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, on your purchases and sales of Class Z shares of the Fund, which
are not reflected in the tables and examples below.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
SHAREHOLDER
FEES (fees
paid directly from your investment) |
| Class I |
Class A |
Class C |
Class
Z |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
None |
5.25% |
None |
None |
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase
price) |
None |
None⁽ᵃ⁾ |
1.00% |
None |
ANNUAL
FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class I |
Class A |
Class C |
Class Z |
Management
Fees |
0.65% |
0.65% |
0.65% |
0.65% |
Distribution
and/or Service (12b-1) Fees |
None |
0.25% |
1.00% |
None |
Other
Expenses |
0.22% |
0.24% |
0.22⁽ᵇ⁾ |
0.12% |
Total
Annual Fund Operating Expenses |
0.87% |
1.14% |
1.87% |
0.77% |
Fee
Waiver and/or Expense Reimbursement |
-0.07% |
-0.09% |
-0.07% |
0.00% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(c) |
0.80% |
1.05% |
1.80% |
0.77% |
(a)You may be charged a
deferred sales charge of up to 0.75% if you did not pay an initial sales charge
on an investment of $1 million or more in Class A shares and you redeem your
shares within one year after
purchase.
(b)Other Expenses for Class C
shares, which are not currently offered, are based on estimated amounts for the
current fiscal year.
(c)Hotchkis & Wiley
Capital Management, LLC has contractually agreed to waive management fees and/or
reimburse expenses (excluding sales loads, taxes, leverage interest, brokerage
commissions, acquired fund fees and expenses, if any, expenses incurred in
connection with any merger or reorganization and extraordinary expenses)
through
August 29,
2024 to ensure that Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement do not exceed the following limits:
Class I – 0.80%, Class A – 1.05%, Class C – 1.80%, and Class Z –
0.80%. The agreement may only be terminated with the consent of the Board of
Trustees.
Example.
These examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
first example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods,
followed by an example that assumes you do not redeem your Class C shares at the
end of the periods. The examples also assume that your investment has a 5%
return each year and that the Fund’s operating expenses remain the same, taking
into account the fee waiver/expense reimbursement in effect for the first year
only. Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
I |
$82 |
$271 |
$475 |
$1,066 |
Class
A |
$626 |
$860 |
$1,111 |
$1,831 |
Class
C |
$283 |
$581 |
$1,004 |
$1,994 |
Class
Z |
$79 |
$246 |
$428 |
$954 |
You
would pay the following expenses if you did not redeem your Class C
shares:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
C |
$183 |
$581 |
$1,004 |
$1,994 |
Portfolio
Turnover.
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 52% of the average value of its
portfolio.
Principal Investment
Strategy. The
Fund normally invests at least 80% of its net assets plus borrowings for
investment purposes in equity securities of small capitalization companies.
Hotchkis & Wiley Capital Management, LLC (the “Advisor”) currently considers
small cap companies to be those with market capitalizations like those found in
the Russell 2000®
Index. The market capitalization range of the Index changes constantly, but as
of June 30, 2023, the range was from $2 million to $13.1 billion. Market
capitalization is measured at the time of initial purchase. The Fund may invest
in foreign (non-U.S.) securities. Under normal conditions, the Fund typically
will hold equity securities of approximately 300 to 400 different
companies.
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HOTCHKIS
& WILEY FUNDS |
17 |
Fund
Summary: Hotchkis & Wiley Funds
The Fund seeks to invest in companies whose future prospects are
misunderstood or not fully recognized by the market. The Fund employs a
fundamental value investing approach which seeks to exploit market
inefficiencies created by irrational investor behavior. To identify these
investment opportunities, the Fund employs a disciplined, bottom-up investment
process based on a proprietary model that is augmented with internally-generated
fundamental research. The Fund seeks broad diversified exposure to these
investment opportunities by holding approximately 300 to 400 portfolio
securities. As part of the Advisor's investment process, the investment team
evaluates the general and industry-specific Environmental, Social, and
Governance (“ESG”) factors that the Advisor believes to be the most financially
material to a company's short-, medium-, and long-term enterprise value. The
Advisor believes this evaluation contributes to its overall analysis of a
company’s value creation for shareholders and future financial performance. With
the exception of diversification guidelines, the Fund does not employ
pre-determined rules for sales; rather, the Fund evaluates each sell candidate
based on the candidate’s specific risk and return characteristics which include:
1) relative valuation; 2) fundamental operating trends; 3) deterioration of
fundamentals; and 4) portfolio diversification.
Principal Investment
Risks.
As with any mutual fund, the value of the Fund’s
investments, and therefore the value of its shares, may go down and you could
lose all or a portion of your investment in the Fund. Many
factors can affect those values. The factors that are most likely to have a
material effect on the Fund’s portfolio as a whole are called “principal risks.”
The principal risks of investing in the Fund are described in this
section.
Market
Risk.
Market
risk is the risk that the market price of securities owned by the Fund may go
down, sometimes rapidly or unpredictably, due to factors affecting securities
markets generally or particular industries represented in the securities
markets. These factors include general economic, political or financial market
conditions, such as the general outlook for corporate earnings, rates of
economic growth and employment, and monetary policy, interest rates, inflation,
and currency rates. Adverse market events or investor sentiment may also lead to
increased shareholder redemptions, which could cause the Fund to experience a
loss or difficulty in selling investments to meet such redemptions. Local,
regional or global events such as war, acts of terrorism, the spread of
infectious illness or other public health issues, financial crises, recessions,
or other events may also lead to increased shareholder redemptions, which could
cause the Fund to experience a loss or difficulty in selling investments to meet
such redemptions.
Style
Risk.
The Advisor follows an investing style that favors value investments. Value
investing style may over time go in and out of favor in certain market cycles.
At times when the value investing style is out of favor the Fund's performance
may be negatively impacted. Investors should be prepared to tolerate volatility
in Fund returns.
Equity
Securities Risk.
Equity securities, both common and preferred stocks, have greater price
volatility than fixed income securities. The market price of equity securities
owned by the Fund may go down, sometimes rapidly or unpredictably. Equity
securities may decline in
value
due to factors affecting equity securities markets generally or particular
industries represented by those markets.
Capitalization
Risk.
Investment in small and mid-cap companies may involve more risk than investing
in larger, more established companies. Small and mid-cap companies may have
limited product lines or markets. They may be less financially secure than
larger, more established companies. They may depend on a small number of key
personnel. Should a product fail, or if management changes, or if there are
other adverse developments, the Fund’s investment in a small or mid-cap company
may lose substantial value. In addition, small and mid-cap companies may be
particularly affected by interest rate increases, as they may find it more
difficult to borrow money to continue or expand operations, or may have
difficulty in repaying any loans.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed
investment portfolio. The Advisor invests in securities that may not necessarily
be included in the Fund’s benchmark. To the extent that the Advisor invests the
Fund’s assets in securities that are not in the Fund’s applicable benchmark
index, there is a greater risk that the Fund’s performance will deviate from
that of the benchmark. The Advisor does not seek to replicate the performance of
any index.
Financial
Sector Risk.
The
Fund currently invests a significant portion of its assets in companies in the
financial sector, and therefore the performance of the Fund could be negatively
impacted by events affecting this sector. This sector can be significantly
affected by changes in interest rates, the rate of corporate and consumer debt
defaults, the availability and cost of borrowing and raising capital, reduced
credit market liquidity, regulatory changes, price competition, bank failures
and other financial crises, and general economic and market conditions. Changing
interest rates could reduce the profitability of certain types of companies in
the financial sector. Financial companies may have concentrated portfolios, such
as a high level of loans to one or more industries or sectors, which makes them
vulnerable to economic conditions that affect such industries or sectors.
Significant events may have a significant negative impact on economies and
financial markets worldwide, resulting in higher debt defaults, loan write-offs,
and government intervention, and potentially the failure of some financial
institutions, each of which would reduce investment performance of financial
sector companies held by the Fund.
Security
Selection Risk.
The Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to its benchmark.
Issuer
Risk.
The value of a security may decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer’s goods or services.
Foreign
(Non-U.S.) Investment Risk. The
Fund may invest in foreign (non-U.S.) securities and may experience more rapid
and extreme changes in value than a fund that invests exclusively in securities
of U.S. companies. The securities markets of many foreign countries are
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18 |
HOTCHKIS
& WILEY FUNDS |
|
Fund
Summary: Hotchkis & Wiley Funds
relatively
small, with a limited number of companies representing a small number of
industries. Additionally, issuers of foreign securities are usually not subject
to the same degree of regulation as U.S. issuers and investments in securities
of foreign issuers may be subject to foreign withholding and other taxes. To the
extent that the Fund invests a significant portion of its assets in a specific
geographic region or country, the Fund will have more exposure to the investment
risks associated with that region or country, although the Advisor does not
intend to focus on a specific geographic region or country.
Adverse
political, economic or social developments, as well as U.S. and foreign
government actions such as the imposition of tariffs, economic and trade
sanctions or embargoes, could undermine the value of the Fund’s investments,
prevent the Fund from realizing the full value of its investments or prevent the
Fund from selling securities it holds.
Financial
reporting standards for companies based in foreign markets differ from those in
the U.S. Additionally, foreign securities markets generally are smaller and less
liquid than U.S. markets. To the extent that the Fund invests in non-U.S. dollar
denominated foreign securities, changes in currency exchange rates may affect
the U.S. dollar value of foreign securities or the income or gain received on
these securities.
Large
Shareholder Risk.
To the extent that a significant portion of the Fund’s shares are held by a
limited number of shareholders or their affiliates, there is a risk that the
share trading activities of these shareholders could disrupt the Fund’s
investment strategies, which could have adverse consequences for the Fund and
other shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
Please
see “Fund Facts” in the Fund’s Prospectus for a more detailed description of the
risks of investing in the Fund.
Performance
The following
performance information provides some indication of the risks of investing in
the Fund by illustrating the variability of the Fund’s returns.
The bar chart shows changes in the Fund’s performance from year to year for
Class I shares. However, the Fund’s Class A and Class C shares are subject to
sales loads. Sales loads are not reflected in the
bar chart and if these amounts were reflected, returns would be less than those
shown. The table, which includes all
applicable fees and sales charges, shows how the Fund’s average annual returns
for 1 year, 5 years and since inception compare with those of a broad measure of
market performance and an additional index that reflects the market sectors in
which the Fund invests. The Fund’s past
performance, before and after taxes, is not necessarily an indication of how the
Fund will perform in the future. Updated performance is
available on the Fund’s website at https://www.hwcm.com/mutual-funds/resources/literature
or by calling the Fund toll-free at 1-866-HW-FUNDS (1-866-493-8637).
The
inception dates for the Fund’s Class I, Class A and Class Z shares are June 30,
2014, June 30, 2014 and September 30,
2019, respectively. Performance of Class Z shares prior to
September 30, 2019 reflects the historical performance of the Fund’s original
share class (Class I).
Calendar Year Total Returns
as of December 31
The
calendar year-to-date return for
the Fund’s Class I shares as of June 30, 2023 was
4.25%.
During the period shown in the bar chart, the highest return for a
quarter was 37.51% (quarter ended December 31,
2020) and the lowest return for a quarter
was -40.67% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2022)
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| |
| 1
Year |
5
Years |
Since
Inception (6/30/14) |
Small
Cap Diversified Value Fund |
|
| |
Return
Before Taxes – Class I |
-6.35 |
% |
5.98 |
% |
7.87 |
% |
Return After
Taxes on Distributions – Class I |
-8.39 |
% |
4.48 |
% |
6.23 |
% |
Return After
Taxes on Distributions and Sale of Fund Shares – Class
I |
-2.53 |
% |
4.35 |
% |
5.87 |
% |
Return
Before Taxes – Class A |
-11.52 |
% |
4.57 |
% |
6.92 |
% |
Return
Before Taxes – Class Z |
-6.39 |
% |
5.97 |
% |
7.86 |
% |
Russell
2000®
Value
Index(a)
(reflects no deduction for
fees, expenses or taxes) |
-14.48 |
% |
4.13 |
% |
5.76 |
% |
Russell
2000®
Index
(reflects
no deduction for fees, expenses or taxes) |
-20.44 |
% |
4.13 |
% |
6.10 |
% |
(a) The
Advisor believes that the additional index reasonably represents the Fund’s
investment strategy.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual
after-tax returns depend on an investor’s tax situation and may differ from
those shown, and after-tax returns shown are not relevant to investors who hold
their Fund shares through tax-advantaged arrangements, such as 401(k) plans or
individual retirement
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HOTCHKIS
& WILEY FUNDS |
19 |
Fund
Summary: Hotchkis & Wiley Funds
accounts (“IRAs”). After-tax
returns are shown for only Class I. After-tax returns for other classes will
vary.
In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides a tax
deduction that benefits the
investor.
Management
Advisor.
Hotchkis
& Wiley Capital Management, LLC.
Portfolio
Managers.
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Investment
team member |
Primary
title with Advisor |
Started
with the Fund |
Judd
Peters, CFA |
Portfolio
Manager |
2014 |
Ryan
Thomes, CFA |
Portfolio
Manager |
2014 |
Purchase
and Sale of Fund Shares. You
may purchase, exchange or redeem Fund shares on any day the New York Stock
Exchange (“NYSE”) is open for trading by written request via mail (Hotchkis
& Wiley Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701) or through a broker-dealer or other financial
intermediary. You may also purchase Fund shares by wire transfer. You may
exchange or redeem Fund shares by telephone at 1-866-HW-FUNDS
(1-866-493-8637).
The
minimum initial investment for Class I shares is $250,000. For Class A and Class
C shares, the minimum initial investment in the Fund is $2,500 for regular
accounts and $1,000 for IRAs. The minimum initial investment for Class Z shares
will vary depending on the type of qualifying investor. The minimum subsequent
investment in the Fund for all share classes is generally $100. The Fund is
currently not offering Class C shares to investors.
Tax
Information. The
Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an IRA. Such tax-advantaged arrangements may be taxed
later upon a withdrawal from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries. If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank or financial advisor), the Fund and/or its Advisor may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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20 |
HOTCHKIS
& WILEY FUNDS |
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| |
Fund
Summary: Hotchkis & Wiley Funds |
GLOBAL
VALUE FUND |
Investment
Objective. The
Fund seeks capital appreciation.
Fees and Expenses of the
Fund. This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You may qualify for sales charge discounts
on Class A shares if you and your family invest, or agree to invest in the
future, at least $25,000 in the Hotchkis
& Wiley Funds. More information about these and other
discounts is available from your financial professional and in the sections
titled “About Class I, Class A, Class C and Class Z Shares” beginning on page 59
of the Prospectus, in Appendix A to the Prospectus, and in “Purchase of Shares”
beginning on page 58 in the Fund’s Statement of Additional Information.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, on your purchases and sales of Class Z shares of the Fund, which
are not reflected in the tables and examples below.
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SHAREHOLDER
FEES
(fees paid directly from your
investment) |
| Class I |
Class A |
Class C |
Class Z |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
None |
5.25% |
None |
None |
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase
price) |
None |
None⁽ᵃ⁾ |
1.00% |
None |
ANNUAL
FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class I |
Class A |
Class C |
Class
Z |
Management
Fees |
0.75% |
0.75% |
0.75% |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
0.25% |
1.00% |
None |
Other
Expenses |
0.50% |
0.50% |
0.50⁽ᵇ⁾ |
0.43⁽ᵇ⁾ |
Total
Annual Fund Operating Expenses |
1.25% |
1.50% |
2.25% |
1.18% |
Fee
Waiver and/or Expense Reimbursement |
-0.30% |
-0.30% |
-0.30% |
-0.23% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(c) |
0.95% |
1.20% |
1.95% |
0.95% |
(a)
You may be charged a
deferred sales charge of up to 0.75% if you did not pay an initial sales charge
on an investment of $1 million or more in Class A shares and you redeem your
shares within one year after
purchase.
(b)
Other Expenses
for Class C and Class Z shares, which are not currently offered, are based on
estimated amounts for the current fiscal
year.
(c) Hotchkis & Wiley
Capital Management, LLC has contractually agreed to waive management fees and/or
reimburse expenses (excluding sales loads, taxes, leverage interest, brokerage
commissions, acquired fund fees and expenses, if any, expenses incurred in
connection with any merger or reorganization and extraordinary expenses)
through August 29,
2024 to ensure that Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement do not exceed the following limits:
Class I – 0.95%, Class A – 1.20%, Class C – 1.95%, and Class Z –
0.95%. The agreement may only be terminated with the consent of the Board of
Trustees.
Example.
These examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
first example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods,
followed by an example that assumes you do not redeem your Class C shares at the
end of the periods. The examples also assume that your investment has a 5%
return each year and that the Fund’s operating expenses remain the same, taking
into account the fee waiver/expense reimbursement in effect for the first year
only. Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
I |
$97 |
$367 |
$657 |
$1,485 |
Class
A |
$641 |
$946 |
$1,274 |
$2,197 |
Class
C |
$298 |
$675 |
$1,178 |
$2,372 |
|
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| |
Class
Z |
$97 |
$352 |
$627 |
$1,411 |
You
would pay the following expenses if you did not redeem your Class C
shares:
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| |
| 1
Year |
3
Years |
5
Years |
10
Years |
Class
C |
$198 |
$675 |
$1,178 |
$2,372 |
Portfolio
Turnover.
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 39% of the average value of its
portfolio.
Principal Investment
Strategy. The Fund seeks to achieve its objective by investing
primarily in U.S. and non-U.S. companies, which may include companies located or
operating in established or emerging markets. Under normal circumstances, the
Fund will invest at least 40% of its net assets (plus the amount of any
borrowings for investment purposes) in the equity securities of companies
located outside of the U.S. If Hotchkis & Wiley Capital Management, LLC (the
“Advisor”) deems market conditions and/or company valuations less favorable for
companies located outside the U.S., the Fund could invest less than 40%, but
would invest at least 30% of its net assets in equity securities of companies
located outside the U.S. The Advisor determines where a company is located, and
thus whether a company is located outside the U.S. or in an emerging market, by
referring to: its primary stock
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HOTCHKIS
& WILEY FUNDS |
21 |
Fund
Summary: Hotchkis & Wiley Funds
exchange
listing; where it is registered, organized or incorporated; where its
headquarters are located; where it derives at least 50% of its revenues or
profits from goods produced or sold, investments made, or services performed; or
where at least 50% of its assets are located. The Fund will allocate its assets
among various regions and countries (but in no less than three different
countries). From time to time, a substantial portion of the Fund’s assets may be
invested in companies located in a single country. The Fund invests in companies
of any size market capitalization.
In
addition to purchasing equity securities on exchanges where the companies are
located, the Fund may purchase equity securities on exchanges other than where
their companies are domiciled (often traded as dual listed securities) or in the
form of Depositary Receipts, which include American Depositary Receipts
(“ADRs”), Global Depositary Receipts (“GDRs”) or similar securities. The Fund
will invest primarily in companies located in developed countries, but may
invest up to 20% of its assets in emerging markets.
The
Fund may enter into currency contracts (such as spot, forward and futures) to
hedge foreign currency exposure.
The Fund seeks to invest in companies whose future prospects are
misunderstood or not fully recognized by the market. The Fund employs a
fundamental value investing approach which seeks to exploit market
inefficiencies created by irrational investor behavior. To identify these
investment opportunities, the Fund employs a disciplined, bottom-up investment
process highlighted by rigorous, internally-generated fundamental research. As
part of the Advisor's investment process, the investment team evaluates the
general and industry-specific Environmental, Social, and Governance (“ESG”)
factors that the Advisor believes to be the most financially material to a
company's short-, medium-, and long-term enterprise value. The Advisor believes
this evaluation contributes to its overall analysis of a company’s value
creation for shareholders and future financial performance. With the exception
of diversification guidelines, the Fund does not employ predetermined rules for
sales; rather, the Fund evaluates each sell candidate based on the candidate’s
specific risk and return characteristics which include: 1) relative valuation;
2) fundamental operating trends; 3) deterioration of fundamentals; and 4)
portfolio diversification.
Principal Investment
Risks. As with any mutual fund, the value of the Fund’s
investments, and therefore the value of its shares, may go down and you could
lose all or a portion of your investment in the Fund. Many
factors can affect those values. The factors that are most likely to have a
material effect on the Fund’s portfolio as a whole are called “principal risks.”
The principal risks of investing in the Fund are described in this section.
Market
Risk.
Market risk is the risk that the market price of securities owned by the Fund
may go down, sometimes rapidly or unpredictably, due to factors affecting
securities markets generally or particular industries represented in the
securities markets. These factors include general economic, political or
financial market conditions, such as the general outlook for corporate earnings,
rates of economic growth and
employment,
and monetary policy, interest rates, inflation, and currency rates. Adverse
market events or investor sentiment may also lead to increased shareholder
redemptions, which could cause the Fund to experience a loss or difficulty in
selling investments to meet such redemptions. Local, regional or global events
such as war, acts of terrorism, the spread of infectious illness or other public
health issues,financial crises recessions, or other events may also lead to
increased shareholder redemptions, which could cause the Fund to experience a
loss or difficulty in selling investments to meet such redemptions.
Style
Risk.
The Advisor follows an investing style that favors value investments. Value
investing style may over time go in and out of favor in certain market cycles.
At times when the value investing style is out of favor the Fund's performance
may be negatively impacted. Investors should be prepared to tolerate volatility
in Fund returns.
Equity
Securities Risk.
Equity securities, both common and preferred stocks, have greater price
volatility than fixed income securities. The market price of equity securities
owned by the Fund may go down, sometimes rapidly or unpredictably. Equity
securities may decline in value due to factors affecting equity securities
markets generally or particular industries represented by those
markets.
Capitalization
Risk.
Large cap companies as a group could fall out of favor with the market, causing
the Fund to underperform investments that focus on small or mid-cap companies.
Investments in small and mid-cap companies may involve more risk than investing
in larger more established companies. Small and mid-cap companies may have
limited product lines or markets. They may be less financially secure than
larger, more established companies. They may depend on a small number of key
personnel. Should a product fail, or if management changes, or if there are
other adverse developments, the Fund’s investment in a small or mid-cap company
may lose substantial value. In addition, small and mid-cap companies may be
particularly affected by interest rate increases, as they may find it more
difficult to borrow money to continue or expand operations, or may have
difficulty in repaying any loans.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed
investment portfolio. The Advisor invests in securities that may not necessarily
be included in the Fund’s benchmark. To the extent that the Advisor invests the
Fund’s assets in securities that are not in the Fund’s benchmark index, there is
a greater risk that the Fund’s performance will deviate from that of the
benchmark. The Advisor does not seek to replicate the performance of any
index.
Financial
Sector Risk.
The Fund currently invests a significant portion of its assets in companies in
the financial sector, and therefore the performance of the Fund could be
negatively impacted by events affecting this sector. This sector can be
significantly affected by changes in interest rates, the rate of corporate and
consumer debt defaults, the availability and cost of borrowing and raising
capital, reduced credit market liquidity, regulatory changes, price competition,
bank failures and other financial crises, and general economic and market
conditions. Changing interest rates could reduce the profitability of certain
types of companies in the financial sector. Financial companies may have
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22 |
HOTCHKIS
& WILEY FUNDS |
|
Fund
Summary: Hotchkis & Wiley Funds
concentrated
portfolios, such as a high level of loans to one or more industries or sectors,
which makes them vulnerable to economic conditions that affect such industries
or sectors. Significant events may have a significant negative impact on
economies and financial markets worldwide, resulting in higher debt defaults,
loan write-offs, and government intervention, and potentially the failure of
some financial institutions, each of which would reduce investment performance
of financial sector companies held by the Fund.
Security
Selection Risk.
The Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to its benchmark.
Issuer
Risk. The
value of a security may decline for a number of reasons which directly relate to
the issuer, such as management performance, financial leverage and reduced
demand for the issuer’s goods or services.
Foreign
(Non-U.S.) Investment Risk.
The Fund invests in foreign (non-U.S.) securities and may experience more rapid
and extreme changes in value than a fund that invests exclusively in securities
of U.S. companies. The securities markets of many foreign countries are
relatively small, with a limited number of companies representing a small number
of industries. Additionally, issuers of foreign securities are usually not
subject to the same degree of regulation as U.S. issuers and may suffer from
increased foreign government action, including nationalization, expropriation or
confiscatory taxation, currency blockage, or political changes or diplomatic
developments. Investments in securities of foreign issuers may be subject to
foreign withholding and other taxes. To the extent that the Fund invests a
significant portion of its assets in a specific geographic region or country,
the Fund will have more exposure to the investment risks associated with that
region or country, although the Advisor does not intend to focus on a specific
geographic region or country.
Adverse
political, economic or social developments, as well as U.S. and foreign
government actions such as the imposition of tariffs, economic and trade
sanctions or embargoes, could undermine the value of the Fund’s investments,
prevent the Fund from realizing the full value of its investments or prevent the
Fund from selling securities it holds.
Financial
reporting standards for companies based in foreign markets differ from those in
the U.S. Additionally, foreign securities markets generally are smaller and less
liquid than U.S. markets. To the extent that the Fund invests in non-U.S. dollar
denominated foreign securities, changes in currency exchange rates may affect
the U.S. dollar value of foreign securities or the income or gain received on
these securities.
Eurozone
Risk.
A number of countries in the European Union (“EU”) have experienced, and may
continue to experience, severe economic and financial difficulties. In
particular, many EU nations are susceptible to economic risks associated with
high levels of debt. As a result, financial markets in the EU have been subject
to increased volatility and declines in asset values and liquidity. Responses to
these financial problems by European governments, central banks, and others,
including austerity measures and reforms, may not work, may result in social
unrest, and
may
limit future growth and economic recovery or have other unintended consequences.
The risk of investing in securities in the European markets may also be
heightened due to the United Kingdom’s withdrawal from the EU (known as
“Brexit”), and there is a risk that other EU countries may pursue a similar
withdrawal. To the extent that the Fund has exposure to European markets or to
transactions tied to the value of the euro, these events could negatively affect
the value and liquidity of the Fund’s investments.
Emerging
Market Risk. Foreign
(non-U.S.) investment risk may be particularly high to the extent that the Fund
invests in emerging market securities. These securities may present market,
credit, currency, liquidity, legal, political and other risks different from, or
greater than, the risks of investing in developed foreign countries. In addition
to the risks of foreign securities in general, countries in emerging markets are
generally more volatile and can have relatively unstable governments, social and
legal systems that do not protect shareholders, economies based on only a few
industries and securities markets that trade a small number of issues. Taxation,
restrictions on foreign investment and on currency convertibility and
repatriation, currency fluctuations and other developments in laws and
regulations of emerging markets could result in loss to the Fund. Inflation and
rapid fluctuations in inflation rates have had, and may continue to have,
negative effects on the economies and securities markets of certain emerging
market countries. In addition, when investing in emerging market countries,
there may be differences in auditing and financial reporting standards, which
may result in unavailability of material information about issuers. Emerging
securities markets may have different clearance and settlement procedures, which
may be unable to keep pace with the volume of securities transactions or
otherwise make it difficult to engage in such transactions.
Currency
Risk.
If the Fund invests directly in foreign (non-U.S.) currencies or in securities
that trade in, and receive revenues in, foreign (non-U.S.) currencies, or in
derivatives that provide exposure to foreign (non-U.S.) currencies, it will be
subject to the risk that those currencies will decline in value relative to the
U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will
decline in value relative to the currency being hedged. As a result, the Fund’s
investments in foreign currency-denominated securities may reduce the Fund’s
returns.
Foreign
Currency Exchange Contracts Risk. A
foreign currency exchange contract involves the Fund’s purchase or sale of a
specific currency on a spot basis or at a future date at a price set at the time
of the contract. Forward contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing the Fund to sustain losses
on these contracts and transaction costs. The use of futures contracts involves
the risk of imperfect correlation in movements in the price of the futures
contracts, exchange rates and the underlying hedged assets. In addition,
although forward contracts limit the risk of loss due to a decline in the value
of the hedged currencies, at the same time they limit any potential gain that
might result should the value of the currencies increase.
ADR
and GDR Risk.
ADRs and GDRs may be subject to some of the same risks as direct investment in
foreign companies, which includes international trade, currency, political,
regulatory and diplomatic risks. In
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HOTCHKIS
& WILEY FUNDS |
23 |
Fund
Summary: Hotchkis & Wiley Funds
a
sponsored ADR arrangement, the foreign issuer assumes the obligation to pay some
or all of the depositary's transaction fees. Under an unsponsored ADR
arrangement, the foreign issuer assumes no obligations and the depositary's
transaction fees are paid directly by the ADR holders. Because unsponsored ADR
arrangements are organized independently and without the cooperation of the
issuer of the underlying securities, available information concerning the
foreign issuer may not be as current as for sponsored ADRs and voting rights
with respect to the deposited securities are not passed through. GDRs can
involve currency risk since, unlike ADRs, they may not be U.S.
dollar-denominated.
Large
Shareholder Risk.
To the extent that a significant portion of the Fund’s shares are held by a
limited number of shareholders or their affiliates, there is a risk that the
share trading activities of these shareholders could disrupt the Fund’s
investment strategies, which could have adverse consequences for the Fund and
other shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
Please
see “Fund Facts” in the Fund’s Prospectus for a more detailed description of the
risks of investing in the Fund.
Performance
The following
performance information provides some indication of the risks of investing in
the Fund by illustrating the variability of the Fund’s returns.
The bar chart shows the changes in the Fund’s performance from year to year for
Class I shares (the class with the longest period of annual returns). However,
the Fund’s Class A and Class C shares are subject to sales loads. Sales loads
are not reflected in the bar chart and if these amounts were reflected, returns
would be less than that shown. The
table, which includes all applicable fees and sales charges, shows how the
Fund’s average annual returns for 1 year, 5 years and 10 years (since inception)
compare with those of a broad measure of market
performance.
The Fund’s past performance,
before and after taxes, is not necessarily an indication of how the Fund will
perform in the future. Updated performance is available on the
Fund’s website at https://www.hwcm.com/mutual-funds/resources/literature
or by calling the Fund toll-free at 1-866-HW-FUNDS (1-866-493-8637).
The
inception dates for the Fund’s Class I and Class A shares are December 31, 2012
and August 30,
2013, respectively. Performance of Class A shares prior to
August 30, 2013 reflects the historical performance of the Fund’s original share
class (Class I) adjusted to reflect the higher operating expenses and sales
charge of Class A shares.
Calendar Year Total Returns
as of December 31
The
calendar year-to-date return for
the Fund’s Class I shares as of June 30, 2023 was
12.41%.
During the period of time shown in the bar chart, the highest return for a
calendar quarter was 32.15% (quarter ended December 31, 2020)
and the lowest return for a calendar
quarter was -36.13% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2022)
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| 1
Year |
5
Years |
10
Years
(Since
Inception -
12/31/12) |
Global
Value Fund |
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Return Before
Taxes – Class I |
-11.66 |
% |
3.07 |
% |
7.54 |
% |
Return After
Taxes on Distributions – Class I |
-12.45 |
% |
2.21 |
% |
6.25 |
% |
Return After
Taxes on Distributions and Sale of Fund Shares – Class
I |
-6.33 |
% |
2.27 |
% |
5.79 |
% |
Return Before
Taxes – Class A |
-16.58 |
% |
1.67 |
% |
6.69 |
% |
MSCI
World Index
(reflects no deduction for
fees, expenses or taxes) |
-18.14 |
% |
6.14 |
% |
8.85 |
% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown, and
after-tax returns shown are not relevant to investors who hold their Fund shares
through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (“IRAs”). After-tax
returns are shown for only Class I. After-tax returns for other classes will
vary.
In
certain cases, the figure representing “Return After Taxes on Distributions and
Sale of Fund Shares” may be higher than the other return figures for the same
period.
A
higher after-tax return results when a capital loss occurs upon redemption and
provides a tax deduction that benefits the
investor.
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24 |
HOTCHKIS
& WILEY FUNDS |
|
Fund
Summary: Hotchkis & Wiley Funds
Management
Advisor.
Hotchkis
& Wiley Capital Management, LLC.
Portfolio
Managers.
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Investment
team member |
Primary
title with Advisor |
Started
with the Fund |
Scott
McBride, CFA |
Chief
Executive Officer and Portfolio Manager |
2012 |
Scott
Rosenthal |
Portfolio
Manager |
2012 |
Purchase
and Sale of Fund Shares. You
may purchase, exchange or redeem Fund shares on any day the New York Stock
Exchange (“NYSE”) is open for trading by written request via mail (Hotchkis
& Wiley Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701) or through a broker-dealer or other financial
intermediary. You may also purchase Fund shares by wire transfer. You may
exchange or redeem Fund shares by telephone at 1-866-HW-FUNDS (1-866-493-8637).
The
minimum initial investment for Class I shares is $250,000. For Class A and Class
C shares, the minimum initial investment in the Fund is $2,500 for regular
accounts and $1,000 for IRAs. The minimum initial investment for Class Z shares
will vary depending on the type of qualifying investor. The minimum subsequent
investment in the Fund for all share classes is generally $100. The Fund is
currently not offering Class C or Class Z shares to investors.
Tax
Information. The
Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an IRA. Such tax-advantaged arrangements may be taxed
later upon a withdrawal from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries. If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank or financial advisor), the Fund and/or its Advisor may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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HOTCHKIS
& WILEY FUNDS |
25 |
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Fund
Summary: Hotchkis & Wiley Funds |
INTERNATIONAL
VALUE FUND |
Investment
Objective. The
Fund seeks capital appreciation.
Fees and Expenses of the
Fund. This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You may qualify for sales charge discounts
on Class A shares if you and your family invest, or agree to invest in the
future, at least $25,000 in the Hotchkis
& Wiley Funds. More information about these and other
discounts is available from your financial professional and in the sections
titled “About Class I, Class A, Class C and Class Z Shares” beginning on page 59
of the Prospectus, in Appendix A to the Prospectus, and in “Purchase of Shares”
beginning on page 58 in the Fund’s Statement of Additional Information.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, on your purchases and sales of Class Z shares of the Fund, which
are not reflected in the tables and examples below.
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SHAREHOLDER
FEES (fees
paid directly from your investment) |
| Class I |
Class A |
Class C |
Class Z |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
None |
5.25% |
None |
None |
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase
price) |
None |
None⁽ᵃ⁾ |
1.00% |
None |
ANNUAL
FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class I |
Class A |
Class C |
Class Z |
Management
Fees |
0.80% |
0.80% |
0.80% |
0.80% |
Distribution
and/or Service (12b-1) Fees |
None |
0.25% |
1.00% |
None |
Other
Expenses |
4.28% |
4.28⁽ᵇ⁾ |
4.28⁽ᵇ⁾ |
4.28⁽ᵇ⁾ |
Total
Annual Fund Operating Expenses |
5.08% |
5.33% |
6.08% |
5.08% |
Fee
Waiver and/or Expense Reimbursement |
-4.13% |
-4.13% |
-4.13% |
-4.13% |
Total
Annual Fund Operating Expenses after Fee Waiver and/or Expense
Reimbursement(c) |
0.95% |
1.20% |
1.95% |
0.95% |
(a)You may be charged a
deferred sales charge of up to 0.75% if you did not pay an initial sales charge
on an investment of $1 million or more in Class A shares and you redeem your
shares within one year after
purchase.
(b)Other Expenses for Class
A, Class C and Class Z shares, which are not currently offered, are based on
estimated amounts for the current fiscal
year.
(c)Hotchkis & Wiley
Capital Management, LLC has contractually agreed to waive management fees and/or
reimburse expenses (excluding sales loads, taxes, leverage interest, brokerage
commissions, acquired fund fees and expenses, if any, expenses incurred in
connection with any merger or reorganization and extraordinary expenses) through
August 29,
2024 to ensure that Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement do not exceed the following
limits: Class I – 0.95%, Class A – 1.20%, Class C – 1.95%, and Class Z
– 0.95%. The agreement may only be terminated with the consent of the Board of
Trustees.
Example.
These examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
first example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods,
followed by an example that assumes you do not redeem your Class C shares at the
end of the periods. The examples also assume that your investment has a 5%
return each year and that the Fund’s operating expenses remain the same, taking
into account the fee waiver/expense reimbursement in effect for the first year
only. Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
I |
$97 |
$1,153 |
$2,208 |
$4,837 |
Class
A |
$641 |
$1,686 |
$2,724 |
$5,289 |
Class
C |
$298 |
$1,438 |
$2,651 |
$5,436 |
Class
Z |
$97 |
$1,153 |
$2,208 |
$4,837 |
You
would pay the following expenses if you did not redeem your Class C
shares:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
C |
$198 |
$1,438 |
$2,651 |
$5,436 |
Portfolio
Turnover.
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 26% of the average value of its
portfolio.
Principal Investment
Strategy. The Fund seeks to achieve its objective by investing
primarily in non-U.S. companies, which may include companies located or
operating in developed or emerging markets. Hotchkis & Wiley Capital
Management, LLC (the “Advisor”) determines where a company is located, and thus
whether a company is located outside the U.S. or in an emerging market, by
referring to: (i) its primary stock exchange listing; (ii) where it is
registered, organized or incorporated; (iii) where its headquarters are located;
(iv) where it derives at least 50% of its revenues or profits from goods
produced or sold, investments made, or services performed; or (v) where at least
50% of its assets are located. The Fund will allocate its assets among various
regions and countries (but in no less than three different countries). From time
to time, a substantial portion of the Fund’s assets may be invested
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26 |
HOTCHKIS
& WILEY FUNDS |
|
Fund
Summary: Hotchkis & Wiley Funds
in
companies located in a single country. The Fund invests in companies of any size
market capitalization.
