ADVISORY AGREEMENT
ADVISORY AGREEMENT made as of this 30th day of April, 2004 by and
between RYDEX ETF TRUST (the "Trust"), a Delaware statutory trust registered as
an investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and PADCO ADVISORS II, INC., a Maryland corporation with its
principal place of business at 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx 00000 (the "Adviser").
W I T N E S S E T H
WHEREAS, the Board of Trustees (the "Board") of the Trust has selected
the Adviser to act as investment adviser to the Trust on behalf of the series
set forth on Schedule A to this Agreement (each a "Fund" and, collectively, the
"Funds"), as such Schedule may be amended from time to time upon mutual
agreement of the parties, and to provide certain related services, as more fully
set forth below, and to perform such services under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Trust and the Adviser do hereby agree as follows:
1. THE ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Adviser shall
act as investment adviser with respect to the Funds. In such capacity, the
Adviser shall, subject to the supervision of the Board, regularly provide the
Funds with investment research, advice and supervision and shall furnish
continuously an investment program for the Funds, consistent with the
respective investment objectives and policies of each Fund. The Adviser shall
determine, from time to time, what securities shall be purchased for the
Funds, what securities shall be held or sold by the Funds and what portion of
the Funds' assets shall be held uninvested in cash, subject always to the
provisions of the Trust's Agreement and Declaration of Trust, By-Laws and its
registration statement on Form N-1A (the "Registration Statement") under the
1940 Act, and under the Securities Act of 1933, as amended (the "1933 Act"),
covering Fund shares, as filed with the Securities and Exchange Commission
(the "Commission"), and to the investment objectives, policies and
restrictions of the Funds, as each of the same shall be from time to time in
effect. To carry out such obligations, the Adviser shall exercise full
discretion and act for the Funds in the same manner and with the same force
and effect as the Funds themselves might or could do with respect to
purchases, sales or other transactions, as well as with respect to all other
such things necessary or incidental to the furtherance or conduct of such
purchases, sales or other transactions. No reference in this Agreement to the
Adviser having full discretionary authority over each Fund's investments
shall in any way limit the right of the Board, in its sole discretion, to
establish or revise policies in connection with the management of a Fund's
assets or to otherwise exercise its right to control the overall management
of a Fund.
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(b) COMPLIANCE. The Adviser agrees to comply with the requirements
of the 1940 Act, the Investment Advisers Act of 1940 (the "Advisers Act"),
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Commodity Exchange Act and the respective rules and regulations
thereunder, as applicable, as well as with all other applicable federal and
state laws, rules, regulations and case law that relate to the services and
relationships described hereunder and to the conduct of its business as a
registered investment adviser. The Adviser also agrees to comply with the
objectives, policies and restrictions set forth in the Registration
Statement, as amended or supplemented, of the Funds, and with any policies,
guidelines, instructions and procedures approved by the Board and provided to
the Adviser. In selecting each Fund's portfolio securities and performing the
Adviser's obligations hereunder, the Adviser shall cause the Fund to comply
with the diversification and source of income requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), for qualification
as a regulated investment company. The Adviser shall maintain compliance
procedures that it reasonably believes are adequate to ensure the its
compliance with the foregoing. No supervisory activity undertaken by the
Board shall limit the Adviser's full responsibility for any of the foregoing.
(c) PROXY VOTING. The Board has the authority to determine how
proxies with respect to securities that are held by the Funds shall be voted,
and the Board has initially determined to delegate the authority and
responsibility to vote proxies for the Fund's securities to the Adviser. So
long as proxy voting authority for the Fund has been delegated to the
Adviser, the Adviser shall exercise its proxy voting responsibilities Adviser
shall carry out such responsibility in accordance with any instructions that
the Board shall provide from time to time, and at all times in a manner
consistent with Rule 206(4)-6 under the Advisers Act and its fiduciary
responsibilities to the Trust. The Adviser shall provide periodic reports and
keep records relating to proxy voting as the Board may reasonably request or
as may be necessary for the Funds to comply with the 1940 Act and other
applicable law. Any such delegation of proxy voting responsibility to the
Adviser may be revoked or modified by the Board at any time.
(d) RECORDKEEPING. The Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the Fund,
except as otherwise provided herein or as may be necessary for the Adviser to
supply to the Trust or its Board the information required to be supplied
under this Agreement.
