Re: Expense Limitation Letter Agreement and Voluntary Expense Limitation Notice
|
Xxxx Xxxxxxx Advisers, LLC |
 |
December 14, 2017
To the Trustees of
Xxxx Xxxxxxx Funds
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
| Re: | Expense Limitation Letter Agreement and Voluntary Expense Limitation Notice |
With reference to each of the Advisory Agreements approved by the Board or entered into by and between Xxxx Xxxxxxx Advisers, LLC (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, Appendix F and Appendix G 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 H, Appendix I and Appendix J 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.
| Very truly yours, | |||
| XXXX XXXXXXX ADVISERS, LLC | |||
| By: | /s/ Xxxxxxx X. Xxxx | ||
| Xxxxxxx X. Xxxx | |||
| Chief Financial Officer | |||
Agreed and Accepted
on behalf of each applicable Trust listed in Appendix A
| By: | Xxxxxxx X. Xxxxx | |
| Xxxxxxx X. Xxxxx | ||
| Chief Financial Officer |
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 Global Conservative Absolute Return Fund |
| Xxxx Xxxxxxx Global Short Duration Credit Fund |
| Xxxx Xxxxxxx Government Income Fund |
| Xxxx Xxxxxxx High Yield Fund |
| Xxxx Xxxxxxx Investment Grade 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 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 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 Balanced Fund |
| Xxxx Xxxxxxx Disciplined Value International Fund |
| Xxxx Xxxxxxx Diversified Real Assets Fund |
| Xxxx Xxxxxxx Emerging Markets Equity Fund |
| Xxxx Xxxxxxx Enduring Assets 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 Focused Strategies Fund |
| Xxxx Xxxxxxx Seaport Fund |
| Xxxx Xxxxxxx Small Cap Core Fund |
| Xxxx Xxxxxxx Value Equity Fund |
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| XXXX XXXXXXX INVESTMENT TRUST II |
| Xxxx Xxxxxxx Financial Industries Fund |
| Xxxx Xxxxxxx Regional Bank Fund |
| XXXX XXXXXXX INVESTMENT TRUST III |
| Xxxx Xxxxxxx Greater China Opportunities 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 annual 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 annual 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.
| Limit on Fund Level | Expiration Date of | |
| Fund | Expenses | Expense Limit |
| Disciplined Value International Fund | 0.88% | 2/28/2019 |
| ESG All Cap Core Fund | 0.81% | 2/28/20191 |
| ESG International Equity Fund | 0.91% | 2/28/20191 |
| ESG Large Cap Core Fund | 0.81% | 2/28/20191 |
| Global Focused Strategies Fund | 1.62% | 2/28/20191 |
| ESG Core Bond Fund | 0.50% | 9/30/2018 |
| Global Conservative Absolute Return Fund | 0.78% | 9/30/2018 |
| Investment Grade Bond Fund | 0.42% | 9/30/2018 |
1 At the December 12-14, 2017 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the renewal of the contractual limit on fund level expenses for ESG All Cap Core Fund (0.81%), ESG International Equity Fund (0.91%), ESG Large Cap Core Fund (0.81%), and Global Focused Strategies Fund (1.62%) with an expiration date of February 28, 2019, each effective upon the current expiration date of February 28, 2018.
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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 annual 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 annual 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.