In
addition to purchasing equity securities on exchanges where the companies are
located, the Fund may purchase equity securities on exchanges other than where
their companies are domiciled (often traded as dual listed securities) or in the
form of Depositary Receipts, which include American Depositary Receipts
(“ADRs”), Global Depositary Receipts (“GDRs”) or similar
securities.
The
Fund may enter into currency contracts (such as spot, forward and futures) to
hedge foreign currency exposure. The Fund will invest primarily in companies
located in developed countries, but may invest up to 20% of its assets in
emerging markets.
The
Fund seeks to invest in companies whose future prospects are misunderstood or
not fully recognized by the market. The Fund employs a fundamental value
investing approach which seeks to exploit market inefficiencies created by
irrational investor behavior. To identify these investment opportunities, the
Fund employs a disciplined, bottom-up investment process highlighted by
rigorous, internally-generated fundamental research. As part of the Advisor's
investment process, the investment team evaluates the general and
industry-specific Environmental, Social, and Governance (“ESG”) factors that the
Advisor believes to be the most financially material to a company's short-,
medium-, and long-term enterprise value. The Advisor believes this evaluation
contributes to its overall analysis of a company’s value creation for
shareholders and future financial performance. With the exception of
diversification guidelines, the Fund does not employ predetermined rules for
sales; rather, the Fund evaluates each sell candidate based on the candidate’s
specific risk and return characteristics which include: 1) relative valuation;
2) fundamental operating trends; 3) deterioration of fundamentals; and
4) portfolio diversification.
Principal Investment
Risks. As with any mutual fund, the value of the Fund’s
investments, and therefore the value of its shares, may go down and you could
lose all or a portion of your investment in the Fund. Many
factors can affect those values. The factors that are most likely to have a
material effect on the Fund’s portfolio as a whole are called “principal risks.”
The principal risks of investing in the Fund are described in this section.
Market
Risk.
Market risk is the risk that the market price of securities owned by the Fund
may go down, sometimes rapidly or unpredictably, due to factors affecting
securities markets generally or particular industries represented in the
securities markets. These factors include general economic, political or
financial market conditions, such as the general outlook for corporate earnings,
rates of economic growth and employment, and monetary policy, interest rates,
inflation, and currency rates. Adverse market events or investor sentiment may
also lead to increased shareholder redemptions, which could cause the Fund to
experience a loss or difficulty in selling investments to meet such redemptions.
Local, regional or global events such as war, acts of terrorism, the spread of
infectious illness or other public health issues,
financial
crises, recessions, or other events may also lead to increased shareholder
redemptions, which could cause the Fund to experience a loss or difficulty in
selling investments to meet such redemptions.
Style
Risk.
The Advisor follows an investing style that favors value investments. Value
investing style may over time go in and out of favor in certain market cycles.
At times when the value investing style is out of favor the Fund's performance
may be negatively impacted. Investors should be prepared to tolerate volatility
in Fund returns.
Equity
Securities Risk.
Equity securities, both common and preferred stocks, have greater price
volatility than fixed income securities. The market price of equity securities
owned by the Fund may go down, sometimes rapidly or unpredictably. Equity
securities may decline in value due to factors affecting equity securities
markets generally or particular industries represented by those
markets.
Capitalization
Risk.
Large cap companies as a group could fall out of favor with the market, causing
the Fund to underperform investments that focus on small or mid-cap companies.
Investments in small and mid-cap companies may involve more risk than investing
in larger more established companies. Small and mid-cap companies may have
limited product lines or markets. They may be less financially secure than
larger, more established companies. They may depend on a small number of key
personnel. Should a product fail, or if management changes, or if there are
other adverse developments, the Fund’s investment in a small or mid-cap company
may lose substantial value. In addition, small and mid-cap companies may be
particularly affected by interest rate increases, as they may find it more
difficult to borrow money to continue or expand operations, or may have
difficulty in repaying any loans.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed
investment portfolio. The Advisor invests in securities that may not necessarily
be included in the Fund’s benchmark. To the extent that the Advisor invests the
Fund’s assets in securities that are not in the Fund’s benchmark index, there is
a greater risk that the Fund’s performance will deviate from that of the
benchmark. The Advisor does not seek to replicate the performance of any
index.
Financial
Sector Risk.
The Fund currently invests a significant portion of its assets in companies in
the financial sector, and therefore the performance of the Fund could be
negatively impacted by events affecting this sector. This sector can be
significantly affected by changes in interest rates, the rate of corporate and
consumer debt defaults, the availability and cost of borrowing and raising
capital, reduced credit market liquidity, regulatory changes, price competition,
bank failures and other financial crises, and general economic and market
conditions. Changing interest rates could reduce the profitability of certain
types of companies in the financial sector. Financial companies may have
concentrated portfolios, such as a high level of loans to one or more industries
or sectors, which makes them vulnerable to economic conditions that affect such
industries or sectors. Significant events may have a significant negative impact
on economies and financial markets worldwide, resulting in higher debt defaults,
loan write-offs, and government intervention, and potentially the failure of
some financial
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HOTCHKIS
& WILEY FUNDS |
27 |
Fund
Summary: Hotchkis & Wiley Funds
institutions,
each of which would reduce investment performance of financial sector companies
held by the Fund.
Security
Selection Risk.
The Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to its benchmark.
Issuer
Risk. The
value of a security may decline for a number of reasons which directly relate to
the issuer, such as management performance, financial leverage and reduced
demand for the issuer’s goods or services.
Foreign
(Non-U.S.) Investment Risk.
The Fund invests in foreign (non-U.S.) securities and may experience more rapid
and extreme changes in value than a fund that invests exclusively in securities
of U.S. companies. The securities markets of many foreign countries are
relatively small, with a limited number of companies representing a small number
of industries. Additionally, issuers of foreign securities are usually not
subject to the same degree of regulation as U.S. issuers and may suffer from
increased foreign government action, including nationalization, expropriation or
confiscatory taxation, currency blockage, or political changes or diplomatic
developments. Investments in securities of foreign issuers may be subject to
foreign withholding and other taxes. To the extent that the Fund invests a
significant portion of its assets in a specific geographic region or country,
the Fund will have more exposure to the investment risks associated with that
region or country, although the Advisor does not intend to focus on a specific
geographic region or country.
Adverse
political, economic or social developments, as well as U.S. and foreign
government actions such as the imposition of tariffs, economic and trade
sanctions or embargoes, could undermine the value of the Fund’s investments,
prevent the Fund from realizing the full value of its investments or prevent the
Fund from selling securities it holds.
Financial
reporting standards for companies based in foreign markets differ from those in
the U.S. Additionally, foreign securities markets generally are smaller and less
liquid than U.S. markets. To the extent that the Fund invests in non-U.S. dollar
denominated foreign securities, changes in currency exchange rates may affect
the U.S. dollar value of foreign securities or the income or gain received on
these securities.
Eurozone
Risk.
A number of countries in the European Union (“EU”) have experienced, and may
continue to experience, severe economic and financial difficulties. In
particular, many EU nations are susceptible to economic risks associated with
high levels of debt. As a result, financial markets in the EU have been subject
to increased volatility and declines in asset values and liquidity. Responses to
these financial problems by European governments, central banks, and others,
including austerity measures and reforms, may not work, may result in social
unrest, and may limit future growth and economic recovery or have other
unintended consequences. The risk of investing in securities in the European
markets may also be heightened due to the United Kingdom’s withdrawal from the
EU (known as “Brexit”), and there is a risk that other EU countries may pursue a
similar withdrawal. To the extent that the Fund
has
exposure to European markets or to transactions tied to the value of the euro,
these events could negatively affect the value and liquidity of the Fund’s
investments.
Emerging
Market Risk. Foreign
(non-U.S.) investment risk may be particularly high to the extent that the Fund
invests in emerging market securities. These securities may present market,
credit, currency, liquidity, legal, political and other risks different from, or
greater than, the risks of investing in developed foreign countries. In addition
to the risks of foreign securities in general, countries in emerging markets are
generally more volatile and can have relatively unstable governments, social and
legal systems that do not protect shareholders, economies based on only a few
industries and securities markets that trade a small number of issues. Taxation,
restrictions on foreign investment and on currency convertibility and
repatriation, currency fluctuations and other developments in laws and
regulations of emerging markets could result in loss to the Fund. Inflation and
rapid fluctuations in inflation rates have had, and may continue to have,
negative effects on the economies and securities markets of certain emerging
market countries. In addition, when investing in emerging market countries,
there may be differences in auditing and financial reporting standards, which
may result in unavailability of material information about issuers. Emerging
securities markets may have different clearance and settlement procedures, which
may be unable to keep pace with the volume of securities transactions or
otherwise make it difficult to engage in such transactions.
Currency
Risk.
If the Fund invests directly in foreign (non-U.S.) currencies or in securities
that trade in, and receive revenues in, foreign (non-U.S.) currencies, or in
derivatives that provide exposure to foreign (non-U.S.) currencies, it will be
subject to the risk that those currencies will decline in value relative to the
U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will
decline in value relative to the currency being hedged. As a result, the Fund’s
investments in foreign currency-denominated securities may reduce the Fund’s
returns.
Foreign
Currency Exchange Contracts Risk.
A foreign currency exchange contract involves the Fund’s purchase or sale of a
specific currency on a spot basis or at a future date at a price set at the time
of the contract. Forward contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing the Fund to sustain losses
on these contracts and transaction costs. The use of futures contracts involves
the risk of imperfect correlation in movements in the price of the futures
contracts, exchange rates and the underlying hedged assets. In addition,
although forward contracts limit the risk of loss due to a decline in the value
of the hedged currencies, at the same time they limit any potential gain that
might result should the value of the currencies increase.
ADR
and GDR Risk.
American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”)
may be subject to some of the same risks as direct investment in foreign
companies, which includes international trade, currency, political, regulatory
and diplomatic risks. In a sponsored ADR arrangement, the foreign issuer assumes
the obligation to pay some or all of the depositary's transaction fees. Under an
unsponsored ADR arrangement, the foreign issuer assumes no obligations and the
depositary's transaction fees are paid directly by the ADR holders.
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HOTCHKIS
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Fund
Summary: Hotchkis & Wiley Funds
Because
unsponsored ADR arrangements are organized independently and without the
cooperation of the issuer of the underlying securities, available information
concerning the foreign issuer may not be as current as for sponsored ADRs and
voting rights with respect to the deposited securities are not passed through.
GDRs can involve currency risk since, unlike ADRs, they may not be U.S.
dollar-denominated.
Large
Shareholder Risk.
To the extent that a significant portion of the Fund’s shares are held by a
limited number of shareholders or their affiliates, there is a risk that the
share trading activities of these shareholders could disrupt the Fund’s
investment strategies, which could have adverse consequences for the Fund and
other shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
Please
see “Fund Facts” in the Fund’s Prospectus for a more detailed description of the
risks of investing in the Fund.
Performance
The following
performance information provides some indication of the risks of investing in
the Fund by illustrating the variability of the Fund’s returns.
The bar chart shows changes in the Fund’s performance from year to year for
Class I shares. However, the Fund’s Class A and Class C shares are subject to
sales loads. Sales loads are not reflected in the
bar chart and if these amounts were reflected, returns would be less than that
shown. The table, which includes all
applicable fees and sales charges, shows how the Fund’s average annual returns
for 1 year, 5 years and since inception compare with those of a broad measure of
market performance. The Fund’s past performance,
before and after taxes, is not necessarily an indication of how the Fund will
perform in the future. Updated performance is available on the
Fund’s website at https://www.hwcm.com/mutual-funds/resources/literature
or by calling the Fund toll-free at 1-866-HW-FUNDS (1-866-493-8637).
The inception date for the Fund’s Class I shares is December 31,
2015.
Calendar Year Total
Returns as of December 31
The
calendar year-to-date return for
the Fund’s Class I shares as of June 30, 2023 was
13.78%.
During the period of time shown in the bar chart, the highest return for a
calendar quarter was 30.35% (quarter ended December 31, 2020)
and the lowest return for a calendar
quarter was -36.78% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2022)
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| 1
Year |
5
Years |
Since
Inception
(12/31/15) |
International
Value Fund |
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Return
Before Taxes – Class I |
-5.41 |
% |
1.24 |
% |
4.90 |
% |
Return
After Taxes on Distributions – Class I |
-5.87 |
% |
0.64 |
% |
4.11 |
% |
Return
After Taxes on Distributions and Sale of Fund Shares – Class
I |
-2.47 |
% |
1.05 |
% |
3.89 |
% |
MSCI
World ex-USA Index
(reflects no deduction for
fees, expenses or taxes) |
-14.29 |
% |
1.79 |
% |
4.87 |
% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown, and
after-tax returns shown are not relevant to investors who hold their Fund shares
through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (“IRAs”). After-tax
returns are shown for only Class I. After-tax returns for other classes will
vary.
In
certain cases, the figure representing “Return After Taxes on Distributions and
Sale of Fund Shares” may be higher than the other return figures for the same
period.
A
higher after-tax return results when a capital loss occurs upon redemption and
provides a tax deduction that benefits the
investor.
Management
Advisor.
Hotchkis
& Wiley Capital Management, LLC.
Portfolio
Managers.
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Investment
team member |
Primary
title with Advisor |
Started
with the Fund |
Scott
Rosenthal |
Portfolio
Manager |
2015 |
Hunter
Doble, CFA |
Portfolio
Manager |
2018 |
David
Green, CFA |
Portfolio
Manager |
2015 |
Purchase
and Sale of Fund Shares. You
may purchase, exchange or redeem Fund shares on any day the New York Stock
Exchange (“NYSE”) is open for trading by written request via mail (Hotchkis
& Wiley Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701) or through a broker-dealer or other financial
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HOTCHKIS
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29 |
Fund
Summary: Hotchkis & Wiley Funds
intermediary.
You may also purchase Fund shares by wire transfer. You may exchange or redeem
Fund shares by telephone at 1-866-HW-FUNDS (1-866-493-8637).
The
minimum initial investment for Class I shares is $250,000. For Class A and Class
C shares, the minimum initial investment in the Fund is $2,500 for regular
accounts and $1,000 for IRAs. The minimum initial investment for Class Z shares
will vary depending on the type of qualifying investor. The minimum subsequent
investment in the Fund for all share classes is generally $100. The Fund is
currently not offering Class A, Class C, or Class Z shares to
investors.
Tax
Information. The
Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an IRA. Such tax-advantaged arrangements may be taxed
later upon a withdrawal from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries. If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank or financial advisor), the Fund and/or its Advisor may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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HOTCHKIS
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Summary: Hotchkis & Wiley Funds |
INTERNATIONAL
SMALL CAP DIVERSIFIED VALUE FUND |
Investment
Objective. The Fund seeks capital appreciation.
Fees and Expenses of the
Fund. This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You may qualify for sales charge discounts
on Class A shares if you and your family invest, or agree to invest in the
future, at least $25,000 in the Hotchkis
& Wiley Funds. More information about these and other
discounts is available from your financial professional and in the sections
titled “About Class I, Class A, Class C and Class Z Shares” beginning on page 59
of the Prospectus, in Appendix A to the Prospectus, and in “Purchase of Shares”
beginning on page 58 in the Fund’s Statement of Additional Information.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, on your purchases and sales of Class Z shares of the Fund, which
are not reflected in the tables and examples below.
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SHAREHOLDER
FEES (fees
paid directly from your investment) |
| Class I |
Class A |
Class Z |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
None |
5.25% |
None |
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase
price) |
None |
None⁽ᵃ⁾ |
None |
ANNUAL
FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class I |
Class A |
Class Z |
Management
Fees |
0.80% |
0.80% |
0.80% |
Distribution
and/or Service (12b-1) Fees |
None |
0.25% |
None |
Other
Expenses |
3.79% |
3.79⁽ᵇ⁾ |
3.79⁽ᵇ⁾ |
Total
Annual Fund Operating Expenses |
4.59% |
4.84% |
4.59% |
Fee
Waiver and/or Expense Reimbursement |
-3.60% |
-3.60% |
-3.60% |
Total
Annual Fund Operating Expenses after Fee Waiver and/or Expense
Reimbursement(c) |
0.99% |
1.24% |
0.99% |
(a)You may be charged a
deferred sales charge of up to 0.75% if you did not pay an initial sales charge
on an investment of $1 million or more in Class A shares and you redeem your
shares within one year after
purchase.
(b)Other Expenses
for Class A and Class Z shares, which are not currently offered, are based on
estimated amounts for the current fiscal
year.
(c)Hotchkis & Wiley
Capital Management, LLC has contractually agreed to waive management fees and/or
reimburse expenses (excluding sales loads, taxes, leverage interest, brokerage
commissions, acquired fund fees and expenses, if any, expenses incurred in
connection with any merger or reorganization and extraordinary expenses)
through August 29,
2024 to ensure that Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement do not exceed the following limits:
Class I – 0.99%, Class A – 1.24%, and Class Z – 0.99%. The agreement may only be
terminated with the consent of the Board of
Trustees.
Example.
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The example assumes that you invest $10,000 in
the Fund for the time periods indicated and then redeem all of your shares at
the end of those periods. The example also assumes that your investment has a 5%
return each year and that the Fund’s operating expenses remain the same, taking
into account the fee waiver/expense reimbursement in effect for the first year
only. Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
I |
$101 |
$1,060 |
$2,026 |
$4,478 |
Class
A |
$645 |
$1,598 |
$2,554 |
$4,958 |
Class
Z |
$101 |
$1,060 |
$2,026 |
$4,478 |
Portfolio
Turnover.
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 78% of the average value of its
portfolio.
Principal Investment
Strategy. The Fund normally invests at least 80% of its net assets
plus borrowings for investment purposes in equity securities of non-U.S. small
capitalization companies, which may include companies located or operating in
developed or emerging markets. Hotchkis & Wiley Capital Management, LLC (the
“Advisor”) determines where a company is located, and thus whether a company is
located outside the U.S. or in an emerging market, by referring to: (i) its
primary stock exchange listing; (ii) where it is registered, organized or
incorporated; (iii) where its headquarters are located; (iv) where it derives at
least 50% of its revenues or profits from goods produced or sold, investments
made, or services performed; or (v) where at least 50% of its assets are
located. The Fund will allocate its assets among various regions and countries
(but in no less than three different countries). From time to time, a
substantial portion of the Fund’s assets may be invested in companies located in
a single country.
Small capitalization companies are defined as
those companies that have market capitalizations not greater than that of the
largest company included in the MSCI World ex-USA Small Cap Index (the “Index”)
at the time of investment. The Index is a free-float adjusted market
capitalization-weighted index that is designed to measure the equity market
performance of smaller capitalization stocks in developed
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HOTCHKIS
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Fund
Summary: Hotchkis & Wiley Funds
markets,
excluding the U.S. market. The market capitalization range of the Index changes
constantly, but as of June 30, 2023, the total market capitalization of the
largest company included in the Index was $23.4 billion. Securities of companies
whose market capitalizations no longer meet this definition after purchase may
continue to be held in the Fund.
In
addition to purchasing equity securities on exchanges where the companies are
located, the Fund may purchase equity securities on exchanges other than where
their companies are domiciled (often traded as dual listed securities) or in the
form of Depositary Receipts, which include American Depositary Receipts
(“ADRs”), Global Depositary Receipts (“GDRs”) or similar securities. The Fund
will invest primarily in companies located in developed countries, but may
invest up to 20% of its assets in emerging markets.
The
Fund intends to invest a significant portion of its assets in companies in the
industrial and financial sectors.
The
Fund may enter into currency contracts (such as spot, forward and futures) to
hedge foreign currency exposure.
The
Fund seeks to invest in companies whose future prospects are misunderstood or
not fully recognized by the market. The Fund employs a fundamental value
investing approach which seeks to exploit market inefficiencies created by
irrational investor behavior. To identify these investment opportunities, the
Fund employs a disciplined, bottom-up investment process based on a proprietary
model that is augmented with internally-generated fundamental research. The Fund
seeks broad diversified exposure to these investment opportunities by, under
normal conditions and after the Fund achieves sufficient scale, holding equity
securities of approximately 250 to 300 different companies. As part of the
Advisor's investment process, the investment team evaluates the general and
industry-specific Environmental, Social, and Governance (“ESG”) factors that the
Advisor believes to be the most financially material to a company's short-,
medium-, and long-term enterprise value. The Advisor believes this evaluation
contributes to its overall analysis of a company’s value creation for
shareholders and future financial performance. With the exception of
diversification guidelines, the Fund does not employ pre-determined rules for
sales; rather, the Fund evaluates each sell candidate based on the candidate’s
specific risk and return characteristics which include: 1) relative
valuation; 2) fundamental operating trends; 3) deterioration of fundamentals;
and 4) portfolio diversification.
Principal Investment
Risks. As with any mutual fund, the value of the Fund’s
investments, and therefore the value of its shares, may go down and you could
lose all or a portion of your investment in the Fund. Many
factors can affect those values. The factors that are most likely to have a
material effect on the Fund’s portfolio as a whole are called “principal risks.”
The principal risks of investing in the Fund are described in this
section.
Market
Risk.
Market risk is the risk that the market price of securities owned by the Fund
may go down, sometimes rapidly or unpredictably, due to factors affecting
securities markets generally or particular
industries
represented in the securities markets. Adverse market events or investor
sentiment may also lead to increased shareholder redemptions, which could cause
the Fund to experience a loss or difficulty in selling investments to meet such
redemptions. Local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, financial
crises, recessions, or other events may also lead to increased shareholder
redemptions, which could cause the Fund to experience a loss or difficulty in
selling investments to meet such redemptions.
Style
Risk.
The Advisor follows an investing style that favors value investments. Value
investing style may over time go in and out of favor in certain market cycles.
At times when the value investing style is out of favor the Fund’s performance
may be negatively impacted. Investors should be prepared to tolerate volatility
in Fund returns.
Equity
Securities Risk.
Equity securities, both common and preferred stocks, have greater price
volatility than fixed income securities. The market price of equity securities
owned by the Fund may go down, sometimes rapidly or unpredictably. Equity
securities may decline in value due to factors affecting equity securities
markets generally or particular industries represented by those
markets.
Small
and Mid-Cap Companies Risk.
Investment in small and mid-cap companies may involve more risk than investing
in larger, more established companies. Small and mid-cap companies may have
limited product lines or markets. They may be less financially secure than
larger, more established companies. They may depend on a small number of key
personnel. Should a product fail, or if management changes, or if there are
other adverse developments, the Fund’s investment in a small or mid-cap company
may lose substantial value. In addition, small and mid-cap companies may have
less access to capital markets during times of market distress.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed
investment portfolio. The Advisor invests in securities that may not necessarily
be included in the Fund’s benchmark. To the extent that the Advisor invests the
Fund’s assets in securities that are not in the Fund’s applicable benchmark
index, there is a greater risk that the Fund’s performance will deviate from
that of the benchmark. The Advisor does not seek to replicate the performance of
any index.
Industrial
Sector Risk. The
Fund may invest a significant portion of its assets in companies in the
industrial sector. The industrial sector can be significantly affected by, among
other things, worldwide economic growth, supply and demand for specific products
and services, rapid technological developments, and government
regulation.
Financial
Sector Risk.
The Fund intends to invest a significant portion of its assets in companies in
the financial sector, and therefore the performance of the Fund could be
negatively impacted by events affecting this sector. This sector can be
significantly affected by changes in interest rates, the rate of corporate and
consumer debt defaults, the availability and cost of borrowing and raising
capital, reduced credit
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HOTCHKIS
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Fund
Summary: Hotchkis & Wiley Funds
market
liquidity, regulatory changes, price competition, bank failures and other
financial crises, and general economic and market conditions. Changing interest
rates could reduce the profitability of certain types of companies in the
financial sector. Financial companies may have concentrated portfolios, such as
a high level of loans to one or more industries or sectors, which makes them
vulnerable to economic conditions that affect such industries or sectors.
Significant events may have a significant negative impact on economies and
financial markets worldwide, resulting in higher debt defaults, loan write-offs,
and government intervention, and potentially the failure of some financial
institutions, each of which would reduce investment performance of financial
sector companies held by the Fund.
Security
Selection Risk.
The Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to its benchmark.
Issuer
Risk.
The value of a security may decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer’s goods or services.
Foreign
(Non-U.S.) Investment Risk.
The Fund may invest in foreign (non-U.S.) securities and may experience more
rapid and extreme changes in value than a fund that invests exclusively in
securities of U.S. companies. The securities markets of many foreign countries
are relatively small, with a limited number of companies representing a small
number of industries. Additionally, issuers of foreign securities are usually
not subject to the same degree of regulation as U.S. issuers and investments in
securities of foreign issuers may be subject to foreign withholding and other
taxes. To the extent that the Fund invests a significant portion of its assets
in a specific geographic region or country, the Fund will have more exposure to
the investment risks associated with that region or country, although the
Advisor does not intend to focus on a specific geographic region or
country.
Adverse
political, economic or social developments, as well as U.S. and foreign
government actions such as the imposition of tariffs, economic and trade
sanctions or embargoes, could undermine the value of the Fund’s investments,
prevent the Fund from realizing the full value of its investments or prevent the
Fund from selling securities it holds.
Financial
reporting standards for companies based in foreign markets differ from those in
the U.S. Additionally, foreign securities markets generally are smaller and less
liquid than U.S. markets. To the extent that the Fund invests in non-U.S. dollar
denominated foreign securities, changes in currency exchange rates may affect
the U.S. dollar value of foreign securities or the income or gain received on
these securities.
Eurozone
Risk.
A number of countries in the European Union (“EU”) have experienced, and may
continue to experience, severe economic and financial difficulties. In
particular, many EU nations are susceptible to economic risks associated with
high levels of debt. As a result, financial markets in the EU have been subject
to increased volatility and declines in asset values and liquidity. Responses to
these financial problems by
European
governments, central banks, and others, including austerity measures and
reforms, may not work, may result in social unrest, and may limit future growth
and economic recovery or have other unintended consequences. The risk of
investing in securities in the European markets may also be heightened due to
the United Kingdom’s withdrawal from the EU (known as “Brexit”), and there is a
risk that other EU countries may pursue a similar withdrawal. To the extent that
the Fund has exposure to European markets or to transactions tied to the value
of the euro, these events could negatively affect the value and liquidity of the
Fund’s investments.
Emerging
Market Risk. Foreign
(non-U.S.) investment risk may be particularly high to the extent that the Fund
invests in emerging market securities. These securities may present market,
credit, currency, liquidity, legal, political and other risks different from, or
greater than, the risks of investing in developed foreign
countries.
In
addition to the risks of foreign securities in general, countries in emerging
markets are generally more volatile and can have relatively unstable
governments, social and legal systems that do not protect shareholders,
economies based on only a few industries and securities markets that trade a
small number of issues. Taxation, restrictions on foreign investment and on
currency convertibility and repatriation, currency fluctuations and other
developments in laws and regulations of emerging markets could result in loss to
the Fund. Inflation and rapid fluctuations in inflation rates have had, and may
continue to have, negative effects on the economies and securities markets of
certain emerging market countries. In addition, when investing in emerging
market countries, there may be differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers. Emerging securities markets may have different clearance and settlement
procedures, which may be unable to keep pace with the volume of securities
transactions or otherwise make it difficult to engage in such
transactions.
Currency
Risk.
If the Fund invests directly in foreign (non-U.S.) currencies or in securities
that trade in, and receive revenues in, foreign (non-U.S.) currencies, or in
derivatives that provide exposure to foreign (non-U.S.) currencies, it will be
subject to the risk that those currencies will decline in value relative to the
U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will
decline in value relative to the currency being hedged. As a result, the Fund’s
investments in foreign currency-denominated securities may reduce the Fund’s
returns.
Foreign
Currency Exchange Contracts Risk.
A foreign currency exchange contract involves the Fund’s purchase or sale of a
specific currency on a spot basis or at a future date at a price set at the time
of the contract. Forward contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing the Fund to sustain losses
on these contracts and transaction costs. The use of futures contracts involves
the risk of imperfect correlation in movements in the price of the futures
contracts, exchange rates and the underlying hedged assets. In addition,
although forward contracts limit the risk of loss due to a decline in the value
of the hedged currencies, at the same time they limit any potential gain that
might result should the value of the currencies
increase.
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HOTCHKIS
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Fund
Summary: Hotchkis & Wiley Funds
ADR
and GDR Risk.
American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”)
may be subject to some of the same risks as direct investment in foreign
companies, which includes international trade, currency, political, regulatory
and diplomatic risks. In a sponsored ADR arrangement, the foreign issuer assumes
the obligation to pay some or all of the depositary's transaction fees. Under an
unsponsored ADR arrangement, the foreign issuer assumes no obligations and the
depositary's transaction fees are paid directly by the ADR holders. Because
unsponsored ADR arrangements are organized independently and without the
cooperation of the issuer of the underlying securities, available information
concerning the foreign issuer may not be as current as for sponsored ADRs and
voting rights with respect to the deposited securities are not passed through.
GDRs can involve currency risk since, unlike ADRs, they may not be U.S.
dollar-denominated.
Large
Shareholder Risk.
To the extent that a significant portion of the Fund’s shares are held by a
limited number of shareholders or their affiliates, there is a risk that the
share trading activities of these shareholders could disrupt the Fund’s
investment strategies, which could have adverse consequences for the Fund and
other shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
Please
see “Fund Facts” in the Fund’s Prospectus for a more detailed description of the
risks of investing in the Fund.
Performance
The following
performance information provides some indication of the risks of investing in
the Fund by illustrating the variability of the Fund’s returns.
The bar chart shows the Fund’s performance for Class I shares. The
table, which includes all applicable fees and sales charges, shows how the
Fund’s average annual returns for 1 year and since inception compare with those
of a broad measure of market performance. The
Fund’s past performance, before and after taxes, is not necessarily an
indication of how the Fund will perform in the future. Updated
performance is available on the Fund’s website at https://www.hwcm.com/mutual-funds/resources/literature
or by calling the Fund toll-free at 1-866-HW-FUNDS (1-866-493-8637).
Calendar Year Total
Returns as of December 31
The
calendar year-to-date return for
the Fund’s Class I shares as of June 30, 2023 was
8.75%.
During
the period shown in the bar chart, the highest return for a
calendar quarter was 18.60% (quarter ended December 31, 2022)
and the lowest return for a calendar
quarter was -12.35% (quarter ended June 30,
2022).
Average
Annual Total Returns
(for
the periods ended December 31, 2022)
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| 1
Year |
Since
Inception (6/30/20) |
International
Small Cap Diversified Fund |
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Return
Before Taxes – Class I |
-8.68 |
% |
14.34 |
% |
Return
After Taxes on Distributions – Class I |
-9.48 |
% |
10.52 |
% |
Return
After Taxes on Distributions and Sale of Fund Shares – Class
I |
-4.05 |
% |
10.28 |
% |
MSCI
World ex-USA Small Cap Index (reflects no deduction for
fees, expenses or taxes) |
-20.59 |
% |
5.47 |
% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown, and
after-tax returns shown are not relevant to investors who hold their Fund shares
through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (“IRAs”). After-tax
returns are shown for only Class I. After-tax returns for other classes will
vary.
In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides a tax
deduction that benefits the
investor.
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34 |
HOTCHKIS
& WILEY FUNDS |
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Fund
Summary: Hotchkis & Wiley Funds
Management
Advisor.
Hotchkis
& Wiley Capital Management, LLC.
Portfolio
Managers.
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Investment
team member |
Primary
title with Advisor |
Started
with the Fund |
Judd
Peters, CFA |
Portfolio
Manager |
2020 |
Ryan
Thomes, CFA |
Portfolio
Manager |
2020 |
Purchase
and Sale of Fund Shares. You
may purchase, exchange or redeem Fund shares on any day the New York Stock
Exchange (“NYSE”) is open for trading by written request via mail (Hotchkis
& Wiley Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701) or through a broker-dealer or other financial
intermediary. You may also purchase Fund shares by wire transfer. You may
exchange or redeem Fund shares by telephone at 1-866-HW-FUNDS (1-866-493-8637).
The
minimum initial investment for Class I shares is $250,000. For Class A shares,
the minimum initial investment in the Fund is $2,500 for regular accounts and
$1,000 for individual retirement accounts (“IRAs”). The minimum initial
investment for Class Z shares will vary depending on the type of qualifying
investor. The minimum subsequent investment in the Fund for all share classes is
generally $100. The Fund is currently not offering Class A or Class Z shares to
investors.
Tax
Information. The
Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an IRA. Such tax-advantaged arrangements may be taxed
later upon a withdrawal from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries. If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank or financial advisor), the Fund and/or its Advisor may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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HOTCHKIS
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Fund
Summary: Hotchkis & Wiley Funds |
VALUE
OPPORTUNITIES FUND |
Investment
Objective.
The Fund seeks capital appreciation.
Fees and Expenses of the
Fund. This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You may qualify for sales charge discounts
on Class A shares if you and your family invest, or agree to invest in the
future, at least $25,000 in the Hotchkis
& Wiley Funds. More information about these and other
discounts is available from your financial professional and in the sections
titled “About Class I, Class A, Class C and Class Z Shares” beginning on page 59
of the Prospectus, in Appendix A to the Prospectus, and in “Purchase of Shares”
beginning on page 58 of the Fund’s Statement of Additional Information.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, on your purchases and sales of Class Z shares of the Fund, which
are not reflected in the tables and examples below.
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SHAREHOLDER
FEES (fees
paid directly from your investment) |
| Class I |
Class A |
Class C |
Class Z |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
None |
5.25% |
None |
None |
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase
price) |
None |
None⁽ᵃ⁾ |
1.00% |
None |
ANNUAL
FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class I |
Class A |
Class C |
Class Z |
Management
Fees |
0.75% |
0.75% |
0.75% |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
0.25% |
1.00% |
None |
Other
Expenses |
0.21% |
0.21% |
0.17% |
0.12% |
Total
Annual Fund Operating Expenses |
0.96% |
1.21% |
1.92% |
0.87% |
(a)You may be charged a
deferred sales charge of up to 0.75% if you did not pay an initial sales charge
on an investment of $1 million or more in Class A shares and you redeem your
shares within one year after
purchase.
Example.
These examples are intended to help you compare the cost
of investing in the Fund with the cost of investing in other mutual funds. The
first example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods,
followed by an example that assumes you do not redeem your Class C shares at the
end of the periods. The examples also assume
that your investment has a 5% return each year and that the Fund’s
operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would
be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
I |
$98 |
$306 |
$531 |
$1,178 |
Class
A |
$642 |
$889 |
$1,155 |
$1,914 |
Class
C |
$295 |
$603 |
$1,037 |
$2,059 |
Class
Z |
$89 |
$278 |
$482 |
$1,073 |
You would pay the following
expenses if you did not redeem your Class C shares:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
C |
$195 |
$603 |
$1,037 |
$2,059 |
Portfolio
Turnover.
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 88% of the average value of its
portfolio.
Principal Investment
Strategy. The Fund normally invests in equity securities, such as
common stock, preferred stock and convertible securities, of any size market
capitalization, and investment grade and high yield (“junk bonds”) fixed income
securities. Hotchkis & Wiley Capital Management, LLC (the “Advisor”) selects
companies that it believes have strong capital appreciation potential. The Fund
may invest in foreign (non-U.S.) securities. The Fund may enter into currency
contracts (such as spot, forward and futures) to hedge foreign currency
exposure.
The Fund seeks to invest in companies whose
future prospects are misunderstood or not fully recognized by the market. The
Fund employs a fundamental value investing approach which seeks to exploit
market inefficiencies created by irrational investor behavior. To identify these
investment opportunities, the Fund employs a disciplined, bottom-up investment
process highlighted by rigorous, internally-generated fundamental research. The
Fund may also use futures, options, swaps and other derivatives (a financial
contract with a value that depends on, or is derived from, the value of an
underlying asset, reference rate or index) as a substitute for taking a position
in the underlying asset, as part of a strategy designed to reduce exposure to
other risks and/or to manage cash. As part of the Advisor's investment process,
the investment team evaluates the general and industry-specific Environmental,
Social, and Governance (“ESG”) factors that the Advisor believes to be the most
financially material to a company's short-,
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36 |
HOTCHKIS
& WILEY FUNDS |
|
Fund
Summary: Hotchkis & Wiley Funds
medium-,
and long-term enterprise value. The Advisor believes this evaluation contributes
to its overall analysis of a company’s value creation for shareholders and
future financial performance.
The
Fund does not employ predetermined rules for sales; rather, the Fund evaluates
each sell candidate based on the candidate’s specific risk and return
characteristics which include: 1) relative valuation; 2) fundamental
operating trends; 3) deterioration of fundamentals; and 4) portfolio
diversification.
Principal Investment
Risks.
As with any mutual fund, the value of the Fund’s
investments, and therefore the value of its shares, may go down and you could
lose all or a portion of your investment in the Fund. Many
factors can affect those values. The factors that are most likely to have a
material effect on the Fund’s portfolio as a whole are called “principal risks.”
The principal risks of investing in the Fund are described in this
section.
Market
Risk.
Market risk is the risk that the market price of securities owned by the Fund
may go down, sometimes rapidly or unpredictably, due to factors affecting
securities markets generally or particular industries represented in the
securities markets. These factors include general economic, political or
financial market conditions, such as the general outlook for corporate earnings,
rates of economic growth and employment, and monetary policy, interest rates,
inflation, and currency rates. Adverse market events or investor sentiment may
also lead to increased shareholder redemptions, which could cause the Fund to
experience a loss or difficulty in selling investments to meet such redemptions.
Local, regional or global events such as war, acts of terrorism, the spread of
infectious illness or other public health issues, financial crises, recessions,
or other events may also lead to increased shareholder redemptions, which could
cause the Fund to experience a loss or difficulty in selling investments to meet
such redemptions.
Style
Risk.
The Advisor follows an investing style that favors value investments. Value
investing style may over time go in and out of favor in certain market cycles.
