SUB-ADVISORY AGREEMENT
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THIS AGREEMENT is made and entered into as of the 6th day of March,
2009 between PADCO Advisors, Inc. (the "Adviser"), a Maryland corporation,
registered under the Investment Advisers Act of 1940, as amended (the
"Investment Advisers Act"), and Security Global Investors, LLC (the
"Subadviser"), a Kansas limited liability company registered under the
Investment Advisers Act.
WITNESSETH:
WHEREAS, Rydex Series Fund, a Delaware statutory trust (the "Trust"),
is registered with the Securities and Exchange Commission (the "Commission") as
an open-end management investment company under the Investment Company Act of
1940, as amended (the "Investment Company Act");
WHEREAS, the Trust is authorized to issue shares of (a) the Global
130/30 Strategy Fund and (b) the Global Market Neutral Fund (individually a
"Fund" and together the "Funds"), each a separate series of the Trust;
WHEREAS, each Fund has, pursuant to an Advisory Agreement with the
Adviser (the "Advisory Agreement"), retained the Adviser to act as investment
adviser for and to manage its assets;
WHEREAS, the Adviser, with the approval of the Trust, desires to retain
the Subadviser as subadviser to act as investment adviser for and to manage each
Fund's Investments (as defined below) and the Subadviser desires to render such
services.
NOW, THEREFORE, the Adviser and Subadviser do mutually agree and
promise as follows:
1. APPOINTMENT AS SUBADVISER. The Adviser hereby retains the Subadviser
to act as investment adviser for and to manage the assets of each Fund, subject
to the supervision of the Adviser and the Board of Trustees of the Funds and
subject to the terms of this Agreement. The Subadviser hereby accepts such
employment. In such capacity, the Subadviser shall be responsible for the Fund's
Investments (as defined below).
2. DUTIES OF SUBADVISER.
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(a) INVESTMENTS. The Subadviser is hereby authorized and
directed and hereby agrees, subject to the stated investment policies
and restrictions of each Fund as set forth in the Fund's prospectus and
statement of additional information as currently in effect and as
supplemented or amended from time to time (collectively referred to
hereinafter as the "Prospectus") and subject to the directions of the
Adviser and each Fund's Board of Trustees to purchase, hold and sell
investments for the Funds (hereinafter "Investments") and to monitor on
a continuous basis the performance of such Investments. The Subadviser
shall give the Fund the benefit of its best efforts in rendering its
services as Subadviser. The Subadviser may contract with or consult
with such banks, other securities firms, brokers or other parties,
without additional expense to the Fund, as it may deem appropriate
regarding investment advice, research and statistical data, clerical
assistance or otherwise.
The Subadviser acknowledges that the Fund may engage in certain
transactions in reliance on exemptions under Rule 10f-3, Rule 12d3-1,
Rule 17a-10 and Rule 17e-1 under the Investment Company Act.
Accordingly, the Subadviser hereby agrees that it will not consult with
any other subadviser of a Fund, or an affiliated person of such other
subadviser, concerning transactions for the Fund in securities or other
fund assets. The Subadviser shall be limited to providing investment
advice with respect to only the discrete portion of each Fund's
portfolio as may be determined from time-to-time by the Adviser, and
shall not consult with any other subadviser (if any) as to any other
portion of such Fund's portfolio concerning transactions for the Fund
in securities or other assets.
