Re: Expense Limitation Letter Agreement and Voluntary Expense Limitation Notice
Exhibit 99.(h)(5)
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Xxxx Xxxxxxx Investment Management LLC
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
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June 25, 2020
To the Trustees of
Xxxx Xxxxxxx Funds
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
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Re:
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Expense Limitation Letter Agreement and Voluntary Expense Limitation Notice
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With reference to each of the Advisory Agreements approved by the Board or entered into by and between Xxxx Xxxxxxx Investment Management LLC (formerly, Xxxx
Xxxxxxx Advisers, LLC and hereinafter, the “Adviser”) and each of the trusts listed in Appendix A to this letter (each, a “Trust” and collectively, the
“Trusts”), on behalf of each of their respective series listed in Appendix A (each, a “Fund” and collectively, the “Funds”), we hereby notify you as follows:
1. The Adviser agrees to contractually waive its advisory fees or, to the extent necessary, reimburse other expenses of each Fund as set forth in Appendix B, Appendix C, Appendix D, Appendix E, and Appendix F
hereto.
2. The Adviser agrees to voluntarily waive its advisory fees or, to the extent necessary, reimburse other expenses of each Fund as set forth in Appendix G, Appendix H and Appendix I hereto.
3. We understand and intend that the Trusts will rely on this undertaking in overseeing the preparation and filing of Post-effective Amendments to the
Registration Statement on Form N-1A for the Trusts and the Funds with the Securities and Exchange Commission, in accruing each Fund’s expenses for purposes of calculating its net and gross asset value per share, and for other purposes permitted
under Form N-1A and/or the Investment Company Act of 1940, as amended, and we expressly permit the Trusts so to rely.
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Very truly yours,
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XXXX XXXXXXX INVESTMENT
MANAGEMENT LLC
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By:
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/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
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Chief Financial Officer
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Agreed and Accepted
on behalf of each applicable Trust listed in Appendix A
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By:
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/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
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Chief Financial Officer
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A copy of the document establishing each Trust is filed with the Secretary of The Commonwealth of Massachusetts. This Agreement is executed by the officer in
his capacity as such and not as an individual and is not binding upon any of the Trustees, officers or shareholders of the Trusts individually but only upon the assets of the Funds.
APPENDIX A
TRUSTS and Funds
XXXX XXXXXXX XXXX TRUST
Xxxx Xxxxxxx ESG Core Bond Fund
Xxxx Xxxxxxx Government Income Fund
Xxxx Xxxxxxx High Yield Fund
Xxxx Xxxxxxx Investment Grade Bond Fund
Xxxx Xxxxxxx Xxxxx Duration Bond Fund
XXXX XXXXXXX CALIFORNIA TAX-FREE INCOME FUND
Xxxx Xxxxxxx California Tax-Free Income Fund
XXXX XXXXXXX CAPITAL SERIES
Xxxx Xxxxxxx Classic Value Fund
Xxxx Xxxxxxx U.S. Global Leaders Growth Fund
XXXX XXXXXXX CURRENT INTEREST
Xxxx Xxxxxxx Money Market Fund
XXXX XXXXXXX EXCHANGE-TRADED FUND TRUST
Xxxx Xxxxxxx Multifactor Consumer Discretionary ETF
Xxxx Xxxxxxx Multifactor Consumer Staples ETF
Xxxx Xxxxxxx Multifactor Developed International ETF
Xxxx Xxxxxxx Multifactor Emerging Markets ETF
Xxxx Xxxxxxx Multifactor Energy ETF
Xxxx Xxxxxxx Multifactor Financials ETF
Xxxx Xxxxxxx Multifactor Healthcare ETF
Xxxx Xxxxxxx Multifactor Industrials ETF
Xxxx Xxxxxxx Multifactor Large Cap ETF
Xxxx Xxxxxxx Multifactor Materials ETF
Xxxx Xxxxxxx Multifactor Media and Communications ETF
Xxxx Xxxxxxx Multifactor Mid Cap ETF
Xxxx Xxxxxxx Multifactor Small Cap ETF
Xxxx Xxxxxxx Multifactor Technology ETF
Xxxx Xxxxxxx Multifactor Utilities ETF
XXXX XXXXXXX INVESTMENT TRUST
Xxxx Xxxxxxx Alternative Risk Premia Fund
Xxxx Xxxxxxx Balanced Fund
Xxxx Xxxxxxx Disciplined Value International Fund
Xxxx Xxxxxxx Diversified Macro Fund
Xxxx Xxxxxxx Diversified Real Assets Fund
Xxxx Xxxxxxx Emerging Markets Equity Fund
Xxxx Xxxxxxx ESG All Cap Core Fund
Xxxx Xxxxxxx ESG International Equity Fund
Xxxx Xxxxxxx ESG Large Cap Core Fund
Xxxx Xxxxxxx Fundamental Large Cap Core Fund