At times when the value investing style is out of favor the Fund's performance
may be negatively impacted. Investors should be prepared to tolerate volatility
in Fund returns.
Equity
Securities Risk.
Equity securities, both common and preferred stocks, have greater price
volatility than fixed income securities. The market price of equity securities
owned by the Fund may go down, sometimes rapidly or unpredictably. Equity
securities may decline in value due to factors affecting equity securities
markets generally or particular industries represented by those
markets.
Capitalization
Risk.
Large cap companies as a group could fall out of favor with the market, causing
the Fund to underperform investments that focus on small or mid-cap companies.
Investment in small and mid-cap companies may involve more risk than investing
in larger, more established companies. Small and mid-cap companies may have
limited product lines or markets. They may be less financially secure than
larger, more established companies. They may depend on a small number of key
personnel. Should a product fail, or if management changes, or if there are
other adverse developments, the Fund’s investment in a small
or
mid-cap company may lose substantial value. In addition, small and mid-cap
companies may be particularly affected by interest rate increases, as they may
find it more difficult to borrow money to continue or expand operations, or may
have difficulty in repaying any loans.
Fixed
Income Securities Risk.
Fixed income securities, such as bonds, involve credit risk. Credit risk is the
risk that the borrower will not make timely payments of principal and interest.
The degree of credit risk depends on the issuer’s financial condition and on the
terms of the securities. Fixed income securities are also subject to interest
rate risk, income risk, and call risk.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed
investment portfolio. The Advisor invests in securities that may not necessarily
be included in the Fund’s benchmark. To the extent that the Advisor invests the
Fund’s assets in securities that are not in the Fund’s benchmark index, there is
a greater risk that the Fund’s performance will deviate from that of the
benchmark. The Advisor does not seek to replicate the performance of any index.
Financial
Sector Risk.
The Fund currently invests a significant portion of its assets in companies in
the financial sector, and therefore the performance of the Fund could be
negatively impacted by events affecting this sector. This sector can be
significantly affected by changes in interest rates, the rate of corporate and
consumer debt defaults, the availability and cost of borrowing and raising
capital, reduced credit market liquidity, regulatory changes, price competition,
bank failures and other financial crises, and general economic and market
conditions. Changing interest rates could reduce the profitability of certain
types of companies in the financial sector. Financial companies may have
concentrated portfolios, such as a high level of loans to one or more industries
or sectors, which makes them vulnerable to economic conditions that affect such
industries or sectors. Significant events may have a significant negative impact
on economies and financial markets worldwide, resulting in higher debt defaults,
loan write-offs, and government intervention, and potentially the failure of
some financial institutions, each of which would reduce investment performance
of financial sector companies held by the Fund.
Information
Technology Sector Risk. The
Fund may invest a significant portion of its assets in companies in the
information technology sector. Factors such as failure to obtain, or delays in
obtaining, financing or regulatory approval, intense competition, product
compatibility, consumer preferences, corporate capital expenditure, rapid
obsolescence, competition from alternative technologies, and research and
development of new products may significantly affect the market value of
securities of issuers in the information technology sector.
Security
Selection Risk.
The Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to its benchmark.
Non-Diversification
Risk.
The Fund is non-diversified under federal securities laws, meaning the Fund can
invest a greater portion of its assets in the securities of any one issuer than
can a diversified fund. Investing in a non-diversified mutual fund involves
greater risk than
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HOTCHKIS
& WILEY FUNDS |
37 |
Fund
Summary: Hotchkis & Wiley Funds
investing in a diversified fund because a loss resulting from the
decline in the value of one security may represent a greater portion of the
total assets of a non-diversified fund. The Fund’s share values could fluctuate
more than those of funds holding more securities in their
portfolios.
Issuer
Risk.
The value of a security may decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer’s goods or services.
Foreign
(Non-U.S.) Investment Risk.
The Fund may invest in foreign (non-U.S.) securities and may experience more
rapid and extreme changes in value than a fund that invests exclusively in
securities of U.S. companies. The securities markets of many foreign countries
are relatively small, with a limited number of companies representing a small
number of industries. Additionally, issuers of foreign securities are usually
not subject to the same degree of regulation as U.S. issuers and investments in
securities of foreign issuers may be subject to foreign withholding and other
taxes. To the extent that the Fund invests a significant portion of its assets
in a specific geographic region or country, the Fund will have more exposure to
the investment risks associated with that region or country, although the
Advisor does not intend to focus on a specific geographic region or
country.
Adverse
political, economic or social developments, as well as U.S. and foreign
government actions such as the imposition of tariffs, economic and trade
sanctions or embargoes, could undermine the value of the Fund’s investments,
prevent the Fund from realizing the full value of its investments or prevent the
Fund from selling securities it holds.
Financial
reporting standards for companies based in foreign markets differ from those in
the U.S. Additionally, foreign securities markets generally are smaller and less
liquid than U.S. markets. To the extent that the Fund invests in non-U.S. dollar
denominated foreign securities, changes in currency exchange rates may affect
the U.S. dollar value of foreign securities or the income or gain received on
these securities.
Interest
Rate Risk.
Interest rate risk is the risk that fixed income securities will decline in
value because of changes in interest rates. As nominal interest rates rise, the
value of certain fixed income securities held by the Fund is likely to decrease.
Fixed income securities with longer durations tend to be more sensitive to
changes in interest rates, usually making them more volatile than securities
with shorter durations. Interest rate changes can be sudden and unpredictable,
and the Fund may lose money as a result of movements in interest
rates.
Recent
and potential future changes in monetary policy made by central banks or
governments are likely to affect the level of interest rates. Rising interest
rates may prompt redemptions from the Fund, which may force the Fund to sell
investments at a time when it is not advantageous to do so, which could result
in losses.
Income
Risk.
The
Fund is subject to income risk, which is the risk that the Fund’s income will
decline during periods of falling interest rates. If the income is reduced,
distributions by the Fund to shareholders may be less.
Credit
Risk.
The Fund could lose money if the issuer or guarantor of a fixed income security,
or the counterparty to a derivatives contract, repurchase agreement or a loan of
portfolio securities, is unable or unwilling to make timely principal and/or
interest payments, or to otherwise honor its obligations.
Liquidity
Risk.
To the extent that a security is difficult to sell (whether because of a lack of
an active market or because of unusual market conditions), the Fund may either
be forced to accept a lower price for it or may have to continue to hold the
security. Either outcome could adversely affect Fund performance. The Fund’s
investments in illiquid securities may reduce the returns of the Fund because it
may be unable to sell the illiquid securities and/or the Fund may sell at a time
or price that is not advantageous in order to meet redemption requests.
Additionally, the market for certain investments may become illiquid under
adverse market or economic conditions independent of any specific adverse
changes in the conditions of a particular issuer which may be magnified in a
rising interest rate environment or other circumstances where redemptions from
fixed income mutual funds may be higher than normal, causing increased supply in
the market due to selling activity. In such cases, the Fund, due to limitations
on investments in illiquid securities and the difficulty in purchasing and
selling such securities or instruments, may be unable to meet redemption
requests in extreme conditions and may be unable to achieve its desired level of
exposure to a certain asset class or sector. To the extent that the Fund’s
principal investment strategies involve foreign (non-U.S.) securities,
derivatives or securities with substantial market and/or credit risk, the Fund
will tend to have increased exposure to liquidity risk.
Call
Risk.
Call risk is the risk that an issuer may exercise its right to redeem a fixed
income security earlier than its maturity (a call). Issuers may call outstanding
securities prior to their maturity for a number of reasons (e.g., declining
interest rates, changes in credit spreads and improvements in the issuer’s
credit quality). If an issuer calls a security that the Fund has invested in,
the Fund may not recoup the full amount of its initial investment and may be
forced to reinvest in lower-yielding securities, securities with greater credit
risks or securities with other, less favorable features.
High
Yield Risk.
The Fund’s investments in high yield securities and unrated securities of
similar credit quality (commonly known as “junk bonds”) may subject the Fund to
greater levels of credit, call and liquidity risk than funds that do not invest
in such securities. High yield securities are considered primarily speculative
with respect to the issuer’s continuing ability to make principal and interest
payments. While offering a greater potential opportunity for capital
appreciation and higher yields, high yield securities typically entail greater
potential price volatility and may be less liquid than higher-rated securities
of similar maturity. An economic downturn or period of rising interest rates
could adversely affect the market for these securities and reduce the Fund’s
ability to sell these securities (liquidity risk). If the issuer of a security
is in default with respect to interest or principal payments, the Fund may lose
its entire investment.
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38 |
HOTCHKIS
& WILEY FUNDS |
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Fund
Summary: Hotchkis & Wiley Funds
Currency
Risk.
If the Fund invests directly in foreign (non-U.S.) currencies or in securities
that trade in, and receive revenues in, foreign (non-U.S.) currencies, or in
derivatives that provide exposure to foreign (non-U.S.) currencies, it will be
subject to the risk that those currencies will decline in value relative to the
U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will
decline in value relative to the currency being hedged. As a result, the Fund’s
investments in foreign currency-denominated securities may reduce the returns of
the Fund.
Foreign
Currency Exchange Contracts Risk.
A
foreign currency exchange contract involves the Fund’s purchase or sale of a
specific currency on a spot basis or at a future date at a price set at the time
of the contract. Forward contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing the Fund to sustain losses
on these contracts and transaction costs. The use of futures contracts involves
the risk of imperfect correlation in movements in the price of the futures
contracts, exchange rates and the underlying hedged assets. In addition,
although forward contracts limit the risk of loss due to a decline in the value
of the hedged currencies, at the same time they limit any potential gain that
might result should the value of the currencies increase.
Credit
Ratings and Unrated Securities Risks. Rating
agencies are private services that provide ratings of the credit quality of
fixed income securities, including convertible securities. Rating agencies may
fail to make timely changes in credit ratings and an issuer’s current financial
condition may be better or worse than a rating indicates. The Fund may purchase
unrated securities (which are not rated by a rating agency and may be less
liquid) if its portfolio managers determine that the security is of comparable
quality to a rated security that the Fund may purchase. To the extent that the
Fund invests in high yield and/or unrated securities, the Fund’s success in
achieving its investment objective may depend more heavily on the portfolio
managers’ creditworthiness analysis than if the Fund invested exclusively in
higher-quality and rated securities.
Derivatives
Risk.
A derivative is a financial contract with a value that depends on, or is derived
from, the value of an underlying asset, reference rate or index. The Fund
typically uses derivatives as a substitute for taking a position in the
underlying asset, as part of a strategy designed to reduce exposure to other
risks and/or to manage cash. The Fund’s use of derivative instruments (such as
futures, swaps and structured securities) involves risks different from, and
possibly greater than, the risks associated with investing directly in
securities and other traditional investments, such as liquidity risk, interest
rate risk, market risk, credit risk and management risk. Changes in the value of
the derivative may not correlate perfectly with, and may be more sensitive to
market events than, the underlying asset, rate or index, and the Fund could lose
more than the initial amount invested. Over-the-counter (“OTC”) derivatives are
also subject to the risk that a counterparty to the transaction will not fulfill
its contractual obligations to the other party, as many of the protections
afforded to centrally-cleared derivative transactions might not be available for
OTC derivatives. For derivatives traded on an exchange or through a central
counterparty, credit risk resides with the creditworthiness of the Fund’s
clearing broker, or the
clearinghouse
itself, rather than to a counterparty in an OTC derivative
transaction.
Large
Shareholder Risk.
To the extent that a significant portion of the Fund’s shares are held by a
limited number of shareholders or their affiliates, there is a risk that the
share trading activities of these shareholders could disrupt the Fund’s
investment strategies, which could have adverse consequences for the Fund and
other shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
ADR
and GDR Risk.
American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”)
may be subject to some of the same risks as direct investment in foreign
companies, which includes international trade, currency, political, regulatory
and diplomatic risks. In a sponsored ADR arrangement, the foreign issuer assumes
the obligation to pay some or all of the depositary's transaction fees. Under an
unsponsored ADR arrangement, the foreign issuer assumes no obligations and the
depositary's transaction fees are paid directly by the ADR holders. Because
unsponsored ADR arrangements are organized independently and without the
cooperation of the issuer of the underlying securities, available information
concerning the foreign issuer may not be as current as for sponsored ADRs and
voting rights with respect to the deposited securities are not passed through.
GDRs can involve currency risk since, unlike ADRs, they may not be U.S.
dollar-denominated.
Please
see “Fund Facts” in the Fund’s Prospectus for a more detailed description of the
risks of investing in the Fund.
Performance
The following
performance information provides some indication of the risks of investing in
the Fund by illustrating the variability of the Fund’s returns.
The bar chart shows changes in the Fund’s performance from year to year for
Class I shares (the class with the longest period of annual returns). However,
the Fund’s Class A and Class C shares are subject to sales loads. Sales
loads are not reflected in the bar chart and if these amounts were reflected,
returns would be less than those shown. The table,
which includes all applicable fees and sales charges, shows how the Fund’s
average annual returns for 1, 5 and 10 years compare with those of a broad
measure of market performance and an additional index that reflects the market
sectors in which the Fund invests. The Fund’s past
performance, before and after taxes, is not necessarily an indication of how the
Fund will perform in the future. Updated performance is
available on the Fund’s website at https://www.hwcm.com/mutual-funds/resources/literature
or by calling the Fund toll-free at 1-866-HW-FUNDS (1-866-493-8637).
The inception dates for the Fund’s Class I, Class A, Class C and
Class Z shares are December 31, 2002, December 31, 2002, August 28, 2003 and
September 30, 2019, respectively. Performance of Class Z shares prior to
September 30, 2019 reflects the historical performance of the Fund’s original
share class (Class I).
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HOTCHKIS
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39 |
Fund
Summary: Hotchkis & Wiley Funds
Calendar Year Total
Returns as of December 31
The
calendar year-to-date return for
the Fund’s Class I shares as of June 30, 2023 was
12.00%.
During the period shown in the bar chart, the highest return for a
quarter was 29.15% (quarter ended December 31,
2020) and the lowest return for a quarter
was -32.99% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2022)
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| 1
Year |
5
Years |
10
Years |
Value
Opportunities Fund |
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Return
Before Taxes – Class I |
-7.88 |
% |
7.84 |
% |
11.26 |
% |
Return
After Taxes on Distributions – Class I |
-8.41 |
% |
6.22 |
% |
9.28 |
% |
Return
After Taxes on Distributions and Sale of Fund Shares – Class
I |
-4.27 |
% |
5.91 |
% |
8.64 |
% |
Return
Before Taxes – Class A |
-12.95 |
% |
6.41 |
% |
10.38 |
% |
Return
Before Taxes – Class C |
-9.70 |
% |
6.79 |
% |
10.16 |
% |
Return
Before Taxes – Class Z |
-7.82 |
% |
7.90 |
% |
11.29 |
% |
Russell
3000®
Value Index(a)
(reflects no deduction for
fees, expenses or taxes) |
-7.98 |
% |
6.50 |
% |
10.16 |
% |
Russell
3000®
Index
(reflects
no deduction for fees, expenses or taxes) |
-19.21 |
% |
8.79 |
% |
12.13 |
% |
(a)
The Advisor believes that
the additional index reasonably represents the Fund’s investment
strategy.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown, and
after-tax returns shown are not relevant to investors who hold their Fund shares
through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (“IRAs”). After-tax
returns are shown for only Class I. After-tax returns for other classes will
vary.
In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides a tax
deduction that benefits the
investor.
Management
Advisor.
Hotchkis
& Wiley Capital Management, LLC.
Portfolio
Managers.
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Investment
team member |
Primary
title with Advisor |
Started
with the Fund |
George
H. Davis, Jr. |
Executive
Chairman and Portfolio Manager |
2002 |
David
Green, CFA |
Portfolio
Manager |
2002 |
Purchase
and Sale of Fund Shares. You
may purchase, exchange or redeem Fund shares on any day the New York Stock
Exchange (“NYSE”) is open for trading by written request via mail (Hotchkis
& Wiley Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701) or through a broker-dealer or other financial
intermediary. You may also purchase Fund shares by wire transfer. You may
exchange or redeem Fund shares by telephone at 1-866-HW-FUNDS
(1-866-493-8637).
The
minimum initial investment for Class I shares is $250,000. For Class A and Class
C shares, the minimum initial investment in the Fund is $2,500 for regular
accounts and $1,000 for IRAs. The minimum initial investment for Class Z shares
will vary depending on the type of qualifying investor. The minimum subsequent
investment in the Fund for all share classes is generally $100.
Tax
Information. The
Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an IRA. Such tax-advantaged arrangements may be taxed
later upon a withdrawal from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries. If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank or financial advisor), the Fund and/or its Advisor may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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40 |
HOTCHKIS
& WILEY FUNDS |
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Fund
Summary: Hotchkis & Wiley Funds |
HIGH
YIELD FUND |
Investment
Objectives.
The Fund seeks high current income combined with the opportunity
for capital appreciation to maximize total return.
Fees and Expenses of the
Fund. This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Fund. You may qualify for sales charge discounts
on Class A shares if you and your family invest, or agree to invest in the
future, at least $100,000 in the Hotchkis
& Wiley Funds. More information about these and other
discounts is available from your financial professional and in the sections
titled “About Class I, Class A, Class C and Class Z Shares” beginning on page 59
of the Prospectus, in Appendix A to the Prospectus, and in “Purchase of Shares”
beginning on page 58 of the Fund’s Statement of Additional Information.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, on your purchases and sales of Class Z shares of the Fund, which
are not reflected in the tables and examples below.
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SHAREHOLDER
FEES (fees
paid directly from your investment) |
| Class I |
Class A |
Class C |
Class Z |
Maximum
Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) |
None |
3.75% |
None |
None |
Maximum
Deferred Sales Charge (Load) (as a percentage of original purchase
price) |
None |
None⁽ᵃ⁾ |
1.00% |
None |
ANNUAL
FUND OPERATING EXPENSES
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class I |
Class A |
Class C |
Class Z |
Management
Fees |
0.55% |
0.55% |
0.55% |
0.55% |
Distribution
and/or Service (12b-1) Fees |
None |
0.25% |
1.00% |
None |
Other
Expenses |
0.22% |
0.18% |
0.23% |
0.11% |
Total
Annual Fund Operating Expenses |
0.77% |
0.98% |
1.78% |
0.66% |
Fee
Waiver and/or Expense Reimbursement |
-0.07% |
-0.06% |
-0.08% |
-0.06% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(b) |
0.70% |
0.92% |
1.70% |
0.60% |
(a)You may be charged a
deferred sales charge of up to 0.75% if you did not pay an initial sales charge
on an investment of $1 million or more in Class A shares and you redeem your
shares within one year after
purchase.
(b)Hotchkis
& Wiley Capital Management, LLC has contractually agreed to waive management
fees and/or reimburse expenses (excluding sales loads, taxes, leverage interest,
brokerage commissions, acquired fund fees and expenses, if any, expenses
incurred in connection with any merger or reorganization and extraordinary
expenses) through August 29,
2024 to ensure that Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement
do
not exceed the following limits: Class I – 0.70%, Class A – 0.95%, Class C -
1.70%, and Class Z – 0.60%. The agreement may only be terminated with the
consent of the Board of Trustees.
Example.
These examples are
intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds. The first example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods, followed by an example that assumes you do
not redeem your Class C shares at the end of the periods. The examples also
assume that your investment has a 5% return each year and that the Fund’s
operating expenses remain the same, taking into account the fee waiver/expense
reimbursement in effect for the first year only. Although your
actual costs may be higher or lower, based on these assumptions, your costs
would be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
I |
$72 |
$239 |
$421 |
$948 |
Class
A |
$465 |
$670 |
$891 |
$1,526 |
Class
C |
$273 |
$552 |
$957 |
$1,877 |
Class
Z |
$61 |
$205 |
$362 |
$817 |
You would pay the following
expenses if you did not redeem your Class C shares:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Class
C |
$173 |
$552 |
$957 |
$1,877 |
Portfolio
Turnover.
The Fund pays transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio).
A higher portfolio turnover rate may indicate higher transaction costs and may
result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 36% of the average value of its
portfolio.
Principal Investment
Strategy. The
Fund normally invests at least 80% of its net assets plus borrowings for
investment purposes in a diversified portfolio of high yield securities, rated
below investment grade (i.e.,
rated below Baa by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently
rated by Standard & Poor’s (“S&P”) or Fitch Ratings (“Fitch”), or, if
unrated, determined by Hotchkis & Wiley Capital Management, LLC (the
“Advisor”) to be of comparable quality) (“junk bonds”). The Fund may also use
futures, swaps and other derivatives (a financial contract with a value that
depends on, or is derived from, the value of an underlying asset, reference rate
or index) as a substitute for taking a position in the underlying asset, as part
of a strategy designed to reduce exposure to other risks and/or to manage cash.
For purposes of the 80% test, derivatives will be valued at market value rather
than notional value. The Fund may invest in mortgage- or asset-backed
securities. The Fund may also invest in restricted securities that are sold in
private placement transactions.
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HOTCHKIS
& WILEY FUNDS |
41 |
Fund
Summary: Hotchkis & Wiley Funds
The
Fund may not invest more than 10% of its total assets in fixed income securities
rated Caa or below by Moody’s, or equivalently rated by S&P or Fitch, or, if
unrated, determined by the Advisor to be of comparable quality. The Fund may
also invest in investment grade fixed income instruments. The average portfolio
duration of the Fund normally will vary within two years (plus or minus) of the
duration of the ICE BofA BB-B U.S. High Yield Constrained Index, which as of
June 30, 2023 was 3.99 years. Duration measures the price sensitivity of a bond
to changes in interest rates, calculated by the dollar weighted average time to
maturity of a bond utilizing the present value of all future cash flows. For
example, the share price of a fund with a duration of three years would be
expected to fall approximately 3% if interest rates rose by one percentage
point.
The
Fund may invest up to 20% of its total assets in securities denominated in
foreign currencies and may invest without limit in U.S. dollar-denominated
securities of foreign issuers. The Fund may invest up to 15% of its total assets
in securities and instruments that are economically tied to emerging market
countries. The Advisor attempts to identify areas of the bond market that are
undervalued relative to the rest of the market.
In selecting securities for the Fund, the Advisor develops an
outlook for credit markets, interest rates, currency exchange rates and the
economy, analyzes individual credit and call risks, and uses other security
selection techniques. The proportion of the Fund’s assets committed to
investment in securities with particular characteristics (such as quality,
sector, interest rate or maturity) varies based on the Advisor’s outlook for the
U.S. economy and the economies of other countries in the world, the financial
markets and other factors. As part of the Advisor's investment process, the
investment team evaluates the general and industry-specific Environmental,
Social, and Governance (“ESG”) factors that the Advisor believes to be the most
financially material to a company's short-, medium-, and long-term enterprise
value. The Advisor believes this evaluation contributes to its overall analysis
of a company’s value creation for shareholders and future financial
performance.
Principal Investment
Risks.
As with any mutual fund, the value of the Fund’s
investments, and therefore the value of its shares, may go down and you could
lose all or a portion of your investment in the Fund. Many
factors can affect those values. The factors that are most likely to have a
material effect on the Fund’s portfolio as a whole are called “principal risks.”
The principal risks of investing in the Fund are described in this
section.
Market
Risk.
Market risk is the risk that the market price of securities owned by the Fund
may go down, sometimes rapidly or unpredictably, due to factors affecting
securities markets generally or particular industries represented in the
securities markets. These factors include general economic political or
financial market conditions, such as the general outlook for corporate earnings,
rates of economic growth and employment, and monetary policy, interest rates,
inflation, and currency rates. Adverse market events or investor sentiment may
also lead to increased shareholder redemptions, which could cause the Fund to
experience a loss or difficulty in selling investments to meet such
redemptions.
Local, regional or global events such as war, acts of terrorism, the spread of
infectious illness or other public health issues, financial crises, recessions,
or other events may also lead to increased shareholder redemptions, which could
cause the Fund to experience a loss or difficulty in selling investments to meet
such redemptions.
Fixed
Income Securities Risk.
Fixed income securities, such as bonds, involve credit risk. Credit risk is the
risk that the borrower will not make timely payments of principal and interest.
The degree of credit risk depends on the issuer’s financial condition and on the
terms of the securities. Fixed income securities are also subject to interest
rate risk, income risk, and call risk.
High
Yield Risk.
The Fund’s investments in high yield securities and unrated securities of
similar credit quality (commonly known as “junk bonds”) may subject the Fund to
greater levels of credit, call and liquidity risk than funds that do not invest
in such securities. High yield securities are considered primarily speculative
with respect to the issuer’s continuing ability to make principal and interest
payments. While offering a greater potential opportunity for capital
appreciation and higher yields, high yield securities typically entail greater
potential price volatility and may be less liquid than higher-rated securities
of similar maturity. An economic downturn or period of rising interest rates
could adversely affect the market for these securities and reduce the Fund’s
ability to sell these securities (liquidity risk). If the issuer of a security
is in default with respect to interest or principal payments, the Fund may lose
its entire investment.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed
investment portfolio. The Advisor invests in securities that may not necessarily
be included in the Fund’s benchmark. To the extent that the Advisor invests the
Fund’s assets in securities that are not in the Fund’s benchmark index, there is
a greater risk that the Fund’s performance will deviate from that of the
benchmark. The Advisor does not seek to replicate the performance of any
index.
Security
Selection Risk.
The Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to its benchmark.
Income
Risk.
The Fund is subject to income risk, which is the risk that the Fund’s income
will decline during periods of falling interest rates. If the income is reduced,
distributions by the Fund to shareholders may be less.
Issuer
Risk.
The value of a security may decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer’s goods or services.
Foreign
(Non-U.S.) Investment Risk.
The Fund may invest in foreign (non-U.S.) securities and may experience more
rapid and extreme changes in value than a fund that invests exclusively in
securities of U.S. companies. The securities markets of many foreign countries
are relatively small, with a limited number of companies representing a small
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42 |
HOTCHKIS
& WILEY FUNDS |
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Fund
Summary: Hotchkis & Wiley Funds
number
of industries. Additionally, issuers of foreign securities are usually not
subject to the same degree of regulation as U.S. issuers and investments in
securities of foreign issuers may be subject to foreign withholding and other
taxes. To the extent that the Fund invests a significant portion of its assets
in a specific geographic region or country, the Fund will have more exposure to
the investment risks associated with that region or country, although the
Advisor does not intend to focus on a specific geographic region or
country.
Adverse
political, economic or social developments, as well as U.S. and foreign
government actions such as the imposition of tariffs, economic and trade
sanctions or embargoes, could undermine the value of the Fund’s investments,
prevent the Fund from realizing the full value of its investments or prevent the
Fund from selling securities it holds.
Financial
reporting standards for companies based in foreign markets differ from those in
the U.S. Additionally, foreign securities markets generally are smaller and less
liquid than U.S. markets. To the extent that the Fund invests in non-U.S. dollar
denominated foreign securities, changes in currency exchange rates may affect
the U.S. dollar value of foreign securities or the income or gain received on
these securities.
Interest
Rate Risk.
Interest rate risk is the risk that fixed income securities will decline in
value because of changes in interest rates. As nominal interest rates rise, the
value of certain fixed income securities held by the Fund is likely to decrease.
Fixed income securities with longer durations tend to be more sensitive to
changes in interest rates, usually making them more volatile than securities
with shorter durations. Interest rate changes can be sudden and unpredictable,
and the Fund may lose money as a result of movements in interest rates. Recent
and potential future changes in monetary policy made by central banks or
governments are likely to affect the level of interest rates. Rising interest
rates may prompt redemptions from the Fund, which may force the Fund to sell
investments at a time when it is not advantageous to do so, which could result
in losses.
Credit
Risk.
The Fund could lose money if the issuer or guarantor of a fixed income security,
or the counterparty to a derivatives contract, repurchase agreement or a loan of
portfolio securities, is unable or unwilling to make timely principal and/or
interest payments, or to otherwise honor its obligations.
Call
Risk.
Call risk is the risk that an issuer may exercise its right to redeem a fixed
income security earlier than its maturity (a call). Issuers may call outstanding
securities prior to their maturity for a number of reasons (e.g., declining
interest rates, changes in credit spreads and improvements in the issuer’s
credit quality). If an issuer calls a security that the Fund has invested in,
the Fund may not recoup the full amount of its initial investment and may be
forced to reinvest in lower-yielding securities, securities with greater credit
risks or securities with other, less favorable features.
Liquidity
Risk.
To the extent that a security is difficult to sell (whether because of a lack of
an active market or because of unusual market conditions), the Fund may either
be forced to accept a lower price for it
or
may have to continue to hold the security. Either outcome could adversely affect
Fund performance. The Fund’s investments in illiquid securities may reduce the
returns of the Fund because it may be unable to sell the illiquid securities
and/or the Fund may sell at a time or price that is not advantageous in order to
meet redemption requests. Additionally, the market for certain investments may
become illiquid under adverse market or economic conditions independent of any
specific adverse changes in the conditions of a particular issuer which may be
magnified in a rising interest rate environment or other circumstances where
redemptions from fixed income mutual funds may be higher than normal, causing
increased supply in the market due to selling activity. In such cases, the Fund,
due to limitations on investments in illiquid securities and the difficulty in
purchasing and selling such securities or instruments, may be unable to meet
redemption requests in extreme conditions and may be unable to achieve its
desired level of exposure to a certain sector. To the extent that the Fund’s
principal investment strategies involve foreign (non-U.S.) securities,
derivatives or securities with substantial market and/or credit risk, the Fund
will tend to have increased exposure to liquidity risk.
The
Fund may invest in restricted securities, including unregistered securities
eligible for resale without registration pursuant to Rule 144A (“Rule 144A
Securities”) and privately-placed securities of U.S. and non-U.S. issuers
offered outside the U.S. without registration with the U.S. Securities and
Exchange Commission pursuant to Regulation S (“Regulation S Securities”) under
the 1933 Act. Rule 144A Securities and Regulation S Securities may be freely
traded among certain qualified institutional investors, such as the Fund, but
whose resale in the U.S. is permitted only in limited circumstances.
Derivatives
Risk.
A derivative is a financial contract with a value that depends on, or is derived
from, the value of an underlying asset, reference rate or index. The Fund
typically uses derivatives as a substitute for taking a position in the
underlying asset, as part of a strategy designed to reduce exposure to other
risks and/or manage cash. The Fund’s use of derivative instruments (such as
futures, swaps and structured securities) involves risks different from, and
possibly greater than, the risks associated with investing directly in
securities and other traditional investments, such as liquidity risk, interest
rate risk, market risk, credit risk and management risk. Changes in the value of
the derivative may not correlate perfectly with, and may be more sensitive to
market events than, the underlying asset, rate or index, and the Fund could lose
more than the initial amount invested. Over-the-counter (“OTC”) derivatives are
also subject to the risk that a counterparty to the transaction will not fulfill
its contractual obligations to the other party, as many of the protections
afforded to centrally-cleared derivative transactions might not be available for
OTC derivatives. For derivatives traded on an exchange or through a central
counterparty, credit risk resides with the creditworthiness of the Fund’s
clearing broker, or the clearinghouse itself, rather than to a counterparty in
an OTC derivative transaction.
Mortgage-Related
and Other Asset-Backed Securities Risk.
Generally, rising interest rates tend to extend the duration of fixed rate
mortgage-related securities, making them more sensitive to changes in interest
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HOTCHKIS
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Fund
Summary: Hotchkis & Wiley Funds
rates.
As a result, in a period of rising interest rates, if the Fund holds
mortgage-related securities, it may exhibit additional volatility. This is known
as extension risk. In addition, adjustable and fixed rate mortgage-related
securities are subject to prepayment risk. When interest rates decline,
borrowers may pay off their mortgages sooner than expected. This can reduce the
returns of the Fund because the Fund may have to reinvest that money at the
lower prevailing interest rates. Asset-backed securities are subject to risks
similar to those associated with mortgage-related securities.
Contingent
Convertible Securities Risk.
The
risks of investing in contingent convertible securities include the risk that
interest payments will be cancelled by the issuer or a regulatory authority, the
risk of ranking junior to other creditors in the event of a liquidation or other
bankruptcy-related event as a result of holding subordinated debt, the risk of
the Fund’s investment becoming further subordinated as a result of conversion
from debt to equity, the risk that principal amount due can be written down to a
lesser amount, and the general risks applicable to fixed income investments,
including interest rate risk, credit risk, market risk and liquidity risk, any
of which could result in losses to the Fund.
Emerging
Market Risk. Foreign
investment risk may be particularly high to the extent that the Fund invests in
emerging market securities that are economically tied to countries with
developing economies. These securities may present market, credit, currency,
liquidity, legal, political and other risks different from, or greater than, the
risks of investing in developed foreign countries. In addition to the risks of
foreign securities in general, countries in emerging markets are generally more
volatile and can have relatively unstable governments, social and legal systems
that do not protect shareholders, economies based on only a few industries and
securities markets that trade a small number of issues. Taxation, restrictions
on foreign investment and on currency convertibility and repatriation, currency
fluctuations and other developments in laws and regulations of emerging markets
could result in loss to the Fund. Inflation and rapid fluctuations in inflation
rates have had, and may continue to have, negative effects on the economies and
securities markets of certain emerging market countries. In addition, when
investing in emerging market countries, there may be differences in auditing and
financial reporting standards, which may result in unavailability of material
information about issuers. Emerging securities markets may have different
clearance and settlement procedures, which may be unable to keep pace with the
volume of securities transactions or otherwise make it difficult to engage in
such transactions.
Currency
Risk.
If the Fund invests directly in foreign (non-U.S.) currencies or in securities
that trade in, and receive revenues in, foreign (non-U.S.) currencies, or in
derivatives that provide exposure to foreign (non-U.S.) currencies, it will be
subject to the risk that those currencies will decline in value relative to the
U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will
decline in value relative to the currency being hedged. As a result, the Fund’s
investments in foreign currency-denominated securities may reduce the returns of
the Fund.
Credit
Ratings and Unrated Securities Risk. Rating
agencies are private services that provide ratings of the credit quality of
fixed income
securities,
including convertible securities. Rating agencies may fail to make timely
changes in credit ratings and an issuer’s current financial condition may be
better or worse than a rating indicates. The Fund may purchase unrated
securities (which are not rated by a rating agency and may be less liquid) if
its portfolio managers determine that the security is of comparable quality to a
rated security that the Fund may purchase. To the extent that the Fund invests
in high yield and/or unrated securities, the Fund’s success in achieving its
investment objective may depend more heavily on the portfolio managers’
creditworthiness analysis than if the Fund invested exclusively in
higher-quality and rated securities.
Leverage
Risk.
Leverage risk is the risk that certain transactions of the Fund, such as the use
of when-issued, delayed delivery or forward commitment transactions or
derivative instruments, may give rise to leverage, magnifying gains and losses
and causing the Fund to be more volatile than if it had not been leveraged. This
means that leverage entails a heightened risk of loss.
Large
Shareholder Risk.
To the extent that a significant portion of the Fund’s shares are held by a
limited number of shareholders or their affiliates, there is a risk that the
share trading activities of these shareholders could disrupt the Fund’s
investment strategies, which could have adverse consequences for the Fund and
other shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
LIBOR
Transition Risk.
The Fund may invest in securities or derivatives that previously utilized the
London Interbank Offered Rate (“LIBOR”) as the reference or benchmark rate for
variable interest rate calculations. The publication of LIBOR rates ceased for
U.S. dollar (USD) LIBOR rates in June 2023. The transition process from LIBOR to
the Secured Overnight Financing Rate ("SOFR") for USD LIBOR rates has become
increasingly well defined, especially following the signing of the federal
Adjustable Interest Rate (LIBOR) Act of 2021 and the Federal Reserve Board's
adoption of implementing regulations in December 2022, which replaced LIBOR
based benchmark rates in instruments with no, or insufficient, alternative rate
setting provisions with a SOFR based rate following the cessation of LIBOR.
There is no assurance that the composition or characteristics of any such
alternative reference rate will be similar to or produce the same value or
economic equivalence as LIBOR or that it will have the same volume or liquidity
as did LIBOR prior to its discontinuance or unavailability, which may affect the
value or liquidity of, or return on, certain of the Fund's investments.
Please
see “Fund Facts” in the Fund’s Prospectus for a more detailed description of the
risks of investing in the Fund.
Performance
The following
performance information provides some indication of the risks of investing in
the Fund by illustrating the variability of the Fund’s returns.
The bar chart shows changes in the Fund’s performance from year to year for
Class I shares (the class with the longest period of annual returns). However,
the Fund’s Class A and Class C shares are subject to sales loads. Sales loads are not reflected in the bar chart and
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HOTCHKIS
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Fund
Summary: Hotchkis & Wiley Funds
if these amounts were reflected, returns would be less than those
shown. The table, which includes all
applicable fees and sales charges, shows how the Fund’s average annual returns
for 1, 5 and 10 years compare with those of a broad measure of market
performance. The Fund’s past performance,
before and after taxes, is not necessarily an indication of how the Fund will
perform in the future. Updated performance is available on the
Fund’s website at https://www.hwcm.com/mutual-funds/resources/literature
or by calling the Fund toll-free at 1-866-HW-FUNDS (1-866-493-8637).
The
inception dates for the Fund’s Class I, Class A, Class C and Class Z shares are
March 31, 2009, May 29, 2009, December 31, 2012 and March 29, 2018,
respectively. Performance figures prior to the inception date of the Class C and
Class Z shares reflect the historical performance of the Fund’s original share
class (Class I) adjusted to reflect the higher operating expenses of Class C
shares.
Calendar Year Total
Returns as of December 31
The
calendar year-to-date return for
the Fund’s Class I shares as of June 30, 2023 was
5.79%.