(b) BROKERAGE. The Subadviser is authorized, subject to the
supervision of the Adviser and each Fund's Board to establish and
maintain accounts on behalf of each Fund with, and place orders for the
purchase and sale of each Fund's Investments with or through, such
persons, brokers or dealers as Subadviser may select which may include,
to the extent permitted by the Adviser and the Fund's Board, brokers or
dealers affiliated with the Subadviser or Adviser, and negotiate
commissions to be paid on such transactions. The Subadviser agrees that
in placing such orders for the Funds it shall attempt to obtain best
execution, provided that, the Subadviser may, on behalf of each Fund,
pay brokerage commissions to a broker which provides brokerage and
research services to the Subadviser in excess of the amount another
broker would have charged for effecting the transaction, provided (i)
the Subadviser determines in good faith that the amount is reasonable
in relation to the value of the brokerage and research services
provided by the executing broker in terms of the particular transaction
or in terms of the Subadviser's overall responsibilities with respect
to that particular Fund and the accounts as to which the Subadviser
exercises investment discretion, (ii) such payment is made in
compliance with Section 28(e) of the Securities Exchange Act of 1934,
as amended, and any other applicable laws and regulations, and (iii) in
the opinion of the Subadviser, the total commissions paid by such Fund
will be reasonable in relation to the benefits to the Fund over the
long term. In reaching such determination, the Subadviser will not be
required to place or attempt to place a specific dollar value on the
brokerage and/or research services provided or being provided by such
broker. It is recognized that the services provided by such brokers may
be useful to the Subadviser in connection with the Subadviser's
services to other clients. On occasions when the Subadviser deems the
purchase or sale of a security to be in the best interests of a Fund as
well as other clients of the Subadviser, the Subadviser, to the extent
permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in
order to obtain the most favorable price or lower brokerage commissions
and efficient execution. In such event, allocation of securities so
sold or purchased, as well as the expenses incurred in the transaction,
will be made by the Subadviser in the manner the Subadviser considers
to be the most equitable and consistent with its fiduciary obligations
to the Fund and to such other clients. The Subadviser will report on
such allocations at the request of the Adviser, or the Fund's Board,
providing such information as the number of aggregated trades to which
such Fund was a party, the broker(s) to whom such trades were directed
and the basis of the allocation for the aggregated trades.
(c) SECURITIES TRANSACTIONS. The Subadviser and any affiliated
person of the Subadviser will not purchase securities or other
instruments from or sell securities or other instruments to a Fund
("Principal Transactions"); PROVIDED, HOWEVER, the Subadviser or an
affiliated person of the Subadviser may enter into a Principal
Transaction with the Fund if (i) the transaction is permissible under
applicable laws and regulations, including, without limitation, the
Investment Company Act and the Investment Advisers Act and the rules
and regulations promulgated thereunder, and (ii) the transaction or
category of transactions receives the express written approval of the
Adviser.
The Subadviser agrees to observe and comply with Rule 17j-1
under the Investment Company Act and its Code of Ethics, as the same
may be amended from time to time. The Subadviser agrees to provide the
Adviser and the Fund with a copy of such Code of Ethics.
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(d) BOOKS AND RECORDS. The Subadviser will maintain all books
and records required to be maintained pursuant to the Investment
Company Act and the rules and regulations promulgated thereunder solely
with respect to transactions made by it on behalf of a Fund including,
without limitation, the books and records required by Subsections
(b)(1), (5), (6), (7), (9), (10) and (11) and Subsection (f) of Rule
31a-1 under the Investment Company Act and shall timely furnish to the
Adviser all information relating to the Subadviser's services hereunder
needed by the Adviser to keep such other books and records of the Funds
required by Rule 31a-1 under the Investment Company Act. The Subadviser
will also preserve all such books and records for the periods
prescribed in part (e) of Rule 31a-2 under the Investment Company Act,
and agrees that such books and records shall remain the sole property
of the Funds and shall be immediately surrendered to the appropriate
Fund upon request. The Subadviser further agrees that all books and
records maintained hereunder shall be made available to the Funds or
the Adviser at any time upon reasonable request and notice, including
telecopy, during any business day.
(e) INFORMATION CONCERNING INVESTMENTS AND SUBADVISER. From time
to time as the Adviser or the Funds may request, the Subadviser will
furnish the requesting party reports on portfolio transactions and
reports on Investments held in the portfolios, all in such detail as
the Adviser or the Funds may reasonably request. The Subadviser will
make available its officers and employees to meet with the Board of
Directors of the Funds at the principal place of business of the Funds
on due notice to review the Investments of the Fund.
