Hotchkis & Wiley Funds NCSR Certified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number			811-10487

Hotchkis and Wiley Funds
(Exact name of registrant as specified in charter)

725 S. Figueroa Street, 39th Floor Los Angeles, California 90071
(Address of principal executive offices) (Zip code)

Anna Marie Lopez Hotchkis and Wiley Capital Management, LLC 725 S. Figueroa Street, 39th Floor Los Angeles, California 90071
(Name and address of agent for service)

Copies to: Mitchell Nichter, Esq. Paul, Hastings, Janofsky & Walker, LLP 55 Second Street, Twenty-Fourth Floor San Francisco, California 94105
(Counsel for the Registrant)

Registrant’s telephone number, including area code:				(213) 430-1000

Date of fiscal year end:	June 30, 2011

Date of reporting period:		July 1, 2010 – June 30, 2011

Item 1 – Report to Shareholders

Diversified Value Fund
  Large Cap Value Fund
    Mid-Cap Value Fund
      Small Cap Value Fund
        Value Opportunities Fund
          Capital Income Fund
            High Yield Fund

HOTCHKIS AND WILEY FUNDS

JUNE 30, 2011

ANNUAL REPORT

TABLE OF CONTENTS

SHAREHOLDER LETTER		3

FUND PERFORMANCE DATA		6

SCHEDULE OF INVESTMENTS:

DIVERSIFIED VALUE FUND		14

LARGE CAP VALUE FUND		16

MID-CAP VALUE FUND		18

SMALL CAP VALUE FUND		20

VALUE OPPORTUNITIES FUND		22

CAPITAL INCOME FUND		24

HIGH YIELD FUND		30

STATEMENTS OF ASSETS AND LIABILITIES		36

STATEMENTS OF OPERATIONS		38

STATEMENTS OF CHANGES IN NET ASSETS		40

FINANCIAL HIGHLIGHTS		43

NOTES TO THE FINANCIAL STATEMENTS		47

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		56

FUND EXPENSE EXAMPLES		57

BOARD CONSIDERATIONS IN APPROVING CONTINUATION OF INVESTMENT ADVISORY AGREEMENTS		58

BOARD CONSIDERATIONS IN APPROVING THE INVESTMENT ADVISORY AGREEMENT FOR THE CAPITAL INCOME FUND		60

MANAGEMENT		61

PRIVACY POLICY		62

INFORMATION ABOUT THE FUNDS	BACK COVER

DEAR SHAREHOLDER:

The following investment review and annual report relates to the activities of the Hotchkis and Wiley Funds for the twelve months ended June 30, 2011.

OVERVIEW

U.S. stocks performed admirably over the past twelve months as the market's recovery from depressed valuation levels continued. An extraordinary corporate earnings recovery lifted stock prices, culminating in a +30.7% return for the S&P 500 over the twelve months ended June 30, 2011.

Compared to the impressive equity performance in second half of 2010, returns in the first half of 2011 have been subdued. Investors appear unable to reconcile continued earnings recovery with lackluster economic reports, which has hindered returns and amplified volatility of late. While S&P 500 companies have recouped nearly all (~96%) of the earnings they generated in 2007, the price level of the index has recovered only about 70%. The result is an equity market exhibiting robust earnings and attractive valuations. Against this backdrop, however, investors are concerned about the sovereign debt crisis in Europe and fiscal policies in the U.S., most notably the debt ceiling issue. While the geopolitical and macroeconomic environment is important, our experience tells us that these concerns tend to be overly discounted in stock prices and that focusing on normal earnings power and valuation can lead to favorable investment outcomes over time.

Until a considerable pullback in the most recent quarter, commodity prices had climbed sharply, driving material and energy stocks higher — the two top-performing sectors over the past twelve months. Financials, particularly the large money center banks, have been notable laggards despite compelling pre-provision income generation and an improving credit environment. The attractive long-term valuation opportunity in financials remains largely undisputed, but investors are concerned about regulatory uncertainty and the sovereign debt landscape. These concerns are discounted to such a degree that we have compelling valuation support even under exceptionally pessimistic scenarios.

Going forward, we recognize an opportunity to own companies with sustainable franchises, robust free cash flow, and strong balance sheets at attractive valuations. In our large cap equity funds, for example, we have positions in select information technology companies that epitomize these traits. A decade ago these were the "must own" stocks at 60x earnings; now they trade for less than 10x earnings, have significant excess cash, and have begun to embrace the virtue of returning this cash to shareholders. The aggregate portfolios are composed of a diverse collection of companies with low financial leverage, sustainable cash flows, and high shareholder payouts — trading at single digit multiples of our normal earnings estimates.

HOTCHKIS AND WILEY DIVERSIFIED VALUE FUND

The Fund's Class I, Class A, and Class C shares had total returns for the twelve month period ended June 30, 2011 of 27.44%, 27.16%, and 26.11%, respectively, compared to the S&P 500 Index return of 30.69% and the Russell 1000 Value Index return of 28.94%. (Fund results shown do not reflect sales charges and would be lower if sales charges were included. More complete performance information can be found on page 7 of this report to shareholders.)

An overweight in large banks was the primary detractor from performance versus the Russell 1000 Value Index for the period as regulatory uncertainty weighed on investors. The underweight in energy was also a detractor as oil prices climbed for most of the period. The largest individual detractors were Hewlett-Packard, Genworth Financial, and Bank of America. Overall stock selection was positive and the largest contributor to relative performance over the twelve month period. Positive selection in the consumer discretionary, materials, and consumer staples sectors were the primary contributors. The largest individual contributors were Royal Dutch Shell, J.C. Penney, and ConocoPhillips.

HOTCHKIS AND WILEY LARGE CAP VALUE FUND

The Fund's Class I, Class A, Class C, and Class R shares had total returns for the twelve month period ended June 30, 2011 of 27.61%, 27.21%, 26.28%, and 26.87%, respectively, compared to the S&P 500 Index return of 30.69% and the Russell 1000 Value Index return of 28.94%. (Fund results shown do not reflect sales charges and would be lower if sales charges were included. More complete performance information can be found on page 8 of this report to shareholders.)

Large banks underperformed due to uncertainty surrounding the regulatory environment and other macro-level issues. The Fund's overweight in these large money center banks was the primary performance detractor versus the Russell 1000 Value Index over the twelve month period. Also hurting relative performance was an underweight in energy, the top-performing sector for the index. The largest individual detractors were Hewlett-Packard, Bank of America, and Genworth Financial. Positive stock selection overall was the largest performance contributor over the period; selection in the materials, consumer staples, and consumer discretionary sectors led the way. The largest individual contributors were Celanese, Royal Dutch Shell, and J.C. Penney.

HOTCHKIS AND WILEY MID-CAP VALUE FUND

The Fund's Class I, Class A, Class C, and Class R shares had total returns for the twelve month period ended June 30, 2011 of 38.05%, 37.63%, 36.63%, and 37.32%, respectively, compared to the Russell Midcap Index return of 38.47% and the Russell Midcap Value Index return of 34.28%. (Fund results shown do not reflect sales charges and would be lower if sales charges were included. More complete performance information can be found on page 9 of this report to shareholders.)

Positive stock selection drove the outperformance versus the Russell Midcap Value Index over the twelve month period. Positive selection in the energy, materials, and information technology sectors were the top contributors. The largest individual contributors were MI Developments, Stone Energy, and Celanese. Detracting from performance was stock selection in the consumer discretionary and consumer staples sectors. The largest individual detractors were Valassis Communications, Jones Group, and Genworth Financial.

HOTCHKIS AND WILEY SMALL CAP VALUE FUND

The Fund's Class I, Class A, and Class R shares had total returns for the twelve month period ended June 30, 2011 of 40.29%, 39.94%, and 38.93%, respectively, compared to the Russell 2000 Index return of 37.41% and the Russell 2000 Value Index return of 31.35%. (Fund results shown do not reflect sales charges and would be lower if sales charges were included. More complete performance information can be found on page 10 of this report to shareholders.)

Positive stock selection represented nearly all of the outperformance versus the Russell 2000 Value Index over the twelve month period. The strongest performance relative to the index came from the energy, health care, and materials sectors. The largest individual contributors were Stone Energy, Noranda Aluminum, and King Pharmaceuticals. Stock selection in the consumer discretionary and consumer staples sectors held back performance relative to the index. The largest individual detractors were Valassis Communications, Jones Group, and Overhill Farms.

HOTCHKIS AND WILEY VALUE OPPORTUNITIES FUND

The Fund's Class I, Class A, and Class R shares had total returns for the twelve month period ended June 30, 2011 of 42.81%, 42.40%, and 41.35%, respectively, compared to the Russell 3000 Index return of 32.37% and the Russell 3000 Value Index return of 29.13%. (Fund results shown do not reflect sales charges and would be lower if sales charges were included. More complete performance information can be found on page 11 of this report to shareholders.)

Nearly all of the outperformance over the past twelve months versus the Russell 3000 Value Index was due to positive security selection. Positive selection in financials and materials drove the outperformance. An overweight in industrials and an underweight in consumer staples also aided returns. The largest individual contributors were Freddie Mac (preferred shares), Noranda Aluminum, and MI Developments. Security selection in the consumer discretionary and industrials sectors detracted from performance relative to the benchmark. The largest individual detractors were Valassis Communications, Tree.com, and Hewlett-Packard.

HOTCHKIS AND WILEY CAPITAL INCOME FUND

The Fund commenced operations on December 31, 2010. The investment review below discusses the Fund's performance since inception through June 30, 2011. The Fund's Class I and Class A shares had total returns of 5.90% and 5.87%, respectively, compared to the S&P 500 Index return of 6.02% and BofA Merrill Lynch U.S. Corporate, Government and Mortgage Index return of 2.73%. (Fund results shown do not reflect sales charges and would be lower if sales charges were included. More complete performance information can be found on page 12 of this report to shareholders.)

Since the inception of the Capital Income Fund on December 31, 2010, both the equity and fixed income markets have performed fairly well, returning between +2% and +6%; the Fund's return fell in the upper portion of this range. While the long-term target allocation between dividend paying equities and high yield bonds is 50/50, we have been partial to equities in 2011. The equity allocation has ranged from 52% to 58%, with the high yield allocation comprising the balance. The equity overweight has been a modest tailwind as equities have outperformed slightly.

The equity portion of the Fund outperformed the S&P 500 over the period. Positive stock selection in industrials and an overweight in utilities were the primary performance contributors over the six month period. The largest individual contributors were Lockheed Martin, Philip Morris International, and Royal Dutch Shell. An underweight in the consumer discretionary sector and stock selection in information technology were the primary performance detractors. The largest individual detractors were Microsoft, JPMorgan, and Wells Fargo.

High yield bonds outperformed their investment grade counterparts for the six month period. The high yield bond portion of the portfolio outperformed both the BofA Merrill Lynch U.S. Corporate, Government and Mortgage Index return of 2.73% and the BofA Merrill Lynch U.S. High Yield BB-B (Constrained 2%) Index return of 4.81%. Strong performance from the portfolio's financial services, capital goods, and energy credits were performance contributors. Automotives was the portfolio's only negative performing sector over the six months, as General Motors debt declined.

HOTCHKIS AND WILEY HIGH YIELD FUND

The Fund's Class I and Class A shares had total returns for the twelve month period ended June 30, 2011 of 18.45% and 18.11%, respectively, compared to the BofA Merrill Lynch U.S. High Yield BB-B (Constrained 2%) Index return of 14.56%. (Fund results shown do not reflect sales charges and would be lower if sales charges were included. More complete performance information can be found on page 13 of this report to shareholders.)

High yield bonds rallied over the twelve month period, outperforming investment grade bonds considerably. Treasury yields oscillated throughout the year but finished close to where they began, attributing the high yield market's rise to a contraction in spreads. The spread tightening was caused by meaningful improvements in market fundamentals — low defaults, credit upgrades, and robust refinancing. Default rates have cratered from over 3% twelve months ago to less than 1%, the upgrade/downgrade ratio (# of upgrades/# of downgrades) has matched its all-time high, and the sizeable new issue market has allowed for the extension of debt maturities. While yields are below historical averages, spreads remain attractive and imply a default rate around 5% — an overly pessimistic outcome, in our view, suggesting an attractive entry point at today's levels.

Nearly all of the outperformance over the past year came from positive credit selection. Credit selection in 15 of the 16 BofA Merrill Lynch sectors was positive or neutral over the twelve month period. The Fund's basic industry, financial services, and services sectors performed particularly well. The small cash position, which was simply a residual of the process, was the largest performance drag. Credit selection in consumer cyclicals also detracted from performance.

CONCLUSION

We appreciate your continued support of the Hotchkis and Wiley Funds, and we look forward to serving your investment needs in the future.

Sincerely,



Anna Marie Lopez President	George Davis Fund Manager	Sheldon Lieberman Fund Manager



Patty McKenna Fund Manager	James Miles Fund Manager	Stan Majcher Fund Manager



David Green Fund Manager	Scott McBride Fund Manager	Judd Peters Fund Manager



Ray Kennedy Fund Manager	Mark Hudoff Fund Manager	Patrick Meegan Fund Manager

Past performance does not guarantee future results.

The above reflects opinions of Fund managers as of June 30, 2011. They are subject to change and any forecasts made cannot be guaranteed. The Funds might not continue to hold any securities mentioned and have no obligation to disclose purchases or sales in these securities. Please refer to the Schedule of Investments in this report for a complete list of fund holdings for June 30, 2011. Indexes do not incur expenses or sales loads and are not available for investment.

Cash flow measures the cash generating capability of a company by adding non-cash charges (e.g., depreciation) and interest expense to pretax income. Free cash flow is earnings before depreciation, amortization, and non-cash charges minus maintenance capital expenditures.

The Global Industry Classification Standard (GICS) was developed by MSCI and S&P, an independent international financial data and investment services company. The GICS methodology is used by the MSCI indexes, which include domestic and international stocks, as well as by a large portion of the professional investment management community. The GICS hierarchy begins with 10 sectors and is followed by 24 industry groups, 67 industries and 147 sub-industries. Each stock that is classified will have a coding at all four of these levels.

Diversification does not assure a profit nor protect against risk in a declining market.

Fund Performance Data

ABOUT FUND PERFORMANCE

The Large Cap Value Fund and Mid-Cap Value Fund have four classes of shares. The Diversified Value Fund, Small Cap Value Fund, Value Opportunities Fund, Capital Income Fund and High Yield Fund have three classes of shares. Each share class has its own sales charge and expense structure, allowing you to invest in the way that best suits your needs. Currently, the Capital Income Fund and High Yield Fund are not offering Class C shares to investors.

Class I shares have no initial sales charge and bear no ongoing distribution and service fees under a 12b-1 plan. Class I shares are available only to eligible investors.

Class A shares incur a maximum initial sales charge of 5.25% for the Diversified Value Fund, Large Cap Value Fund, Mid-Cap Value Fund, Small Cap Value Fund and Value Opportunities Fund, 4.75% for the Capital Income Fund and 3.75% for the High Yield Fund and an annual distribution and service fee of 0.25%.

Class C shares are subject to an annual distribution and service fee of 1.00%. In addition, Class C shares are subject to a 1.00% contingent deferred sales charge (CDSC) if redeemed within one year after purchase. Class C shares automatically convert to Class A shares approximately eight years after purchase and will then be subject to lower distribution and service fees.

Class R shares have no initial sales charge or CDSC and are subject to an annual distribution and service fee of 0.50%. Class R shares are offered only by the Large Cap Value Fund and Mid-Cap Value Fund and are available only to certain retirement plans.

FUND RISKS

Mutual fund investing involves risk; loss of principal is possible. The Small Cap Value Fund, Mid-Cap Value Fund and Value Opportunities Fund invest in small- and medium-capitalization companies which tend to have limited liquidity and greater price volatility than large-capitalization companies. The Value Opportunities Fund is a non-diversified fund which involves greater risk than investing in diversified funds, such as business risk, significant stock price fluctuations and sector concentration. Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales. The Value Opportunities Fund, Capital Income Fund and High Yield Fund invest in debt securities that decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investment by the Capital Income Fund and High Yield Fund in lower-rated and non-rated securities presents a greater risk of loss to principal and interest than higher-rated securities. The Capital Income Fund and High Yield Fund may invest in derivative securities, which derive their performance from the performance of an underlying asset, index, interest rate or currency exchange rate. Derivatives can be volatile and involve various types and degrees of risks. Depending upon the characteristics of particular derivatives, they can suddenly become illiquid. Investments in asset-backed and mortgage-backed securities include additional risks that investors should be aware of such as credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. The Funds may invest in foreign securities, including developed and emerging markets, which involve greater volatility and political, economic, and currency risks.

MARKET INDEXES

The following are definitions for indexes used in the shareholder letter and the performance summary tables on the following pages. These indexes are unmanaged and include the reinvestment of dividends, but do not reflect the payment of transaction costs and advisory and other fees associated with an investment in the Funds. The securities that comprise these indexes may differ substantially from the securities in the Funds' portfolios. The Funds' value disciplines may prevent or restrict investments in the benchmark indexes. It is not possible to invest directly in an index. Each index named is not the only index which may be used to characterize performance of a specific Fund and other indexes may portray different comparative performance.

S&P 500^® Index, a capital weighted, unmanaged index, represents the aggregate market value of the common equity of 500 stocks primarily traded on the New York Stock Exchange.

Russell 3000^® Index, an unmanaged index, is comprised of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market.

Russell 3000^® Value Index measures the performance of those Russell 3000^® companies with lower price-to-book ratios and lower forecasted growth values.

Russell 1000^® Index, an unmanaged index, measures the performance of the 1,000 largest companies in the Russell 3000^® Index.

Russell 1000^® Value Index measures the performance of those Russell 1000^® companies with lower price-to-book ratios and lower forecasted growth values.

Russell Midcap^® Index, an unmanaged index, measures the performance of the 800 smallest companies in the Russell 1000^® Index.

Russell Midcap^® Value Index measures the performance of those Russell Midcap^® companies with lower price-to-book ratios and lower forecasted growth values.

Russell 2000^® Index, an unmanaged index, is a stock market index comprised of the 2,000 smallest companies in the Russell 3000^® Index.

Russell 2000^® Value Index measures the performance of those Russell 2000^® companies with lower price-to-book ratios and lower forecasted growth values.

BofA Merrill Lynch U.S. Corporate, Government and Mortgage Index (previously ML U.S. Domestic Master Index) is a broad-based measure of the total rate of return performance of the U.S. investment grade bond markets. The index is a capitalization weighted aggregation of outstanding U.S. Treasury, agency, and supranational, mortgage pass-through, and investment grade corporate bonds meeting specified selection criteria.

BofA Merrill Lynch U.S. High Yield BB-B (Constrained 2%) Index contains all securities in the BofA Merrill Lynch 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%.

Fund Performance Data

DIVERSIFIED VALUE FUND

Total Return Based on a $10,000 Investment

Comparative Results†††

For Periods ended June 30, 2011	1 Year			5 Years			Since 8/30/04*
Class I
Average annual total return		27.44	%		–1.18	%		2.98	%
Class A
Average annual total return (with sales charge)		20.50	%		–2.49	%		1.92	%
Average annual total return (without sales charge)		27.16	%		–1.43	%		2.72	%
Class C
Average annual total return (with CDSC)		25.11	%		–2.10	%		1.99	%
Average annual total return (without CDSC)		26.11	%		–2.10	%		1.99	%
S&P 500 Index††
Average annual total return		30.69	%		2.94	%		4.85	%
Russell 1000 Index††
Average annual total return		31.93	%		3.30	%		5.43	%
Russell 1000 Value Index††
Average annual total return		28.94	%		1.15	%		4.64	%

Average annual total returns with sales charge and CDSC shown for Class A and Class C shares, respectively, have been adjusted to reflect the current applicable sales charges of each specific class. Returns for Class A reflect the current maximum initial sales charges of 5.25%. Class C shares have no adjustment for sales charges, but redemptions within one year of purchase may be subject to a CDSC of 1%. Average annual total returns without sales charge or CDSC do not reflect the current maximum sales charges. Had the sales charge or CDSC been included, the Fund's returns would have been lower.

† The Fund invests primarily in stocks of U.S. companies with market capitalizations similar to the Russell 1000 Index.

†† See index descriptions on page 6.

††† Fund returns during certain periods shown reflect a fee waiver and/or expense reimbursement. Without waiver/reimbursement, returns would have been lower. Returns shown include the reinvestment of all dividends.

* Commencement of Class I, Class A and Class C.

Past performance is not indicative of future results and the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Fund Performance Data

LARGE CAP VALUE FUND

Total Return Based on a $10,000 Investment

Comparative Results†††

For Periods ended June 30, 2011	1 Year			5 Years			10 Years			Since 6/24/87*
Class I
Average annual total return		27.61	%		–2.04	%		4.33	%		8.28	%
Class A
Average annual total return (with sales charge)		20.57	%		–3.36	%		3.52	%		7.79	%
Average annual total return (without sales charge)		27.21	%		–2.31	%		4.08	%		8.03	%
Class C
Average annual total return (with CDSC)		25.28	%		–2.94	%		3.34	%		7.21	%
Average annual total return (without CDSC)		26.28	%		–2.94	%		3.34	%		7.21	%
Class R
Average annual total return		26.87	%		–2.56	%		3.85	%		7.75	%
S&P 500 Index††
Average annual total return		30.69	%		2.94	%		2.72	%		8.71	%
Russell 1000 Index††
Average annual total return		31.93	%		3.30	%		3.21	%		8.89	%
Russell 1000 Value Index††
Average annual total return		28.94	%		1.15	%		3.98	%		n/a

Returns shown for Class A, Class C, and Class R shares for the periods prior to their inception are derived from the historical performance of Class I shares of the Fund during such periods and have been adjusted to reflect the higher total annual operating expenses of each specific class. (Inception dates: Class A — 10/26/01; Class C — 2/4/02; Class R — 8/28/03.)

† The Fund invests primarily in stocks of U.S. companies with market capitalizations similar to the Russell 1000 Index.

†† See index descriptions on page 6.

* Commencement of Class I.

Past performance is not indicative of future results and the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Fund Performance Data

MID-CAP VALUE FUND

Total Return Based on a $10,000 Investment

Comparative Results†††

For Periods ended June 30, 2011	1 Year			5 Years			10 Years			Since 1/2/97*
Class I
Average annual total return		38.05	%		3.32	%		9.29	%		12.40	%
Class A
Average annual total return (with sales charge)		30.39	%		1.95	%		8.44	%		11.72	%
Average annual total return (without sales charge)		37.63	%		3.06	%		9.03	%		12.13	%
Class C
Average annual total return (with CDSC)		35.63	%		2.46	%		8.30	%		11.34	%
Average annual total return (without CDSC)		36.63	%		2.46	%		8.30	%		11.34	%
Class R
Average annual total return		37.32	%		2.80	%		8.90	%		11.95	%
Russell Midcap Index††
Average annual total return		38.47	%		5.30	%		7.59	%		9.54	%
Russell Midcap Value Index††
Average annual total return		34.28	%		4.01	%		8.42	%		9.92	%

† The Fund invests primarily in stocks of U.S. companies with market capitalizations similar to the Russell Midcap Index.

†† See index descriptions on page 6.

* Commencement of Class I.

Past performance is not indicative of future results and the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Fund Performance Data

SMALL CAP VALUE FUND

Total Return Based on a $10,000 Investment

Comparative Results†††

For Periods ended June 30, 2011	1 Year			5 Years			10 Years			Since 9/20/85*
Class I
Average annual total return		40.29	%		3.24	%		11.14	%		11.78	%
Class A
Average annual total return (with sales charge)		32.58	%		1.87	%		10.31	%		11.30	%
Average annual total return (without sales charge)		39.94	%		2.98	%		10.91	%		11.53	%
Class C
Average annual total return (with CDSC)		37.93	%		2.41	%		10.15	%		10.73	%
Average annual total return (without CDSC)		38.93	%		2.41	%		10.15	%		10.73	%
Russell 2000 Index††
Average annual total return		37.41	%		4.08	%		6.27	%		9.65	%
Russell 2000 Value Index††
Average annual total return		31.35	%		2.24	%		7.53	%		n/a

Returns shown for Class A and Class C shares for the periods prior to their inception are derived from the historical performance of Class I shares of the Fund during such periods and have been adjusted to reflect the higher total annual operating expenses of each specific class. (Inception dates: Class A — 10/6/00; Class C — 2/4/02.)

† The Fund invests primarily in stocks of U.S. companies with market capitalizations less than $3 billion.

†† See index descriptions on page 6.

* Commencement of Class I.

Past performance is not indicative of future results and the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Fund Performance Data

VALUE OPPORTUNITIES FUND

Total Return Based on a $10,000 Investment

Comparative Results†††

For Periods ended June 30, 2011	1 Year			5 Years			Since 12/31/02*
Class I
Average annual total return		42.81	%		6.76	%		13.04	%
Class A
Average annual total return (with sales charge)		34.93	%		5.36	%		12.15	%
Average annual total return (without sales charge)		42.40	%		6.49	%		12.86	%
Class C
Average annual total return (with CDSC)		40.35	%		5.82	%		11.98	%
Average annual total return (without CDSC)		41.35	%		5.82	%		11.98	%
S&P 500 Index††
Average annual total return		30.69	%		2.94	%		7.00	%
Russell 3000 Index††
Average annual total return		32.37	%		3.35	%		7.82	%
Russell 3000 Value Index††
Average annual total return		29.13	%		1.23	%		7.59	%

Returns shown for Class C shares for the periods prior to their inception are derived from the historical performance of Class I shares of the Fund during such periods and have been adjusted to reflect the higher total annual operating expenses of the class. (Inception date: Class C — 8/28/03.)

† The Fund invests primarily in securities of companies with strong capital appreciation potential.

†† See index descriptions on page 6.

* Commencement of Class I and Class A.

Past performance is not indicative of future results and the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Fund Performance Data

CAPITAL INCOME FUND

Total Return Based on a $10,000 Investment

Comparative Results†††

For Periods ended June 30, 2011	Since 12/31/10*
Class I
Aggregate total return		5.90	%
Class A
Aggregate total return (with sales charge)		0.83	%
Aggregate total return (without sales charge)		5.87	%
S&P 500 Index††
Aggregate total return		6.02	%
BofA Merrill Lynch U.S. Corporate, Government and Mortgage Index††
Aggregate total return		2.73	%

Returns shown for Class A shares for the periods prior to its inception are derived from the historical performance of Class I shares of the Fund during such periods and have been adjusted to reflect the higher total annual operating expenses of the class. (Inception date: Class A — 2/28/11.)

