Re: Expense Limitation Letter Agreement and Voluntary Expense Limitation Notice
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Xxxx Xxxxxxx Advisers, LLC 000 Xxxxxxxx Xxxxxx Xxxxxx, XX 00000 |
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December 18, 2013
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 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 and Appendix E 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 F, 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.
| 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: | /s/ 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 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 INVESTMENT TRUST
Xxxx Xxxxxxx Balanced Fund
Xxxx Xxxxxxx Enduring Equity Fund
Xxxx Xxxxxxx Global Opportunities Fund
Xxxx Xxxxxxx Large Cap Equity Fund
Xxxx Xxxxxxx Seaport Fund
Xxxx Xxxxxxx Small Cap Core Fund
Xxxx Xxxxxxx Small Cap Intrinsic Value Fund
Xxxx Xxxxxxx Sovereign Investors Fund
XXXX XXXXXXX INVESTMENT TRUST II
Xxxx Xxxxxxx Financial Industries Fund
Xxxx Xxxxxxx Regional Bank Fund
Xxxx Xxxxxxx Small Cap Equity 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
XXXX XXXXXXX TAX-EXEMPT SERIES FUND
Xxxx Xxxxxxx Massachusetts Tax-Free Income Fund
Xxxx Xxxxxxx New York Tax-Free Income Fund
| X-0 |
XXXXXXXX X
Fund Level Contractual Expense Limitations
For purposes of the first part of this Appendix:
“Expenses” means all the expenses of a Fund 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; (vii) Rule 12b-1 fees; (viii) transfer agency fees; 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 Trust.
“Expense Limit” means the percentage of a Fund’s average annual net assets (on an annualized basis) set forth below.
The Adviser contractually agrees to waive advisory fees or, if necessary, reimburse other expenses of the 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. 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 each of the Funds indicated below for the purposes of this Appendix shall be as follows:
| Fund | Annual Expense Limit | Expiration Date of Expense Limit |
| None |
| B-1 |
APPENDIX C
Class Level Contractual 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 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 Fund indicated below for the purposes of this Appendix shall be as follows:
| Classes | Expiration Date of Expense | ||||||||||
| Fund | X | X | X | X | X0 | X0 | X0 | X0 | X0 | X0 | Xxxxx |
| Xxxxxxxx Equity Fund | 1.90% | N/A | N/A | 1.60% | X/X | X/X | X/X | X/X | X/X | 1.50% | 2/28/20151 |
| Financial Industries Fund | N/A | N/A | 2.15% | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 2/28/2015 |
| Global Xxxxxxxxxxxxx Xxxx | X/X | X/X | X/X | X/X | X/X | 1.61% | N/A | N/A | N/A | 1.10% | 2/28/20152 |
1 At the December 16-18, 2013 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the fee waiver and/or expense reimbursement arrangement for Class A, Class I and Class R6 shares of the Fund with an expiration date of February 28, 2015, effective as of the commencement of the Fund’s operations.
2 At the December 16-18, 2013 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 of the fee waiver and/or expense reimbursement arrangements for the Funds listed above to February 28, 2015, each effective upon the current expiration date of February 28, 2014.
| C-1 |
| Classes | Expiration Date of Expense | ||||||||||
| Fund | X | X | X | X | X0 | X0 | X0 | X0 | X0 | X0 | Xxxxx |
| Xxxxxxx Xxxxx Opportunities Fund | N/A | N/A | N/A | 1.34%3 | X/X | X/X | X/X | X/X | X/X | X/X | 2/28/20153 |
| Large Cap Equity Fund | N/A | 1.83%4 | 1.83%4 | 0.78%4 | X/X | X/X | X/X | X/X | X/X | X/X | 2/29/20164 |
| Small Cap Intrinsic Value Fund | X/X | X/X | X/X | X/X | X/X | X/X | X/X | X/X | N/A | 1.10%2 | 2/28/20152 |
| U.S. Global Leaders Growth Fund | 1.30% | 2.05% | 2.05% | 0.99% | N/A | 1.40% | N/A | N/A | N/A | 0.85%2 | 2/28/2014 for Class A,
2/28/2015 for |
| Bond Fund | See below | See below | See below | See below | N/A | See below | N/A | N/A | N/A | 0.57% and see below | 9/30/2014 |
| Global
Conservative Absolute Return Fund |
1.50% | N/A | N/A | 1.19% | X/X | X/X | X/X | X/X | X/X | 1.10% | 9/30/2014 |
| Government Income Fund | 0.98% | X/X | X/X | X/X | X/X | X/X | X/X | X/X | N/A | N/A | 9/30/2014 |
| High Yield Fund | N/A | N/A | N/A | 0.72% | X/X | X/X | X/X | X/X | X/X | X/X | 9/30/2014
|
For Xxxx Xxxxxxx Xxxx Fund, the Adviser and its affiliates agree to waive a portion of their fees and/or reimburse certain Expenses in order to reduce the total annual fund operating expenses for Class A, Class B, Class C, Class I, Class R2 and Class R6 shares by 0.05% of the Fund’s average daily net assets. These fee waivers and/or expense reimbursements expire on September 30, 2014, unless renewed by mutual agreement of the Fund and the Adviser based upon a determination that this is appropriate under the circumstances at the time.*
3 At the December 16-18, 2013 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, an increase in the fee waiver and/or expense reimbursement arrangement for Class I shares of Greater China Opportunities Fund (from 1.31% to 1.34%) with an expiration date of February 28, 2015, effective upon the current expiration date of February 28, 2014.