| Limit on Fund Level | Expiration Date of | |
| Fund | Expenses | Expense Limit |
| Xxxx Xxxxxxx Multifactor Large Cap ETF | 0.35% | 8/31/2018 |
| Xxxx Xxxxxxx Multifactor Mid Cap ETF | 0.45% | 8/31/2018 |
| Xxxx Xxxxxxx Multifactor Consumer | 0.50% | 8/31/2018 |
| Discretionary ETF | ||
| Xxxx Xxxxxxx Multifactor Consumer | 0.50% | 8/31/2018 |
| Staples ETF | ||
| Xxxx Xxxxxxx Multifactor Developed | 0.45% | 8/31/2018 |
| International ETF | ||
| Xxxx Xxxxxxx Multifactor Energy ETF | 0.50% | 8/31/2018 |
| Xxxx Xxxxxxx Multifactor Financials ETF | 0.50% | 8/31/2018 |
| Xxxx Xxxxxxx Multifactor Healthcare ETF | 0.50% | 8/31/2018 |
| Xxxx Xxxxxxx Multifactor Industrials ETF | 0.50% | 8/31/2018 |
| Xxxx Xxxxxxx Multifactor Materials ETF | 0.50% | 8/31/2018 |
| Xxxx Xxxxxxx Multifactor Small Cap ETF | 0.50% | 8/31/2019 |
| Xxxx Xxxxxxx Multifactor Technology ETF | 0.50% | 8/31/2018 |
| Xxxx Xxxxxxx Multifactor Utilities ETF | 0.50% | 8/31/2018 |
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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 annual 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:
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| Expiration | ||||||||||||
| Date of | ||||||||||||
| Class | Class | Class | Class | Class | Class | Class | Class | Class | Class | Class | Expense | |
| Fund | A | B | C | I | R1 | R2 | R3 | R4 | R5 | R6 | T | Limit |
| Disciplined | N/A | N/A | N/A | 0.98% | X/X | X/X | X/X | X/X | X/X | 0.88% | N/A | 2/28/2019 |
| Value | ||||||||||||
| International | ||||||||||||
| Fund | ||||||||||||
| Emerging | 1.50% | N/A | 2.20% | 1.25% | N/A | 1.60% | N/A | 1.35% | N/A | N/A | 1.45% | 2/28/2018 for |
| Markets | Class I and | |||||||||||
| Equity Fund | Class T | |||||||||||
| 2/28/2019 for | ||||||||||||
| Class A, Class | ||||||||||||
| C, Class R2 | ||||||||||||
| and Class R41 | ||||||||||||
| Fundamental | N/A | 1.82% | 1.82% | 0.78% | X/X | X/X | X/X | X/X | X/X | X/X | N/A | 2/28/20192 |
| Large Cap | ||||||||||||
| Core Fund | ||||||||||||
| Greater China | N/A | N/A | N/A | 1.34% | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 2/28/20193 |
| Opportunities | ||||||||||||
| Fund | ||||||||||||
| Global | 1.14% | N/A | 1.89% | 0.89% | X/X | X/X | X/X | X/X | X/X | X/X | 1.09% | 9/30/2018 |
| Conservative | ||||||||||||
| Absolute | ||||||||||||
| Return Fund | ||||||||||||
| Government | 0.98% | X/X | X/X | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 0.98% | 9/30/2018 |
| Income Fund | ||||||||||||
| High Yield | N/A | N/A | N/A | 0.72% | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 9/30/2018 |
| Fund |
1 At the December 12-14, 2017 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved the renewal of the class level contractual total operating expense limitation for Class A (1.50%), Class C (2.20%), Class R2 (1.60%) and Class R4 (1.35%) shares of Emerging Markets Equity Fund with an expiration date of February 28, 2019, each effective upon the current expiration date of February 28, 2018.
2 At the December 12-14, 2017 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved the renewal of the class level contractual total operating expense limitation for Class B (1.82%), Class C (1.82%) and Class I (0.78%) shares of Fundamental Large Cap Core Fund with an expiration date of February 28, 2019, each effective upon the current expiration date of February 28, 2018.
3 At the December 12-14, 2017 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved the renewal of the class level contractual total operating expense limitation for Class I (1.34%) shares of Greater China Opportunities Fund with an expiration date of February 28, 2019, effective upon the current expiration date of February 28, 2018.