Aggregate total returns with sales charge shown for Class A shares have been adjusted to reflect the current applicable sales charge of the class. Returns for Class A reflect the current maximum initial sales charge of 4.75%. Aggregate total returns without sales charge do not reflect the current maximum sales charges. Had the sales charge been included, the Fund's returns would have been lower.

† The Fund invests primarily in dividend-paying equities and high yield fixed income securities.

†† See index description on page 6.

††† Fund returns during the period shown reflect a fee waiver and/or expense reimbursement. Without waiver/reimbursement, returns would have been lower. Returns shown include the reinvestment of all dividends. Returns for periods less than one year are not annualized.

* Commencement of Class I.

Past performance is not indicative of future results and the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Fund Performance Data

HIGH YIELD FUND

Total Return Based on a $10,000 Investment

Comparative Results†††

For Periods ended June 30, 2011	1 Year			Since 3/31/09*
Class I
Average annual total return		18.45	%		25.12	%
Class A
Average annual total return (with sales charge)		13.68	%		22.41	%
Average annual total return (without sales charge)		18.11	%		24.50	%
BofA Merrill Lynch U.S. High Yield BB-B (Constrained 2%) Index††
Average annual total return		14.56	%		24.75	%

Average annual total returns with sales charge shown for Class A shares have been adjusted to reflect the current applicable sales charge of the class. Returns for Class A reflect the current maximum initial sales charge of 3.75%. Average annual total returns without sales charge do not reflect the current maximum sales charges. Had the sales charge been included, the Fund's returns would have been lower.

† The Fund invests primarily in high yield securities.

†† See index description on page 6.

* Commencement of Class I.

Past performance is not indicative of future results and the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Diversified Value Fund

Largest Equity Holdings	Percent of net assets
Hewlett-Packard Company		4.50	%
Royal Dutch Shell PLC - Class B - ADR		4.14	%
Wells Fargo & Company		3.90	%
JPMorgan Chase & Company		3.87	%
ConocoPhillips		3.71	%
Lockheed Martin Corporation		3.22	%
Vodafone Group PLC - ADR		3.08	%
The Allstate Corporation		2.99	%
Bank of America Corporation		2.97	%
Exelon Corporation		2.96	%

COMMON STOCKS — 99.19%	Shares Held		Value
*CONSUMER DISCRETIONARY — 11.47%* *Auto Components — 2.24%*
Johnson Controls, Inc.		91,200	$	3,799,392
Magna International, Inc.		90,300		4,879,812
				8,679,204
*Automobiles — 0.99%*
General Motors Company (a)		125,900		3,822,324
*Media — 3.69%*
Comcast Corporation		307,100		7,441,033
The Interpublic Group of Companies, Inc.		240,200		3,002,500
Time Warner Cable, Inc.		49,600		3,870,784
				14,314,317
*Multiline Retail — 2.12%*
J.C. Penney Company, Inc.		238,100		8,223,974
*Specialty Retail — 2.43%*
The Gap, Inc.		250,400		4,532,240
Home Depot, Inc.		135,400		4,904,188
				9,436,428
TOTAL CONSUMER DISCRETIONARY				44,476,247
*CONSUMER STAPLES — 6.67%* *Beverages — 0.99%*
PepsiCo, Inc.		54,400		3,831,392
*Food & Staples Retailing — 4.46%*
CVS Caremark Corporation		197,900		7,437,082
Safeway, Inc.		146,800		3,430,716
Wal-Mart Stores, Inc.		120,800		6,419,312
				17,287,110
*Food Products — 0.74%*
Kraft Foods, Inc.		80,900		2,850,107
*Household Products — 0.48%*
Kimberly-Clark Corporation		28,200		1,876,992
TOTAL CONSUMER STAPLES				25,845,601

	Shares Held		Value
*ENERGY — 10.60%* *Oil, Gas & Consumable Fuels — 10.60%*
Chevron Corporation		27,700	$	2,848,668
Cobalt International Energy, Inc. (a)		215,900		2,942,717
ConocoPhillips		191,300		14,383,847
Royal Dutch Shell PLC — Class B — ADR		223,800		16,057,650
Total SA — ADR		84,000		4,858,560
TOTAL ENERGY				41,091,442
*FINANCIALS — 26.44%* *Commercial Banks — 6.52%*
KeyCorp		318,503		2,653,130
PNC Financial Services Group, Inc.		66,315		3,953,037
SunTrust Banks, Inc.		136,700		3,526,860
Wells Fargo & Company		539,434		15,136,518
				25,269,545
*Consumer Finance — 0.97%*
Capital One Financial Corporation		73,200		3,782,244
*Diversified Financial Services — 9.66%*
Bank of America Corporation		1,050,222		11,510,433
Citigroup, Inc.		262,374		10,925,253
JPMorgan Chase & Company		366,400		15,000,416
				37,436,102
*Insurance — 9.29%*
The Allstate Corporation		380,200		11,607,506
American International Group, Inc. (a)		217,500		6,377,100
Genworth Financial, Inc. (a)		544,100		5,593,348
Hartford Financial Services Group, Inc.		75,600		1,993,572
MetLife, Inc.		88,742		3,893,112
Prudential Financial, Inc.		30,800		1,958,572
XL Group PLC		209,800		4,611,404
				36,034,614
TOTAL FINANCIALS				102,522,505

The accompanying notes are an integral part of these financial statements.
14

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Diversified Value Fund

	Shares Held			Value
*HEALTH CARE — 7.93%* *Health Care Equipment & Supplies — 0.48%*
Covidien PLC		35,000		$	1,863,050
*Health Care Providers & Services — 1.00%*
Quest Diagnostics, Inc.		65,500			3,871,050
*Pharmaceuticals — 6.45%*
Eli Lilly & Company		174,100			6,533,973
Johnson & Johnson		79,100			5,261,732
Merck & Company, Inc.		78,996			2,787,769
Novartis AG — ADR		92,700			5,664,897
Pfizer, Inc.		231,400			4,766,840
					25,015,211
TOTAL HEALTH CARE					30,749,311
*INDUSTRIALS — 10.81%* *Aerospace & Defense — 6.39%*
The Boeing Company		25,300			1,870,429
Embraer SA — ADR		111,500			3,431,970
Huntington Ingalls Industries, Inc. (a)		15,483			534,164
Lockheed Martin Corporation		154,400			12,501,768
Northrop Grumman Corporation		92,600			6,421,810
					24,760,141
*Air Freight & Logistics — 1.36%*
FedEx Corporation		55,500			5,264,175
*Industrial Conglomerates — 1.01%*
Tyco International Limited		79,200			3,914,856
*Machinery — 2.05%*
Cummins, Inc.		28,900			2,990,861
PACCAR, Inc.		97,500			4,981,275
					7,972,136
TOTAL INDUSTRIALS					41,911,308
*INFORMATION TECHNOLOGY — 13.21%* *Computers & Peripherals — 4.50%*
Hewlett-Packard Company		479,200			17,442,880
*Electronic Equipment, Instruments & Components — 1.79%*
TE Connectivity Limited		188,900			6,943,964
*IT Services — 0.50%*
International Business Machines Corporation		11,200			1,921,360
*Software — 6.42%*
CA, Inc.		469,106			10,714,381
Microsoft Corporation		394,000	��		10,244,000
Oracle Corporation		120,000			3,949,200
					24,907,581
TOTAL INFORMATION TECHNOLOGY					51,215,785

	Shares Held		Value
*MATERIALS — 1.11%* *Chemicals — 1.11%*
Celanese Corporation		44,100	$	2,350,971
PPG Industries, Inc.		21,600		1,961,064
TOTAL MATERIALS				4,312,035
*TELECOMMUNICATION SERVICES — 3.08%* *Wireless Telecommunication Services — 3.08%*
Vodafone Group PLC — ADR		446,400		11,927,808
TOTAL TELECOMMUNICATION SERVICES				11,927,808
*UTILITIES — 7.87%* *Electric Utilities — 5.38%*
Edison International		143,900		5,576,125
Exelon Corporation		268,300		11,493,972
PPL Corporation		136,300		3,793,229
				20,863,326
*Multi-Utilities — 2.49%*
Public Service Enterprise Group, Inc.		295,000		9,628,800
TOTAL UTILITIES				30,492,126
Total investments — 99.19% (Cost $459,713,948)				384,544,168
Time deposit* — 0.58%				2,243,436
Other assets in excess of liabilities — 0.23%				904,749
Net assets — 100.00%			$	387,692,353

(a) — Non-income producing security.

ADR — American Depositary Receipt

* — Time deposit with HSBC Bank bears interest at 0.03% and matures on 7/1/2011. Invested through a cash management account administered by Brown Brothers Harriman & Co.

The accompanying notes are an integral part of these financial statements.
15

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Large Cap Value Fund

Largest Equity Holdings	Percent of net assets
Hewlett-Packard Company		4.86	%
Royal Dutch Shell PLC - Class B - ADR		4.39	%
JPMorgan Chase & Company		4.38	%
Wells Fargo & Company		4.11	%
ConocoPhillips		4.00	%
Exelon Corporation		3.96	%
Lockheed Martin Corporation		3.58	%
Vodafone Group PLC - ADR		3.56	%
The Allstate Corporation		3.48	%
CA, Inc.		3.25	%

COMMON STOCKS — 97.72%	Shares Held		Value
*CONSUMER DISCRETIONARY — 9.99%* *Auto Components — 1.00%*
Magna International, Inc.		177,900	$	9,613,716
*Automobiles — 1.02%*
Harley-Davidson, Inc.		239,600		9,816,412
*Media — 2.60%*
Comcast Corporation		1,030,600		24,971,438
*Multiline Retail — 2.53%*
J.C. Penney Company, Inc.		702,500		24,264,350
*Specialty Retail — 2.64%*
The Gap, Inc.		737,300		13,345,130
Home Depot, Inc.		328,609		11,902,218
				25,247,348
*Textiles, Apparel & Luxury Goods — 0.20%*
The Jones Group, Inc.		176,900		1,919,365
TOTAL CONSUMER DISCRETIONARY				95,832,629
*CONSUMER STAPLES — 6.41%* *Food & Staples Retailing — 5.08%*
CVS Caremark Corporation		576,700		21,672,386
Safeway, Inc.		411,500		9,616,755
Wal-Mart Stores, Inc.		329,300		17,499,002
				48,788,143
*Food Products — 0.84%*
Kraft Foods, Inc.		229,200		8,074,716
*Tobacco — 0.49%*
Philip Morris International, Inc.		69,900		4,667,223
TOTAL CONSUMER STAPLES				61,530,082

	Shares Held		Value
*ENERGY — 9.91%* *Oil, Gas & Consumable Fuels — 9.91%*
ConocoPhillips		510,700	$	38,399,533
Royal Dutch Shell PLC — Class B — ADR		586,700		42,095,725
Total SA — ADR		251,400		14,540,976
TOTAL ENERGY				95,036,234
*FINANCIALS — 27.69%* *Commercial Banks — 6.67%*
PNC Financial Services Group, Inc.		282,600		16,845,786
Regions Financial Corporation		1,235,500		7,660,100
Wells Fargo & Company		1,405,891		39,449,301
				63,955,187
*Consumer Finance — 1.33%*
Capital One Financial Corporation		247,300		12,777,991
*Diversified Financial Services — 10.54%*
Bank of America Corporation		2,763,889		30,292,223
Citigroup, Inc.		690,068		28,734,432
JPMorgan Chase & Company		1,027,300		42,057,662
				101,084,317
*Insurance — 9.15%*
The Allstate Corporation		1,094,900		33,427,297
Genworth Financial, Inc. (a)		1,390,900		14,298,452
MetLife, Inc.		415,058		18,208,595
Unum Group		187,700		4,782,596
XL Group PLC		777,900		17,098,242
				87,815,182
TOTAL FINANCIALS				265,632,677

The accompanying notes are an integral part of these financial statements.
16

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Large Cap Value Fund

	Shares Held		Value
*HEALTH CARE — 7.53%* *Pharmaceuticals — 7.53%*
Eli Lilly & Company		634,100	$	23,797,773
Johnson & Johnson		157,000		10,443,640
Merck & Company, Inc.		270,400		9,542,416
Novartis AG — ADR		274,100		16,750,251
Pfizer, Inc.		570,000		11,742,000
TOTAL HEALTH CARE				72,276,080
*INDUSTRIALS — 8.52%* *Aerospace & Defense — 6.25%*
Embraer SA — ADR		274,000		8,433,720
Huntington Ingalls Industries, Inc. (a)		39,150		1,350,675
Lockheed Martin Corporation		424,600		34,379,862
Northrop Grumman Corporation		227,700		15,790,995
				59,955,252
*Industrial Conglomerates — 1.00%*
Tyco International Limited		194,125		9,595,599
*Machinery — 1.27%*
PACCAR, Inc.		237,800		12,149,202
TOTAL INDUSTRIALS				81,700,053
*INFORMATION TECHNOLOGY — 13.67%* *Computers & Peripherals — 4.86%*
Hewlett-Packard Company		1,281,200		46,635,680
*Electronic Equipment, Instruments & Components — 1.76%*
TE Connectivity Limited		458,425		16,851,703
*IT Services — 0.95%*
International Business Machines Corporation		52,900		9,074,995
*Software — 6.10%*
CA, Inc.		1,362,981		31,130,486
Microsoft Corporation		1,056,000		27,456,000
				58,586,486
TOTAL INFORMATION TECHNOLOGY				131,148,864
*MATERIALS — 1.29%* *Chemicals — 1.29%*
Celanese Corporation		232,300		12,383,913
TOTAL MATERIALS				12,383,913
*TELECOMMUNICATION SERVICES — 3.56%* *Wireless Telecommunication Services — 3.56%*
Vodafone Group PLC — ADR		1,278,600		34,164,192
TOTAL TELECOMMUNICATION SERVICES				34,164,192
*UTILITIES — 9.15%* *Electric Utilities — 6.64%*
Edison International		420,200		16,282,750
Exelon Corporation		886,500		37,977,660
PPL Corporation		339,700		9,453,851
				63,714,261

	Shares Held		Value
*Multi-Utilities — 2.51%*
Public Service Enterprise Group, Inc.		737,500	$	24,072,000
TOTAL UTILITIES				87,786,261
Total investments — 97.72% (Cost $1,128,783,577)				937,490,985
Time deposit* — 1.37%				13,108,689
Other assets in excess of liabilities — 0.91%				8,732,327
Net assets — 100.00%			$	959,332,001

(a) — Non-income producing security.

ADR — American Depositary Receipt

* — Time deposit with Wells Fargo bears interest at 0.03% and matures on 7/1/2011. Invested through a cash management account administered by Brown Brothers Harriman & Co.

The accompanying notes are an integral part of these financial statements.
17

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Mid-Cap Value Fund

Largest Equity Holdings	Percent of net assets
Valassis Communications, Inc.		6.05	%
CA, Inc.		4.12	%
Cobalt International Energy, Inc.		4.09	%
Con-way, Inc.		3.99	%
MI Developments, Inc.		3.86	%
The Gap, Inc.		3.72	%
Stone Energy Corporation		3.50	%
Huntington Ingalls Industries, Inc.		3.22	%
Arris Group, Inc.		3.09	%
Edison International		2.95	%

COMMON STOCKS — 99.14%	Shares Held		Value
*CONSUMER DISCRETIONARY — 21.10%* *Auto Components — 4.37%*
The Goodyear Tire & Rubber Company (a)		1,714,500	$	28,752,165
Magna International, Inc.		563,400		30,446,136
				59,198,301
*Automobiles — 0.49%*
Harley-Davidson, Inc.		162,500		6,657,625
*Media — 6.77%*
The Interpublic Group of Companies, Inc.		779,000		9,737,500
Valassis Communications, Inc. (a) (b)		2,702,900		81,897,870
				91,635,370
*Multiline Retail — 2.09%*
J.C. Penney Company, Inc.		819,000		28,288,260
*Specialty Retail — 6.17%*
Aeropostale, Inc. (a)		363,400		6,359,500
The Gap, Inc.		2,785,800		50,422,980
Rent-A-Center, Inc.		874,700		26,730,832
				83,513,312
*Textiles, Apparel & Luxury Goods — 1.21%*
The Jones Group, Inc.		1,516,000		16,448,600
TOTAL CONSUMER DISCRETIONARY				285,741,468
*CONSUMER STAPLES — 5.08%* *Food & Staples Retailing — 5.08%*
Safeway, Inc.		1,600,100		37,394,337
SUPERVALU, Inc. (c)		3,328,300		31,319,303
TOTAL CONSUMER STAPLES				68,713,640

	Shares Held		Value
*ENERGY — 10.61%* *Oil, Gas & Consumable Fuels — 10.61%*
Cobalt International Energy, Inc. (a)		4,064,400	$	55,397,772
Kosmos Energy Limited (a) (c)		1,308,500		22,218,330
Murphy Oil Corporation		160,700		10,551,562
Stone Energy Corporation (a)		1,561,600		47,457,024
Tesoro Corporation (a)		349,100		7,997,881
TOTAL ENERGY				143,622,569
*FINANCIALS — 27.98%* *Commercial Banks — 11.27%*
Fifth Third Bancorp		2,400,300		30,603,825
First Horizon National Corporation		864,158		8,244,064
KeyCorp		3,683,820		30,686,220
Regions Financial Corporation		5,844,100		36,233,420
SunTrust Banks, Inc.		1,327,300		34,244,340
Synovus Financial Corporation		6,053,200		12,590,656
				152,602,525
*Diversified Financial Services — 1.80%*
PHH Corporation (a)		1,189,700		24,412,644
*Insurance — 11.05%*
The Allstate Corporation		507,800		15,503,134
CNO Financial Group, Inc. (a)		4,368,400		34,554,044
Genworth Financial, Inc. (a)		3,203,300		32,929,924
Hartford Financial Services Group, Inc.		831,400		21,924,018
Unum Group		781,200		19,904,976
XL Group PLC		1,126,400		24,758,272
				149,574,368
*Real Estate Management & Development — 3.86%*
MI Developments, Inc.		1,718,200		52,284,826
TOTAL FINANCIALS				378,874,363

The accompanying notes are an integral part of these financial statements.
18

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Mid-Cap Value Fund

	Shares Held		Value
*HEALTH CARE — 1.81%* *Health Care Equipment & Supplies — 0.32%*
Kinetic Concepts, Inc. (a)		75,000	$	4,322,250
*Health Care Providers & Services — 1.49%*
LifePoint Hospitals, Inc. (a)		335,600		13,115,248
Quest Diagnostics, Inc.		119,100		7,038,810
				20,154,058
TOTAL HEALTH CARE				24,476,308
*INDUSTRIALS — 12.77%* *Aerospace & Defense — 5.48%*
Alliant Techsystems, Inc.		142,700		10,178,791
Embraer SA — ADR		663,700		20,428,686
Huntington Ingalls Industries, Inc. (a)		1,264,300		43,618,350
				74,225,827
*Construction & Engineering — 0.50%*
EMCOR Group, Inc. (a)		229,000		6,711,990
*Machinery — 0.51%*
Terex Corporation (a)		243,800		6,936,110
*Professional Services — 2.29%*
Manpower, Inc.		577,000		30,956,050
*Road & Rail — 3.99%*
Con-way, Inc.		1,392,800		54,054,568
TOTAL INDUSTRIALS				172,884,545
*INFORMATION TECHNOLOGY — 11.91%* *Communications Equipment — 3.09%*
Arris Group, Inc. (a)		3,608,800		41,898,168
*Computers & Peripherals — 0.18%*
Lexmark International, Inc. (a)		81,800		2,393,468
*Electronic Equipment, Instruments & Components — 2.85%*
TE Connectivity Limited		1,050,700		38,623,732
*Semiconductors & Semiconductor Equipment — 1.15%*
ON Semiconductor Corporation (a)		1,487,000		15,568,890
*Software — 4.64%*
CA, Inc.		2,440,844		55,748,877
Symantec Corporation (a)		355,700		7,014,404
				62,763,281
TOTAL INFORMATION TECHNOLOGY				161,247,539

	Shares Held		Value
*UTILITIES — 7.88%* *Electric Utilities — 7.88%*
Edison International		1,032,000	$	39,990,000
Great Plains Energy, Inc.		1,585,500		32,867,415
PPL Corporation		1,217,200		33,874,676
TOTAL UTILITIES				106,732,091
Total investments — 99.14% (Cost $1,502,933,152)				1,342,292,523
Collateral for securities on loan^ — 1.29%				17,477,265
Time deposit* — 1.00%				13,550,784
Liabilities in excess of other assets — (1.43)%				(19,335,333	)
Net assets — 100.00%			$	1,353,985,239

(a) — Non-income producing security.

(b) — Affiliated issuer. See Note 6 in Notes to the Financial Statements.

(c) — All or a portion of this security is on loan. The total market value of securities on loan was $17,051,610.

ADR — American Depositary Receipt

^ — Collateral for securities on loan of $17,477,265 was invested in the Invesco Government Agency Portfolio. The 7-day yield as of June 30, 2011 was 0.02%.

* — Time deposit with Citibank bears interest at 0.03% and matures on 7/1/2011. Invested through a cash management account administered by Brown Brothers Harriman & Co.

The accompanying notes are an integral part of these financial statements.
19

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Small Cap Value Fund

Largest Equity Holdings	Percent of net assets
Valassis Communications, Inc.		6.10	%
Great Plains Energy, Inc.		4.74	%
Alliant Techsystems, Inc.		4.46	%
Noranda Aluminum Holding Corporation		4.30	%
Con-way, Inc.		4.21	%
MI Developments, Inc.		3.75	%
Stone Energy Corporation		3.68	%
Huntington Ingalls Industries, Inc.		3.47	%
Symetra Financial Corporation		3.40	%
Miller Industries, Inc.		3.32	%

COMMON STOCKS — 98.94%	Shares Held		Value
*CONSUMER DISCRETIONARY — 15.89%* *Auto Components — 1.05%*
The Goodyear Tire & Rubber Company (a)		206,000	$	3,454,620
*Hotels, Restaurants & Leisure — 0.68%*
Jack in the Box, Inc. (a)		81,200		1,849,736
Lakes Entertainment, Inc. (a)		175,900		386,980
				2,236,716
*Household Durables — 0.79%*
Furniture Brands International, Inc. (a)		632,800		2,619,792
*Media — 6.94%*
The Interpublic Group of Companies, Inc.		222,200		2,777,500
Valassis Communications, Inc. (a)		664,300		20,128,290
				22,905,790
*Multiline Retail — 0.34%*
99 Cents Only Stores (a)		54,700		1,107,128
*Specialty Retail — 1.44%*
Rent-A-Center, Inc.		155,800		4,761,248
*Textiles, Apparel & Luxury Goods — 4.65%*
The Jones Group, Inc.		717,300		7,782,705
Quiksilver, Inc. (a)		1,609,600		7,565,120
				15,347,825
TOTAL CONSUMER DISCRETIONARY				52,433,119
*CONSUMER STAPLES — 1.50%* *Food Products — 1.50%*
Overhill Farms, Inc. (a) (b)		889,200		4,935,060
TOTAL CONSUMER STAPLES				4,935,060
*ENERGY — 6.77%* *Energy Equipment & Services — 0.47%*
Bristow Group, Inc.		30,300		1,545,906

	Shares Held		Value
*Oil, Gas & Consumable Fuels — 6.30%*
Cobalt International Energy, Inc. (a)		579,700	$	7,901,311
Petroquest Energy, Inc. (a)		105,400		739,908
Stone Energy Corporation (a)		400,100		12,159,039
				20,800,258
TOTAL ENERGY				22,346,164
*FINANCIALS — 25.11%* *Commercial Banks — 5.56%*
Associated Banc-Corp		210,500		2,925,950
First Horizon National Corporation		598,131		5,706,172
First Interstate BancSystem, Inc.		226,600		3,340,084
M&T Bank Corporation		3,991		351,009
Synovus Financial Corporation		606,800		1,262,144
Webster Financial Corporation		226,600		4,763,132
				18,348,491
*Diversified Financial Services — 3.24%*
PHH Corporation (a)		520,700		10,684,764
*Insurance — 11.49%*
CNO Financial Group, Inc. (a)		1,200,800		9,498,328
Employers Holdings, Inc.		203,600		3,414,372
Global Indemnity PLC (a)		422,113		9,362,466
The Hanover Insurance Group, Inc.		11,700		441,207
Horace Mann Educators Corporation		255,100		3,982,111
Symetra Financial Corporation		835,200		11,216,736
				37,915,220
*Real Estate Investment Trusts — 0.80%*
CapLease, Inc.		539,100		2,646,981
*Real Estate Management & Development — 3.75%*
MI Developments, Inc.		407,500		12,400,225

The accompanying notes are an integral part of these financial statements.
20

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Small Cap Value Fund

	Shares Held		Value
*Thrifts & Mortgage Finance — 0.27%*
First Financial Holdings, Inc.		87,900	$	788,463
Territorial Bancorp, Inc.		4,600		95,312
				883,775
TOTAL FINANCIALS				82,879,456
*HEALTH CARE — 3.89%* *Health Care Equipment & Supplies — 1.94%*
Kinetic Concepts, Inc. (a)		110,900		6,391,167
*Health Care Providers & Services — 1.95%*
LifePoint Hospitals, Inc. (a)		84,300		3,294,444
PharMerica Corporation (a)		246,800		3,149,168
				6,443,612
TOTAL HEALTH CARE				12,834,779
*INDUSTRIALS — 25.54%* *Aerospace & Defense — 8.15%*
Alliant Techsystems, Inc.		206,400		14,722,512
Embraer SA — ADR		22,900		704,862
Huntington Ingalls Industries, Inc. (a)		332,400		11,467,800
				26,895,174
*Commercial Services & Supplies — 0.46%*
The Geo Group, Inc. (a)		65,200		1,501,556
*Construction & Engineering — 0.43%*
EMCOR Group, Inc. (a)		48,500		1,421,535
*Machinery — 6.97%*
CIRCOR International, Inc.		95,900		4,107,397
Meritor, Inc. (a)		112,200		1,799,688
Miller Industries, Inc.		586,900		10,969,161
Mueller Water Products, Inc.		389,800		1,551,404
Terex Corporation (a)		161,100		4,583,295
				23,010,945
*Professional Services — 5.28%*
Heidrick & Struggles International, Inc.		182,900		4,140,856
Hudson Highland Group, Inc. (a)		1,624,700		8,692,145
Manpower, Inc.		85,500		4,587,075
				17,420,076
*Road & Rail — 4.25%*
Con-way, Inc.		358,200		13,901,742
Saia, Inc. (a)		7,600		128,820
				14,030,562
TOTAL INDUSTRIALS				84,279,848
*INFORMATION TECHNOLOGY — 8.00%* *Communications Equipment — 3.23%*
Arris Group, Inc. (a)		817,600		9,492,336
Symmetricom, Inc. (a)		199,700		1,164,251
				10,656,587

	Shares Held		Value
*Computers & Peripherals — 0.17%*
Lexmark International, Inc. (a)		19,800	$	579,348
*IT Services — 3.35%*
Ciber, Inc. (a)		307,000		1,703,850
Heartland Payment Systems, Inc.		195,600		4,029,360
Ness Technologies, Inc. (a)		704,800		5,335,336
				11,068,546
*Semiconductors & Semiconductor Equipment — 1.25%*
ON Semiconductor Corporation (a)		392,600		4,110,522
TOTAL INFORMATION TECHNOLOGY				26,415,003
*MATERIALS — 4.30%* *Metals & Mining — 4.30%*
Noranda Aluminum Holding Corporation (a)		937,400		14,192,236
TOTAL MATERIALS				14,192,236
*UTILITIES — 7.94%* *Electric Utilities — 7.94%*
Great Plains Energy, Inc.		754,200		15,634,566
Portland General Electric Company		269,900		6,823,072
Westar Energy, Inc.		139,400		3,751,254
TOTAL UTILITIES				26,208,892
Total investments — 98.94% (Cost $316,764,168)				326,524,557
Time deposit* — 0.18%				598,580
Other assets in excess of liabilities — 0.88%				2,891,060
Net assets — 100.00%			$	330,014,197

(a) — Non-income producing security.

