Hotchkis & Wiley SMID Cap Diversified Value Fund

Hotchkis & Wiley SMID Cap Diversified Value Fund (HWSM) is an actively managed ETF owning about 150 to 200 small and mid-sized, mostly U.S. companies that its managers consider undervalued. It costs 0.55% a year, more than double the 0.25% average of six similar funds, most of them S&P mid-cap value index ETFs. With $2.75 million in assets as of June 30, 2026, it is also far smaller than any of them.

• Over the year to Oct 27, 2026, HWSM returned +19.0%, 2nd of 7 among similar funds.
• The deepest fall in its price history was 10.2% (Feb 20, 2026 to Mar 20, 2026), recovered by Jun 9, 2026.

No distribution history is available for this fund.

As of Jun 30, 2026, the fund held 164 securities; the ten largest made up 16.69% of assets.

• Over the three months to Jun 30, 2026, investors added a net $0.00 (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +6.20%, +1.71%, +3.53%.

HWSM does not track an index. Its advisor, Hotchkis & Wiley Capital Management, normally keeps at least 80% of net assets in stocks of small and mid-sized companies it considers value stocks. Small and mid-sized means a company's stock market value falls within the range of the Russell 2000 and Russell Midcap indexes over the prior 12 months. That range was $8 million to $14.2 billion as of June 30, 2026. Size is checked only at purchase, and foreign stocks are allowed.

A company counts as value if it sits in an outside value index, or if it trades below the market average on a measure such as price relative to earnings or book value (accounting net worth). It also counts if the advisor's analysis puts its worth above its price. A proprietary model plus in-house research looks for companies the market misjudges after temporary setbacks, cyclical slumps or loss of investor favor.

It held 164 stocks as of June 30, 2026, within its 150-to-200 target. The 10 largest, led by F5, PPG Industries and Dominion Energy, made up 16.7% of assets. Apart from diversification guidelines, there are no fixed exit rules; the team judges each case on stretched valuation, weakening business results, diversification and its own strategy metrics. Turnover was 53%, so roughly half the portfolio changed hands. The June 30 holdings included no derivatives.

• HWSM charges 0.55% a year, versus an average of 0.25% for the similar funds below (7th of 7, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $56 in the first year and $— over 10 years (assuming a 5% annual return).

A stock-picked small and mid-cap value fund with $2.75 million in assets, an above-average fee and only about a year of price history fits as a side position around a broader core.

HWSM could add a stock-picked mix of smaller, out-of-favor value companies to a large-company core. It launched March 31, 2025, so it missed the 2008, 2020 and 2022 downturns, and its price history covers no full calendar year. Its deepest drop was 10.2%, from February 20 to March 20, 2026; it regained its February high by June 9, 2.7 months later. Smaller companies can fall harder in a bear market, a risk for anyone drawing money in a bad year.

Income is modest: a 1.14% trailing 12-month yield as of October 27, 2026, paid once a year. The 0.55% expense ratio is more than double the 0.25% average of similar funds. The SEC's standard example puts costs on $10,000 at $56 over one year and $176 over three. Past results don't predict the future, and any plan needs to consider the whole portfolio, not one fund.

Matched by closest holdings overlap from the latest N-PORT reports (no similar fund shares 20% or more of its holdings).