EXHIBIT h(5)
Subject to change
FORM OF
EXPENSE CAP AGREEMENT
AGREEMENT dated this day of 1999 by and
between New England Funds Trust III, a Massachusetts business trust (the
"Trust"), and New England Funds Management, L.P., a Delaware limited partnership
(the "Adviser").
WHEREAS, the Adviser has been appointed the investment adviser to the
[Name of the Fund] (the "Fund") pursuant to an Advisory Agreement;
WHEREAS, the Fund is expected to invest all (or substantially all) of
its investment assets in a registered, open-end management company, or separate
series thereof (the "Portfolio"), in accordance with Section 12(d)(1)(E) under
the Investment Company Act of 1940 (the " 1940 Act");
WHEREAS, the Fund has entered into a Special Servicing Agreement (the
"Special Servicing Agreement") with the Portfolio to compensate the Fund for
expenses incurred by the Fund in providing shareholder servicing, account
management, transfer and dividend disbursing agency services, and shareholder
reports, proxies, prospectuses and similar communications and other related
services to its shareholders; and
WHEREAS, the Adviser has agreed to subsidize the expenses of the Fund
so as to limit the operating expenses of the Fund (exclusive of the expenses
paid for by the Portfolio under the Special Servicing Agreement, and of any
interest, taxes and extraordinary expenses) to 0.10% of its average daily
assets.
NOW, THEREFORE, the Trust and the Adviser hereby agree as follows:
1. The Adviser shall pay such portion of the expenses incurred in the
operation of the Fund, as is necessary to reduce the total operating expenses
borne by the Fund (exclusive of expenses paid by the Portfolio under Special
Servicing Agreement, and of any interest, taxes or extraordinary expenses) to
0.10% of the average daily net assets of the Fund.
2. The Fund agrees to repay to the Adviser the amount of fees waived
and expenses borne by the Adviser with respect to the Fund pursuant to Section 1
of this Agreement, subject to the limitation provided in this Section 2. Such
repayment shall be made monthly, but only if the operating expenses of the Fund
(exclusive of expenses paid by the Portfolio under the Special Servicing
Agreement, and of any interest, taxes and extraordinary expenses), without
regard to such repayment, are at an annual rate (as a percentage of the Fund'
average daily net assets) that is less than the percentage rate for the Fund set
forth in Section 1. Furthermore, the amount repaid by the Fund in any month
shall be limited so that the sum of (a) the amount of such repayment and (b) the
other operating expenses of the Fund (exclusive of expenses paid by the
Portfolio under the Special Servicing Agreement, and of any interest, taxes and
extraordinary expenses) do not exceed the annual rate (as a percentage of the
Fund's average daily net assets) for the Fund set forth in Section 1.
Amounts of fees waived and expenses borne by the Adviser with respect
to the Fund pursuant to Section 1 during any fiscal year of the Trust shall not
be repayable if the amounts repayable by the Fund pursuant to the immediately
preceding two sentences during the period ending two years after the end of such
fiscal year are not sufficient to completely repay such amounts of fees waived
and expenses borne.
3. The Adviser may not terminate its obligation under Section I to
waive fees or bear expenses with respect to the Fund in any period covered by
this Agreement without the prior written consent of the Independent Trustees as
that term is defined in the 1940 Act. Any termination under this section shall
not affect the obligation (including the amount of the obligation) of the Fund
to repay amounts of fees waived or expenses borne by the Adviser during periods
prior to the termination date.
4. This Agreement shall become effective as of the date set forth
above, and unless otherwise terminated, this Agreement shall continue in effect
for a period of two years from such date.
A copy of the Agreement and Declaration of Trust establishing New
England The Funds Trust III is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed with
respect to each Fund on behalf of the Trust by officers of the Trust as officers
and not individually and that the obligations of or arising out of this
Agreement are not binding upon any of the Trustees, officers or shareholders
individually but are binding only upon the assets and property belonging to the
Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NEW ENGLAND THE FUNDS TRUST III,
on behalf of [Name of The Fund]
By: ------------------------------
Name -----------------------------
Title ----------------------------
NEW ENGLAND THE FUNDS MANAGEMENT, L.P.
By NEF Corp., its general partner
By: ------------------------------
Name -----------------------------
Title ----------------------------