During the period shown in the bar chart, the highest return for a
calendar quarter was 10.22% (quarter ended June 30, 2020)
and the lowest return for a calendar
quarter was -17.19% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2022)
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| 1
Year |
5
Years |
10
Years |
High
Yield Fund |
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| |
Return
Before Taxes – Class I |
-9.80 |
% |
1.13 |
% |
3.40 |
% |
Return
After Taxes on Distributions – Class I |
-11.70 |
% |
-1.09 |
% |
0.87 |
% |
Return
After Taxes on Distributions and Sale of Fund Shares – Class
I |
-5.77 |
% |
-0.05 |
% |
1.50 |
% |
Return
Before Taxes – Class A |
-13.50 |
% |
0.05 |
% |
2.71 |
% |
Return
Before Taxes – Class C |
-11.48 |
% |
0.14 |
% |
2.37 |
% |
Return
Before Taxes – Class Z |
-9.70 |
% |
1.22 |
% |
3.44 |
% |
ICE
BofA BB-B U.S. High Yield Constrained Index (reflects no deduction for
fees, expenses or taxes) |
-10.53 |
% |
2.32 |
% |
3.94 |
% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown, and
after-tax returns shown are not relevant to investors who hold their Fund shares
through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (“IRAs”). After-tax
returns are shown for only Class I. After-tax returns for other classes will
vary.
In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides a tax
deduction that benefits the
investor.
Management
Advisor.
Hotchkis
& Wiley Capital Management, LLC.
Portfolio
Managers.
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Investment
team member |
Primary
title with Advisor |
Started
with the Fund |
Ray
Kennedy, CFA |
Portfolio
Manager |
2009 |
Mark
Hudoff |
Portfolio
Manager |
2009 |
Patrick
Meegan, CFA |
Portfolio
Manager |
2012 |
Richard
Mak, CFA |
Portfolio
Manager |
2014 |
Purchase
and Sale of Fund Shares. You
may purchase, exchange or redeem Fund shares on any day the New York Stock
Exchange (“NYSE”) is open for trading by written request via mail (Hotchkis
& Wiley Funds, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701) or through a broker-dealer or other financial
intermediary. You may also purchase Fund shares by wire transfer. You
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HOTCHKIS
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Fund
Summary: Hotchkis & Wiley Funds
may
exchange or redeem Fund shares by telephone at 1-866-HW-FUNDS
(1-866-493-8637).
The
minimum initial investment for Class I shares is $250,000. For Class A and Class
C shares, the minimum initial investment in the Fund is $2,500 for regular
accounts and $1,000 for IRAs. The minimum initial investment for Class Z shares
will vary depending on the type of qualifying investor. The minimum subsequent
investment in the Fund for all share classes is generally $100.
Tax
Information. The
Fund’s distributions are taxable, and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an IRA. Such tax-advantaged arrangements may be taxed
later upon a withdrawal from those arrangements.
Payments
to Broker-Dealers and Other Financial Intermediaries. If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank or financial advisor), the Fund and/or its Advisor may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
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HOTCHKIS
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Fund
Facts |
ABOUT
THE FUNDS |
This
section provides additional information about the following series of Hotchkis
& Wiley Funds (the “Trust”), each series a “Fund” and collectively, the
“Funds”:
•Hotchkis
& Wiley Diversified Value Fund (“Diversified Value Fund”)
•Hotchkis
& Wiley Large Cap Value Fund (“Large Cap Value Fund”)
•Hotchkis
& Wiley Mid-Cap Value Fund (“Mid-Cap Value Fund”)
•Hotchkis
& Wiley Small Cap Value Fund (“Small Cap Value Fund”)
•Hotchkis
& Wiley Small Cap Diversified Value Fund (“Small Cap Diversified Value
Fund”)
•Hotchkis
& Wiley Global Value Fund (“Global Value Fund”)
•Hotchkis
& Wiley International Value Fund (“International Value Fund”)
•Hotchkis
& Wiley International Small Cap Diversified Value Fund (“International Small
Cap Diversified Value Fund”)
•Hotchkis
& Wiley Value Opportunities Fund (“Value Opportunities Fund”)
•Hotchkis
& Wiley High Yield Fund (“High Yield Fund”)
Fundamental
and Non-Fundamental Investment Policies
Each
Fund’s investment objective(s) is a fundamental policy that cannot be changed by
action of the Board of Trustees of Hotchkis & Wiley Funds (the “Trust’)
without shareholder approval.
The
Large Cap Value Fund, Mid-Cap Value Fund, Small Cap Value Fund, Small Cap
Diversified Value Fund, International Small Cap Diversified Value Fund and High
Yield Fund will provide 60 days’ prior written notice to shareholders of a
change in the Fund’s non-fundamental policy of investing at least 80% of its net
assets plus borrowings for investment purposes in the type of investments
suggested by the Fund’s name. For purposes of any 80% non-fundamental policy,
equity securities shall include without limitation exchange-traded funds
(“ETFs”) that have an investment strategy similar to the Fund’s or that
otherwise are permitted investments of the Fund.
Please
see “Investment Restrictions” in the SAI for additional information about the
Funds’ fundamental and non-fundamental investment policies.
All
Funds
ESG
Factors
As
part of the Advisor's investment process, the investment team evaluates the
general and industry-specific Environmental, Social, and Governance (“ESG”)
factors that the Advisor believes to be the most financially material to a
company's short-, medium-, and long-term enterprise value. The Advisor believes
this evaluation contributes to its overall analysis of a company's value
creation for shareholders and future financial performance.
The
Advisor utilizes data from company filings, various third-party sources, as well
as information from engagement with company management, in its ESG evaluation
process. The investment team analyzes a company's ESG factors as part of its
proprietary fundamental risk ratings process. Material ESG risks and
opportunities are reflected in these ratings, which influence investment
decisions. The weight given to any particular ESG factor may vary depending upon
a company's industry and may change over time.
The
fundamental risk ratings, which include ESG factors, are one of many inputs
considered by the investment team in evaluating whether to buy, sell or hold the
company for the Fund's portfolio.
Across
industries, the investment team evaluates common corporate ESG factors,
including but not limited to those listed below.
Environmental:
greenhouse gas emissions, energy management, and water management.
Social:
recruitment and management of a global, diverse, and skilled workforce,
community relations, product safety, and labor practices.
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Governance:
composition and structure of the board of directors, executive management's
compensation level and structure, competitive behavior, systematic risk
management, and business ethics.
Money
Market Investments
To
meet redemptions and when waiting to invest cash receipts, the Funds may invest
in short-term, investment grade bonds, money market mutual funds and other money
market instruments. To the extent that a Fund invests in a money market mutual
fund, there will be some duplication of expenses because the Fund would bear its
pro rata portion of such money market mutual fund’s advisory fees and
operational expenses.
Temporary
Defensive Investments
A
Fund temporarily can invest up to 100% of its assets in short-term, investment
grade bonds, money market mutual funds and other money market instruments in
response to adverse market, economic or political conditions. A Fund may not
achieve its objective using this type of investing.
Value
Investing
The
Advisor follows a value style that emphasizes owning select securities that, in
the opinion of the Advisor, offer exceptional value independent of whether those
securities are represented in the Funds’ respective benchmarks. The Advisor
believes that value investment strategies provide greater risk-adjusted returns
than growth investment strategies. Additionally, the Advisor believes that over
the long term, investors are better served owning low-expectation stocks that
trade at discounts to the value of their future cash flows than high-expectation
stocks that trade at premiums. The Advisor identifies these investment
opportunities by employing a disciplined, bottom-up research process that
emphasizes internally generated fundamental research whose consistent
application seeks to maximize long-term performance.
The
Diversified Value Fund, Large Cap Value Fund, Mid-Cap Value Fund, Small Cap
Value Fund, Small Cap Diversified Value Fund, Global Value Fund, International
Value Fund, International Small Cap Diversified Value Fund and Value
Opportunities Fund emphasize these characteristics in different degrees
depending on investment objective(s) and market capitalization focus. These
Funds’ holdings may differ significantly from their respective
benchmarks.
Percentage
Investment Limitations
Unless
otherwise stated, all percentage limitations on Fund investments listed in this
Prospectus will apply at the time of investment. A Fund would not violate these
limitations unless an excess or deficiency occurs or exists immediately after
and as a result of an investment.
What
are the main risks of investing in the Funds?
As
with any mutual fund, the value of a Fund’s investments, and therefore the value
of its shares, may go down and you could lose all or a portion of your
investment in the Fund. Many factors can affect those values. The factors that
are most likely to have a material effect on a Fund’s portfolio as a whole are
called “principal risks.” The principal risks of investing in a Fund, which
could adversely affect its net asset value (“NAV”), yield and total return, are
described in this section. A Fund may be subject to additional risks other than
those described below because the types of investments made by the Fund can
change over time. We cannot guarantee that a Fund will achieve its investment
objective(s) or that the Fund’s performance will be positive for any period of
time. Historically, there have been extended periods of time in which certain
Funds have not achieved their investment objective(s).
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HOTCHKIS
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Each
Fund’s principal risks are listed below:
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| Diversified
Value Fund |
Large
Cap Value Fund |
Mid-Cap
Value Fund |
Small
Cap Value Fund |
Small
Cap Diversified Value Fund |
Global
Value Fund |
International Value Fund |
International
Small Cap Diversified Value Fund |
Value
Opportunities Fund |
High
Yield Fund |
Active
Management Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
X |
ADRs
and GDRs Risk |
X |
X |
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|
X |
X |
X |
X |
|
Call
Risk |
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| X |
X |
Capitalization
Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
|
Contingent
Convertible Securities Risk |
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| X |
Credit
Ratings and Unrated Securities Risks |
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X |
X |
Credit
Risk |
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X |
X |
Currency
Risk |
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X |
X |
X |
X |
X |
Derivatives
Risk |
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X |
X |
Emerging
Market Risk |
|
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|
X |
X |
X |
|
X |
Equity
Securities Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
|
ESG
Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
X |
Eurozone
Risk |
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X |
X |
X |
| |
Financial
Sector Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
|
Fixed
Income Securities Risk |
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X |
X |
Foreign
(Non-U.S.) Investment Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
X |
Foreign
Currency Exchange Contracts Risk |
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| X |
X |
X |
X |
|
High
Yield Risk |
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X |
X |
Income
Risk |
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| X |
X |
Industrial
Sector Risk |
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X |
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| X |
| |
Information
Technology Sector Risk |
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| X |
|
Interest
Rate Risk |
|
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X |
X |
Issuer
Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
X |
Large
Shareholder Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
X |
Leverage
Risk |
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X |
LIBOR
Transition Risk |
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| X |
Liquidity
Risk |
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| X |
X |
Market
Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
X |
Mortgage-Related
and Other Asset-Backed Securities Risk |
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X |
Non-Diversification
Risk |
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X |
|
Security
Selection Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
X |
Style
Risk |
X |
X |
X |
X |
X |
X |
X |
X |
X |
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Active
Management Risk
The
Funds are subject to management risk because they are actively managed
investment portfolios. The Advisor invests in securities that may not
necessarily be included in a Fund’s benchmark. To the extent that the Advisor
invests a Fund’s assets in securities that are not in the Fund’s applicable
benchmark index, there is a greater risk that the Fund’s performance will
deviate from that of the benchmark. The Advisor does not seek to replicate the
performance of any index. The Advisor will apply investment techniques and risk
analyses in making investment decisions for the Funds, but there can be no
guarantee that these decisions will produce the desired results. Additionally,
legislative, regulatory or tax developments may affect the investment techniques
available to the portfolio managers in connection with managing the Funds and
may also adversely affect the ability of the Funds to achieve their investment
objectives. Consequently, the Funds are subject to the risks that the methods
and analysis employed by the Advisor may not produce the desired results and
result in losses to the Funds.
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HOTCHKIS
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American
Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”)
Risk
ADRs
are certificates that evidence ownership of shares of a foreign issuer and are
alternatives to purchasing directly the underlying foreign securities in their
national markets and currencies. GDRs are certificates issued by an
international bank that generally are traded and denominated in the currencies
of countries other than the home country of the issuer of the underlying shares.
ADRs and GDRs may be subject to certain of the risks associated with direct
investments in the securities of foreign companies, such as currency, political,
economic and market risks, because their values depend on the performance of the
non-dollar denominated underlying foreign securities.
Certain
countries may limit the ability to convert ADRs into the underlying foreign
securities and vice versa, which may cause the securities of the foreign company
to trade at a discount or premium to the market price of the related ADR. ADRs
may be purchased through sponsored or unsponsored facilities. A sponsored
facility is established jointly by a depositary and the issuer of the underlying
security. A depositary may establish an unsponsored facility without
participation by the issuer of the deposited security. Unsponsored receipts may
involve higher expenses and may be less liquid. Holders of unsponsored ADRs
generally bear all the costs of such facilities, and the depositary of an
unsponsored facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through voting rights to the holders of such receipts in respect of the
deposited securities.
GDRs
can involve currency risk since, unlike ADRs, they may not be U.S. dollar
denominated. A Fund’s NAV could decline if the currency of the non-U.S. market
in which the Fund invests depreciates against the U.S. dollar, even if the value
of the Fund’s holdings, measured in the foreign currencies,
increases.
Call
Risk
Call
risk is the risk that an issuer may exercise its right to redeem a fixed income
security earlier than its maturity (a call). Issuers may call outstanding
securities prior to their maturity for a number of reasons (e.g., declining
interest rates, changes in credit spreads and improvements in the issuer’s
credit quality). If an issuer calls a security that the Fund has invested in,
the Fund may not recoup the full amount of its initial investment and may be
forced to reinvest in lower-yielding securities, securities with greater credit
risks or securities with other, less favorable features.
Capitalization
Risk
The
Global Value Fund, International Value Fund and Value Opportunities Fund invest
in companies of any size market capitalization.
The
Diversified Value Fund and Large Cap Value Fund invest in securities of large
cap companies. Large cap companies as a group could fall out of favor with the
market, causing a Fund to underperform investments that focus on small or
mid-cap companies.
The
Diversified Value Fund and Large Cap Value Fund may also invest in the
securities of mid-cap companies. The Mid-Cap Value Fund, Small Cap Value Fund,
Small Cap Diversified Value Fund and International Small Cap Diversified Value
Fund invest in the securities of small and mid-cap companies. Investment in
small and mid-cap companies may involve more risk than investing in larger, more
established companies. Small and mid-cap companies may have limited product
lines or markets. They may be less financially secure than larger, more
established companies. They may depend on a small number of key personnel.
Should a product fail, or if management changes, or if there are other adverse
developments, a Fund’s investment in a small or mid-cap company may lose
substantial value.
The
general risks associated with fixed income securities and equity securities are
particularly pronounced for securities issued by companies with small or
mid-sized market capitalizations. In addition, small and mid-cap companies may
be particularly affected by interest rate increases, as they may find it more
difficult to borrow money to continue or expand operations, or may have
difficulty in repaying any loans, and may have less access to capital markets
during times of market distress.
Contingent
Convertible Securities Risk
Contingent
convertible securities (“CoCos”) are a form of hybrid debt security issued
primarily by non-U.S. financial institutions that are intended to either convert
into equity or have their principal written down upon the occurrence of certain
“triggers.” The triggers are generally linked to regulatory capital thresholds
or regulatory actions calling into question the issuing banking institution’s
continued viability as a going-concern. CoCos’ unique equity conversion or
principal write-down features are tailored to the issuing banking institution
and its regulatory requirements.
The
risks of investing in CoCos include the risk that interest payments will be
cancelled by the issuer or a regulatory authority, the risk of ranking junior to
other creditors in the event of a liquidation or other bankruptcy-related event
as a result of holding subordinated debt, the risk of a Fund’s investment
becoming
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further
subordinated as a result of conversion from debt to equity, the risk that
principal amount due can be written down to a lesser amount, and the general
risks applicable to fixed income investments, including interest rate risk,
credit risk, market risk and liquidity risk, any of which could result in losses
to a Fund.
Credit
Ratings and Unrated Securities Risks
Rating
agencies are private services that provide ratings of the credit quality of
fixed income securities, including convertible securities. The Statement of
Additional Information (“SAI”) describes the various ratings assigned to fixed
income securities by Moody’s, S&P and Fitch. Ratings assigned by a rating
agency are not absolute standards of credit quality and do not evaluate market
risks. Rating agencies may fail to make timely changes in credit ratings and an
issuer’s current financial condition may be better or worse than a rating
indicates. Rating restrictions are reviewed at time of purchase. A Fund will not
necessarily sell a security when its rating is reduced below its rating at the
time of purchase or the Fund’s minimum rating requirements. The Advisor does not
rely solely on credit ratings, and may develop its own analysis of issuer credit
quality. A Fund may purchase unrated securities (which are not rated by a rating
agency) if its portfolio manager determines that the security is of comparable
quality to a rated security that the Fund may purchase. Unrated securities may
be less liquid than comparable rated securities and involve the risk that the
portfolio manager may not accurately evaluate the security’s comparative credit
rating. Analysis of the creditworthiness of issuers of high yield securities may
be more complex than for issuers of higher-quality fixed income securities. To
the extent that a Fund invests in high yield and/or unrated securities, a Fund’s
success in achieving its investment objectives may depend more heavily on the
portfolio managers’ creditworthiness analysis than if the Fund invested
exclusively in higher-quality and rated securities.
Credit
Risk
A
Fund could lose money if the issuer or guarantor of a fixed income security, or
the counterparty to a derivatives contract, repurchase agreement or a loan of
portfolio securities, is unable or unwilling to make timely principal and/or
interest payments, or to otherwise honor its obligations. Securities are subject
to varying degrees of credit risk, which are often reflected in credit ratings.
Municipal bonds are subject to the risk that litigation, legislation or other
political events, local business or economic conditions, or the bankruptcy of
the issuer could have a significant effect on an issuer’s ability to make
payments of principal and/or interest.
Currency
Risk
If
a Fund invests directly in foreign (non-U.S.) currencies or in securities that
trade in, and receive revenues in, foreign (non-U.S.) currencies, or in
derivatives that provide exposure to foreign (non-U.S.) currencies, it will be
subject to the risk that those currencies will decline in value relative to the
U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will
decline in value relative to the currency being hedged.
Currency
rates may fluctuate significantly over short periods of time for a number of
reasons, including changes in interest rates, intervention (or the failure to
intervene) by U.S. or foreign governments, central banks or supranational
entities such as the International Monetary Fund, or by the imposition of
currency controls or other political developments in the United States or
abroad. As a result, a Fund’s investments in foreign currency-denominated
securities may reduce the returns of a Fund.
Derivatives
Risk
A
derivative is a financial contract with a value that depends on, or is derived
from, the value of an underlying asset, reference rate or index. The various
types of derivative instruments that a Fund may use are described in detail
under “Description of the Funds, Their Investments and Risks” in the SAI. A Fund
typically uses derivatives as a substitute for taking a position in the
underlying asset and/or as part of a strategy designed to reduce exposure to
other risks, such as interest rate or currency risk. A Fund may also use
derivatives for leverage, in which case their use would involve leveraging risk.
A Fund’s use of derivative instruments (such as futures, options, swaps and
structured securities) involves risks different from, and possibly greater than,
the risks associated with investing directly in securities and other traditional
investments. Derivatives are subject to a number of risks described elsewhere in
this section, such as liquidity risk, interest rate risk, market risk, credit
risk and management risk. They also involve the risk of mispricing or improper
valuation and the risk that changes in the value of the derivative may not
correlate perfectly with the underlying asset, rate or index. Changes in the
value of the derivative may not correlate perfectly with, and may be more
sensitive to market events than, the underlying asset, rate or index, and a Fund
could lose more than the initial amount invested. Over-the-counter (“OTC”)
derivatives are also subject to the risk that a counterparty to the transaction
will not fulfill its contractual obligations to the other party, as many of the
protections afforded to centrally-cleared derivative transactions might not be
available for OTC derivatives. For derivatives traded on an exchange or through
a central counterparty, credit risk resides with the creditworthiness of a
Fund’s clearing broker, or the clearinghouse itself, rather than to a
counterparty in an OTC derivative transaction. Also, suitable derivative
transactions may not be available in all circumstances
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and
there can be no assurance that a Fund will engage in these transactions to
reduce exposure to other risks when that would be beneficial.
When
a derivative is used as a hedge against a position that a Fund holds, any loss
generated by the derivative generally should be substantially offset by gains on
the hedged investment, and vice versa. Although hedging can reduce or eliminate
losses, it can also reduce or eliminate gains. Hedges are sometimes subject to
imperfect matching between the derivative and the underlying security, and there
can be no assurance that a Fund’s hedging transactions will be
effective.
Futures.
A futures contract provides for the future sale by one party and purchase by
another party of an asset at a specified price on a specified date. Upon
entering into futures contracts, a Fund bears the risk of unexpected price
movements in the underlying asset and the risk of imperfect correlation in
movements in the price of the futures contract and the underlying asset. There
can be no assurance that a liquid secondary market will exist for any particular
futures contract at any specific time. Thus, it may not be possible to close out
a futures position. Because of low initial margin deposits made upon the opening
of a futures position, futures transactions involve substantial leverage. As a
result, relatively small movements in the price of the futures contracts can
result in substantial unrealized gains or losses. There is also the risk of loss
by a Fund of margin deposits in the event of the bankruptcy of a broker with
whom the Fund has an open position in a financial futures contract.
Options.
The Funds may purchase put options on securities to protect holdings in an
underlying or related security against a substantial decline in market value.
The Funds may purchase call options on securities and security indexes. The
purchase and writing of options involves certain risks. If a put or call option
purchased by a Fund is not sold when it has remaining value, and if the market
price of the underlying security, in the case of a put, remains equal to or
greater than the exercise price or, in the case of a call, remains less than or
equal to the exercise price, the Fund will lose its entire investment in the
option. There can be no assurance that a liquid market will exist when a Fund
seeks to close out an option position. Furthermore, if trading restrictions or
suspensions are imposed on the options markets, the Fund may be unable to close
out a position.
Swaps.
Swap agreements are two-party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
standard OTC swap transaction, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular predetermined
investments or instruments. Whether a Fund’s use of swap agreements will be
successful in furthering its investment objective will depend on the Advisor’s
ability to correctly predict whether certain types of investments are likely to
produce greater returns than other investments. The Fund bears the risk that the
Advisor will not accurately forecast future market trends or the values of
assets, reference rates, indexes, or other economic factors in establishing swap
positions for the Fund. Because they are two party contracts and because they
may have terms of greater than seven days, swap agreements may be considered to
be illiquid. Moreover, each Fund bears the risk of loss of the amount expected
to be received under a swap agreement in the event of the default or bankruptcy
of a swap agreement counterparty. The swaps market is subject to increasing
regulations, in both U.S. and non-U.S. markets. It is possible that developments
in the swaps market, including additional government regulation, could adversely
affect a Fund’s ability to terminate existing swap agreements or to realize
amounts to be received under such agreements.
Emerging
Market Risk
Foreign
(non-U.S.) investment risk may be particularly high to the extent that a Fund
invests in emerging market securities. These securities may present market,
credit, currency, liquidity, legal, political and other risks different from, or
greater than, the risks of investing in developed foreign
countries.
In
addition to the risks of foreign securities in general, countries in emerging
markets are generally more volatile and can have relatively unstable
governments, social and legal systems that do not protect shareholders,
economies based on only a few industries and securities markets that trade a
small number of issues. Taxation, restrictions on foreign investment and on
currency convertibility and repatriation, currency fluctuations and other
developments in laws and regulations of emerging markets could result in loss to
the Fund. Inflation and rapid fluctuations in inflation rates have had, and may
continue to have, negative effects on the economies and securities markets of
certain emerging market countries. In addition, when investing in emerging
market countries, there may be differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers. Emerging securities markets may have different clearance and settlement
procedures, which may be unable to keep pace with the volume of securities
transactions or otherwise make it difficult to engage in such
transactions.
Equity
Securities Risk
Equity
securities, both common and preferred stocks as well as convertible stocks and
warrants, have greater price volatility than fixed income securities. The market
price of equity securities owned by a Fund may go down, sometimes rapidly or
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unpredictably.
Equity securities may decline in value due to factors affecting equity
securities markets generally or particular industries represented by those
markets.
ESG
Risk
Incorporation
of ESG factors into a Fund's investment process may cause the Fund to make
different investments, and result in different exposures to various issuers and
industries, than funds that do not incorporate such considerations into their
strategy or investment processes. The Advisor's ESG considerations may also
result in a greater emphasis on long-term performance, which may result in the
Fund forgoing shorter-term opportunities to buy certain securities when it might
otherwise be advantageous to do so, or selling securities for ESG-related
reasons when it might not otherwise be advantageous to do so. This may affect
the Fund's performance depending on whether certain investments are in or out of
favor, and the Fund's investment performance could be different compared to
funds that do not incorporate ESG considerations.
There
are significant differences in interpretations of what it means for a company to
meet ESG criteria. The Advisor's assessment of a company may differ from that of
other funds advised by different advisers, and the Advisor's assessment of a
company's ESG factors could change over time. As a result, stocks selected by
the Advisor may not reflect the beliefs and values of any particular investor.
When evaluating an issuer, the Advisor is dependent on information or data
obtained through voluntary or third-party reporting that may be incomplete,
inaccurate, or unavailable, which could cause the Advisor to incorrectly assess
an issuer's ESG practices. Because ESG factor analysis is used as one part of
the Advisor's overall investment process, a Fund may still invest in securities
of issuers that many or all market participants view as having an unfavorable
ESG profile.
Eurozone
Risk
A
number of countries in the European Union (“EU”) have experienced, and may
continue to experience, severe economic and financial difficulties. In
particular, many EU nations are susceptible to economic risks associated with
high levels of debt. As a result, financial markets in the EU have been subject
to increased volatility and declines in asset values and liquidity. Responses to
these financial problems by European governments, central banks, and others,
including austerity measures and reforms, may not work, may result in social
unrest, and may limit future growth and economic recovery or have other
unintended consequences. The risk of investing in securities in the European
markets may also be heightened due to the United Kingdom’s withdrawal from the
EU (known as “Brexit”), and there is a risk that other EU countries may pursue a
similar withdrawal. To the extent that the Fund has exposure to European markets
or to transactions tied to the value of the euro, these events could negatively
affect the value and liquidity of the Fund’s investments.
Financial
Sector Risk
The
Diversified Value Fund, Large Cap Value Fund, Mid-Cap Value Fund, Small Cap
Value Fund, Small Cap Diversified Value Fund, Global Value Fund, International
Value Fund, International Small Cap Diversified Value Fund and Value
Opportunities Fund currently invest a significant portion of their assets in
companies in the financial sector, and therefore the performance of the Fund
could be negatively impacted by events affecting this sector. This sector can be
significantly affected by changes in interest rates, the rate of corporate and
consumer debt defaults, the availability and cost of borrowing and raising
capital, reduced credit market liquidity, regulatory changes, price competition,
bank failures and other financial crises, and general economic and market
conditions. Changing interest rates could reduce the profitability of certain
types of companies in the financial sector. Financial companies may have
concentrated portfolios, such as a high level of loans to one or more industries
or sectors, which makes them vulnerable to economic conditions that affect such
industries or sectors. Significant events may have a significant negative impact
on economies and financial markets worldwide, resulting in higher debt defaults,
loan write-offs, and government intervention, and potentially the failure of
some financial institutions, each of which would reduce investment performance
of financial sector companies held by the Fund.
Fixed
Income Securities Risk
The
Value Opportunities Fund and High Yield Fund invest in fixed income securities.
Fixed income securities, such as bonds, involve credit risk. Credit risk is the
risk that the borrower will not make timely payments of principal and interest.
The degree of credit risk depends on the issuer’s financial condition and on the
terms of the securities. Fixed income securities are also subject to interest
rate risk, income risk, and call risk.
Foreign
(Non-U.S.) Investment Risk
A
Fund may invest in foreign (non-U.S.) securities and may experience more rapid
and extreme changes in value than a fund that invests exclusively in securities
of U.S. companies. The securities markets of many foreign countries are
relatively small, with a limited number of companies representing a small number
of industries. Additionally, issuers of foreign securities are usually not
subject to the same degree of regulation as U.S. issuers and investments in
securities of foreign issuers may be subject to foreign withholding and other
taxes. Reporting, accounting and auditing standards of foreign countries differ,
in some
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cases
significantly, from U.S. standards. Also, nationalization, expropriation or
confiscatory taxation, currency blockage, political changes or diplomatic
developments could adversely affect a Fund’s investments in a foreign country.
In the event of nationalization, expropriation or other confiscation, the Fund
could lose its entire investment in foreign securities. To the extent that a
Fund invests a significant portion of its assets in a specific geographic region
or country, the Fund will have more exposure to the investment risks associated
with that region or country. Additionally, adverse conditions in a certain
region may adversely affect securities of other countries with economies that
appear to be unrelated. Adverse political, economic or social developments, as
well as U.S. and foreign government actions such as the imposition of tariffs,
economic and trade sanctions or embargoes, could undermine the value of the
Fund’s investments, prevent the Fund from realizing the full value of its
investments or prevent the Fund from selling securities it holds.
To
the extent that the Fund invests in non-U.S. dollar denominated foreign
securities, changes in currency exchange rates may affect the U.S. dollar value
of foreign securities or the income or gain received on these
securities.
Foreign
Currency Exchange Contracts
A
foreign currency exchange contract involves the Fund’s purchase or sale of a
specific currency on a spot basis or at a future date at a price set at the time
of the contract. Forward foreign currency exchange contracts reduce the Fund’s
exposure to changes in the value of the currency it will deliver and increases
its exposure to changes in the value of the currency it will receive for the
duration of the contract. The projection of short-term currency market movements
is extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Forward contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs. The use of
futures contracts involves the risk of imperfect correlation in movements in the
price of the futures contracts, exchange rates and the underlying hedged assets.
In addition, although forward contracts limit the risk of loss due to a decline
in the value of the hedged currencies, at the same time they limit any potential
gain that might result should the value of the currencies increase.
High
Yield Risk
A
Fund’s investments in high yield securities and unrated securities of similar
credit quality (commonly known as “high yield securities" or "junk bonds”) may
subject the Fund to greater levels of credit, call and liquidity risk than funds
that do not invest in such securities. While offering a greater potential
opportunity for capital appreciation and higher yields, high yield securities
typically entail greater potential price volatility and may be less liquid than
higher-rated securities. These securities are considered primarily speculative
with respect to the issuer’s continuing ability to make principal and interest
payments. They may also be more susceptible to real or perceived adverse
economic and competitive industry conditions than higher-rated securities of
similar maturity. An economic downturn or period of rising interest rates could
adversely affect the market for these securities and reduce the Fund’s ability
to sell these securities (liquidity risk). If the issuer of a security is in
default with respect to interest or principal payments, the Fund may lose its
entire investment.
High
yield securities structured as zero-coupon bonds or pay-in-kind securities tend
to be especially volatile as they are particularly sensitive to downward pricing
pressures from rising interest rates or widening spreads and may require a Fund
to make taxable distributions of imputed income without receiving the actual
cash currency. Issuers of high yield securities may have the right to “call” or
redeem the issue prior to maturity, which may result in a Fund having to
reinvest the proceeds in other high yield securities or similar instruments that
may pay lower interest rates. A Fund may also be subject to greater levels of
liquidity risk than funds that do not invest in high yield securities. In
addition, the high yield securities in which a Fund invests may not be listed on
any exchange and a secondary market for such securities may be comparatively
illiquid relative to markets for other more liquid fixed income securities.
Consequently, transactions in high yield securities may involve greater costs
than transactions in more actively traded securities. A lack of
publicly-available information, irregular trading activity and wide bid/ask
spreads among other factors, may, in certain circumstances, make high yield debt
more difficult to sell at an advantageous time or price than other types of
securities or instruments. These factors may result in a Fund being unable to
realize full value for these securities and/or may result in a Fund not
receiving the proceeds from a sale of a high yield security for an extended
period after such sale, each of which could result in losses to a Fund. Because
of the risks involved in investing in high yield securities, an investment in a
Fund that invests in such securities should be considered
speculative.
Income
Risk
Income
risk is the risk that the Fund’s income will decline during periods of falling
interest rates or when the Fund experiences defaults on debt securities it
holds. The Fund’s income declines when interest rates fall because, as the
Fund’s higher-yielding debt securities mature or are prepaid, the Fund must
re-invest the proceeds in debt securities that have lower, prevailing interest
rates. The amount and rate of distributions that the Fund’s shareholders receive
are affected by the income that the Fund receives from its portfolio holdings.
If the income is reduced, distributions by the Fund to shareholders may be
less.
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Industrial
Sector Risk
The
Small Cap Value Fund and International Small Cap Diversified Value Fund may
invest a significant portion of their assets in companies in the industrial
sector. The industrial sector can be significantly affected by, among other
things, worldwide economic growth, supply and demand for specific products and
services, rapid technological developments, and government regulation. Aerospace
and defense companies, a component of the industrial sector, can be
significantly affected by government spending policies because companies
involved in this industry rely, to a significant extent, on U.S. and foreign
government demand for their products and services. Thus, the financial condition
of, and investor interest in, aerospace and defense companies are heavily
influenced by governmental defense spending policies. Transportation securities,
a component of the industrial sector, are cyclical and have occasional sharp
price movements which may result from changes in the economy, fuel prices, labor
agreements and insurance costs.
Information
Technology Sector Risk
The
Value Opportunities Fund may invest a significant portion of its assets in the
information technology sector. Companies in the information technology sector
may be adversely affected by the failure to obtain, or delays in obtaining,
financing or regulatory approval, intense competition, both domestically and
internationally, product compatibility, consumer preferences, corporate capital
expenditure, rapid obsolescence and competition for the services of qualified
personnel. Companies in the information technology sector also face competition
or potential competition with numerous alternative technologies. The information
technology sector is subject to rapid and significant changes in technology. The
success of sector participants depends substantially on the timely and
successful introduction of new products.
Interest
Rate Risk
Interest
rate risk is the risk that fixed income securities will decline in value because
of changes in interest rates. As nominal interest rates rise, the value of
certain fixed income securities held by the Fund is likely to decrease. A
nominal interest rate can be described as the sum of a real interest rate and an
expected inflation rate. Fixed income securities with longer durations tend to
be more sensitive to changes in interest rates, usually making them more
volatile than securities with shorter durations. Interest rate changes can be
sudden and unpredictable, and the Fund may lose money as a result of movements
in interest rates. Recent and potential future changes in monetary policy made
by central banks or governments are likely to affect the level of interest
rates. Rising interest rates may prompt redemptions from the Fund, which may
force the Fund to sell investments at a time when it is not advantageous to do
so, which could result in losses.
Variable
and floating rate securities generally are less sensitive to interest rate
changes but may decline in value if their interest rates do not rise as much, or
as quickly, as interest rates in general. Conversely, floating rate securities
will not generally increase in value if interest rates decline. Inverse floating
rate securities may decrease in value if interest rates increase. Inverse
floating rate securities may also exhibit greater price volatility than a fixed
rate obligation with similar credit quality. When a Fund holds variable or
floating rate securities, a decrease (or, in the case of inverse floating rate
securities, an increase) in market interest rates will adversely affect the
income received from such securities and the NAV of a Fund’s shares.
Measures
such as average duration may not accurately reflect the true interest rate
sensitivity of a Fund. This is especially the case if the Fund consists of
securities with widely varying durations. Therefore, if a Fund has an average
duration that suggests a certain level of interest rate risk, the Fund may in
fact be subject to greater interest rate risk than the average would suggest.
This risk is greater to the extent the Fund uses leverage or derivatives in
connection with the management of the Fund.
Convexity
is an additional measure used to understand a security’s or Fund’s interest rate
sensitivity. Convexity measures the rate of change of duration in response to
changes in interest rates. With respect to a security’s price, a larger
convexity (positive or negative) may imply more dramatic price changes in
response to changing interest rates. Convexity may be positive or negative.
Negative convexity implies that interest rate increases result in increased
duration, meaning increased sensitivity in prices in response to rising interest
rates. Thus, securities with negative convexity, which may include bonds with
traditional call features and certain mortgage-backed securities, may experience
greater losses in periods of rising interest rates. Accordingly, if a Fund holds
such securities, the Fund may be subject to a greater risk of losses in periods
of rising interest rate.
Issuer
Risk
The
value of a security may decline for a number of reasons which directly relate to
the issuer, such as management performance, financial leverage and reduced
demand for the issuer’s goods or services.
Large
Shareholder Risk
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To
the extent that a significant portion of the Fund’s shares are held by a limited
number of shareholders or their affiliates, there is a risk that the share
trading activities of these shareholders could disrupt the Fund’s investment
strategies, which could have adverse consequences for the Fund and other
shareholders (e.g.,
by requiring the Fund to sell investments at inopportune times or causing the
Fund to maintain larger-than-expected cash positions pending acquisition of
investments).
Leverage
Risk
Leverage
risk is the risk that certain transactions of the Fund, such as the use of
when-issued, delayed delivery or forward commitment transactions or derivative
instruments, may give rise to leverage, magnifying gains and losses and causing
the Fund’s NAV to be more volatile than if it had not been leveraged. This means
that leverage entails a heightened risk of loss.
LIBOR
Transition Risk
The
Fund may invest in securities or derivatives that previously utilized the London
Interbank Offered Rate (“LIBOR”) as the reference or benchmark rate for variable
interest rate calculations. The publication of LIBOR rates ceased for U.S.
dollar (USD) LIBOR rates in June 2023. The transition process from LIBOR to the
Secured Overnight Financing Rate ("SOFR") for USD LIBOR rates has become
increasingly well defined, especially following the signing of the federal
Adjustable Interest Rate (LIBOR) Act of 2021 and the Federal Reserve Board's
adoption of implementing regulations in December 2022, which replaced LIBOR
based benchmark rates in instruments with no, or insufficient, alternative rate
setting provisions with a SOFR based rate following the cessation of LIBOR.
