(PUB) Investing 2015

April 2015

Morningstar FundInvestor

23

Data through March 31, 2015 Hotchkis & Wiley High Yield A

Ticker Status Yield SEC Yield Total Assets Mstar Category HWHAX Open 5.4% 5.31% $2,565 mil High Yield Bond

Morningstar Analyst Rating 03-03-15

Investment Style Fixed Income Income Rtn %Rank Cat

Historical Profile Return Risk Rating Average Average Neutral

45

44

23

49

47

43

´

Manager Change Partial Manager Change

12.0 14.0 16.0 18.0

Morningstar Pillars Process Performance

Positive Positive Positive Positive Positive

∞ ∞ ∞ ∞ ∞

Growth of $10,000

Investment Values of Fund Investment Values of BC Agg Bnd Performance Quartile (within Category) History

People Parent Price

10.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 03-15

Morningstar Analyst Rating Morningstar evaluates mutual funds based on five key pillars, which its analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis. Analyst Rating Spectrum Œ „ ´ˇ ¨

12.80 12.61 11.85 . . . . . 11.71

12.99

12.32

12.48

NAV

0.90 1.89 18.76 . . . . . . -5.95 12.22 . . . . . . -2.49 3.57 . . . . . . 7.28 8.20 . . . . . . -5.39 10.56 . . . . . . 75 3 . . . . . . 8.46 17.64 13.43 -5.07 -1.60 5.53 -4.63 10.48 1.04 5.88 2.58 2.05 7.60 10.04 62 19 12

2.63 2.44 0.09 1.33 1.30 0.16 0.00 21 . . . 639

Total Return % +/-BC Agg Bnd

+/-BofAML HY Master

Income Return % Capital Return %

Total Rtn % Rank Cat

Pillar Spectrum Positive ∞

0.86 0.94 0.60 . . . . . 0.44 0.53 . . . . . 0.95 0.95 . . . . . 8.10 7.59 . . . . . 175 123 . . . . . 39 16 . . . . . 0.89 0.25 0.95 6.88 139 0.05 0.95 7.47 57 177 96

0.73 0.13 0.95 5.91

0.70 0.10 0.95 5.59

Income $

§ Negative

¶ Neutral

Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil

Performance 03-31-15 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total

66

51

2010 2011 2012 2013 2014

6.01 -1.01 3.41 0.92 6.50 1.60 3.18 -0.70 2.89 2.17 2.63 2.44 0.78 0.40 0.65 -0.05 7.45 6.88 8.56 7.90 Total

7.85 4.93 18.76

489

604

-8.05 6.18

1.89

4.92 3.62 17.64

Portfolio Analysis 02-28-15

Rating and Risk Time Load-Adj

2.05 3.73 -2.25 -1.81

8.46 0.90

Date of Maturity

Amount

Value % Net $000 Assets

Morningstar

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Period Return % Rtn vs Cat

Total Fixed-Income:137

$000

1 Yr 3 Yr 5 Yr

-3.13 6.09 7.74

Trailing

+/- BC +/- BofAML %Rank Growth of

Aecom 144A 5.875% Mgm Resorts Intl 7.75%

10-15-24 22,750 24,229 0.98 03-15-22 20,562 23,543 0.95 05-01-23 21,826 22,644 0.91 02-01-19 21,652 22,626 0.91 02-01-23 23,503 22,416 0.90 01-15-24 21,333 22,410 0.90 03-01-21 22,985 22,382 0.90 05-15-22 21,718 22,125 0.89 02-01-22 20,490 21,924 0.88 12-01-21 20,385 21,863 0.88 05-15-21 21,535 21,589 0.87 11-15-20 20,972 21,496 0.87

Return% Agg Bnd HY Master

Cat

$10,000

Avg Avg

-Avg +Avg

3 Mo 6 Mo 1 Yr

0.09 -0.67 -1.40 -0.02 0.16

21 10,263 59 10,078 60 10,065 17 12,406

Cst Brands 5%

10 Yr Incept

. . . .

Trinseo Matls Oper Sca / Weekley Homes Llc/ Fin 6 Vtr Fin Bv 144A 6.875% Harland Clarke Hldgs 144 Numericable Grp Sa 144A Chs / Cmnty Health Sys 6 Amer Greetings 7.375%

11.12

3 Yr Avg 5 Yr Avg 10 Yr Avg 15 Yr Avg

Other Measures

Standard Index Best Fit Index BC Agg Bnd Credit Suisse HY USD

12 15,078 . . . . . . . . . . Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat

Alpha

6.2

1.0

Beta

0.34

0.91

R-Squared

6

95

3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated)

3.36 4.64

56 50

2.58 2.88

57

Standard Deviation

4.06 7.45 1.78

85 . . . .

