CUSTODY AGREEMENT
THIS AGREEMENT is made and entered into as of this 16th day of October,
2009, by and between RYDEX SERIES FUNDS, a Delaware statutory trust (the
"Trust"), acting for and on behalf of all mutual fund portfolios as are
currently authorized and issued by the Trust or may be authorized and issued by
the Trust subsequent to the date of this Agreement (each a "Fund" and
collectively the "Funds") and U.S. BANK NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of
America (the "Custodian").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company, and
is authorized to issue shares of beneficial interest in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Custodian is a bank having the qualifications prescribed in
Section 26(a)(1) of the 1940 Act; and
WHEREAS, the Trust desires to retain the Custodian to act as custodian of
the cash and securities of each series of the Trust; and
WHEREAS, the Board of Trustees of the Trust has delegated to the Custodian
the responsibilities set forth in Rule 17f-5(c) under the 1940 Act and the
Custodian is willing to undertake the responsibilities and serve as the foreign
custody manager for the Trust.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have the
meanings set forth below unless the context otherwise requires:
1.01 "AUTHORIZED PERSON" means any Officer or other person duly authorized
by resolution of the Board of Trustees of the Trust to give Oral
Instructions and Written Instructions on behalf of the Fund and named in
EXHIBIT A hereto or in such resolutions of the Board of Trustees, certified
by an Officer, as may be received by the Custodian from time to time.
1.02 "BOARD OF TRUSTEES" shall mean the trustees from time to time serving
under the Trust's declaration of trust, as amended from time to time.
1.03 "BOOK-ENTRY SYSTEM" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular Xx. 000, 00 XXX 306, in Subpart B of 31
CFR Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
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1.04 "BUSINESS DAY" shall mean any day recognized as a settlement day by The
New York Stock Exchange, and any other day for which the Trust computes the
net asset value of Shares of the Fund.
1.05 "ELIGIBLE FOREIGN CUSTODIAN" has the meaning set forth in Rule
17f-5(a)(1), including a majority-owned or indirect subsidiary of a U.S.
Bank (as defined in Rule 17f-5), a bank holding company meeting the
requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or
by other appropriate action of the SEC), or a foreign branch of a Bank (as
defined in Section 2(a)(5) of the 0000 Xxx) meeting the requirements of a
custodian under Section 17(f) of the 1940 Act; the term does not include any
Eligible Securities Depository.
1.06 "ELIGIBLE SECURITIES DEPOSITORY" shall mean a system for the central
handling of securities as that term is defined in Rule 17f-4 and 17f-7 under
the 0000 Xxx.
1.07 "FOREIGN ASSETS" means any investments (including foreign currencies)
for which the primary market is outside the United States, and any cash and
cash equivalents that are reasonably necessary to effect the Trust's or the
Trust's series transactions in those investments.
1.08 "FUND CUSTODY ACCOUNT" shall mean any of the accounts in the name of
the Trust, which is provided for in Section 3.2 below.
1.09 "IRS" shall mean the Internal Revenue Service.
1.10 "FINRA" shall mean the Financial Industry Regulatory Authority, Inc.
1.11 "OFFICER" shall mean the Chairman, President, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Trust.
1.12 "ORAL INSTRUCTIONS" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by any two Authorized Persons,
(ii) recorded and kept among the records of the Custodian made in the
ordinary course of business, and (iii) orally confirmed by the Custodian.
The Trust shall cause all Oral Instructions to be confirmed by Written
Instructions prior to the end of the next Business Day. If such Written
Instructions confirming Oral Instructions are not received by the Custodian
prior to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Trust. If Oral Instructions
vary from the Written Instructions that purport to confirm them, the
Custodian shall notify the Trust of such variance but such Oral Instructions
will govern unless the Custodian has not yet acted.
1.13 "PROPER INSTRUCTIONS" shall mean Oral Instructions or Written
Instructions.
1.14 "SEC" shall mean the Securities and Exchange Commission.
1.15 "SECURITIES" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed securities or
other obligations, and any certificates, receipts, warrants or other
instruments or documents representing rights to receive, purchase or
subscribe for the same, or
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evidencing or representing any other rights or interests therein, or any
similar property or assets that the Custodian or its agents have the
facilities to clear and service.
1.16 "SECURITIES DEPOSITORY" shall mean The Depository Trust Company and any
other clearing agency registered with the SEC under Section 17A of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), which acts as
a system for the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of the Securities.
1.17 "SHARES" shall mean, with respect to a Fund, the units of beneficial
interest issued by the Trust on account of the Fund.
1.18 "SUB-CUSTODIAN" shall mean and include (i) any branch of a "U.S. bank,"
as that term is defined in Rule 17f-5 under the 1940 Act, and (ii) any
"Eligible Foreign Custodian" having a contract with the Custodian which the
Custodian has determined will provide reasonable care of assets of the Fund
based on the standards specified in Section 3.03 below. Such contract shall
be in writing and shall include provisions that provide: (i) for
indemnification or insurance arrangements (or any combination of the
foregoing) such that the Fund will be adequately protected against the risk
of loss of assets held in accordance with such contract; (ii) that the
Foreign Assets will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the Sub-Custodian or its creditors
except a claim of payment for their safe custody or administration, in the
case of cash deposits, liens or rights in favor of creditors of the
Sub-Custodian arising under bankruptcy, insolvency, or similar laws; (iii)
that beneficial ownership for the Foreign Assets will be freely transferable
without the payment of money or value other than for safe custody or
administration; (iv) that adequate records will be maintained identifying
the assets as belonging to the Fund or as being held by a third party for
the benefit of the Fund; (v) that the Fund's independent public accountants
will be given access to those records or confirmation of the contents of
those records; and (vi) that the Fund will receive periodic reports with
respect to the safekeeping of the Fund's assets, including, but not limited
to, notification of any transfer to or from a Fund's account or a third
party account containing assets held for the benefit of the Fund. Such
contract may contain, in lieu of any or all of the provisions specified in
(i)-(vi) above, such other provisions that the Custodian determines will
provide, in their entirety, the same or a greater level of care and
protection for Fund assets as the specified provisions.
1.19 "WRITTEN INSTRUCTIONS" shall mean (i) written communications actually
received by the Custodian and signed by any two Authorized Persons, (ii)
communications by telex or any other such system from one or more persons
reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications between electro-mechanical or electronic devices provided
that the use of such devices and the procedures for the use thereof shall
have been approved by resolutions of the Board of Trustees, a copy of which,
certified by an Officer, shall have been delivered to the Custodian.
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ARTICLE II.
APPOINTMENT OF CUSTODIAN
2.01 APPOINTMENT. The Trust hereby appoints the Custodian as custodian of
all Securities and cash owned by or in the possession of the Fund at any
time during the period of this Agreement, on the terms and conditions set
forth in this Agreement, and the Custodian hereby accepts such appointment
and agrees to perform the services and duties set forth in this Agreement.
The Trust hereby delegates to the Custodian, subject to Rule 17f-5(b), the
responsibilities with respect to the Fund's Foreign Assets, and the
Custodian hereby accepts such delegation as foreign custody manager with
respect to the Fund. The services and duties of the Custodian shall be
confined to those matters expressly set forth herein, and no implied duties
are assumed by or may be asserted against the Custodian hereunder.
2.02 DOCUMENTS TO BE FURNISHED. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of
the Agreement to the Custodian by the Trust:
(a) A copy of the Trust's declaration of trust, certified by the Secretary;
(b) A copy of the Trust's bylaws, certified by the Secretary;
(c) A copy of the resolution of the Board of Trustees of the Trust
appointing the Custodian, certified by the Secretary;
(d) A copy of the current prospectuses of the Fund (the "Prospectus");
(e) A certification of the Chairman or the President and the Secretary of
the Trust setting forth the names and signatures of the current Officers
of the Trust and other Authorized Persons; and
(f) An executed authorization required by the Shareholder Communications Act
of 1985, attached hereto as EXHIBIT D.
