FORM OF
AMENDMENT
TO
ADVISORY AGREEMENT
BETWEEN
RYDEX SERIES FUNDS
AND PADCO ADVISORS, INC.,
DATED APRIL 30, 2004,
AS AMENDED
FORM OF
AMENDMENT
TO
ADVISORY AGREEMENT
DATED APRIL 30, 2004, AS AMENDED,
BETWEEN
RYDEX SERIES FUNDS
AND
PADCO ADVISORS, INC.
The following amendment is applicable to Schedule A of the Advisory Agreement
between Rydex Series Funds (the "Trust") and PADCO Advisors, Inc. (the
"Adviser"), dated April 30, 2004, as amended to date (the "Agreement"), and is
hereby incorporated into and made a part of the Agreement:
Schedule A of the Agreement is amended, effective [________, 2006], to read as
follows:
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 FUND RATE
---- ---- ---- ----
Nova* ............................ 0.75% Banking ................... 0.85%
Nova Master ...................... 0.75% Basic Materials ........... 0.85%
Ursa*............................. 0.90% Biotechnology ............. 0.85%
Ursa Master ...................... 0.90% Consumer Products ......... 0.85%
OTC* ............................. 0.75% Electronics ............... 0.85%
OTC Master ....................... 0.75% Energy .................... 0.85%
Arktos* .......................... 0.90% Energy Services ........... 0.85%
Arktos Master .................... 0.90% Financial Services ........ 0.85%
Medius* .......................... 0.90% Health Care ............... 0.85%
Medius Master .................... 0.90% Internet .................. 0.85%
Mekros ........................... 0.90% Leisure ................... 0.85%
U.S. Government Bond ............. 0.50% Precious Metals ........... 0.75%
Juno* ............................ 0.90% Real Estate ............... 0.85%
Juno Master ...................... 0.90% Retailing ................. 0.85%
Large-Cap Europe ................. 0.90% Technology ................ 0.85%
Large-Cap Japan .................. 0.90% Telecommunications ........ 0.85%
Large-Cap Value .................. 0.75% Transportation ............ 0.85%
FUND RATE FUND RATE
---- ---- ---- ----
Large-Cap Growth ................. 0.75% Utilities* ................ 0.85%
Mid-Cap Value .................... 0.75% Utilities Master........... 0.85%
Mid-Cap Growth ................... 0.75% Commodities................ 0.75%
Inverse Mid-Cap* ................. 0.90% Sector Rotation ........... 0.90%
Inverse Mid-Cap Master ........... 0.90% Core Equity** ............. 0.70%
Small-Cap Value .................. 0.75% S&P 500.................... 0.75%
Small-Cap Growth ................. 0.75% Xxxxxxx 2000............... 0.75%
Inverse Small-Cap* ............... 0.90% EPT MODERATE FUND X.XX%
Inverse Small-Cap Master ......... 0.90% EPT CONSERVATIVE FUND X.XX%
Strengthening Dollar.............. 0.90% EPT AGGRESSIVE FUND X.XX%
Weakening Dollar.................. 0.90%
U.S. Government Money Market...... 0.50%
All-Cap Value..................... 0.90%
ADDITIONS ARE NOTED IN BOLD.
* The fee will be reduced to 0.00% for any period during which the Fund invests
through a master-feeder structure.
** The management fee with respect to the Core Equity Fund (the "Fund") is
comprised of a basic fee (the "Basic Fee") at the annual rate of 0.70% of the
Fund's average daily net assets and a performance adjustment (the "Performance
Adjustment") as discussed below.
1. CORE EQUITY FUND MANAGEMENT FEE.
The management fee with respect to the Core Equity Fund (the "Fund") is
comprised of a basic fee (the "Basic Fee") at the annual rate of 0.70% of the
Fund's average daily net assets and a performance adjustment (the "Performance
Adjustment") as discussed below.
A. CALCULATING THE PERFORMANCE ADJUSTMENT.
The performance adjustment shall be calculated monthly by:
(i) Determining the difference in performance (the "Performance
Difference") between the Fund and the Xxxxxxx 3000 Index (the
"Index"), as described in paragraph C;
(ii) Using the Performance Difference calculated under paragraph
B(ii) to determine the performance adjustment ( the
"Performance Adjustment"), as illustrated in paragraph D; and
(iii) Adding the Performance Adjustment to the Basic Fee to
determine the management fee for the applicable month.