4 If approved by its shareholders, Sovereign Investors Fund is scheduled to reorganize into Large Cap Equity Fund on May 2, 2014. At the December 16-18, 2013 meeting of the Board of Trustees of the Trusts, the Adviser notified, and the Board approved, the fee waiver and/or expense reimbursement arrangements for Class B, Class C and Class I shares of Large Cap Equity Fund listed above if the merger is approved by shareholders of Sovereign Investors Fund, effective upon the closing date of the reorganization, with an expiration date of February 29, 2016.
| C-2 |
* At the June 24-26, 2013 meeting of the Board of Trustees of the Trust, the Adviser notified the Board of, and the Board approved, the extension of the expiration date (to September 30, 2014) of the fee waiver and/or expense reimbursement arrangement, effective upon the current expiration date of September 30, 2013.
| C-3 |
APPENDIX D
Class Specific Contractual Expense Limitations
For purposes of this Appendix:
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, blue-sky fees, and printing and postage fees, as applicable,* and other class specific expenses (“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”).
For purposes of implementing any total fund operating expense limitations set forth in the tables in Appendix C in addition to a Class Expense Waiver for the same share class, the Class Expense Waiver will be applied first and if following the application of the Class Expense Waiver to the extent that “Expenses” of the share class (as described in Appendix C) exceed the percentage of average annual net assets (on an annualized basis) attributable to the class as set forth in the table in Appendix C (the “Class Total Operating Contractual Expense Limitation”), the Adviser contractually agrees to reduce its management fee or, if necessary, make payment to the class in an amount equal to the amount by which “Expenses” (as described in Appendix C) of the share class exceed the Class Total Operating Contractual Expense Limitation.
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.
*Blue-sky fees and printing and postage fees are applicable Class Level Expenses for the Class Expense Waiver of the following Funds: Enduring Equity Fund, Financial Industries Fund, Global Opportunities Fund, Greater China Opportunities Fund, Seaport Fund, Small Cap Intrinsic Value Fund and Global Conservative Absolute Return Fund.
| Fund | Classes A |
B | C | I | R1 | R2 | R3 | R4 | R5 | R6 | Expiration Date of Expense Limit |
| Balanced Fund | N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 0.00%2 | 2/28/2015 |
| Classic Value Fund | N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 0.00%2 | 2/28/2015 |
| Enduring Equity Fund | X/X | X/X | X/X | X/X | X/X | X/X | X/X | X/X | N/A | 0.00%2 | 2/28/2015 |
Financial Industries Fund |
N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | N/A | N/A | 2/28/2015 |
1 At the December 16-18, 2013 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the fee waiver and/or expense reimbursement arrangement for Class B shares of the Funds listed above with an expiration date of February 28, 2015, each effective as of March 1, 2014.
2 At the December 16-18, 2013 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the fee waiver and/or expense reimbursement arrangement for Class R6 shares of the Funds listed above, which will be voluntary for the period from January 1, 2014 to January 31, 2014 and contractual for the period from February 1, 2014 to February 28, 2015.
