Exhibit (h)(3)
[Adviser Letterhead]
September 2, 2005
To the Trustees of:
Xxxx Xxxxxxx Funds III
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: Expense Limitation Agreement
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With reference to the Advisory Agreement proposed to be entered into by and
between Xxxx Xxxxxxx Investment Management Services, LLC (the "Adviser") and
Xxxx Xxxxxxx Funds III, on behalf of each series of the Trust (each, a "Fund"
and collectively, the "Funds"), we hereby notify you as follows:
1. The Adviser agrees to waive its management fee for each Fund and, to the
extent necessary, bear other expenses, as set forth in Appendices A and B
hereto.
2. Until terminated by the Adviser as provided in Appendices A and B, the
expense limitation arrangements set forth for each of the Funds in Appendices A
and B hereto may only be modified by a majority vote of the "non-interested"
Trustees of the Funds (as defined under the Investment Company Act of 1940, as
amended (the "1940 Act")) affected.
3. We understand and intend that you will rely on this undertaking in
overseeing the preparation and filing of the Registration Statements on Form
N-1A for the Trust and the Funds with the Securities and Exchange Commission and
in accruing each Fund's expenses for purposes of calculating its net asset value
per share and for other purposes permitted under Form N-1A and/or the 1940 Act,
and we expressly permit you so to rely.
Very truly yours,
XXXX XXXXXXX INVESTMENT
MANAGEMENT SERVICES, LLC
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Executive Vice President
ACCEPTED AND AGREED TO BY:
XXXX XXXXXXX FUNDS III,
On behalf of the series of the Trust
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
APPENDIX A
ADVISORY FEE WAIVER
For purposes of this Appendix A:
"Expenses" means all the expenses of a Fund excluding: (i) taxes, (ii)
portfolio brokerage commissions, (iii) interest, (iv) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business, (v) advisory fees; (vi) Rule 12b-1
fees; (vii) transfer agency fees; (viii) blue sky fees; (ix) fees under any
agreements or plans of the Trust dealing with services for shareholders and
others with beneficial interests in shares of the Trust; and (x) printing and
postage.
"Expense Limit" means the percentage of a Fund's average annual net assets
on an annualized basis set forth below.
The Adviser agrees to reduce its advisory fee for a Fund of the Trust, or
if necessary make payment to a Fund, in an amount equal to the amount by which
the Expenses of such Fund exceed the Expense Limit for such Fund set forth in
the table below. This expense reimbursement shall continue in effect until
November 1, 2006 and thereafter until terminated by the Adviser on notice to the
Trust.
The Expense Limit for each of the Funds for the purposes of the Appendix A
shall be as follows:
Fund Expense Limit
---- -------------
U.S. Core Fund 0.10%
International Core Fund 0.20%
Intrinsic Value Fund 0.08%
Growth Opportunities Fund 0.24%
Growth Fund 0.11%
International Growth Fund 0.20%
Value Opportunities Fund 0.09%
U.S. Quality Equity Fund 0.07%
Global Fund 0.19%
Active Value Fund 0.05%
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APPENDIX B
CLASS SPECIFIC EXPENSE LIMITATIONS
For purposes of this Appendix B:
"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, (iv) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business; and (v) fees under any agreements or
plans of the Trust dealing with services for shareholders and others with
beneficial interests in shares of the Trust.
"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 agrees to 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.
This expense reimbursement shall continue in effect until November 1, 2006
and thereafter until terminated by the Adviser on notice to the Trust.
The Expense Limit for the classes of shares of the Funds indicated below
for the purposes of this Appendix B shall be as follows:
Class A
-------
Fund Expense Limit
---- -------------
U.S. Core Fund 1.350%
Intrinsic Value Fund 1.350%
Growth Fund 1.400%
International Core Fund 1.700%
International Growth Fund 1.700%
Value Opportunities Fund 1.390%
Growth Opportunities Fund 1.540%
Active Value Fund 1.400%
U.S. Quality Equity Fund 1.350%
Global Fund 1.670%
Class B
-------
Fund Expense Limit
---- -------------
U.S. Core Fund 2.050%
Intrinsic Value Fund 2.050%
Growth Fund 2.100%
International Core Fund 2.400%
International Growth Fund 2.400%
Value Opportunities Fund 2.090%
Growth Opportunities Fund 2.240%
Active Value Fund 2.100%
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U.S. Quality Equity Fund 2.050%
Global Fund 2.370%
Class C
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Fund Expense Limit
---- -------------
U.S. Core Fund 2.050%
Intrinsic Value Fund 2.050%
Growth Fund 2.100%
International Core Fund 2.400%
International Growth Fund 2.400%
Value Opportunities Fund 2.090%
Growth Opportunities Fund 2.240%
Active Value Fund 2.100%
U.S. Quality Equity Fund 2.050%
Global Fund 2.370%
Class I
-------
Fund Expense Limit
---- -------------
U.S. Core Fund 0.950%
Intrinsic Value Fund 0.950%
Growth Fund 1.000%
International Core Fund 1.200%
International Growth Fund 1.200%
Value Opportunities Fund 0.990%
Growth Opportunities Fund 1.140%
Active Value Fund 1.000%
U.S. Quality Equity Fund 0.950%
Global Fund 1.170%
Class R
-------
Fund Expense Limit
---- -------------
U.S. Core Fund 1.450%
Intrinsic Value Fund 1.450%
Growth Fund 1.500%
International Core Fund 1.700%
International Growth Fund 1.700%
Value Opportunities Fund 1.490%
Growth Opportunities Fund 1.640%
Active Value Fund 1.500%
U.S. Quality Equity Fund 1.450%
Global Fund 1.670%
Class NAV
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Fund Expense Limit
---- -------------
U.S. Core Fund Not Applicable
Intrinsic Value Fund 0.850%
Growth Fund 0.900%
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International Core Fund 1.100%
International Growth Fund 1.100%
Value Opportunities Fund 0.890%
Growth Opportunities Fund 1.040%
Active Value Fund Not Applicable
U.S. Quality Equity Fund Not Applicable
Global Fund Not Applicable
Class 1 [the number "1"]
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Fund Expense Limit
---- -------------
U.S. Core Fund Not Applicable
Intrinsic Value Fund 0.900%
Growth Fund 0.950%
International Core Fund 1.150%
International Growth Fund 1.150%
Value Opportunities Fund 0.940%
Growth Opportunities Fund 1.090%
Active Value Fund Not Applicable
U.S. Quality Equity Fund Not Applicable
Global Fund Not Applicable
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