Xxxx Xxxxxxx Global Thematic Opportunities Fund
A-1
Xxxx Xxxxxxx Infrastructure Fund
Xxxx Xxxxxxx International Dynamic Growth Fund
Xxxx Xxxxxxx Seaport Long/Short Fund
Xxxx Xxxxxxx Small Cap Core Fund
XXXX XXXXXXX INVESTMENT TRUST II
Xxxx Xxxxxxx Financial Industries Fund
Xxxx Xxxxxxx Regional Bank Fund
XXXX XXXXXXX MUNICIPAL SECURITIES TRUST
Xxxx Xxxxxxx High Yield Municipal Bond Fund
Xxxx Xxxxxxx Tax-Free Bond Fund
XXXX XXXXXXX SOVEREIGN BOND FUND
Xxxx Xxxxxxx Xxxx Fund
XXXX XXXXXXX STRATEGIC SERIES
Xxxx Xxxxxxx Income Fund
X-0
XXXXXXXX X
Fund Level Contractual Limitation on Fund Level Expenses
For purposes of this Appendix:
The Adviser contractually agrees to reduce its management fee
for the Fund or, if necessary, make payment to the Fund, in an amount equal to the amount by which the “Expenses” of the Fund exceed the percentage of average daily net assets (on an annualized basis) of the Fund as set forth in the table below.
“Expenses” means all the expenses of the Fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Fund’s
business, (e) Rule 12b-1 fees, (f) transfer agent fees and service fees, (g) shareholder servicing fees, (h) borrowing costs, (i) prime brokerage fees, (j) acquired fund fees and expenses paid indirectly, and (k) short dividend expense.
“Expense Limit” means the percentage of a Fund’s average daily net assets (on an annualized basis) set forth below.
The current expense limitation agreement expires on the date specified, unless renewed by mutual agreement of the Fund and the Adviser based upon a determination
that this is appropriate under the circumstances at that time.
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Fund
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Limit on Fund Level
Expenses
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Expiration Date of
Expense Limit
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Disciplined Value International Fund
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0.88%
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2/28/2021
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Diversified Macro Fund
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1.33%
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2/28/2021
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ESG All Cap Core Fund
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0.81%
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2/28/2021
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ESG International Equity Fund
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0.91%
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2/28/2021
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ESG Large Cap Core Fund
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0.81%
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2/28/2021
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Global Thematic Opportunities Fund
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0.84%
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2/28/2021
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International Dynamic Growth Fund
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0.83%
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2/28/2021
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ESG Core Bond Fund
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0.50%
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9/30/20211
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Investment Grade Bond Fund
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0.38%
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9/30/20211
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Short Duration Bond Fund
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0.29%
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9/30/20211
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1 At the June 23-25, 2020 meeting of the Board of Trustees of the Trust, the Adviser notified the Board of, and the Board approved, the renewal of the contractual limit on fund level expenses for ESG Core Bond Fund (0.50%), Investment Grade Bond Fund (0.38%) and Short Duration Bond Fund (0.29%), each with an expiration date of September 30, 2021, each effective upon the current expiration date of September 30, 2020.
B-1
APPENDIX C
Fund Level Contractual Limitation on Total Operating Expenses
For purposes of this Appendix:
The Adviser contractually agrees to reduce its management fee
for the Fund or, if necessary, make payment to the Fund, in an amount equal to the amount by which the “Expenses” of the Fund exceed the percentage of average daily net assets (on an annualized basis) of the Fund as set forth in the table below.