The Subadviser will also provide such information as is
customarily provided by a subadviser and may be required for the Funds
or the Adviser to comply with their respective obligations under
applicable laws, including, without limitation, the Internal Revenue
Code of 1986, as amended (the "Code"), the Investment Company Act, the
Investment Advisers Act, the Securities Act of 1933, as amended (the
"Securities Act") and any state securities laws, and any rule or
regulation thereunder.
During the term of this Agreement, the Adviser agrees to furnish
the Subadviser at its principal office all registration statements,
proxy statements, reports to stockholders, sales literature or other
materials prepared for distribution to stockholders of the Funds, or
the public that refer to the Subadviser for Subadviser's review and
approval. The Subadviser shall be deemed to have approved all such
materials unless the Subadviser reasonably objects by giving notice to
the Adviser in writing within five business days (or such other period
as may be mutually agreed) after receipt thereof. The Subadviser's
right to object to such materials is limited to the portions of such
materials that expressly relate to the Subadviser, its services and its
clients. The Adviser agrees to use its best efforts to ensure that
materials prepared by its employees or agents or its affiliates that
refer to the Subadviser or its clients in any way are consistent with
those materials previously approved by the Subadviser as referenced in
this paragraph. Sales literature may be furnished to the Subadviser by
first class or overnight mail, facsimile transmission equipment or hand
delivery.
(f) CUSTODY ARRANGEMENTS. The Subadviser shall provide the
Funds' custodian, on each business day with information relating to all
transactions concerning each Fund's assets.
(g) COMPLIANCE WITH APPLICABLE LAWS AND GOVERNING DOCUMENTS. In
all matters relating to the performance of this Agreement, the
Subadviser and its directors, officers, partners, employees and
interested persons shall act in conformity with the Trust's Agreement
and Declaration of Trust, By-Laws, and currently effective registration
statement and with the written instructions and directions of the
Funds' Board and the Adviser, after receipt of such documents, from the
Fund(s), and shall comply with the requirements of the Investment
Company Act, the Investment Advisers Act, the
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Commodity Exchange Act (the "CEA"), the rules thereunder, and all other
applicable federal and state laws and regulations.
In carrying out its obligations under this Agreement, the
Subadviser shall ensure that the Fund complies with all applicable
statutes and regulations necessary to qualify the Fund as a Regulated
Investment Company under Subchapter M of the Code (or any successor
provision), and shall notify the Adviser immediately upon having a
reasonable basis for believing that either Fund has ceased to so
qualify or that it might not so qualify in the future.
(h) INFORMATION CONCERNING THE FUNDS. The Adviser has furnished
the Subadviser with copies of each of the following documents and will
furnish the Subadviser at its principal office all future amendments
and supplements to such documents, if any, as soon as practicable after
such documents become available: (i) the Trust's Agreement and
Declaration of Trust, (ii) the By-Laws of the Funds, (iii) each Fund's
registration statement under the Investment Company Act and the
Securities Act of 1933, as amended, as filed with the Commission, and
(iv) any written instructions of the Funds' Board and the Adviser.
(i) VOTING OF PROXIES. The Subadviser shall direct the custodian
as to how to vote such proxies as may be necessary or advisable in
connection with any matters submitted to a vote of shareholders of
Investments held by the Funds.
(j) INFORMATIONAL MATERIAL. The Subadviser shall provide the
Adviser for its review, prior to their use, copies of all informational
materials prepared by or on behalf of the Subadvsier, mentioning either
Fund, including, but not limited to, advertisements, brochures, and
promotional and any other similar materials (the "Informational
Materials"), and that such Informational Materials shall conform with,
and be disseminated in accordance with, applicable laws.
3. INDEPENDENT CONTRACTOR. In the performance of its duties
hereunder, the Subadviser is and shall be an independent contractor and unless
otherwise expressly provided herein or otherwise authorized in writing, shall
have no authority to act for or represent either Fund or the Adviser in any way
or otherwise be deemed an agent of either Fund or the Adviser.