2.03 NOTICE OF APPOINTMENT OF TRANSFER AGENT. The Trust agrees to notify the
Custodian in writing of the appointment, termination or change in
appointment of any transfer agent of the Fund.
ARTICLE III.
CUSTODY OF CASH AND SECURITIES
3.01 SEGREGATION. All Securities and non-cash property held by the Custodian
for the account of the Fund (other than Securities maintained in a
Securities Depository, Eligible Securities Depository or Book-Entry System)
shall be physically segregated from other Securities and non-cash property
in the possession of the Custodian (including the Securities
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and non-cash property of the other series of the Trust, if applicable) and
shall be identified as subject to this Agreement.
3.02 FUND CUSTODY ACCOUNTS. As to each Fund, the Custodian shall open and
maintain in its trust department a custody account in the name of the Trust
coupled with the name of the Fund, subject only to draft or order of the
Custodian, in which the Custodian shall enter and carry all Securities, cash
and other assets of such Fund which are delivered to it.
3.03 Appointment of Agents.
(a) In its discretion, the Custodian may appoint one or more
Sub-Custodians to establish and maintain arrangements with (i) Eligible
Securities Depositories or (ii) Eligible Foreign Custodians who are
members of the Sub-Custodian's network to hold Securities and cash of
the Fund and to carry out such other provisions of this Agreement as it
may determine; provided, however, that the appointment of any such
agents and maintenance of any Securities and cash of the Fund shall be
at the Custodian's expense and shall not relieve the Custodian of any of
its obligations or liabilities under this Agreement. The Custodian shall
be liable for the actions of any Sub-Custodians (regardless of whether
assets are maintained in the custody of a Sub-Custodian, a member of its
network or an Eligible Securities Depository) appointed by it as if such
actions had been done by the Custodian.
(b) If, after the initial appointment of Sub-Custodians by the Board of
Trustees in connection with this Agreement, the Custodian wishes to
appoint other Sub-Custodians to hold property of the Fund, it will so
notify the Trust and make the necessary determinations as to any such
new Sub-Custodian's eligibility under Rule 17f-5 under the 1940 Act.
(c) In performing its delegated responsibilities as foreign custody
manager to place or maintain the Fund's assets with a Sub-Custodian, the
Custodian will determine that the Fund's assets will be subject to
reasonable care, based on the standards applicable to custodians in the
country in which the Fund's assets will be held by that Sub-Custodian,
after considering all factors relevant to safekeeping of such assets,
including, without limitation the factors specified in Rule 17f-5(c)(1).
(d) The agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(c)(2) under the 1940 Act.
(e) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Trustees of the withdrawal or
placement of the Securities and cash of the Fund with a Sub-Custodian
and of any material changes in the Fund's arrangements. Such reports
shall include an analysis of the custody risks associated with
maintaining assets with any Eligible Securities Depositories. The
Custodian shall promptly take such steps as may be required to withdraw
assets of the Fund from any Sub-Custodian arrangement that has ceased to
meet the requirements of Rule 17f-5 or Rule 17f-7 under the 1940 Act, as
applicable.
(f) With respect to its responsibilities under this Section 3.03, the
Custodian hereby warrants to the Trust that it agrees to exercise
reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of property of the Fund. The
Custodian further warrants that the Fund's assets will be subject to
reasonable care if maintained with a Sub-
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Custodian, after considering all factors relevant to the safekeeping of
such assets, including, without limitation: (i) the Sub-Custodian's
practices, procedures, and internal controls for certificated securities
(if applicable), its method of keeping custodial records, and its
security and data protection practices; (ii) whether the Sub-Custodian
has the requisite financial strength to provide reasonable care for Fund
assets; (iii) the Sub-Custodian's general reputation and standing and,
in the case of a Securities Depository, the Securities Depository's
operating history and number of participants; and (iv) whether the Fund
will have jurisdiction over and be able to enforce judgments against the
Sub-Custodian, such as by virtue of the existence of any offices of the
Sub-Custodian in the United States or the Sub-Custodian's consent to
service of process in the United States.
(g) The Custodian shall establish a system or ensure that its
Sub-Custodian has established a system to monitor on a continuing basis
(i) the appropriateness of maintaining the Fund's assets with a
Sub-Custodian or Eligible Foreign Custodians who are members of a
Sub-Custodian's network; (ii) the performance of the contract governing
the Fund's arrangements with such Sub-Custodian or Eligible Foreign
Custodian's members of a Sub-Custodian's network; and (iii) the custody
risks of maintaining assets with an Eligible Securities Depository. The
Custodian must promptly notify the Fund or its investment adviser of any
material change in these risks.
(h) The Custodian shall use reasonable commercial efforts to collect all
income and other payments with respect to Foreign Assets to which the
Fund shall be entitled and shall credit such income, as collected, to
the Trust. In the event that extraordinary measures are required to
collect such income, the Trust and Custodian shall consult as to the
measures and as to the compensation and expenses of the Custodian
relating to such measures.
3.04 DELIVERY OF ASSETS TO CUSTODIAN. The Trust shall deliver, or cause to
be delivered, to the Custodian all of the Fund's Securities, cash and other
investment assets, including (i) all payments of income, payments of
principal and capital distributions received by the Fund with respect to
such Securities, cash or other assets owned by the Fund at any time during
the period of this Agreement, and (ii) all cash received by the Fund for the
issuance of Shares. The Custodian shall not be responsible for such
Securities, cash or other assets until actually received by it.
3.05 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities Depository or
in a Book-Entry System, subject to the following provisions:
(a) The Custodian, on an on-going basis, shall deposit in a Securities
Depository or Book-Entry System all Securities eligible for deposit
therein and shall make use of such Securities Depository or Book-Entry
System to the extent possible and practical in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities,
and deliveries and returns of collateral consisting of Securities.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or
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Securities Depository which includes only assets held by the Custodian
as a fiduciary, custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository shall, by
book-entry, identify such Securities as belonging to the Fund.
(d) If Securities purchased by the Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that such Securities have been transferred to the
Depository Account, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the account of
the Fund. If Securities sold by the Fund are held in a Book-Entry System
or Securities Depository, the Custodian shall transfer such Securities
upon (i) receipt of advice from the Book-Entry System or Securities
Depository that payment for such Securities has been transferred to the
Depository Account, and (ii) the making of an entry on the records of
the Custodian to reflect such transfer and payment for the account of
the Fund.
(e) The Custodian shall provide the Trust with copies of any report
(obtained by the Custodian from a Book-Entry System or Securities
Depository in which Securities of the Fund are kept) on the internal
accounting controls and procedures for safeguarding Securities deposited
in such Book-Entry System or Securities Depository.
(f) Notwithstanding anything to the contrary in this Agreement, the
Custodian shall be liable to the Trust for any loss or damage to the
Fund resulting from (i) the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful misconduct on the part
of the Custodian or any Sub-Custodian, or (ii) failure of the Custodian
or any Sub-Custodian to enforce effectively such rights as it may have
against a Book-Entry System or Securities Depository. At its election,
the Trust shall be subrogated to the rights of the Custodian with
respect to any claim against a Book-Entry System or Securities
Depository or any other person from any loss or damage to the Fund
arising from the use of such Book-Entry System or Securities Depository,
if and to the extent that the Fund has not been made whole for any such
loss or damage.