(b) — Affiliated issuer. See Note 6 in Notes to the Financial Statements.

ADR — American Depositary Receipt

* — Time deposit with Citibank bears interest at 0.03% and matures on 7/1/2011. Invested through a cash management account administered by Brown Brothers Harriman & Co.

The accompanying notes are an integral part of these financial statements.
21

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Value Opportunities Fund

Largest Equity Holdings	Percent of net assets
Valassis Communications, Inc.		12.49	%
Federal Home Loan Mortgage Corporation - Series Z		5.10	%
Noranda Aluminum Holding Corporation		4.47	%
JPMorgan Chase & Company		4.46	%
Total SA - ADR		4.26	%
Vodafone Group PLC - ADR		4.24	%
Microsoft Corporation		4.06	%
Cobalt International Energy, Inc.		4.04	%
Hewlett-Packard Company		3.77	%
Hudson Highland Group, Inc.		3.62	%

COMMON STOCKS — 88.11%	Shares Held		Value
*CONSUMER DISCRETIONARY — 14.40%* *Hotels, Restaurants & Leisure — 0.46%*
Lakes Entertainment, Inc. (a)		179,600	$	395,120
*Household Durables — 0.25%*
Furniture Brands International, Inc. (a)		53,400		221,076
*Media — 12.49%*
Valassis Communications, Inc. (a)		354,800		10,750,440
*Textiles, Apparel & Luxury Goods — 1.20%*
Quiksilver, Inc. (a)		219,700		1,032,590
TOTAL CONSUMER DISCRETIONARY				12,399,226
*CONSUMER STAPLES — 1.84%* *Food & Staples Retailing — 0.48%*
Wal-Mart Stores, Inc.		7,800		414,492
*Food Products — 1.36%*
Overhill Farms, Inc. (a)		210,800		1,169,940
TOTAL CONSUMER STAPLES				1,584,432
*ENERGY — 8.30%* *Oil, Gas & Consumable Fuels — 8.30%*
Cobalt International Energy, Inc. (a)		255,100		3,477,013
Total SA — ADR		63,400		3,667,056
TOTAL ENERGY				7,144,069
*FINANCIALS — 18.26%* *Commercial Banks — 2.87%*
Wells Fargo & Company		88,200		2,474,892
*Diversified Financial Services — 4.46%*
JPMorgan Chase & Company		93,800		3,840,172
*Insurance — 5.54%*
The Allstate Corporation		94,600		2,888,138
Global Indemnity PLC (a)		84,684		1,878,291
				4,766,429

	Shares Held		Value
*Real Estate Management & Development — 2.10%*
MI Developments, Inc.		59,300	$	1,804,499
*Thrifts & Mortgage Finance — 3.29%*
Tree.com, Inc. (a) (b)		553,200		2,832,384
TOTAL FINANCIALS				15,718,376
*INDUSTRIALS — 22.56%* *Aerospace & Defense — 8.82%*
Alliant Techsystems, Inc.		6,300		449,379
Huntington Ingalls Industries, Inc. (a)		78,366		2,703,627
Lockheed Martin Corporation		36,500		2,955,405
Northrop Grumman Corporation		21,400		1,484,090
				7,592,501
*Air Freight & Logistics — 0.45%*
Air T, Inc.		42,900		384,813
*Machinery — 4.41%*
KSB AG (f)		1,100		840,124
Miller Industries, Inc.		158,098		2,954,852
				3,794,976
*Marine — 1.93%*
Clarkson PLC		83,000		1,658,481
*Professional Services — 3.62%*
Hudson Highland Group, Inc. (a)		582,000		3,113,700
*Road & Rail — 3.33%*
Con-way, Inc.		74,000		2,871,940
TOTAL INDUSTRIALS				19,416,411
*INFORMATION TECHNOLOGY — 7.83%* *Computers & Peripherals — 3.77%*
Hewlett-Packard Company		89,100		3,243,240
*Software — 4.06%*
Microsoft Corporation		134,500		3,497,000
TOTAL INFORMATION TECHNOLOGY				6,740,240

The accompanying notes are an integral part of these financial statements.
22

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Value Opportunities Fund

	Shares Held		Value
*MATERIALS — 4.47%* *Metals & Mining — 4.47%*
Noranda Aluminum Holding Corporation (a)		254,400	$	3,851,616
TOTAL MATERIALS				3,851,616
*TELECOMMUNICATION SERVICES — 4.24%* *Wireless Telecommunication Services — 4.24%*
Vodafone Group PLC — ADR		136,500		3,647,280
TOTAL TELECOMMUNICATION SERVICES				3,647,280
*UTILITIES — 6.21%* *Electric Utilities — 3.75%*
Exelon Corporation		59,600		2,553,264
PPL Corporation		24,300		676,269
				3,229,533
*Multi-Utilities — 2.46%*
Public Service Enterprise Group, Inc.		64,700		2,111,808
TOTAL UTILITIES				5,341,341
Total common stocks (Cost $76,313,802)				75,842,991
INVESTMENT COMPANIES — 0.98%
*Equity Mutual Funds — 0.98%*
Diamond Hill Financial Trends Fund, Inc.		86,100		848,085
Total investment companies (Cost $644,142)				848,085
PREFERRED STOCKS — 9.39%
*FINANCIALS — 9.39%* *Real Estate Investment Trusts — 3.34%*
Strategic Hotels & Resorts, Inc. — Series A (a)		99,700		2,875,348
*Thrifts & Mortgage Finance — 6.05%*
Federal Home Loan Mortgage Corporation — Series K (a)		33,900		154,245
Federal Home Loan Mortgage Corporation — Series N (a)		118,600		406,205
Federal Home Loan Mortgage Corporation — Series S (a)		18,700		86,955
Federal Home Loan Mortgage Corporation — Series T (a)		37,900		170,550
Federal Home Loan Mortgage Corporation — Series Z (a)		1,489,100		4,392,845
				5,210,800
TOTAL FINANCIALS				8,086,148
Total preferred stocks (Cost $3,452,337)				8,086,148

CORPORATE BONDS — 0.83%	Amount		Value
*ENERGY — 0.83%* *Oil, Gas & Consumable Fuels — 0.83%*
American Petroleum Tankers LLC/American Petroleum Tankers Company 10.250%, 05/01/2015	$	679,000	$	712,950
TOTAL ENERGY				712,950
Total corporate bonds (cost $663,420)				712,950
Total investments — 99.31% (Cost $81,073,701)				85,490,174
Time deposit* — 0.45%				386,310
Other assets in excess of liabilities — 0.24%				205,535
Net assets — 100.00%			$	86,082,019

(a) — Non-income producing security.

(b) — Affiliated issuer. See Note 6 in Notes to the Financial Statements.

(f) — Security valued using Interactive Data's proprietary fair value pricing model. The total market value of this security was $840,124, representing 0.98% of net assets. See Note 1 in Notes to the Financial Statements.

ADR — American Depositary Receipt

* — Time deposit with HSBC Bank bears interest at 0.03% and matures on 7/1/2011. Invested through a cash management account administered by Brown Brothers Harriman & Co.

The accompanying notes are an integral part of these financial statements.
23

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Capital Income Fund

Largest Issuers	Percent of net assets
Lockheed Martin Corporation		3.65	%
Exelon Corporation		3.60	%
Vodafone Group PLC - ADR		3.47	%
Royal Dutch Shell PLC - Class B - ADR		3.46	%
JPMorgan Chase & Company		3.42	%
Microsoft Corporation		3.20	%
ConocoPhillips		2.56	%
Wells Fargo & Company		2.55	%
Johnson & Johnson		2.32	%
Philip Morris International, Inc.		2.32	%

COMMON STOCKS — 57.44%	Shares Held		Value
*CONSUMER DISCRETIONARY — 2.97%* *Automobiles — 0.37%*
General Motors Company (b) (i)		4,600	$	2,990
General Motors Company (b)		853		25,897
				28,887
*Multiline Retail — 0.85%*
J.C. Penney Company, Inc.		1,925		66,490
*Specialty Retail — 1.75%*
Home Depot, Inc.		3,802		137,708
TOTAL CONSUMER DISCRETIONARY				233,085
*CONSUMER STAPLES — 9.18%* *Beverages — 1.14%*
PepsiCo, Inc.		1,268		89,305
*Food & Staples Retailing — 1.41%*
Wal-Mart Stores, Inc. (c)		2,081		110,584
*Food Products — 2.88%*
Kraft Foods, Inc.		3,928		138,384
Unilever PLC — ADR		2,737		88,651
				227,035
*Household Products — 1.43%*
Kimberly-Clark Corporation		1,680		111,821
*Tobacco — 2.32%*
Philip Morris International, Inc. (c)		2,722		181,748
TOTAL CONSUMER STAPLES				720,493
*ENERGY — 6.90%* *Oil, Gas & Consumable Fuels — 6.90%*
ConocoPhillips		2,669		200,682
Royal Dutch Shell PLC — Class B — ADR		3,786		271,646
Total SA — ADR		1,197		69,234
TOTAL ENERGY				541,562

	Shares Held		Value
*FINANCIALS — 9.23%* *Commercial Banks — 4.10%*
PNC Financial Services Group, Inc.		2,578	$	153,675
Wells Fargo & Company		5,984		167,910
				321,585
*Diversified Financial Services — 3.42%*
JPMorgan Chase & Company (c)		6,554		268,321
*Insurance — 1.71%*
The Allstate Corporation		4,396		134,210
TOTAL FINANCIALS				724,116
*HEALTH CARE — 7.39%* *Pharmaceuticals — 7.39%*
Eli Lilly & Company		3,560		133,607
Johnson & Johnson		2,733		181,799
Novartis AG — ADR		2,179		133,159
Pfizer, Inc.		6,369		131,201
TOTAL HEALTH CARE				579,766
*INDUSTRIALS — 4.74%* *Aerospace & Defense — 4.74%*
Lockheed Martin Corporation (c)		3,541		286,715
Northrop Grumman Corporation		1,232		85,439
TOTAL INDUSTRIALS				372,154
*INFORMATION TECHNOLOGY — 4.28%* *IT Services — 1.08%*
International Business Machines Corporation		495		84,917
*Software — 3.20%*
Microsoft Corporation		9,652		250,952
TOTAL INFORMATION TECHNOLOGY				335,869
*MATERIALS — 0.49%* *Chemicals — 0.49%*
RPM International, Inc.		1,678		38,628
TOTAL MATERIALS				38,628

The accompanying notes are an integral part of these financial statements.
24

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Capital Income Fund

	Shares Held		Value
*TELECOMMUNICATION SERVICES — 3.47%* *Wireless Telecommunication Services — 3.47%*
Vodafone Group PLC — ADR		10,202	$	272,597
TOTAL TELECOMMUNICATION SERVICES				272,597
*UTILITIES — 8.79%* *Electric Utilities — 6.48%*
Edison International		3,433		133,029
Exelon Corporation (c)		6,592		282,402
PPL Corporation		3,339		92,924
				508,355
*Multi-Utilities — 2.31%*
Public Service Enterprise Group, Inc.		5,557		181,380
TOTAL UTILITIES				689,735
Total common stocks (Cost $4,366,943)				4,508,005
PREFERRED STOCKS — 2.31%
*FINANCIALS — 2.31%* *Commercial Banks — 1.19%*
Citigroup Capital XIII, 7.875% (a)		595		16,529
Countrywide Capital V, 7.000%		1,958		48,794
Zions Bancorporation — Series C, 9.500%		1,065		27,839
				93,162
*Consumer Finance — 0.81%*
Ally Financial, Inc. — Series G, 7.000% (Acquired 12/31/2010 — 03/24/2011, Cost $28,203) (r)		30		28,196
GMAC Capital Trust I — Series 2, 8.125% (a)		1,375		35,200
				63,396
*Real Estate Investment Trusts — 0.18%*
Strategic Hotels & Resorts, Inc. — Series A, 8.500% (b)		500		14,420
*Thrifts & Mortgage Finance — 0.13%*
Federal Home Loan Mortgage Corporation — Series Z, 8.375% (b)		3,385		9,986
TOTAL FINANCIALS				180,964
Total preferred stocks (Cost $170,354)				180,964
CONVERTIBLE PREFERRED STOCKS — 2.45%
*CONSUMER DISCRETIONARY — 0.53%* *Auto Components — 0.53%*
The Goodyear Tire & Rubber Company, 5.875%		750		41,715
TOTAL CONSUMER DISCRETIONARY				41,715
*FINANCIALS — 1.43%* *Commercial Banks — 0.70%*
KeyCorp — Series A, 7.750%		200		22,400
Wells Fargo & Company, 7.500%		30		31,799
				54,199

	Shares Held		Value
*Diversified Financial Services — 0.41%*
Citigroup, Inc., 7.500%		271	$	32,561
*Insurance — 0.32%*
Hartford Financial Services Group, Inc. — Series F, 7.250%		960		25,018
TOTAL FINANCIALS				111,778
*UTILITIES — 0.49%* *Electric Utilities — 0.49%*
PPL Corporation, 8.750%		700		38,437
TOTAL UTILITIES				38,437
Total convertible preferred stocks (Cost $189,047)				191,930
INVESTMENT COMPANIES — 1.63%
*Exchange Traded Funds — 1.63%*
iShares iBoxx $ High Yield Corporate Bond Fund		1,400		127,834
Total investment companies (Cost $129,276)				127,834
CONVERTIBLE BONDS — 0.37%	Amount
*INDUSTRIALS — 0.37%* *Machinery — 0.37%*
Meritor, Inc. 4.000%, 02/15/2027	$	30,000		28,800
TOTAL INDUSTRIALS				28,800
Total convertible bonds (Cost $31,911)				28,800
CORPORATE BONDS — 32.90%
*CONSUMER DISCRETIONARY — 7.44%* *Auto Components — 1.26%*
Allison Transmission, Inc. 7.125%, 05/15/2019 (Acquired 05/09/2011, Cost $25,344) (r)		25,000		24,438
American Axle & Manufacturing Holdings, Inc. 9.250%, 01/15/2017 (Acquired 12/31/2010, Cost $19,999) (r)		18,000		19,710
Pinafore LLC/Pinafore, Inc. 9.000%, 10/01/2018 (Acquired 12/31/2010 — 06/03/2011, Cost $32,552) (r)		30,000		32,475
Stoneridge, Inc. 9.500%, 10/15/2017 (Acquired 12/31/2010, Cost $21,619) (r)		20,000		22,200
				98,823
*Automobiles — 0.38%*
Chrysler Group LLC 8.250%, 06/15/2021 (Acquired 05/19/2011 — 06/03/2011, Cost $29,963) (r)		30,000		29,550

The accompanying notes are an integral part of these financial statements.
25

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Capital Income Fund

	Amount		Value
*Hotels, Restaurants & Leisure — 1.94%*
CityCenter Holdings LLC/ CityCenter Finance Corporation 11.500%, 01/15/2017 (Acquired 03/25/2011 — 06/20/2011, Cost $25,327) (p) (r)	$	25,000	$	27,250
CKE Restaurants, Inc. 11.375%, 07/15/2018		45,000		49,387
DineEquity, Inc. 9.500%, 10/30/2018 (Acquired 12/31/2010 — 06/03/2011, Cost $32,257) (r)		30,000		32,700
NCL Corporation Limited 9.500%, 11/15/2018 (Acquired 12/31/2010 — 06/03/2011, Cost $42,459) (r)		40,000		42,800
				152,137
*Household Durables — 0.32%*
M/I Homes, Inc. 8.625%, 11/15/2018		25,000		24,719
*Leisure Equipment & Products — 0.71%*
Harrah's Operating Company, Inc. 10.000%, 12/15/2018		25,000		22,688
Seven Seas Cruises 9.125%, 05/15/2019 (Acquired 05/13/2011, Cost $32,000) (r)		32,000		33,120
				55,808
*Media — 2.50%*
Bresnan Broadband Holdings LLC 8.000%, 12/15/2018 (Acquired 12/31/2010, Cost $20,700) (r)		20,000		20,725
CCO Holdings LLC/ CCO Holdings Capital Corporation 6.500%, 04/30/2021		25,000		24,781
Cequel Communications Holdings I LLC/ Cequel Capital Corporation 8.625%, 11/15/2017 (Acquired 12/31/2010 — 06/21/2011, Cost $36,302) (r)		35,000		36,574
Clear Channel Worldwide Holdings, Inc. — Series B 9.250%, 12/15/2017		30,000		32,850
Cumulus Media, Inc. 7.750%, 05/01/2019 (Acquired 05/26/2011, Cost $20,050) (r)		20,000		19,400
Kabel BW Erste Beteiligungs GmbH/Kabel Baden-Wurttemberg GmbH & Company KG 7.500%, 03/15/2019 (Acquired 03/28/2011 — 04/05/2011, Cost $30,688) (r)		30,000		30,750
Unitymedia Hessen GmbH & Company/ Unitymedia NRW GmbH 8.125%, 12/01/2017 (Acquired 12/31/2010, Cost $31,500) (r)		30,000		32,025
				197,105

	Amount		Value
*Multiline Retail — 0.33%*
Dillard's, Inc. 7.130%, 08/01/2018	$	25,000	$	25,625
TOTAL CONSUMER DISCRETIONARY				583,767
*CONSUMER STAPLES — 0.86%* *Food Products — 0.32%*
Del Monte Foods Company 7.625%, 02/15/2019 (Acquired 02/01/2011, Cost $25,000) (r)		25,000		25,375
*Household Products — 0.54%*
FGI Holding Company, Inc. 11.250%, 10/01/2015 (p)		20,587		20,767
FGI Operating Company, Inc. 10.250%, 08/01/2015		20,000		21,350
				42,117
TOTAL CONSUMER STAPLES				67,492
*ENERGY — 3.79%* *Energy Equipment & Services — 1.35%*
McJunkin Red Man Corporation 9.500%, 12/15/2016 (Acquired 12/31/2010, Cost $23,854) (r)		25,000		25,563
Parker Drilling Company 9.125%, 04/01/2018		35,000		37,100
PHI, Inc. 8.625%, 10/15/2018		25,000		26,250
Thermon Industries, Inc. 9.500%, 05/01/2017		16,000		17,240
				106,153
*Oil, Gas & Consumable Fuels — 2.44%*
American Petroleum Tankers LLC/ American Petroleum Tankers Company 10.250%, 05/01/2015		32,000		33,600
Comstock Resources, Inc. 8.375%, 10/15/2017		20,000		21,100
7.750%, 04/01/2019		30,000		30,263
Overseas Shipholding Group, Inc. 7.500%, 02/15/2024		27,000		22,815
PetroQuest Energy LLC 10.000%, 09/01/2017		30,000		31,800
Stone Energy Corporation 8.625%, 02/01/2017		50,000		51,749
				191,327
TOTAL ENERGY				297,480

The accompanying notes are an integral part of these financial statements.
26

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Capital Income Fund

	Amount		Value
*FINANCIALS — 4.06%* *Commercial Banks — 0.93%*
CIT Group, Inc. 7.000%, 05/02/2017 (Acquired 12/31/2010 — 03/24/2011, Cost $50,116) (r)	$	50,000	$	50,000
TransUnion LLC/TransUnion Financing Corporation 11.375%, 06/15/2018		20,000		22,700
				72,700
*Consumer Finance — 1.42%*
Ally Financial, Inc. 7.250%, 09/15/2017		20,000		20,034
Credit Acceptance Corporation 9.125%, 02/01/2017 (Acquired 04/04/2011, Cost $26,967) (r)		25,000		26,813
SLM Corporation — Series A 8.450%, 06/15/2018		30,000		32,971
Springleaf Finance Corporation 6.900%, 12/15/2017		35,000		32,288
				112,106
*Diversified Financial Services — 0.42%*
PHH Corporation 9.250%, 03/01/2016		30,000		32,963
*Insurance — 0.96%*
American International Group, Inc. 8.175%, 05/15/2058 (a)		25,000		27,409
CNO Financial Group, Inc. 9.000%, 01/15/2018 (Acquired 12/31/2010 — 05/17/2011, Cost $47,852) (r)		45,000		47,925
				75,334
*Investments & Miscellaneous Financial Services — 0.33%*
Constellation Enterprises LLC 10.625%, 02/01/2016 (Acquired 01/20/2011 — 01/21/2011, Cost $24,802) (i) (r)		25,000		25,656
TOTAL FINANCIALS				318,759

	Amount		Value
*HEALTH CARE — 3.95%* *Health Care Providers & Services — 2.05%*
AMGH Merger Sub, Inc. 9.250%, 11/01/2018 (Acquired 12/31/2010 — 06/03/2011, Cost $26,458) (r)	$	25,000	$	26,500
Capella Healthcare, Inc. 9.250%, 07/01/2017 (Acquired 12/31/2010 — 06/03/2011, Cost $37,476) (r)		35,000		37,100
CDRT Merger Sub, Inc. 8.125%, 06/01/2019 (Acquired 05/13/2011 — 06/03/2011, Cost $35,188) (r)		35,000		35,088
CHS/Community Health Systems, Inc. 8.875%, 07/15/2015		40,000		41,300
Surgical Care Affiliates, Inc. 10.000%, 07/15/2017 (Acquired 12/31/2010, Cost $20,400) (r)		20,000		20,750
				160,738
*Health Care Technology — 0.98%*
Giant Funding Corporation 8.250%, 02/01/2018 (Acquired 01/13/2011 — 06/03/2011, Cost $31,388) (r)		30,000		31,425
MedAssets, Inc. 8.000%, 11/15/2018 (Acquired 12/31/2010, Cost $20,200) (r)		20,000		19,900
STHI Holding Corporation 8.000%, 03/15/2018 (Acquired 03/11/2011 — 03/24/2011, Cost $25,764) (r)		25,000		25,500
				76,825
*Pharmaceuticals — 0.92%*
ConvaTec Healthcare E SA 10.500%, 12/15/2018 (Acquired 12/31/2010 — 06/28/2011, Cost $41,075) (r)		40,000		41,600
Endo Pharmaceuticals Holdings, Inc. 7.250%, 01/15/2022 (Acquired 06/03/2011 — 06/15/2011, Cost $30,100) (r)		30,000		30,600
				72,200
TOTAL HEALTH CARE				309,763

The accompanying notes are an integral part of these financial statements.
27

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Capital Income Fund

	Amount		Value
*INDUSTRIALS — 4.60%* *Airlines — 1.53%*
America West Airlines Pass Through Trust — Series 2001-1 7.100%, 04/02/2021	$	20,908	$	20,751
American Airlines, Inc. 7.500%, 03/15/2016 (Acquired 03/09/2011 — 06/02/2011, Cost $34,856) (r)		35,000		34,475
Continental Airlines, Inc. Pass Through Trust — Series 2003-ERJ1 7.875%, 07/02/2018		37,937		37,842
Delta Air Lines, Inc. Pass Through Trust — Class B — Series 2007-1 8.021%, 08/10/2022		26,797		27,231
				120,299
*Building Products — 0.45%*
Roofing Supply Group LLC/ Roofing Supply Finance, Inc. 8.625%, 12/01/2017 (Acquired 12/31/2010 — 06/03/2011, Cost $36,175) (r)		35,000		35,131
*Commercial Services & Supplies — 1.33%*
International Lease Finance Corporation 8.250%, 12/15/2020		50,000		54,125
RSC Equipment Rental, Inc./RSC Holdings III LLC 8.250%, 02/01/2021		30,000		30,000
United Rentals North America, Inc. 8.375%, 09/15/2020		20,000		20,350
				104,475
*Machinery — 0.96%*
Accuride Corporation 9.500%, 08/01/2018		20,000		21,500
Altra Holdings, Inc. 8.125%, 12/01/2016		20,000		21,700
The Manitowoc Company, Inc. 8.500%, 11/01/2020		30,000		32,175
				75,375
*Road & Rail — 0.33%*
Florida East Coast Railway Corporation 8.125%, 02/01/2017 (Acquired 02/09/2011 — 04/06/2011, Cost $26,070) (r)		25,000		25,938
TOTAL INDUSTRIALS				361,218