There is no assurance that the composition or characteristics of any such
alternative reference rate will be similar to or produce the same value or
economic equivalence as LIBOR or that it will have the same volume or liquidity
as did LIBOR prior to its discontinuance or unavailability, which may affect the
value or liquidity of, or return on, certain of the Fund's
investments.
Liquidity
Risk
To
the extent that a security is difficult to sell (whether because of a lack of an
active market or because of unusual market conditions), a Fund may either be
forced to accept a lower price for it or may have to continue to hold the
security. Either outcome could adversely affect Fund performance. An illiquid
security is any investment that a Fund reasonably expects cannot be sold or
disposed of in current market conditions in seven calendar days without the sale
or disposition significantly changing the market value of the investment. A
Fund’s investments in illiquid securities may reduce the returns of the Fund
because it may be unable to sell the illiquid securities and/or the Fund may
sell at a time or price that is not advantageous in order to meet redemption
requests. Additionally, the market for certain investments may become illiquid
under adverse market or economic conditions independent of any specific adverse
changes in the conditions of a particular issuer. In such cases, the Fund, due
to limitations on investments in illiquid securities and the difficulty in
purchasing and selling such securities or instruments, may be unable to achieve
its desired level of exposure to a certain sector. To the extent that a Fund’s
principal investment strategies involve foreign (non-U.S.) securities,
derivatives or securities with substantial market and/or credit risk, the Fund
will tend to have increased exposure to liquidity risk. Fixed income securities
with longer durations until maturity face heightened levels of liquidity risk as
compared to fixed income securities with shorter durations until
maturity.
Liquidity
risk also refers to the risk of unusually high redemption requests or other
unusual market conditions that may make it difficult for a Fund to sell
investments within the allowable time period to meet redemptions or may be
unable to meet redemption requests in extreme conditions. Meeting such
redemption requests could require a Fund to sell securities at reduced prices or
under unfavorable conditions, which would reduce the value of the Fund. It may
also be the case that other market participants may be attempting to liquidate
fixed income holdings at the same time as a Fund, causing increased supply in the
market and contributing to liquidity risk and downward pricing
pressure.
Restricted
securities are privately-placed securities whose resale is restricted under the
U.S. securities laws. The Fund may invest in restricted securities, including
Rule 144A Securities and Regulation S Securities which may be freely traded
among certain qualified institutional investors, such as the Fund, but whose
resale in the U.S. is permitted only in limited circumstances. While restricted
securities offer attractive investment opportunities otherwise not available on
an open market, because such securities are available to few buyers, they are
often both difficult to sell and to value.
Market
Risk
Market
risk is the risk that the market price of securities owned by the Funds may go
down, sometimes rapidly or unpredictably, due to factors affecting securities
markets generally or particular industries represented in the securities
markets. Local, regional or global events such as war, acts of terrorism, the
spread of infectious illness or other public health issues, financial crises,
recessions, or other events could have a significant impact on the Fund and its
investments. The value of a security may decline due to general economic,
political or financial market conditions which are not specifically related to a
particular company, such as real or perceived adverse economic conditions,
including changes in the general outlook for corporate earnings, rates of
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economic
growth and employment, monetary policy, interest rates, inflation, and currency
rates, or due to adverse investor sentiment generally. The value of a security
may also decline due to factors which affect a particular industry or
industries, such as labor shortages or increased production costs and
competitive conditions within an industry. During a general downturn in the
securities markets, multiple asset classes may decline in value
simultaneously.
Exchanges
and securities markets may close early, close late or issue trading halts on
specific securities, which may result in, among other things, a Fund being
unable to buy or sell certain securities or financial instruments at an
advantageous time or accurately price its portfolio investments.
Policy
changes by the U.S. Government and/or Federal Reserve, such as raising interest
rates, also could cause increased volatility in financial markets and higher
levels of shareholder redemptions, which could have a negative impact on a Fund.
Adverse market events may also lead to increased shareholder redemptions, which
could cause a Fund to experience a loss or difficulty in selling investments to
meet such redemptions.
Natural
and environmental disasters, such as earthquakes and tsunamis, can be highly
disruptive to economies and markets, adversely impacting individual companies
and industries, securities markets, interest rates, credit ratings, inflation,
investor sentiment, and other factors affecting the value of the Funds’
investments. Similarly, dramatic disruptions can be caused by communicable
diseases, epidemics, pandemics, plagues and other public health crises. The
foregoing could impair the Fund’s ability to maintain operational standards
(such as with respect to satisfying redemption requests), disrupt the operations
of the Fund’s service providers, adversely affect the value and liquidity of the
Fund’s investments, and negatively impact the Fund’s performance, and overall
prevent the Fund from implementing its investment strategies and achieving its
investment objective.
Securities
and financial markets may be susceptible to market manipulation or other
fraudulent trade practices, which could disrupt the orderly functioning of these
markets or adversely affect the values of investments traded in these markets,
including investments held by the Fund.
Mortgage-Related
and Other Asset-Backed Securities Risk
Mortgage-related
and other asset-backed securities are subject to certain additional risks.
Generally, rising interest rates tend to extend the duration of fixed rate
mortgage-related securities, making them more sensitive to changes in interest
rates. As a result, in a period of rising interest rates, if a Fund holds
mortgage-related securities, it may exhibit additional volatility. This is known
as extension risk. In addition, adjustable and fixed rate mortgage-related
securities are subject to prepayment risk. When interest rates decline,
borrowers may pay off their mortgages sooner than expected. This can reduce the
returns of the Fund because the Fund may have to reinvest that money at the
lower prevailing interest rates. A Fund’s investments in other asset-backed
securities are subject to risks similar to those associated with
mortgage-related securities, as well as additional risks associated with the
nature of the assets and the servicing of those assets.
Non-Diversification
Risk
The
Value Opportunities Fund is non-diversified under federal securities laws,
meaning the Fund can invest a greater portion of its assets in the securities of
any one issuer than can a diversified fund. Investing in a non-diversified
mutual fund involves greater risk than investing in a diversified fund because a
loss resulting from the decline in the value of one security may represent a
greater portion of the total assets of a non-diversified fund. The Fund’s share
values could fluctuate more than those of funds holding more securities in their
portfolios.
Security
Selection Risk
The
Advisor may misjudge the risk and/or return potential of a security. This
misjudgment can result in a loss or a significant performance deviation relative
to a Fund’s benchmark index or indices.
Style
Risk
The
Advisor follows an investing style that favors value investments. Value
investing style may over time go in and out of favor in certain market cycles.
At times when the value investing style is out of favor the Fund's performance
may be negatively impacted. Investors should be prepared to tolerate volatility
in Fund returns.
Non-Principal
Investment Risks
In
addition to the principal investment risks described above, the Funds may also
invest or engage in, or be subject to risks associated with, the
following:
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Operational
Risk
The
Funds are exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures. The Funds are
subject to certain operational risks associated with reliance on service
providers and service providers’ data sources, including with respect to
calculation of NAVs. Errors or systems failures and other technological issues
may adversely impact a Fund’s calculations of its NAV, and such NAV calculation
issues may result in inaccurately calculated NAVs, delays in NAV calculation
and/or the inability to calculate NAVs over extended periods. A Fund may be
unable to recover any losses associated with such failures.
The
Funds seek to reduce these operational risks through controls and procedures
believed to be reasonably designed to address these risks. However, these
controls and procedures cannot address every possible risk and may not fully
mitigate the risks that they are intended to address.
Cybersecurity
Risk
Investment
companies, including the Funds, must rely in part on digital and network
technologies (collectively, “cyber networks”) to conduct their businesses. Such
cyber networks might in some circumstances be at risk of cyber-attacks or
failures. As a result, the Funds or their service providers, or the issuers of
securities in which the Funds invest, may experience disruptions in business
operations that may potentially result in financial losses, the inability of the
Funds or Fund shareholders to transact business, the inability of the Funds to
calculate a net asset value, violations of applicable privacy and other laws
(including unauthorized access to sensitive information about the Funds or their
investors), regulatory fines, penalties, reputational damage, reimbursement or
other compensation costs and/or additional compliance costs. The Funds and their
shareholders could be negatively impacted as a result.
Other
Investments
This
Prospectus does not attempt to disclose all of the various types of securities
and investment techniques that may be used by each Fund. As with other actively
managed mutual funds, investors in the Funds rely on the professional investment
judgment and skill of the Advisor and the individual portfolio managers. Please
see “Description of the Funds, Their Investments and Risks” in the SAI for
additional information about the securities and investment techniques that may
be used by the Funds and their related risks.
Investing
in any of the Funds does not constitute a complete investment program. You
should consider the Funds as just one part of your investment program. Each Fund
may invest in a company that another Hotchkis & Wiley fund may hold. As a
result, investing in multiple Hotchkis & Wiley funds might not provide
meaningful diversification for shareholders’ investment portfolios. In addition,
holding multiple funds may result in exposure to individual companies,
industries and/or economic sectors beyond what may be appropriate for your
individual portfolio, goals and/or risk tolerance. You should contact your
investment professional for further information regarding these increased risks
and exposures.
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Each
year the Funds will send investors an annual report (along with an updated
Summary Prospectus) and a semi-annual report (or a notification of the
availability of these shareholder reports), which contain important financial
information about the Funds. To reduce expenses, we will send one annual report,
one semi-annual report and one Summary Prospectus per household, unless you
instruct us or your financial intermediary otherwise.
If
you would like further information about the Funds, including how they invest,
please see the SAI, which is available on the Funds’ website
(https://www.hwcm.com/mutual-funds/resources/literature).
The
Funds’ complete unaudited portfolio holdings as of each month-end generally will
be available by the last business day of the following month on the Funds’
website. This information will, at a minimum, remain on the Funds’ website until
the Funds’ holdings for the subsequent month-end are posted to the Funds’
website. A complete description of the Funds’ policies and procedures regarding
the disclosure of portfolio holdings can be found in the SAI.
Information
about the manner in which the Funds offer shares is set forth below in this
section and subsequent sections of the prospectus. Information relating to
eligibility to invest in a particular share class, minimum investment amounts,
special services, and sales charge reductions and waivers applies if you are
transacting directly with the Funds. Shares of the Funds are also available
through certain financial intermediaries, such as a bank or broker-dealer. If
you invest through an intermediary, you are not transacting directly with a Fund
and you must follow that intermediary’s transaction procedures which may include
different requirements to invest in a particular share class, minimum investment
amounts, special services, and sales charge reductions and waivers. Appendix A
to the prospectus sets forth a description of the sales charge reductions and
waivers, investment minimums and other requirements applicable to Fund shares
purchased through Edward Jones, Janney Montgomery Scott, Merrill Lynch, Morgan
Stanley, Oppenheimer & Co. Inc., Raymond James, and Robert W. Baird &
Co., as such information was provided to the Funds by the
intermediary.
Your
intermediary may impose charges for its services in addition to the fees charged
by the Funds. You should consult with your intermediary for information
regarding its conditions, procedures, and fees for transacting in Fund shares.
The Funds are not responsible for the implementation of any intermediary’s
transaction procedures or sales charge reductions and waivers.
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ABOUT
CLASS I, CLASS A, CLASS C and CLASS Z
SHARES |
The
Funds are available for purchase only by residents of states in which the Funds’
shares are registered for sale.
Class
I shares may be available on brokerage platforms of firms that have agreements
with the Fund’s distributor to offer such shares solely when acting as an agent
for the investor. An investor transacting in Class I shares in these programs
may be required to pay a commission and/or other forms of compensation to the
broker. Shares of the Fund may be offered in the future in other share classes
that have different fees and expenses.
Not
everyone is eligible to buy Class I or Class Z shares. Class A shares of the
International Value Fund and International Small Cap Diversified Value Fund are
not currently offered to investors. Class C shares of the Small Cap Diversified
Value Fund, Global Value Fund and International Value Fund are not currently
offered to investors, and the International Small Cap Diversified Value Fund
does not have Class C shares. Class Z shares of the Diversified Value Fund,
Global Value Fund, International Value Fund and International Small Cap
Diversified Value Fund are not currently offered to investors. Class Z shares
may not be available through your financial intermediaries.
Each
class has its own sales charge and expense structure, allowing you to invest in
the way that best suits your needs. Each share class represents an ownership
interest in the same investment portfolio as the other classes of shares of that
Fund. When you choose your class of shares, you should consider the size of your
investment and how long you plan to hold your shares. Your financial consultant
or other financial intermediary can help you determine which share class is best
suited to your personal financial goals. If you qualify to purchase Class I
shares, which also have a higher minimum initial investment requirement, it may
be in your best interest to purchase them rather than any other class, since the
other share classes (with the exception of Class Z shares) have higher expenses
than Class I shares (although they also have a lower minimum initial investment
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requirement).
Each class of a Fund invests in the same portfolio of securities; however, the
returns for each class of shares would differ because each class is subject to
different expenses.
The
Funds’ shares are distributed by Quasar Distributors, LLC, a subsidiary of
Foreside Financial Group, LLC (the “Distributor”).
Investors
eligible to purchase Class I or Class Z shares of the Funds may do so at the
Funds’ NAV without a sales charge or other fee imposed by the Distributor. You
may be required to pay brokerage commissions and other transaction fees on your
purchases and sales of Class Z shares of the Funds.
If
you select Class A shares, you generally pay the Distributor a sales charge at
the time of purchase. You may be eligible for a sales charge reduction or
waiver. The Funds have adopted a plan under Rule 12b-1 of the Investment Company
Act of 1940, as amended (“1940 Act”), that allows the Funds to pay distribution
and service fees for the sale, distribution and shareholder servicing of their
shares. If you buy Class A shares, you also pay out of Fund assets this annual
distribution and service fee of 0.25%. Because distribution and service fees are
paid out of Fund assets on an ongoing basis, over time these fees increase the
cost of your investment and may cost you more than paying other types of sales
charges. In addition, you may be subject to a deferred sales charge of 0.75% on
Class A shares if you redeem any portion of an investment of $1 million or more,
for which the sales charge was waived, within one year of the purchase of such
shares.
If
you select Class C shares, you will invest the full amount of your purchase
price, but you will be subject to an annual distribution and service fee, as
described above, of 1.00%. Because these fees are paid out of Fund assets on an
ongoing basis, over time these fees increase the cost of your investment and may
cost you more than paying other types of sales charges. In addition, you may be
subject to a deferred sales charge when you redeem Class C shares within one
year.
The
availability of certain sales charge waivers and discounts will depend on
whether you purchase your shares directly from the Funds or through a financial
intermediary. Intermediaries may have different policies and procedures
regarding the availability of front-end sales load waivers or contingent
deferred (back-end) sales charge (“CDSC”) waivers, which are discussed below. In
all instances, it is the purchaser’s responsibility to notify the Funds or the
purchaser’s financial intermediary at the time of purchase of any relationship
or other facts qualifying the purchaser for sales charge waivers or discounts.
For waivers and discounts not available through a particular intermediary,
shareholders will have to purchase Fund shares directly from the Fund or through
another intermediary to receive these waivers or discounts. Please see
“Intermediary-Defined Sales Charge Waiver Policies” in Appendix A for more
information.
Certain
financial intermediaries that make the Funds’ shares available to their
customers may charge fees in addition to those described in this Prospectus for
providing certain services, including: marketing, distribution or other services
intended to assist in the offer and sale of Fund shares; shareholder servicing
activities; and/or sub-transfer agency services provided to individual
shareholders or beneficial owners where a financial intermediary maintains
omnibus accounts with the Funds’ transfer agent. The Advisor, the Distributor or
their affiliates may pay all or a portion of those fees out of their own
resources. The compensation is discretionary and may be available only to
selected selling and servicing agents. The amount of fees paid to a financial
intermediary in any given year will vary and may be based on one or more
factors, including a fixed amount, a fixed percentage rate, a financial
intermediary’s sales of Fund shares, assets in Fund shares held by the
intermediary’s customers, or other factors. In addition, consistent with
applicable regulations, the Advisor, the Distributor or their affiliates may
from time to time pay for or make contributions to financial intermediaries or
their employees in connection with various activities including: training and
education seminars for financial intermediary employees, clients and potential
clients; due diligence meetings regarding the Funds; recreational activities;
gifts; and/or other non-cash items. See the SAI for a discussion of marketing
and support payments and sub-transfer agency policies. The prospect of
receiving, or the receipt of, additional payments or other compensation as
described above by financial intermediaries may provide such intermediaries
and/or their salespersons with an incentive to favor sales of shares of the
Funds, and other mutual funds whose affiliates make similar compensation
available, over sale of shares of mutual funds (or non-mutual fund investments)
not making such payments.
To
better understand the pricing of the Funds’ shares, we have summarized the
information below. The summary is qualified by the more detailed information set
forth below with respect to each class.
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| Class
I |
| Class
A |
| Class
C |
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| Class
Z |
Availability |
Generally
available to pension and profit-sharing plans, employee benefit trusts,
endowments, foundations, corporations and high net worth
individuals. |
| Generally
available through selected securities brokers and other financial
intermediaries. |
| Generally
available through selected securities brokers and other financial
intermediaries. |
|
| Generally
available to pension and profit-sharing plans, employee benefit trusts,
endowments, foundations, corporations and high net worth
individuals. |
Initial
Sales Charge? |
No.
Entire purchase price is invested in shares of the Fund. |
| Yes.
Payable at time of purchase. Lower sales charges available or waived for
certain investments. |
| No.
Entire purchase price is invested in shares of the Fund. |
|
| No.
Entire purchase price is invested in shares of the Fund. |
Deferred
Sales Charge? |
No. |
| No,
except shares purchased without a front-end sales load (purchases over $1
million) that are redeemed within one year. |
| Yes.
Payable if you redeem within one year of purchase. |
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| No. |
Redemption
Fee? |
No. |
| No. |
| No. |
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| No. |
Distribution
and/or Service Fees? |
None. |
| 0.25% |
| 1.00% |
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| None. |
Conversion
to A Shares? |
No. |
| Not
applicable. |
| Yes.
Automatically after approximately eight years. |
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| No. |
Class
I Shares
Class
I shares are offered primarily for direct investments by investors such as
pension and profit-sharing plans, employee benefit trusts, endowments,
foundations, corporations and high net worth individuals. Class I shares may
also be offered through certain financial intermediaries that charge their
customers transaction or other service fees with respect to their customers’
investments in the Funds.
Pension
and profit-sharing plans, employee benefit trusts and employee benefit plan
alliances and “wrap account” or “managed fund” programs established with
broker-dealers or financial intermediaries that maintain an omnibus or pooled
account for a Fund generally may purchase Class I shares, subject to investment
minimums.
The
minimum initial investment for Class I shares is $250,000. The Advisor may waive
the initial minimum in certain circumstances, including the
following:
•Transfers
of shares from existing accounts if the registration or beneficial owner remains
the same.
•Employees
of the Advisor and its affiliates and their families.
•Employee
benefit plans sponsored by the Advisor.
•Certain
retirement, advisory or brokerage programs offered by financial intermediaries.
•Trustees
of the Trust and their families.
•Institutional
clients of the Advisor.
•Employer
sponsored retirement plans.
•Registered
investment advisors purchasing shares for their clients through transaction fee
programs.
Before
making an investment in Class I shares, you should call the Advisor at
1-800-796-5606 to determine if you are eligible to invest in Class I shares. The
Advisor will provide you with an application form and give you further
instructions on how to invest. The transfer agent must have received your
completed application before you may make an initial investment.
Class
I shareholders may be able to convert to Class Z shares of the same Fund if the
Class Z shareholders satisfy the eligibility requirements for Class Z shares.
Please contact your financial intermediary for additional information on how to
convert your shares into another share class. The conversion of Class I shares
to Class Z shares of the same Fund is not a taxable event for federal income tax
purposes.
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Class
A Shares – Diversified Value Fund, Large Cap Value Fund, Mid-Cap Value Fund,
Small Cap Value Fund, Small Cap Diversified Value Fund, Global Value Fund,
International Value Fund, International Small Cap Diversified Value Fund and
Value Opportunities Fund
Currently,
the International Value Fund and International Small Cap Diversified Value Fund
are not offering Class A shares to investors.
If
you select Class A shares, you will pay a sales charge at the time of purchase
based on the amount of your investment as shown in the following table.
Securities brokers’ compensation will be as shown in the last
column.
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Your
Investment |
Sales
Charge as a % of Offering Price |
Sales
Charge as a % of Your Investment* |
Dealer
Compensation as a % of Offering Price |
Less
than $25,000 |
5.25% |
5.54% |
5.00% |
$25,000
but less than $50,000 |
4.75% |
4.99% |
4.50% |
$50,000
but less than $100,000 |
4.00% |
4.17% |
3.75% |
$100,000
but less than $250,000 |
3.00% |
3.09% |
2.75% |
$250,000
but less than $1,000,000 |
2.00% |
2.04% |
1.80% |
$1,000,000
and over |
0.00% |
0.00% |
0.00%** |
*Rounded
to the nearest one-hundredth percent. |
**
The Advisor pays up to 0.75% of the Offering Price as compensation to
dealers. |
Class
A Shares – High Yield Fund
If
you select Class A shares, you will pay a sales charge at the time of purchase
based on the amount of your investment as shown in the following table.
Securities brokers’ compensation will be as shown in the last
column.
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Your
Investment |
Sales
Charge as a % of Offering Price |
Sales
Charge as a % of Your Investment* |
Dealer
Compensation as a % of Offering Price |
Less
than $100,000 |
3.75% |
3.90% |
3.50% |
$100,000
but less than $250,000 |
3.25% |
3.36% |
3.00% |
$250,000
but less than $500,000 |
2.25% |
2.30% |
2.00% |
$500,000
but less than $1,000,000 |
1.75% |
1.78% |
1.50% |
$1,000,000
and over |
0.00% |
0.00% |
0.00%** |
*
Rounded to the nearest one-hundredth percent. ** The Advisor pays up to
0.75% of the Offering Price as compensation to dealers.
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Class
A Shares - General
No
initial sales charge applies to Class A shares that you buy through reinvestment
of dividends.
If
you invest $1 million or more in Class A shares, you do not pay an initial sales
charge, and the Advisor compensates the selling dealer or other financial
intermediary. To cover the amount of compensation that the Advisor pays to
dealers in connection with your purchase of Class A shares without an initial
sales charge, you may be charged a deferred sales charge of up to 0.75% on such
Class A shares that were purchased without a front-end sales load if you redeem
your shares within one year after purchase. Shares acquired through reinvestment
of distributions are not subject to a CDSC. For purposes of determining the
applicability of CDSCs, shares not subject to a CDSC will be sold first. The
circumstances in which a deferred sales charge may be reduced or waived are
included under the heading “Reduction or Waiver of Deferred Sales Charges
Applicable to Class A and Class C Shares” in this section.
Investors
qualifying for significantly reduced initial sales charges on Class A shares may
find the initial sales charge alternative particularly attractive, because
similar sales charge reductions are not available with respect to the deferred
sales charges imposed in connection with purchases of Class C shares. Investors
not qualifying for reduced initial sales charges who expect to maintain their
investment for an extended period of time also may elect to purchase Class A
shares, because over time the accumulated ongoing distribution and service fees
on Class C shares may exceed the initial sales charges and lower distribution
and service fees on Class A shares. In addition, the ongoing Class C
distribution and service fees will cause Class C shares to have higher expense
ratios, pay lower dividends and have lower total returns than the Class A
shares.
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A
reduced or waived sales charge on a purchase of Class A shares may apply
for:
•Purchases
under a Right
of Accumulation or
Letter of Intent;
•Certain
programs of selected securities brokers and other financial intermediaries that
have an agreement with the Distributor or its affiliates;
•Financial
intermediaries who have entered into an agreement with the Distributor to offer
shares to self-directed investment brokerage accounts that may or may not charge
a transaction fee to their customers;
•Certain
wrap or other fee-based programs offered by financial
intermediaries;
•Registered
representatives (and their immediate family members as described below under
“Right of Accumulation”) of brokers-dealers who act as selling agents;
•Employer
sponsored retirement plans including but not limited to 401(k) plans, money
purchase pension plans, profit sharing plans, defined benefit plans, 403(b)
plans, and 457 plans, other than employer sponsored retirement plans that
purchase Class A shares through brokerage relationships in which sales charges
are customarily imposed.
Investors
may need to provide their financial intermediary with the information necessary
to take full advantage of reduced or waived Class A sales charges. Certain
intermediaries may provide different shares charge waivers or discounts. These
waivers and/or discounts and the applicable intermediaries are described under
“Intermediary-Defined Sales Charge Waiver Policies” in Appendix A to this
Prospectus.
Right
of Accumulation
A
Right
of Accumulation
permits you to pay the sales charge applicable to the current market value
(based on the maximum offer price) of all shares you own in all series and
classes of the Hotchkis & Wiley Funds held at the financial intermediary at
which you are making the current purchase. If the current purchase is made
directly through the transfer agent, then only those shares held directly at the
transfer agent may apply toward the right of accumulation. Shares held in the
name of a nominee or custodian under pension, profit-sharing or other employee
benefit plans may not be combined with other shares to qualify for the right of
accumulation. The following are relationships that, if held individually or in
any combination within the group, can be aggregated: the individual; his/her
spouse; his/her children under 21; any account that has the same social security
number as the individual, his/her spouse and/or his/her children under 21. In
order to receive a reduced sales charge, you must, at the time of purchase,
provide sufficient information to permit verification that the purchase
qualifies for the discount. All eligible shareholder names, account numbers and
tax identification numbers, along with an indication of the relationship to the
investor, must be included at the time of the initial purchase. The Right of
Accumulation may be amended or terminated at any time.
Letter
of Intent
A
Letter
of Intent
permits you to pay the Class A sales charge that would be applicable if you
agree to buy at least $25,000 in the Hotchkis & Wiley Funds (excluding the
High Yield Fund) within a 13-month period, starting with the first purchase
pursuant to the Letter of Intent. A Letter of Intent for the High Yield Fund
permits you to pay the Class A sales charge that would be applicable if you
agree to buy at least $100,000 in the High Yield Fund within a 13-month period,
starting with the first purchase pursuant to the Letter of Intent. The Letter of
Intent is not a binding obligation to purchase any amount of Class A shares, but
its execution will result in the purchaser paying the reduced sales charge
applicable to the intended amount in the Letter. A purchase not originally made
pursuant to a Letter of Intent may be included under a subsequent Letter of
Intent executed within 90 days of such purchase if you notify the transfer agent
in writing of this intent within the 90-day period. The value of Class A shares
of a Fund presently held, based on the maximum offer price, on the date of the
first purchase under the Letter of Intent may be included as a credit toward the
completion of the Letter, but the reduced sales charge applicable to the amount
covered by the Letter will be applied only to new purchases. At the end of the
13-month period, if the total amount of shares does not equal the amount stated
in the Letter of Intent, you will be notified and must pay the difference
between the sales charge on the Class A shares purchased at the reduced rate and
the sales charge applicable to the shares actually purchased through the Letter.
Class A shares equal to 5% of the intended amount will be held in escrow during
the 13-month period (while remaining registered in the name of the purchaser)
for this purpose. The first purchase under the Letter of Intent must be at least
5% of the dollar amount of such Letter. If a purchase during the term of such
Letter would otherwise be subject to a further reduced sales
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charge
based on the right of accumulation, the purchaser will be entitled on that
purchase and subsequent purchases to that further reduced percentage sales
charge, but there will be no retroactive reduction of the sales charges on any
previous purchase. Purchasers who may qualify for this further reduced sales
charge must provide the transfer agent with sufficient information to permit
confirmation of qualification. In order to execute a Letter of Intent, please
contact the transfer agent at 1-866-HW-FUNDS (1-866-493-8637) for
instructions.
If
you redeem Class A shares and within 60 days buy new Class A shares in the same
Fund and register the account in the same way as the redeemed shares, you may
have your sales charge waived on the new purchase amount. The amount eligible
for this Reinstatement
Privilege
may not exceed the amount of your redemption proceeds. To exercise the
privilege, contact your financial consultant, selected securities dealer, other
financial intermediary or the transfer agent at 1-866-HW-FUNDS
(1-866-493-8637).
Class
A shareholders may be able to convert to Class I shares of the same Fund if the
Class A shareholders satisfy the eligibility requirements for Class I shares.
Please contact your financial intermediary for additional information on how to
convert your shares into another share class. The conversion of Class A shares
to Class I shares of the same Fund is not a taxable event for federal income tax
purposes.
Please
see “Intermediary–Defined Sales Charge Waiver Policies” in Appendix A below for
more information. You can find information about sales loads and breakpoints
free of charge on the Fund’s website at www.hwcm.com and in the SAI, which is
also available on the website.
Class
C Shares
Currently,
the Small Cap Diversified Value Fund, Global Value Fund, and International Value
Fund are not offering Class C shares to investors, and the International Small
Cap Diversified Value Fund does not have Class C shares. If you select Class C
shares, you do not pay an initial sales charge at the time of purchase. However,
the Distributor compensates the selling dealer or other financial intermediary.
If you redeem your Class C shares within one year after purchase, you may be
required to pay a deferred sales charge. You will also pay distribution and
service fees of 1.00% each year under a distribution plan that the Funds have
adopted under Rule 12b-1 under the 1940 Act. Because these fees are paid out of
the Fund’s assets on an ongoing basis, over time these fees increase the cost of
your investment and may cost you more than paying other types of sales charges.
The Distributor uses the money that it receives from the distribution fees
primarily to compensate financial consultants, selected securities brokers or
other financial intermediaries who assist you in purchasing Fund shares and also
to cover the costs of marketing and advertising. The service fees pay for
personal services provided to shareholders and the maintenance of shareholder
accounts. Proceeds from the CDSC and the 1.00% Distribution Plan payments made
in the first year after purchase are paid to the Distributor and are used in
whole or in part by the Distributor to pay the Advisor for financing the 1.00%
up-front commission to dealers who sell Class C shares.
Shareholders
eligible to invest at NAV ($1 million sales charge breakpoint discount) may not
purchase Class C shares.
If
you redeem Class C shares within one year after purchase, you may be charged a
deferred sales charge of 1.00%. Shares acquired through reinvestment of
distributions are not subject to a CDSC. Your deferred sales charge will be
based on the original cost of the shares being redeemed. Shares not subject to a
CDSC will be sold first. If you sell only some of your shares, shares not
subject to a CDSC are sold first. The circumstances in which a deferred sales
charge may be reduced or waived are included under the heading “Reduction or
Waiver of Deferred Sales Charges Applicable to Class A and Class C Shares” in
this section.
Your
Class C shares convert automatically into Class A shares approximately eight
years after purchase. Class A shares are subject to lower annual expenses than
Class C shares. The conversion of Class C shares to Class A shares of the same
Fund is not a taxable event for federal income tax purposes.
Class
C shareholders may be able to convert to Class I shares of the same Fund if the
Class C shareholders satisfy the eligibility requirements for Class I shares.
Please contact your financial intermediary for additional information on how to
convert your shares into another share class. The conversion of Class C shares
to Class I shares of the same Fund is not a taxable event for federal income tax
purposes.
Reduction
or Waiver of Deferred Sales Charges Applicable to Class A and Class C
Shares
The
deferred sales charge relating to Class A and Class C shares may be reduced or
waived in certain circumstances, such as:
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•Compensation
paid by the Advisor to a dealer for the purchase of Class A shares without a
sales load was less than 0.75% of the offering price;
•Shares
sold as part of a required minimum distribution for IRA and retirement accounts
pursuant to the Internal Revenue Code of 1986, as amended;
•Redemptions
by certain eligible 401(a) and 401(k) plans offered through a recordkeeping
platform and certain retirement plan rollovers;
•Withdrawals
resulting from shareholder death or disability as long as the waiver request is
made within one year after death or disability or, if later, reasonably promptly
following completion of probate, or in connection with involuntary termination
of an account in which Fund shares are held;
•Redemptions
resulting from a return of an excess contribution to a qualified employer
retirement plan or an IRA;
•Withdrawals
through a Systematic Withdrawal Plan;
•Certain
qualified plans for which the Distributor does not pay upfront commissions to
selected dealers; and
•Redemptions
of shares acquired through reinvestment of dividends and
distributions.
Certain
intermediaries may provide different Class A or Class C share CDSC waivers or
discounts. These waivers and/or discounts and the applicable intermediaries are
described under “Intermediary-Defined Sales Charge Waiver Policies” in Appendix
A to this Prospectus.
Class
Z Shares
Currently,
the Diversified Value Fund, Global Value Fund, International Value Fund and
International Small Cap Diversified Value Fund are not offering Class Z shares
to investors. Class Z Shares of the Funds are generally offered to investors
(provided that no administrative payments, sub-transfer agency payments or
service payments are required) where Class Z shares are held through plan level
or omnibus accounts such as employer sponsored retirement plans including but
not limited to 401(k) plans, money purchase pension plans, profit sharing plans,
defined benefit plans, 403(b) plans, and 457 plans as well as financial
intermediaries who have made the Class Z shares available to their clients.
There is no minimum initial investment for employer sponsored retirement
plans.
Class
Z shares are also available to high net worth individuals, endowments,
foundations, trusts, estates, governmental institutions, and corporations,
(collectively “institutional accounts”). Other institutional accounts may be
permitted to purchase Class Z shares subject to the Fund’s determination of
eligibility. The minimum initial investment for institutional accounts is
$1,000,000. The minimum initial investment amount may be waived subject to the
Fund’s discretion. You may be required to pay brokerage commissions on your
purchases and sales of Class Z shares of the Funds.
Class
Z shares may not be available through certain financial
intermediaries.
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HOW
TO BUY, SELL, TRANSFER AND EXCHANGE
SHARES |
The
following chart summarizes how to buy, sell, transfer and exchange shares
through your financial consultant, selected securities dealer, broker,
investment adviser, service provider or other financial intermediary or directly
with the Fund through the Fund’s transfer agent. Because the selection of a
mutual fund involves many considerations, your financial consultant, selected
securities dealer or other financial intermediary may help you with this
decision. The Funds do not issue share certificates.
In
compliance with the USA PATRIOT Act of 2001 (Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
Act), please note that the transfer agent will verify certain information on
your application as part of the Funds’ Anti-Money Laundering Program. As
requested on the application, you must supply your full name, date of birth,
social security number and permanent street address. If you are opening the
account in the name of a legal entity (e.g.,
partnership, limited liability company, business trust, corporation, etc.), you
must also supply the identity of the beneficial owners. Mailing addresses
containing only a P.O. Box will not be accepted. Please contact the transfer
agent if you need additional assistance with your application.
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If
the Funds do not have a reasonable basis for determining your identity, the
account will be rejected or you will not be allowed to perform transactions on
the account until the necessary information to confirm your identity is
received. In the rare event that the Transfer Agent is unable to verify your
identity, the Fund reserves the right to redeem your account at the current
day’s net asset value.
Shares
of the Funds have not been registered for sale outside of the United
States.
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If
You Want To |
Your
Choices |
| Information
Important for You to Know |
Buy
Shares |
First,
select the share class appropriate for you.
Not
everyone is eligible to buy Class I and Class Z shares. |
| Refer
to the pricing of shares table in the section entitled “About Class I,
Class A, Class C, and Class Z Shares.” Be sure to read this Prospectus
carefully. |
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| Next,
determine the amount of your investment. |
| For
Class I shares, the minimum initial investment is $250,000. For Class A
and Class C shares, the minimum initial investment is $2,500 ($1,000 for
IRA or other individual retirement accounts). The minimum for Class Z
shares will vary depending on the type of qualifying investor. There is no
minimum initial investment for retirement plans. (The minimums for initial
investments may be reduced or waived under certain
circumstances.)
Financial
advisors, broker-dealers, bank trust departments, or other financial
intermediaries offering asset allocation models or other fee-based
programs may have initial investment minimums of less than $2,500. Certain
fund supermarket platforms may have initial investment minimums of less
than $2,500. Consult your investment professional for the minimum initial
investment specified by the program’s provider. |
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| Next,
have your financial consultant, selected securities dealer or other
financial intermediary submit your purchase order, or |
| The
price of your shares is based on the next calculation of NAV per share
after receipt of your order. Purchase orders received prior to the close
of regular trading on the NYSE (generally, 4:00 p.m. Eastern time) are
priced at the NAV determined that day (plus applicable sales charges for
Class A shares). Certain financial intermediaries, however, may require
submission of orders prior to that time.
Purchase
orders received after that time are priced based on the NAV determined on
the next business day. The Fund may reject any order to buy shares and may
suspend the sale of shares at any time. Certain financial intermediaries
may charge a fee to process a purchase. |
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If
You Want To |
Your
Choices |
| Information
Important for You to Know |
| Purchase
through the transfer agent |
|
Purchase
By Mail
Send
a completed account application along with a check payable to HOTCHKIS
& WILEY FUNDS to the following address:
(regular
mail)
Hotchkis
& Wiley Funds
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
(overnight)
Hotchkis
& Wiley Funds
c/o
U.S. Bank Global Fund Services
615
E. Michigan Street, 3rd Floor
Milwaukee,
Wisconsin 53202-5207
The
Funds do not consider the U.S. Postal Service or other independent
delivery services to be their agents. Therefore, deposit in the mail or
with such services, or receipt at the U.S. Bancorp Fund Services, LLC post
office box, of purchase orders or redemption requests does not constitute
receipt by the transfer agent of the Funds. Receipt of purchase orders or
redemption requests is based on when the order is received at the transfer
agent’s offices.