(g) With respect to its responsibilities under this Section 3.05 and
pursuant to Rule 17f-4 under the 1940 Act, the Custodian hereby warrants
to the Trust that it agrees to (i) exercise due care in accordance with
reasonable commercial standards in discharging its duty as a securities
intermediary to obtain and thereafter maintain such assets, (ii)
provide, promptly upon request by the Trust, such reports as are
available concerning the Custodian's internal accounting controls and
financial strength, and (iii) require any Sub-Custodian to exercise due
care in accordance with reasonable commercial standards in discharging
its duty as a securities intermediary to obtain and thereafter maintain
assets corresponding to the security entitlements of its entitlement
holders.
3.06 DISBURSEMENT OF MONEYS FROM FUND CUSTODY ACCOUNT. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from the Fund
Custody Account but only in the following cases:
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(a) For the purchase of Securities for the Fund but only in accordance
with Section 4.01 of this Agreement and only (i) in the case of
Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to the Custodian (or
any Sub-Custodian) of such Securities registered as provided in Section
3.09 below or in proper form for transfer, or if the purchase of such
Securities is effected through a Book-Entry System or Securities
Depository, in accordance with the conditions set forth in Section 3.05
above; (ii) in the case of options on Securities, against delivery to
the Custodian (or any Sub-Custodian) of such receipts as are required by
the customs prevailing among dealers in such options; (iii) in the case
of futures contracts and options on futures contracts, against delivery
to the Custodian (or any Sub-Custodian) of evidence of title thereto in
favor of the Fund or any nominee referred to in Section 3.09 below; and
(iv) in the case of repurchase or reverse repurchase agreements entered
into between the Trust and a bank which is a member of the Federal
Reserve System or between the Trust and a primary dealer in U.S.
Government securities, against delivery of the purchased Securities
either in certificate form or through an entry crediting the Custodian's
account at a Book-Entry System or Securities Depository with such
Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.07(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in Section
5.01 below;
(e) For the payment of any expense or liability incurred by the Fund,
including, but not limited to, the following payments for the account of
the Fund: interest; taxes; administration, investment advisory,
accounting, auditing, transfer agent, custodian, trustee and legal fees;
and other operating expenses of the Fund; in all cases, whether or not
such expenses are to be in whole or in part capitalized or treated as
deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered under the
1934 Act and a member of FINRA, relating to compliance with rules of the
Options Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions by the
Fund;
(g) For transfer in accordance with the provisions of any agreement
among the Trust, the Custodian and a futures commission merchant
registered under the Commodity Exchange Act, relating to compliance with
the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations) regarding
account deposits in connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less; and
(i) For any other proper purpose, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of Trustees,
certified by an Officer, specifying the amount
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and purpose of such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such payment
is to be made.
3.07 DELIVERY OF SECURITIES FROM FUND CUSTODY ACCOUNT. Upon receipt of
Proper Instructions, the Custodian shall release and deliver, or cause the
Sub-Custodian to release and deliver, Securities from the Fund Custody
Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or cashiers
check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section 3.05
above;
(c) To an offeror's depository agent in connection with tender or other
similar offers for Securities of the Fund; provided that, in any such
case, the cash or other consideration is to be delivered to the
Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name of
the Fund, the Custodian or any Sub-Custodian, or any nominee or nominees
of any of the foregoing, or (ii) for exchange for a different number of
certificates or other evidence representing the same aggregate face
amount or number of units; provided that, in any such case, the new
Securities are to be delivered to the Custodian;
(e) To the broker selling the Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
issuer of such Securities, or pursuant to provisions for conversion
contained in such Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities in connection
with the issuance or cancellation of depository receipts; provided that,
in any such case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of the Fund,
but only against receipt of such collateral as the Trust shall have
specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Trust, but only against receipt
by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust;
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(l) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered under the
1934 Act and a member of FINRA, relating to compliance with the rules of
the Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions
by the Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian and a futures commission merchant
registered under the Commodity Exchange Act, relating to compliance with
the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations) regarding
account deposits in connection with transactions by the Fund;
(n) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the Board
of Trustees, certified by an Officer, specifying the Securities to be
delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such Securities shall
be made; or
(o) To brokers, clearing banks or other clearing agents for examination
or trade execution in accordance with market custom; provided that in
any such case the Custodian shall have no responsibility or liability
for any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the
Custodian's own negligence or willful misconduct.
3.08 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise instructed
by the Trust, the Custodian shall with respect to all Securities held for
the Fund:
(a) Subject to Section 9.04 below, collect on a timely basis all income
and other payments to which the Fund is entitled either by law or
pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 9.04 below, collect on a
timely basis the amount payable upon all Securities which may mature or
be called, redeemed, or retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations
of any other taxing authority now or hereafter in effect, and prepare
and submit reports to the IRS and the Trust at such time, in such manner
and containing such information as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities Depository, all
rights and similar Securities issued with respect to Securities of the
Fund; and
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(g) In general, and except as otherwise directed in Proper Instructions,
attend to all non-discretionary details in connection with the sale,
exchange, substitution, purchase, transfer and other dealings with
Securities and other assets of the Fund.
3.09 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for the
Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System if eligible therefor. All other Securities held for the
Fund may be registered in the name of the Fund, the Custodian, a
Sub-Custodian or any nominee thereof, or in the name of a Book-Entry System,
Securities Depository or any nominee of either thereof. The records of the
Custodian with respect to Foreign Assets of the Fund that are maintained
with a Sub-Custodian in an account that is identified as belonging to the
Custodian for the benefit of its customers shall identify those securities
as belonging to the Fund. The Trust shall furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in proper
form for transfer, or to register in the name of any of the nominees
referred to above or in the name of a Book-Entry System or Securities
Depository, any Securities registered in the name of the Fund.
3.10 RECORDS.
(a) The Custodian shall maintain complete and accurate records with
respect to Securities, cash or other property held for the Fund,
including (i) journals or other records of original entry containing an
itemized daily record in detail of all receipts and deliveries of
Securities and all receipts and disbursements of cash; (ii) ledgers (or
other records) reflecting (A) Securities in transfer, (B) Securities in
physical possession, (C) monies and Securities borrowed and monies and
Securities loaned (together with a record of the collateral therefor and
substitutions of such collateral), (D) dividends and interest received,
and (E) dividends receivable and interest receivable; (iii) canceled
checks and bank records related thereto; and (iv) all records relating
to its activities and obligations under this Agreement. The Custodian
shall keep such other books and records of the Fund as the Trust shall
reasonably request, or as may be required by the 1940 Act, including,
but not limited to, Section 31 of the 1940 Act and Rule 31a-2
promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in compliance with the
rules and regulations of the SEC, (ii) be the property of the Trust and
at all times during the regular business hours of the Custodian be made
available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or agents of the SEC, and
(iii) if required to be maintained by Rule 31a-1 under the 1940 Act, be
preserved for the periods prescribed in Rules 31a-1 and 31a-2 under the
1940 Act.
3.11 FUND REPORTS BY CUSTODIAN. The Custodian shall furnish the Trust with a
daily activity statement and a summary of all transfers to or from each Fund
Custody Account on the day following such transfers. At least monthly, the
Custodian shall furnish the Trust with a detailed statement of the
Securities and moneys held by the Custodian and the Sub-Custodians for the
Fund under this Agreement.
11
3.12 OTHER REPORTS BY CUSTODIAN. As the Trust may reasonably request from
time to time, the Custodian shall provide the Trust with reports on the
internal accounting controls and procedures for safeguarding Securities
which are employed by the Custodian or any Sub-Custodian.