4. COMPENSATION. The Adviser shall pay to the Subadviser, for
the services rendered hereunder, the fee set forth in Exhibit A to this
Agreement.
5. EXPENSES. The Subadviser shall bear all expenses incurred by
it in connection with its services under this Agreement and will, from
time to time, at its sole expense employ or associate itself with such
persons as it believes to be particularly fitted to assist it in the
execution of its duties hereunder. However, the Subadviser shall not
assign or delegate any of its investment management duties under this
Agreement without the approval of the Adviser and the applicable Fund's
Board.
6. REPRESENTATIONS AND WARRANTIES OF SUBADVISER. The Subadviser
represents and warrants to the Adviser and the Funds as follows:
(a) The Subadviser is registered as an investment adviser
under the Investment Advisers Act;
(b) The Subadviser will immediately notify the Adviser of the
occurrence of any event that would disqualify the Subadviser
from serving as an investment adviser of an investment company
pursuant to Section 9(a) of the Investment Company Act;
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(c) The Subadviser has filed a notice of exemption pursuant
to Rule 4.14 under the CEA with the Commodity Futures Trading
Commission (the "CFTC") and the National Futures Association;
(d) The Subadviser is fully authorized under all applicable
law to serve as Subadviser to the Funds and to perform the
services described under this Agreement;
(e) The Subadviser is a limited liability company duly
organized and validly existing under the laws of the state of
Kansas with the power to own and possess its assets and carry on
its business as it is now being conducted;
(f) The execution, delivery and performance by the Subadviser
of this Agreement are within the Subadviser's powers and have
been duly authorized by all necessary action on the part of its
members, and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of
the Subadviser for the execution, delivery and performance by
the Subadviser of this Agreement, and the execution, delivery
and performance by the Subadviser of this Agreement do not
contravene or constitute a default under (i) any provision of
applicable law, rule or regulation, (ii) the Subadviser's
governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the
Subadviser;
(g) This Agreement is a valid and binding agreement of the
Subadviser;
(h) The Form ADV of the Subadviser previously provided to the
Adviser is a true and complete copy of the form filed with the
Commission and the information contained therein is accurate and
complete in all material respects as of its filing date, and
does not omit to state any material fact necessary in order to
make the statements made, in light of the circumstances under
which they were made, not misleading;
(i) The Subadviser has adopted compliance policies and
procedures reasonably designed to prevent violations of the
Investment Advisers Act and the rules thereunder, has provided
the Adviser with a copy of such compliance policies and
procedures (and will provide them with any amendments thereto),
and agrees to assist the Fund in complying with the Funds'
compliance program adopted pursuant to Rule 38a-1 under the
Investment Company Act, to the extent applicable. The Subadviser
understands that the Boards of Trustees of the Funds are
required to approve the Subadviser's compliance policies and
procedures and acknowledges that this Agreement is conditioned
upon such Board approval; and
(j) The Subadviser shall not divert any Funds' portfolio
securities transactions to a broker or dealer in consideration
of such broker or dealer's promotion or sales of shares of such
Fund, any other series of the Trust, or any other registered
investment company.
7. NON-EXCLUSIVITY. The services of the Subadviser with respect to the
Funds are not deemed to be exclusive, and the Subadviser and its officers shall
be free to render investment advisory and administrative or other services to
others (including other investment companies) and to engage in other activities
so long as its duties hereunder are not impaired thereby.
