EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of May 1, 2006 by and between PADCO
Advisors, Inc., a Maryland corporation, d/b/a/ Rydex Investments (the
"Adviser"), and Rydex Series Funds (the "Trust") (the "Agreement"), on behalf of
each series of the Trust set forth in Schedule A attached hereto (each a "Fund,"
and collectively, the "Funds").
WHEREAS, the Trust is a Delaware statutory trust organized on February 11, 1993
pursuant to a Declaration of Trust ("Declaration of Trust") and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, management investment company, and each Fund is a series of the Trust;
WHEREAS, the Trust and the Adviser have entered into an Investment Advisory
Agreement dated April 30, 2004 and as amended May 23, 2005 (the "Advisory
Agreement"), pursuant to which the Adviser provides investment advisory services
to the Funds for compensation based on the value of the average daily net assets
of the Funds;
WHEREAS, the Trust and the Adviser have determined that it is in the best
interests of each Fund and its shareholders to maintain the expenses of the
Funds at a level below the level to which the Funds would normally be subject in
order to maintain the Funds' expense ratios at the Maximum Annual Operating
Expense Limit (as hereinafter defined) specified for the Funds in Schedule A
hereto;
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION.
1.1. APPLICABLE EXPENSE LIMIT. To the extent that the aggregate expenses
incurred by the Funds in any fiscal year, including but not limited to
investment advisory fees of the Adviser (but excluding interest, taxes,
brokerage commissions, other expenditures which are capitalized in accordance
with generally accepted accounting principles, other extraordinary expenses not
incurred in the ordinary course of such Funds' business and amounts payable
pursuant to any plan adopted in accordance with Rule 12b-1 under the 1940 Act)
("Fund Operating Expenses"), exceed the Maximum Annual Operating Expense Limit,
as defined in Section 1.2 below, such excess amount (the "Excess Amount") shall
be the liability of the Adviser.
1.2. MAXIMUM ANNUAL OPERATING EXPENSE LIMIT. The Maximum Annual Operating
Expense Limit with respect to each Fund shall be the amount specified in
Schedule A based on a percentage of the average daily net assets of the Funds.
1.3. METHOD OF COMPUTATION. To determine the Adviser's liability with respect to
the Excess Amount, each month the Fund Operating Expenses for each Fund shall be
annualized as of the last day of the month. If the annualized Fund Operating
Expenses of a Fund for any month exceed the Maximum Annual Operating Expense
Limit of such Fund, the Adviser shall first waive or reduce its investment
advisory fee for such month by an amount sufficient to reduce the
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annualized Funds Operating Expenses to an amount no higher than the Maximum
Annual Operating Expense Limit.
1.4. YEAR-END ADJUSTMENT. If necessary, on or before the last day of the first
month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the investment advisory fees
waived or reduced by the Adviser with respect to the previous fiscal year shall
equal the Excess Amount.
2. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall continue in effect with respect to all Funds until August
1, 2007 and shall thereafter continue in effect with respect to the Funds from
year to year provided such continuance is specifically approved by a majority of
the Trustees of the Trust who are not "interested persons" of the Trust or any
other party to this Agreement, as defined in the 1940 Act ("Non-Interested
Trustees"). Nevertheless, this Agreement may be terminated by either party
hereto, without payment of any penalty, upon ninety (90) days' prior written
notice to the other party at its principal place of business; provided that, in
the case of termination by the Adviser, such action shall be authorized by
resolution of a majority of the Non-Interested Trustees of the Trust or by a
vote of a majority of the outstanding voting securities of the Trust.
3. MISCELLANEOUS.
3.1. CAPTIONS. The captions in this Agreement are included for convenience of
reference only and in no other way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
3.2. INTERPRETATION. Nothing herein contained shall be deemed to require the
Trust or the Funds to take any action contrary to the Trust's Declaration of
Trust or By-Laws, or any applicable statutory or regulatory requirement to which
it is subject or by which it is bound, or to relieve or deprive the Trust's
Board of Trustees of its responsibility for and control of the conduct of the
affairs of the Trust or the Funds. The parties to this Agreement acknowledge and
agree that all litigation arising hereunder, whether direct or indirect, and of
any and every nature whatsoever shall be satisfied solely out of the assets of
the affected Funds and that no Trustee, officer or holder of shares of
beneficial interest of the Funds shall be personally liable for any of the
foregoing liabilities. The Trust's Declaration of Trust, as amended from time to
time, is on file in the Office of the Secretary of State of Delaware. Such
Declaration of Trust describes in detail the respective responsibilities and
limitations on liability of the Trustees, officers, and holders of shares of
beneficial interest.
3.3. DEFINITIONS. Any question of interpretation of any term or provision of
this Agreement, including but not limited to the investment advisory fee, the
computations of net asset values, and the allocation of expenses, having a
counterpart in or otherwise derived from the terms and provisions of the
Advisory Agreement or the 1940 Act, shall have the same meaning as and be
resolved by reference to such Advisory Agreement or the 1940 Act.
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3.4. ENFORCEABILITY. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their
respective officers thereunto duly authorized, as of the day and year first
above written.
RYDEX SERIES FUNDS,
on behalf of each series of the Trust set forth in Schedule A
/s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
Title: Vice President and Treasurer
PADCO ADVISORS, INC.
/s/ Xxxx X. Xxxxxxxxxxx
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Name: Xxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
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SCHEDULE A
MAXIMUM ANNUAL OPERATING EXPENSE LIMITS
This Agreement relates to the following Funds of the Trust:
NAME OF FUNDS MAXIMUM ANNUAL OPERATING EXPENSE LIMIT
Commodities Fund 1.20% for A Class Shares
1.95% for C Class Shares
1.20% for H Class Shares
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