3.13 PROXIES AND OTHER MATERIALS. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the Fund to
be promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Trust such proxies, all proxy soliciting materials
and all notices relating to such Securities. With respect to the Foreign
Assets, the Custodian will use reasonable commercial efforts to facilitate
the exercise of voting and other shareholder rights, subject to the laws,
regulations and practical constraints that may exist in the country where
such securities are issued. The Trust acknowledges that local conditions,
including lack of regulation, onerous procedural obligations, lack of notice
and other factors may have the effect of severely limiting the ability of
the Trust to exercise shareholder rights.
3.14 INFORMATION ON CORPORATE ACTIONS. The Custodian shall promptly deliver
to the Trust all information received by the Custodian and pertaining to
Securities being held by the Fund with respect to optional tender or
exchange offers, calls for redemption or purchase, or expiration of rights
as described in the Standards of Service Guide attached as EXHIBIT B. If the
Trust desires to take action with respect to any tender offer, exchange
offer or other similar transaction, the Trust shall notify the Custodian at
least three Business Days prior to the date on which the Custodian is to
take such action. The Trust will provide or cause to be provided to the
Custodian all relevant information for any Security which has unique
put/option provisions at least three Business Days prior to the beginning
date of the tender period.
ARTICLE IV.
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.01 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities for
the Fund, Written Instructions shall be delivered to the Custodian,
specifying (i) the name of the issuer or writer of such Securities, and the
title or other description thereof, (ii) the number of shares, principal
amount (and accrued interest, if any) or other units purchased, (iii) the
date of purchase and settlement, (iv) the purchase price per unit, (v) the
total amount payable upon such purchase, and (vi) the name of the person to
whom such amount is payable. The Custodian shall upon receipt of such
Securities purchased by the Fund pay out of the moneys held for the account
of the Fund the total amount specified in such Written Instructions to the
person named therein. The Custodian shall not be under any obligation to pay
out moneys to cover the cost of a purchase of Securities for the Fund, if in
the Fund Custody Account there is insufficient cash available to the Fund
for which such purchase was made.
4.02 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. In
any and every case where payment for the purchase of Securities for the Fund
is made by the Custodian in advance of receipt of the Securities purchased
and in the absence of specified Written Instructions to so pay in advance,
the Custodian shall be liable to the Fund for such payment.
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4.03 SALE OF SECURITIES. Promptly upon each sale of Securities by the Fund,
Written Instructions shall be delivered to the Custodian, specifying (i) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (ii) the number of shares, principal amount (and
accrued interest, if any), or other units sold, (iii) the date of sale and
settlement, (iv) the sale price per unit, (v) the total amount payable upon
such sale, and (vi) the person to whom such Securities are to be delivered.
Upon receipt of the total amount payable to the Fund as specified in such
Written Instructions, the Custodian shall deliver such Securities to the
person specified in such Written Instructions. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to it,
and may deliver Securities and arrange for payment in accordance with the
customs prevailing among dealers in Securities.
4.04 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 4.03 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with
generally accepted market practice, to deliver such Securities prior to
actual receipt of final payment therefor. In any such case, the Fund shall
bear the risk that final payment for such Securities may not be made or that
such Securities may be returned or otherwise held or disposed of by or
through the person to whom they were delivered, and the Custodian shall have
no liability for any for the foregoing.
4.05 PAYMENT FOR SECURITIES SOLD. In its sole discretion and from time to
time, the Custodian may credit the Fund Custody Account, prior to actual
receipt of final payment thereof, with (i) proceeds from the sale of
Securities which it has been instructed to deliver against payment, (ii)
proceeds from the redemption of Securities or other assets of the Fund, and
(iii) income from cash, Securities or other assets of the Fund. Any such
credit shall be conditional upon actual receipt by Custodian of final
payment and may be reversed if final payment is not actually received in
full. The Custodian may, in its sole discretion and from time to time,
permit the Fund to use funds so credited to the Fund Custody Account in
anticipation of actual receipt of final payment. Any such funds shall be
repayable immediately upon demand made by the Custodian at any time prior to
the actual receipt of all final payments in anticipation of which funds were
credited to the Fund Custody Account.
4.06 ADVANCES BY CUSTODIAN FOR SETTLEMENT. The Custodian may, in its sole
discretion and from time to time, advance funds to the Trust to facilitate
the settlement of a Fund's transactions in the Fund Custody Account. Any
such advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V.
REDEMPTION OF FUND SHARES
5.01 TRANSFER OF FUNDS. From such funds as may be available for the purpose
in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares of the
Fund, the Custodian shall wire each amount specified in such Proper
Instructions to or through such bank or broker-dealer as the Trust may
designate.
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5.02 NO DUTY REGARDING PAYING BANKS. Once the Custodian has wired amounts to
a bank or broker-dealer pursuant to Section 5.01 above, the Custodian shall
not be under any obligation to effect any further payment or distribution by
such bank or broker-dealer.
ARTICLE VI.
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and maintain
a segregated account or accounts for and on behalf of the Fund, into which
account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account:
(a) in accordance with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under the 1934 Act and a
member of FINRA (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of the
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions
by the Fund;
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in connection
with financial futures contracts (or options thereon) purchased or sold
by the Fund;
(c) which constitute collateral for loans of Securities made by the
Fund;
(d) for purposes of compliance by the Fund with requirements under the
1940 Act for the maintenance of segregated accounts by registered
investment companies in connection with reverse repurchase agreements
and when-issued, delayed delivery and firm commitment transactions; and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Board of Trustees, certified by an Officer, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
Each segregated account established under this Article VI shall be established
and maintained for the Fund only. All Proper Instructions relating to a
segregated account shall specify the Fund.
ARTICLE VII.
COMPENSATION OF CUSTODIAN
7.01 COMPENSATION. The Custodian shall be compensated for providing the
services set forth in this Agreement in accordance with the fee schedule set
forth on EXHIBIT C hereto (as amended from time to time). The Custodian
shall also be compensated for such out-of-pocket expenses (e.g.,
telecommunication charges, postage and delivery charges, and reproduction
charges) as are reasonably incurred by the Custodian in performing its
duties hereunder. The
14
Trust shall pay all such fees and reimbursable expenses within 30 calendar
days following receipt of the billing notice, except for any fee or expense
subject to a good faith dispute. The Trust shall notify the Custodian in
writing within 30 calendar days following receipt of each invoice if the
Trust is disputing any amounts in good faith. The Trust shall pay such
disputed amounts within 10 calendar days of the day on which the parties
agree to the amount to be paid. With the exception of any fee or expense the
Trust is disputing in good faith as set forth above, unpaid invoices shall
accrue a finance charge of 1-1/2% per month after the due date.
Notwithstanding anything to the contrary, amounts owed by the Trust to the
Custodian shall only be paid out of the assets and property of the
particular Fund involved.
7.02 OVERDRAFTS. The Trust is responsible for maintaining an appropriate
level of short term cash investments to accommodate cash outflows. The Trust
may obtain a formal line of credit for potential overdrafts of its custody
account. In the event of an overdraft or in the event the line of credit is
insufficient to cover an overdraft, the overdraft amount or the overdraft
amount that exceeds the line of credit will be charged in accordance with
the fee schedule set forth on Exhibit C hereto (as amended from time to
time)
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES
8.01 REPRESENTATIONS AND WARRANTIES OF THE TRUST. The Trust hereby
represents and warrants to the Custodian, which representations and
warranties shall be deemed to be continuing throughout the term of this
Agreement, that:
(a) It is duly organized and existing under the laws of the jurisdiction
of its organization, with full power to carry on its business as now
conducted, to enter into this Agreement and to perform its obligations
hereunder;
(b) This Agreement has been duly authorized, executed and delivered by
the Trust in accordance with all requisite action and constitutes a
valid and legally binding obligation of the Trust, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties; and
(c) It is conducting its business in compliance in all material respects
with all applicable laws and regulations, both state and federal, and
has obtained all regulatory approvals necessary to carry on its business
as now conducted; there is no statute, rule, regulation, order or
judgment binding on it and no provision of its charter, bylaws or any
contract binding it or affecting its property which would prohibit its
execution or performance of this Agreement.
