SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into as of the [__] day of [November],
2008 between PADCO Advisors, Inc. (the "Adviser"), a Maryland corporation,
registered under the Investment Advisers Act of 1940, as amended (the
"Investment Advisers Act"), and Security Global Investors, LLC (the
"Subadviser"), a Kansas limited liability company registered under the
Investment Advisers Act.
WITNESSETH:
WHEREAS, Rydex Series Fund, a Delaware statutory trust (the "Trust"), is
registered with the Securities and Exchange Commission (the "Commission") as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "Investment Company Act");
WHEREAS, the Trust is authorized to issue shares of the Global 130/30
Strategy Fund (the "Fund"), a separate series of the Trust;
WHEREAS, the Fund has, pursuant to an Advisory Agreement with the Adviser
(the "Advisory Agreement"), retained the Adviser to act as investment adviser
for and to manage its assets;
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Subadviser as subadviser to act as investment adviser for and to manage the
Fund's Investments (as defined below) and the Subadviser desires to render such
services.
NOW, THEREFORE, the Adviser and Subadviser do mutually agree and promise as
follows:
1. APPOINTMENT AS SUBADVISER. The Adviser hereby retains the Subadviser to
act as investment adviser for and to manage the assets of the Fund, subject to
the supervision of the Adviser and the Board of Trustees of the Fund and subject
to the terms of this Agreement. The Subadviser hereby accepts such employment.
In such capacity, the Subadviser shall be responsible for the Fund's Investments
(as defined below).
2. DUTIES OF SUBADVISER.
(a) INVESTMENTS. The Subadviser is hereby authorized and directed and
hereby agrees, subject to the stated investment policies and restrictions
of the Fund as set forth in the Fund's prospectus and statement of
additional information as currently in effect and as supplemented or
amended from time to time (collectively referred to hereinafter as the
"Prospectus") and subject to the directions of the Adviser and the Fund's
Board of Trustees to purchase, hold and sell investments for the Fund
(hereinafter "Investments") and to monitor on a continuous basis the
performance of such Investments. The Subadviser shall give the Fund the
benefit of its best efforts in rendering its services as Subadviser. The
Subadviser may contract with or consult with such banks, other securities
firms, brokers or other parties, without additional expense to the Fund, as
it may deem appropriate regarding investment advice, research and
statistical data, clerical assistance or otherwise.
The Subadviser acknowledges that the Fund may engage in certain
transactions in reliance on exemptions under Rule 10f-3, Rule 12d3-1, Rule
17a-10 and Rule 17e-1 under the Investment Company Act. Accordingly, the
Subadviser hereby agrees that it will not consult with any other subadviser
of the Fund, or an affiliated person of such other subadviser, concerning
transactions for the Fund in securities or other fund assets. The
Subadviser shall be limited to providing
investment advice with respect to only the discrete portion of the Fund's
portfolio as may be determined from time-to-time by the Adviser, and shall
not consult with any other subadviser (if any) as to any other portion of
such Fund's portfolio concerning transactions for the Fund in securities or
other assets.
(b) BROKERAGE. The Subadviser is authorized, subject to the
supervision of the Adviser and the Fund's Board to establish and maintain
accounts on behalf of the Fund with, and place orders for the purchase and
sale of the Fund's Investments with or through, such persons, brokers or
dealers as Subadviser may select which may include, to the extent permitted
by the Adviser and the Fund's Board, brokers or dealers affiliated with the
Subadviser or Adviser, and negotiate commissions to be paid on such
transactions. The Subadviser agrees that in placing such orders for the
Fund it shall attempt to obtain best execution, provided that, the
Subadviser may, on behalf of the Fund, pay brokerage commissions to a
broker which provides brokerage and research services to the Subadviser in
excess of the amount another broker would have charged for effecting the
transaction, provided (i) the Subadviser determines in good faith that the
amount is reasonable in relation to the value of the brokerage and research
services provided by the executing broker in terms of the particular
transaction or in terms of the Subadviser's overall responsibilities with
respect to the Fund and the accounts as to which the Subadviser exercises
investment discretion, (ii) such payment is made in compliance with Section
28(e) of the Securities Exchange Act of 1934, as amended, and any other
applicable laws and regulations, and (iii) in the opinion of the
Subadviser, the total commissions paid by the Fund will be reasonable in
relation to the benefits to the Fund over the long term. In reaching such
determination, the Subadviser will not be required to place or attempt to
place a specific dollar value on the brokerage and/or research services
provided or being provided by such broker. It is recognized that the
services provided by such brokers may be useful to the Subadviser in
connection with the Subadviser's services to other clients. On occasions
when the Subadviser deems the purchase or sale of a security to be in the
best interests of the Fund as well as other clients of the Subadviser, the
Subadviser, to the extent permitted by applicable laws and regulations,
may, but shall be under no obligation to, aggregate the securities to be
sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of
securities so sold or purchased, as well as the expenses incurred in the
transaction, will be made by the Subadviser in the manner the Subadviser
considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients. The Subadviser will
report on such allocations at the request of the Adviser, or the Fund's
Board, providing such information as the number of aggregated trades to
which the Fund was a party, the broker(s) to whom such trades were directed
and the basis of the allocation for the aggregated trades.