	Amount		Value
*INFORMATION TECHNOLOGY — 1.12%* *Communications Equipment — 0.31%*
CDW Escrow Corporation 8.500%, 04/01/2019 (Acquired 03/29/2011, Cost $25,000) (r)	$	25,000	$	24,625
*Electronic Equipment, Instruments & Components — 0.60%*
Freescale Semiconductor, Inc. 9.250%, 04/15/2018 (Acquired 12/31/2010, Cost $21,942) (r)		20,000		21,650
8.050%, 02/01/2020 (Acquired 06/07/2010, Cost $24,504) (r)		25,000		25,250
				46,900
*Software — 0.21%*
First Data Corporation 8.875%, 08/15/2020 (Acquired 12/31/2010, Cost $15,881) (r)		15,000		16,088
TOTAL INFORMATION TECHNOLOGY				87,613
*MATERIALS — 4.41%* *Chemicals — 1.17%*
Georgia Gulf Corporation 9.000%, 01/15/2017 (Acquired 12/31/2010, Cost $21,666) (r)		20,000		21,400
Hexion U.S. Finance Corporation/ Hexion Nova Scotia Finance ULC 8.875%, 02/01/2018		20,000		20,900
Momentive Performance Materials, Inc. 9.000%, 01/15/2021		20,000		20,500
Omnova Solutions, Inc. 7.875%, 11/01/2018 (Acquired 05/31/2011 — 06/27/2011, Cost $30,025) (r)		30,000		28,988
				91,788
*Containers & Packaging — 0.78%*
BWAY Holding Company 10.000%, 06/15/2018		30,000		32,888
Solo Cup Company 8.500%, 02/15/2014		30,000		28,125
				61,013
*Metals & Mining — 0.74%*
Atkore International, Inc. 9.875%, 01/01/2018 (Acquired 12/31/2010 — 06/03/2011, Cost $36,974) (r)		35,000		36,925
Rain CII Carbon LLC/CII Carbon Corporation 8.000%, 12/01/2018 (Acquired 12/31/2010, Cost $20,600) (r)		20,000		21,400
				58,325

The accompanying notes are an integral part of these financial statements.
28

Schedule of Investments — June 30, 2011

Hotchkis and Wiley Capital Income Fund

	Amount		Value
*Paper & Forest Products — 1.72%*
Ainsworth Lumber Company Limited 11.000%, 07/29/2015 (Acquired 12/31/2010 — 06/21/2011, Cost $39,984) (p) (r)	$	41,000	$	38,129
Georgia-Pacific LLC 7.750%, 11/15/2029		25,000		28,851
Longview Fibre Paper & Packaging 8.000%, 06/01/2016 (Acquired 05/17/2011, Cost $36,318) (r)		36,000		36,360
Verso Paper Holdings LLC/Verso Paper, Inc. 8.750%, 02/01/2019 (Acquired 02/02/2011 — 06/28/2011, Cost $34,871) (r)		35,000		31,325
				134,665
TOTAL MATERIALS				345,791
*TELECOMMUNICATION SERVICES — 0.27%* *Wireless Telecommunication Services — 0.27%*
Clearwire Communication LLC/ Clearwire Finance, Inc. 12.000%, 12/01/2015 (Acquired 12/31/2010, Cost $21,583) (r)		20,000		21,450
TOTAL TELECOMMUNICATION SERVICES				21,450
*UTILITIES — 2.40%* *Electric Utilities — 1.04%*
GenOn Energy, Inc. 9.500%, 10/15/2018		30,000		31,349
NRG Energy, Inc. 7.875%, 05/15/2021 (Acquired 05/10/2011, Cost $25,000) (r)		25,000		25,000
Texas Competitive Electric Holdings Company LLC 11.500%, 10/01/2020 (Acquired 04/18/2011, Cost $25,063) (r)		25,000		24,688
				81,037
*Independent Power Producers & Energy Traders — 0.91%*
Calpine Corporation 7.875%, 07/31/2020 (Acquired 12/31/2010 — 01/05/2011, Cost $30,675) (r)		30,000		31,500
Edison Mission Energy 7.000%, 05/15/2017		30,000		24,450
Mirant Americas Generation LLC 8.500%, 10/01/2021		15,000		15,450
				71,400
*Multi-Utilities — 0.45%*
Energy Future Intermediate Holding Company LLC 9.750%, 10/15/2019		35,000		35,559
TOTAL UTILITIES				187,996
Total corporate bonds (Cost $2,576,039)				2,581,329

WARRANTS — 0.11%	Shares Held		Value
*Automobiles — 0.11%*
General Motors Company Expiration: July 2016 Exercise Price: $10.00 (b)		406	$	8,688
Total warrants (Cost $11,639)				8,688
Total investments — 97.21% (Cost $7,475,209)				7,627,550
Time deposit* — 1.91%				150,061
Other assets in excess of liabilities — 0.88%				69,105
Net assets — 100.00%			$	7,846,716

(a) — The coupon rate shown on variable rate securities represents the rate at June 30, 2011.

(b) — Non-income producing security.

(c) — All or a portion of this security is segregated as collateral for delayed delivery securities.

(i) — Illiquid security

(p) — Payment in-kind security.

(r) — Restricted security under Rule 144A of the Securities Act of 1933. Purchased in a private placement transaction; resale to the public may require registration or be limited to qualified institutional buyers. The total market value of these securities was $1,402,030, representing 17.87% of net assets.

ADR — American Depositary Receipt

* — Time deposit with HSBC Bank bears interest at 0.03% and matures on 7/1/2011. Invested through a cash management account administered by Brown Brothers Harriman & Co.

The accompanying notes are an integral part of these financial statements.
29

Schedule of Investments — June 30, 2011

Hotchkis and Wiley High Yield Fund

Largest Issuers	Percent of net assets
Ally Financial, Inc.		2.67	%
International Lease Finance Corporation		1.60	%
CIT Group, Inc.		1.60	%
CNO Financial Group, Inc.		1.52	%
Stone Energy Corporation		1.51	%
CKE Restaurants, Inc.		1.40	%
PetroQuest Energy LLC		1.35	%
Comstock Resources, Inc.		1.35	%
Zions Bancorporation		1.35	%
Strategic Hotels & Resorts, Inc.		1.32	%

CORPORATE BONDS — 81.20%	Amount		Value
*Airlines — 4.54%*
America West Airlines Pass Through Trust — Series 2001-1 7.100%, 04/02/2021	$	2,188,756	$	2,172,340
American Airlines, Inc. 7.500%, 03/15/2016 (Acquired 03/09/2011 — 03/15/2011, Cost $2,467,671) (r)		2,480,000		2,442,800
Continental Airlines, Inc. Pass Through Trust — Series 2003-ERJ1 7.875%, 07/02/2018		1,718,837		1,714,540
Delta Air Lines, Inc. Pass Through Trust — Class B — Series 2007-1 8.021%, 08/10/2022		2,054,950		2,088,240
United Air Lines, Inc. Pass Through Trust — Class B — Series 2007-1 7.336%, 07/02/2019 (Acquired 06/23/2010 — 05/03/2011, Cost $2,489,900) (e) (i)		2,619,590		2,511,401
				10,929,321
*Auto Loans — 1.10%*
Credit Acceptance Corporation 9.125%, 02/01/2017 (Acquired 02/28/2011 — 04/04/2011, Cost $2,649,718) (r)		2,475,000		2,654,438

	Amount		Value
*Auto Parts & Equipment — 3.63%*
Accuride Corporation 9.500%, 08/01/2018	$	480,000	$	516,000
Affinia Group, Inc. 10.750%, 08/15/2016 (Acquired 08/06/2009 — 02/09/2011, Cost $1,856,326) (r)		1,728,000		1,935,360
Allison Transmission, Inc. 7.125%, 05/15/2019 (Acquired 04/27/2011 — 05/09/2011, Cost $1,991,531) (r)		1,975,000		1,930,563
American Axle & Manufacturing Holdings, Inc. 9.250%, 01/15/2017 (Acquired 12/10/2009 — 05/03/2010, Cost $969,076) (r)		950,000		1,040,250
Pinafore LLC/Pinafore, Inc. 9.000%, 10/01/2018 (Acquired 09/21/2010 — 01/12/2011, Cost $2,189,323) (r)		2,080,000		2,251,600
Stoneridge, Inc. 9.500%, 10/15/2017 (Acquired 09/24/2010 — 01/04/2011, Cost $1,030,103) (r)		1,005,000		1,115,550
				8,789,323
*Automakers — 0.98%*
Chrysler Group LLC 8.250%, 06/15/2021 (Acquired 05/19/2011 — 06/13/2011, Cost $2,415,346) (r)		2,410,000		2,373,850
*Banking — 0.59%*
Ally Financial, Inc. 7.250%, 09/15/2017		1,431,000		1,433,443
*Building & Construction — 1.13%*
M/I Homes, Inc. 8.625%, 11/15/2018		2,730,000		2,699,287

The accompanying notes are an integral part of these financial statements.
30

Schedule of Investments — June 30, 2011

Hotchkis and Wiley High Yield Fund

	Amount		Value
*Building Materials — 1.13%*
Roofing Supply Group LLC/ Roofing Supply Finance, Inc. 8.625%, 12/01/2017 (Acquired 11/08/2010 — 01/12/2011, Cost $2,813,306) (r)	$	2,725,000	$	2,735,219
*Chemicals — 2.58%*
Georgia Gulf Corporation 9.000%, 01/15/2017 (Acquired 12/11/2009 — 08/13/2010, Cost $1,300,598) (r)		1,269,000		1,357,830
Hexion U.S. Finance Corporation/ Hexion Nova Scotia Finance ULC 8.875%, 02/01/2018		1,480,000		1,546,600
Momentive Performance Materials, Inc. 9.000%, 01/15/2021		1,230,000		1,260,750
Omnova Solutions, Inc. 7.875%, 11/01/2018 (Acquired 05/31/2011 — 06/27/2011, Cost $2,150,042) (r)		2,125,000		2,053,281
				6,218,461
*Consumer — Products — 1.14%*
FGI Holding Company, Inc. 11.250%, 10/01/2015 (p)		1,265,782		1,276,858
FGI Operating Company, Inc. 10.250%, 08/01/2015		1,380,000		1,473,150
				2,750,008
*Consumer/Commercial/Lease Financing — 5.46%*
CIT Group, Inc. 7.000%, 05/01/2017		405		404
7.000%, 05/02/2017 (Acquired 12/10/2009 — 03/24/2011, Cost $3,768,005) (r)		3,848,000		3,848,000
International Lease Finance Corporation 8.250%, 12/15/2020 (c)		3,570,000		3,864,525
SLM Corporation — Series A 8.450%, 06/15/2018 (c)		1,570,000		1,725,537
Springleaf Finance Corporation 6.900%, 12/15/2017		2,525,000		2,329,312
TransUnion LLC/ TransUnion Financing Corporation 11.375%, 06/15/2018		1,230,000		1,396,050
				13,163,828
*Department Stores — 0.88%*
Dillard's, Inc. 7.130%, 08/01/2018		2,070,000		2,121,750
*Diversified Capital Goods — 0.52%*
FCC Holdings, Inc. 12.000%, 12/15/2015 (Acquired 01/03/2011, Cost $1,253,125) (i) (r)		1,250,000		1,262,500

	Amount		Value
*Electric — Generation — 5.60%*
Calpine Corporation 7.875%, 07/31/2020 (Acquired 06/15/2011 — 06/29/2011, Cost $2,056,250) (r)	$	2,000,000	$	2,100,000
Edison Mission Energy 7.000%, 05/15/2017 (c)		2,425,000		1,976,375
Energy Future Holdings Corporation 9.750%, 10/15/2019		2,113,000		2,146,729
Energy Future Intermediate Holding Company LLC 9.750%, 10/15/2019		1,057,000		1,073,873
GenOn Energy, Inc. 9.500%, 10/15/2018		1,720,000		1,797,400
Mirant Americas Generation LLC 8.500%, 10/01/2021		1,058,000		1,089,740
NRG Energy, Inc. 7.875%, 05/15/2021 (Acquired 05/10/2011 — 06/21/2011, Cost $1,868,750) (r)		1,875,000		1,875,000
Texas Competitive Electric Holdings Company LLC 11.500%, 10/01/2020 (Acquired 04/14/2011 — 04/18/2011, Cost $1,473,913) (r)		1,475,000		1,456,563
				13,515,680
*Electronics — 1.00%*
Freescale Semiconductor, Inc. 9.250%, 04/15/2018 (Acquired 04/20/2010 — 08/24/2010, Cost $1,445,725) (r)		1,410,000		1,526,325
8.050%, 02/01/2020 (Acquired 06/07/2011 — 06/09/2011, Cost $855,772) (r)		875,000		883,750
				2,410,075
*Energy — Exploration & Production — 4.21%*
Comstock Resources, Inc. 8.375%, 10/15/2017		1,470,000		1,550,850
7.750%, 04/01/2019		1,680,000		1,694,700
PetroQuest Energy LLC 10.000%, 09/01/2017		3,080,000		3,264,800
Stone Energy Corporation 8.625%, 02/01/2017		3,517,000		3,640,095
				10,150,445
*Food — Wholesale — 0.83%*
Del Monte Foods Company 7.625%, 02/15/2019 (Acquired 02/01/2011 — 03/07/2011, Cost $2,004,375) (r)		1,975,000		2,004,625

The accompanying notes are an integral part of these financial statements.
31

Schedule of Investments — June 30, 2011

Hotchkis and Wiley High Yield Fund

	Amount		Value
*Forestry/Paper — 3.51%*
Ainsworth Lumber Company Limited 11.000%, 07/29/2015 (Acquired 02/22/2010 — 06/21/2011, Cost $2,865,313) (p) (r)	$	2,914,203	$	2,710,209
Georgia-Pacific LLC 7.750%, 11/15/2029		350,000		403,913
Longview Fibre Paper & Packaging, Inc. 8.000%, 06/01/2016 (Acquired 05/17/2011 — 06/13/2011, Cost $2,715,545) (r)		2,680,000		2,706,800
Verso Paper Holdings LLC/Verso Paper, Inc. 8.750%, 02/01/2019 (Acquired 01/11/2011 — 06/28/2011, Cost $2,958,593) (r)		2,950,000		2,640,250
				8,461,172
*Gaming — 1.54%*
CityCenter Holdings LLC/ CityCenter Finance Corporation 11.500%, 01/15/2017 (Acquired 01/13/2011 — 06/20/2011, Cost $1,573,922) (p) (r)		1,500,000		1,635,000
Harrah's Operating Company, Inc. 10.000%, 12/15/2018		2,285,000		2,073,638
				3,708,638
*Health Facilities — 3.09%*
Capella Healthcare, Inc. 9.250%, 07/01/2017 (Acquired 06/21/2010 — 03/07/2011, Cost $2,553,613) (r)		2,435,000		2,581,100
CHS/Community Health Systems, Inc. 8.875%, 07/15/2015		2,910,000		3,004,575
Surgical Care Affiliates, Inc. 10.000%, 07/15/2017 (Acquired 12/15/2009 — 02/08/2011, Cost $1,799,748) (r)		1,790,000		1,857,125
				7,442,800
*Health Services — 2.51%*
AMGH Merger Sub, Inc. 9.250%, 11/01/2018 (Acquired 10/15/2010 — 03/08/2011, Cost $2,136,655) (r)		2,055,000		2,178,300
CDRT Merger Sub, Inc. 8.125%, 06/01/2019 (Acquired 05/13/2011 — 06/27/2011, Cost $1,876,750) (r)		1,880,000		1,884,700
STHI Holding Corporation 8.000%, 03/15/2018 (Acquired 03/11/2011 — 04/04/2011, Cost $2,012,318) (r)		1,955,000		1,994,100
				6,057,100

	Amount		Value
*Investments & Miscellaneous Financial Services — 1.06%*
Constellation Enterprises LLC 10.625%, 02/01/2016 (Acquired 01/20/2011 — 02/23/2011, Cost $2,500,083) (i) (r)	$	2,500,000	$	2,565,625
*Leisure — 2.12%*
NCL Corporation Limited 9.500%, 11/15/2018 (Acquired 11/04/2010 — 05/19/2011, Cost $2,939,130) (r)		2,770,000		2,963,899
Seven Seas Cruises 9.125%, 05/15/2019 (Acquired 05/13/2011 — 05/17/2011, Cost $2,133,625) (r)		2,068,000		2,140,380
				5,104,279
*Life Insurance — 1.52%*
CNO Financial Group, Inc. 9.000%, 01/15/2018 (Acquired 12/14/2010 — 05/17/2011, Cost $3,555,894) (r)		3,445,000		3,668,925
*Machinery — 1.54%*
Altra Holdings, Inc. 8.125%, 12/01/2016		1,460,000		1,584,100
The Manitowoc Company, Inc. 8.500%, 11/01/2020		1,980,000		2,123,550
				3,707,650
*Media — Broadcast — 0.81%*
Crown Media Holdings, Inc. 10.500%, 07/15/2019 (Acquired 06/29/2011, Cost $250,000) (d) (r)		250,000		258,750
Cumulus Media, Inc. 7.750%, 05/01/2019 (Acquired 04/29/2011 — 06/22/2011, Cost $1,758,136) (r)		1,750,000		1,697,500
				1,956,250

The accompanying notes are an integral part of these financial statements.
32

Schedule of Investments — June 30, 2011

Hotchkis and Wiley High Yield Fund

	Amount		Value
*Media — Cable — 4.38%*
Bresnan Broadband Holdings LLC 8.000%, 12/15/2018 (Acquired 12/01/2010 — 02/22/2011, Cost $1,791,613) (r)	$	1,730,000	$	1,792,713
CCO Holdings LLC/ CCO Holdings Capital Corporation 6.500%, 04/30/2021 (c)		2,455,000		2,433,519
Cequel Communications Holdings I LLC/ Cequel Capital Corporation 8.625%, 11/15/2017 (Acquired 10/30/2009 — 06/21/2011, Cost $2,319,512) (r)		2,315,000		2,419,175
Kabel BW Erste Beteiligungs GmbH/Kabel Baden-Wurttemberg GmbH & Company KG 7.500%, 03/15/2019 (Acquired 03/23/2011 — 04/05/2011, Cost $1,529,725) (r)		1,500,000		1,537,500
Unitymedia Hessen GmbH & Company/ Unitymedia NRW GmbH 8.125%, 12/01/2017 (Acquired 11/17/2009 — 11/02/2010, Cost $2,304,490) (r)		2,220,000		2,369,850
				10,552,757
*Media — Services — 0.89%*
Clear Channel Worldwide Holdings, Inc. — Series B 9.250%, 12/15/2017 (c)		1,960,000		2,146,200
*Medical Products — 0.93%*
Giant Funding Corporation 8.250%, 02/01/2018 (Acquired 01/12/2011 — 01/13/2011, Cost $2,193,125) (r)		2,150,000		2,252,125
*Metals/Mining Excluding Steel — 0.55%*
Rain CII Carbon LLC/CII Carbon Corporation 8.000%, 12/01/2018 (Acquired 11/23/2010, Cost $1,230,000) (r)		1,230,000		1,316,100
*Multi-Line Insurance — 1.06%*
American International Group, Inc. 8.175%, 05/15/2058 (a)		2,325,000		2,549,014
*Oil Field Equipment & Services — 4.96%*
American Petroleum Tankers LLC/ American Petroleum Tankers Company 10.250%, 05/01/2015		2,296,000		2,410,800
McJunkin Red Man Corporation 9.500%, 12/15/2016 (Acquired 12/16/2009 — 04/20/2011, Cost $2,232,027) (r)		2,250,000		2,300,625
Parker Drilling Company 9.125%, 04/01/2018		2,455,000		2,602,300
PHI, Inc. 8.625%, 10/15/2018		2,275,000		2,388,750
Thermon Industries, Inc. 9.500%, 05/01/2017		2,098,000		2,260,595
				11,963,070

	Amount		Value
*Packaging — 1.77%*
BWAY Holding Company 10.000%, 06/15/2018	$	1,970,000	$	2,159,613
Solo Cup Company 8.500%, 02/15/2014		2,250,000		2,109,375
				4,268,988
*Pharmaceuticals — 1.93%*
ConvaTec Healthcare E SA 10.500%, 12/15/2018 (Acquired 12/28/2010 — 06/28/2011, Cost $3,047,183) (r)		2,910,000		3,026,399
Endo Pharmaceuticals Holdings, Inc. 7.250%, 01/15/2022 (Acquired 06/06/2011 — 06/27/2011, Cost $1,615,375) (r)		1,600,000		1,632,000
				4,658,399
*Railroads — 1.01%*
Florida East Coast Railway Corporation 8.125%, 02/01/2017 (Acquired 01/19/2011 — 04/06/2011, Cost $2,417,618) (r)		2,345,000		2,432,938
*Restaurants — 2.45%*
CKE Restaurants, Inc. 11.375%, 07/15/2018		3,075,000		3,374,813
DineEquity, Inc. 9.500%, 10/30/2018 (Acquired 12/01/2010 — 01/21/2011, Cost $2,477,773) (r)		2,330,000		2,539,700
				5,914,513
*Software/Services — 1.54%*
First Data Corporation 10.550%, 09/24/2015 (p)		1,052,750		1,097,492
8.875%, 08/15/2020 (Acquired 08/11/2010 — 11/01/2010, Cost $1,045,833) (r)		1,025,000		1,099,312
MedAssets, Inc. 8.000%, 11/15/2018 (Acquired 11/09/2010 — 11/16/2010, Cost $1,551,488) (r)		1,520,000		1,512,400
				3,709,204
*Specialty Retail — 0.08%*
DirectBuy Holdings, Inc. 12.000%, 02/01/2017 (Acquired 01/21/2011, Cost $486,824) (r)		500,000		197,500
*Steel Producers/Products — 1.21%*
Atkore International, Inc. 9.875%, 01/01/2018 (Acquired 12/15/2010 — 03/03/2011, Cost $2,876,217) (r)		2,755,000		2,906,525

The accompanying notes are an integral part of these financial statements.
33

Schedule of Investments — June 30, 2011

Hotchkis and Wiley High Yield Fund

	Amount		Value
*Support — Services — 2.63%*
PHH Corporation 9.250%, 03/01/2016	$	1,883,000	$	2,068,946
RSC Equipment Rental, Inc./ RSC Holdings III LLC 8.250%, 02/01/2021		2,140,000		2,140,000
United Rentals North America, Inc. 8.375%, 09/15/2020		2,085,000		2,121,488
				6,330,434
*Telecom — Wireless — 1.01%*
Clearwire Communication LLC/ Clearwire Finance, Inc. 12.000%, 12/01/2015 (Acquired 09/21/2010 — 03/15/2011, Cost $1,848,063) (r)		1,730,000		1,855,425
Wind Acquisition Holdings Finance SA 12.250%, 07/15/2017 (Acquired 01/05/2011, Cost $560,384) (p) (r)		500,000		578,750
				2,434,175
*Telecommunications Equipment — 0.93%*
CDW Escrow Corporation 8.500%, 04/01/2019 (Acquired 03/29/2011, Cost $1,175,000) (r)		1,175,000		1,157,375
CDW LLC/CDW Finance Corporation 11.500%, 10/12/2015 (p)		12,999		13,779
12.535%, 10/12/2017		1,000,000		1,082,500
				2,253,654
*Transportation Excluding Air/Rail — 0.85%*
Overseas Shipholding Group, Inc. 7.500%, 02/15/2024		2,432,000		2,055,040
Total corporate bonds (cost $192,697,851)				195,825,328
CONVERTIBLE BONDS — 0.93%
*Auto Parts & Equipment — 0.93%*
Meritor, Inc. 4.000%, 02/15/2027		2,330,000		2,236,800
Total convertible bonds (cost $2,205,555)				2,236,800

CONVERTIBLE PREFERRED STOCKS — 4.30%	Shares Held		Value
*Auto Parts & Equipment — 0.54%*
The Goodyear Tire & Rubber Company, 5.875%		23,300	$	1,295,946
*Banking — 2.00%*
Citigroup, Inc., 7.500%		23,546		2,829,052
KeyCorp — Series A, 7.750%		17,800		1,993,600
				4,822,652
*Electric — Integrated — 0.94%*
PPL Corporation, 8.750%		41,500		2,278,765
*Multi-Line Insurance — 0.82%*
Hartford Financial Services Group, Inc. — Series F, 7.250%		75,440		1,965,966
Total convertible preferred stocks (Cost $10,095,112)				10,363,329
PREFERRED STOCKS — 6.88%
*Banking — 4.62%*
Ally Financial, Inc. — Series G, 7.000% (Acquired 10/22/2010 — 03/24/2011, Cost $2,363,725) (r)		2,570		2,415,479
Citigroup Capital XIII, 7.875% (a)		49,405		1,372,471
Countrywide Capital V, 7.000%		62,098		1,547,482
GMAC Capital Trust I — Series 2, 8.125% (a)		101,125		2,588,800
Zions Bancorporation — Series C, 9.500%		124,135		3,244,888
				11,169,120
*Gaming — 0.59%*
Las Vegas Sands Corporation — Series A, 10.000%		12,500		1,413,673
*Hotels — 1.32%*
Strategic Hotels & Resorts, Inc. — Series A, 8.500% (b)		46,900		1,352,596
Strategic Hotels & Resorts, Inc. — Series C, 8.250% (b)		64,700		1,829,716
				3,182,312
*Investments & Miscellaneous Financial Services — 0.35%*
Federal Home Loan Mortgage Corporation — Series Z, 8.375% (b)		282,538		833,487
Total preferred stocks (Cost $14,966,436)				16,598,592
COMMON STOCKS — 0.92%
*Automakers — 0.92%*
General Motors Company (b) (i)		352,400		229,060
General Motors Company (b)		65,459		1,987,335
Total common stocks (Cost $2,275,257)				2,216,395

The accompanying notes are an integral part of these financial statements.
34

Schedule of Investments — June 30, 2011

Hotchkis and Wiley High Yield Fund

WARRANTS — 0.28%	Shares Held		Value
*Automakers — 0.28%*
General Motors Company Expiration: July 2016 Exercise Price: $10.00 (b)		31,171	$	667,059
Total warrants (Cost $735,178)				667,059
Total investments — 94.51% (Cost $222,975,389)				227,907,503
Time deposits* — 2.64%				6,371,805
Other assets in excess of liabilities — 2.85%				6,871,657
Net assets — 100.00%			$	241,150,965

(a) — The coupon rate shown on variable rate securities represents the rate at June 30, 2011.

(b) — Non-income producing security.