8.02 REPRESENTATIONS AND WARRANTIES OF THE CUSTODIAN. The Custodian hereby
represents and warrants to the Trust, which representations and warranties
shall be deemed to be continuing throughout the term of this Agreement,
that:
(a) It is duly organized and existing under the laws of the jurisdiction
of its organization, with full power to carry on its business as now
conducted, to enter into this Agreement and to perform its obligations
hereunder;
15
(b) It is a U.S. Bank as defined in section (a)(7) of Rule 17f-5.
(c) This Agreement has been duly authorized, executed and delivered by
the Custodian in accordance with all requisite action and constitutes a
valid and legally binding obligation of the Custodian, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties; and
(d) It is conducting its business in compliance in all material respects
with all applicable laws and regulations, both state and federal, and
has obtained all regulatory approvals necessary to carry on its business
as now conducted; there is no statute, rule, regulation, order or
judgment binding on it and no provision of its charter, bylaws or any
contract binding it or affecting its property which would prohibit its
execution or performance of this Agreement.
ARTICLE IX.
CONCERNING THE CUSTODIAN
9.01 STANDARD OF CARE. The Custodian shall exercise reasonable care in the
performance of its duties under this Agreement. The Custodian shall not be
liable for any error of judgment or mistake of law or for any loss suffered
by the Trust in connection with its duties under this Agreement, except a
loss arising out of or relating to the Custodian's (or a Sub-Custodian's)
refusal or failure to comply with the terms of this Agreement (or any
sub-custody agreement) or from its (or a Sub-Custodian's) bad faith,
negligence or willful misconduct in the performance of its duties under this
Agreement (or any sub-custody agreement). The Custodian shall be entitled to
rely on and may act upon advice of counsel on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice. The Custodian shall promptly notify the Trust of any action
taken or omitted by the Custodian pursuant to advice of counsel.
9.02 ACTUAL COLLECTION REQUIRED. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Fund or any
money represented by a check, draft or other instrument for the payment of
money, until the Custodian or its agents actually receive such cash or
collect on such instrument.
9.03 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property or
evidence of title thereto received or delivered by it pursuant to this
Agreement.
9.04 LIMITATION ON DUTY TO COLLECT. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property
due and payable with respect to Securities held for the Fund if such
Securities are in default or payment is not made after due demand or
presentation.
9.05 RELIANCE UPON DOCUMENTS AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian
shall be entitled to rely upon any Oral Instructions and any Written
Instructions actually received by it pursuant to this Agreement.
16
9.06 COOPERATION. The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trust to keep the
books of account of the Fund and/or compute the value of the assets of the
Fund. The Custodian shall take all such reasonable actions as the Trust may
from time to time request to enable the Trust to obtain, from year to year,
favorable opinions from the Trust's independent accountants with respect to
the Custodian's activities hereunder in connection with (i) the preparation
of the Trust's reports on Form N-1A and Form N-SAR and any other reports
required by the SEC, and (ii) the fulfillment by the Trust of any other
requirements of the SEC.
ARTICLE X.
INDEMNIFICATION
10.01 INDEMNIFICATION BY TRUST. The Trust shall indemnify and hold harmless
the Custodian, any Sub-Custodian and any nominee thereof (each, an
"Indemnified Party" and collectively, the "Indemnified Parties") from and
against any and all claims, demands, losses, expenses and liabilities of any
and every nature (including reasonable attorneys' fees) that an Indemnified
Party may sustain or incur or that may be asserted against an Indemnified
Party by any person arising directly or indirectly (i) from the fact that
Securities are registered in the name of any such nominee, (ii) from any
action taken or omitted to be taken by the Custodian or such Sub-Custodian
(a) at the request or direction of or in reliance on the advice of the
Trust, or (b) upon Proper Instructions, or (iii) from the performance of its
obligations under this Agreement or any sub-custody agreement, provided that
neither the Custodian nor any such Sub-Custodian shall be indemnified and
held harmless from and against any such claim, demand, loss, expense or
liability arising out of or relating to its refusal or failure to comply
with the terms of this Agreement (or any sub-custody agreement), or from its
bad faith, negligence or willful misconduct in the performance of its duties
under this Agreement (or any sub-custody agreement). This indemnity shall be
a continuing obligation of the Trust, its successors and assigns,
notwithstanding the termination of this Agreement. As used in this
paragraph, the terms "Custodian" and "Sub-Custodian" shall include their
respective directors, officers and employees.
10.02 INDEMNIFICATION BY CUSTODIAN. The Custodian shall indemnify and hold
harmless the Trust from and against any and all claims, demands, losses,
expenses, and liabilities of any and every nature (including reasonable
attorneys' fees) that the Trust may sustain or incur or that may be asserted
against the Trust by any person arising directly or indirectly out of any
action taken or omitted to be taken by an Indemnified Party as a result of
the Indemnified Party's refusal or failure to comply with the terms of this
Agreement (or any sub-custody agreement), or from its bad faith, negligence
or willful misconduct in the performance of its duties under this Agreement
(or any sub-custody agreement). This indemnity shall be a continuing
obligation of the Custodian, its successors and assigns, notwithstanding the
termination of this Agreement. As used in this paragraph, the term "Trust"
shall include the Trust's trustees, officers and employees.
10.03 SECURITY. If the Custodian advances cash or Securities to the Fund for
any purpose, either at the Trust's request or as otherwise contemplated in
this Agreement, or in the event that the Custodian or its nominee incurs, in
connection with its performance under this Agreement,
17
any claim, demand, loss, expense or liability (including reasonable
attorneys' fees) (except such as may arise from its or its nominee's bad
faith, negligence or willful misconduct), then, in any such event, any
property at any time held for the account of the Fund shall be security
therefor, and should the Fund fail promptly to repay or indemnify the
Custodian, the Custodian shall be entitled to utilize available cash of such
Fund and to dispose of other assets of such Fund to the extent necessary to
obtain reimbursement or indemnification.
10.04 Miscellaneous.
(a) Neither party to this Agreement shall be liable to the other party
for consequential, special or punitive damages under any provision of
this Agreement.
(b) The indemnity provisions of this Article shall indefinitely survive
the termination and/or assignment of this Agreement.
(c) In order that the indemnification provisions contained in this
Article X shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee harmless,
the indemnitor shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further understood
that the indemnitee will use all reasonable care to notify the
indemnitor promptly concerning any situation that presents or appears
likely to present the probability of a claim for indemnification. The
indemnitor shall have the option to defend the indemnitee against any
claim that may be the subject of this indemnification. In the event that
the indemnitor so elects, it will so notify the indemnitee and thereupon
the indemnitor shall take over complete defense of the claim, and the
indemnitee shall in such situation initiate no further legal or other
expenses for which it shall seek indemnification under this Article X.
The indemnitee shall in no case confess any claim or make any compromise
in any case in which the indemnitor will be asked to indemnify the
indemnitee except with the indemnitor's prior written consent.
ARTICLE XI.
FORCE MAJEURE
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; acts of terrorism; sabotage; strikes; epidemics;
riots; power failures; computer failure and any such circumstances beyond its
reasonable control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that in the event of a failure or delay, the
Custodian (i) shall not discriminate against the Fund in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement, and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
18
ARTICLE XII.
