DIREXION FUNDS OPERATING EXPENSES LIMITATION AGREEMENT
THIS
OPERATING EXPENSES LIMTIATION AGREEMENT (the “Agreement”) is effective as of
September 1, 2006, by and between, DIREXION FUNDS, a Massachusetts
business trust (the “Trust”), on behalf of each of the funds listed on Appendix
A (the “Funds”), each a series of the Trust, and the adviser of the Funds,
Xxxxxxxx Asset Management, LLC, a New York limited liability corporation
(the
“Adviser”).
WHEREAS,
the Adviser renders advice and services to the Funds pursuant to the terms
and
provisions of an Investment Advisory Agreement between the Trust and the
Adviser
(the “Investment Advisory Agreement”); and
WHEREAS,
the Funds are responsible for, and have assumed the obligation for, payment
of
certain expenses pursuant to the Investment Advisory Agreement that have
not
been assumed by the Adviser; and
WHEREAS,
the Adviser desires to limit the Funds’ Operating Expenses (as that term is
defined below in Paragraph 2 of this Agreement) pursuant to the terms and
provisions of this Agreement, and the Trust (on behalf of the Funds) desires
to
allow the Adviser to implement those limits;
NOW
THEREFORE, in consideration of the covenants and the mutual promises hereinafter
set forth, the parties, intending to be legally bound hereby, mutually agree
as
follows:
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1.
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Limit
On Operating Expenses. The Adviser hereby agrees to limit each Fund’s
current Operating Expenses to an annual rate, expressed as a percentage
of
each Fund’s respective average daily net assets to the amounts listed in
Appendix A (the “Annual Limits”). In the event that the current Operating
Expenses of each Fund, as accrued each month, exceed its Annual
Limit, the
Adviser will pay to that Fund, on a monthly basis, the excess expense
within 30 days of being notified that an excess expense payment
is
due.
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2.
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Definition.
For purposes of this Agreement, the term “Operating Expenses” with respect
to the Funds is defined to include all expenses necessary or appropriate
for the operation of the Funds, including the Adviser’s advisory fee and
other expenses described in the Investment Advisory Agreement and
any Rule
12b-1 fees, but does not include any front-end or contingent deferred
loads, taxes, leverage interest, dividends or interest on short
positions,
brokerage commissions, expenses incurred in connection with any
merger or
reorganization, or extraordinary expenses such as
litigation.
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3.
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Reimbursement
of Fees and Expenses. The Adviser retains its right to receive
reimbursement of any excess expense payments paid by it pursuant
to this
Agreement under the same terms and conditions as it is permitted
under the
Investment Advisory Agreement, which provides that the Adviser
may recover any expenses reimbursed in the three previous years
if the
recovery does not cause a Fund to exceed any expense limitations
voluntarily or contractually imposed by the
Adviser.
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4.
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Term.
This Agreement shall be in effect for the Funds’ fiscal year ending August
31, 2007, unless sooner terminated as provided in Paragraph 5 of
this
Agreement.
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5.
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Termination.
This Agreement may be terminated at any time, and without payment
of any
penalty, by the Board of Trustees of the Trust, on behalf of the
Funds,
upon notice to the Adviser. This Agreement may not be terminated
by the
Adviser without the consent of the Board of Trustees of the
Trust. This Agreement will automatically terminate if the
Investment Advisory Agreement is terminated, with such termination
effective upon the effective date of the Investment Advisory Agreement’s
termination. No shareholder approval is required to terminate
or amend this agreement.
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6.
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Assignment.
This Agreement and all rights and obligations hereunder may not
be
assigned without the written consent of the other
party.
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7.
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Severability.
If any provision of this Agreement shall be held or made invalid
by a
court decision, statute or rule, or shall be otherwise rendered
invalid,
the remainder of this Agreement shall not be affected
thereby.
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8.
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Governing
Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without giving effect to
the
conflict of laws principles thereof; provided that nothing herein
shall be
construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act of 1940,
and the
Investment Advisers Act of 1940, and any rules and regulations
promulgated
thereunder.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and attested by their duly authorized officers, all on the day and
year
first above written.
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By:
Name:
Title:
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XXXXXXX
ASSET MANAGEMENT, LLC
By:
Name:
Title:
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2
APPENDIX
A
| FUND |
ANNUAL
LIMIT
|
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| Investor Class | Advisor Class | |||
| 1. | S&P 500® Bear 1X Fund | 1.75% | 2.50% | |
| 2. | Dow 30SM Bull 1.25X Fund | 1.75% | 2.50% | |
| 3. | NASDAQ-100® Bull 1.25X Fund | 1.75% | 2.50% | |
| 4. | Small Cap Bull 2.5X Fund | 1.75% | 2.50% | |
| 5. | Small Cap Bear 2.5X Fund | 1.75% | 2.50% | |
| 6. | Emerging Markets Bull 2X Fund | 1.75% | 2.50% | |
| 7. | Emerging Markets Bear 2X Fund | 1.75% | 2.50% | |
| 8. | Developed Markets Bull 2X Fund | 1.75% | 2.50% | |
| 9. | Developed Markets Bear 2X Fund | 1.75% | 2.50% | |