(c) — All or a portion of this security is segregated as collateral for delayed delivery securities.

(d) — Delayed delivery security.

(e) — Restricted security not registered under the Securities Act of 1933. Purchased in a private placement transaction; resale to the public may require registration or be limited to qualified institutional buyers. The total market value of this security was $2,511,401, representing 1.04% of net assets.

(i) — Illiquid security.

(p) — Payment in-kind security.

* — Time deposits of $1,200,000 with Bank of America, $1,200,000 with Citibank, $1,200,000 with HSBC Bank, $1,200,000 with JPMorgan Chase and $1,571,805 with Wells Fargo bear interest at 0.03% and mature on 7/1/2011. Invested through a cash management account administered by Brown Brothers Harriman & Co.

The accompanying notes are an integral part of these financial statements.
35

Statements of Assets & Liabilities

JUNE 30, 2011

	Diversified Value Fund			Large Cap Value Fund			Mid-Cap Value Fund			Small Cap Value Fund
Assets:
Investments, at value*
Unaffiliated issuers	$	384,544,168		$	937,490,985		$	1,260,394,653		$	321,589,497
Affiliated issuers		—			—			81,897,870			4,935,060
Collateral for securities on loan		—			—			17,477,265			—
Time deposit		2,243,436			13,108,689			13,550,784			598,580
Dividends and interest receivable		830,849			2,712,073			1,763,151			218,311
Receivable for investments sold		585,993			11,451,141			7,444,694			3,387,930
Receivable for Fund shares sold		574,737			1,158,799			1,269,032			1,196,208
Other assets		47,168			51,727			59,339			22,487
Total assets	$	388,826,351		$	965,973,414		$	1,383,856,788		$	331,948,073
Liabilities:
Collateral for securities on loan	$	—		$	—		$	17,477,265		$	—
Payable for investments purchased		157,339			—			9,930,941			1,187,695
Payable for Fund shares repurchased		322,710			5,122,245			700,808			293,434
Payable to Advisor		215,014			562,760			810,547			198,253
Payable to Trustees		330			942			1,146			278
Accrued distribution and service fees		77,848			453,502			273,404			105,374
Accrued expenses and other liabilities		360,757			501,964			677,438			148,842
Total liabilities		1,133,998			6,641,413			29,871,549			1,933,876
Net assets	$	387,692,353		$	959,332,001		$	1,353,985,239		$	330,014,197
Net Assets consist of:
Paid-in capital	$	1,211,427,800		$	2,275,989,640		$	1,869,075,398		$	338,312,454
Undistributed net investment income (loss)		5,573,244			15,119,527			668,761			—
Undistributed net realized loss on securities		(754,138,911	)		(1,140,484,574	)		(355,118,291	)		(18,058,646	)
Net unrealized appreciation (depreciation) of securities		(75,169,780	)		(191,292,592	)		(160,640,629	)		9,760,389
Net assets	$	387,692,353		$	959,332,001		$	1,353,985,239		$	330,014,197
Calculation of Net Asset Value Per Share and Public Offering Price Per Share — Class I
Net assets	$	328,273,205		$	588,822,540		$	1,077,148,575		$	254,186,918
Shares outstanding (unlimited shares $0.001 par value authorized)		32,801,587			34,727,289			43,157,435			5,790,247
Net asset value per share	$	10.01		$	16.96		$	24.96		$	43.90
Calculation of Net Asset Value Per Share — Class A
Net assets	$	45,383,382		$	319,863,343		$	235,301,481		$	64,100,434
Shares outstanding (unlimited shares $0.001 par value authorized)		4,522,634			18,994,285			9,509,826			1,462,170
Net asset value per share	$	10.03		$	16.84		$	24.74		$	43.84
Public Offering Price Per Share — Class A
(Net asset value per share divided by 0.9475)	$	10.59		$	17.77		$	26.11		$	46.27
Calculation of Net Asset Value Per Share and Public Offering Price Per Share — Class C
Net assets	$	14,035,766		$	36,612,278		$	35,319,967		$	11,726,845
Shares outstanding (unlimited shares $0.001 par value authorized)		1,414,562			2,221,535			1,522,221			292,392
Net asset value per share	$	9.92		$	16.48		$	23.20		$	40.11
Calculation of Net Asset Value Per Share and Public Offering Price Per Share — Class R
Net assets				$	14,033,840		$	6,215,216
Shares outstanding (unlimited shares $0.001 par value authorized)					827,858			249,147
Net asset value per share				$	16.95		$	24.95
*Cost of investments
Unaffiliated issuers	$	459,713,948		$	1,128,783,577		$	1,425,862,575		$	311,953,635
Affiliated issuers		—			—			77,070,577			4,810,533

The accompanying notes are an integral part of these financial statements.
36

Statements of Assets & Liabilities

JUNE 30, 2011

	Value Opportunities Fund		Capital Income Fund		High Yield Fund
Assets:
Investments, at value*
Unaffiliated issuers	$	82,657,790	$	7,627,550	$	227,907,503
Affiliated issuers		2,832,384		—		—
Time deposit		386,310		150,061		6,371,805
Dividends and interest receivable		213,621		70,607		4,172,272
Receivable for investments sold		—		31,722		2,070,877
Receivable for Fund shares sold		189,740		—		4,527,939
Receivable from Advisor		—		8,622		—
Other assets		9,939		27,621		23,406
Total assets	$	86,289,784	$	7,916,183	$	245,073,802
Liabilities:
Payable for investments purchased	$	20,662	$	46,153	$	3,030,001
Payable for Fund shares repurchased		29,345		99		135,751
Payable to Advisor		52,822		—		68,086
Payable to Trustees		74		6		224
Accrued distribution and service fees		53,675		49		28,930
Distributions payable to shareholders		—		767		566,707
Accrued expenses and other liabilities		51,187		22,393		93,138
Total liabilities		207,765		69,467		3,922,837
Net assets	$	86,082,019	$	7,846,716	$	241,150,965
Net Assets consist of:
Paid-in capital	$	80,292,601	$	7,589,941	$	227,664,341
Undistributed net investment income		360,527		11,583		577
Undistributed net realized gain on securities		1,012,418		92,851		8,553,933
Net unrealized appreciation of securities		4,416,473		152,341		4,932,114
Net assets	$	86,082,019	$	7,846,716	$	241,150,965
Calculation of Net Asset Value Per Share and Public Offering Price Per Share — Class I
Net assets	$	39,013,840	$	7,764,940	$	187,319,312
Shares outstanding (unlimited shares $0.001 par value authorized)		1,847,290		748,571		14,641,101
Net asset value per share	$	21.12	$	10.37	$	12.79
Calculation of Net Asset Value Per Share — Class A
Net assets	$	34,907,720	$	81,776	$	53,831,653
Shares outstanding (unlimited shares $0.001 par value authorized)		1,652,694		7,880		4,227,377
Net asset value per share	$	21.12	$	10.38	$	12.73
Public Offering Price Per Share — Class A
(Net asset value per share divided by 0.9475)	$	22.29
(Net asset value per share divided by 0.9525)			$	10.90
(Net asset value per share divided by 0.9625)					$	13.23
Calculation of Net Asset Value Per Share and Public Offering Price Per Share — Class C
Net assets	$	12,160,459
Shares outstanding (unlimited shares $0.001 par value authorized)		601,822
Net asset value per share	$	20.21
*Cost of investments
Unaffiliated issuers	$	77,210,920	$	7,475,209	$	222,975,389
Affiliated issuers		3,862,781		—		—

The accompanying notes are an integral part of these financial statements.
37

Statements of Operations

FOR THE YEAR ENDED JUNE 30, 2011

	Diversified Value Fund			Large Cap Value Fund			Mid-Cap Value Fund		Small Cap Value Fund
Investment income:
Dividends*	$	10,234,100		$	30,191,931		$	16,153,681	$	2,613,227
Interest		1,252			3,014			5,703		1,355
Securities on loan		5,886			15,482			26,934		4,054
Total income		10,241,238			30,210,427			16,186,318		2,618,636
Expenses:
Advisory fees		3,005,462			8,583,022			9,467,984		2,059,608
Professional fees and expenses		39,885			92,410			96,568		31,349
Custodian fees and expenses		30,532			75,794			38,236		12,169
Transfer agent fees and expenses		968,482			2,274,410			2,780,200		550,031
Accounting fees and expenses		57,767			148,390			163,212		40,820
Administration fees and expenses		182,308			514,657			560,897		120,641
Trustees' fees and expenses		52,613			147,578			161,968		33,314
Reports to shareholders		57,935			98,497			152,993		42,147
Registration fees		51,078			86,984			97,122		57,779
Distribution and service fees — Class A		146,063			1,339,719			608,470		132,786
Distribution and service fees — Class C		156,870			398,745			352,356		79,200
Distribution and service fees — Class R		—			77,887			31,075		—
Other expenses		38,401			147,108			153,108		21,756
Total expenses		4,787,396			13,985,201			14,664,189		3,181,600
Expense waiver by Advisor (Note 2)		(677,543	)		(152,620	)		—		—
Net expenses		4,109,853			13,832,581			14,664,189		3,181,600
Net investment income (loss)		6,131,385			16,377,846			1,522,129		(562,964	)
Realized and Unrealized Gains on Securities:
Net realized gains from:
Sales of unaffiliated issuers		29,115,834			109,009,985			170,777,107		5,887,154
Sales of affiliated issuers		—			—			5,719,194		—
Net realized gains on securities		29,115,834			109,009,985			176,496,301		5,887,154
Net change in unrealized appreciation of securities		61,828,896			142,849,684			205,594,616		76,081,588
Net gains on securities		90,944,730			251,859,669			382,090,917		81,968,742
Net Increase in Net Assets Resulting from Operations	$	97,076,115		$	268,237,515		$	383,613,046	$	81,405,778
*Net of Foreign Taxes Withheld	$	111,871		$	317,719		$	232,424	$	25,606

The accompanying notes are an integral part of these financial statements.
38

Statements of Operations

FOR THE PERIOD ENDED JUNE 30, 2011

	Value Opportunities Fund			Capital Income Fund+			High Yield Fund
Investment income:
Dividends*	$	1,233,518		$	90,298		$	980,732
Interest		86,756			99,954			15,478,304
Securities on loan		1,430			—			—
Total income		1,321,704			190,252			16,459,036
Expenses:
Advisory fees		524,564			22,913			1,153,308
Professional fees and expenses		20,967			15,572			34,964
Custodian fees and expenses		12,192			3,408			10,650
Transfer agent fees and expenses		103,196			13,863			156,663
Accounting fees and expenses		14,860			22,743			44,600
Administration fees and expenses		30,414			13,750			91,335
Trustees' fees and expenses		8,213			422			23,588
Reports to shareholders		8,817			1,269			17,213
Registration fees		47,733			13,183			37,488
Distribution and service fees — Class A		71,961			58			97,733
Distribution and service fees — Class C		96,186			—			—
Offering costs		—			24,175			—
Other expenses		6,425			965			12,923
Total expenses		945,528			132,321			1,680,465
Expense waiver by Advisor (Note 2)		—			(79,371	)		(114,885	)
Expense waiver by Administrator (Note 2)		—			(24,750	)		—
Net expenses		945,528			28,200			1,565,580
Net investment income		376,176			162,052			14,893,456
Realized and Unrealized Gains on Securities:
Net realized gains (losses) from:
Sales of unaffiliated issuers		4,266,339			62,672			10,733,809
Sales of affiliated issuers		(44,575	)		—			—
Foreign currency transactions		(6,102	)		—			—
Net realized gains on securities		4,215,662			62,672			10,733,809
Net change in unrealized appreciation of securities		15,223,713			152,341			4,360,950
Net gains on securities		19,439,375			215,013			15,094,759
Net Increase in Net Assets Resulting from Operations	$	19,815,551		$	377,065		$	29,988,215
*Net of Foreign Taxes Withheld	$	26,945		$	1,205		$	—

+ The Fund commenced operations on December 31, 2010.

The accompanying notes are an integral part of these financial statements.
39

Statements of Changes in Net Assets

	Diversified Value Fund						Large Cap Value Fund
	Year ended June 30, 2011			Year ended June 30, 2010			Year ended June 30, 2011			Year ended June 30, 2010
Operations:
Net investment income	$	6,131,385		$	6,137,640		$	16,377,846		$	15,753,349
Net realized gains on securities		29,115,834			24,590,527			109,009,985			91,626,181
Net change in unrealized appreciation of securities		61,828,896			51,108,962			142,849,684			113,829,913
Net increase in net assets resulting from operations		97,076,115			81,837,129			268,237,515			221,209,443
Dividends and Distributions to Shareholders:
Net investment income:
Class I		(3,189,584	)		(8,661,558	)		(1,195,113	)		(16,064,138	)
Class A		(592,761	)		(1,214,806	)		(510,391	)		(17,999,865	)
Class C		(67,992	)		(301,075	)		—			(1,312,882	)
Class R		—			—			—			(559,010	)
Net realized gains on securities:
Class I		—			—			—			—
Class A		—			—			—			—
Class C		—			—			—			—
Class R		—			—			—			—
Net decrease in net assets resulting from dividends and distributions to shareholders		(3,850,337	)		(10,177,439	)		(1,705,504	)		(35,935,895	)
Capital Share Transactions:
Net decrease in net assets resulting from capital share transactions		(96,800,822	)		(110,814,136	)		(350,959,563	)		(291,006,578	)
Net Assets:
Total decrease in net assets		(3,575,044	)		(39,154,446	)		(84,427,552	)		(105,733,030	)
Beginning of year		391,267,397			430,421,843			1,043,759,553			1,149,492,583
End of year	$	387,692,353		$	391,267,397		$	959,332,001		$	1,043,759,553
Undistributed net investment income	$	5,573,244		$	3,292,196		$	15,119,527		$	447,185

The accompanying notes are an integral part of these financial statements.
40

Statements of Changes in Net Assets

	Mid-Cap Value Fund						Small Cap Value Fund
	Year ended June 30, 2011			Year ended June 30, 2010			Year ended June 30, 2011			Year ended June 30, 2010
Operations:
Net investment income (loss)	$	1,522,129		$	2,847,727		$	(562,964	)	$	400,407
Net realized gains on securities		176,496,301			134,292,160			5,887,154			36,085,393
Net change in unrealized appreciation of securities		205,594,616			226,710,894			76,081,588			37,933,996
Net increase in net assets resulting from operations		383,613,046			363,850,781			81,405,778			74,419,796
Dividends and Distributions to Shareholders:
Net investment income:
Class I		(3,219,747	)		(8,960,309	)		(317,460	)		(965,469	)
Class A		(477,326	)		(1,897,204	)		(36,859	)		(97,453	)
Class C		—			(234,248	)		—			(11,575	)
Class R		(4,022	)		(42,446	)		—			—
Net realized gains on securities:
Class I		—			—			—			—
Class A		—			—			—			—
Class C		—			—			—			—
Class R		—			—			—			—
Net decrease in net assets resulting from dividends and distributions to shareholders		(3,701,095	)		(11,134,207	)		(354,319	)		(1,074,497	)
Capital Share Transactions:
Net increase (decrease) in net assets resulting from capital share transactions		(152,876,673	)		(334,285,993	)		32,329,916			(38,123,734	)
Net Assets:
Total increase in net assets		227,035,278			18,430,581			113,381,375			35,221,565
Beginning of year		1,126,949,961			1,108,519,380			216,632,822			181,411,257
End of year	$	1,353,985,239		$	1,126,949,961		$	330,014,197		$	216,632,822
Undistributed net investment income	$	668,761		$	2,847,727		$	—		$	330,914

The accompanying notes are an integral part of these financial statements.
41

Statements of Changes in Net Assets

	Value Opportunities Fund						Capital Income Fund			High Yield Fund
	Year ended June 30, 2011			Year ended June 30, 2010			Period ended June 30, 2011+			Year ended June 30, 2011			Year ended June 30, 2010
Operations:
Net investment income	$	376,176		$	379,538		$	162,052		$	14,893,456		$	5,652,837
Net realized gains on securities		4,215,662			9,443,069			62,672			10,733,809			5,976,840
Net change in unrealized appreciation (depreciation) of securities		15,223,713			602,407			152,341			4,360,950			(515,291	)
Net increase in net assets resulting from operations		19,815,551			10,425,014			377,065			29,988,215			11,114,386
Dividends and Distributions to Shareholders:
Net investment income:
Class I		(338,384	)		(341,711	)		(149,527	)		(12,260,396	)		(4,597,070	)
Class A		(193,897	)		(315,639	)		(942	)		(2,703,890	)		(1,044,888	)
Class C		(61,725	)		(91,121	)		—			—			—
Net realized gains on securities:
Class I		—			—			—			(5,274,588	)		(1,986,505	)
Class A		—			—			—			(1,289,265	)		(644,379	)
Class C		—			—			—			—			—
Net decrease in net assets resulting from dividends and distributions to shareholders		(594,006	)		(748,471	)		(150,469	)		(21,528,139	)		(8,272,842	)
Capital Share Transactions:
Net increase in net assets resulting from capital share transactions		13,705,558			9,658,397			7,620,120			117,462,062			81,739,179
Net Assets:
Total increase in net assets		32,927,103			19,334,940			7,846,716			125,922,138			84,580,723
Beginning of period		53,154,916			33,819,976			—			115,228,827			30,648,104
End of period	$	86,082,019		$	53,154,916		$	7,846,716		$	241,150,965		$	115,228,827
Undistributed net investment income	$	360,527		$	584,459		$	11,583		$	577		$	71,339

+ The Fund commenced operations on December 31, 2010.

The accompanying notes are an integral part of these financial statements.
42

Financial Highlights

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
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			Net investment income (loss)
Class I
Year ended 6/30/2011	$	7.94	$	0.15		$	2.02		$	2.17		$	(0.10	)	$	—		$	(0.10	)	$	10.01		27.44	%	$	328,273		0.95	%		1.12	%		1.59	%
Year ended 6/30/2010		6.77		0.12			1.25			1.37			(0.20	)		—			(0.20	)		7.94		20.22			330,586		0.95			1.11			1.48
Year ended 6/30/2009		9.57		0.16			(2.65	)		(2.49	)		(0.31	)		—			(0.31	)		6.77		–25.59			352,322		0.95			1.10			2.20
Year ended 6/30/2008		15.26		0.18			(4.88	)		(4.70	)		(0.14	)		(0.85	)		(0.99	)		9.57		–32.13			1,132,685		0.95			0.98			1.46
Year ended 6/30/2007		12.85		0.11			2.68			2.79			(0.11	)		(0.27	)		(0.38	)		15.26		21.80			1,712,419		0.95			0.98			0.77
Class A
Year ended 6/30/2011		7.96		0.14			2.02			2.16			(0.09	)		—			(0.09	)		10.03		27.16			45,383		1.20			1.37			1.42
Year ended 6/30/2010		6.79		0.10			1.25			1.35			(0.18	)		—			(0.18	)		7.96		19.84			45,427		1.20			1.36			1.21
Year ended 6/30/2009		9.56		0.14			(2.64	)		(2.50	)		(0.27	)		—			(0.27	)		6.79		–25.83			60,533		1.20			1.36			1.98
Year ended 6/30/2008		15.21		0.14			(4.86	)		(4.72	)		(0.08	)		(0.85	)		(0.93	)		9.56		–32.29			168,160		1.20			1.22			1.07
Year ended 6/30/2007		12.80		0.07			2.68			2.75			(0.07	)		(0.27	)		(0.34	)		15.21		21.57			670,824		1.20			1.21			0.49
Class C
Year ended 6/30/2011		7.90		0.06			2.00			2.06			(0.04	)		—			(0.04	)		9.92		26.11			14,036		1.95			2.12			0.61
Year ended 6/30/2010		6.74		0.04			1.26			1.30			(0.14	)		—			(0.14	)		7.90		19.17			15,254		1.95			2.11			0.47
Year ended 6/30/2009		9.41		0.11			(2.60	)		(2.49	)		(0.18	)		—			(0.18	)		6.74		–26.26			17,566		1.73			2.09			1.48
Year ended 6/30/2008		15.01		0.04			(4.79	)		(4.75	)		(0.00	)³		(0.85	)		(0.85	)		9.41		–32.81			45,761		1.95			1.97			0.35
Year ended 6/30/2007		12.66		(0.03	)		2.65			2.62			—			(0.27	)		(0.27	)		15.01		20.77			160,555		1.90			1.96			(0.21	)

	Year Ended June 30,
	2011			2010			2009			2008			2007
Portfolio turnover rate		63	%		43	%		70	%		74	%		44	%

			Income (loss) from investment operations								Dividends and distributions																Ratios to Average Net Assets
Large Cap 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			Net investment income
Class I
Year ended 6/30/2011	$	13.32	$	0.26	$	3.42		$	3.68		$	(0.04	)	$	—		$	(0.04	)	$	16.96		27.61	%	$	588,823		1.05	%		1.07	%		1.60	%
Year ended 6/30/2010		11.49		0.21		1.99			2.20			(0.37	)		—			(0.37	)		13.32		20.08			478,653		1.05			1.09			1.51
Year ended 6/30/2009		16.33		0.29		(4.80	)		(4.51	)		(0.33	)		(0.00	)³		(0.33	)		11.49		–27.81			500,821		1.05			1.07			2.45
Year ended 6/30/2008		26.62		0.33		(8.32	)		(7.99	)		(0.28	)		(2.02	)		(2.30	)		16.33		–31.84			1,168,499		1.00			1.00			1.53
Year ended 6/30/2007		23.42		0.25		4.25			4.50			(0.29	)		(1.01	)		(1.30	)		26.62		19.63			2,669,807		0.98			0.98			0.98
Class A
Year ended 6/30/2011		13.25		0.21		3.39			3.60			(0.01	)		—			(0.01	)		16.84		27.21			319,863		1.30			1.31			1.33
Year ended 6/30/2010		11.44		0.16		2.01			2.17			(0.36	)		—			(0.36	)		13.25		19.82			512,120		1.30			1.34			1.17
Year ended 6/30/2009		16.25		0.27		(4.79	)		(4.52	)		(0.29	)		(0.00	)³		(0.29	)		11.44		–28.02			584,598		1.30			1.32			2.21
Year ended 6/30/2008		26.51		0.28		(8.31	)		(8.03	)		(0.21	)		(2.02	)		(2.23	)		16.25		–32.06			1,397,045		1.25			1.25			1.28
Year ended 6/30/2007		23.32		0.19		4.24			4.43			(0.23	)		(1.01	)		(1.24	)		26.51		19.35			3,060,990		1.22			1.22			0.73
Class C
Year ended 6/30/2011		13.05		0.09		3.34			3.43			—			—			—			16.48		26.28			36,612		2.05			2.07			0.59
Year ended 6/30/2010		11.33		0.06		1.99			2.05			(0.33	)		—			(0.33	)		13.05		18.91			38,064		2.05			2.09			0.46
Year ended 6/30/2009		15.99		0.21		(4.72	)		(4.51	)		(0.15	)		(0.00	)³		(0.15	)		11.33		–28.26			44,951		1.73			2.07			1.77
Year ended 6/30/2008		26.12		0.10		(8.18	)		(8.08	)		(0.03	)		(2.02	)		(2.05	)		15.99		–32.59			116,947		2.00			2.00			0.45
Year ended 6/30/2007		22.96		0.03		4.19			4.22			(0.05	)		(1.01	)		(1.06	)		26.12		18.62			452,182		1.83			1.97			0.12
Class R
Year ended 6/30/2011		13.36		0.17		3.42			3.59			—			—			—			16.95		26.87			14,034		1.55			1.56			1.08
Year ended 6/30/2010		11.54		0.13		2.03			2.16			(0.34	)		—			(0.34	)		13.36		19.55			14,922		1.55			1.59			0.97
Year ended 6/30/2009		16.37		0.23		(4.83	)		(4.60	)		(0.23	)		(0.00	)³		(0.23	)		11.54		–28.17			19,123		1.55			1.57			1.93
Year ended 6/30/2008		26.68		0.22		(8.37	)		(8.15	)		(0.14	)		(2.02	)		(2.16	)		16.37		–32.27			44,867		1.50			1.50			1.02
Year ended 6/30/2007		23.47		0.12		4.28			4.40			(0.18	)		(1.01	)		(1.19	)		26.68		19.06			103,263		1.48			1.48			0.49

	Year Ended June 30,
	2011			2010			2009			2008			2007
Portfolio turnover rate		43	%		47	%		69	%		55	%		40	%

¹ Net investment income (loss) per share has been calculated based on average shares outstanding during the period.

² Total 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.

³ Amount is less than $0.005.