“Expenses” means all the expenses of the Fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Fund’s
business, (e) borrowing costs, (f) prime brokerage fees, (g) acquired fund fees and expenses paid indirectly, and (h) short dividend expense.
“Expense Limit” means the percentage of a Fund’s average daily net assets (on an annualized basis) set forth below.
The current expense limitation agreement expires on the date specified, unless renewed by mutual agreement of the Fund and the Adviser based upon a determination
that this is appropriate under the circumstances at that time.
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Fund
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Limit on Fund Level
Expenses
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Expiration Date of
Expense Limit
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Xxxx Xxxxxxx Multifactor Large Cap ETF
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0.29%
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8/31/2021
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Xxxx Xxxxxxx Multifactor Mid Cap ETF
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0.42%
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8/31/2021
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Xxxx Xxxxxxx Multifactor Consumer Discretionary ETF
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0.40%
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8/31/20211
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Xxxx Xxxxxxx Multifactor Consumer Staples ETF
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0.40%
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8/31/20211
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Xxxx Xxxxxxx Multifactor Developed International ETF
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0.39%
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8/31/2021
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Xxxx Xxxxxxx Multifactor Emerging Markets ETF
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0.49%
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8/31/2021
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Xxxx Xxxxxxx Multifactor Energy ETF
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0.40%
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8/31/20211
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Xxxx Xxxxxxx Multifactor Financials ETF
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0.40%
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8/31/20211
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Xxxx Xxxxxxx Multifactor Healthcare ETF
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0.40%
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8/31/20211
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Xxxx Xxxxxxx Multifactor Industrials ETF
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0.40%
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8/31/20211
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Xxxx Xxxxxxx Multifactor Materials ETF
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0.40%
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8/31/20211
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Xxxx Xxxxxxx Multifactor Media and Communications ETF
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0.40%
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8/31/20211
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Xxxx Xxxxxxx Multifactor Small Cap ETF
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0.42%
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8/31/2021
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Xxxx Xxxxxxx Multifactor Technology ETF
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0.40%
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8/31/2021
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Xxxx Xxxxxxx Multifactor Utilities ETF
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0.40%
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8/31/20211
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1 At the June 23-25, 2020 meeting of the Board of Trustees of the
Trust, the Adviser notified the Board of, and the Board approved, the renewal of the contractual limit on total operating expenses for Xxxx Xxxxxxx Multifactor Consumer Discretionary ETF (0.40%); Xxxx Xxxxxxx Multifactor Consumer Staples ETF
(0.40%); Xxxx Xxxxxxx Multifactor Energy ETF (0.40%); Xxxx Xxxxxxx Multifactor Financials ETF (0.40%); %); Xxxx Xxxxxxx Multifactor Healthcare ETF (0.40%); Xxxx Xxxxxxx Multifactor Industrials ETF (0.40%); Xxxx Xxxxxxx Multifactor Materials ETF
(0.40%); Xxxx Xxxxxxx Multifactor Media and Communications ETF (0.40%); Xxxx Xxxxxxx Multifactor Technology ETF (0.40%); and Xxxx Xxxxxxx Multifactor Utilities ETF (0.40%), each with an expiration date of August 31, 2021, each effective upon the
current expiration date of August 31, 2020.
C-1
APPENDIX D
Class Level Contractual Total Operating Expense Limitations
For purposes of this Appendix:
“Expenses” means all the expenses of a class of shares of a Fund (including those expenses of the Fund attributable to such class) but excluding: (i) taxes; (ii)
portfolio brokerage commissions; (iii) interest expense; (iv) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Fund’s business; (v) acquired fund fees and expenses paid indirectly;
(vi) borrowing costs; (vii) prime brokerage fees; (viii) short dividend expense; and (ix) fees under any agreements or plans of the Fund dealing with services for shareholders and others with beneficial interests in shares of the Fund.
“Expense Limit” means the percentage of average daily net assets (on an annualized basis) attributable to a class of shares of the Funds set
forth below.
The Adviser contractually agrees to waive advisory fees or, if necessary, reimburse expenses or make payment to a specific class of shares
of the Fund (up to the amount of the expenses relating solely to such class of shares), in an amount equal to the amount by which the Expenses of such class of shares exceed the Expense Limit for such class set forth in the table below. The
current expense limitation agreements expire on the dates specified, unless renewed by mutual agreement of the Fund and the Adviser based upon a determination that this is appropriate under the circumstances at that time.