PROPRIETARY AND CONFIDENTIAL INFORMATION
12.01 The Custodian agrees on behalf of itself and its directors, officers,
and employees to treat confidentially and as proprietary information of the
Trust, all records and other information relative to the Trust and prior,
present, or potential shareholders of the Trust (and clients of said
shareholders), and not to use such records and information for any purpose
other than the performance of its responsibilities and duties hereunder,
except (i) after prior notification to and approval in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld
where the Custodian may be exposed to civil or criminal contempt proceedings
for failure to comply, (ii) when requested to divulge such information by
duly constituted authorities, or (iii) when so requested by the Trust.
Records and other information which have become known to the public through
no wrongful act of the Custodian or any of its employees, agents or
representatives, and information that was already in the possession of the
Custodian prior to receipt thereof from the Trust or its agent, shall not be
subject to this paragraph.
12.02 Further, the Custodian will adhere to the privacy policies adopted by
the Trust pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be
modified from time to time. In this regard, the Custodian shall have in
place and maintain physical, electronic and procedural safeguards reasonably
designed to protect the security, confidentiality and integrity of, and to
prevent unauthorized access to or use of, records and information relating
to the Trust and its shareholders.
ARTICLE XIII.
EFFECTIVE DATE; TERMINATION
13.01 EFFECTIVE DATE. This Agreement shall become effective as of the date
first written above.
13.02 TERMINATION. This Agreement may be terminated by either party upon
giving 90 days prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties. Notwithstanding the
foregoing, this Agreement may be terminated by any party upon the breach of
the other party of any material term of this Agreement if such breach is not
cured within 15 days of notice of such breach to the breaching party. In
addition, the Trust may, at any time, immediately terminate this Agreement
in the event of the appointment of a conservator or receiver for the
Custodian by regulatory authorities or upon the happening of a like event at
the direction of an appropriate regulatory agency or court of competent
jurisdiction.
13.03 APPOINTMENT OF SUCCESSOR CUSTODIAN. If a successor custodian shall
have been appointed by the Board of Trustees, the Custodian shall, upon
receipt of a notice of acceptance by the successor custodian, on such
specified date of termination (i) deliver directly to the successor
custodian all Securities (other than Securities held in a Book-Entry System
or Securities Depository) and cash then owned by the Fund and held by the
Custodian as custodian, and (ii) transfer any Securities held in a
Book-Entry System or Securities Depository
19
to an account of or for the benefit of the Fund at the successor custodian,
provided that the Trust shall have paid to the Custodian all fees, expenses
and other amounts to the payment or reimbursement of which it shall then be
entitled. In addition, the Custodian shall, at the expense of the Trust,
transfer to such successor all relevant books, records, correspondence, and
other data established or maintained by the Custodian under this Agreement
in a form reasonably acceptable to the Trust (if such form differs from the
form in which the Custodian has maintained the same, the Trust shall pay any
expenses associated with transferring the data to such form), and will
cooperate in the transfer of such duties and responsibilities, including
provision for assistance from the Custodian's personnel in the establishment
of books, records, and other data by such successor. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
Agreement.
13.04 FAILURE TO APPOINT SUCCESSOR CUSTODIAN. If a successor custodian is
not designated by the Trust on or before the date of termination of this
Agreement, then the Custodian shall have the right to deliver to a bank or
trust company of its own selection, which bank or trust company (i) is a
"bank" as defined in the 1940 Act, and (ii) has aggregate capital, surplus
and undivided profits as shown on its most recent published report of not
less than $25 million, all Securities, cash and other property held by
Custodian under this Agreement and to transfer to an account of or for the
Fund at such bank or trust company all Securities of the Fund held in a
Book-Entry System or Securities Depository. Upon such delivery and transfer,
such bank or trust company shall be the successor custodian under this
Agreement and the Custodian shall be relieved of all obligations under this
Agreement. In addition, under these circumstances, all books, records and
other data of the Trust shall be returned to the Trust.
ARTICLE XIV.
CLASS ACTIONS
The Custodian shall use its best efforts to identify and file claims for the
Fund(s) involving any class action litigation that impacts any security the
Fund(s) may have held during the class period. The Trust agrees that the
Custodian may file such claims on its behalf and understands that it may be
waiving and/or releasing certain rights to make claims or otherwise pursue class
action defendants who settle their claims. Further, the Trust acknowledges that
there is no guarantee these claims will result in any payment or partial payment
of potential class action proceeds and that the timing of such payment, if any,
is uncertain.
However, the Trust may instruct the Custodian to distribute class action notices
and other relevant documentation to the Fund(s) or its designee and, if it so
elects, will relieve the Custodian from any and all liability and responsibility
for filing class action claims on behalf of the Fund(s).
In the event the Fund(s) are closed, the Custodian shall only file the class
action claims upon written instructions by an authorized representative of the
closed Fund(s). Any expenses associated with such filing will be assessed
against the proceeds received of any class action settlement.
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ARTICLE XV.
MISCELLANEOUS
15.01 COMPLIANCE WITH LAWS. The Trust has and retains primary responsibility for
all compliance matters relating to the Fund, including but not limited to
compliance with the 1940 Act, the Internal Revenue Code of 1986, the
Xxxxxxxx-Xxxxx Act of 2002, the USA Patriot Act of 2001 and the policies and
limitations of the Fund relating to its portfolio investments as set forth in
its Prospectus and statement of additional information. The Custodian's services
hereunder shall not relieve the Trust of its responsibilities for assuring such
compliance or the Board of Trustee's oversight responsibility with respect
thereto.
15.02 AMENDMENT. This Agreement may not be amended or modified in any manner
except by written agreement executed by the Custodian and the Trust, and
authorized or approved by the Board of Trustees.
15.03 ASSIGNMENT. This Agreement shall extend to and be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Trust without the written consent of
the Custodian, or by the Custodian without the written consent of the Trust
accompanied by the authorization or approval of the Board of Trustees.
15.04 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, without regard to conflicts
of law principles. To the extent that the applicable laws of the State of
Minnesota, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control, and nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or order of
the SEC thereunder.
15.05 NO AGENCY RELATIONSHIP. Nothing herein contained shall be deemed to
authorize or empower either party to act as agent for the other party to this
Agreement, or to conduct business in the name, or for the account, of the other
party to this Agreement.
15.06 SERVICES NOT EXCLUSIVE. Nothing in this Agreement shall limit or restrict
the Custodian from providing services to other parties that are similar or
identical to some or all of the services provided hereunder.
15.07 INVALIDITY. Any provision of this Agreement which may be determined by
competent authority to be prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. In such case, the
parties shall in good faith modify or substitute such provision consistent with
the original intent of the parties.
15.08 NOTICES. Any notice required or permitted to be given by either party to
the other shall be in writing and shall be deemed to have been given on the date
delivered personally or by courier service, or three days after sent by
registered or certified mail, postage prepaid, return receipt
21
requested, or on the date sent and confirmed received by facsimile transmission
to the other party's address set forth below:
Notice to the Custodian shall be sent to:
U.S Bank, N.A.
0000 X. Xxxxxxxxxxx Xx., XX-XX-X000
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
and notice to the Trust shall be sent to:
Rydex Series Funds
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
15.09 MULTIPLE ORIGINALS. This Agreement may be executed on two or more
counterparts, each of which when so executed shall be deemed an original, but
such counterparts shall together constitute but one and the same instrument.
15.10 NO WAIVER. No failure by either party hereto to exercise, and no delay by
such party in exercising, any right hereunder shall operate as a waiver thereof.
The exercise by either party hereto of any right hereunder shall not preclude
the exercise of any other right, and the remedies provided herein are cumulative
and not exclusive of any remedies provided at law or in equity.
15.11 REFERENCES TO CUSTODIAN. The Trust shall not circulate any printed matter
which contains any reference to Custodian without the prior written approval of
Custodian, excepting printed matter contained in the Prospectus or statement of
additional information for the Fund and such other printed matter as merely
identifies Custodian as custodian for the Fund. The Trust shall submit printed
matter requiring approval to Custodian in draft form, allowing sufficient time
for review by Custodian and its counsel prior to any deadline for printing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the date
first above written.