The Adviser shall maintain separate books and detailed records of
all matters pertaining to Fund assets advised by the Adviser required by Rule
31a-1 under the 1940 Act (other than those records being maintained by any
administrator, custodian or transfer agent appointed by the Funds) relating
to its responsibilities provided hereunder with respect to the Funds, and
shall preserve such records for the periods and in a manner prescribed
therefore by Rule 31a-2 under the 1940 Act (the "Fund Books and Records").
The Fund Books and Records shall be available to the Board at any time upon
request, shall be delivered to the Trust upon the termination of this
Agreement and shall be available without delay during any day the Trust is
open for business.
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(e) HOLDINGS INFORMATION AND PRICING. The Adviser shall provide
regular reports regarding Fund holdings, and shall, on its own initiative,
furnish the Trust and its Board from time to time with whatever information
the Adviser believes is appropriate for this purpose. The Adviser agrees to
immediately notify the Trust if the Adviser reasonably believes that the
value of any security held by a Fund may not reflect fair value. The Adviser
agrees to provide any pricing information of which the Adviser is aware to
the Trust, its Board and/or any Fund pricing agent to assist in the
determination of the fair value of any Fund holdings for which market
quotations are not readily available or as otherwise required in accordance
with the 1940 Act or the Trust's valuation procedures for the purpose of
calculating the Fund net asset value in accordance with procedures and
methods established by the Board.
(f) COOPERATION WITH AGENTS OF THE TRUST. The Adviser agrees to
cooperate with and provide reasonable assistance to the Trust, any Trust
custodian or foreign sub-custodians, any Trust pricing agents and all other
agents and representatives of the Trust, such information with respect to the
Funds as they may reasonably request from time to time in the performance of
their obligations, provide prompt responses to reasonable requests made by
such persons and establish appropriate interfaces with each so as to promote
the efficient exchange of information and compliance with applicable laws and
regulations.
2. CODE OF ETHICS. The Adviser has adopted a written code of ethics
that it reasonably believes complies with the requirements of Rule 17j-1
under the 1940 Act, which it will provide to the Trust. The Adviser shall
ensure that its Access Persons (as defined in the Adviser's Code of Ethics)
comply in all material respects with the Adviser's Code of Ethics, as in
effect from time to time. Upon request, the Adviser shall provide the Trust
with a (i) a copy of the Adviser's current Code of Ethics, as in effect from
time to time, and (ii) certification that it has adopted procedures
reasonably necessary to prevent Access Persons from engaging in any conduct
prohibited by the Adviser's Code of Ethics. Annually, the Adviser shall
furnish a written report, which complies with the requirements of Rule 17j-1,
concerning the Adviser's Code of Ethics to the Trust. The Adviser shall
respond to requests for information from the Trust as to violations of the
Code by Access Persons and the sanctions imposed by the Adviser. The Adviser
shall immediately notify the Trust of any material violation of the Code,
whether or not such violation relates to an security held by any Fund.
3. INFORMATION AND REPORTING. The Adviser shall provide the Trust
and its respective officers with such periodic reports concerning the
obligations the Adviser has assumed under this Agreement as the Trust may
from time to time reasonably request.
(a) NOTIFICATION OF BREACH / COMPLIANCE REPORTS. The Adviser shall
notify the Trust immediately upon detection of (i) any material failure to
manage any Fund in accordance with its investment objectives and policies or
any applicable law; or (ii) any material breach of any of the Funds' or the
Adviser's policies, guidelines or procedures. In addition, the Adviser shall
provide a quarterly report regarding each Fund's compliance with its
investment objectives and policies, applicable law, including, but not
limited to the 1940 Act and Subchapter M of the Code, and the Fund's
policies,
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guidelines or procedures as applicable to the Adviser's obligations under
this Agreement. The Adviser agrees to correct any such failure promptly and
to take any action that the Board may reasonably request in connection with
any such breach. Upon request, the Adviser shall also provide the officers of
the Trust with supporting certifications in connection with such
certifications of Fund financial statements and disclosure controls pursuant
to the Xxxxxxxx-Xxxxx Act. The Adviser will promptly notify the Trust in the
event (i) the Adviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before or by
any court, public board, or body, involving the affairs of the Trust
(excluding class action suits in which a Fund is a member of the plaintiff
class by reason of the Fund's ownership of shares in the defendant) or the
compliance by the Adviser with the federal or state securities laws or (ii)
an actual change in control of the Adviser resulting in an "assignment" (as
defined in the 1940 Act) has occurred or is otherwise proposed to occur.