B. COMPUTING THE PERFORMANCE DIFFERENCE.
The Performance Difference is calculated monthly, and is determined by
measuring the percentage difference between the performance of one H-Class Share
of the Fund and the performance of the Index over the most recent 12-month
period. The performance of one H-Class Share of the Fund shall be measured by
computing the percentage difference, carried to five decimal places, between the
net asset value as of the last business day of the period selected for
comparison and the net asset value of such share as of the last business day of
the prior period, adjusted for dividends or capital gain distributions treated
as reinvested immediately. The performance of the Index will be established by
measuring the percentage difference, carried to five decimal places, between the
beginning and ending values of the Index for the comparison period, with
dividends or capital gain distributions on the securities that comprise the
Index being treated as reinvested immediately.
C. DETERMINING THE PERFORMANCE ADJUSTMENT.
For every 0.0375% in Performance Difference, the Adviser's fee will be
adjusted upwards or downwards by 0.01%. The maximum adjustment rate is 0.20% per
year, resulting in a minimum possible annual fee of 0.50% and a maximum possible
annual fee of 0.90%.
D. PERFORMANCE ADJUSTMENT EXAMPLE.
The following example illustrates the application of the Performance
Adjustment:
FUND'S INDEX'S FUND'S
FOR THE ROLLING 12-MONTH INVESTMENT CUMULATIVE PERFORMANCE RELATIVE
PERFORMANCE PERIOD PERFORMANCE CHANGE TO THE INDEX
------------------ ----------- ------ ------------
January 1 $50.00 100.00
December 31 $55.25 110.20
Absolute change + $5.25 +$ 10.20
Actual change + 10.50% + 10.20% +0.30%
Based on these assumptions, the Core Equity Fund calculates the Adviser's
management fee rate for the month-ended December 31 as follows:
o The portion of the annual basic fee rate of 0.70% applicable to that month
is multiplied by the Fund's average daily net assets for the month. This
results in the dollar amount of the basic fee.
o The +0.30% difference between the performance of the Fund and the record
of the Index is divided by 3.75, producing a rate of 0.08%.
o The 0.08% rate (adjusted for the number of days in the month) is
multiplied by the Fund's average daily net assets for the performance
period. This results in the dollar amount of the performance adjustment.
o The dollar amount of the performance adjustment is added to the dollar
amount of the basic fee, producing the adjusted management fee.
2. PERFORMANCE PERIODS
For the period from July 1, 2003 through May 31, 2004, the Adviser will be
paid at the Base Rate, without regard to any Performance Adjustment. For the
month ending June 30, 2004, the Adviser will begin applying the Performance
Adjustment as described herein, based upon the performance of the Fund relative
to the performance of the Index during the 12-month period from July 1, 2003
through June 30, 2004. The 12-month comparison period will roll over with each
succeeding month, so that it will always equal 12 months, ending with the month
for which the performance incentive adjustment is being computed.
3. CHANGES TO THE "INDEX" OR THE "CLASS"
The Trustees have initially designated the Xxxxxxx 3000 Index and
the H-Class Shares as the index and class to be used for purposes of determining
the Performance Adjustment (referred to herein as the "Index" and the "Class,"
respectively). From time to time, to the extent permitted by the 1940 Act, the
Trustees may, by a vote of the Trustees of the Trust voting in person, including
a majority of the Trustees who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of any such parties, determine (i) that
another securities index is a more appropriate benchmark than the Index for
purposes of evaluating the performance of the Trust; and/or (ii) that a
different class of shares of the Trust representing interests in the Fund other
than the Class is most appropriate for use in calculating the Performance
Adjustment. After ten days' written notice to the Adviser, a different index
(the "Successor Index") may be substituted for the Index in prospectively
calculating the Performance Adjustment, and/or a different class of shares (the
"Successor Class") may be substituted in calculating the Performance Adjustment.
However, the calculation of that portion of the Performance Adjustment
attributable to any portion of the performance period prior to the adoption of
the Successor Index will still be based upon the Fund's performance compared to
the Index. The use of a Successor Class of shares for purposes of calculating
the Performance Adjustment shall apply to the entire performance period so long
as such Successor Class was outstanding at the beginning of such period. In the
event that such Successor Class of shares was not outstanding for all or a
portion of the Performance Period, it may only be used in calculating that
portion of the Performance adjustment attributable to the period during which
such Successor Class was outstanding and any prior portion of the Performance
Period shall be calculated using the Class of shares previously designated.
In witness whereof, the parties hereto have caused this Amendment to be executed
in their names and on their behalf and through their duly-authorized officers as
of the [_____ day of _________, 2006].
RYDEX SERIES FUNDS
By:__________________________
Name: Xxxx X. Xxxxxxxxxxx
Title: President
PADCO ADVISORS, INC.
By:__________________________
Name: Xxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
