AMENDMENT
DATED FEBRUARY 16, 2007
TO THE
ADVISORY AGREEMENT
BETWEEN
RYDEX SERIES FUNDS
AND PADCO ADVISORS, INC.,
DATED APRIL 30, 2004,
AS AMENDED
AMENDMENT DATED
FEBRUARY 16, 2007
TO THE
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 February 16, 2007, 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
---- -----
Nova* .................................................................. 0.75%
Nova Master ............................................................ 0.75%
Xxxxxxx S&P 500 (formerly Ursa)* ....................................... 0.90%
Xxxxxxx S&P 500 Master (formerly Ursa Master) .......................... 0.90%
OTC* ................................................................... 0.75%
OTC Master ............................................................. 0.75%
Inverse OTC (formerly Arktos)* ......................................... 0.90%
Inverse OTC Master (formerly Arktos Master) ............................ 0.90%
Mid-Cap Advantage (formerly Medius)* ................................... 0.90%
Mid-Cap Advantage Master (formerly Medius Master)....................... 0.90%
Xxxxxxx 2000 Advantage (formerly Mekros) ............................... 0.90%
Banking ................................................................ 0.85%
Basic Materials ........................................................ 0.85%
Biotechnology .......................................................... 0.85%
Consumer Products ...................................................... 0.85%
Electronics ............................................................ 0.85%
Energy ................................................................. 0.85%
Energy Services ........................................................ 0.85%
Financial Services ..................................................... 0.85%
Health Care ............................................................ 0.85%
Internet ............................................................... 0.85%
Leisure ................................................................ 0.85%
FUND RATE
---- -----
Government Long Bond Advantage (formerly U.S. Government Bond) ......... 0.50%
Inverse Government Long Bond (formerly Juno)* .......................... 0.90%
Inverse Government Long Bond Master (formerly Juno Master) ............. 0.90%
Europe Advantage (formerly Large-Cap Europe) ........................... 0.90%
Japan Advantage (formerly Large-Cap Japan) ............................. 0.90%
Large-Cap Value ........................................................ 0.75%
Large-Cap Growth ....................................................... 0.75%
Mid-Cap Value .......................................................... 0.75%
Mid-Cap Growth ......................................................... 0.75%
Inverse Mid-Cap* ....................................................... 0.90%
Inverse Mid-Cap Master ................................................. 0.90%
Small-Cap Value ........................................................ 0.75%
Small-Cap Growth ....................................................... 0.75%
Inverse Xxxxxxx 2000 (formerly Inverse Small-Cap)* ..................... 0.90%
Inverse Xxxxxxx 2000 Master (formerly Inverse Small-Cap Master) ........ 0.90%
Dynamic Strengthening Dollar (formerly Strengthening Dollar) ........... 0.90%
Dynamic Weakening Dollar (formerly Weakening Dollar) ................... 0.90%
U.S. Government Money Market ........................................... 0.50%
All-Cap Value .......................................................... 0.90%
Precious Metals ........................................................ 0.75%
Real Estate ............................................................ 0.85%
Retailing .............................................................. 0.85%
Technology ............................................................. 0.85%
Telecommunications ..................................................... 0.85%
Transportation ......................................................... 0.85%
Utilities* ............................................................. 0.85%
Utilities Master ....................................................... 0.85%
Commodities ............................................................ 0.75%
Sector Rotation ........................................................ 0.90%
Multi-Cap Core Equity (formerly Core Equity)** ......................... 0.70%
S&P 500 ................................................................ 0.75%
Xxxxxxx 2000 ........................................................... 0.75%
Essential Portfolio Moderate ........................................... 0.00%
Essential Portfolio Conservative ....................................... 0.00%
Essential Portfolio Aggressive ......................................... 0.00%
Managed Futures Strategy ............................................... 0.90%
HIGH YIELD STRATEGY .................................................... 0.75%
INVERSE HIGH YIELD STRATEGY ............................................ 0.75%
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 Multi-Cap 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. MULTI-CAP CORE EQUITY FUND MANAGEMENT FEE.
The management fee with respect to the Multi-Cap 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 Multi-Cap 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 1940 Act) 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 16th day of February, 2007.
RYDEX SERIES FUNDS
By: /s/ Xxxx X. Xxxxxxxxxxx
-----------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
PADCO ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxxxxxx
-----------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