8. REPRESENTATIONS AND WARRANTIES OF ADVISER. The Adviser represents
and warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under
the Investment Advisers Act;
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(b) The Adviser is a Maryland corporation duly organized and
validly existing under the laws of the State of Maryland with
the power to own and possess its assets and carry on its
business as it is now being conducted;
(c) The execution, delivery and performance by the Adviser of
this Agreement and the Advisory Agreement are within the
Adviser's powers and have been duly authorized by all necessary
action on the part of its directors, and no action by or in
respect of, or filing with, any governmental body, agency or
official is required on the part of the Adviser for the
execution, delivery and performance by the Adviser of this
Agreement, and the execution, delivery and performance by the
Adviser of this Agreement do not contravene or constitute a
default under (i) any provision of applicable law, rule or
regulation, (ii) the Adviser's governing instruments, or (iii)
any agreement, judgment, injunction, order, decree or other
instrument binding upon the Adviser;
(d) This Agreement and the Advisory Agreement are valid and
binding agreements of the Adviser;
(e) The Form ADV of the Adviser previously provided to the
Subadviser is a true and complete copy of the form filed with
the Commission and the information contained therein is accurate
and complete in all material respects as of its filing date and
does not omit to state any material fact necessary in order to
make the statements made, in light of the circumstances under
which they were made, not misleading;
(f) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV at least 48 hours prior to the execution
of this Agreement.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE
INFORMATION. All representations and warranties made by the Subadviser and the
Adviser pursuant to Sections 6 and 8 hereof shall survive for the duration of
this Agreement and the parties hereto shall promptly notify each other in
writing upon becoming aware that any of the foregoing representations and
warranties are no longer true.
10. LIABILITY AND INDEMNIFICATION. The Subadviser shall indemnify and
hold harmless the Trust and all affiliated persons thereof (within the meaning
of Section 2(a)(3) of the 0000 Xxx) and all their respective controlling persons
(as described in Section 15 of the 0000 Xxx) against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other
expenses) by reason of or arising out of: (a) the Subadviser being in material
violation of any applicable federal or state law, rule or regulation or any
investment policy or restriction set forth in the Funds' Registration Statement
or any written guidelines or instruction provided in writing by the Board, (b) a
Fund's failure to satisfy the diversification or source of income requirements
of Subchapter M of the Code, or (c) the Subadviser's misfeasance or negligence
generally in the performance of its duties hereunder or its negligent disregard
of its obligations and duties under this Agreement.
11. DURATION AND TERMINATION.
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(a) DURATION. This Agreement shall become effective upon the date
first above written, provided that this Agreement shall not take effect
with respect to a Fund unless it has first been approved by a vote of a
majority of those Trustees of the Trust, who are not parties to this
Agreement or interested persons of any such party, cast in person at a
meeting called for
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the purpose of voting on such approval. This Agreement shall continue
in effect for a period of two years from the date hereof, subject
thereafter to being continued in force and effect from year to year if
specifically approved each year by the Board of Trustees or by the vote
of a majority of the applicable Fund's outstanding voting securities.
In addition to the foregoing, each renewal of this Agreement must be
approved by the vote of a majority of the Fund's Trustees who are not
parties to this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such
approval. Prior to voting on the renewal of this Agreement, the Board
of Trustees of the Funds may request and evaluate, and the Subadviser
shall furnish, such information as may reasonably be necessary to
enable the Fund's Board to evaluate the terms of this Agreement.
(b) TERMINATION. Notwithstanding whatever may be provided herein to
the contrary, this Agreement may be terminated at any time, without
payment of any penalty:
(i) By vote of a majority of the Board of Trustees of a Fund, or by
vote of a majority of the outstanding voting securities of the Fund, or
by the Adviser, in each case, upon sixty (60) days' written notice to
the Subadviser;
(ii) By the Adviser upon breach by the Subadviser of any
representation or warranty contained in Section 6 hereof, which shall
not have been cured within twenty (20) days of the Subadviser's receipt
of written notice of such breach;
(iii) By the Adviser immediately upon written notice to the
Subadviser if the Subadviser becomes unable to discharge its duties and
obligations under this Agreement; or
(iv) By the Subadviser upon 120 days written notice to the Adviser
and the applicable Fund.
This Agreement shall not be assigned (as such term is defined in
the Investment Company Act) without the prior written consent of the parties
hereto. This Agreement shall terminate automatically in the event of its
assignment without such consent or upon the termination of the Advisory
Agreement.
12. DUTIES OF THE ADVISER. The Adviser shall continue to have
responsibility for all services to be provided to the Funds pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement.
