FEE WAIVER AGREEMENT

      THIS FEE WAIVER AGREEMENT (this "Agreement") is entered into between First
Trust Exchange-Traded Fund III, a Massachusetts business trust (the "Trust"), on
behalf of First Trust Managed Municipal ETF (the "Fund"), and First Trust
Advisors L.P., an Illinois limited partnership ("FTA"), as of February 2, 2016.

                                   RECITALS:

       A. The Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), comprised
of various exchange-traded funds, including the Fund.

       B. FTA is the investment advisor to the Fund pursuant to that certain
Investment Management Agreement, dated as of April 3, 2014 (the "Management
Agreement"), and is responsible for the selection and ongoing monitoring of the
securities in the Fund's portfolio and certain other services necessary for the
management of the Fund and is paid an annual management fee by the Fund.

       C. FTA has agreed to waive a portion of its annual management fees in an
amount equal to 0.15% of the Fund's net assets from February 2, 2016 through
March 1, 2017 and the Fund desires to induce FTA to do so.

       D. FTA and the Trust desire to more fully describe and document the
above-described fee waivers for the Fund all in accordance with the terms and
provisions hereinafter set forth.

      NOW, THEREFORE, IN CONSIDERATION of the foregoing facts and other good and
valuable consideration, the parties hereto hereby agree as follows:

       Section 1. Waiver of Fees. FTA agrees to waive investment management fees
otherwise payable to it by the Fund in the amount of 0.15% of the Fund's net
assets. The aggregate amount of management fees waived shall be accrued daily
and paid on a monthly basis for the Fund but calculated on an annualized basis.
FTA shall not have any right to reimbursement of any amount so waived.

       Section 2. Accounting. FTA's fund accounting department shall develop and
maintain appropriate internal accounting policies and procedures to monitor and
calculate the aggregate amount of investment management fees waived on a monthly
basis for the Fund.

       Section 3. Term and Continuation. This Agreement shall be effective as of
February 2, 2016 and shall continue until March 1, 2017 (the "Waiver Term").
This Agreement may be continued and the Waiver Term may be extended for
additional periods as agreed to in writing by the parties. This Agreement may be
terminated by the Trust on behalf of the Fund at any time by action of the





Trust's Board of Trustees and by FTA after the expiration of the Waiver Term
upon sixty (60) days' written notice to the other party.

       Section 4. Notices. Any notice shall be sufficient when sent by
registered or certified mail to the other party at the address of such party,
set forth below such party's signature on this Agreement.



                                      
Address: First Trust Advisors L.P.       Address: First Trust Exchange-Traded Fund III
         120 East Liberty Drive                   120 East Liberty Drive
         Wheaton, Illinois 60187                  Wheaton, Illinois 60187
         Attention: W. Scott Jardine,             Attention: W. Scott Jardine, Secretary
         General Counsel


       Section 5. Entire Agreement; Amendments. This Agreement supersedes and
abrogates all prior understandings, communications and agreements (whether
written or oral) between the parties with respect to the subject matter hereof,
and this Agreement constitutes the entire agreement between the parties with
respect to such subject matter. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto. No assignment by
either party shall be of any force except with the prior written consent of the
other party.

       Section 6. Governing Law; Miscellaneous. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Illinois (without
regard to principles of law), including all matters of construction, validity,
and performance; provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or regulation of the Securities and
Exchange Commission. If any provision of this Agreement shall be held or made
invalid by a court's decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. The captions in this Agreement are
included for convenience only and in no way define any of the provisions hereof
or otherwise affect their construction or effect. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors.

   [Remainder of the page left intentionally blank. Signature page follows.]





IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

FIRST TRUST ADVISORS L.P.

/s/ James M. Dykas
------------------------------------
James M. Dykas
Chief Financial Officer



FIRST TRUST EXCHANGE-TRADED FUND III,
ON BEHALF OF FIRST TRUST MANAGED MUNICIPAL ETF

/s/ Donald P. Swade
------------------------------------
Donald P. Swade
Treasurer and CFO