Checks
must be drawn on a U.S. bank in U.S. dollars for the exact amount of the
purchase. You will receive the NAV (plus applicable sales charges for
Class A shares) next determined after the transfer agent receives your
check and completed application. The Funds will not accept payment in
cash, money orders, U.S. Treasury checks, credit card checks, traveler’s
checks, or starter checks for the purchase of shares. The Funds are unable
to accept post-dated checks or any conditional order or payment. If your
check does not clear, you will be charged a $25 service charge and for any
other losses sustained by the Funds. |
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Purchase
By Wire
If
you are making your first investment in the Funds, before you wire funds,
the transfer agent must have a completed account application. You may mail
or overnight deliver your account application to the transfer agent. Upon
receipt of your completed account application, the transfer agent will
establish an account for you. The account number assigned will be required
as part of the instruction that should be provided to your financial
institution to send the wire. Your financial institution must include the
name of the Fund you are purchasing, the account number, and your name so
that the wire may be correctly applied. Your bank should transmit funds by
wire to:
U.S.
Bank, N.A.
777
East Wisconsin Avenue
Milwaukee,
WI 53202
ABA
#075000022
For
credit to U.S. Bancorp Fund Services, LLC
Account
#112-952-137
For
further credit to HOTCHKIS & WILEY FUNDS
[Name
of Fund]
shareholder
name and account number
Federal
fund purchases will only be accepted on a day on which the Funds and the
custodian are open for business. Wired funds must be received prior to
4:00 p.m. Eastern time to be eligible for same day pricing. The Funds and
U.S. Bank, N.A. are not responsible for the consequences of delays
resulting from the banking or Federal Reserve wire system, or from
incomplete wiring instructions. |
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If
You Want To |
Your
Choices |
| Information
Important for You to Know |
Add
to Your Investment |
Purchase
additional shares |
| The
minimum investment for additional purchases is generally $100. (The
minimums for additional purchases may be waived under certain
circumstances.)
If
you purchased your shares through the transfer agent, forms for additional
contributions are included with your account statements or by calling
1-866-HW-FUNDS (1-866-493-8637). You may purchase additional shares via
wire. Before sending your wire, please contact the transfer agent to
advise them of your intent to wire funds. This will ensure prompt and
accurate credit of your wire.
Your
financial consultant, selected securities dealer or other financial
intermediary may also submit your order. |
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| Acquire
additional shares through the automatic dividend reinvestment plan (if you
hold Fund shares directly through the transfer agent) |
| Unless
you elect to receive dividends in cash, all dividends are automatically
reinvested without a sales charge. |
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| Participate
in the automatic investment plan (if you hold Fund shares directly through
the transfer agent) |
| You
may invest a specific amount on a periodic basis through the transfer
agent. The current minimum for such automatic investments is $100
(subsequent to the minimum initial investment). The minimum may be waived
or revised under certain circumstances. To participate in the plan, your
financial institution must be a member of the Automated Clearing House
(“ACH”) network. You may change or terminate your participation in the
plan at any time by notifying the transfer agent five (5) calendar days
prior to your next transaction. To change your financial institution, a
signature guarantee or signature validation may be required. If your
financial institution rejects your transaction, the transfer agent will
charge a $25 fee to your account. Selected securities brokers or other
financial intermediaries may also offer automatic investment
plans. |
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Transfer
Shares to Another Securities Dealer or Other Financial
Intermediary |
Transfer
to a participating securities dealer or other financial
intermediary |
| You
may transfer your Fund shares to another selected securities dealer or
other financial intermediary if authorized dealer agreements are in place
between the Distributor and the transferring intermediary and the
Distributor and the receiving intermediary. Certain shareholder services
may not be available for all transferred shares. All future trading of
these assets must be coordinated by the receiving
intermediary. |
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| Transfer
to a non-participating securities dealer or other financial
intermediary |
|
You
must either:
•Transfer
your shares to an account with the transfer agent or
•Sell
your shares, paying any applicable deferred sales
charge. |
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Sell
Your Shares |
Have
your financial consultant, selected securities dealer or other financial
intermediary submit your sales order. |
| The
price of your shares is based on the next calculation of NAV after receipt
of your order. For your redemption request to be priced at the NAV on the
day of your request (minus applicable deferred sales charges for Class A
and Class C shares), you must submit your request to your selected
securities dealer or other financial intermediary prior to that day’s
close of regular trading on the NYSE (generally, 4:00 p.m. Eastern
time).
Certain
financial intermediaries, however, may require submission of orders prior
to that time. Redemption requests received after that time are priced
(less applicable deferred sales charges for Class A and Class C shares) at
the NAV at the close of regular trading on the next business day. Certain
financial intermediaries may charge a fee to process a sale of shares.
The
Fund may postpone or reject an order to sell shares under certain
circumstances permitted by the Securities and Exchange Commission pursuant
to Section 22(e) of the 1940 Act, including during unusual market
conditions or emergencies when the Fund can’t determine the value of its
assets or sell its holdings. |
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If
You Want To |
Your
Choices |
| Information
Important for You to Know |
| Sell
through the transfer agent |
| You
may sell shares held at the transfer agent by writing to the transfer
agent at the address on the back cover of this Prospectus. All
shareholders on the account must sign the letter. A signature guarantee,
from either a Medallion program member or a non-Medallion program member,
will generally be required, but may be waived, in the following instances:
(i) all redemptions that are more than $50,000; (ii) redemption proceeds
are payable or sent to any person, address or bank account not on record;
(iii) a redemption request is received by the transfer agent and the
address on record has changed within 30 calendar days; or (iv) when
ownership is being changed on the account. A signature guarantee or
signature validation may be required when adding telephone redemption
privileges or adding/changing automated financial institution instructions
on an existing account or when redemptions are paid to a corporation,
partnership, trust or fiduciary. Non-financial transactions including
establishing or modifying certain services on an account may require a
signature guarantee, signature verification from a Signature Validation
Program member or other acceptable form of authentication from a financial
institution source. In addition to the situations described above, the
Funds and/or the transfer agent reserve the right to require a signature
guarantee or signature validation in other instances based on the
circumstances relative to the particular situation. You can obtain a
signature guarantee from a bank, securities dealer, securities broker,
credit union, savings association, national securities exchange or
registered securities association. A notary public seal will not be
acceptable. You may have to supply additional documentation at the request
of the transfer agent, depending on the type of account. The Funds reserve
the right to waive any signature requirement at their discretion.
Shareholders who have an IRA or other retirement plan must indicate on
their written redemption request whether to withhold federal income tax.
Redemption requests failing to indicate an election will generally be
subject to withholding. Shares held in IRA accounts may be redeemed by
telephone at 1-866-HW-FUNDS (1-866-493-8637). Investors will be asked
whether or not to withhold taxes from any distribution.
The
Fund may postpone or reject an order to sell shares under certain
circumstances permitted by the Securities and Exchange Commission pursuant
to Section 22(e) of the 1940 Act, including during unusual market
conditions or emergencies when the Fund can’t determine the value of its
assets or sell its holdings. |
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If
You Want To |
Your
Choices |
| Information
Important for You to Know |
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| All
requests received in good order by the transfer agent before the close of
regular trading on the NYSE (generally, 4:00 p.m. Eastern time) will be
processed that day and the proceeds will usually be sent the next day,
although it could be delayed for up to seven days. You may have a check
sent to the address of record, proceeds may be wired to your
pre-determined financial institution account or proceeds may be sent via
electronic funds transfer through the ACH network using instructions
previously provided to the transfer agent for your account. There is a $15
fee for outgoing wire transfers. Interest or income is not earned on
redemption or distribution checks sent to you during the time a check
remains uncashed. In all cases, proceeds will be processed within seven
calendar days following a properly completed request. There are
circumstances when proceeds could be longer including, but not limited to,
if you make a redemption request before a Fund has collected payment for
the purchase of shares, the Fund or the transfer agent may delay mailing
your proceeds. This delay will usually not exceed 12 calendar days from
the date of purchase. The delay will not apply if you purchased your
shares via wire payment. The Funds typically expect to meet redemption
requests by paying out proceeds from cash or cash equivalents held in
their portfolios, or by selling other portfolio holdings. The Funds
reserve the right to redeem your Fund shares “in kind” as described under
“Redemption in Kind,” below. The Funds may use any of these methods of
satisfying redemption requests under stressed or normal market conditions.
During periods of distressed market conditions, when a significant portion
of a Fund’s portfolio may be comprised of less-liquid investments, a Fund
may be more likely to pay proceeds by redeeming your Fund shares in-kind.
You
may also sell your Fund shares held at the transfer agent by telephone
request if the amount being sold does not exceed $50,000 and if certain
other conditions are met. The $50,000 maximum does not apply to Class I
shares. Contact the transfer agent at 1-866-HW-FUNDS (1-866-493-8637) for
details. If an account has more than one owner or authorized person, the
transfer agent will accept telephone instructions from any one owner or
authorized person. |
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Sell
Shares Systematically |
Participate
in a Fund’s Systematic Withdrawal Plan |
|
You
can choose to receive systematic payments from your Fund account either by
check or through direct deposit to your financial institution account of
at least $100 per payment if you have at least $10,000 in your account.
You can generally arrange through the transfer agent or your selected
securities dealer or other financial intermediary for systematic sales of
shares of a fixed dollar amount as frequently as monthly, subject to
certain conditions. Under either method, you should have dividends
automatically reinvested. You may elect to change or terminate your
participation in this Plan at any time by contacting the transfer agent
five (5) calendar days prior to the next scheduled
withdrawal.
The
deferred sales charge is waived for systematic redemptions. Ask your
financial intermediary or the transfer agent for details. Each withdrawal
is generally a taxable event for federal income tax
purposes. |
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If
You Want To |
Your
Choices |
| Information
Important for You to Know |
Exchange
Your Shares |
Select
the Fund into which you want to exchange. |
|
You
can exchange your shares of a Fund for shares in an identically registered
account of another Hotchkis & Wiley Fund subject to the policies and
procedures adopted by the participating securities dealer or other
financial intermediary or the transfer agent, depending on how you hold
your Fund shares, and also subject to the policies described below. The
minimum exchange amount is $1,000. Exchanges are generally considered a
sale for federal income tax purposes.
Each
class of Fund shares, except Class Z shares, is generally exchangeable for
shares of the same class of another Hotchkis & Wiley
Fund.
For
Class A and Class C shares, in an exchange between the Funds and other
Hotchkis & Wiley funds, the holding period of the original Fund will
be aggregated with the holding period of the current Fund when calculating
a deferred sales charge at the redemption of those shares.
To
exercise the exchange privilege, contact your financial consultant,
selected securities dealer or other financial intermediary or call the
transfer agent at 1-866-HW-FUNDS (1-866-493-8637).
|
During
periods of substantial economic or market change, you may find telephone
redemptions difficult to implement and may encounter higher than usual call
waits. Telephone trades must be received by or prior to market close. Please
allow sufficient time to place your telephone transaction prior to market close.
If a servicing agent or shareholder cannot contact the transfer agent by
telephone, they should make a redemption request in writing in the manner
described earlier. Once a telephone transaction has been placed, it cannot be
canceled or modified after the close of regular trading on the NYSE (generally,
4:00 p.m., Eastern time).
Redemption
in Kind
The
Funds reserve the right to pay redeeming shareholders with large accounts
securities instead of cash in certain circumstances. The Funds have elected
under Rule 18f-1 under the 1940 Act to pay all redemptions of Fund shares by a
single shareholder during any 90-day period in cash, up to the lesser of (i)
$250,000 or (ii) 1% of the Fund’s net assets measured as of the beginning of
such 90-day period. A Fund will typically distribute a pro rata portion of all
securities or other financial assets when redeeming in kind, subject to certain
exclusions in accordance with procedures approved by the Board of Trustees. If
your shares are redeemed in kind, then you will incur transaction costs when you
subsequently sell the securities distributed to you. Redemptions in kind are
taxable for federal income tax purposes in the same manner as redemptions for
cash.
Liquidating
Small Accounts
Because
of the high cost of maintaining smaller shareholder accounts, the Funds may
redeem the shares in your account (without charging any deferred sales charge)
if the value of your account falls below $500 due to redemptions you have made.
You will be notified that the value of your account is less than $500 before a
Fund makes an involuntary redemption. You will then have 60 days to make an
additional investment to bring the value of your account to at least $500 before
a Fund takes any action. This involuntary redemption does not apply to
retirement plans or Uniform Gifts or Transfers to Minors Act accounts. A
redemption of your shares in a Fund will generally be treated as a sale for
federal income tax purposes, and depending on the investor and type of account,
may be subject to tax.
Unclaimed
Property
Your
mutual fund account may be transferred to your state of residence if no activity
occurs within your account during the “inactivity period” specified in your
state’s abandoned property laws. If the Funds are unable to locate a
shareholder, they will determine whether the shareholder’s account can legally
be considered abandoned. The Funds are legally obligated to escheat (or
transfer) abandoned property to the appropriate state’s unclaimed property
administrator in accordance with statutory requirements. The shareholder’s last
known address of record determines which state has jurisdiction. Investors who
are residents of the state of Texas may designate a representative to receive
legislatively required unclaimed property due diligence notifications. Please
contact the Funds to complete a Texas Designation of Representative form.
Right
to Suspend Sales and Reject Purchase Orders
The
Funds reserve the right to suspend the offering of shares at any time, and to
reject a purchase order.
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The
Advisor and the Funds are dedicated to minimizing or eliminating short-term
and/or active trading in the Funds. Purchases and exchanges of the Funds should
be made for long-term investment purposes. Short-term or excessive trading into
or out of a Fund may harm other shareholders in various ways, including
disrupting portfolio management strategies, increasing brokerage and
administrative costs, and causing the Fund to generate taxable gains. To protect
the interests of the long-term shareholders of the Funds, the Board of Trustees
has adopted the following policies and has authorized the Advisor to make
adjustments to specific provisions in these policies as necessary to ensure
their effectiveness.
The
Funds discourage frequent purchases and redemptions of Fund shares, whether for
"market timing" or any other purpose. Accordingly, the Funds reserve the right
to reject any purchase or exchange request for any reason, including
transactions representing excessive trading and transactions accepted by any
shareholder's financial intermediary. For example, a Fund may reject any
purchase order, including an exchange, from any investor who, in the Advisor's
opinion, has a pattern of short-term or excessive trading in the Funds or other
mutual funds or whose trading has been disruptive to a Fund or other mutual
funds.
The
Funds monitor trading activity in a variety of ways. Active trading within a
30-day period will generally be questioned if the trades meet certain thresholds
for materiality. However, the Funds may reject trades from any shareholder who
the Funds believe is engaged in excessive trading, whether or not in violation
of these guidelines. The Funds may consider trading patterns over a longer
period than 30 days and may take into account market conditions, the number of
trades and the amount of the trades in making such determinations. In applying
these policies, the Funds consider the information available to them at the time
and reserve the right to consider trading activity in multiple accounts under
common ownership, control or influence. Additionally, these guidelines may be
changed at any time without prior notice to shareholders.
When
excessive or short-term trading is detected, the party involved may be banned
from future trading in the Funds. Judgments related to the rejection of
purchases and the banning of future trades are inherently subjective and involve
some selectivity in their application. The Advisor will seek to make judgments
and applications that are consistent with the interests of the Funds'
shareholders.
Persons
engaged in excessive trading practices may use a variety of strategies to avoid
detection, such as trading through multiple financial intermediaries or within
omnibus accounts that pool transactions together in one account. The Funds may
not be able to effectively monitor or detect excessive or short-term trading
that occurs through financial intermediaries, particularly in an omnibus
account. It is common for a substantial portion of Fund shares to be held in
omnibus accounts. The Funds may not always be able to detect or curtail
excessive or short-term trading in omnibus accounts, which may harm shareholders
as described above.
In
addition, the Funds attempt to limit exchanges in retirement plans, which often
trade in omnibus accounts, to no more than one round-trip exchange per
participant within a 30-day period. It is the responsibility of plan sponsors to
communicate the Funds' restrictions to plan participants and monitor and apply
the exchange limitation. The exchange limits may be modified to conform to
individual plan exchange limits, Department of Labor regulations and automated
asset allocation or dollar-cost-averaging programs. Certain automated or
pre-established exchange, asset allocation and dollar-cost-averaging programs
may not be subject to these exchange limits.
The
Distributor has entered into agreements with respect to financial advisers and
other financial intermediaries that maintain omnibus accounts with the transfer
agent pursuant to which such financial advisors and other financial
intermediaries undertake to cooperate with the Advisor and the Distributor in
monitoring purchase, exchange and redemption orders by their customers in order
to detect and prevent short-term or excessive trading of the Funds’ shares
through such accounts. Certain plan recordkeepers may offer the Funds a menu of
options designed to limit active trading. These options may include blocking of
exchanges or round-trip limitations for certain time periods. Generally, the
Funds prefer to implement buy blocks, whereby a participant who initiates a sale
in a Fund would not be able to make a purchase for 30 days. This limitation does
not include payroll contributions, rollovers, loan transactions, automatic
rebalancing or other similar transactions. It may not be practical for each plan
sponsor and/or recordkeeper to implement this systematic limitation or other
short-term trading policies of the Funds. The Funds will accept as adequate
reasonable policies and procedures to detect and deter active trading even
though those policies may not be as restrictive as those of the Funds.
Shareholders who own shares of the Funds through plan sponsors may request
copies of such policies and procedures from those plan sponsors and/or
recordkeepers.
For
purposes of application of these policies, the Funds generally do not consider
the following types of transactions to be active trading (unless significant in
size or frequency of trades):
•With
respect to discretionary wrap programs, changes in investment models by research
teams;
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•“Rebalancing”
transactions by brokers or investment advisors to align accounts with target
portfolios;
•“Rebalancing”
transactions by shareholders between taxable and non-taxable
accounts;
•Sales
and purchases effected for the purpose of changing the class of Fund shares
held;
•Sales
and purchases effected for the purpose of realizing tax gains/losses in order to
offset other tax gains/losses; and
•Sales
and purchases effected by plan sponsors, recordkeepers or other intermediaries
for various operational purposes.
When
you buy shares, you pay the NAV next determined after receipt of your order,
plus any applicable sales charge. This is the offering price. The NAV of a class
of a Fund is the market value in U.S. dollars of the Fund’s net assets
(i.e.,
assets less liabilities) attributable to that class, divided by the number of
shares outstanding in that class. Expenses, including the fees payable to the
Advisor, are accrued daily. Due to the fact that different expenses are charged
to the Class I, Class A, Class C, and Class Z shares of a Fund, the NAV of the
classes of a Fund may vary. Shares are also redeemed at their NAV, minus any
applicable deferred sales charge. Each Fund calculates its NAV each day the NYSE
is open as of the close of regular trading on the NYSE based on prices at the
time of closing. Because some foreign markets are open on days when the Funds do
not price their shares, the value of a Fund’s holdings (and correspondingly, the
Fund’s NAV) could change at a time when you are not able to buy or sell Fund
shares.
Regular
trading on the NYSE generally closes at 4:00 p.m. Eastern time. The NAV used in
determining your price is the next one calculated after your purchase or
redemption order is received. On holidays or other days when the NYSE is closed,
the NAV is not calculated, and the Funds do not transact purchase or redemption
requests.
Assets
are valued primarily on the basis of market quotations as provided by
independent pricing agents. Fixed income securities, including those to be
purchased under firm commitment agreements, are normally priced on the basis of
the evaluated mean provided by independent pricing agents, which take into
account appropriate factors such as institutionalized trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. The Funds have adopted fair valuation
procedures for use in appropriate circumstances. If no price, or in the
Advisor’s determination no price representing market value, is provided for a
security held by a Fund by an independent pricing agent, then the security will
be fair valued. In using fair value pricing, the Advisor attempts to establish
the price that the Fund might reasonably have expected to receive upon a sale of
the security at 4:00 p.m. Eastern time.
A
third-party vendor’s proprietary fair value pricing model is used to assist in
determining current valuation for foreign securities traded in markets that
close prior to the NYSE. When fair value pricing is employed, the value of the
portfolio security used to calculate the Funds’ NAV may differ from quoted or
official closing prices. Due to the subjective and variable nature of fair value
pricing, it is possible that the value determined for a particular security may
be materially different from the value realized upon its sale. It is possible
that market timers may attempt to buy or sell Fund shares to profit from price
movements in foreign markets that are not yet reflected in a Fund’s NAV. Such
trades may have the effect of reducing the value of existing shareholders’
investments. The Trust’s use of fair value pricing is designed to more
accurately reflect the current market value of a portfolio security and to
minimize the possibilities for time-zone arbitrage.
The
Board has designated the Advisor as the Funds' “valuation designee” to perform
all fair valuations of the Funds' portfolio investments. The Advisor, as the
Funds' valuation designee, has established procedures for its fair valuation of
the Funds' portfolio investments, which address, among other things, determining
when market quotations are not readily available or reliable and the fair
valuation of such portfolio investments, as well as the use and oversight of
third-party pricing services for fair valuation.
Each
Fund has authorized one or more financial intermediaries to receive on its
behalf purchase and redemption orders. Such intermediaries are authorized to
designate other intermediaries to receive purchase and redemption orders on the
Fund’s behalf. A Fund will be deemed to have received a purchase or redemption
order when an authorized intermediary or, if applicable, an intermediary’s
authorized designee, receives the order. Customer orders will be priced at the
NAV for the applicable class of a Fund (plus any applicable sales charge or
minus any applicable deferred sales charge) next computed after they are
received by an authorized intermediary or the intermediary’s authorized designee
and accepted by a Fund. If the payment for a purchase order is not made by a
designated time, the order will be canceled and the financial intermediary could
be held liable for any losses.
Under
certain circumstances, the per share NAV of a class of a Fund’s shares may be
different from the per share NAV of another class of shares as a result of the
different daily expense accruals applicable to each class of shares. Generally,
when
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the
Funds pay income dividends, those dividends are expected to differ over time by
approximately the amount of the expense accrual differential between the
classes.
The
Funds will distribute any realized net capital gains at least annually. The
Diversified Value Fund, the Large Cap Value Fund, the Mid-Cap Value Fund, the
Small Cap Value Fund, the Small Cap Diversified Value Fund, the Global Value
Fund, the International Value Fund, the International Small Cap Diversified
Value Fund and the Value Opportunities Fund will distribute any net investment
income at least annually. Although this cannot be predicted with any certainty,
each of these Funds anticipates that the majority of its distributions, if any,
will consist of capital gains.
The
High Yield Fund distributes substantially all of its net investment income to
shareholders in the form of dividends. The High Yield Fund intends to declare
income dividends daily and distribute them monthly to shareholders of record. In
addition, the High Yield Fund distributes any net capital gains it earns from
the sale of portfolio securities to shareholders no less frequently than
annually. Net short-term capital gains may be paid more frequently.
The
High Yield Fund shares will normally begin to earn dividends on the business day
after payment for Fund shares is received by the Trust. The High Yield Fund
shares will normally earn dividends through the date of redemption. Shares of
the High Yield Fund redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day. Generally, if you redeem all of your
shares at any time during the month, you will also receive all dividends earned
through the date of redemption. When you redeem only a portion of your shares,
all dividends accrued on those shares will be reinvested, or paid in cash, on
the next dividend payment date.
Dividends
paid by a Fund with respect to each class of shares are calculated in the same
manner and at the same time, but dividends on Class A and Class C shares are
expected to be lower than dividends on Class I and Class Z shares as a result of
the distribution fees applicable to Class A and Class C shares.
If
you purchase and sell your shares through an intermediary, consult your
intermediary to determine when your shares begin and stop accruing dividends;
the information described above may vary.
The
Funds may also pay a special distribution at the end of the calendar year to
comply with federal tax requirements. Dividends and/or distributions may be
reinvested automatically in shares of a Fund at NAV without a sales charge or
may be taken in cash. If your account is with a selected securities dealer or
other financial intermediary that has an agreement with a Fund, contact your
dealer or intermediary about which option you would like. If your account is
with the transfer agent and you would like to receive dividends in cash, contact
the transfer agent by telephone or in writing at least five (5) days prior to
the record date of the next distribution. If an investor elects to receive
distributions in cash and the U.S. Postal Service cannot deliver your check, or
if a check remains uncashed for six months, the Fund reserves the right to
reinvest the distribution check in the shareholder’s account at the then current
NAV for that class of the Fund and to reinvest all subsequent distributions. The
federal income tax treatment of distributions will be the same whether they are
paid in cash or reinvested in additional shares.
You
may be subject to federal income tax on distributions from a Fund, whether you
receive them in cash or additional shares. Distributions from a Fund’s net
investment income (which includes dividends, interest, net short-term capital
gains and net gains from foreign currency transactions), if any, generally are
taxable to you as ordinary income, unless such distributions are attributable to
“qualified dividend income” eligible for the reduced federal income tax rates
applicable to long-term capital gains, provided certain holding period and other
requirements are satisfied. Distributions of a Fund’s net capital gains (the
excess of net long-term capital gains over net short-term capital losses), if
any, are taxable as long-term capital gains, regardless of how long you may have
held shares of the Funds. Distributions from a Fund may also be subject to
foreign, state and local income taxes.
Distributions
declared by a Fund during October, November or December to shareholders of
record during such month and paid by January 31 of the following year are
treated for federal income tax purposes as if received by shareholders and paid
by the Fund on December 31 of the year in which the distribution was
declared.
If
you purchase shares of a Fund just before a dividend or distribution, you will
pay the full price for the shares and receive a portion of the purchase price
back as a taxable distribution. This is referred to as “buying a
dividend.”
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If
you redeem Fund shares or exchange them for shares of another Hotchkis &
Wiley Fund, you generally will be treated as having sold your shares and may
recognize a taxable gain or loss for federal income tax purposes, depending on
whether the redemption proceeds are more or less than your basis in the redeemed
shares. The gain or loss will generally be treated as long-term capital gain or
loss if the shares were held for more than one year and if not held for such
period, as short-term capital gain or loss. Short-term capital gains are taxable
at ordinary federal income tax rates. Long-term capital gains are taxable to
individuals and other non-corporate taxpayers at a maximum federal income tax
rate of 20%. Your ability to utilize capital losses may be limited.
An
additional 3.8% Medicare tax is imposed on certain net investment income
(including dividends and capital gain distributions received from a Fund and net
gains from redemptions or other taxable dispositions of shares of a Fund) of
U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income”
(in the case of an estate or trust) exceeds a threshold amount.
Dividends
and interest received by a Fund may give rise to withholding and other taxes
imposed by foreign countries. Tax treaties between certain countries and the
U.S. may reduce or eliminate such taxes. A Fund may be eligible to elect to
“pass through” to you foreign income taxes that it pays if more than 50% of the
value of its total assets at the close of its taxable year consists of stock or
securities of foreign corporations. If a Fund is eligible for and makes this
election, you will be required to include your share of those taxes in gross
income as a distribution from the Fund. You will then be allowed to claim a
credit (or a deduction, if you itemize deductions) for such amounts on your
federal income tax return, subject to certain limitations. Tax-exempt holders of
Fund shares, such as qualified retirement plans, will not generally benefit from
such a deduction or credit.
If
you are neither a lawful permanent resident nor a citizen of the U.S. or if you
are a foreign entity, a Fund’s ordinary income dividends (which may include
distributions of net short-term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies.
By
law, each Fund must withhold 24% of your dividends and redemption proceeds if
the taxpayer identification number or social security number you have provided
is incorrect, you fail to make certain required certifications and/or if a Fund
receives notification from the Internal Revenue Service requiring backup
withholding.
This
section summarizes some of the consequences under current federal income tax law
of an investment in a Fund. It is not a substitute for personal tax advice.
Consult your personal tax advisor about the potential tax consequences to you of
an investment in a Fund under all applicable tax laws, including federal, state,
foreign and local tax laws.
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The
Management Team
The
Advisor
Hotchkis
& Wiley Capital Management, LLC, 601 South Figueroa Street, 39th Floor, Los
Angeles, California 90017-5704, is each Fund’s investment advisor. The Advisor
is a limited liability company, the primary members of which are HWCap Holdings,
a limited liability company with members who are current and former employees of
the Advisor, and Stephens-H&W, LLC, a limited liability company whose
primary member is SF Holding Corp., which is a diversified holding company. The
Advisor’s predecessor entity was organized as an investment advisor in 1980. As
of June 30, 2023, the Advisor had approximately $30 billion in investment
company and other portfolio assets under management. The Advisor supervises and
arranges the purchase and sale of securities held in the Funds’
portfolios.
For
its services under the applicable advisory agreement, the Advisor is entitled to
receive an annual management fee for the Diversified Value Fund as
follows:
First
$250 million in assets 0.70% of average net
assets
Next
$250 million in assets 0.60% of average net
assets
Over
$500 million in assets 0.50% of average net assets
For
its services under the applicable advisory agreement, the Advisor is entitled to
receive an annual management fee for the Large Cap Value Fund as
follows:
First
$500 million in assets 0.70% of average net
assets
Next
$500 million in assets 0.60% of average net
assets
Over
$1 billion in assets 0.55% of average net assets
For
its services under the applicable advisory agreement, the Advisor is entitled to
receive an annual management fee for the Mid-Cap Value Fund as
follows:
First
$5 billion in assets 0.75% of average net
assets
Next
$5 billion in assets 0.65% of average net
assets
Over
$10 billion in assets 0.60% of average net assets
For
its services under the applicable advisory agreement, the Advisor is entitled to
receive an annual management fee for the Small Cap Value Fund of 0.75% of
average daily net assets; for the Small Cap Diversified Value Fund of 0.65% of
average daily net assets; for the Global Value Fund of 0.75% of average daily
net assets; for the International Value Fund of 0.80% of average daily net
assets; for the International Small Cap Diversified Value Fund of 0.80% of
average daily net assets; for the Value Opportunities Fund of 0.75% of average
daily net assets; and for the High Yield Fund of 0.55% of average daily net
assets.
The
annual fee paid to the Advisor as a percentage of average daily net assets for
the year ended June 30, 2023, net of expense reimbursements or fee waivers (if
applicable), was 0.47% for the Diversified Value Fund, 0.68% for the Large Cap
Value Fund; 0.75% for the Mid-Cap Value Fund; 0.71% for the Small Cap Value
Fund, 0.58% for the Small Cap Diversified Value Fund, 0.45% for the Global Value
Fund, 0.00% for the International Value Fund, 0.00% for the International Small
Cap Diversified Value Fund, 0.75% for the Value Opportunities Fund and 0.48% for
the High Yield Fund. The Advisor has agreed to waive fees or make reimbursements
so that annual operating expenses of each Fund (excluding sales loads, taxes,
leverage interest, brokerage commissions, acquired fund fees and expenses, if
any, expenses incurred in connection with any merger or reorganization and
extraordinary expenses) will be limited as noted below.
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Expense
Limit (as a percentage of average net assets) |
Fund |
Class
I |
Class
A |
Class
C |
Class
Z |
Diversified
Value |
0.80% |
1.05% |
1.80% |
0.80% |
Large
Cap Value |
0.95% |
1.20% |
1.95% |
0.95% |
Mid-Cap
Value |
1.05% |
1.30% |
2.05% |
1.05% |
Small
Cap Value |
0.97% |
1.22% |
1.97% |
0.97% |
Small
Cap Diversified Value |
0.80% |
1.05% |
1.80% |
0.80% |
Global
Value |
0.95% |
1.20% |
1.95% |
0.95% |
International
Value |
0.95% |
1.20% |
1.95% |
0.95% |
International
Small Cap Diversified Value |
0.99% |
1.24% |
N/A |
0.99% |
Value
Opportunities |
1.15% |
1.40% |
2.15% |
1.15% |
High
Yield |
0.70% |
0.95% |
1.70% |
0.60% |
The
Advisor has agreed to these expense limits through August 29, 2024. The
agreement may be terminated only with the consent of the Funds’
Board.
A
discussion regarding the basis on which the Board of Trustees approved the
continuation of the investment advisory agreement for each Fund is available in
the Annual Report to shareholders for the year ended June 30, 2023.
Portfolio
Managers
The
Advisor also manages institutional separate accounts and is the sub-advisor to
other mutual funds. The investment process employed is the same for similar
accounts, including the Funds, and is team-based utilizing primarily in-house,
fundamental research. The investment research staff is organized by industry and
sector and supports all of the accounts managed in each of the Advisor’s
investment strategies. Portfolio managers for each strategy ensure that the best
thinking of the investment team is reflected in the “target portfolios.”
Investment ideas for each Fund are generated by the Advisor’s investment team.
The Advisor has identified the portfolio managers with the most significant
responsibility for each Fund’s portfolio. The list does not include all members
of the investment team.
The
investment process is team driven where each portfolio manager participates in
the investment research review and decision-making process for all of the
Funds.
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Investment
Team Member |
| Primary
Role |
| Title
and Recent Biography |
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George
H. Davis, Jr. |
| Jointly
and primarily responsible for day-to-day management of the Diversified
Value Fund, Large Cap Value Fund, Mid-Cap Value Fund and Value
Opportunities Fund. He participates in the investment research review and
decision-making process and represents the Funds to current and
prospective shareholders. |
| Executive
Chairman (since 2021) and Portfolio Manager (since 2001) of Advisor; Chief
Executive Officer of Advisor (2001-2021); joined Advisor’s predecessor in
1988 as an equity analyst and became portfolio manager in
1989. |
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Hunter
Doble, CFA |
|
Jointly
and primarily responsible for day-to-day management of the Mid-Cap Value
Fund and International Value Fund.
He
participates in the investment research review and decision-making process
and represents the Funds to current and prospective
shareholders. |
| Portfolio
Manager of Advisor (since 2005). |
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David
Green, CFA |
| Jointly
and primarily responsible for day-to-day management of the Small Cap Value
Fund, International Value Fund and Value Opportunities Fund. He
participates in the investment research review and decision-making process
and represents the Funds to current and prospective
shareholders. |
| Principal
and Portfolio Manager of Advisor (since 2001); joined Advisor’s
predecessor in 1997 as portfolio manager. |
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Investment
Team Member |
| Primary
Role |
| Title
and Recent Biography |
Mark
Hudoff
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| Jointly
and primarily responsible for day-to-day management of the High Yield
Fund. He participates in the investment research review and
decision-making process and represents the Fund to current and prospective
shareholders. |
| Portfolio
Manager of Advisor (since 2009). Executive Vice President, Portfolio
Manager and Head of Global High Yield investments at PIMCO (2000 –
2009). |
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Ray
Kennedy, CFA |
| Jointly
and primarily responsible for day-to-day management of the High Yield
Fund. He participates in the investment research review and
decision-making process and represents the Fund to current and prospective
shareholders. |
| Portfolio
Manager of Advisor (since 2008). Managing Director, Portfolio Manager and
a senior member of PIMCO’s investment strategy group (1996 –
2007). |
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Stan
Majcher, CFA |
| Jointly
and primarily responsible for day-to-day management of the Mid-Cap Value
Fund. He participates in the investment research review and
decision-making process and represents the Fund to current and prospective
shareholders. |
| Principal
and Portfolio Manager of Advisor (since 2001); joined Advisor’s
predecessor in 1996 as an equity analyst and became portfolio manager in
1999. |
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Richard
Mak, CFA |
| Jointly
and primarily responsible for day–to-day management of the High Yield
Fund. He participates in the investment research review and
decision-making process and represents the Fund to current and prospective
shareholders. |
| Portfolio
Manager of Advisor (since 2013). Senior Vice-President, High Yield
Portfolio Manager/Credit Analyst at PIMCO (2007 – 2013). |
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Scott
McBride, CFA |
| Jointly
and primarily responsible for day-to-day management of the Diversified
Value Fund, Large Cap Value Fund and Global Value Fund. He participates in
the investment research review and decision making process and represents
the Funds to current and prospective shareholders. |
| Chief
Executive Officer (since 2021) and Portfolio Manager of Advisor (since
2004); President of Advisor (2016-2021); joined Advisor’s predecessor in
2001 as equity analyst and became portfolio manager in 2004. |
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Patricia
McKenna, CFA |
| Participates
in the investment research review and decision-making process and
represents the Diversified Value Fund and Large Cap Value Fund to current
and prospective shareholders. |
| Principal
and Portfolio Manager of Advisor (since 2001); joined Advisor’s
predecessor in 1995 as portfolio manager. |
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Patrick
Meegan, CFA |
| Jointly
and primarily responsible for day-to-day management of the High Yield
Fund. He participates in the investment research review and
decision-making process and represents the Fund to current and prospective
shareholders. |
| Portfolio
Manager of Advisor (since 2001); joined Advisor’s predecessor in 1998 as
an equity analyst and became portfolio manager in 2001. |
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James
Miles |
| Jointly
and primarily responsible for day-to-day management of the Small Cap Value
Fund. He participates in the investment research review and
decision-making process and represents the Fund to current and prospective
shareholders. |
| Principal
and Portfolio Manager of Advisor (since 2001); joined Advisor’s
predecessor in 1995 as portfolio manager. |
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Judd
Peters, CFA |
| Jointly
and primarily responsible for day-to-day management of the Diversified
Value Fund, Large Cap Value Fund, Small Cap Diversified Value Fund and
International Small Cap Diversified Value Fund. He participates in the
investment research review and decision making process and represents the
Funds to current and prospective shareholders. |
| Portfolio
Manager of Advisor (since 2003); joined Advisor’s predecessor in 1999 as
equity analyst and became portfolio manager in 2003. |
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Scott
Rosenthal |
| Jointly
and primarily responsible for day-to-day management of the Global Value
Fund and International Value Fund. He participates in the investment
research review and decision making process and represents the Funds to
current and prospective shareholders. |
| Portfolio
Manager of Advisor (since 2010); joined Advisor in 2007 as equity analyst
and became portfolio manager in 2010. |
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Investment
Team Member |
| Primary
Role |
| Title
and Recent Biography |
Ryan
Thomes, CFA |
| Jointly
and primarily responsible for day–to-day management of the Small Cap
Diversified Value Fund and International Small Cap Diversified Value Fund.