The Expense Limit for the classes of shares of the Funds indicated below for the purposes of this Appendix shall be as follows:
D-1
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Class
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Class
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Class
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Class
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Class
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Class
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Class
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Class
NAV
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Expiration Date of
Expense Limit
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Fund
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A
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B
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C
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I
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R2
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R4
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R6
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Disciplined Value International Fund
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N/A
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N/A
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N/A
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0.98%
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N/A
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N/A
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0.88%
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N/A
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2/28/2021
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Fundamental Large Cap Core Fund
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N/A
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1.82%
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1.82%
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0.78%
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N/A
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N/A
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N/A
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N/A
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2/28/2021
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Global Thematic Opportunities Fund
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1.19%
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N/A
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1.94%
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0.94%
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N/A
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N/A
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N/A
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N/A
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2/28/2021
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Infrastructure Fund
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1.31%
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N/A
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2.01%
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1.00%
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N/A
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N/A
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0.92%
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0.92%
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2/28/2021
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Government Income Fund
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0.98%
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X/X
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X/X
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X/X
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X/X
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X/X
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X/X
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X/X
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9/30/20211
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High Yield Fund
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N/A
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N/A
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N/A
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0.72%
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N/A
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N/A
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N/A
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N/A
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9/30/20212
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High Yield Municipal Bond Fund
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0.89%
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1.64%
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1.64%
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0.74%
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N/A
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N/A
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0.72%
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N/A
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9/30/20213
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Short Duration Bond Fund
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0.65%
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N/A
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1.40%
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0.40%
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N/A
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N/A
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0.29%
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N/A
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9/30/20214
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1 At the June 23-25, 2020 meeting of the Board of Trustees of the
Trust, the Adviser notified the Board of, and the Board approved, the renewal of the class level limit on total operating expenses for Government Income Fund for Class A Shares (0.98%), with an expiration date of September 30, 2021, effective upon
the current expiration date of September 30, 2020.
2 At the June 23-25,
2020 meeting of the Board of Trustees of the Trust, the Adviser notified the Board of, and the Board approved, the renewal of the class level limit on total operating expenses for High Yield Fund for Class I Shares (0.72%), with an expiration date
of September 30, 2021, effective upon the current expiration date of September 30, 2020.
3 At the June 23-25,
2020 meeting of the Board of Trustees of the Trust, the Adviser notified the Board of, and the Board approved, the addition of the class level limit on total operating expenses for High Yield Municipal Bond Fund for Class A (0.89%); Class B
(1.64%); Class C (1.64%); Class I (0.74%); and Class R6 (0.72%) Shares, each with an expiration date of September 30, 2021, each effective as of July 1, 2020.
4 At the June 23-25,
2020 meeting of the Board of Trustees of the Trust, the Adviser notified the Board of, and the Board approved, the renewal of the class level limit on total operating expenses for Short Duration Bond Fund for Class A (0.65%),Class C (1.40%), Class
I (0.40%), and Class R6 (0.29%) Shares, with an expiration date of September 30, 2021, effective upon the current expiration date of September 30, 2020.
D-2
APPENDIX E
Fund Level Contractual Limit on Other Expenses
For purposes of this Appendix:
The Adviser contractually agrees to reduce its management fee
for the Fund or, if necessary, make payment to the Fund, in an amount equal to the amount by which the “Expenses” of the Fund exceed the percentage of average daily net assets (on an annualized basis) of the Fund as set forth in the table below.
“Expenses” means all the expenses of the Fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Fund’s
business, (e) advisory fees, (f) Rule 12b-1 fees, (g) transfer agent fees and service fees, (h) shareholder servicing fees, (i) borrowing costs, (j) prime brokerage fees, (k) acquired fund fees and expenses paid indirectly, and (l) short dividend
expense.
“Expense Limit” means the percentage of a Fund’s average daily net assets (on an annualized basis) set forth below.
The current expense limitation agreement expires on the date specified, unless renewed by mutual agreement of the Fund and the Adviser based upon a determination
that this is appropriate under the circumstances at that time.