D-2
APPENDIX E
Class Specific Contractual Expense Limitations
For purposes of this Appendix:
Except as noted, the Adviser contractually agrees to waive and/or reimburse all class-specific expenses for the share classes of the Fund listed in the table below, including Rule 12b-1 fees, transfer agency fees and service fees, shareholder servicing fees and other class-specific expenses, as applicable (“Class Level Expenses”), to the extent they exceed the amount of average annual net assets (on an annualized basis) attributable to the class set forth in the table (the “Class Expense Waiver”).
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.
| Expiration Date of | ||
| Fund | Class R6 | Expense Limit |
| ESG All Cap Core Fund | 0.00% | 2/28/2018 |
| ESG Large Cap Core Fund | 0.00% | 2/28/2018 |
| Global Focused Strategies Fund | 0.00% | 2/28/2018 |
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APPENDIX F
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 annual 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 annual 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.
| Limit on Other | Expiration Date of | |
| Fund | Expenses | Expense Limit |
| Greater China Opportunities Fund | 0.30% | February 28, 20191 |
| Value Equity Fund | 0.04% | February 28, 00000 |
XXXXXXXX X
Fund Level Contractual Investment Management Fee Waivers
The Adviser agrees to limit Xxxx Xxxxxxx Value Equity Fund’s management fee to a maximum annual rate of 0.66% of the Fund’s average daily net assets. The limitation will continue until at least February 28, 2019.*
* At the December 12-14, 2017 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the extension of the expiration date (to February 28, 2019) of the management fee limitation, effective upon the current expiration date of February 28, 2019.
1 At the December 12-14, 2017 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the renewal of the contractual limit on other expenses for Greater China Opportunities Fund (0.30%) and Value Equity Fund (0.04%) to February 28, 2019, each effective upon the current expiration date of February 28, 2018.
F-1
The Adviser agrees to limit Xxxx Xxxxxxx Government Income Fund’s management fee to a maximum annual rate of 0.53% of the Fund’s average daily net assets. The limitation will continue until at least September 30, 2018.*
* At the December 6-8, 2016 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the extension of the expiration date (to September 30, 2018) of the management fee limitation, effective upon the current expiration date of September 30, 2017.
The Adviser agrees to reduce Xxxx Xxxxxxx Enduring Assets Fund’s management fee by an annual rate of 0.20% of the Fund’s average daily net assets. The reduction will continue until at least February 28, 2018.*
* At the June 20-23, 2016 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the advisory fee waiver (0.20%) for Xxxx Xxxxxxx Enduring Assets Fund with an expiration date of February 28, 2018, effective July 1, 2016.
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, 2019.*
* At the December 12-14, 2017 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the advisory fee waiver (0.05%) for Xxxx Xxxxxxx Diversified Real Assets Fund with an expiration date of July 31, 2019, effective as of the commencement of operations of Xxxx Xxxxxxx Diversified Real Assets Fund.
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APPENDIX H
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 annual 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:
| Classes | ||||||||||
| Fund | X | X | X | X | X0 | X0 | X0 | X0 | X0 | X0 |
| X/X |
*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.
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APPENDIX I
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 annual 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.
| Limit on Other | |
| Fund | Expenses |
| Balanced Fund | 0.20% |
| Classic Value Fund | 0.20% |
| Emerging Markets Equity Fund | 0.25% |
| Enduring Assets Fund | 0.25% |
| Financial Industries Fund | 0.20% |
| Fundamental Large Cap Core Fund | 0.20% |
| Regional Bank Fund | 0.20% |
| Seaport Fund | 0.20% |
| Small Cap Core Fund | 0.20% |
| U.S. Global Leaders Growth Fund | 0.20% |
| Bond Fund | 0.15% |
| California Tax-Free Income Fund | 0.15% |
| Global Short Duration Credit Fund | 0.15% |
| Government Income Fund | 0.15% |
| High Yield Fund | 0.15% |
| High Yield Municipal Bond Fund | 0.15% |
| Income Fund | 0.15% |
| Tax-Free Bond Fund | 0.15% |
| Money Market Fund | 0.15% |
* 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
APPENDIX J
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
J-1