He participates in the investment research review and decision-making
process and represents the Funds to current and prospective
shareholders. |
| Portfolio
Manager of Advisor (since 2018); joined Advisor in 2008 as portfolio
analyst and became portfolio manager in
2018. |
Please
see the SAI for more information about management of the Funds, including
additional information about the portfolio managers’ compensation, other
accounts managed by the portfolio managers and the portfolio managers’ ownership
of shares of the Funds that they manage.
Additional
Information
The
Trust enters into contractual arrangements with various parties, including among
others, the Funds’ investment adviser, principal underwriter, custodian and
transfer agent, who provide services to the Funds. Shareholders are not parties
to any such contractual arrangements or intended beneficiaries of those
contractual arrangements, and those contractual arrangements are not intended to
create in any shareholder any right to enforce them against the service
providers or to seek any remedy under them against the service providers, either
directly or on behalf of the Trust.
This
Prospectus provides information concerning the Funds that you should consider in
determining whether to purchase Fund shares. Neither this Prospectus nor the SAI
is intended, or should be read, to be or give rise to an agreement or contract
between the Trust, the Trustees or any Fund and any investor, or to give rise to
any rights in any shareholder or other person other than any rights under
federal or state law that may not be waived.
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Description
of Indices
The
performance of the Indices assumes the reinvestment of all distributions but
does not assume any transaction costs, taxes, management fees or other expenses.
It is not possible to invest directly in an index.
The
Russell 1000®
Index, an unmanaged index, measures the performance of those 1,000 largest
companies in the Russell 3000®
Index. The Russell 1000®
Index represents approximately 93% of the U.S. market.
The
Russell 1000®
Value Index measures the performance of those Russell 1000®
companies with lower price-to-book ratios and lower forecasted growth
values.
The
Russell Midcap®
Index, an unmanaged index, measures the performance of the 800 smallest
companies in the Russell 1000®
Index.
The
Russell Midcap®
Value Index measures the performance of those Russell Midcap®
companies with lower price-to-book ratios and lower forecasted growth
values.
The
Russell 2000®
Index, an unmanaged index, measures the performance of the 2,000 smallest
companies in the Russell 3000®
Index.
The
Russell 2000®
Value Index measures the performance of those Russell 2000®
companies with lower price-to-book ratios and lower forecasted growth
values.
The
Russell 3000®
Index,
an unmanaged index, is a stock market index comprised of the 3,000 largest
U.S.-traded stocks which represent about 98% of all U.S. incorporated equity
securities.
The
Russell 3000®
Value Index measures the performance of those Russell 3000®
companies
with lower price-to-book ratios and lower forecasted growth values.
The
MSCI World Index is a free float-adjusted weighted index capturing large and mid
cap representation across 23 Developed Markets (DM) countries. The Index
includes reinvestment of dividends, net foreign withholding taxes.
The
MSCI World ex-USA Index is a free float-adjusted weighted index capturing large
and mid cap representation across 22 of 23 Developed Markets (DM) countries,
excluding the United States. The Index includes reinvestment of dividends, net
foreign withholding taxes.
The
MSCI World ex-USA Small Cap Index captures small cap representation across 22 of
23 Developed Markets (DM) countries. The Index includes reinvestment of
dividends, net foreign withholding taxes.
The
ICE BofA BB-B U.S. High Yield Constrained Index contains all securities in the
ICE BofA U.S. High Yield Index rated BB+ through B- by S&P (or equivalent as
rated by Moody’s or Fitch), but caps issuer exposure at 2%. Index constituents
are capitalization-weighted, based on their current amount outstanding, provided
the total allocation to an individual issuer does not exceed 2%.
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Financial
Highlights
The
financial highlights tables below are intended to help you understand the Funds’
financial performance for the past five years, or since inception if less than
five years, by showing information for the Funds’ Class I, Class A, Class C and
Class Z shares, as applicable. Certain information reflects financial results
for a single Fund share. The total returns in the tables represent the rate that
an investor would have earned (or lost) on an investment in the Funds (assuming
reinvestment of all dividends and distributions). The financial highlights
tables show the Funds' financial performance for the fiscal years ended June 30,
2019, 2020, 2021, 2022 and 2023. This information has been audited by Deloitte
& Touche LLP, whose report, along with the Funds’ financial statements, are
included in the Funds’ annual
report,
which is available upon request. Financial highlights are not available for
share classes that are not currently offered.
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| |
|
HOTCHKIS
& WILEY FUNDS |
81 |
The
following per share data and ratios have been derived from information provided
in the financial statements.
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|
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| |
|
| Income
(loss) from investment operations |
Dividends
and distributions |
|
|
| Ratios
to Average Net Assets |
Diversified
Value Fund |
Net
asset value, beginning of year |
Net
investment
income (loss)1 |
Net
gains (losses) on securities (both realized and unrealized) |
Total
from investment operations |
Dividends
(from net investment income) |
Distributions (from
capital gains) |
Total
distributions |
Net
asset value, end of year |
Total
return2 |
Net
assets, end of year (in thousands) |
Expenses, net
of reimbursement/waiver |
Expenses,
before reimbursement/waiver |
Net
investment income (loss) |
Class
I |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
$22.76 |
$0.33 |
$3.49 |
$3.82 |
$(0.27) |
$— |
$(0.27) |
$26.31 |
16.88% |
$46,907 |
0.80% |
1.04% |
1.33% |
Year
ended 6/30/2022 |
25.09 |
0.25 |
(2.30) |
(2.05) |
(0.28) |
— |
(0.28) |
22.76 |
-8.27 |
50,757 |
0.80 |
1.01 |
0.98 |
Year
ended 6/30/2021 |
15.31 |
0.25 |
9.92 |
10.17 |
(0.39) |
— |
(0.39) |
25.09 |
67.14 |
63,906 |
0.80 |
1.03 |
1.24 |
Year
ended 6/30/2020 |
18.90 |
0.32 |
(3.54) |
(3.22) |
(0.37) |
— |
(0.37) |
15.31 |
-17.51 |
46,372 |
0.80 |
1.04 |
1.83 |
Year
ended 6/30/2019 |
18.80 |
0.30 |
0.06 |
0.36 |
(0.26) |
— |
(0.26) |
18.90 |
2.08 |
63,333 |
0.83 |
0.99 |
1.65 |
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| |
|
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|
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|
|
|
| |
|
|
|
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|
|
|
|
|
|
| |
Class
A |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
22.84 |
0.27 |
3.50 |
3.77 |
(0.20) |
— |
(0.20) |
26.41 |
16.58 |
34,785 |
1.05 |
1.25 |
1.10 |
Year
ended 6/30/2022 |
25.18 |
0.19 |
(2.30) |
(2.11) |
(0.23) |
— |
(0.23) |
22.84 |
-8.49 |
32,489 |
1.05 |
1.22 |
0.72 |
Year
ended 6/30/2021 |
15.36 |
0.20 |
9.96 |
10.16 |
(0.34) |
— |
(0.34) |
25.18 |
66.74 |
43,719 |
1.05 |
1.24 |
1.00 |
Year
ended 6/30/2020 |
18.95 |
0.28 |
(3.56) |
(3.28) |
(0.31) |
— |
(0.31) |
15.36 |
-17.68 |
24,972 |
1.05 |
1.25 |
1.57 |
Year
ended 6/30/2019 |
18.85 |
0.26 |
0.05 |
0.31 |
(0.21) |
— |
(0.21) |
18.95 |
1.78 |
35,807 |
1.08 |
1.24 |
1.39 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
C |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
22.73 |
0.08 |
3.50 |
3.58 |
— |
— |
— |
26.31 |
15.75 |
568 |
1.80 |
2.04 |
0.34 |
Year
ended 6/30/2022 |
25.07 |
(0.01) |
(2.29) |
(2.30) |
(0.04) |
— |
(0.04) |
22.73 |
-9.20 |
722 |
1.80 |
1.98 |
(0.04) |
Year
ended 6/30/2021 |
15.24 |
0.05 |
9.91 |
9.96 |
(0.13) |
— |
(0.13) |
25.07 |
65.57 |
1,141 |
1.80 |
1.97 |
0.25 |
Year
ended 6/30/2020 |
18.77 |
0.14 |
(3.55) |
(3.41) |
(0.12) |
— |
(0.12) |
15.24 |
-18.33 |
1,069 |
1.80 |
1.98 |
0.80 |
Year
ended 6/30/2019 |
18.64 |
0.12 |
0.06 |
0.18 |
(0.05) |
— |
(0.05) |
18.77 |
0.98 |
2,141 |
1.83 |
1.99 |
0.64 |
|
|
|
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|
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| |
|
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|
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|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, |
| 2023 |
2022 |
2021 |
2020 |
2019 |
| |
Portfolio
turnover rate |
26% |
28% |
32% |
28% |
26% |
| |
|
|
|
|
|
|
|
| |
82 |
HOTCHKIS
& WILEY FUNDS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Income
(loss) from investment operations |
Dividends
and distributions |
|
|
| Ratios
to Average Net Assets |
Large
Cap Value Fund |
Net
asset value, beginning of period |
Net
Investment income (loss)1 |
Net
gains (losses) on securities (both realized and unrealized) |
Total
from investment operations |
Dividends
(from net investment income) |
Distributions
(from capital gains) |
Total
distributions |
Net
asset value, end of period |
Total
return2 |
Net
assets, end of period (in thousands) |
Expenses,
net of reimbursement/waiver |
Expenses,
before reimbursement/waiver |
Net
investment income (loss) |
Class
I |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
$38.92 |
$0.57 |
$4.86 |
$5.43 |
$(0.53) |
$(2.76) |
$(3.29) |
$41.06 |
14.35% |
$219,456 |
0.95% |
0.99% |
1.40% |
Year
ended 6/30/2022 |
43.29 |
0.41 |
(4.40) |
(3.99) |
(0.38) |
— |
(0.38) |
38.92 |
-9.31 |
214,692 |
0.95 |
0.97 |
0.93 |
Year
ended 6/30/2021 |
26.81 |
0.41 |
16.64 |
17.05 |
(0.57) |
— |
(0.57) |
43.29 |
64.20 |
293,318 |
0.95 |
0.98 |
1.19 |
Year
ended 6/30/2020 |
33.29 |
0.53 |
(6.44) |
(5.91) |
(0.57) |
— |
(0.57) |
26.81 |
-18.18 |
257,544 |
0.95 |
0.95 |
1.72 |
Year
ended 6/30/2019 |
33.57 |
0.51 |
0.19 |
0.70 |
(0.64) |
(0.34) |
(0.98) |
33.29 |
2.51 |
357,191 |
0.95 |
0.95 |
1.56 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
A |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
38.66 |
0.46 |
4.84 |
5.30 |
(0.40) |
(2.76) |
(3.16) |
40.80 |
14.08 |
134,901 |
1.20 |
1.20 |
1.14 |
Year
ended 6/30/2022 |
43.04 |
0.31 |
(4.38) |
(4.07) |
(0.31) |
— |
(0.31) |
38.66 |
-9.53 |
150,260 |
1.18 |
1.18 |
0.71 |
Year
ended 6/30/2021 |
26.67 |
0.33 |
16.56 |
16.89 |
(0.52) |
— |
(0.52) |
43.04 |
63.82 |
149,051 |
1.18 |
1.18 |
0.96 |
Year
ended 6/30/2020 |
33.14 |
0.46 |
(6.45) |
(5.99) |
(0.48) |
— |
(0.48) |
26.67 |
-18.42 |
113,504 |
1.20 |
1.20 |
1.49 |
Year
ended 6/30/2019 |
33.36 |
0.41 |
0.22 |
0.63 |
(0.51) |
(0.34) |
(0.85) |
33.14 |
2.24 |
116,354 |
1.20 |
1.20 |
1.26 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
C |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
38.24 |
0.14 |
4.80 |
4.94 |
(0.04) |
(2.76) |
(2.80) |
40.38 |
13.23 |
3,311 |
1.95 |
1.96 |
0.36 |
Year
ended 6/30/2022 |
42.57 |
(0.02) |
(4.31) |
(4.33) |
— |
— |
— |
38.24 |
-10.17 |
4,691 |
1.91 |
1.91 |
(0.05) |
Year
ended 6/30/2021 |
26.26 |
0.05 |
16.36 |
16.41 |
(0.10) |
— |
(0.10) |
42.57 |
62.60 |
7,467 |
1.92 |
1.92 |
0.16 |
Year
ended 6/30/2020 |
32.59 |
0.24 |
(6.36) |
(6.12) |
(0.21) |
— |
(0.21) |
26.26 |
-18.93 |
9,567 |
1.88 |
1.88 |
0.78 |
Year
ended 6/30/2019 |
32.68 |
0.17 |
0.25 |
0.42 |
(0.17) |
(0.34) |
(0.51) |
32.59 |
1.49 |
14,948 |
1.95 |
1.95 |
0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
Z |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
38.92 |
0.54 |
4.93 |
5.47 |
(0.57) |
(2.76) |
(3.33) |
41.06 |
14.46 |
13,023 |
0.87 |
0.87 |
1.34 |
Year
ended 6/30/2022 |
43.30 |
0.46 |
(4.40) |
(3.94) |
(0.44) |
— |
(0.44) |
38.92 |
-9.22 |
35,081 |
0.86 |
0.86 |
1.07 |
Year
ended 6/30/2021 |
26.82 |
0.47 |
16.63 |
17.10 |
(0.62) |
— |
(0.62) |
43.30 |
64.34 |
12,958 |
0.84 |
0.84 |
1.33 |
Period
from 9/30/20193
to
6/30/2020 |
33.12 |
0.49 |
(6.19) |
(5.70) |
(0.60) |
— |
(0.60) |
26.82 |
-17.65 |
6,943 |
0.834 |
0.834 |
2.374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, |
| 2023 |
2022 |
2021 |
2020 |
2019 |
| |
Portfolio
turnover rate |
26% |
35% |
25% |
29% |
23% |
| |
1Net
investment income (loss) per share has been calculated based on average shares
outstanding during the period.
2Total
returns exclude the effects of sales charges. The Fund’s investment advisor may
have waived a portion of its advisory fee and/or reimbursed a portion of the
Fund’s expenses. Without such waiver and/or reimbursement, the Fund’s
performance would have been lower. Returns for periods less than one year are
not annualized.
3Commencement
of operations.
4Annualized.
|
|
|
|
|
|
|
| |
|
HOTCHKIS
& WILEY FUNDS |
83 |
The
following per share data and ratios have been derived from information provided
in the financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Income
(loss) from investment operations |
Dividends
and distributions |
|
|
| Ratios
to Average Net Assets |
Mid-Cap
Value Fund |
Net
asset value, beginning of period |
Net
Investment income (loss)1 |
Net
gains (losses) on securities (both realized and unrealized) |
Total
from investment operations |
Dividends
(from net investment income) |
Distributions
(from capital gains) |
Total
distributions |
Net
asset value, end of period |
Total
return2 |
Net
assets, end of period (in thousands) |
Expenses, net
of reimbursement/waiver |
Expenses,
before reimbursement/waiver |
Net
investment income (loss) |
Class
I |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
$40.71 |
$0.53 |
$5.35 |
$5.88 |
$(0.22) |
$— |
$(0.22) |
$46.37 |
14.47% |
$289,249 |
1.00% |
1.00% |
1.18% |
Year
ended 6/30/2022 |
42.23 |
0.22 |
(1.18) |
(0.96) |
(0.56) |
— |
(0.56) |
40.71 |
-2.34 |
286,887 |
1.01 |
1.01 |
0.51 |
Year
ended 6/30/2021 |
22.27 |
0.48 |
20.20 |
20.68 |
(0.72) |
— |
(0.72) |
42.23 |
93.96 |
302,584 |
1.04 |
1.04 |
1.50 |
Year
ended 6/30/2020 |
33.10 |
0.51 |
(10.82) |
(10.31) |
(0.52) |
— |
(0.52) |
22.27 |
-31.62 |
202,902 |
1.04 |
1.04 |
1.73 |
Year
ended 6/30/2019 |
39.68 |
0.24 |
(5.94) |
(5.70) |
(0.33) |
(0.55) |
(0.88) |
33.10 |
-14.29 |
1,044,280 |
1.00 |
1.00 |
0.67 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
A |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
39.99 |
0.43 |
5.26 |
5.69 |
(0.13) |
— |
(0.13) |
45.55 |
14.24 |
120,783 |
1.21 |
1.21 |
0.97 |
Year
ended 6/30/2022 |
41.52 |
0.13 |
(1.15) |
(1.02) |
(0.51) |
— |
(0.51) |
39.99 |
-2.54 |
111,771 |
1.21 |
1.21 |
0.31 |
Year
ended 6/30/2021 |
21.93 |
0.43 |
19.87 |
20.30 |
(0.71) |
— |
(0.71) |
41.52 |
93.63 |
118,947 |
1.23 |
1.23 |
1.35 |
Year
ended 6/30/2020 |
32.53 |
0.43 |
(10.65) |
(10.22) |
(0.38) |
— |
(0.38) |
21.93 |
-31.78 |
71,919 |
1.22 |
1.22 |
1.56 |
Year
ended 6/30/2019 |
39.03 |
0.15 |
(5.82) |
(5.67) |
(0.28) |
(0.55) |
(0.83) |
32.53 |
-14.48 |
159,676 |
1.25 |
1.25 |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
C |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
34.61 |
0.07 |
4.55 |
4.62 |
— |
— |
— |
39.23 |
13.35 |
4,481 |
1.98 |
1.98 |
0.20 |
Year
ended 6/30/2022 |
35.80 |
(0.17) |
(1.01) |
(1.18) |
(0.01) |
— |
(0.01) |
34.61 |
-3.29 |
4,480 |
1.97 |
1.97 |
(0.46) |
Year
ended 6/30/2021 |
19.01 |
0.15 |
17.19 |
17.34 |
(0.55) |
— |
(0.55) |
35.80 |
92.13 |
8,206 |
2.01 |
2.01 |
0.57 |
Year
ended 6/30/2020 |
28.12 |
0.20 |
(9.27) |
(9.07) |
(0.04) |
— |
(0.04) |
19.01 |
-32.29 |
8,389 |
1.96 |
1.96 |
0.82 |
Year
ended 6/30/2019 |
33.93 |
(0.10) |
(5.05) |
(5.15) |
(0.11) |
(0.55) |
(0.66) |
28.12 |
-15.15 |
24,447 |
2.00 |
2.00 |
(0.33) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
Class
Z |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
40.72 |
0.58 |
5.36 |
5.94 |
(0.28) |
— |
(0.28) |
46.38 |
14.60 |
30,591 |
0.88 |
0.88 |
1.30 |
Year
ended 6/30/2022 |
42.25 |
0.29 |
(1.19) |
(0.90) |
(0.63) |
— |
(0.63) |
40.72 |
-2.23 |
30,870 |
0.87 |
0.87 |
0.65 |
Year
ended 6/30/2021 |
22.26 |
0.56 |
20.19 |
20.75 |
(0.76) |
— |
(0.76) |
42.25 |
94.35 |
22,879 |
0.88 |
0.88 |
1.75 |
Period
from 9/30/20193
to 6/30/2020 |
30.67 |
0.40 |
(8.25) |
(7.85) |
(0.56) |
— |
(0.56) |
22.26 |
-26.16 |
15,976 |
0.894 |
0.894 |
2.124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, |
| 2023 |
2022 |
2021 |
2020 |
2019 |
| |
Portfolio
turnover rate |
35% |
41% |
37% |
27% |
34% |
| |
|
|
|
|
|
|
|
| |
84 |
HOTCHKIS
& WILEY FUNDS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Income
(loss) from investment operations |
Dividends
and distributions |
|
|
| Ratios
to Average Net Assets |
Small
Cap Value Fund |
Net
asset value, beginning of period |
Net
investment income (loss)1 |
Net
gains (losses) on securities (both realized and unrealized) |
Total
from investment operations |
Dividends
(from net investment income) |
Distributions
(from capital gains) |
Total
distributions |
Net
asset value, end of period |
Total
return2 |
Net
assets, end of period (in thousands) |
Expenses,
net of reimbursement/waiver |
Expenses,
before reimbursement/waiver |
Net
investment income (loss) |
Class
I |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
$66.00 |
$0.74 |
$11.79 |
$12.53 |
$(0.42) |
$(8.39) |
$(8.81) |
$69.72 |
19.73% |
$627,132 |
1.01% |
1.06% |
1.07% |
Year
ended 6/30/2022 |
68.58 |
0.27 |
(2.59) |
(2.32) |
(0.26) |
— |
(0.26) |
66.00 |
-3.42 |
510,545 |
1.06 |
1.06 |
0.38 |
Year
ended 6/30/2021 |
38.22 |
0.23 |
30.56 |
30.79 |
(0.43) |
— |
(0.43) |
68.58 |
80.88 |
512,396 |
1.07 |
1.07 |
0.44 |
Year
ended 6/30/2020 |
53.27 |
0.45 |
(12.86) |
(12.41) |
(0.48) |
(2.16) |
(2.64) |
38.22 |
-24.70 |
335,080 |
1.05 |
1.05 |
0.94 |
Year
ended 6/30/2019 |
63.89 |
0.35 |
(6.34) |
(5.99) |
(0.33) |
(4.30) |
(4.63) |
53.27 |
-8.97 |
670,391 |
1.03 |
1.03 |
0.61 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
A |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
65.67 |
0.60 |
11.72 |
12.32 |
(0.34) |
(8.39) |
(8.73) |
69.26 |
19.49 |
50,327 |
1.21 |
1.21 |
0.86 |
Year
ended 6/30/2022 |
68.24 |
0.16 |
(2.58) |
(2.42) |
(0.15) |
— |
(0.15) |
65.67 |
-3.56 |
33,250 |
1.21 |
1.21 |
0.23 |
Year
ended 6/30/2021 |
38.03 |
0.14 |
30.41 |
30.55 |
(0.34) |
— |
(0.34) |
68.24 |
80.58 |
35,039 |
1.25 |
1.25 |
0.27 |
Year
ended 6/30/2020 |
52.98 |
0.36 |
(12.83) |
(12.47) |
(0.32) |
(2.16) |
(2.48) |
38.03 |
-24.86 |
26,028 |
1.25 |
1.25 |
0.76 |
Year
ended 6/30/2019 |
63.49 |
0.18 |
(6.26) |
(6.08) |
(0.13) |
(4.30) |
(4.43) |
52.98 |
-9.20 |
44,240 |
1.28 |
1.28 |
0.32 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
C |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
52.23 |
0.08 |
9.21 |
9.29 |
(0.08) |
8.39 |
(8.47) |
53.05 |
18.60 |
2,181 |
1.96 |
1.96 |
0.15 |
Year
ended 6/30/2022 |
54.55 |
(0.27) |
(2.05) |
(2.32) |
— |
— |
— |
52.23 |
-4.25 |
1,157 |
1.94 |
1.94 |
(0.48) |
Year
ended 6/30/2021 |
30.49 |
(0.19) |
24.33 |
24.14 |
(0.08) |
— |
(0.08) |
54.55 |
79.25 |
2,026 |
1.99 |
1.99 |
(0.46) |
Year
ended 6/30/2020 |
42.94 |
0.02 |
(10.31) |
(10.29) |
— |
(2.16) |
(2.16) |
30.49 |
-25.40 |
3,528 |
1.95 |
1.95 |
0.05 |
Year
ended 6/30/2019 |
52.65 |
(0.21) |
(5.20) |
(5.41) |
— |
(4.30) |
(4.30) |
42.94 |
-9.86 |
7,496 |
2.03 |
2.03 |
(0.44) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
Z |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
66.04 |
0.85 |
11.78 |
12.63 |
(0.55) |
(8.39) |
(8.94) |
69.73 |
19.90 |
11,434 |
0.87 |
0.87 |
1.22 |
Year
ended 6/30/2022 |
68.62 |
0.42 |
(2.60) |
(2.18) |
(0.40) |
— |
(0.40) |
66.04 |
-3.22 |
9,394 |
0.86 |
0.86 |
0.59 |
Year
ended 6/30/2021 |
38.23 |
0.35 |
30.55 |
30.90 |
(0.51) |
— |
(0.51) |
68.62 |
81.23 |
10,246 |
0.87 |
0.87 |
0.65 |
Period
from 9/30/20193
to 6/30/2020 |
52.15 |
0.56 |
(11.79) |
(11.23) |
(0.53) |
(2.16) |
(2.69) |
38.23 |
-22.99 |
6,540 |
0.874 |
0.874 |
1.724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, |
| 2023 |
2022 |
2021 |
2020 |
2019 |
| |
Portfolio
turnover rate |
42% |
49% |
36% |
34% |
40% |
| |
1Net
investment income (loss) per share has been calculated based on average shares
outstanding during the period.
2Total
returns exclude the effects of sales charges. The Fund’s investment advisor may
have waived a portion of its advisory fee and/or reimbursed a portion of the
Fund’s expenses. Without such waiver and/or reimbursement, the Fund’s
performance would have been lower. Returns for periods less than one year are
not annualized.
3Commencement
of operations.
4Annualized.
|
|
|
|
|
|
|
| |
|
HOTCHKIS
& WILEY FUNDS |
85 |
The
following per share data and ratios have been derived from information provided
in the financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Income
(loss) from investment operations |
Dividends
and distributions |
|
|
| Ratios
to Average Net Assets |
Small
Cap Diversified Value Fund |
Net
asset value, beginning of period |
Net
investment income1 |
Net
gains (losses) on securities (both realized and unrealized) |
Total
from investment operations |
Dividends
(from net investment income) |
Distributions
(from capital gains) |
Total
distributions |
Net
asset value, end of period |
Total
return2 |
Net
assets, end of period (in thousands) |
Expenses,
net of reimbursement/waiver |
Expenses,
before reimbursement/waiver |
Net
investment income |
Class
I |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
$11.91 |
$0.21 |
$1.24 |
$1.45 |
$(0.19) |
$(0.91) |
$(1.10) |
$12.26 |
12.47% |
$551,324 |
0.80% |
0.87% |
1.69% |
Year
ended 6/30/2022 |
13.99 |
0.17 |
(1.38) |
(1.21) |
(0.14) |
(0.73) |
(0.87) |
11.91 |
-9.34 |
461,866 |
0.80 |
0.87 |
1.26 |
Year
ended 6/30/2021 |
7.88 |
0.14 |
6.07 |
6.21 |
(0.10) |
— |
(0.10) |
13.99 |
79.26 |
427,708 |
0.80 |
0.87 |
1.21 |
Year
ended 6/30/2020 |
10.08 |
0.12 |
(2.23) |
(2.11) |
(0.09) |
— |
(0.09) |
7.88 |
-21.14 |
143,415 |
0.82 |
0.92 |
1.37 |
Year
ended 6/30/2019 |
12.21 |
0.10 |
(1.30) |
(1.20) |
(0.08) |
(0.85) |
(0.93) |
10.08 |
-9.23 |
95,405 |
0.90 |
1.06 |
0.91 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
A |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
11.83 |
0.18 |
1.22 |
1.40 |
(0.16) |
(0.91) |
(1.07) |
12.16 |
12.12 |
36,173 |
1.05 |
1.14 |
1.54 |
Year
ended 6/30/2022 |
13.91 |
0.13 |
(1.36) |
(1.23) |
(0.12) |
(0.73) |
(0.85) |
11.83 |
-9.57 |
5,839 |
1.05 |
1.15 |
0.98 |
Year
ended 6/30/2021 |
7.83 |
0.11 |
6.06 |
6.17 |
(0.09) |
— |
(0.09) |
13.91 |
79.09 |
8,668 |
1.05 |
1.14 |
0.96 |
Year
ended 6/30/2020 |
10.03 |
0.10 |
(2.24) |
(2.14) |
(0.06) |
— |
(0.06) |
7.83 |
-21.48 |
1,535 |
1.07 |
1.18 |
1.06 |
Year
ended 6/30/2019 |
12.14 |
0.06 |
(1.26) |
(1.20) |
(0.06) |
(0.85) |
(0.91) |
10.03 |
-9.35 |
2,875 |
1.15 |
1.36 |
0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
Z |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
11.90 |
0.21 |
1.24 |
1.45 |
(0.19) |
(0.91) |
(1.10) |
12.25 |
12.54 |
77,815 |
0.77 |
0.77 |
1.72 |
Year
ended 6/30/2022 |
13.99 |
0.18 |
(1.39) |
(1.21) |
(0.15) |
(0.73) |
(0.88) |
11.90 |
-9.38 |
2,458 |
0.76 |
0.76 |
1.33 |
Year
ended 6/30/2021 |
7.87 |
0.15 |
6.07 |
6.22 |
(0.10) |
— |
(0.10) |
13.99 |
79.45 |
1,186 |
0.77
|
0.77
|
1.25
|
Period
from 9/30/20193
to 6/30/2020 |
10.02 |
0.09 |
(2.14) |
(2.05) |
(0.10) |
— |
(0.10) |
7.87 |
-20.75 |
40 |
0.804 |
0.844 |
1.414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, |
|
| 2023 |
2022 |
2021 |
2020 |
2019 |
| |
Portfolio
turnover rate |
52% |
38% |
42% |
53% |
84% |
| |
|
|
|
|
|
|
|
| |
86 |
HOTCHKIS
& WILEY FUNDS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Income
(loss) from investment operations |
Dividends
and distributions |
|
|
| Ratios
to Average Net Assets |
Global
Value Fund |
Net
asset value, beginning of year |
Net
investment
income1 |
Net
gains (losses) on securities (both realized and unrealized) |
Total
from investment operations |
Dividends
(from net investment income) |
Distributions
(from capital gains) |
Total
distributions |
Net
asset value, end of year |
Total
return2 |
Net
assets, end of year (in thousands) |
Expenses,
net of reimbursement/waiver |
Expenses,
before reimbursement/waiver |
Net
investment income |
Class
I |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
$12.64 |
$0.16 |
$2.01 |
$2.17 |
$(0.14) |
$(0.36) |
$(0.50) |
$14.31 |
17.61% |
$31,599 |
0.95% |
1.25% |
1.17% |
Year
ended 6/30/2022 |
14.44 |
0.14 |
(1.84) |
(1.70) |
(0.10) |
— |
(0.10) |
12.64 |
-11.86 |
31,800 |
0.95 |
1.22 |
0.98 |
Year
ended 6/30/2021 |
8.96 |
0.10 |
5.56 |
5.66 |
(0.18) |
— |
(0.18) |
14.44 |
63.58 |
36,025 |
0.95 |
1.29 |
0.83 |
Year
ended 6/30/2020 |
11.55 |
0.14 |
(2.42) |
(2.28) |
(0.13) |
(0.18) |
(0.31) |
8.96 |
-20.42 |
25,148 |
0.95 |
1.32 |
1.31 |
Year
ended 6/30/2019 |
13.30 |
0.23 |
(0.94) |
(0.71) |
(0.14) |
(0.90) |
(1.04) |
11.55 |
-4.57 |
39,749 |
0.96 |
1.62 |
2.02 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
A |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
12.63 |
0.13 |
2.00 |
2.13 |
(0.10) |
(0.36) |
(0.46) |
14.30 |
17.30 |
1,535 |
1.20 |
1.50 |
0.96 |
Year
ended 6/30/2022 |
14.43 |
0.11 |
(1.84) |
(1.73) |
(0.07) |
— |
(0.07) |
12.63 |
-12.07 |
1,290 |
1.20 |
1.46 |
0.73 |
Year
ended 6/30/2021 |
8.96 |
0.08 |
5.54 |
5.62 |
(0.15) |
— |
(0.15) |
14.43 |
63.05 |
1,484 |
1.20 |
1.48 |
0.58 |
Year
ended 6/30/2020 |
11.55 |
0.11 |
(2.41) |
(2.30) |
(0.11) |
(0.18) |
(0.29) |
8.96 |
-20.57 |
168 |
1.20 |
1.62 |
1.05 |
Year
ended 6/30/2019 |
13.28 |
0.09 |
(0.83) |
(0.74) |
(0.09) |
(0.90) |
(0.99) |
11.55 |
-4.85 |
238 |
1.24 |
2.64 |
0.72 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, |
| 2023 |
2022 |
2021 |
2020 |
2019 |
| |
Portfolio
turnover rate |
39% |
38% |
39% |
36% |
36% |
| |
1Net
investment income per share has been calculated based on average shares
outstanding during the period.
2Total
returns exclude the effects of sales charges. The Fund’s investment advisor may
have waived a portion of its advisory fee and/or reimbursed a portion of the
Fund’s expenses. Without such waiver and/or reimbursement, the Fund’s
performance would have been lower. Returns for periods less than one year are
not annualized.
3Commencement
of operations.
4Annualized.
|
|
|
|
|
|
|
| |
|
HOTCHKIS
& WILEY FUNDS |
87 |
The
following per share data and ratios have been derived from information provided
in the financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Income
(loss) from investment operations |
Dividends
and distributions |
|
|
| Ratios
to Average Net Assets |
International
Value Fund |
Net
asset value, beginning of year |
Net
investment
income1 |
Net
gains (losses) on securities (both realized and unrealized) |
Total
from investment operations |
Dividends
(from net investment income) |
Distributions
(from capital gains) |
Total
distributions |
Net
asset value, end of year |
Total
return2 |
Net
assets, end of year (in thousands) |
Expenses,
net of reimbursement/waiver |
Expenses,
before reimbursement/waiver |
Net
investment income |
Class
I |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
$10.35 |
$0.26 |
$1.96 |
$2.22 |
$(0.23) |
$(0.12) |
$(0.35) |
$12.22 |
21.88% |
$3,310 |
0.95% |
5.08% |
2.37% |
Year
ended 6/30/2022 |
11.66 |
0.27 |
(1.41) |
(1.14) |
(0.17) |
— |
(0.17) |
10.35 |
-9.82 |
2,708 |
0.95 |
4.87 |
2.35 |
Year
ended 6/30/2021 |
7.59 |
0.15 |
4.04 |
4.19 |
(0.12) |
— |
(0.12) |
11.66 |
55.37 |
2,554 |
0.95 |
5.13 |
1.56 |
Year
ended 6/30/2020 |
9.77 |
0.13 |
(1.96) |
(1.83) |
(0.19) |
(0.16) |
(0.35) |
7.59 |
-19.66 |
1,874 |
0.95 |
6.10 |
1.39 |
Year
ended 6/30/2019 |
11.57 |
0.19 |
(1.27) |
(1.08) |
(0.14) |
(0.58) |
(0.72) |
9.77 |
-9.04 |
2,334 |
0.99 |
5.94 |
1.85 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, |
| 2023 |
2022 |
2021 |
2020 |
2019 |
| |
Portfolio
turnover rate |
26% |
20% |
29% |
30% |
42% |
| |
|
|
|
|
|
|
|
| |
88 |
HOTCHKIS
& WILEY FUNDS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Income
(loss) from investment operations |
Dividends
and distributions |
|
|
| Ratios
to Average Net Assets |
International
Small Cap Diversified Value Fund |
Net
asset value, beginning of period |
Net
investment
income1 |
Net
gains (losses) on securities (both realized and unrealized) |
Total
from investment operations |
Dividends
(from net investment income) |
Distributions
(from capital gains) |
Total
distributions |
Net
asset value, end of period |
Total
return2 |
Net
assets, end of period (in thousands) |
Expenses,
net of reimbursement/waiver |
Expenses,
before reimbursement/waiver |
Net
investment income |
Class
I |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
$10.29 |
$0.29 |
$1.41 |
$1.70 |
$(0.20) |
$(0.36) |
$(0.56) |
$11.43 |
17.07% |
$6,607 |
0.99% |
4.59% |
2.72% |
Year
ended 6/30/2022 |
14.83 |
0.25 |
(2.01) |
(1.76) |
(0.39) |
$(2.39) |
(2.78) |
10.29 |
-14.28 |
5,709 |
0.99 |
4.23 |
1.92 |
Period
from 6/30/20203
to 6/30/2021 |
10.00 |
0.24 |
4.87 |
5.11 |
(0.08) |
(0.20) |
(0.28) |
14.83 |
51.58 |
6,661 |
0.99 |
4.27 |
1.91 |
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, |
| 2023 |
2022 |
2021 |
Portfolio
turnover rate |
78% |
45% |
63% |
1Net
investment income per share has been calculated based on average shares
outstanding during the period.
2Total
returns exclude the effects of sales charges. The Fund's investment advisor may
have waived a portion of its advisory fee and/or reimbursed a portion of the
Fund's expenses. Without such waiver and/or reimbursement, the Fund's
performance would have been lower. Returns for periods less than one year are
not annualized.