(b) BOARD AND FILINGS INFORMATION. The Adviser will also provide the
Trust with any information reasonably requested regarding its management of
the Funds required for any meeting of the Board, or for any shareholder
report, amended registration statement, proxy statement, or prospectus
supplement to be filed by the Trust with the Commission. The Adviser will
make its officers and employees available to meet with the Board from time to
time on due notice to review its investment management services to the Funds
in light of current and prospective economic and market conditions and shall
furnish to the Board such information as may reasonably be necessary in order
for the Board to evaluate this Agreement or any proposed amendments thereto.
(c) TRANSACTION INFORMATION. The Adviser shall furnish to the Trust
such information concerning portfolio transactions as may be necessary to
enable the Trust or its designated agent to perform such compliance testing
on the Funds and the Adviser's services as the Trust may, in its sole
discretion, determine to be appropriate. The provision of such information by
the Adviser to the Trust or its designated agent in no way relieves the
Adviser of its own responsibilities under this Agreement.
4. BROKERAGE.
(a) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of a Fund, neither the Adviser nor any of its
directors, officers or employees will act as a principal or agent or receive
any commission except as permitted by the 1940 Act.
(b) PLACEMENT OF ORDERS. The Adviser shall arrange for the placing
of all orders for the purchase and sale of securities for a Fund's account
with brokers or dealers selected by the Adviser. In the selection of such
brokers or dealers and the placing of such orders, the Adviser is directed at
all times to seek for the Fund the most favorable execution and net price
available under the circumstances. It is also understood that it is desirable
for the Fund that the Adviser have access to brokerage and research services
provided by brokers who may execute brokerage transactions at a higher cost
to the Fund
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than may result when allocating brokerage to other brokers, consistent with
section 28(e) of the 1934 Act and any Commission staff interpretations
thereof. Therefore, the Adviser is authorized to place orders for the
purchase and sale of securities for a Fund with such brokers, subject to
review by the Board from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided by
such brokers may be useful to the Adviser in connection with its or its
affiliates' services to other clients.
(c) AGGREGATED TRANSACTIONS. On occasions when the Adviser deems the
purchase or sale of a security to be in the best interest of a Fund as well
as other clients of the Adviser, the Adviser may, to the extent permitted by
applicable law and regulations, aggregate the order for securities to be sold
or purchased. In such event, the Adviser will allocate securities or futures
contracts so purchased or sold, as well as the expenses incurred in the
transaction, in the manner the Adviser reasonably considers to be equitable
and consistent with its fiduciary obligations to the Fund and to such other
clients under the circumstances.
(d) AFFILIATED BROKERS. The Adviser or any of its affiliates may act
as broker in connection with the purchase or sale of securities or other
investments for a Fund, subject to: (a) the requirement that the Adviser seek
to obtain best execution and price within the policy guidelines determined by
the Board and set forth in the Fund's current prospectus and SAI; (b) the
provisions of the 1940 Act; (c) the provisions of the Advisers Act; (d) the
provisions of the 1934 Act; and (e) other provisions of applicable law. These
brokerage services are not within the scope of the duties of the Adviser
under this Agreement. Subject to the requirements of applicable law and any
procedures adopted by the Board, the Adviser or its affiliates may receive
brokerage commissions, fees or other remuneration from a Fund for these
services in addition to the Adviser's fees for services under this Agreement.
5. CUSTODY. Nothing in this Agreement shall permit the Adviser to take
or receive physical possession of cash, securities or other investments of
a Fund.
6. ALLOCATION OF CHARGES AND EXPENSES. The Adviser will bear its own
costs of providing services hereunder. The Adviser agrees to pay all expenses
incurred by the Trust except for interest, taxes, brokerage and other
expenses incurred in placing orders for the purchase and sale of
securities and other investment instruments, extraordinary expenses,
and distribution fees and expenses paid by the Trust under any distribution
plan adopted pursuant to Rule 12b-1 under the 1940 Act.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) PROPERLY REGISTERED. The Adviser is registered as an investment
adviser under the Advisers Act, and will remain so registered for the
duration of this Agreement. The Adviser is not prohibited by the Advisers Act
or the 1940 Act from performing the services contemplated by this Agreement,
and to the best knowledge of the Adviser, there is no proceeding or
investigation that is reasonably likely to result in the Adviser being
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prohibited from performing the services contemplated by this Agreement. The
Adviser agrees to promptly notify the Trust of the occurrence of any event
that would disqualify the Adviser from serving as an investment adviser to an
investment company. The Adviser is in compliance in all material respects
with all applicable federal and state law in connection with its investment
management operations.