The accompanying notes are an integral part of these financial statements.
43

Financial Highlights

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 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			Net investment income (loss)
Class I
Year ended 6/30/2011	$	18.14	$	0.05		$	6.85		$	6.90		$	(0.08	)	$	—		$	(0.08	)	$	24.96		38.05	%	$	1,077,149		1.08	%		1.08	%		0.20	%
Year ended 6/30/2010		13.76		0.05			4.49			4.54			(0.16	)		—			(0.16	)		18.14		33.00			875,883		1.10			1.10			0.29
Year ended 6/30/2009		17.44		0.13			(3.68	)		(3.55	)		(0.09	)		(0.04	)		(0.13	)		13.76		–20.21			850,809		1.15			1.15			0.94
Year ended 6/30/2008		31.99		0.15			(10.34	)		(10.19	)		(0.20	)		(4.16	)		(4.36	)		17.44		–34.05			1,551,863		1.03			1.03			0.65
Year ended 6/30/2007		28.91		0.14			5.98			6.12			(0.02	)		(3.02	)		(3.04	)		31.99		21.87			3,681,426		1.02			1.02			0.44
Class A
Year ended 6/30/2011		18.01		(0.01	)		6.78			6.77			(0.04	)		—			(0.04	)		24.74		37.63			235,301		1.33			1.33			(0.06	)
Year ended 6/30/2010		13.68		0.01			4.46			4.47			(0.14	)		—			(0.14	)		18.01		32.67			215,231		1.35			1.35			0.03
Year ended 6/30/2009		17.32		0.09			(3.64	)		(3.55	)		(0.05	)		(0.04	)		(0.09	)		13.68		–20.41			224,667		1.40			1.40			0.67
Year ended 6/30/2008		31.75		0.09			(10.26	)		(10.17	)		(0.10	)		(4.16	)		(4.26	)		17.32		–34.20			415,674		1.28			1.28			0.38
Year ended 6/30/2007		28.77		0.06			5.94			6.00			—			(3.02	)		(3.02	)		31.75		21.56			1,150,029		1.26			1.26			0.19
Class C
Year ended 6/30/2011		16.98		(0.17	)		6.39			6.22			—			—			—			23.20		36.63			35,320		2.08			2.08			(0.81	)
Year ended 6/30/2010		12.99		(0.12	)		4.23			4.11			(0.12	)		—			(0.12	)		16.98		31.67			30,317		2.10			2.10			(0.71	)
Year ended 6/30/2009		16.40		0.05			(3.42	)		(3.37	)		—			(0.04	)		(0.04	)		12.99		–20.52			26,888		1.66			2.14			0.41
Year ended 6/30/2008		30.43		(0.10	)		(9.77	)		(9.87	)		—			(4.16	)		(4.16	)		16.40		–34.68			60,544		2.03			2.03			(0.43	)
Year ended 6/30/2007		27.83		(0.11	)		5.73			5.62			—			(3.02	)		(3.02	)		30.43		20.88			252,320		1.81			2.01			(0.36	)
Class R
Year ended 6/30/2011		18.18		(0.07	)		6.85			6.78			(0.01	)		—			(0.01	)		24.95		37.32			6,215		1.58			1.58			(0.30	)
Year ended 6/30/2010		13.82		(0.04	)		4.51			4.47			(0.11	)		—			(0.11	)		18.18		32.36			5,519		1.60			1.60			(0.23	)
Year ended 6/30/2009		17.49		0.06			(3.68	)		(3.62	)		(0.01	)		(0.04	)		(0.05	)		13.82		–20.65			6,156		1.65			1.65			0.44
Year ended 6/30/2008		32.01		0.04			(10.36	)		(10.32	)		(0.04	)		(4.16	)		(4.20	)		17.49		–34.35			12,588		1.53			1.53			0.16
Year ended 6/30/2007		29.05		(0.02	)		6.00			5.98			—			(3.02	)		(3.02	)		32.01		21.27			27,167		1.52			1.52			(0.06	)

	Year Ended June 30,
	2011			2010			2009			2008			2007
Portfolio turnover rate		62	%		67	%		85	%		51	%		45	%

			Income (loss) from investment operations									Dividends and distributions																Ratios to Average Net Assets
Small Cap 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			Net investment income (loss)
Class I
Year ended 6/30/2011	$	31.33	$	(0.05	)	$	12.68		$	12.63		$	(0.06	)	$	—		$	(0.06	)	$	43.90		40.29	%	$	254,187		1.08	%		1.08	%		(0.13	)%
Year ended 6/30/2010		21.15		0.07			10.28			10.35			(0.17	)		—			(0.17	)		31.33		49.02			165,348		1.14			1.14			0.23
Year ended 6/30/2009		31.67		0.12			(9.99	)		(9.87	)		(0.16	)		(0.49	)		(0.65	)		21.15		–30.69			164,020		1.12			1.12			0.58
Year ended 6/30/2008		50.00		0.15			(14.45	)		(14.30	)		—			(4.03	)		(4.03	)		31.67		–29.19			291,515		1.08			1.08			0.39
Year ended 6/30/2007		48.13		0.06			6.42			6.48			(0.09	)		(4.52	)		(4.61	)		50.00		14.32			526,706		1.01			1.01			0.12
Class A
Year ended 6/30/2011		31.34		(0.15	)		12.68			12.53			(0.03	)		—			(0.03	)		43.84		39.94			64,100		1.33			1.33			(0.39	)
Year ended 6/30/2010		21.18		0.00	³		10.30			10.30			(0.14	)		—			(0.14	)		31.34		48.70			47,007		1.39			1.39			(0.01	)
Year ended 6/30/2009		31.69		0.07			(10.00	)		(9.93	)		(0.09	)		(0.49	)		(0.58	)		21.18		–30.90			15,630		1.37			1.37			0.32
Year ended 6/30/2008		50.14		0.02			(14.44	)		(14.42	)		—			(4.03	)		(4.03	)		31.69		–29.36			43,959		1.33			1.33			0.04
Year ended 6/30/2007		48.30		(0.06	)		6.44			6.38			(0.02	)		(4.52	)		(4.54	)		50.14		14.03			120,897		1.26			1.26			(0.14	)
Class C
Year ended 6/30/2011		28.87		(0.42	)		11.66			11.24			—			—			—			40.11		38.93			11,727		2.08			2.08			(1.14	)
Year ended 6/30/2010		19.65		(0.22	)		9.56			9.34			(0.12	)		—			(0.12	)		28.87		47.56			4,278		2.14			2.14			(0.77	)
Year ended 6/30/2009		29.37		(0.01	)		(9.22	)		(9.23	)		—			(0.49	)		(0.49	)		19.65		–31.05			1,761		1.72			2.12			(0.03	)
Year ended 6/30/2008		47.18		(0.29	)		(13.49	)		(13.78	)		—			(4.03	)		(4.03	)		29.37		–29.88			4,159		2.08			2.08			(0.80	)
Year ended 6/30/2007		45.83		(0.22	)		6.09			5.87			—			(4.52	)		(4.52	)		47.18		13.65			14,683		1.60			2.01			(0.48	)

	Year Ended June 30,
	2011			2010			2009			2008			2007
Portfolio turnover rate		54	%		93	%		65	%		62	%		31	%

¹ Net investment income (loss) per share has been calculated based on average shares outstanding during the period.

³ Amount is less than $0.005.

The accompanying notes are an integral part of these financial statements.
44

Financial Highlights

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 year		Net investment income (loss)²			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 return³			Net assets, end of year (in thousands)		Expenses, net of reimbursement/ waiver			Expenses			Net investment income (loss)
Class I
Year ended 6/30/2011	$	14.96	$	0.14		$	6.24		$	6.38		$	(0.22	)	$	—		$	(0.22	)	$	21.12		42.81	%	$	39,014		1.11	%		1.11	%		0.74	%
Year ended 6/30/2010		10.99		0.17			4.08			4.25			(0.28	)		—			(0.28	)		14.96		38.72			24,073		1.15			1.15			1.12
Year ended 6/30/2009		13.72		0.20			(2.82	)		(2.62	)		(0.11	)		—			(0.11	)		10.99		–18.87			17,668		1.19			1.19			1.99
Year ended 6/30/2008		21.55		0.11			(6.00	)		(5.89	)		(0.05	)		(1.89	)		(1.94	)		13.72		–28.58			22,921		1.07			1.07			0.63
Year ended 6/30/2007		19.36		0.02			3.87			3.89			—			(1.70	)		(1.70	)		21.55		20.82			44,410		0.98			0.98			0.12
Class A
Year ended 6/30/2011		14.98		0.11			6.22			6.33			(0.19	)		—			(0.19	)		21.12		42.40			34,908		1.36			1.36			0.58
Year ended 6/30/2010		11.01		0.13			4.09			4.22			(0.25	)		—			(0.25	)		14.98		38.43			21,794		1.40			1.40			0.87
Year ended 6/30/2009		13.70		0.17			(2.80	)		(2.63	)		(0.06	)		—			(0.06	)		11.01		–19.05			9,533		1.44			1.44			1.60
Year ended 6/30/2008		21.55		0.06			(6.00	)		(5.94	)		(0.02	)		(1.89	)		(1.91	)		13.70		–28.80			22,729		1.31			1.31			0.36
Year ended 6/30/2007		19.40		(0.03	)		3.88			3.85			—			(1.70	)		(1.70	)		21.55		20.56			64,743		1.23			1.23			(0.14	)
Class C
Year ended 6/30/2011		14.40		(0.05	)		5.99			5.94			(0.13	)		—			(0.13	)		20.21		41.35			12,160		2.11			2.11			(0.26	)
Year ended 6/30/2010		10.61		0.01			3.95			3.96			(0.17	)		—			(0.17	)		14.40		37.38			7,288		2.15			2.15			0.10
Year ended 6/30/2009		13.18		0.12			(2.67	)		(2.55	)		(0.02	)		—			(0.02	)		10.61		–19.32			6,619		1.86			2.19			1.22
Year ended 6/30/2008		20.94		(0.07	)		(5.80	)		(5.87	)		—			(1.89	)		(1.89	)		13.18		–29.34			13,621		2.06			2.06			(0.39	)
Year ended 6/30/2007		19.00		(0.14	)		3.78			3.64			—			(1.70	)		(1.70	)		20.94		19.85			46,856		1.79			1.98			(0.69	)

	Year Ended June 30,
	2011			2010			2009			2008			2007
Portfolio turnover rate		137	%		166	%		210	%		119	%		53	%

			Income from investment operations						Dividends and distributions															Ratios to Average Net Assets
Capital Income Fund	Net asset value, beginning of period		Net investment income²		Net gains 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 return³			Net assets, end of period (in thousands)		Expenses, net of reimbursement/ waiver			Expenses			Net investment income			��
Class I
Period from 12/31/2010¹ to 6/30/2011	$	10.00	$	0.24	$	0.35	$	0.59	$	(0.22	)	$	—	$	(0.22	)	$	10.37		5.90	%	$	7,765		0.80	%⁴		3.75	%⁴		4.60	%⁴
Class A
Period from 2/28/2011¹ to 6/30/2011		10.34		0.15		0.03		0.18		(0.14	)		—		(0.14	)		10.38		1.74			82		1.05⁴			4.12⁴			4.31⁴

				Period December 31, 2010¹through June 30, 2011
Portfolio turnover rate					39	%

¹ Commencement of operations.

² Net investment income (loss) per share has been calculated based on average shares outstanding during the period.

³ Total 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.

⁴ Annualized.

The accompanying notes are an integral part of these financial statements.
45

Financial Highlights

The following per share data and ratios have been derived from information provided in the financial statements.

			Income from investment operations						Dividends and distributions																Ratios to Average Net Assets
High Yield Fund	Net asset value, beginning of period		Net investment income²		Net gains 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 return³			Net assets, end of period (in thousands)		Expenses, net of reimbursement/ waiver			Expenses			Net investment income
Class I
Year ended 6/30/2011	$	12.01	$	0.92	$	1.23	$	2.15	$	(0.93	)	$	(0.44	)	$	(1.37	)	$	12.79		18.45	%	$	187,319		0.70	%		0.75	%		7.15	%
Year ended 6/30/2010		10.90		1.02		1.65		2.67		(1.03	)		(0.53	)		(1.56	)		12.01		25.45			93,139		0.70			0.89			8.51
Period from 3/31/2009¹ to 6/30/2009		10.00		0.24		0.90		1.14		(0.24	)		—			(0.24	)		10.90		11.40			28,097		0.70⁴			2.02⁴			9.04⁴
Class A
Year ended 6/30/2011		11.97		0.88		1.21		2.09		(0.89	)		(0.44	)		(1.33	)		12.73		18.11			53,832		0.95			1.01			6.88
Year ended 6/30/2010		10.89		0.97		1.64		2.61		(1.00	)		(0.53	)		(1.53	)		11.97		24.76			22,090		0.95			1.12			8.10
Period from 5/29/2009¹ to 6/30/2009		10.84		0.07		0.05		0.12		(0.07	)		—			(0.07	)		10.89		1.16			2,551		0.95⁴			2.16⁴			7.59⁴

	Year Ended June 30,
	2011			2010			Period March 31, 2009¹through June 30, 2009
Portfolio turnover rate		139	%		175	%		123	%

¹ Commencement of operations.

² Net investment income per share has been calculated based on average shares outstanding during the period.

⁴ Annualized.

The accompanying notes are an integral part of these financial statements.
46

Notes to the Financial Statements

JUNE 30, 2011

NOTE 1.

Organization. Hotchkis and Wiley Funds (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, management investment company. The Trust was organized as a Delaware statutory trust on July 23, 2001 and consists of seven series of shares. The Hotchkis and Wiley Diversified Value Fund, the Hotchkis and Wiley Large Cap Value Fund, the Hotchkis and Wiley Mid-Cap Value Fund, the Hotchkis and Wiley Small Cap Value Fund, the Hotchkis and Wiley Capital Income Fund and the Hotchkis and Wiley High Yield Fund (collectively, the "H&W Funds") are diversified series and the Hotchkis and Wiley Value Opportunities Fund (together with the H&W Funds, hereafter referred to as the "Funds") is a non-diversified series of the Trust. The Trust was organized to acquire the assets and liabilities of the Mercury HW Large Cap Value Fund, the Mercury HW Mid-Cap Value Fund and the Mercury HW Small Cap Value Fund (the "Mercury HW Funds"). On February 4, 2002, the Mercury HW Funds were reorganized into the Trust through a non-taxable exchange. On August 28, 2009, the Hotchkis and Wiley Core Value Fund was renamed the Hotchkis and Wiley Diversified Value Fund and the Hotchkis and Wiley All Cap Value Fund was renamed the Hotchkis and Wiley Value Opportunities Fund.

The Large Cap Value Fund and Mid-Cap Value Fund have four classes of shares: Class I, Class A, Class C and Class R. The Diversified Value Fund, Small Cap Value Fund, Value Opportunities Fund, Capital Income Fund and High Yield Fund have three classes of shares: Class I, Class A and Class C. Class A shares are sold with a front-end sales charge. Class C shares may be subject to a contingent deferred sales charge. Class C shares are automatically converted to Class A shares approximately eight years after purchase and will then be subject to lower distribution and service fees. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that Class A, Class C and Class R shares bear certain expenses related to the distribution and servicing expenditures. Currently, the Capital Income Fund and High Yield Fund are not offering Class C shares to investors.

Significant Accounting Policies. The Funds' financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Funds. In preparing these financial statements, the Trust has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

Security Valuation. Portfolio securities that are listed on a securities exchange (whether domestic or foreign) or The Nasdaq Stock Market ("NSM") (including the Nasdaq National Market and the Nasdaq Small Cap Market) are valued at the last reported sale price (or official closing price) on that day as of the close of the New York Stock Exchange (which is generally 4:00 p.m. Eastern time), or, in the absence of recorded sales, at the average of readily available closing bid and asked prices on such exchange or NSM. Unlisted equity securities that are not included in NSM are valued at the last sale price or, if the last sale price is unavailable, at the average of the quoted bid and asked prices in the over-the-counter market. Fixed-income securities are generally valued at the mean between the bid and asked prices on the basis of information from independent pricing services but may also be valued based on reported transactions or a broker-dealer quotation. The pricing services may provide a price determined by a matrix pricing method or other analytical pricing models. Short-term investments with remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. Investments quoted in foreign currency are valued daily in U.S. dollars on the basis of the foreign currency exchange rate prevailing at the time of valuation. Securities and assets for which market value quotations are not available are valued at their fair value as determined in good faith by or under the direction of the Trust's Board of Trustees. The Board has approved the use of Interactive Data's proprietary fair value pricing model to assist in determining current valuation for foreign securities traded in markets that close prior to the New York Stock Exchange. When fair value pricing is employed, the value of the portfolio security used to calculate the Funds' net asset values may differ from quoted or official closing prices.

The Trust has performed an analysis of all existing investments to determine the significance and character of all inputs to their fair value determination. Various inputs are used in determining the value of each Fund's investments. These inputs are summarized in the following three broad categories:

• Level 1 — Quoted unadjusted prices for identical instruments in active markets to which the Trust has access at the date of measurement.

• Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.

• Level 3 — Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Trust's own assumptions that market participants would use to price the asset or liability based on the best available information.

The following table presents the valuation levels of each Fund's assets as of June 30, 2011:

	Diversified Value		Large Cap Value		Mid-Cap Value		Small Cap Value
Level 1 — Quoted prices in an active market:
Common Stocks	$	384,544,168	$	937,490,985	$	1,342,292,523	$	326,524,557
Level 2 —
Other significant observable market inputs		—		—		—		—
Level 3 —
Significant unobservable inputs		—		—		—		—
Total Investments	$	384,544,168	$	937,490,985	$	1,342,292,523	$	326,524,557

	Value Opportunities		Capital Income		High Yield
Level 1 — Quoted prices in an active market:
Common Stocks	$	75,002,867	$	4,505,015	$	1,987,335
Investment Companies		848,085		127,834		—
Preferred Stocks		7,679,943		152,768		12,769,440
Convertible Preferred Stocks		—		191,930		10,363,329
Warrants		—		8,688		667,059
Level 2 —
Other significant observable market inputs:
Common Stocks		840,124		2,990		229,060
Preferred Stocks		406,205		28,196		3,829,152
Convertible Bonds		—		28,800		2,236,800
Corporate Bonds		712,950		2,581,329		195,825,328
Level 3 — Significant unobservable inputs		—		—		—
Total Investments	$	85,490,174	$	7,627,550	$	227,907,503

Please refer to the Schedule of Investments for additional information regarding the composition of the amounts listed above.

There were transfers from Level 1 to Level 2 of $406,205 for the Value Opportunities Fund using market value as of June 30, 2011. The transfers were due to lack of trading volume on June 30, 2011. There were no transfers into or out of Level 1 or Level 2 during the year ended June 30, 2011 for the Diversified Value Fund, Large Cap Value Fund, Mid-Cap Value Fund, Small Cap Value Fund, Capital Income Fund and High Yield Fund. Transfers between Levels are recognized at the end of the reporting period.

The Trust did not have any liabilities that were measured at fair value on June 30, 2011.

Income and Expense Allocation. Common expenses incurred by the Trust which are not allocable to a specific Fund are allocated among the Funds based upon relative net assets or evenly, depending on the nature of the expenditure. Net investment income, other than class-specific expenses, and realized and unrealized gains and losses are allocated daily to each class of shares based upon the relative net asset value of outstanding shares of each class at the beginning of the day (after adjusting for the current day's capital share activity of the respective class).

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income are declared daily and paid monthly for the Capital Income Fund and High Yield Fund, declared and paid semi-annually for the Large Cap Value Fund and declared and paid annually for the Diversified Value Fund, Mid-Cap Value Fund, Small Cap Value Fund and Value Opportunities Fund. Distributions of net realized capital gains, if any, will be declared and paid at least annually.

Security Transactions and Investment Income. Security and shareholder transactions are recorded on trade date. Realized gains and losses on sales of investments are calculated on the specifically identified cost basis of the securities. Dividend income, less foreign taxes withheld, if any, are recorded on the ex-dividend date. Interest income is recognized on the accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security using the effective yield method. Return of capital distributions received from REIT securities are recorded as an adjustment to the cost of the security and thus may impact unrealized gains or losses on the security.

Foreign Currency Transactions. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Funds isolate the portion of realized gains or losses resulting from changes in foreign exchange rates on securities from the fluctuations arising from changes in market prices of securities held. Reported net realized foreign exchange gains

or losses arise from sales of securities, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds' books and the U.S. dollar equivalent of the amounts actually received or paid.

Payment In-Kind Securities. Certain Funds may invest in payment in-kind securities. Payment in-kind securities give the issuer the option at each interest payment date of making interest payments in either cash or additional debt securities. Those additional debt securities usually have the same terms, including maturity dates and interest rates, and associated risks as the original bonds. The daily market quotations of the original bonds may include the accrued interest (referred to as a dirty price) and may require a pro-rata adjustment to interest receivable from the unrealized appreciation or depreciation of securities on the Statements of Assets and Liabilities.

Restricted and Illiquid Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale or are illiquid. Restricted securities generally may be resold in transactions exempt from registration. An illiquid security is a security which cannot be disposed of promptly (within seven days) and in the usual course of business at approximately its fair value and includes repurchase agreements maturing in excess of seven days, time deposits with a withdrawal penalty, non-negotiable instruments and instruments for which no market exists. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at the current valuation may be difficult.

NOTE 2.

Fees and Transactions with Affiliates. The Trust has entered into Investment Advisory Agreements for each of the Funds with Hotchkis and Wiley Capital Management, LLC (the "Advisor"), with which the officers and a Trustee of the Trust are affiliated. 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 is responsible for the management of the Funds' investments and provides the personnel, facilities, equipment and certain other services necessary to the operations of each Fund. The Advisor receives a fee, computed daily and payable monthly, at the annual rates presented below as applied to each Fund's daily net assets. The Advisor has contractually agreed to pay all operating expenses in excess of the annual rates presented below as applied to such Fund's daily net assets through October 31, 2012.

	Diversified Value			Large Cap Value			Mid-Cap Value			Small Cap Value			Value Opportunities			Capital Income			High Yield
Annual Advisory Fee Rate		0.75	%¹		0.75	%¹		0.75	%¹		0.75	%		0.75	%		0.65	%		0.55	%
Annual cap on expenses — Class I		0.95	%		1.05	%		1.15	%		1.25	%		1.25	%		0.80	%		0.70	%
Annual cap on expenses — Class A		1.20	%		1.30	%		1.40	%		1.50	%		1.50	%		1.05	%		0.95	%
Annual cap on expenses — Class C		1.95	%		2.05	%		2.15	%		2.25	%		2.25	%		1.80	%		1.70	%
Annual cap on expenses — Class R	Not applicable				1.55	%		1.65	%	Not applicable			Not applicable			Not applicable			Not applicable

¹ Effective January 1, 2007, the Annual Advisory Fee Rate is 0.75% for the first $5 billion in assets, 0.65% for the next $5 billion in assets and 0.60% for assets over $10 billion.

Quasar Distributors, LLC is the principal underwriter and distributor for the shares of the Funds ("Quasar" or the "Distributor"). The Distributor is affiliated with the Funds' transfer agent, fund accountant and administrator, U.S. Bancorp Fund Services, LLC. Pursuant to the Distribution Plan adopted by the Trust in accordance with Rule 12b-1 under the 1940 Act, the Funds pay the Distributor ongoing distribution and service fees. The fees are accrued daily at the annual rates based upon the average daily net assets of the shares as follows:

	Distribution and Service Fee
Class A		0.25	%
Class C		1.00	%
Class R		0.50	%

Pursuant to separate agreements with the Distributor, selected dealers and other financial intermediaries also provide distribution services to the Funds. The ongoing distribution and service fee compensates the Distributor and selected dealers for providing distribution-related and shareholder services to Class A, Class C and Class R shareholders.

Certain selected dealers and other financial intermediaries charge a fee for shareholder accounting services and administrative services that they provide to the Funds on behalf of certain shareholders; the portion of this fee paid by the Funds is included within "Transfer agent fees and expenses" in the Statements of Operations.

Stephens Inc. is an affiliated broker-dealer of the Funds. For the year ended June 30, 2011, Stephens Inc. received the following amounts of front-end sales charges for Class A shares:

Diversified Value				Large Cap Value				Mid-Cap Value				Small Cap Value				Value Opportunities				Capital Income*				High Yield
$	—			$	2,198			$	5,805			$	4,193			$	371			$	—			$	471

* The Capital Income Fund — Class A commenced operations on February 28, 2011.

U.S. Bancorp Fund Services, LLC, the Funds' administrator, agreed to waive a portion of its fees during the Capital Income Fund's first year of operations.

NOTE 3.

Investments. Purchases and sales of investment securities, excluding short-term investments, for the year ended June 30, 2011 were as follows:

	Diversified Value		Large Cap Value		Mid-Cap Value		Small Cap Value		Value Opportunities		Capital Income*		High Yield
Purchases	$	247,196,926	$	477,833,612	$	775,259,754	$	180,399,536	$	108,273,573	$	9,758,587	$	373,483,693
Sales		342,052,803		828,487,205		941,494,107		146,135,541		94,779,292		2,344,375		273,298,963

* The Fund commenced operations on December 31, 2010.

The Funds did not have any purchases or sales of U.S. Government securities for the year ended June 30, 2011.

NOTE 4.

Federal Income Taxes. It is each Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and each Fund intends to distribute substantially all of its investment company net taxable income and net capital gains to shareholders. Therefore, no federal income tax provision is required. Under the applicable foreign tax law, a withholding tax may be imposed on interest, dividends and capital gains at various rates.

Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the Funds for financial reporting purposes. The Funds may utilize earnings and profits distributed to shareholders on redemptions of shares as part of the dividends paid deduction. Generally accepted accounting principles require that permanent financial reporting and tax differences be reclassified within the capital accounts.

The following information is presented on an income tax basis as of June 30, 2011:

	Diversified Value			Large Cap Value			Mid-Cap Value			Small Cap Value			Value Opportunities			Capital Income			High Yield
Tax cost of investments	$	460,418,719		$	1,151,205,500		$	1,504,069,118		$	319,367,611		$	81,265,637		$	7,446,935		$	223,057,017
Gross unrealized appreciation		29,408,639			70,259,180			91,732,586			49,751,845			11,306,471			297,710			8,103,593
Gross unrealized depreciation		(105,283,190	)		(283,973,695	)		(253,509,181	)		(42,594,899	)		(7,081,934	)		(117,095	)		(3,253,107	)
Net unrealized appreciation (depreciation) on investments		(75,874,551	)		(213,714,515	)		(161,776,595	)		7,156,946			4,224,537			180,615			4,850,486
Distributable ordinary income (as of 6/30/11)		5,573,244			15,119,527			668,761			—			1,430,002			76,927			6,791,093
Distributable long-term gains (as of 6/30/11)		—			—			—			—			442,058			—			2,411,752
Total distributable earnings		5,573,244			15,119,527			668,761			—			1,872,060			76,927			9,202,845
Other accumulated losses		(753,434,140	)		(1,118,062,651	)		(353,982,325	)		(15,455,203	)		(307,179	)		(767	)		(566,707	)
Total accumulated gains (losses)	$	(823,735,447	)	$	(1,316,657,639	)	$	(515,090,159	)	$	(8,298,257	)	$	5,789,418		$	256,775		$	13,486,624

As of the close of business on December 31, 2010, in exchange for shares the Advisor transferred assets valued at $3,298,650 to the Capital Income Fund. As a result of the tax-free transfers, the Capital Income Fund acquired $30,179 of unrealized appreciation for tax purposes. As of June 30, 2011, the Capital Income Fund held securities with $28,274 of net unrealized appreciation relating to the transfers.

On the Statement of Assets and Liabilities, the following adjustments were made for permanent tax adjustments. These differences are due primarily to differing treatment for items such as in-kind redemptions, net operating losses, foreign currency gain/loss transactions, and transfers in-kind.