3Commencement
of operations.
|
|
|
|
|
|
|
| |
|
HOTCHKIS
& WILEY FUNDS |
89 |
The
following per share data and ratios have been derived from information provided
in the financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Income
(loss) from investment operations |
Dividends
and distributions |
|
|
| Ratios
to Average Net Assets |
Value
Opportunities Fund |
Net
asset value, beginning of period |
Net
investment
income (loss)1 |
Net
gains (losses) on securities (both realized and unrealized) |
Total
from investment operations |
Dividends
(from net investment income) |
Distributions
(from capital gains) |
Total
distributions |
Net
asset value, end of period |
Total
return2 |
Net
assets, end of period (in thousands) |
Expenses,
net of reimbursement/waiver |
Expenses,
before reimbursement/waiver |
Net
investment income (loss) |
Class
I |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
$29.09 |
$0.35 |
$6.74 |
$7.09 |
$(0.08) |
$(0.72) |
$(0.80) |
$35.38 |
24.67% |
$384,206 |
0.96% |
0.96% |
1.05% |
Year
ended 6/30/2022 |
37.42 |
0.16 |
(3.67) |
(3.51) |
(0.45) |
(4.37) |
(4.82) |
29.09 |
-11.50 |
326,559 |
0.94 |
0.94 |
0.44 |
Year
ended 6/30/2021 |
22.61 |
0.50 |
15.06 |
15.56 |
(0.75) |
— |
(0.75) |
37.42 |
69.77 |
390,241 |
0.94 |
0.94 |
1.69 |
Year
ended 6/30/2020 |
28.08 |
0.49 |
(5.28) |
(4.79) |
(0.32) |
(0.36) |
(0.68) |
22.61 |
-17.56 |
401,552 |
0.97 |
0.97 |
1.88 |
Year
ended 6/30/2019 |
30.38 |
0.30 |
0.09 |
0.39 |
(0.31) |
(2.38) |
(2.69) |
28.08 |
2.45 |
588,097 |
0.96 |
0.96 |
1.05 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
A |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
29.09 |
0.26 |
6.75 |
7.01 |
(0.04) |
(0.72) |
(0.76) |
35.34 |
24.36 |
81,197 |
1.21 |
1.21 |
0.80 |
Year
ended 6/30/2022 |
37.43 |
0.07 |
(3.68) |
(3.61) |
(0.36) |
(4.37) |
(4.73) |
29.09 |
-11.72 |
70,350 |
1.20 |
1.20 |
0.19 |
Year
ended 6/30/2021 |
22.66 |
0.43 |
15.06 |
15.49 |
(0.72) |
— |
(0.72) |
37.43 |
69.24 |
83,243 |
1.24 |
1.24 |
1.43 |
Year
ended 6/30/2020 |
28.12 |
0.43 |
(5.29) |
(4.86) |
(0.24) |
(0.36) |
(0.60) |
22.66 |
-17.73 |
72,162 |
1.20 |
1.20 |
1.64 |
Year
ended 6/30/2019 |
30.40 |
0.22 |
0.10 |
0.32 |
(0.22) |
(2.38) |
(2.60) |
28.12 |
2.18 |
131,050 |
1.21 |
1.21 |
0.77 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
C |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
26.37 |
0.03 |
6.08 |
6.11 |
— |
(0.72) |
(0.72) |
31.76 |
23.44 |
18,818 |
1.92 |
1.92 |
0.10 |
Year
ended 6/30/2022 |
34.31 |
(0.18) |
(3.31) |
(3.49) |
(0.08) |
(4.37) |
(4.45) |
26.37 |
-12.34 |
19,575 |
1.91 |
1.91 |
(0.55) |
Year
ended 6/30/2021 |
20.87 |
0.21 |
13.83 |
14.04 |
(0.60) |
— |
(0.60) |
34.31 |
68.05 |
27,089 |
1.93 |
1.93 |
0.76 |
Year
ended 6/30/2020 |
25.94 |
0.23 |
(4.90) |
(4.67) |
(0.04) |
(0.36) |
(0.40) |
20.87 |
-18.32 |
26,951 |
1.91 |
1.91 |
0.94 |
Year
ended 6/30/2019 |
28.22 |
0.01 |
0.10 |
0.11 |
(0.01) |
(2.38) |
(2.39) |
25.94 |
1.44 |
47,021 |
1.96 |
1.96 |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
Z |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
29.09 |
0.38 |
6.74 |
7.12 |
(0.09) |
(0.72) |
(0.81) |
35.40 |
24.74 |
51,068 |
0.87 |
0.87 |
1.14 |
Year
ended 6/30/2022 |
37.43 |
0.19 |
(3.68) |
(3.49) |
(0.48) |
(4.37) |
(4.85) |
29.09 |
-11.40 |
40,582 |
0.86 |
0.86 |
0.52 |
Year
ended 6/30/2021 |
22.62 |
0.55 |
15.04 |
15.59 |
(0.78) |
— |
(0.78) |
37.43 |
69.86 |
43,886 |
0.87 |
0.87 |
1.81 |
Period
from 9/30/20193
to 6/30/2020 |
27.79 |
0.37 |
(4.84) |
(4.47) |
(0.34) |
(0.36) |
(0.70) |
22.62 |
-16.61 |
16,207 |
0.854 |
0.854 |
1.954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, |
| 2023 |
2022 |
2021 |
2020 |
2019 |
| |
Portfolio
turnover rate |
88% |
75% |
76% |
47% |
60% |
| |
|
|
|
|
|
|
|
| |
90 |
HOTCHKIS
& WILEY FUNDS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Income
(loss) from investment operations |
Dividends
and distributions |
|
|
| Ratios
to Average Net Assets |
High
Yield Fund |
Net
asset value, beginning of year |
Net
investment
income1 |
Net
gains (losses) on securities (both realized and unrealized) |
Total
from investment operations |
Dividends
(from net investment income) |
Distributions
(from capital gains) |
Total
distributions |
Net
asset value, end of year |
Total
return2 |
Net
assets, end of year (in thousands) |
Expenses,
net of reimbursement/waiver |
Expenses,
before reimbursement/waiver |
Net
investment income |
Class
I |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
$9.83 |
$0.57 |
$0.31 |
$0.88 |
$(0.57) |
$— |
$(0.57) |
$10.14 |
9.23% |
$723,548 |
0.70% |
0.77% |
5.73% |
Year
ended 6/30/2022 |
11.58 |
0.51 |
(1.75) |
(1.24) |
(0.51) |
— |
(0.51) |
9.83 |
-11.12 |
642,934 |
0.70 |
0.77 |
4.56 |
Year
ended 6/30/2021 |
10.22 |
0.59 |
1.34 |
1.93 |
(0.57) |
— |
(0.57) |
11.58 |
19.32 |
857,715 |
0.70 |
0.75 |
5.34 |
Year
ended 6/30/2020 |
11.69 |
0.65 |
(1.48)5 |
(0.83) |
(0.64) |
— |
(0.64) |
10.22 |
-7.26 |
978,398 |
0.70 |
0.75 |
5.85 |
Year
ended 6/30/2019 |
11.90 |
0.69 |
(0.21)5 |
0.48 |
(0.69) |
— |
(0.69) |
11.69 |
4.19 |
1,825,782 |
0.70 |
0.75 |
5.87 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
A |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
9.75 |
0.55 |
0.29 |
0.84 |
(0.55) |
— |
(0.55) |
10.04 |
8.80 |
28,521 |
0.92 |
0.98 |
5.52 |
Year
ended 6/30/2022 |
11.48 |
0.48 |
(1.73) |
(1.25) |
(0.48) |
— |
(0.48) |
9.75 |
-11.28 |
29,066 |
0.93 |
0.98 |
4.33 |
Year
ended 6/30/2021 |
10.13 |
0.56 |
1.33 |
1.89 |
(0.54) |
— |
(0.54) |
11.48 |
19.09 |
39,312 |
0.91 |
0.97 |
5.12 |
Year
ended 6/30/2020 |
11.62 |
0.63 |
(1.51)5 |
(0.88) |
(0.61) |
— |
(0.61) |
10.13 |
-7.77 |
43,638 |
0.95 |
1.01 |
5.54 |
Year
ended 6/30/2019 |
11.83 |
0.65 |
(0.20)5 |
0.45 |
(0.66) |
— |
(0.66) |
11.62 |
3.92 |
303,367 |
0.95 |
1.00 |
5.62 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
C |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
9.83 |
0.47 |
0.31 |
0.78 |
(0.47) |
— |
(0.47) |
10.14 |
8.03 |
614 |
1.70 |
1.78 |
4.73 |
Year
ended 6/30/2022 |
11.57 |
0.40 |
(1.74) |
(1.34) |
(0.40) |
— |
(0.40) |
9.83 |
-11.94 |
1,078 |
1.70 |
1.77 |
3.55 |
Year
ended 6/30/2021 |
10.21 |
0.49 |
1.34 |
1.83 |
(0.47) |
— |
(0.47) |
11.57 |
18.20 |
1,769 |
1.66 |
1.71 |
4.41 |
Year
ended 6/30/2020 |
11.68 |
0.55 |
(1.48) |
(0.93) |
(0.54) |
— |
(0.54) |
10.21 |
-8.13 |
2,596 |
1.64 |
1.69 |
4.95 |
Year
ended 6/30/2019 |
11.89 |
0.57 |
(0.21) |
0.36 |
(0.57) |
— |
(0.57) |
11.68 |
3.15 |
3,599 |
1.70 |
1.75 |
4.88 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
Z |
|
|
|
|
|
|
|
|
|
|
|
| |
Year
ended 6/30/2023 |
9.83 |
0.58 |
0.31 |
0.89 |
(0.58) |
— |
(0.58) |
10.14 |
9.23 |
149,231 |
0.60 |
0.66 |
5.84 |
Year
ended 6/30/2022 |
11.58 |
0.52 |
(1.75) |
(1.23) |
(0.52) |
— |
(0.52) |
9.83 |
-11.04 |
131,847 |
0.60 |
0.65 |
4.66 |
Year
ended 6/30/2021 |
10.22 |
0.61 |
1.33 |
1.94 |
(0.58) |
— |
(0.58) |
11.58 |
19.44 |
211,034 |
0.60 |
0.65 |
5.56 |
Year
ended 6/30/2020 |
11.70 |
0.64 |
(1.46)5 |
(0.82) |
(0.66) |
— |
(0.66) |
10.22 |
-7.24 |
523,848 |
0.60
|
0.65
|
6.02
|
Year
ended 6/30/2019 |
11.90 |
0.70 |
(0.20) |
0.50 |
(0.70) |
— |
(0.70) |
11.70 |
4.38 |
401,268 |
0.60
|
0.65
|
5.99
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Year
Ended June 30, |
| 2023 |
2022 |
2021 |
2020 |
2019 |
| |
Portfolio
turnover rate |
36% |
40% |
82% |
67% |
41% |
| |
1Net
investment income (loss) per share has been calculated based on average shares
outstanding during the period.
2Total
returns exclude the effects of sales charges. The Fund’s investment advisor may
have waived a portion of its advisory fee and/or reimbursed a portion of the
Fund’s expenses. Without such waiver and/or reimbursement, the Fund’s
performance would have been lower. Returns for periods less than one year are
not annualized.
3Commencement
of operations.
4Annualized.
5Redemption
fees per share were less than $0.005.
|
|
|
|
|
|
|
| |
|
HOTCHKIS
& WILEY FUNDS |
91 |
Intermediary-Defined
Sales Charge Waiver Policies
The
sales charge reductions and waivers applicable to Fund shares purchased through
Edward Jones, Janney Montgomery Scott, Merrill Lynch, Morgan Stanley,
Oppenheimer & Co. Inc., Raymond James, and Robert W. Baird & Co. are set
forth below. The financial intermediary-specific information below is provided
by, or based on information provided by, the financial intermediaries noted.
Each financial intermediary’s transaction procedures, including the sales charge
reductions and waivers set forth below, are implemented by and are the
responsibility of the applicable financial intermediary set forth below, not the
Funds. You should consult with your intermediary for additional information or
if you have questions regarding its sales charge reductions and waivers.
*****
Edward
D. Jones & Co., L.P. (“Edward Jones”)
Policies
Regarding Transactions Through Edward Jones
The
following information has been provided by Edward Jones:
Effective
on or after March 1, 2021, the following information supersedes prior
information with respect to transactions and positions held in fund shares
through an Edward Jones system. Clients of Edward Jones (also referred to as
“shareholders”) purchasing fund shares on the Edward Jones commission and
fee-based platforms are eligible only for the following sales charge discounts
(also referred to as “discounts”) and waivers, which can differ from discounts
and waivers described elsewhere in the mutual fund prospectus or statement of
additional information (“SAI”) or through another broker-dealer. In all
instances, it is the shareholder’s responsibility to inform Edward Jones at the
time of purchase of any relationship, holdings of Hotchkis & Wiley Funds, or
other facts qualifying the purchaser for discounts or waivers. Edward Jones can
ask for documentation of such circumstance. Shareholders should contact Edward
Jones if they have questions regarding their eligibility for these discounts and
waivers.
Breakpoints
• Breakpoint
pricing, otherwise known as volume pricing, at dollar thresholds as described in
the prospectus.
Rights
of Accumulation (“ROA”)
• The
applicable sales charge on a purchase of Class A shares is determined by taking
into account all share classes (except certain money market funds and any assets
held in group retirement plans) of Hotchkis & Wiley Funds held by the
shareholder or in an account grouped by Edward Jones with other accounts for the
purpose of providing certain pricing considerations ("pricing groups"). If
grouping assets as a shareholder, this includes all share classes held on the
Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder
notifying Edward Jones of such assets at the time of calculation. Money market
funds are included only if such shares were sold with a sales charge at the time
of purchase or acquired in exchange for shares purchased with a sales
charge.
• The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to
establish or change ROA for the IRA accounts associated with the plan to a
plan-level grouping as opposed to including all share classes at a shareholder
or pricing group level.
• ROA
is determined by calculating the higher of cost or market value (current shares
x NAV).
Letter
of Intent (“LOI”)
• Through
a LOI, shareholders can receive the sales charge and breakpoint discounts for
purchases shareholders intend to make over a 13-month period from the date
Edward Jones receives the LOI. The LOI is determined by calculating the higher
of cost or market value of qualifying holdings at LOI initiation in combination
with the value that the shareholder intends to buy over a 13-month period to
calculate the front- end sales charge and any breakpoint discounts. Each
purchase the shareholder makes during that 13-month period will receive the
sales charge and breakpoint discount that applies to the total amount. The
inclusion
of eligible fund family assets in the LOI calculation is dependent on the
shareholder notifying Edward Jones of such assets at the time of calculation.
Purchases made before the LOI is received by Edward Jones are not adjusted under
the LOI and will not reduce the sales charge previously paid. Sales charges will
be adjusted if LOI is not met.
• If
the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to
establish or change ROA for the IRA accounts associated with the plan to a
plan-level grouping, LOIs will also be at the plan-level and may only be
established by the employer.
Sales
Charge Waivers
Sales
charges are waived for the following shareholders and in the following
situations:
• Associates
of Edward Jones and its affiliates and their family members who are in the same
pricing group (as determined by Edward Jones under its policies and procedures)
as the associate. This waiver will continue for the remainder of the associate's
life if the associate retires from Edward Jones in good-standing and remains in
good standing pursuant to Edward Jones' policies and procedures.
• Shares
purchased in an Edward Jones fee-based program.
• Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment.
• Shares
purchased from the proceeds of redeemed shares of the same fund family so long
as the following conditions
are
met: 1) the proceeds are from the sale of shares within 60 days of the purchase,
and 2) the sale and purchase are
made
in the same share class and the same account or the purchase is made in an
individual retirement account with proceeds from liquidations in a
non-retirement account.
• Shares
exchanged into Class A shares from another share class so long as the exchange
is into the same fund and was initiated at the discretion of Edward Jones.
Edward Jones is responsible for any remaining CDSC due to the fund company, if
applicable. Any future purchases are subject to the applicable sales charge as
disclosed in the prospectus.
• Exchanges
from Class C shares to Class A shares of the same fund, generally, in the 84th
month following the anniversary of the purchase date or earlier at the
discretion of Edward Jones.
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If
the shareholder purchases shares that are subject to a CDSC and those shares are
redeemed before the CDSC is expired, the shareholder is responsible to pay the
CDSC except in the following conditions:
• The
death or disability of the shareholder.
• Systematic
withdrawals with up to 10% per year of the account value.
• Return
of excess contributions from an Individual Retirement Account
(IRA).
• Shares
sold as part of a required minimum distribution for IRA and retirement accounts
if the redemption is taken in or
after
the year the shareholder reaches qualified age based on applicable IRS
regulations.
• Shares
sold to pay Edward Jones fees or costs in such cases where the transaction is
initiated by Edward Jones.
• Shares
exchanged in an Edward Jones fee-based program.
• Shares
acquired through NAV reinstatement.
• Shares
redeemed at the discretion of Edward Jones for Minimum Balances, as described
below.
Other
Important Information Regarding Transactions Through Edward Jones
Minimum
Purchase Amounts
• Initial
purchase minimum: $250
• Subsequent
purchase minimum: none
Minimum
Balances
• Edward
Jones has the right to redeem at its discretion fund holdings with a balance of
$250 or less. The following are
examples
of accounts that are not included in this policy:
◦ A
fee-based account held on an Edward Jones platform
◦ A
529 account held on an Edward Jones platform
◦ An
account with an active systematic investment plan or LOI
Exchanging
Share Classes
• At
any time it deems necessary, Edward Jones has the authority to exchange at NAV a
shareholder’s holdings in a fund to Class A shares of the same
fund.
Janney
Montgomery Scott
Effective
May 1, 2020, if you purchase fund shares through a Janney Montgomery Scott LLC
(“Janney”) brokerage account, you will be eligible for the following load
waivers (front-end sales charge waivers and contingent deferred sales charge
(“CDSC”), or back-end sales charge, waivers) and discounts, which may differ
from those disclosed elsewhere in this fund’s Prospectus or SAI.
Front-end
sales charge* waivers on Class A shares available at Janney
•
Shares purchased through reinvestment of capital gains distributions and
dividend reinvestment when purchasing shares of the same fund (but not any other
fund within the fund family).
•
Shares purchased by employees and registered representatives of Janney or its
affiliates and their family members as designated by Janney.
•
Shares purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within ninety (90) days following the
redemption, (2) the redemption and purchase occur in the same account, and (3)
redeemed shares were subject to a front-end or deferred sales load (i.e., right
of reinstatement).
•
Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans,
employer-sponsored 403(b) plans, profit sharing and money purchase pension plans
and defined benefit plans). For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
•
Shares acquired through a right of reinstatement.
•
Class C shares that are no longer subject to a contingent deferred sales charge
and are converted to Class A shares of the same fund pursuant to Janney’s
policies and procedures.
CDSC
waivers on Class A and C shares available at Janney
•
Shares sold upon the death or disability of the shareholder.
•
Shares sold as part of a systematic withdrawal plan as described in the fund’s
Prospectus.
•
Shares purchased in connection with a return of excess contributions from an IRA
account.
•
Shares sold as part of a required minimum distribution for IRA and retirement
accounts pursuant to the Internal Revenue Code.
•
Shares sold to pay Janney fees but only if the transaction is initiated by
Janney.
•
Shares acquired through a right of reinstatement.
•
Shares exchanged into the same share class of a different fund.
Front-end
sales charge* discounts available at Janney: breakpoints, rights of
accumulation, and/or letters of intent
•
Breakpoints as described in the fund’s Prospectus.
•
Rights of accumulation (“ROA”), which entitle shareholders to breakpoint
discounts, will be automatically calculated based on the aggregated holding of
fund family assets held by accounts within the purchaser’s household at Janney.
Eligible fund family assets not held at Janney may be included in the ROA
calculation only if the shareholder notifies his or her financial advisor about
such assets.
•
Letters of intent which allow for breakpoint discounts based on anticipated
purchases within a fund family, over a 13-month time period. Eligible fund
family assets not held at Janney Montgomery Scott may be included in the
calculation of letters of intent only if the shareholder notifies his or her
financial advisor about such assets.
*
Also referred to as an “initial sales charge.”
Merrill
Lynch
Shareholders
purchasing Fund shares through a Merrill Lynch platform or account will be
eligible only for the following load waivers (front-end sales charge waivers and
contingent deferred, or back-end, sales charge waivers) and discounts, which may
differ from those disclosed elsewhere in the Fund’s prospectus or
SAI.
|
| |
Front-end
Sales Load Waivers on Class A Shares available at Merrill
Lynch |
|
Employer-sponsored
retirement, deferred compensation and employee benefit plans (including
health savings accounts) and trusts used to fund those plans, provided
that the shares are not held in a commission-based brokerage account and
shares are held for the benefit of the plan |
Shares
purchased by a 529 Plan (does not include 529 Plan units or 529-specific
share classes or equivalents) |
Shares
purchased through a Merrill Lynch affiliated investment advisory
program |
Shares
exchanged due to the holdings moving from a Merrill Lynch affiliated
investment advisory program to a Merrill Lynch brokerage (non-advisory)
account pursuant to Merrill Lynch’s policies relating to sales load
discounts and waivers |
Shares
purchased by third party investment advisors on behalf of their advisory
clients through Merrill Lynch’s platform |
Shares
of funds purchased through the Merrill Edge Self-Directed platform (if
applicable) |
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other
fund within the fund family) |
Shares
exchanged from Class C (i.e. level-load) shares of the same fund pursuant
to Merrill Lynch’s policies relating to sales load discounts and
waivers |
Employees
and registered representatives of Merrill Lynch or its affiliates and
their family members |
Directors
or Trustees of the Fund, and employees of the Fund’s investment adviser or
any of its affiliates, as described in this prospectus |
Eligible
shares purchased from the proceeds of redemptions within the same fund
family, provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and
(3) redeemed shares were subject to a front-end or deferred sales load
(known as Rights of Reinstatement). Automated transactions (i.e.
systematic purchases and withdrawals) and purchases made after shares are
automatically sold to pay Merrill Lynch’s account maintenance fees are not
eligible for reinstatement |
|
| |
CDSC
Waivers on Class A and Class C Shares available at Merrill
Lynch |
Death
or disability of the shareholder |
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
prospectus |
Return
of excess contributions from an IRA Account |
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts pursuant to the Internal Revenue Code |
Shares
sold to pay Merrill Lynch fees but only if the transaction is initiated by
Merrill Lynch |
Shares
acquired through a right of reinstatement |
Shares
held in retirement brokerage accounts, that are exchanged for a lower cost
share class due to transfer to certain fee based accounts or platforms
(applicable to Class A and Class C shares only) |
Shares
received through an exchange due to the holdings moving from a Merrill
Lynch affiliated investment advisory program to a Merrill Lynch brokerage
(non-advisory) account pursuant to Merrill Lynch’s policies relating to
sales load discounts and waivers |
Front-end
load Discounts Available at Merrill Lynch: Breakpoints, Rights of
Accumulation & Letters of Intent |
Breakpoints
as described in this prospectus |
Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts
as described in the Fund’s prospectus will be automatically calculated
based on the aggregated holding of fund family assets held by accounts
(including 529 program holdings, where applicable) within the purchaser’s
household at Merrill Lynch. Eligible fund family assets not held at
Merrill Lynch may be included in the ROA calculation only if the
shareholder notifies his or her financial advisor about such
asset |
Letters
of Intent (LOI) which allow for breakpoint discounts based on anticipated
purchases within a fund family, through Merrill Lynch, over a 13-month
period of time (if applicable) |
Morgan
Stanley
Effective
July 1, 2018, shareholders purchasing Fund shares through a Morgan Stanley
Wealth Management transactional brokerage account will be eligible only for the
following front-end sales charge waivers with respect to Class A shares, which
may differ from and may be more limited than those disclosed elsewhere in this
Fund’s Prospectus or SAI.
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth
Management
•Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement plans do
not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans
•Morgan
Stanley employee and employee-related accounts according to Morgan Stanley’s
account linking rules
•Shares
purchased through reinvestment of dividends and capital gains distributions when
purchasing shares of the same fund
•Shares
purchased through a Morgan Stanley self-directed brokerage account
•Class
C (i.e., level-load) shares that are no longer subject to a contingent deferred
sales charge and are converted to Class A shares of the same fund pursuant to
Morgan Stanley Wealth Management’s share class conversion program
•Shares
purchased from the proceeds of redemptions within the same fund family, provided
(i) the repurchase occurs within 90 days following the redemption, (ii) the
redemption and purchase occur in the same account, and (iii) redeemed shares
were subject to a front-end or deferred sales charge.
Oppenheimer
& Co. Inc.
Effective
June 1, 2020, shareholders purchasing Fund shares through an Oppenheimer &
Co. Inc. (“OPCO”) platform or account are eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed
elsewhere in this Fund’s prospectus or SAI.
Front-end
Sales Load Waivers on Class A Shares available at OPCO
–Employer-sponsored
retirement, deferred compensation and employee benefit plans (including health
savings accounts) and trusts used to fund those plans, provided that the shares
are not held in a commission-based brokerage account and shares are held for the
benefit of the plan
–Shares
purchased by or through a 529 Plan
–Shares
purchased through a OPCO affiliated investment advisory program
–Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other fund
within the fund family)
–Shares
purchased from the proceeds of redemptions within the same fund family, provided
(1) the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were
subject to a front-end or deferred sales load (known as Rights of Restatement).
–A
shareholder in the Fund’s Class C shares will have their shares converted at net
asset value to Class A shares (or the appropriate share class) of the Fund if
the shares are no longer subject to a CDSC and the conversion is in line with
the policies and procedures of OPCO
–Employees
and registered representatives of OPCO or its affiliates and their family
members
–Directors
or Trustees of the Fund, and employees of the Fund’s investment adviser or any
of its affiliates, as described in this prospectus
CDSC
Waivers on A, B and C Shares available at OPCO
–Death
or disability of the shareholder
–Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
prospectus
–Return
of excess contributions from an IRA Account
–Shares
sold as part of a required minimum distribution for IRA and retirement accounts
due to the shareholder reaching the qualified age based on applicable IRS
regulations as described in the prospectus
–Shares
sold to pay OPCO fees but only if the transaction is initiated by
OPCO
–Shares
acquired through a right of reinstatement
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation &
Letters of Intent
–Breakpoints
as described in this prospectus.
–Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at OPCO. Eligible fund family
assets not held at OPCO may be included in the ROA calculation only if the
shareholder notifies his or her financial advisor about such
assets.
RAYMOND
JAMES®
Intermediary-Defined
Sales Charge Waiver Policies
The
availability of certain initial or deferred sales charge waivers and discounts
may depend on the particular financial intermediary or type of account through
which you purchase or hold Fund shares.
Intermediaries
may have different policies and procedures regarding the availability of
front-end sales load waivers or contingent deferred (back-end) sales load
(“CDSC”) waivers, which are discussed below. In all instances, it is the
purchaser’s responsibility to notify the fund or the purchaser’s financial
intermediary at the time of purchase of any relationship or other facts
qualifying the purchaser for sales charge waivers or discounts. For waivers and
discounts not available through a particular intermediary, shareholders will
have to purchase fund shares directly from the fund or through another
intermediary to receive these waivers or discounts.
Raymond
James & Associates, Inc., Raymond James Financial Services, Inc. and each
entity’s affiliates (“Raymond James”)
Effective
March 1, 2019, shareholders purchasing fund shares through a Raymond James
platform or account, or through an introducing broker-dealer or independent
registered investment adviser for which Raymond James provides trade execution,
clearance, and/or custody services, will be eligible only for the following load
waivers (front-end sales charge waivers and contingent deferred, or back-end,
sales charge waivers) and discounts, which may differ from those disclosed
elsewhere in this fund’s prospectus or SAI.
Front-end
sales load waivers on Class A shares available at Raymond James
•Shares
purchased in an investment advisory program.
•Shares
purchased within the same fund family through a systematic reinvestment of
capital gains and dividend distributions.
•Employees
and registered representatives of Raymond James or its affiliates and their
family members as designated by Raymond James.
•Shares
purchased from the proceeds of redemptions within the same fund family, provided
(1) the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were
subject to a front-end or deferred sales load (known as Rights of
Reinstatement).
•A
shareholder in the Fund’s Class C shares will have their shares converted at net
asset value to Class A shares (or the appropriate share class) of the Fund if
the shares are no longer subject to a CDSC and the conversion is in line with
the policies and procedures of Raymond James.
CDSC
Waivers on Classes A, B and C shares available at Raymond James
•Death
or disability of the shareholder.
•Shares
sold as part of a systematic withdrawal plan as described in the fund’s
prospectus.
•Return
of excess contributions from an IRA Account.
•Shares
sold as part of a required minimum distribution for IRA and retirement accounts
due to the shareholder reaching the qualified age based on applicable IRS
regulations as described in the fund’s prospectus.
•Shares
sold to pay Raymond James fees but only if the transaction is initiated by
Raymond James.
•Shares
acquired through a right of reinstatement.
Front-end
load discounts available at Raymond James: breakpoints, rights of accumulation,
and/or letters of intent
•Breakpoints
as described in this prospectus.
•Rights
of accumulation which entitle shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at Raymond James. Eligible
fund family assets not held at Raymond James may be included in the calculation
of rights of accumulation only if the shareholder notifies his or her financial
advisor about such assets.
•Letters
of intent which allow for breakpoint discounts based on anticipated purchases
within a fund family, over a 13-month time period. Eligible fund family assets
not held at Raymond James may be included in the calculation of letters of
intent only if the shareholder notifies his or her financial advisor about such
assets.
Robert
W. Baird & Co. (“Baird”):
Effective
June 15, 2020, shareholders purchasing fund shares through a Baird platform or
account will only be eligible for the following sales charge waivers (front-end
sales charge waivers and CDSC waivers) and discounts, which may differ from
those disclosed elsewhere in this prospectus or the SAI
Front-End
Sales Charge Waivers on Investors A-shares Available at Baird
•Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing share of the same fund
•Share
purchase by employees and registers representatives of Baird or its affiliate
and their family members as designated by Baird
•Shares
purchased using the proceeds of redemptions from a Hotchkis & Wiley Fund,
provided (1) the repurchase occurs within 90 days following the redemption, (2)
the redemption and purchase occur in the same accounts, and (3) redeemed shares
were subject to a front-end or deferred sales charge (known as rights of
reinstatement)
•A
shareholder in the Funds Investor C Shares will have their share converted at
net asset value to Investor A shares of the same fund if the shares are no
longer subject to CDSC and the conversion is in line with the policies and
procedures of Baird
•Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at
Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans,
profit sharing and money purchase pension plans and defined benefit plans. For
purposes of this provision, employer-sponsored retirement plans do not include
SEP IRAs, Simple IRAs or SAR-SEPs
CDSC
Waivers on Investor A and C shares Available at Baird
•Shares
sold due to death or disability of the shareholder
•Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
Prospectus
•Shares
bought due to returns of excess contributions from an IRA Account
•Shares
sold as part of a required minimum distribution for IRA and retirement accounts
due to the shareholder reaching the qualified age based on applicable Internal
Revenue Service regulations as described in the Fund’s prospectus
•Shares
sold to pay Baird fees but only if the transaction is initiated by
Baird
•Shares
acquired through a right of reinstatement
Front-End
Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of
Accumulations
•Breakpoints
as described in this prospectus
•Rights
of accumulations which entitles shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of Hotchkis & Wiley
Funds’ assets held by accounts within the purchaser’s household at Baird.
Eligible Hotchkis & Wiley Funds’ assets not held at Baird may be included in
the rights of accumulations calculation only if the shareholder notifies his or
her financial advisor about such assets
•Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of
Hotchkis & Wiley Funds through Baird, over a 13-month period of
time
The
Hotchkis & Wiley Funds and Hotchkis & Wiley Capital Management, LLC
value our relationship with our clients as our most important asset. We are
committed to safeguarding our clients’ confidential non-public personal
information. Our privacy policy outlines the steps we take to protect our
clients’ personal information.
Information
We May Collect
H&W
collects non-public information about you from the following sources in the
normal course of business to serve you better:
•Information
we receive about you on applications, questionnaires or other
forms;
•Information
you give us orally or in written or electronic correspondence;
•Information
about your transactions with us, financial intermediaries or
others;
•Information
received from your custodian, consultant, attorneys or others;
•Information
provided by you through our website; and
•Information
collected about you automatically from our website through the use of a variety
of technologies (including the use of “cookies”) to collect analytics on web
traffic and user activity.
Information
We May Disclose
H&W
does not sell your personal information to anyone, nor do we disclose your
personal information to unaffiliated third parties without the client’s
authorization, except to your authorized representatives (including consultants,
attorneys or accountants). We may also disclose your personal information to
financial intermediaries (such as broker-dealers or custodians), but only as
permitted by law and only as necessary for us to provide agreed services and
products to you. H&W may also disclose your personal information to other
service providers with which we have business arrangements to help administer
our business. These service providers are bound by law or by contract to use
this information only for the services for which we hired them, and are not
permitted to use or share this information for any other purposes. In limited
circumstances, we may disclose your personal information as required by law or
in response to inquiries from governmental or self-regulatory
authorities.
Confidentiality
and Security
Our
employees are advised about the importance of safeguarding our clients’
confidential non-public personal information. H&W limits access to your
personal information, as much as practicable, to those employees who need to
know that information to provide products and services to you. We also maintain
physical, electronic and procedural safeguards to guard your non-public personal
information.
Information
About Former Clients
H&W
also applies this policy to former clients.
Rights
Applicable to California Residents
Residents
of California should review the privacy notice for the California Consumer
Privacy Act of 2018 (CCPA). You can obtain a copy of our CCPA notice by
contacting us at 1-800-362-8889 (toll free) or at
[email protected].
Updates
to Our Privacy Policy
From
time to time, H&W may update or revise our privacy policy. In the event of
any material changes to the privacy policy, H&W will promptly inform its
clients of that change in accordance with applicable law.
Contact
Information
If
you have any questions about our Privacy Policy, please contact us at
[email protected].
|
| |
PROSPECTUS |
INFORMATION
ABOUT THE FUNDS |
Advisor
Hotchkis
& Wiley Capital Management, LLC
601
South Figueroa Street, 39th Floor
Los
Angeles, California 90017-5704
(213)
430-1000
Administrator,
Fund Accountant and Transfer Agent
U.S.
Bank Global Fund Services
615
East Michigan Street, 3rd Floor
Milwaukee,
Wisconsin 53202-5207
1-866-HW-FUNDS
(1-866-493-8637)
Independent
Registered Public Accounting Firm
Deloitte
& Touche LLP
695
Town Center Drive, Suite 1000
Costa
Mesa, CA 92626
Please
read this Prospectus before you invest in the Funds. Keep the Prospectus for
future reference. You can get additional information about the Funds
in:
–Statement
of Additional Information – tells you more about the Funds' features and
policies, including additional risk information (incorporated by reference into,
meaning it is legally a part of this Prospectus)
–Annual
Report and Semi-Annual Report – additional information about the Funds'
investments is available in the Funds' annual and semi-annual reports to
shareholders (the annual report contains a discussion of market conditions and
investment strategies that significantly affected Fund performance during the
last fiscal year)
To
get this information and other information regarding the Funds free of charge or
for shareholder questions, contact the Funds’ transfer agent at the number
listed above.
The
current SAI, annual report and semi-annual report are available on https://www.hwcm.com/mutual-funds/resources/literature.
Information
about the Funds, including the SAI, annual report and semi-annual report, is
available on the SEC’s website at http://www.sec.gov and copies may be obtained
upon payment of a duplicating fee by electronic request at the following e-mail
address: [email protected].
You
should rely only on the information contained in this Prospectus when deciding
whether to invest. No one is authorized to provide you with information that is
different.
Distributor
Quasar
Distributors, LLC
111
East Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202-5300
Custodian
Brown
Brothers Harriman & Co.
50
Post Office Square
Boston,
Massachusetts 02110
Counsel
Vedder
Price P.C.
222
North LaSalle Street, Suite 2600
Chicago,
Illinois 60601
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PROSPECTUS |
INFORMATION
ABOUT THE FUNDS |
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| NASDAQ |
| CUSIP |
Diversified
Value Fund |
|
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Class
I |
HWCIX |
| 44134R768 |
Class
A |
HWCAX |
| 44134R750 |
Class
C |
HWCCX |
| 44134R743 |
Class
Z |
not
currently offered |
| not
currently offered |
Large
Cap Value Fund |
|
| |
Class
I |
HWLIX |
| 44134R503 |
Class
A |
HWLAX |
| 44134R107 |
Class
C |
HWLCX |
| 44134R701 |
Class
Z |
HWLZX |
| 44134R511 |
Mid-Cap
Value Fund |
|
| |
Class
I |
HWMIX |
| 44134R800 |
Class
A |
HWMAX |
| 44134R206 |
Class
C |
HWMCX |
| 44134R875 |
Class
Z |
HWMZX |
| 44134R495 |
Small
Cap Value Fund |
|
| |
Class
I |
HWSIX |
| 44134R867 |
Class
A |
HWSAX |
| 44134R305 |
Class
C |
HWSCX |
| 44134R842 |
Class
Z |
HWSZX |
| 44134R487 |
Small
Cap Diversified Value Fund |
| |
Class
I |
HWVIX |
| 44134R651 |
Class
A |
HWVAX |
| 44134R644 |
Class
C |
not
currently offered |
| not
currently offered |
Class
Z |
HWVZX |
| 44134R479 |
Global
Value Fund |
|
| |
Class
I |
HWGIX |
| 44134R685 |
Class
A |
HWGAX |
| 44134R677 |
Class
C |
not
currently offered |
| not
currently offered |
Class
Z |
not
currently offered |
| not
currently offered |
International
Value Fund |
| |
Class
I |
HWNIX |
| 44134R636 |
Class
A |
not
currently offered |
| not
currently offered |
Class
C |
not
currently offered |
| not
currently offered |
Class
Z |
not
currently offered |
| not
currently offered |
International
Small Cap Diversified Value Fund |
|
Class
I |
HWTIX |
| 44134R453 |
Class
A |
not
currently offered |
| not
currently offered |
Class
Z |
not
currently offered |
| not
currently offered |
Value
Opportunities Fund |
| |
Class
I |
HWAIX |
| 44134R834 |
Class
A |
HWAAX |
| 44134R792 |
Class
C |
HWACX |
| 44134R826 |
Class
Z |
HWAZX |
| 44134R461 |
High
Yield Fund |
|
| |
Class
I |
HWHIX |
| 44134R735 |
Class
A |
HWHAX |
| 44134R727 |
Class
C |
HWHCX |
| 44134R669 |
Class
Z |
HWHZX |
| 44134R529 |
Investment
Company Act File #811-10487
CODE
#HWF-P-0823
Hotchkis
& Wiley Funds are distributed
by
Quasar Distributors, LLC
HOTCHKIS
& WILEY FUNDS
601
South Figueroa Street, 39th
Floor
Los
Angeles, California 90017-5704