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Fund
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Limit on Other
Expenses
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Expiration Date of
Expense Limit
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E-1
APPENDIX F
Fund Level Contractual Investment Management Fee Waivers
The Adviser agrees to reduce Xxxx Xxxxxxx Diversified Real Assets
Fund’s management fee by an annual rate of 0.05% of the Fund’s average daily net assets. The reduction will continue until at least July 31, 2021.
F-1
APPENDIX G
Class Level Voluntary Total Operating Expense Limitations*
For purposes of this Appendix:
“Expenses” means all the expenses of a class of shares of the Fund (including those expenses of the Fund attributable to such class) but excluding: (i) taxes;
(ii) portfolio brokerage commissions; (iii) interest expense; (iv) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Fund’s business; (v) acquired fund fees and expenses paid
indirectly; (vi) short dividend expense; and (vii) fees under any agreements or plans of the Fund dealing with services for shareholders and others with beneficial interests in shares of the Fund.
“Expense Limit” means the percentage of average daily net assets (on an annualized basis) attributable to a class of shares of the Fund set
forth below.
The Adviser voluntarily agrees to waive advisory fees or, if necessary, reimburse expenses or make payment to a specific class of shares of
the Fund (up to the amount of the expenses relating solely to such class of shares), in an amount equal to the amount by which the Expenses of such class of shares exceed the Expense Limit for such class set forth in the table below.
The Expense Limit for the classes of shares of the Fund indicated below for the purposes of this Appendix shall be as follows:
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Fund
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Classes
X |
X
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X
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X
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X0
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X0
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X0
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X0
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X0
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X0
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X/X
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*These fee waivers and/or expense reimbursements are voluntary and may be amended or terminated at any time by the Adviser on notice to the Trust
G-1
APPENDIX H
Fund Level Voluntary Limit on Other Expenses*
For purposes of this Appendix:
The Adviser voluntarily agrees to reduce its management fee
for the Fund or, if necessary, make payment to the Fund, in an amount equal to the amount by which the “Other Expenses” of the Fund exceed the percentage of average daily net assets (on an annualized basis) of the Fund as set forth in the table
below. “Other Expenses” means all the expenses of the Fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund’s business, (e) investment management fees, (f) Rule 12b-1 fees, (g) transfer agent fees and service fees, (h) shareholder servicing fees, (i) borrowing costs, (j) prime brokerage fees, (k) acquired fund fees and expenses paid indirectly,
and (l) short dividend expense.
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Fund
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Limit on Other
Expenses
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Balanced Fund
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0.20%
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Classic Value Fund
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0.20%
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Emerging Markets Equity Fund
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0.25%
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Financial Industries Fund
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0.20%
|
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Fundamental Large Cap Core Fund
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0.20%
|
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Infrastructure Fund
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0.25%
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Regional Bank Fund
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0.20%
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Seaport Long/Short Fund
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0.20%
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Small Cap Core Fund
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0.20%
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U.S. Global Leaders Growth Fund
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0.20%
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Bond Fund
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0.15%
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California Tax-Free Income Fund
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0.15%
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Government Income Fund
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0.15%
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High Yield Fund
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0.15%
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High Yield Municipal Bond Fund
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0.15%
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Income Fund
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0.15%
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Tax-Free Bond Fund
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0.15%
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Money Market Fund
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0.15%
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* These fee waivers and/or expense reimbursements are voluntary and may be amended or terminated at any time by the Adviser
on notice to the Trust.
H-1
APPENDIX I
Voluntary Money Market Fund Expense Limitation Agreement
For Xxxx Xxxxxxx Money Market Fund, the Adviser and its
affiliates may voluntarily waive a portion of their fees (including, but not limited to, distribution and service (Rule 12b‑1) fees) and/or reimburse certain expenses to the extent necessary to assist the Fund in attempting to avoid a negative
yield. In addition, the Adviser and its affiliates have voluntarily agreed to waive a portion of their fees (including, but not limited to, Rule 12b-1 fees) and/or reimburse certain expenses to the extent necessary to assist the fund in attempting
to achieve a positive yield. These fee waivers and/or expense reimbursements are voluntary and may be amended or terminated at any time by the Adviser on notice to the Trust.
I-1