	Paid- in Capital			Undistributed Net Investment Income (Loss)			Undistributed Net Realized Gain (Loss) on Securities
Diversified Value	$	—		$	—		$	—
Large Cap Value		257,199			—			(257,199	)
Mid-Cap Value		—			—			—
Small Cap Value		(562,964	)		586,369			(23,405	)
Value Opportunities		—			(6,102	)		6,102
Capital Income		(30,179	)		—			30,179
High Yield		64,585			68			(64,653	)

The tax components of distributions paid during the fiscal years ended June 30, 2011 and 2010, capital loss carryovers as of June 30, 2011, and tax basis post-October losses as of June 30, 2011, which are not recognized for tax purposes until the first day of the following fiscal year, are:

	June 30, 2011										June 30, 2010
	Ordinary Income Distributions		Long-Term Capital Gains Distributions		Net Capital Loss Carryovers			Post- October Losses			Ordinary Income Distributions		Long-Term Capital Gains Distributions
Diversified Value	$	3,850,337	$	—	$	(753,434,140	)¹	$	—		$	10,177,439	$	—
Large Cap Value		1,705,504		—		(1,117,291,671	)¹		—			35,935,895		—
Mid-Cap Value		3,701,095		—		(353,982,325	)¹		—			11,134,207		—
Small Cap Value		354,319		—		(10,875,844	)²		(4,579,359	)		1,074,497		—
Value Opportunities		594,006		—		—			(6,102	)³		748,471		—
Capital Income*		150,469		—		—			—			—		—
High Yield		20,868,402		659,737		—			—			8,272,842		—

* The Fund commenced operations on December 31, 2010.

¹ Expires from 6/30/2017 to 6/30/2018.

² Expires on 6/30/2017.

³ Post-October currency loss.

As of and during the year ended June 30, 2011, the Trust did not have a liability for any unrecognized tax benefits. The Trust recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations. During the year ended June 30, 2011, the Trust did not incur any interest or penalties. The tax years ended June 30, 2008 through June 30, 2011 remain open and subject to examination by tax jurisdictions.

NOTE 5.

Capital Share Transactions. Transactions in capital shares for each class were as follows:

	Sales				Reinvestment of dividends and distributions				Redemptions						Net increase (decrease)
	Shares		Amount		Shares		Amount		Shares			Amount			Shares			Amount
Year Ended June 30, 2011
Diversified Value Fund
Class I		9,063,743	$	84,516,357		331,261	$	3,153,607		(18,252,601	)	$	(167,482,470	)		(8,857,597	)	$	(79,812,506	)
Class A		1,775,147		16,177,915		37,457		358,088		(2,994,213	)		(28,657,112	)		(1,181,609	)		(12,121,109	)
Class C		28,736		263,989		4,199		39,850		(550,265	)		(5,171,046	)		(517,330	)		(4,867,207	)
Total net increase (decrease)		10,867,626		100,958,261		372,917		3,551,545		(21,797,079	)		(201,310,628	)		(10,556,536	)		(96,800,822	)
Large Cap Value Fund
Class I^		11,670,128		188,092,474		69,479		1,118,612		(12,935,580	)		(202,979,846	)		(1,195,973	)		(13,768,760	)
Class A		13,456,972		203,875,840		28,671		459,024		(33,141,324	)		(526,050,068	)		(19,655,681	)		(321,715,204	)
Class C		119,277		1,843,113		—		—		(813,915	)		(12,683,813	)		(694,638	)		(10,840,700	)
Class R		168,158		2,687,617		—		—		(457,344	)		(7,322,516	)		(289,186	)		(4,634,899	)
Total net increase (decrease)		25,414,535		396,499,044		98,150		1,577,636		(47,348,163	)		(749,036,243	)		(21,835,478	)		(350,959,563	)
Mid-Cap Value Fund
Class I		11,457,820		268,464,741		133,711		3,091,411		(16,711,568	)		(362,229,904	)		(5,120,037	)		(90,673,752	)
Class A		2,140,945		49,682,049		11,697		268,444		(4,595,466	)		(105,424,146	)		(2,442,824	)		(55,473,653	)
Class C		296,806		6,594,390		—		—		(560,030	)		(12,100,770	)		(263,224	)		(5,506,380	)
Class R		55,236		1,257,221		55		1,259		(109,759	)		(2,481,368	)		(54,468	)		(1,222,888	)
Total net increase (decrease)		13,950,807		325,998,401		145,463		3,361,114		(21,976,823	)		(482,236,188	)		(7,880,553	)		(152,876,673	)
Small Cap Value Fund
Class I		2,122,618		85,562,223		3,328		135,240		(1,613,031	)		(62,022,961	)		512,915			23,674,502
Class A		1,495,708		58,804,285		683		27,750		(1,534,006	)		(55,671,977	)		(37,615	)		3,160,058
Class C		219,582		8,286,450		—		—		(75,395	)		(2,791,094	)		144,187			5,495,356
Total net increase (decrease)		3,837,908		152,652,958		4,011		162,990		(3,222,432	)		(120,486,032	)		619,487			32,329,916

	Sales				Reinvestment of dividends and distributions				Redemptions						Net increase (decrease)
	Shares		Amount		Shares		Amount		Shares			Amount			Shares			Amount
Year Ended June 30, 2011
Value Opportunities Fund
Class I		661,205	$	12,796,546		15,038	$	280,771		(437,749	)	$	(7,961,186	)		238,494		$	5,116,131
Class A		2,180,195		43,268,913		7,314		136,781		(1,989,792	)		(36,800,821	)		197,717			6,604,873
Class C		235,941		4,511,089		1,791		32,156		(142,124	)		(2,558,691	)		95,608			1,984,554
Total net increase (decrease)		3,077,341		60,576,548		24,143		449,708		(2,569,665	)		(47,320,698	)		531,819			13,705,558
Capital Income Fund+
Class I*		744,592		7,495,847		13,686		142,260		(9,707	)		(99,805	)		748,571			7,538,302
Class A**		8,368		86,771		85		889		(573	)		(5,842	)		7,880			81,818
Total net increase (decrease)		752,960		7,582,618		13,771		143,149		(10,280	)		(105,647	)		756,451			7,620,120
High Yield Fund
Class I***		13,262,284		169,337,240		925,870		11,784,662		(7,299,094	)		(94,184,191	)		6,889,060			86,937,711
Class A		3,116,008		39,947,495		272,528		3,456,132		(1,006,952	)		(12,879,276	)		2,381,584			30,524,351
Total net increase (decrease)		16,378,292		209,284,735		1,198,398		15,240,794		(8,306,046	)		(107,063,467	)		9,270,644			117,462,062
Year Ended June 30, 2010
Diversified Value Fund
Class I		4,972,666		41,350,065		1,045,965		8,493,234		(16,436,717	)		(129,371,439	)		(10,418,086	)		(79,528,140	)
Class A		522,457		4,223,233		80,860		659,817		(3,816,820	)		(30,671,843	)		(3,213,503	)		(25,788,793	)
Class C		153,083		1,262,454		21,837		177,316		(847,963	)		(6,936,973	)		(673,043	)		(5,497,203	)
Total net increase (decrease)		5,648,206		46,835,752		1,148,662		9,330,367		(21,101,500	)		(166,980,255	)		(14,304,632	)		(110,814,136	)
Large Cap Value Fund
Class I		25,070,013		352,828,596		1,393,942		14,510,940		(34,132,258	)		(454,373,507	)		(7,668,303	)		(87,033,971	)
Class A		21,200,143		288,574,600		1,570,657		16,303,426		(35,228,715	)		(487,066,216	)		(12,457,915	)		(182,188,190	)
Class C		202,449		2,651,952		64,665		666,047		(1,318,327	)		(17,703,356	)		(1,051,213	)		(14,385,357	)
Class R		266,107		3,662,651		34,066		357,350		(840,146	)		(11,419,061	)		(539,973	)		(7,399,060	)
Total net increase (decrease)		46,738,712		647,717,799		3,063,330		31,837,763		(71,519,446	)		(970,562,140	)		(21,717,404	)		(291,006,578	)
Mid-Cap Value Fund
Class I		17,043,465		309,569,795		434,374		7,727,506		(31,010,770	)		(566,870,167	)		(13,532,931	)		(249,572,866	)
Class A		3,977,627		71,499,896		62,674		1,108,079		(8,508,970	)		(150,031,070	)		(4,468,669	)		(77,423,095	)
Class C		312,381		5,449,500		8,473		141,750		(604,972	)		(10,228,974	)		(284,118	)		(4,637,724	)
Class R		97,352		1,761,632		479		8,560		(239,555	)		(4,422,500	)		(141,724	)		(2,652,308	)
Total net increase (decrease)		21,430,825		388,280,823		506,000		8,985,895		(40,364,267	)		(731,552,711	)		(18,427,442	)		(334,285,993	)
Small Cap Value Fund
Class I		1,988,405		62,418,930		9,658		284,582		(4,476,881	)		(130,958,370	)		(2,478,818	)		(68,254,858	)
Class A		1,411,117		48,237,777		1,835		55,335		(651,007	)		(20,085,060	)		761,945			28,208,052
Class C		98,402		3,111,570		201		5,579		(39,990	)		(1,194,077	)		58,613			1,923,072
Total net increase (decrease)		3,497,924		113,768,277		11,694		345,496		(5,167,878	)		(152,237,507	)		(1,658,260	)		(38,123,734	)
Value Opportunities Fund
Class I		632,910		10,063,236		22,673		328,752		(654,387	)		(8,215,374	)		1,196			2,176,614
Class A		1,251,634		19,076,092		12,357		179,550		(674,733	)		(10,186,329	)		589,258			9,069,313
Class C		75,156		1,136,877		3,299		46,251		(196,120	)		(2,770,658	)		(117,665	)		(1,587,530	)
Total net increase (decrease)		1,959,700		30,276,205		38,329		554,553		(1,525,240	)		(21,172,361	)		472,789			9,658,397

	Sales				Reinvestment of dividends and distributions				Redemptions						Net increase (decrease)
	Shares		Amount		Shares		Amount		Shares			Amount			Shares		Amount
Year Ended June 30, 2010
High Yield Fund****
Class I		4,801,401	$	58,007,943		508,218	$	6,077,968		(135,404	)	$	(1,636,737	)		5,174,215	$	62,449,174
Class A		1,732,205		20,773,851		122,212		1,458,442		(242,963	)		(2,942,288	)		1,611,454		19,290,005
Total net increase (decrease)		6,533,606		78,781,794		630,430		7,536,410		(378,367	)		(4,579,025	)		6,785,669		81,739,179

^ Includes an in-kind redemption which resulted in a realized gain of $290,071.

+ As of June 30, 2011, the Capital Income Fund had a single shareholder, Hotchkis and Wiley Capital Management, LLC, which individually held 47.1% of the total shares outstanding of the Capital Income Fund.

* For the period December 31, 2010 (commencement of operations) to June 30, 2011.

** For the period February 28, 2011 (commencement of operations) to June 30, 2011.

*** Includes an in-kind redemption which resulted in a realized gain of $64,585.

**** As of June 30, 2010, the High Yield Fund had a single shareholder, Hotchkis and Wiley Capital Management, LLC, which individually held 11.5% of the total shares outstanding of the High Yield Fund.

NOTE 6.

Investments in Affiliated Issuers. An issuer in which a Fund's holdings represent 5% or more of the outstanding voting securities of the issuer is an "affiliated" issuer as defined in the 1940 Act. A schedule of each Fund's investments in securities of affiliated issuers held during the year ended June 30, 2011, is set forth below:

Mid-Cap Value Fund

Issuer Name	Share Balance At July 1, 2010		Additions		Reductions		Share Balance At June 30, 2011		Dividend Income		Value At June 30, 2011
Valassis Communications, Inc.+		1,554,400		1,470,500		322,000		2,702,900	$	—	$	81,897,870
									$	—

+ Non-income producing security.

Small Cap Value Fund

Issuer Name	Share Balance At July 1, 2010		Additions		Reductions		Share Balance At June 30, 2011		Dividend Income		Value At June 30, 2011
Hudson Highland Group, Inc.*+		1,624,700		—		—		1,624,700	$	—	$	8,692,145
Overhill Farms, Inc.+		780,200		109,000		—		889,200		—		4,935,060
									$	—

* Issuer was not an affiliate as of June 30, 2011.

+ Non-income producing security.

Value Opportunities Fund

Issuer Name	Share Balance At July 1, 2010		Additions		Reductions		Share Balance At June 30, 2011		Dividend Income		Value At June 30, 2011
Tree.com, Inc.+		256,000		320,400		23,200		553,200	$	—	$	2,832,384
									$	—

+ Non-income producing security.

NOTE 7.

Securities Lending. Effective December 2007, the Funds entered into a securities lending arrangement with Brown Brothers Harriman & Co. (the "Custodian"). Under the securities lending agreement, the Custodian is authorized to loan securities on behalf of the Funds to approved brokers. In exchange, the Funds receive cash collateral in the amount of at least 102% of the value of the securities loaned plus accrued interest. The total market value of securities on loan for each Fund as of June 30, 2011 is disclosed on the Schedule of Investments. The cash collateral is invested in short-term instruments as noted on the Schedule of Investments. Income earned from these investments is included in "Securities on loan" on the Statement of Operations and is allocated to each Fund based on each Fund's proportion of the total cash collateral received. Securities lending involves counterparty risks, including the risk that the loaned securities may not be returned in a timely manner or at all. Subject to certain conditions, the Custodian has agreed to indemnify the Funds from losses resulting from a borrower's failure to return a loaned security. In addition, the Funds bear the risk of loss associated with the investment of cash collateral received.

A portion of the income generated by the investment of the collateral, net of any rebates paid by the Custodian to borrowers, is remitted to the Custodian as lending agent, and the remainder is paid to the applicable Fund.

NOTE 8.

Indemnifications. Under the Trust's organizational documents and indemnification agreements between each independent Trustee and the Trust, its officers and Trustees are indemnified against certain liability arising out of the performance of their duties to the Funds. In addition, in the normal course of business the Trust enters into contracts that contain a variety of representations and warranties, which provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds. However, based on experience, the Funds expect the risk of loss to be remote.

NOTE 9.

Risk Factors. Investing in a Fund may involve certain risks including, but not limited to, those described below.

Lower rated debt securities generally have higher rates of interest and involve greater risk of default or price changes due to changes in the issuer's creditworthiness than higher rated debt securities. The market prices of these securities may fluctuate more than higher quality securities and may decline significantly in periods of general economic difficulty. There may be little trading in the secondary market for particular debt securities, which may make them more difficult to value or sell.

The prices of, and the income generated by, most debt securities held by a Fund may be affected by changing interest rates and by changes in the effective maturities and credit ratings of these securities. For example, the prices of debt securities in a Fund's portfolio generally will decline when interest rates rise and increase when interest rates fall. In addition, falling interest rates may cause an issuer to redeem, "call" or refinance a security before its stated maturity, which may result in the fund having to reinvest the proceeds in lower yielding securities. Debt securities are also subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default. Longer maturity debt securities generally have higher rates of interest and may be subject to greater price fluctuations than shorter maturity debt securities.

The prices of, and the income generated by, the common stocks and other equity securities held by a Fund may decline in response to certain events taking place around the world, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; governmental or governmental agency responses to economic conditions; and currency, interest rate and commodity price fluctuations.

Certain funds, accounts, individuals or affiliates may from time to time own (beneficially or of record) or control a significant percentage of the Funds' shares. Redemptions by these entities of their holdings in the Funds may impact the Funds' liquidity and NAV. These redemptions may also force the Funds to sell securities.

NOTE 10.

New Accounting Pronouncements. In May 2011, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2011-04 "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs." ASU No. 2011-04 requires additional disclosures regarding fair value measurements. Effective for fiscal years beginning after December 15, 2011, and for interim periods within those fiscal years, entities will need to disclose the following:

1) the amounts of any transfers between Level 1 and Level 2 and the reasons for those transfers, and

2) for Level 3 fair value measurements, quantitative information about the significant unobservable inputs used, a description of the entity's valuation processes, and a narrative description of the sensitivity of the fair value measurement to changes in the unobservable inputs and the interrelationship between inputs.

Management is currently evaluating the impact ASU No. 2011-04 will have on the Funds' financial statement disclosures.

NOTE 11.

The Regulated Investment Company Modernization Act. On December 22, 2010, The Regulated Investment Company Modernization Act of 2010 (the "Modernization Act") was signed by The President. The Modernization Act is the first major piece of legislation affecting Regulated Investment Companies ("RICs") since 1986 and it modernizes several of the federal income and excise tax provisions related to RICs. Some highlights of the enacted provisions are described below.

New capital losses may now be carried forward indefinitely, and retain the character of the original loss. Under pre-enactment law, capital losses could be carried forward for eight years, and carried forward as short-term capital, irrespective of the character of the original loss. The Modernization Act contains simplification provisions, which are aimed at preventing disqualification of a RIC for "inadvertent" failures of the asset diversification and/or qualifying income tests. Additionally, the Modernization Act exempts RICs from the preferential dividend rule, and repealed the 60-day designation requirement for certain types of pay-through income and gains. Finally, the Modernization Act contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file amended Forms 1099 to restate previously reported distributions.

Except for the simplification provisions related to RIC qualification, the Modernization Act is effective for taxable years beginning after December 22, 2010. The provisions related to RIC qualification are effective for taxable years for which the extended due date of the tax return is after December 22, 2010.

NOTE 12.

Subsequent Events. The Large Cap Value Fund declared distributions from net investment income payable on July 8, 2011 to shareholders of record on July 7, 2011. The distributions from Class I shares were $5,426,422 or $0.16 per share, Class A shares were $2,061,315 or $0.12 per share, Class C shares were $126,995 or $0.06 per share and Class R shares were $85,268 or $0.10 per share.

NOTE 13.(UNAUDITED)

Federal Tax Disclosure. The Funds designated as long-term capital gain dividends, pursuant to Internal Revenue Code Section 852(b)(3), the amount necessary to reduce the earnings and profits of the Funds related to net capital gains to zero for the tax year ended June 30, 2011.

For the year ended June 30, 2011, the following percentages of ordinary distributions paid qualify for the dividend received deduction available to corporate shareholders: Diversified Value Fund — 100.00%, Large Cap Value Fund — 100.00%, Mid-Cap Value Fund — 100.00%, Small Cap Value Fund — 100.00%, Value Opportunities Fund — 100.00%, Capital Income Fund — 41.34%, High Yield Fund — 3.66%.

For the year ended June 30, 2011, the following percentages of ordinary distributions paid are designated as qualified income under the Jobs and Growth Tax Relief Reconciliation Act of 2003: Diversified Value Fund — 100.00%, Large Cap Value Fund — 100.00%, Mid-Cap Value Fund — 100.00%, Small Cap Value Fund — 100.00%, Value Opportunities Fund — 100.00%, Capital Income Fund — 55.64%, High Yield Fund — 3.66%. Shareholders should consult their tax advisors.

Additional Information Applicable to Foreign Shareholders Only. For the year ended June 30, 2011, the Funds designate the following percentages of ordinary distributions paid as interest-related dividends under Internal Revenue Code Section 871(k)(1)(c): Diversified Value Fund — 0.47%, Large Cap Value Fund — 0.17%, Mid-Cap Value Fund — 0.98%, Small Cap Value Fund — 0.69%, Value Opportunities Fund — 0.80%, Capital Income Fund — 58.46%, High Yield Fund — 85.55%. For the year ended June 30, 2011, the following percentages of ordinary income distributions paid are designated as short-term capital gain distributions under Internal Revenue Code Section 871(k)(2)(c): Diversified Value Fund — 0.00%, Large Cap Value Fund — 0.00%, Mid-Cap Value Fund — 0.00%, Small Cap Value Fund — 0.00%, Value Opportunities Fund — 0.00%, Capital Income Fund — 0.00%, High Yield Fund — 28.29%.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders
of Hotchkis and Wiley Funds

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the Diversified Value Fund, Large Cap Value Fund, Mid-Cap Value Fund, Small Cap Value Fund, Value Opportunities Fund, Capital Income Fund and High Yield Fund (constituting the Hotchkis and Wiley Funds, hereafter referred to as the "Funds") at June 30, 2011, the results of each of their operations for the period then ended, the changes in each of their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2011 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLC

Los Angeles, California
August 19, 2011

Fund Expense Examples (Unaudited)

As a mutual fund shareholder, you incur two types of costs: (1) transaction costs such as initial sales charges (loads) on purchase payments and contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees, distribution and service (12b-1) fees and other fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested at the beginning of the most recent six-month period and held for the entire period (January 1, 2011 – June 30, 2011).

The table below illustrates the Funds' costs in two ways:

Based on Actual Fund Returns. This section provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Based on Hypothetical 5% Yearly Returns. This section provides information about hypothetical account values and hypothetical expenses based on the Funds' actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.

	Based on Actual Fund Returns							Based on Hypothetical 5% Yearly Returns
	Beginning Account Value 1/1/11		Ending Account Value 6/30/11		Expenses Paid During Period* 1/1/11 - 6/30/11			Beginning Account Value 1/1/11		Ending Account Value 6/30/11		Expenses Paid During Period* 1/1/11 - 6/30/11		Annualized Expense Ratio
Diversified Value Fund
Class I	$	1,000.00	$	1,035.20	$	4.79		$	1,000.00	$	1,020.08	$	4.76		0.95	%
Class A		1,000.00		1,034.00		6.05			1,000.00		1,018.84		6.01		1.20
Class C		1,000.00		1,030.10		9.82			1,000.00		1,015.12		9.74		1.95
Large Cap Value Fund
Class I		1,000.00		1,036.70		5.30			1,000.00		1,019.59		5.26		1.05
Class A		1,000.00		1,035.00		6.56			1,000.00		1,018.35		6.51		1.30
Class C		1,000.00		1,031.30		10.32			1,000.00		1,014.63		10.24		2.05
Class R		1,000.00		1,033.50		7.82			1,000.00		1,017.11		7.75		1.55
Mid-Cap Value Fund
Class I		1,000.00		1,040.90		5.26			1,000.00		1,019.64		5.21		1.04
Class A		1,000.00		1,039.50		6.52			1,000.00		1,018.40		6.46		1.29
Class C		1,000.00		1,035.30		10.29			1,000.00		1,014.68		10.19		2.04
Class R		1,000.00		1,038.30		7.78			1,000.00		1,017.16		7.70		1.54
Small Cap Value Fund
Class I		1,000.00		1,043.30		5.37			1,000.00		1,019.54		5.31		1.06
Class A		1,000.00		1,041.80		6.63			1,000.00		1,018.30		6.56		1.31
Class C		1,000.00		1,038.30		10.41			1,000.00		1,014.58		10.29		2.06
Value Opportunities Fund
Class I		1,000.00		1,082.50		5.68			1,000.00		1,019.34		5.51		1.10
Class A		1,000.00		1,080.90		6.97			1,000.00		1,018.10		6.76		1.35
Class C		1,000.00		1,077.30		10.82			1,000.00		1,014.38		10.49		2.10
Capital Income Fund
Class I		1,000.00		1,059.00		4.08			1,000.00		1,020.83		4.01		0.80
Class A		1,000.00		1,017.40		3.54	**		1,000.00		1,019.59		5.26		1.05
High Yield Fund
Class I		1,000.00		1,044.90		3.55			1,000.00		1,021.32		3.51		0.70
Class A		1,000.00		1,043.70		4.81			1,000.00		1,020.08		4.76		0.95

* Expenses are equal to the Funds' annualized expense ratio by class multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (181), then divided by the number of days in the most recent fiscal year (365).

** Actual expenses are equal to the Fund's annualized expense ratio for Class A multiplied by the average account value over the period, multiplied by 122/365 (to reflect the commencement of operations to June 30, 2011).

Board Considerations in Approving Continuation of Investment Advisory Agreements (Unaudited)

Background and Approval Process. Hotchkis and Wiley Capital Management, LLC (the "Advisor") serves as investment adviser to the Hotchkis and Wiley Large Cap Value Fund, the Hotchkis and Wiley Mid-Cap Value Fund, the Hotchkis and Wiley Small Cap Value Fund, the Hotchkis and Wiley Value Opportunities Fund, the Hotchkis and Wiley Diversified Value Fund and the Hotchkis and Wiley High Yield Fund (each a "Fund") pursuant to separate investment advisory agreements (the "Advisory Agreements") with the Hotchkis and Wiley Funds (the "Trust"). The Advisory Agreements were initially approved by the Board of Trustees at the inception of each Fund for two-year terms. The Advisory Agreements continue thereafter if approved annually by the Trustees, including a majority of the Trustees who are not "interested persons" (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of the Trust (the "Independent Trustees"), cast in person at a meeting called for the purpose of voting on the Advisory Agreements. The Advisory Agreements for each Fund were most recently considered by the Board at a meeting held in May 2011.

As part of the annual contract review process, the Independent Trustees, through their independent legal counsel, requested and received extensive materials, including information relating to (i) the nature, extent and quality of services provided by the Advisor, including compliance with legal requirements, (ii) short-term and long-term performance of each Fund relative to peer groups, their Lipper fund category and market indices, (iii) the costs of the services provided and the Advisor's profitability with respect to the management of each Fund, (iv) the extent to which the Advisor has in the past or is likely in the future to experience economies of scale in connection with the investment advisory services it provides to each Fund, (v) the expense ratios of each Fund as compared with the expense ratios of their peer group and their Lipper fund category and (vi) any benefits to the Advisor and its affiliates from its relationship with the Funds. The Independent Trustees also requested and received information specifically related to the Advisor's risk controls and risk evaluation process. The Independent Trustees noted that the information provided by the Advisor was thorough and responsive to their requests. The information provided in response to their request supplemented information received by the Board throughout the year, both in writing and in meetings, regarding the Funds, including Fund performance, expense ratios, portfolio composition and regulatory compliance. The Independent Trustees also held a conference call with their independent legal counsel to review the materials provided by the Advisor and reviewed and discussed a legal memorandum regarding, among other things, the duties of directors/trustees under the 1940 Act and relevant state law in reviewing and approving investment advisory contracts. The Independent Trustees, through their independent legal counsel, then provided follow-up questions to the Advisor to which they received responses in advance of the May Board meeting.