RYDEX SERIES FUNDS U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxx Xxxxx By: /s/ Xxxxxxx X. XxXxx
-------------------------- ----------------------------
Name: Xxxx Xxxxx Name: Xxxxxxx X. XxXxx
Title: Treasurer Title: Vice President
22
EXHIBIT A
AUTHORIZED PERSONS - RYDEX SERIES FUNDS (CURRENTLY ON FILE AT U.S. BANK,
N.A. IN CINCINNATI, OH)
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Fund Custody Accounts.
AUTHORIZED PERSONS SPECIMEN SIGNATURES
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
23
EXHIBIT B
U.S. BANK INSTITUTIONAL CUSTODY SERVICES
STANDARDS OF SERVICE GUIDE
U.S. Bank, N.A. ("U.S. Bank") is committed to providing superior quality
service to all customers and their agents at all times. We have compiled this
guide as a tool for our clients to determine our standards for the processing of
security settlements, payment collection, and capital change transactions.
Deadlines recited in this guide represent the times required for U.S. Bank to
guarantee processing. Failure to meet these deadlines will result in settlement
at our client's risk. In all cases, U.S. Bank will make every effort to complete
all processing on a timely basis.
U.S. Bank is a direct participant of the Depository Trust Company, a
direct member of the Federal Reserve Bank of Cleveland, and utilizes the Bank of
New York as its agent for ineligible and foreign securities.
For corporate reorganizations, U.S. Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, Capital Changes
Daily (CCH) and the WALL STREET JOURNAL.
For bond calls and mandatory puts, U.S. Bank utilizes SEI's Bond Source,
Xxxxx Information Systems, Standard & Poor's Corporation, XCITEK, and DTC
Important Notices. U.S. Bank will not notify clients of optional put
opportunities.
Any securities delivered free to U.S. Bank or its agents must be received
three (3) business days prior to any payment or settlement in order for the U.S.
Bank standards of service to apply.
Should you have any questions regarding the information contained in this
guide, please feel free to contact your account representative.
THE INFORMATION CONTAINED IN THIS STANDARDS OF SERVICE GUIDE
IS SUBJECT TO CHANGE. SHOULD ANY CHANGES BE MADE U.S. BANK
WILL PROVIDE YOU WITH AN UPDATED COPY OF ITS STANDARDS OF
SERVICE GUIDE.
24
U.S. BANK SECURITY SETTLEMENT STANDARDS
TRANSACTION TYPE INSTRUCTIONS DEADLINES-
CENTRAL TIME
Securities Eligible for DTC 1:00 p.m. on Settlement Date
o Equities
o Corporate & municipal bonds
o Commercial paper
o Medium-term notes
o Collateralized mortgage issues
o Zero coupon bonds (already at DTC)
Federal Reserve book-entry securities 12:30 p.m. on Settlement Date
(includes treasuries, agencies, GNMAs)
Bank of New York - physical securities 11:00 a.m. on Settlement Date minus one
Purchase of physical security to be 1 day prior to Settlement Date
held in Milwaukee vault. Includes
private placements
Sale of physical security held in 2 days prior to Settlement Date
Milwaukee vault
Proper documents must be included if
asset in customer's name
25
U.S. BANK PAYMENT STANDARDS
SECURITY TYPE INCOME PRINCIPAL
Equities Payable Date
Municipal Bonds* Payable Date Payable Date
Corporate Bonds* Payable Date Payable Date
Federal Reserve Bank Book Entry* Payable Date Payable Date
PTC GNMA's (P&I) Payable Date + 1 Payable Date + 1
CMOs*
DTC Payable Date + 1 Payable Date + 1
SBA Loan Certificates When Received When Received
Unit Investment Trust Certificates* Payable Date Payable Date
Certificates of Deposit* Payable Date + 1 Payable Date + 1
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
*Variable Rate Securities
Federal Reserve Bank Book Entry Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
NOTE: If a payable date falls on a weekend or bank holiday, payment will
be made on the immediately following business day.
26
U.S. BANK CORPORATE REORGANIZATION STANDARDS
TYPE OF ACTION DEADLINE FOR CLIENT
INSTRUCTIONS
TO U.S. BANK - CENTRAL TIME
Voluntary offers including: 24 hours prior to expiration
o Rights
o Warrants
o Election mergers
o Mandatory puts with option to retain
o Optional puts
o Voluntary tenders
o Consents
o Exchanges
o Conversions
27
EXHIBIT C TO THE CUSTODY AGREEMENT - RYDEX SERIES FUNDS
CUSTODIAN COMPENSATION AT JUNE, 2009
(RELATES TO SERVICES PROVIDED TO THE COMPANY IN RESPECT OF THE CUSTODIAN'S
OVERALL RELATIONSHIP WITH THE FOLLOWING FUND STRUCTURES:
RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS
RYDEX VARIABLE TRUST
RYDEX (CFC))
The Custodian will receive monthly compensation for services according to the
terms of the following Schedule (as they relate to the overall relationship with
the aforementioned funds):
I. Portfolio Transaction* Fees:
a. For each repurchase agreement transaction $0
b. For each portfolio transaction processed through DTC or Federal Reserve $0
c. For each portfolio transaction processed through our New York custodian $0
d. For each Amortized Security Purchase and sale $0
e. For each Amortized Security Prin/Int Paydown $0
f. For each covered call option/future contract written, exercised or expired $0
g. For each Cedel/Euro clear transaction $0
h. For each Disbursement (Fund expenses only) $0
*A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange.
Overdrafts - charged to the account at prime interest rate minus 2%.
