NOTES TO FINANCIAL STATEMENTS
(1) Significant Accounting Policies:
Mercury HW Large Cap Value Fund (the "Fund") (formerly Equity Income Fund) is a fund of Mercury HW
Funds (the "Trust") (formerly Hotchkis and Wiley Funds). The Trust is registered under the Investment Company
Act of 1940 as a diversified, open-end management investment company, which is organized as a Massachusetts
business trust. The Fund's financial statements are prepared in conformity with accounting principles generally
accepted in the United States of America, which may require the use of management accruals and estimates.
These unaudited financial statements reflect all adjustments, which are, in the opinion of management, necessary
to a fair statement of the results for the interim period presented. All such adjustments are of a normal, recurring
nature. The Fund offers a single class (Class I) of shares. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments--Portfolio securities that are traded on stock exchanges are valued at the last sale
price on the exchange on which such securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. Securities traded in the over-the-counter market
are valued at the last available bid price prior to the time of valuation. In cases where securities are traded on
more than one exchange, the securities are valued on the exchange designated by or under the authority of the
Board of Trustees as the primary market. Securities that are traded both in the over-the-counter market and on a
stock exchange are valued according to the broadest and most representative market. Short-term securities are
valued at amortized cost, which approximates market value. Other investments are stated at market value.
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 th