| D-1 |
| Fund | Classes X |
X | X | X | X0 | X0 | X0 | X0 | X0 | X0 | Xxxxxxxxxx Date of Expense Limit |
| Global Opportunities Fund | N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 0.00%2 | 2/28/2015 |
| Greater China Opportunities Fund | N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | X/X | N/A | 2/28/2015 |
| Large Cap Equity Fund | N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 0.00%2 | 2/28/2015 |
| Regional Bank Fund | N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 2/28/2015 |
| Seaport Fund | 0.55%3 | N/A | N/A | 0.25%3 | X/X | X/X | X/X | X/X | X/X | See below4 | 2/28/2015 |
| Small Cap Equity Fund | N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 0.00%2 | 2/28/2015 |
| Small Cap Intrinsic Value Fund | N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 0.00%2 | 2/28/2015 |
| Sovereign Investors Fund | N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 2/28/2015 |
| U.S. Global Leaders Growth Fund | N/A | 1.30%1 | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 0.00%2 | 2/28/2015 |
| Bond Fund | X/X | X/X | X/X | X/X | X/X | X/X | X/X | X/X | N/A | 0.00%5 | 9/30/2015 |
| Global Conservative Absolute Return Fund | X/X | X/X | X/X | X/X | X/X | X/X | X/X | X/X | X/X | 0.00%5 | 9/30/2015 |
| Income Fund | X/X | X/X | X/X | X/X | X/X | X/X | X/X | X/X | N/A | 0.00%5 | 9/30/2015 |
3 At the December 16-18, 2013 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the fee waiver and/or expense reimbursement arrangement for Class A and Class I shares of the Fund, with an expiration date of February 28, 2015, effective as of the commencement of the Fund’s operations.
4 At the December 16-18, 2013 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, (i) a contractual fee waiver and/or expense reimbursement arrangement of 0.10% for Class R6 shares of the Fund with an expiration date of February 28, 2015, effective as of the commencement of the Fund’s operations and (ii) a fee waiver and/or expense reimbursement arrangement of 0.00% for Class R6 shares which will be voluntary for the period from January 1, 2014 to January 31, 2014 and contractual for the period from February 1, 2014 to February 28, 2015.
5 At the December 16-18, 2013 meeting of the Board of Trustees of the Trusts, the Adviser notified the Board of, and the Board approved, the fee waiver and/or expense reimbursement arrangement for Class R6 shares of the Funds listed above, which will be voluntary for the period from January 1, 2014 to January 31, 2014 and contractual for the period from February 1, 2014 to September 30, 2015.
| D-2 |
APPENDIX E
Fund Level Contractual Investment Management Fee Waivers
The Adviser agrees to limit Xxxx Xxxxxxx Money Market Fund’s management fee to a maximum annual rate of 0.40% of the Fund’s average daily net assets. The limitation will continue until at least July 31, 2014.*
* At the March 17-20, 2013 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 July 31, 2014) of the management fee limitation, effective upon the current expiration date of July 31, 2013.
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, 2014.**
** At the June 24-26, 2013 meeting of the Board of Trustees of the Trust, the Adviser notified the Board of, and the Board approved, the extension of the expiration date (to September 30, 2014) of the management fee limitation, effective upon the current expiration date of September 30, 2013.
| E-1 |
APPENDIX F
Fund Level Voluntary Total Operating Expense Limitations
For purposes of this Appendix:
“Expenses” means all the expenses of a Fund 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; (vii) Rule 12b-1 fees; (viii) transfer agency fees; 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 Trust.
“Expense Limit” means the percentage of a Fund’s average annual net assets (on an annualized basis) set forth below.
The Adviser voluntarily agrees to waive advisory fees or, if necessary, reimburse other expenses of the 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.
The Expense Limit for each of the Funds indicated below for the purposes of this Appendix shall be as follows:
| Fund | Annual Expense Limit | Expiration Date of Expense Limit* |
| None |
* 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.
| 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 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 | Expiration Date of Expense | ||||||||||
| Fund | A | B | C | I | R1 | R2 | R3 | R4 | R5 | R6 | Limit* |
| Global Short Duration Credit Fund | 1.35% | N/A | N/A | 1.04% | X/X | X/X | X/X | X/X | X/X | X/X | |
| High Yield Fund | N/A | 1.82% | 1.82% | X/X | X/X | X/X | X/X | X/X | X/X | X/X | |
| Financial Industries Fund | N/A | 2.15% | X/X | X/X | X/X | X/X | X/X | X/X | X/X | N/A | |
| Small Cap Core Fund | 1.50% | N/A | N/A | 1.20% | X/X | X/X | X/X | X/X | X/X | 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.
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. 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 “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) blue sky fees, (i) printing and postage, (j) acquired fund fees and expenses paid indirectly, and (k) short dividend expense.
| Fund | Limit on Other Expenses |
Expiration Date of Expense Limit* |
| Enduring Equity Fund | 0.25% | |
| Seaport Fund | 0.25% |
* 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
Fund Level Voluntary Investment Management Fee Waivers
The Adviser voluntarily agrees to reduce its management fee that would be payable by Xxxx Xxxxxxx Global Conservative Absolute Return Fund (after giving effect to asset-based breakpoints) by 0.04% of the Fund’s average daily net assets. The Adviser may terminate this voluntary waiver at any time upon notice to Xxxx Xxxxxxx Global Conservative Absolute Return Fund.
| I-1 |