II. Market Value Fee
Based upon an annual rate of:
o .0004 (4 Basis Points) on First $6 Billion in net assets of
entire relationship
o .00005 (1/2 Basis Point) on Balance
III. Annual Relationship Minimum Fee $1,800,000
IV. Out-of-Pocket Expenses $0
V. XXX Documents
Per Shareholder/year to hold each XXX Document $0
o There will be no annual trade count true up on any of the above
mentioned Trusts
28
EXHIBIT C TO THE CUSTODY AGREEMENT (CONTINUED) - RYDEX SERIES FUNDS
GLOBAL SUB-CUSTODIAL SERVICES
ANNUAL FEE SCHEDULE AT JUNE, 2009
SAFEKEEPING TRANSACTION
COUNTRY INSTRUMENT (BPS) FEE
------------------- ---------- ----------- -----------
Argentina All 15.00 $ 40
Australia All 2.00 $ 30
Austria All 3.50 $ 35
Bahrain All 50.00 $140
Bangladesh All 40.00 $150
Belgium All 2.50 $ 45
Benin* All 40.00 $155
Bermuda All 15.00 $ 60
Botswana All 25.00 $ 50
Brazil All 15.00 $ 00
Xxxxxxxx All 40.00 $ 80
Burkina Faso* All 40.00 $155
Canada All 1.25 $ 12
Cayman Islands* All 1.00 $ 10
Channel Islands* All 1.50 $ 00
Xxxxx All 20.00 $ 60
China"A" Shares All 15.00 $ 65
China"B" Shares All 15.00 $ 65
Columbia All 40.00 $100
Costa Rica All 15.00 $ 00
Xxxxxxx All 35.00 $ 65
Cyprus* All 15.00 $ 00
Xxxxx Xxxxxxxx All 20.00 $ 00
Xxxxxxx All 3.00 $ 00
Xxxxxxx All 35.00 $ 65
Egypt All 40.00 $100
Estonia All 7.00 $ 25
Euromarkets(3) All 1.50 $ 10
Finland All 5.00 $ 00
Xxxxxx All 2.50 $ 45
Germany All 1.00 $ 30
Ghana All 25.00 $ 50
Greece All 20.00 $105
Guinea Bissau* All 50.00 $155
Hong Kong All 6.00 $ 60
Hungary All 35.00 $135
Iceland All 15.00 $ 60
India All 10.00 $105
Indonesia All 12.00 $100
Ireland Equities 3.00 $ 30
Ireland Gov't Bonds 1.50 $ 10
Israel All 15.00 $ 45
Italy All 3.00 $ 50
Ivory Coast All 40.00 $155
Jamaica* All 35.00 $ 00
Xxxxx All 1.50 $ 15
Jordan All 40.00 $125
Kazakhstan All 60.00 $150
Kenya All 30.00 $ 00
Xxxxxx Equities 15.00 $ 00
Xxxxxx Bonds 25.00 $ 90
Lebanon All 25.00 $ 90
Lithuania All 20.00 $ 50
Luxembourg All 4.00 $ 00
Xxxxxxxx All 6.00 $ 80
Mali* All 40.00 $155
Malta All 22.00 $ 75
Mauritius All 30.00 $100
Mexico All 3.00 $ 20
Morocco All 35.00 $100
Namibia All 30.00 $ 00
Xxxxxxxxxxx All 3.00 $ 25
New Zealand All 3.00 $ 40
Niger* All 40.00 $155
Nigeria All 30.0 $ 00
Xxxxxx All 3.00 $ 45
Oman All 50.00 $140
Pakistan All 30.00 $100
Peru All 45.00 $105
Philippines All 8.00 $ 75
Poland All 25.00 $ 50
Portugal All 15.00 $ 85
Qatar All 45.00 $140
Romania All 35.00 $100
Russia Equities/Bonds 30.00 $200
Russia MINFIN 15.00 $ 50
Senegal* All 40.00 $155
Singapore All 3.00 $ 00
Xxxxxx Xxxxxxxx All 25.00 $110
Slovenia All 25.00 $110
South Africa All 3.00 $ 00
Xxxxx Xxxxx All 10.00 $ 20
Spain All 3.00 $ 00
Xxx Xxxxx All 15.00 $ 60
Swaziland All 30.00 $ 50
Sweden All 2.00 $ 00
Xxxxxxxxxxx All 2.00 $ 50
Taiwan All 20.00 $100
Thailand All 6.00 $ 45
Togo* All 40.00 $155
Trinidad & Tobago* All 30.00 $ 65
Tunisia All 40.00 $ 00
Xxxxxx All 15.00 $ 15
UAE All 45.00 $130
United Kingdom All 1.50 $ 10
Ukraine All 30.00 $ 45
Uruguay All 50.00 $ 65
Venezuela All 40.00 $125
Vietnam* All 40.00 $130
Zambia All 30.00 $ 50
* ADDITIONAL CUSTOMER DOCUMENTATION AND INDEMNIFICATION WILL BE REQUIRED
PRIOR TO ESTABLISHING ACCOUNTS IN THESE MARKETS.
BASE FEE - A monthly base charge of $1,200 per account (fund) will apply.
o Fee is expressed in basis points per annum where one basis point
equals one hundredth of one percent (.01%) and is calculated based
upon month-end market value, unless stated otherwise.
o A transaction is defined as a receipt or delivery versus payment, a
free receive or deliver, maturities, or security transaction related
to corporate events.
29
o Euroclear - Eurobonds only. Eurobonds are held in Euroclear at a
standard rate, but other types of securities (including but not
limited to equities, domestic market debt and mutual funds) will be
subject to a surcharge. In addition, certain transactions that are
delivered within Euroclear or from a Euroclear account to a third
party depository or settlement system, will be subject to a
surcharge (surcharge schedule available upon request).
o For all other markets specified above, surcharges may apply if a security
is held outside of the local market.
Straight Through Processing - fees waived.
FOR NON-US RESIDENT CLIENTS INVESTING IN THE U.S. MARKET: Fees for US custody
are provided on the basis that if assets are held in an omnibus account for
multiple underlying clients, the Client will take the necessary action to attain
Qualified Intermediary (QI) status for US IRS withholding tax purposes. Should
the Client fail to take the necessary action, the fee quoted would be subject to
review, and all costs incurred by The Bank of New York in fulfilling its
obligations under the US regulations would be passed to the Client. Please refer
to the separate Non-Resident Alien (NRA) fee schedule.
Note: For the clients who are the sole beneficial owner of the assets held in
their account with The Bank of New York and the client has provided a "W8Ben"
form per account stating their ownership of the assets, the above will not
apply.
CASH TRANSACTIONS:
o Currency Trade - $10 per transaction
o 3rd Party Foreign Exchange - a Foreign Exchange transaction undertaken
through a third party will be charged $50.
STANDARD NON-U.S. PROXY SERVICES FEES:
o Notification $5
o Vote $10
o Relationship Set Up Fee $100
TAX RECLAMATION SERVICES: May be subject to additional charges depending upon
the service level agreed. Tax reclaims that have been outstanding for more than
6 (six) months with the client will be charged $50 per claim.
COMMUNICATION FEES:
o SWIFT REPORTING AND MESSAGE FEES - The following fees will apply in
respect of client requested SWIFT reports and messages:
- Cash Reporting
o MT900 - Cash Debit Advice $1.80 each
o MT910 - Cash Credit Advice $1.80 each
o MT940 - Detail Cash Statement $1.00 per message
o MT950 - Cash Statement $1.00 per message
- Securities Position Reporting
O MT535 - Statement of Holdings $2.00 per message
(One MT535 will be issued per account per
month free of charge)
O MT536 - Statement of Transactions $2.00 per message
O MT537 - Statement of Pendings $2.00 per message
- Confirmations
o MT544 - Receive Free Confirm $1.00 per message
o MT545 - Receive Against Payment Confirm $1.00 per message
o MT546 - Deliver Free Confirm $1.00 per message
o MT547 - Deliver Against Payment Confirm $1.00 per message
- Facsimile Reporting Fees
o Corporate Actions Notifications $2.00 per notification
o Cash and Securities Reports $1.00 per page
30
OUT OF POCKET EXPENSES
o Charges incurred by The Bank of New York for local taxes, stamp duties or
other local duties and assessments, stock exchange fees, postage and
insurance for shipping, facsimile reporting, extraordinary
telecommunications fees or other expenses which are unique to a country in
which the client or its clients is investing will be passed along as
incurred.
o A surcharge may be added to certain out-of-pocket expenses listed herein
to cover handling, servicing and other administrative costs associated
with the activities giving rise to such expenses. Also, certain expenses
are charged at a predetermined flat rate.
31
EXHIBIT D
SHAREHOLDER COMMUNICATIONS ACT AUTHORIZATION
RYDEX SERIES FUNDS (CURRENTLY ON FILE WITH U.S. BANK, N.A.)
The Shareholder Communications Act of 1985 requires banks and trust companies to
make an effort to permit direct communication between a company which issues
securities and the shareholder who votes those securities.
Unless you specifically require us to NOT release your name and address to
requesting companies, we are required by law to disclose your name and address.
Your "yes" or "no" to disclosure will apply to all securities U.S. Bank holds
for you now and in the future, unless you change your mind and notify us in
writing.
YES U.S. Bank is authorized to provide the Trust's name,
-------- address and security position to requesting
companies whose stock is owned by the Trust.
X NO U.S. Bank is NOT authorized to provide the Trust's
name, address and security position to requesting
companies whose stock is owned by the Trust.
RYDEX SERIES FUNDS
By: /s/ Xxxx Xxxxx
-------------------------
Title: Treasurer
Date: 10/16/09
32