Unit 6.625%

Mean

Pinnacle Operating Corpo Salix Pharmaceuticals 14

Sharpe Ratio

01-15-21 19,135 21,479 0.87 Mens Wearhouse 144A 7% 07-01-22 20,206 21,368 0.86 Kosmos Engy 144A 7.875% 08-01-21 22,227 21,005 0.85 Popular 7% 07-01-19 20,772 20,980 0.85 Wells Enterprises Inc. 1 02-01-20 20,152 20,605 0.83 Parsley Engy 144A 7.5% 02-15-22 19,766 20,359 0.82 Phi 5.25% 03-15-19 22,225 20,336 0.82 Geo Grp Inc New 5.875% 10-15-24 19,320 20,334 0.82 Current Investment Style Sector Breakdown % of assets

Potential Capital Gain Exposure: -1% of assets

Morningstar’s Take by Sarah Bush 03-03-15 Managers Ray Kennedy and Mark Hudoff take a relatively plain-vanilla approach at Hotchkis & Wiley High Yield. They stick to domestic high-yield bonds, eschewing emerging-markets debt and common stock. But, unlike some competitors in the high-yield Morningstar Category, who run sprawling portfolios or make big changes to sector or credit-quality based on their macro outlook, the pair has designed this strategy to be driven by bond-picking. This is a relatively compact portfolio, with a significant allocation (roughly 50% of the portfolio) dedicated to smaller and mid-cap names that, the team argues, are less widely followed and provide particularly attractive opportunities. The results here have so far been impressive. Kennedy and Hudoff credit the firm’s small-cap analysts (who also focus on stocks) with many of the fund’s best picks and, indeed, bond-by-bond selection has driven much of its success. After a relatively lackluster 2009, during which the recently launched fund struggled to put cash to work, the fund had a particularly strong year in 2010, thanks to opportunistic

bets in the auto and industrials sectors and names such as Interpublic Group IPG and Valassis VCI. In 2013, the fund’s bond-picking in the auto and industrials sectors again helped it shine. The fund’s small-cap focus does add some additional risk, and the fund has stumbled in recent high-yield sell-offs: Certain energy picks, including offshore driller Atwood Oceanics ATW, took a toll in 2014. However, these periods of underperformance have not yet had a significant impact on the fund’s record. Indeed, from 2010 through February 2015, the fund’s 9.9% gain outpaced roughly 90% of its peers. There are good reasons to believe the fund’s edge is sustainable, including its seasoned management team and reasonable fee structure. And, importantly given the fund’s preference for smaller-cap names, Hotchkis & Wiley has indicated that it will close this fund at $5 billion. All in all, this fund merits a Morningstar Analyst Rating of Bronze.

Government

6

Duration Ltd Mod Ext

Corporate Bond

78

Quality High Med Low

Bank Loan Convertible

1 3 3

Preferred

figure provided by fund

1

Agency MBS 0 Non-Agency Residential MBS 0 Commercial MBS 0 Asset-Backed 1 Covered Bond 0 Municipal 0 Cash & Equivalents 8 Other 0

1 Avg Eff Duration Avg Eff Maturity Avg Credit Quality Avg Wtd Coupon Avg Wtd Price Coupon Range

4.0 Yrs

.

B

6.58%

101.41% of par

% of Bonds Rel Cat

0% PIK 0% to 8% 8% to 11% 11% to 14%

0.0 0.0 78.3 1.3 21.7 0.6 0.0 0.0 0.0 0.0

Composition - Net Cash 7.9

Bonds 83.6

More than 14%

Stocks 2.3

Other

6.1

Address:

Hotchkis & Wiley Funds Los Angeles, CA 90017-5439 866-493-8637

Minimum Purchase: Min Auto Inv Plan:

$2500 $2500

Add: $100 IRA: $1000

1.00=Category Average

Add: $100

Credit Analysis

Special Securities Restricted/Illiquid Secs Exotic Mortgage-Backed Emerging-Markets Secs Options/Futures/Warrants

% bonds 02-28-15

Sales Fees:

3.75%L, , 2.00%R

BB

37

AAA

0 0 0 5

48

Web Address: Inception: Advisor: Subadvisor: NTF Plans:

www.hwcm.com

Management Fee:

0.55%

B 43 Below B 8 NR/NA 6

AA

0

05-29-09

Actual Fees:

Mgt:0.55% Dist:0.25%

Hotchkis & Wiley Capital Management LLC

Expense Projections: Income Distribution:

3Yr:$677 Monthly

5Yr:$902 10Yr:$1549

A

Trace

None

No

BBB

Fidelity Instl-NTF, Schwab Instl NTF

Mutual Funds ß ®

© 2015Morningstar, Inc.All rights reserved. The information herein isnot representedorwarranted to be accurate, correct, complete or timely. Pastperformance isnoguarantee of future results.Access updated reports at To order reprints, call 312-696-6100. mfb.morningstar.com.

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