HOTCHKIS AND WILEY FUNDS
                     OPERATING EXPENSE LIMITATION AGREEMENT

      THIS OPERATING EXPENSE LIMITATION AGREEMENT (the "Agreement") is
effective as of the 28th day of July, 2004, by and between HOTCHKIS AND WILEY
FUNDS, a Delaware statutory trust (the "Trust"), on behalf of its five series
listed in APPENDIX A below (each, a "Fund" and collectively, the "Funds), and
HOTCHKIS AND WILEY CAPITAL MANAGEMENT, LLC, a Delaware limited liability
company (the "Advisor").

                                  WITNESSETH:

      WHEREAS, the Advisor renders advice and services to the Funds pursuant to
the terms and provisions of those certain Investment Advisory Agreements
between the Trust and the Advisor in respect of the Funds (collectively, the
"Investment Advisory Agreements"); and

      WHEREAS, the Funds, and each of their respective classes, are responsible
for, and have assumed the obligation for, payment of certain expenses that have
not been assumed by the Advisor pursuant to the Investment Advisory Agreements;
and

      WHEREAS, the Advisor desires to limit each Fund's Operating Expenses (as
that term is defined in Paragraph 2 of this Agreement) pursuant to the terms
and provisions of this Agreement, and the Trust (on behalf of each Fund)
desires to allow the Advisor to implement those limits;

      NOW THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties, intending to be legally bound hereby,
mutually agree as follows:

      1.  LIMIT ON OPERATING EXPENSES. The Advisor hereby agrees to limit each
class of each Fund's current Operating Expenses to an annual rate, expressed as
a percentage of each class' respective average annual net assets to the amounts
listed in APPENDIX A (the "Annual Limits"). In the event that the current
Operating Expenses of a class of a Fund, as accrued each month, exceed its
Annual Limit, the Advisor will pay to that class of such Fund, on a monthly
basis, the excess expense within 30 days of being notified that an excess
expense payment is due.

      2.  DEFINITION. For purposes of this Agreement, the term "Operating
Expenses" with respect to each class of each Fund, is defined to include all
expenses necessary or appropriate for the operation of such Fund and each of
its classes, including the Advisor's investment advisory or management fee
detailed in the Investment Advisory Agreement, any Rule 12b-1 fees and other
expenses described in the Investment Advisory Agreement, but does not include
any front-end or contingent deferred sales loads, taxes, leverage interest,
brokerage commissions, expenses incurred in connection with any merger or
reorganization, or extraordinary expenses such as litigation.



      3.  TERM. This Agreement shall become effective on the date hereof (or in
the case of Hotchkis and Wiley Core Value Fund, from its inception date)
through October 31, 2005, unless sooner terminated as provided in Paragraph 4
of this Agreement.

      4.  TERMINATION. This Agreement may be terminated at any time, and
without payment of any penalty, by the Board of Trustees of the Trust, on
behalf of any Fund, upon sixty (60) days' written notice to the Advisor. This
Agreement may not be terminated by the Advisor without the consent of the Board
of Trustees of the Trust, which consent will not be unreasonably withheld. This
Agreement will automatically terminate with respect to any Fund if the
respective Investment Advisory Agreement is terminated, with such termination
effective upon the effective date of the Investment Advisory Agreement's
termination.

      5.  ASSIGNMENT. This Agreement and all rights and obligations hereunder
may not be assigned without the written consent of the other party.

      6.  SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected
thereby.

      7.  GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect to the
conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation
or rule, including the Investment Company Act of 1940, as amended, and the
Investment Advisers Act of 1940, as amended, and any rules and regulations
promulgated thereunder.

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day
and year first above written.



HOTCHKIS AND WILEY FUNDS               HOTCHKIS AND WILEY CAPITAL
                                       MANAGEMENT, LLC
                                 
By:       /s/ NANCY D. CELICK          By:      /s/ NANCY D. CELICK
Name:     Nancy D. Celick              Name:    Nancy D. Celick
Title:    President                    Title:   Chief Operating Officer




                                   APPENDIX A


                                      FUND
             EXPENSE LIMIT (AS A PERCENTAGE OF AVERAGE NET ASSETS)



                        CLASS I     CLASS A     CLASS B    CLASS C     CLASS R
                        -------     -------     -------    -------     -------
                                                        
Large Cap Value          1.05%       1.30%       2.05%      2.05%       1.55%
Mid-Cap Value            1.15%       1.40%       2.15%      2.15%       1.65%
Small Cap Value          1.25%       1.50%       2.25%      2.25%        N/A
All Cap Value            1.25%       1.50%        N/A       2.25%        N/A
Core Value               0.95%       1.20%        N/A       1.95%        N/A