(c) SECURITIES TRANSACTIONS. The Subadviser and any affiliated person
of the Subadviser will not purchase securities or other instruments from or
sell securities or other instruments to the Fund ("Principal
Transactions"); PROVIDED, HOWEVER, the Subadviser or an affiliated person
of the Subadviser may enter into a Principal Transaction with the Fund if
(i) the transaction is permissible under applicable laws and regulations,
including, without limitation, the Investment Company Act and the
Investment Advisers Act and the rules and regulations promulgated
thereunder, and (ii) the transaction or category of transactions receives
the express written approval of the Adviser.
The Subadviser agrees to observe and comply with Rule 17j-1 under
the Investment Company Act and its Code of Ethics, as the same may be
amended from time to time. The Subadviser agrees to provide the Adviser and
the Fund with a copy of such Code of Ethics.
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(d) BOOKS AND RECORDS. The Subadviser will maintain all books and
records required to be maintained pursuant to the Investment Company Act
and the rules and regulations promulgated thereunder solely with respect to
transactions made by it on behalf of the Fund including, without
limitation, the books and records required by Subsections (b)(1), (5), (6),
(7), (9), (10) and (11) and Subsection (f) of Rule 31a-1 under the
Investment Company Act and shall timely furnish to the Adviser all
information relating to the Subadviser's services hereunder needed by the
Adviser to keep such other books and records of the Fund required by Rule
31a-1 under the Investment Company Act. The Subadviser will also preserve
all such books and records for the periods prescribed in part (e) of Rule
31a-2 under the Investment Company Act, and agrees that such books and
records shall remain the sole property of the Fund and shall be immediately
surrendered to the appropriate Fund upon request. The Subadviser further
agrees that all books and records maintained hereunder shall be made
available to the Fund or the Adviser at any time upon reasonable request
and notice, including telecopy, during any business day.
(e) INFORMATION CONCERNING INVESTMENTS AND SUBADVISER. From time to
time as the Adviser or the Fund may request, the Subadviser will furnish
the requesting party reports on portfolio transactions and reports on
Investments held in the portfolios, all in such detail as the Adviser or
the Fund may reasonably request. The Subadviser will make available its
officers and employees to meet with the Board of Directors of the Fund at
the Fund's principal place of business on due notice to review the
Investments of the Fund.
The Subadviser will also provide such information as is
customarily provided by a subadviser and may be required for the Fund or
the Adviser to comply with their respective obligations under applicable
laws, including, without limitation, the Internal Revenue Code of 1986, as
amended (the "Code"), the Investment Company Act, the Investment Advisers
Act, the Securities Act of 1933, as amended (the "Securities Act") and any
state securities laws, and any rule or regulation thereunder.