(b) ADV DISCLOSURE. The Adviser has provided the Trust with a copy
of its Form ADV as most recently filed with the SEC and will, promptly after
filing any amendment to its Form ADV with the SEC, furnish a copy of such
amendments to the Trust. The information contained in the Adviser's Form ADV
is accurate and complete in all material respects 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.
(c) FUND DISCLOSURE DOCUMENTS. The Adviser has reviewed and will in
the future review, the Registration Statement, and any amendments or
supplements thereto, the annual or semi-annual reports to shareholders, other
reports filed with the Commission and any marketing material of a Fund
(collectively the "Disclosure Documents") and represents and warrants that
with respect to disclosure about the Adviser, the manner in which the Adviser
manages the Fund or information relating directly or indirectly to the
Adviser, such Disclosure Documents contain or will contain, as of the date
thereof, no untrue statement of any material fact and does not omit any
statement of material fact which was required to be stated therein or
necessary to make the statements contained therein not misleading.
(d) USE OF THE NAME "RYDEX". The Adviser has the right to use the
name "Rydex" in connection with its services to the Trust and that, subject
to the terms set forth in Section 8 of this Agreement, the Trust shall have
the right to use the name "Rydex" in connection with the management and
operation of the Funds. The Adviser is not aware of any threatened or
existing actions, claims, litigation or proceedings that would adversely
effect or prejudice the rights of the Adviser or the Trust to use the name
"Rydex".
(e) INSURANCE. The Adviser maintains errors and omissions insurance
coverage in an appropriate amount and shall provide prior written notice to
the Trust (i) of any material changes in its insurance policies or insurance
coverage; or (ii) if any material claims will be made on its insurance
policies. Furthermore, the Adviser shall upon reasonable request provide the
Trust with any information it may reasonably require concerning the amount of
or scope of such insurance.
(f) NO DETRIMENTAL AGREEMENT. The Adviser represents and warrants
that it has no arrangement or understanding with any party, other than the
Trust, that would influence the decision of the Adviser with respect to its
selection of securities for a Fund, and that all selections shall be done in
accordance with what is in the best interest of the Fund.
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(g) CONFLICTS. The Adviser shall act honestly, in good faith and in
the best interests of the Trust including requiring any of its personnel with
knowledge of Fund activities to place the interest of the Fund first, ahead
of their own interests, in all personal trading scenarios that may involve a
conflict of interest with the Funds, consistent with its fiduciary duties
under applicable law.
(h) REPRESENTATIONS. The representations and warranties in this
Section 7 shall be deemed to be made on the date this Agreement is executed
and at the time of delivery of the quarterly compliance report required by
Section 3(a), whether or not specifically referenced in such report.
8. THE NAME "RYDEX". The Adviser grants to the Trust a sublicense to
use the name "Rydex" (the "Name") as part of the name of any Fund. The
foregoing authorization by the Adviser to the Trust to use the Name as part
of the name of any Fund is not exclusive of the right of the Adviser itself
to use, or to authorize others to use, the Name; the Trust acknowledges and
agrees that, as between the Trust and the Adviser, the Adviser has the right
to use, or authorize others to use, the Name. The Trust shall (1) only use
the Name in a manner consistent with uses approved by the Adviser; (2) use
its best efforts to maintain the quality of the services offered using the
Name; (3) adhere to such other specific quality control standards as the
Adviser may from time to time promulgate. At the request of the Adviser, the
Trust will (a) submit to Adviser representative samples of any promotional
materials using the Name; and (b) change the name of any Fund within three
months of its receipt of the Adviser's request, or such other shorter time
period as may be required under the terms of a settlement agreement or court
order, so as to eliminate all reference to the Name and will not thereafter
transact any business using the Name in the name of any Fund; provided,
however, that the Trust may continue to use beyond such date any supplies of
prospectuses, marketing materials and similar documents that the Trust had on
had at the date of such name change in quantities not exceeding those
historically produced and used in connection with such Fund.
9. ADVISER'S COMPENSATION. The Funds shall pay to the Adviser, as
compensation for the Adviser's services hereunder, a fee, determined as
described in Schedule A that is attached hereto and made a part hereof. Such
fee shall be computed daily and paid not less than monthly in arrears by the
Funds.
The method for determining net assets of a Fund for purposes hereof
shall be the same as the method for determining net assets for purposes of
establishing the offering and redemption prices of Fund shares as described in
the Fund's prospectus. In the event of termination of this Agreement, the fee
provided in this Section shall be computed on the basis of the period ending on
the last business day on which this Agreement is in effect subject to a pro rata
adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month.
10. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder,
the Adviser 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 the Trust or any Fund in any way or otherwise
be deemed to be an agent of the Trust or any Fund. If any
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occasion should arise in which the Adviser gives any advice to its clients
concerning the shares of a Fund, the Adviser will act solely as investment
counsel for such clients and not in any way on behalf of the Fund.
11. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in section 2(a)(4) of the 1940 Act); provided that such termination
shall not relieve the Adviser of any liability incurred hereunder.
This Agreement may not be added to or changed orally and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act, when applicable.
12. DURATION AND TERMINATION.
(a) This Agreement shall become effective as of the date executed
and shall remain in full force and effect continually thereafter, subject to
renewal as provided in Section 12(d) and unless terminated automatically as
set forth in Section 11 hereof or until terminated as follows:
(b) The Trust may cause this Agreement to terminate either (i) by
vote of its Board or (ii) with respect to any Fund, upon the affirmative vote
of a majority of the outstanding voting securities of the Fund; or
(c) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Trust; or
(d) This Agreement shall automatically terminate two years from the
date of its execution unless its renewal is specifically approved at least
annually thereafter by (i) a majority vote of the Trustees, including a
majority vote of such Trustees who are not interested persons of the Trust or
the Adviser, at a meeting called for the purpose of voting on such approval;
or (ii) the vote of a majority of the outstanding voting securities of each
Fund; provided, however, that if the continuance of this Agreement is
submitted to the shareholders of the Funds for their approval and such
shareholders fail to approve such continuance of this Agreement as provided
herein, the Adviser may continue to serve hereunder as to the Funds in a
manner consistent with the 1940 Act and the rules and regulations thereunder;
and
Termination of this Agreement pursuant to this Section shall be without
payment of any penalty.
In the event of termination of this Agreement for any reason, the
Adviser shall, immediately upon notice of termination or on such later date as
may be specified in such notice, cease all activity on behalf of the Fund and
with respect to any of its assets, except as otherwise required by any fiduciary
duties of the Adviser under applicable law. In addition, the Adviser
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shall deliver the Fund Books and Records to the Trust by such means and in
accordance with such schedule as the Trust shall direct and shall otherwise
cooperate, as reasonably directed by the Trust, in the transition of portfolio
asset management to any successor of the Adviser.
13. CERTAIN DEFINITIONS. For the purposes of this Agreement:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" shall have the meaning as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the Commission
under the 1940 Act or any interpretations of the Commission staff.
(b) "Interested persons" and "Assignment" shall have their
respective meanings as set forth in the 1940 Act, subject, however, to such
exemptions as may be granted by the Commission under the 1940 Act or any
interpretations of the Commission staff.
14. LIABILITY OF THE ADVISER. The Adviser 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 controlling persons (as
described in Section 15 of the 1933 Act) (collectively, the "Adviser
Indemnitees") 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 Adviser 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
Adviser's willful misfeasance, bad faith or gross negligence generally
in the performance of its duties hereunder or its reckless disregard of
its obligations and duties under this Agreement.
15. 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.
16. LIMITATION OF LIABILITY. 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 Fund and that no Trustee,
officer or holder of shares of beneficial interest of the Fund shall be
personally liable for any of the foregoing liabilities. The Trust's
Certificate of Trust, as amended from time to time, is on file in the
Office of the Secretary of State of the State of Delaware. Such
Certificate of Trust and the Trust's Agreement and Declaration of Trust
describe in detail the respective responsibilities and limitations on
liability of the Trustees, officers, and holders of shares of
beneficial interest.
17. JURISDICTION. This Agreement shall be governed by and construed in
accordance with the substantive laws of state of Delaware and the
Adviser consents to the jurisdiction of courts, both state or federal,
in Delaware, with respect to any dispute under this Agreement.
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18. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement
and shall not affect its construction.
19. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be signed on their behalf by their duly authorized officers as of the date first
above written.
RYDEX ETF TRUST, on behalf of each Fund listed
on Schedule A
By: /s/ XXXX X. XXXXXXXXXXX
-----------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
PADCO ADVISORS II, INC.
By: /s/ XXXX X. XXXXXXXXXXX
-----------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
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SCHEDULE A
TO THE
ADVISORY AGREEMENT
DATED APRIL 30, 2004 BETWEEN
RYDEX ETF TRUST
AND
PADCO ADVISORS II, INC.
The Trust will pay to the Adviser as compensation for the Adviser's services
rendered, a fee, computed daily at an annual rate based on the average daily net
assets of the respective Fund in accordance the following fee schedule:
FUND RATE
---- ----
Rydex S&P Equal Weight ETF .............. 0.40%
A-1