13. AMENDMENT. This Agreement may be amended by mutual consent of the
parties, provided that the terms of each such amendment with shall be approved
by the Board of Trustees of the applicable Fund or by a vote of a majority of
the outstanding voting securities of the applicable Fund.
14. NOTICE. Any notice that is required to be given by the parties to
each other (or to the Fund) under the terms of this Agreement shall be in
writing, delivered, or mailed postpaid to the other party, or transmitted by
facsimile with acknowledgment of receipt, to the parties at the following
addresses or facsimile numbers, which may from time to time be changed by the
parties by notice to the other party:
(a) If to the Subadviser:
Security Global Investors, LLC
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
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Attention: Xxxx Xxxxx, Vice President and Head of Global Equity
Facsimile: (000) 000-0000
With a copy to:
Security Benefit Corporation
One Security Benefit Place
Topeka, KS 66636
Attention: General Counsel
Facsimile: (000) 000-0000
(b) If to the Adviser:
PADCO Advisors, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
With a copy to:
Security Benefit Corporation
One Security Benefit Place
Topeka, KS 66636
Attention: General Counsel
Facsimile: (000) 000-0000
(d) If to the Trust:
Rydex Series Fund
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Secretary
Facsimile: (000) 000-0000
15. GOVERNING LAW; JURISDICTION. Except as indicated in Section 19(b)
of this Agreement, this Agreement shall be governed by and construed in
accordance with the laws of the State of Kansas, without regard to its conflicts
of law provisions.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall together constitute one and the same
instrument.
17. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
18. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision or applicable law, the remainder of the
Agreement shall not be affected adversely and shall remain in full force and
effect.
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19. CERTAIN DEFINITIONS.
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(a) "BUSINESS DAY." As used herein, business day means any
customary business day in the United States on which the New York Stock
Exchange is open.
(b) MISCELLANEOUS. As used herein, "investment company,"
"affiliated person," "interested person," "assignment," "broker,"
"dealer" and "affirmative vote of the majority of the Fund's
outstanding voting securities" shall all have such meaning as such
terms have in the Investment Company Act. The term "investment adviser"
shall have such meaning as such term has in the Investment Advisers Act
and the Investment Company Act, and in the event of a conflict between
such Acts, the most expansive definition shall control. In addition,
where the effect of a requirement of the Investment Company Act
reflected in any provision of this Agreement is relaxed by a rule,
regulation or order of the Commission, whether of special or general
application, such provision shall be deemed to incorporate the effect
of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first written above.
PADCO Advisors, Inc.
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
Attest: /s/ Xxxxx Xxxxxxxx
----------------------
Name: Xxxxx Xxxxxxxx
Title: Attorney
Security Global Investors, LLC
By: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: Vice President
Attest: /s/ Xxxxx Xxxxxxxx
----------------------
Name: Xxxxx Xxxxxxxx
Title: Attorney
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EXHIBIT A
Compensation
For all services rendered by the Subadviser hereunder to the Global 130/30
Strategy Fund, Adviser shall pay to Subadviser a fee (the "Subadvisory Fee") at
an annual rate of 0.65% (65 basis points) of the Fund's average daily net
assets.
For all services rendered by the Subadviser hereunder to the Global Market
Neutral Fund, Adviser shall pay to Subadviser a fee (the "Subadvisory Fee") at
an annual rate of 0.80% (80 basis points) of the Fund's average daily net
assets.
For purposes of calculating the compensation to be paid hereunder, each Fund's
assets shall be computed in the same manner at the end of the business day as
the value of such net assets is computed in connection with the determination of
the net asset value of such Fund's shares as described in the then current
prospectus for the Fund.
The Subadvisory Fee shall be accrued for each calendar day the Subadviser
renders subadvisory services hereunder and the sum of the daily fee accruals
shall be paid monthly to the Subadviser as soon as practicable following the
last day of each month, by wire transfer if so requested by the Subadviser, but
no later than ten (10) business days thereafter. If this Agreement shall be
effective for only a portion of a year, then the Subadviser's fee for said year
shall be prorated for such portion.
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