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HOTCHKIS AND WILEY FUNDS
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800 WEST SIXTH STREET - FIFTH FLOOR - LOS ANGELES, CALIFORNIA 90017 -
(213) 362-8900 - FAX (213) 623-7880
August 27, 1996
Dear Shareholder:
You should have received proxy material in the mail recently stating that a
special meeting will be held on September 27, 1996, at which shareholders will
vote on various issues. The primary reason for the shareholders' meeting is the
approval of new advisory agreements for the Hotchkis and Wiley Funds (the
"Funds") because of the expected acquisition of the partnership interests in
Hotchkis and Wiley, advisor to the Funds, by Merrill Lynch & Co., Inc. Since
Merrill Lynch's funds are primarily load funds, shareholders may believe that
the Hotchkis and Wiley Funds will also become load funds. Also, one of the
items for shareholder approval is an amendment to the Declaration of Trust that
would permit Trustees to authorize classes of shares, which may have further
fostered the belief that the intention was to become a load-family.
We have receive numerous questions and are taking this opportunity to clarify
the issues for shareholders. Allowing the Funds to issue shares in different
classes would enable the Funds to be offered through different distribution
channels. If the proposal is approved by shareholders and eventually the Funds
add a class of shares, it will most likely be an institutional class with a
large minimum opening amount. WE HAVE NO INTENTION OF MAKING YOU PAY A LOAD.
We have every intention of maintaining the Hotchkis and Wiley name and
maintaining the Funds separately from the Merrill Lynch funds. We do expect,
however, to benefit from Merrill Lynch's technology and support functions in
years to come.
We hope this information helps you make your voting decision. Remember, your
vote is important, so please complete, sign and return your proxy card promptly.
Feel free to call us at (800) 236-4479 if you have any questions.
Sincerely,
/s/ Nancy D. Celick
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Nancy D. Celick
President
NDC: md
Hotchkis and Wiley - Investment Advisor
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"Script" for those answering calls to 800 number with questions
regarding proxy statement for September 27, 1996 Shareholders' meeting.
HOTCHKIS AND WILEY FUNDS' PROXY STATEMENT
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A brief discussion of the proposals included in the proxy statement follows:
PROPOSAL #1 requests approval of the Trustees. Please note that Joe Grills,
Mike Quinn and Richard West would be new trustees; a brief bio on each of them
is included on pages 7 and 8 of the proxy statement.
PROPOSAL #2 requests approval of the new investment advisory agreements. The
current agreements require automatic termination in the event of assignment. In
anticipation of the acquisition of Hotchkis and Wiley by Merrill Lynch,
shareholders of each of the Funds' are being asked to approve new agreements.
In general, Hotchkis and Wiley has every intention of retaining the Hotchkis
and Wiley name, as well as maintaining the funds separately from Merrill Lynch.
WHEN DISCUSSING THIS PROPOSAL YOU MAY WANT TO STRESS THAT, AS DISCLOSED ON PAGE
14, MERRILL LYNCH HAS REPRESENTED TO THE TRUSTEES THAT IT WOULD NOT SEEK AN
ADVISORY FEE INCREASE FOR THE NEXT TWO YEARS.
PROPOSAL #3 requests ratification of Price Waterhouse as the Funds independent
auditors.
PROPOSAL #4 requests approval of amendments to the Declaration of Trust to allow
the issuance of multiple classes of shares. Such structure would allow us to
offer a more tailored marketing and distribution service to our shareholders and
potential shareholders. If the proposal is approved by shareholders and the
Funds eventually add a class of shares, it will most likely be an institutional
class with a large minimum opening amount. WE HAVE NO INTENTIONS OF MAKING
CURRENT SHAREHOLDERS PAY A LOAD. FURTHERMORE, AS STATED ON PAGE 20, THE BOARD OF
TRUSTEES HAS NO INTENT TO INSTITUTE A MULTIPLE CLASS SYSTEM AT THE CURRENT TIME.