At the Board meeting, representatives of the Advisor discussed certain responses with the Trustees and responded to their further questions. The Trustees considered the factors set out in case law and identified by the Securities and Exchange Commission as most relevant in considering the renewal of investment advisory agreements. The Trustees considered these and other factors, as summarized in more detail below, and concluded that the terms of each Advisory Agreement are fair and reasonable and the continuance of each Agreement is in the best interests of the applicable Fund. No single factor was determinative in the Board's analysis.

Nature, Extent and Quality of Services. As part of the Board's decision-making process, the Trustees noted that the Advisor and its predecessors have managed the Funds and their predecessors since their inception, and the Trustees believe that a long-term relationship with a capable, conscientious investment adviser is in the best interests of the Funds. The Board also considered that shareholders invest in a Fund specifically seeking the Advisor's investment expertise and style. The Board also noted that when shareholders invest in a Fund, they know the advisory fee that is paid by the Fund. In this connection, the Trustees considered, in particular, whether each Fund is managed in accordance with its investment objective and policies as disclosed to shareholders. The Trustees concluded that each Fund is managed consistent with its investment objective and policies.

The Trustees reviewed information regarding various services provided by the Advisor to the Funds, including an organizational chart and background information on personnel performing such services. The Trustees also reviewed each Fund's performance and information regarding the Advisor's investment program, which is driven by team-oriented, in-depth, fundamental research. The Trustees considered the depth and quality of the Advisor's investment process, the low turnover rates of the Advisor's key personnel, the overall stability of the Advisor's organization, and the experience, capability and integrity of its senior management. The Trustees considered the portfolio managers' significant investments in the Funds. The Trustees reviewed the Trust's compliance program and the Advisor's commitment to a rigorous compliance effort and the resultant compliance by the Funds and the Advisor with legal requirements.

The Trustees also considered other non-advisory services provided to the Funds, such as the services of Advisor employees as officers and other personnel provided that are necessary for Fund operations. The Trustees particularly noted that the services of the Trust's Chief Compliance Officer are provided to the Funds at no cost to the Funds. The Trustees noted that the Advisor organizes Board meetings and the preparation of Board meeting materials, and those Advisor employees serving as Trust officers oversee and manage the other Fund service providers.

Based on their review, the Trustees concluded that the nature, extent and quality of services provided (and expected to be provided) to each Fund under its Advisory Agreement were of a high level and were very satisfactory.

Investment Performance of the Funds and the Advisor. The Trustees noted that they review data on the short-term and long-term performance of the Funds in connection with each quarterly Board meeting. For the contract review meeting, the Trustees reviewed a report prepared by the Trust's administrator based on information compiled from Lipper Inc., an independent provider of data to mutual fund boards (the "Report"), that compared the performance of Class I shares of each Fund to that of a small group of funds that are similar primarily in terms of investment styles (each, a "Peer Group"). Performance information through March 2011 was provided by the Advisor as well. Since some Peer Group funds' advisory contracts include administration services, the Report included administration fees with advisory fees for comparability. The Trust's administrator provided a supplemental report comparing the performance of each Fund's Class I shares to that of the median of the most comparable Lipper universe, but the Advisor noted, and the Independent Trustees agreed, that the Funds' performance compared to that of the Peer Groups was more relevant.

The Board considered the performance information for each Fund, noting that each Fund significantly outperformed its Peer Group median for the 1-year period ended December 31, 2010. The Board considered that each equity Fund outperformed its Peer Group median for the 3-year period ended December 31, 2010, except for the Large Cap Value Fund. The Board noted that the High Yield Fund's inception date was March 31, 2009, so 3-year

performance was not yet available. The Board noted that each equity Fund underperformed its Peer Group median for the 5-year period ended December 31, 2010, except for the Value Opportunities Fund, and that each Fund with 10-year performance (i.e., the Large Cap Value, Mid Cap Value and Small Cap Value Funds) outperformed its Peer Group median for such period. The Board also noted that each Fund outperformed its benchmark index(es) for the 1-year period covered in the Report.

The Trustees considered the Advisor's efforts to address prior under-performance issues, particularly the Advisor's increased emphasis on risk assessment, and noted the significant improvements in the Funds' performance over the past two years.

Fees, Expenses and Profitability. The Trustees reviewed information provided by the Advisor and data contained in the Report and in the supplemental report regarding the Funds' advisory fees and expense ratios, including information regarding any expense caps for the Funds. The Trustees reviewed data in the Report showing how the Funds' advisory fees and expense ratios compared to those of their respective Peer Groups. The Trustees reviewed supplemental information from the administrator regarding median advisory fees and expense ratios of the most comparable Lipper universe. The Trustees also reviewed information provided by the Advisor on advisory fees charged by the Advisor for subadvisory services it provides to other mutual funds and advisory fees it charges to its separate account clients with investment objectives and policies similar to those of the Funds. The Trustees considered a list of the many additional functions performed for the Funds that the Advisor does not perform for its separate account and subadvisory clients. The Trustees noted that even though the Funds require more services and have higher costs, and even though it is generally acknowledged that managing mutual funds subjects an investment adviser to more legal and regulatory risk than is the case with separate accounts, the fees charged to each Fund other than the Diversified Value, Large Cap Value and High Yield Funds are the same as or lower than the Advisor's current standard fee schedules for its separate account clients.

With respect to the advisory fee for each Fund, the Trustees noted that the Report showed that the Small Cap Value and Value Opportunities Funds' net advisory fees (including administration fees) were lower than these Funds' Peer Group medians, that the High Yield Fund's net advisory fee (including administration fees) was essentially the same as its Peer Group median, and that the Diversified Value, Large Cap Value and Mid-Cap Value Funds' advisory fees (including administration fees) were somewhat higher than their Peer Group medians. The Trustees noted that the Advisor had agreed to add breakpoints to the fee schedule for the Large Cap Value, Mid-Cap Value and Diversified Value Funds effective January 1, 2007, but that lower asset levels in 2010 meant that the breakpoints did not have an impact on the advisory fees. They noted that the Advisor uses a research-intensive process where other firms, including those advising Peer Funds, might use investment processes that are less research-intensive. With respect to the expense ratios for the Funds, the Trustees noted that the Report showed that the Large Cap Value, Mid-Cap Value and Diversified Value Funds' net expense ratio was higher than the median of their Peer Group, and the Small Cap Value, Value Opportunities and High Yield Funds' net expense ratio was lower than the median of their Peer Group. The Trustees noted the quality of the Advisor's investment process and concluded that the advisory fee and expense ratios were fair and reasonable for each Fund.

The Trustees reviewed information concerning profitability to the Advisor under the Advisory Agreements, including information regarding the methodology for allocating expenses. The Trustees reviewed data regarding the Advisor's variable expenses and fixed expenses. The Trustees considered that in 2010, as well as in 2009, the Advisor had absorbed over $1 million of costs above expense caps for the Funds for which it would not be reimbursed, and has agreed to continue to do so, noting that annualized expense ratios continue to be above the expense cap for the Large Cap Value, Diversified Value and High Yield Funds. The Trustees also recognized that individual fund or product line profitability of other advisers is generally not publicly available, and that profitability may be affected by numerous factors, so that the comparability of profitability among advisory firms is limited. The Trustees noted the importance of the Advisor's profitability — which is derived solely from investment management fees — in maintaining its entrepreneurial environment in a private, primarily employee-owned structure. They noted that the Advisor's compensation/profit structure facilitates retention of its management and investment professionals. They also noted that from time to time the Advisor had voluntarily limited growth of assets by closing certain Funds to new investors. The Trustees noted that closing Funds was financially disadvantageous to the Advisor, and illustrated a commitment to act in the best interests of Fund shareholders. The Trustees concluded that the level of profitability to the Advisor under the Advisory Agreements appeared to be not excessive.

Economies of Scale and Whether Fee Levels Reflect These Economies of Scale. The Trustees considered information regarding the investment, compliance and client service personnel and the new fixed-income portfolio managers who have been hired by the Advisor over the past few years, and the increase in technology spending. The Trustees concluded that the Funds' shareholders share in the additional services, investment in talented employees and capital improvements provided by the Advisor without an increase in advisory fees. The Trustees also noted that the addition of breakpoints to the Large Cap Value, Mid-Cap Value and Diversified Value Funds has in the past enabled, and may in the future enable, shareholders to share in economies of scale.

Indirect Benefits to the Advisor from its Relationship to the Funds. The Trustees considered information regarding any indirect benefits to the Advisor that could be identified from its relationship to the Funds. In particular, the Trustees considered any benefits from soft dollar arrangements. The Trustees noted that, while the Advisor had not historically used the Funds' commissions to pay for research, other than for proprietary research from brokers that was "bundled" with the commission cost, at the May Board meeting the Advisor had requested the ability to use commission sharing arrangements that would permit the Advisor to pay for third-party research with the equity Funds' soft dollars. The Trustees considered that the bundled research services and the use of commission sharing arrangements are expected to provide valuable information or service to the investment research process, which benefits the Funds (as well as the Advisor's other clients). The Trustees noted that the ability to use the Funds' soft dollars to obtain third-party research would be a fallout benefit to the Advisor. The Trustees also noted that the commissions paid by the Funds are generally quite low and that the Advisor stated, in asking the Board to permit the use of commission sharing arrangements to obtain research for the Funds, that this would not affect best execution and the Funds should bear no additional costs as a result of these arrangements.

* * * *

Based on their review, including their consideration of each of the factors referred to above, the Trustees, including all of the Independent Trustees, concluded that the terms of each Advisory Agreement are fair and reasonable and that the renewal of each Agreement is in the best interests of each Fund.

Board Considerations in Approving the Investment Advisory Agreement for the
Capital Income Fund

The Board of Trustees of the Hotchkis and Wiley Funds (the "Trust"), including the Independent Trustees, approved the Investment Advisory Agreement (the "Advisory Agreement") between the Trust on behalf of the Hotchkis and Wiley Capital Income Fund (the "Fund") and Hotchkis and Wiley Capital Management, LLC (the "Advisor"), at a meeting held on November 17, 2010. The Board determined that the terms of the Advisory Agreement are fair and reasonable and that the Agreement is in the best interests of the Fund.

To reach this determination, the Board considered its duties under the Investment Company Act of 1940, as amended (the "1940 Act"), as well as under the general principles of state law in reviewing and approving investment advisory contracts; the requirements of the 1940 Act in such matters; the fiduciary duty of investment advisers with respect to advisory agreements and compensation; the standards used by courts in determining whether investment company boards have fulfilled their duties; and the factors to be considered by the Board in voting on such agreements. To assist the Board in its evaluation of the Advisory Agreement, the Independent Trustees participated in a special meeting in October 2010 at which the portfolio managers discussed their background and relevant experience and their investment strategy for the Fund. The Independent Trustees then received a report from the Advisor in advance of the November 2010 Board meeting responding to an information request contained in a memorandum from counsel to the Independent Trustees. The report, among other things, outlined the services to be provided by the Advisor; the proposed advisory fee for the Fund as compared to fees charged by investment advisers to comparable funds (noting that the Advisor does not currently have any other clients for which it manages in this style); estimated expenses of the Fund as compared to expense ratios of comparable funds; the nature of expenses to be incurred in providing services to the Fund and the potential for economies of scale, if any; financial data on the Advisor and estimated profitability from the Advisory Agreement; any fall-out benefits to the Advisor; and information on the Advisor's compliance program. The Independent Trustees also met separately with their independent legal counsel to discuss the information provided by the Advisor. The Board applied its business judgment to determine whether the arrangements between the Trust and the Advisor are reasonable business arrangements from the Fund's perspective as well as from the perspective of shareholders.

In reviewing the Advisory Agreement, the Board considered the nature, quality and extent of services to be provided by the Advisor. The Board considered that the Advisor will be responsible for the overall management and administration of the Fund. The Board noted the background and experience of the portfolio managers and their investment style. At the preliminary meeting held in October 2010 and at the November 2010 meeting, the Trustees received presentations from the portfolio managers and were able to ask questions about the proposed investment strategies for the Fund, how portfolio trades would be executed, and how the Advisor's compliance program would apply for the Fund. In light of the information presented and the considerations made, the Board concluded that the nature, quality and extent of services to be provided to the Fund by the Advisor under the Advisory Agreement are expected to be satisfactory.

The Board considered the advisory fees to be paid under the Advisory Agreement. The Board reviewed data compiled by the Advisor from information prepared by Lipper Inc., an independent source, showing the proposed advisory fee and the estimated expense ratio of the Fund as compared to the advisory fees and expense ratios of the institutional class of a peer group selected by the Advisor based on investment objective and portfolio composition. Based on the information provided, the Board noted that the Fund's proposed advisory fee was above the median of the peer group and that the Fund's expense ratio, taking into consideration the two year expense limitation to which the Advisor agreed, was slightly above the median expense ratio of the peer group, and also noted the impact on the data of the two funds in the peer group each having over $39 billion in assets under management. Since the Fund is newly organized, the Board did not consider investment performance of the Fund, but it did consider the performance of the Hotchkis and Wiley High Yield Fund, for which one of the portfolio managers serves as co-portfolio manager. On the basis of all the information provided on the fees and expenses of the Fund, the Board concluded that the advisory fees were reasonable and appropriate in light of the nature, quality and extent of services expected to be provided by the Advisor under the Advisory Agreement.

The Board noted that the Advisor anticipates that, in time, there may be economies of scale from managing the Fund as Fund assets grow, and that, in the meantime, the Advisor intends to minimize the impact of high expense ratios typical of a recently-formed small fund by agreeing to cap expenses for the first two years of operations. The Board noted that the Advisor stated that as Fund assets grow and expense ratios decrease below the expense caps, the Advisor will continue to invest in the investment team. The Board took the costs to be borne by the Advisor in connection with its services to be performed under the Advisory Agreement into consideration and noted that the Advisor estimated the Fund would not be profitable to the Advisor in the near term. The Board considered that the Advisor had identified as a fall-out benefit to the Advisor its being associated with the Trust.

* * * *

Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined that the terms of the Advisory Agreement are fair and reasonable and that the approval of the Agreement is in the best interests of the Fund. No single factor was determinative in the Board's analysis.

Management (Unaudited)

INDEPENDENT TRUSTEES

Name and Year of Birth

Position
Held with
the Trust

Term of
Office* and
Length of
Time Served

Principal Occupation(s) During
Past Five Years

Number of
Portfolios in
Fund Complex
Overseen by
Trustee

Other
Directorships
Held by Trustee
During Past
Five Years

Randall H. Breitenbach
(born 1960)

Trustee^(a)

Since 2001

Co-Founder, Director and CEO, BreitBurn Energy Company, LLC and President, BreitBurn Energy Partners, L.P. (1988 — present); Chairman Emeritus, Finance Committee, Stanford University PIC Endowment (1999 — present).

Seven

BreitBurn Energy Partners, L.P.; BreitBurn Energy Company, LLC

Robert L. Burch III
(born 1934)

Trustee

Since 2001

Managing Partner, A.W. Jones Co. (investments) (1984 — present); Chairman, Jonathan Mfg. Corp. (slide manufacturing) (1977 — 2004).

Seven

None

Alejandra C. Edwards, Ph.D.
(born 1954)

Trustee

Since 2007

California State University — Long Beach: Associate Chair Economics (2001 — present); Graduate Advisor Economics (2000 — present); Professor of Economics (1994 — present).

Seven

None

Marcy Elkind, Ph.D.
(born 1947)

Trustee

Since 2005

President, Elkind Economics, Inc. (1980 — present).

Seven

None

Robert Fitzgerald
(born 1952)

Trustee^(b)

Since 2005

Chief Financial Officer of National Retirement Partners, Inc. (2005 — 2007); Executive Vice President and Chief Financial Officer of PIMCO Advisors L.P. (1995 — 2001).

Seven

Independent Trustee, Brandes Investment Trust (5 portfolios).

John A.G. Gavin
(born 1931)

Trustee
Chairman

Since 2001
Since 2007

Senior Counselor, Hicks Holdings (private equity investment firm) (2001 — present); Chairman, Gamma Holdings (international capital and consulting) (1968 — present); U.S. Ambassador to Mexico (1981 — 1986).

Seven

Independent Trustee: Causeway Capital Management Trust (3 portfolios); TCW Strategic Income Fund, Inc. (1 portfolio); TCW Funds, Inc. (27 portfolios).

Donald Morrison, Ph.D.
(born 1939)

Trustee

Since 2007

The William E. Leonhard Professor in the Anderson Graduate School of Management at the University of California, Los Angeles (1988 — present).

Seven

None

* Each Independent Trustee serves until his or her successor is elected and qualified or until his or her death or resignation or removal as provided in the Trust's Agreement and Declaration of Trust.

^(a) Chairman of the Nominating and Governance Committee.

^(b) Chairman of the Audit Committee.

INTERESTED TRUSTEE

Name and Year of Birth

Position
Held with
the Trust

Term of
Office** and
Length of
Time Served

Principal Occupation(s) During
Past Five Years

Number of
Portfolios in
Fund Complex
Overseen by
Trustee

Other
Directorships
Held by Trustee
During Past
Five Years

George H. Davis, Jr.*
(born 1961)

Trustee

Since 2007

Chief Executive Officer and Portfolio Manager of Hotchkis and Wiley Capital Management, LLC (the "Advisor") (2001 — present).

Seven

None

* Mr. Davis is an "interested person," as defined in the 1940 Act, of the Trust based on his position as Chief Executive Officer and Portfolio Manager of the Advisor.

** As Trustee, Mr. Davis serves until his successor is elected and qualified or until his death or resignation or removal as provided in the Trust's Agreement and Declaration of Trust.

OFFICERS

Name and Year of Birth

Position
Held with
the Trust

Term of
Office* and
Length of
Time Served

Principal Occupation(s) During Past Five Years

Anna Marie Lopez
(born 1967)

President

Since 2007

Chief Operating Officer of the Advisor (2007 — present); Chief Compliance Officer of the Advisor (2001 — 2007).

Mark McMahon
(born 1968)

Vice President and Secretary

Since 2006

Managing Director, Mutual Fund Operations of the Advisor (2006 — present); Client Relations Manager of Boston Financial Data Services (1991 — 2006).

James Menvielle
(born 1972)

Vice President and Treasurer

Since 2007

Chief Financial Officer of the Advisor (2006 — present); Controller of Metropolitan West Asset Management, LLC (1998 — 2006); Chief Financial Officer of MWAM Distributors, LLC (2004 — 2006).

Tina Kodama
(born 1968)

Vice President and Chief Compliance Officer

Since 2007

Chief Compliance Officer of the Advisor (2007 — present); Director of Compliance of the Advisor (2006 — 2007); Vice President — Compliance of First Pacific Advisors, Inc. (2004 — 2006).

* Each officer is appointed by and serves at the pleasure of the Board of Trustees of the Trust.

The Statement of Additional Information includes additional information about the Trust's Trustees and officers, and is available without charge upon request by calling the transfer agent at 1-866-HW-FUNDS (1-866-493-8637). The address for all Trustees and officers of the Trust is c/o Hotchkis and Wiley Capital Management, LLC, 725 South Figueroa Street, 39th Floor, Los Angeles, CA 90017, attention: Trust Secretary.

Privacy Policy

The Hotchkis and Wiley Funds and Hotchkis and 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.

We collect non-public personal 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 on written or electronic correspondence;

• Information about your transactions with us, financial intermediaries, or others;

• Information received from your custodian, consultant, attorneys, or others; and

• Information provided and captured on our website, including any information captured on our website through the use of "cookies".

We do 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 your consultant, attorney or accountant). We may disclose your personal information to financial intermediaries (such as broker-dealers and custodians) only as permitted by law and only as necessary for us to provide agreed services and products. We may also disclose your personal information to other service providers with whom we have business arrangements to help administrate our business. These service providers are bound by law or by contract to use your information only for the services for which we hired them, and are not permitted to use or share this information for any other purpose. In limited circumstances, we may disclose your personal information as required by law or in response to inquires from governmental authorities.

We limit access to your personal information, as much as possible, 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 the privacy of your nonpublic personal information.

We apply this policy to current and former clients.

This page is not part of the annual report.

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Information about the Funds

ADVISOR

Hotchkis and Wiley Capital Management, LLC
725 South Figueroa Street, 39th Floor
Los Angeles, California 90017

LEGAL COUNSEL

Paul Hastings LLP
55 Second Street, 24th Floor
San Francisco, California 94105

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PricewaterhouseCoopers LLP
350 South Grand Avenue
Los Angeles, California 90071

DISTRIBUTOR

Quasar Distributors, LLC
615 East Michigan Street
Milwaukee, WI 53202

ADMINISTRATOR AND TRANSFER AGENT

U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202

CUSTODIAN

Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109

This report is for the information of shareholders of the Hotchkis and Wiley Funds, but may also be used as sales literature when preceded or accompanied by a current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the Funds.

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is included in the Statement of Additional Information, which is available without charge, upon request, by calling 1-866-HW-FUNDS (1-866-493-8637) and on the Securities and Exchange Commission's ("SEC") website at http://www.sec.gov.

Information regarding how the Funds voted proxies relating to portfolio securities during the 12-month period ended June 30, 2010 is available without charge on the Funds' website at www.hwcm.com and on the SEC's website at http://www.sec.gov.

Hotchkis and Wiley Funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds' Forms N-Q are available free of charge on the SEC's website at http://www.sec.gov. You may also review or, for a fee, copy the forms at the SEC's Public Reference Room in Washington, D.C. (1-202-551-8090). The Forms N-Q are also available on the Funds' website at www.hwcm.com under the "Download Center".

HOTCHKIS AND WILEY FUNDS

725 SOUTH FIGUEROA STREET, 39th Floor
LOS ANGELES, CALIFORNIA 90017-5439
www.hwcm.com
1.866.HW.FUNDS (1.866.493.8637)

CODE #HWF-AR-0611-0811

JUNE 30, 2011

ANNUAL REPORT

Item 2 - Code of Ethics

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer. The registrant has not made any amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report. A copy of the code of ethics is available without charge, upon request, by calling toll-free 1-800-796-5606.

Item 3 - Audit Committee Financial Expert

The registrant’s Board has determined that Robert Fitzgerald, a member of the registrant’s Audit Committee, is an “audit committee financial expert” and “independent,” as such terms are defined in this Item. This designation will not increase the designee’s duties, obligations or liability as compared to his duties, obligations and liability as a member of the Audit Committee and of the Board; nor will it reduce the responsibility of the other Audit Committee members. The Board believes each member of the Audit Committee contributes significantly to the effective oversight of the registrant’s financial statements and condition.

Item 4 - Principal Accountant Fees and Services

The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. “Audit services” refer to performing an audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. The principal accountant did not provide any other services. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.

	FYE 6/30/2011		FYE 6/30/2010
Audit Fees	$	115,700	$	130,800
Audit-Related Fees	$	0	$	0
Tax Fees	$	42,800	$	37,500
All Other Fees	$	0	$	0

The registrant’s Audit Committee (the “Committee”) has adopted policies and procedures with regard to the pre-approval of services. The Committee shall pre-approve any engagement of the independent auditors to provide any non-prohibited services to the registrant, including the fees and other compensation to be paid to the independent auditors. The Chairman of the Audit Committee may grant the pre-approval of services to the registrant for non-prohibited services for engagements of less than $5,000. All such delegated pre-approvals shall be presented to the Audit Committee no later than the next Audit Committee meeting. The Committee shall also pre-approve any engagement of the independent auditors, including the fees and other

compensation to be paid to the independent auditors, to provide any non-audit services to the Adviser (or any “control affiliate” of the Adviser providing ongoing services to the registrant), if the engagement relates directly to the operations and financial reporting of the registrant. The Chairman of the Audit Committee may grant the pre-approval for non-prohibited services to the Adviser for engagements of less than $5,000. All such delegated pre-approvals shall be presented to the Audit Committee no later than the next Audit Committee meeting.

The percentage of fees billed by PricewaterhouseCoopers LLP applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:

	FYE 6/30/2011		FYE 6/30/2010
Audit-Related Fees	0	%	0	%
Tax Fees	0	%	0	%
All Other Fees	0	%	0	%

All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant.

The following table indicates the non-audit fees billed or expected to be billed by the registrant’s accountant for services to the registrant and to the registrant’s investment adviser for the last two years. The registrant’s Audit Committee has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant’s independence.

Non-Audit Related Fees	FYE 6/30/2011		FYE 6/30/2010
Registrant	$	42,800	$	37,500
Registrant’s Investment Adviser	$	99,300	$	105,000

Item 5 - Audit Committee of Listed Registrants

Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).

Item 6 - Investments

Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.

Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable to open-end investment companies.

Item 8 - Portfolio Managers of Closed-End Management Investment Companies

Not applicable to open-end investment companies.

Item 9 - Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable to open-end investment companies.

Item 10 - Submission of Matters to a Vote of Security Holders

The identification and recommendation of individuals for Board membership is the responsibility of the Nominating and Governance Committee. Shareholders may submit suggestions for candidates by forwarding their correspondence by U.S. mail or other courier service to the Funds’ Secretary for the attention of the Chairman of the Nominating and Governance Committee, 725 S. Figueroa Street, 39th Floor, Los Angeles, CA 90017-5439.

Item 11 - Controls and Procedures

(a) The officers providing the certifications in this report in accordance with Rule 30a-2 under the Investment Company Act of 1940 (the “Act”) have concluded, based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act), that such controls and procedures are effective, based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing date of this report.

(b) There was no change in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the registrant’s last fiscal half-year which has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12 - Exhibits

(a)(1) — Code of Ethics: Available without charge, upon request, by calling toll-free 1-800-796-5606.

(a)(2) — Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Attached hereto.

(a)(3) — Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investments companies.

(b) — Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Hotchkis and Wiley Funds


By:	/s/ Anna Marie Lopez

	Anna Marie Lopez
	President of Hotchkis and Wiley Funds

Date: August 25, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Hotchkis and Wiley Funds


By:	/s/ Anna Marie Lopez

	Anna Marie Lopez
	President of Hotchkis and Wiley Funds

Date: August 25, 2011


By:	/s/ James Menvielle

	James Menvielle
	Treasurer of Hotchkis and Wiley Funds

Date: August 25, 2011

EXHIBIT INDEX

(a)(2)		Certifications of Principal Executive Officer and Principal Financial Officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.

(b)		Certification of Principal Executive Officer and Principal Financial Officer as required by Section 906 of the Sarbanes-Oxley Act of 2002.

Hotchkis & Wiley Funds N-CSRCertified annual shareholder report (management investment company)