During the term of this Agreement, the Adviser agrees to furnish
the Subadviser at its principal office all registration statements, proxy
statements, reports to stockholders, sales literature or other materials
prepared for distribution to stockholders of the Fund, or the public that
refer to the Subadviser for Subadviser's review and approval. The
Subadviser shall be deemed to have approved all such materials unless the
Subadviser reasonably objects by giving notice to the Adviser in writing
within five business days (or such other period as may be mutually agreed)
after receipt thereof. The Subadviser's right to object to such materials
is limited to the portions of such materials that expressly relate to the
Subadviser, its services and its clients. The Adviser agrees to use its
best efforts to ensure that materials prepared by its employees or agents
or its affiliates that refer to the Subadviser or its clients in any way
are consistent with those materials previously approved by the Subadviser
as referenced in this paragraph. Sales literature may be furnished to the
Subadviser by first class or overnight mail, facsimile transmission
equipment or hand delivery.
(f) CUSTODY ARRANGEMENTS. The Subadviser shall provide the Fund's
custodian, on each business day with information relating to all
transactions concerning the Fund's assets.
(g) COMPLIANCE WITH APPLICABLE LAWS AND GOVERNING DOCUMENTS. In all
matters relating to the performance of this Agreement, the Subadviser and
its directors, officers, partners, employees and interested persons shall
act in conformity with the Trust's Agreement and Declaration of Trust,
By-Laws, and currently effective registration statement and with the
written instructions and directions of the Fund's Board and the Adviser,
after receipt of such documents, from the Fund, and shall comply with the
requirements of the Investment Company Act, the
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Investment Advisers Act, the Commodity Exchange Act (the "CEA"), the rules
thereunder, and all other applicable federal and state laws and
regulations.
In carrying out its obligations under this Agreement, the
Subadviser shall ensure that the Fund complies with all applicable statutes
and regulations necessary to qualify the Fund as a Regulated Investment
Company under Subchapter M of the Code (or any successor provision), and
shall notify the Adviser immediately upon having a reasonable basis for
believing that the Fund has ceased to so qualify or that it might not so
qualify in the future.
(h) INFORMATION CONCERNING THE FUNDS. The Adviser has furnished the
Subadviser with copies of each of the following documents and will furnish
the Subadviser at its principal office all future amendments and
supplements to such documents, if any, as soon as practicable after such
documents become available: (i) the Trust's Agreement and Declaration of
Trust, (ii) the By-Laws of the Fund, (iii) the Fund's registration
statement under the Investment Company Act and the Securities Act of 1933,
as amended, as filed with the Commission, and (iv) any written instructions
of the Fund's Board and the Adviser.
(i) VOTING OF PROXIES. The Subadviser shall direct the custodian as to
how to vote such proxies as may be necessary or advisable in connection
with any matters submitted to a vote of shareholders of Investments held by
the Fund.
(j) INFORMATIONAL MATERIAL. The Subadviser shall provide the Adviser
for its review, prior to their use, copies of all informational materials
prepared by or on behalf of the Subadvsier, mentioning the Fund, including,
but not limited to, advertisements, brochures, and promotional and any
other similar materials (the "Informational Materials"), and that such
Informational Materials shall conform with, and be disseminated in
accordance with, applicable laws.
3. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder, the
Subadviser 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 Fund or the Adviser in any way or
otherwise be deemed an agent of the Fund or the Adviser.
4. COMPENSATION. The Adviser shall pay to the Subadviser, for the services
rendered hereunder, the fee set forth in Exhibit A to this Agreement.
5. EXPENSES. The Subadviser shall bear all expenses incurred by it in
connection with its services under this Agreement and will, from time to time,
at its sole expense employ or associate itself with such persons as it believes
to be particularly fitted to assist it in the execution of its duties hereunder.
However, the Subadviser shall not assign or delegate any of its investment
management duties under this Agreement without the approval of the Adviser and
the Fund's Board.
6. REPRESENTATIONS AND WARRANTIES OF SUBADVISER. The Subadviser represents
and warrants to the Adviser and the Fund as follows:
(a) The Subadviser is registered as an investment adviser under the
Investment Advisers Act;
(b) The Subadviser will immediately notify the Adviser of the
occurrence of any event that would disqualify the Subadviser from serving
as an investment adviser of an investment company pursuant to Section 9(a)
of the Investment Company Act;
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(c) The Subadviser has filed a notice of exemption pursuant to Rule
4.14 under the CEA with the Commodity Futures Trading Commission (the
"CFTC") and the National Futures Association;
(d) The Subadviser is fully authorized under all applicable law to
serve as Subadviser to the Fund and to perform the services described under
this Agreement;
(e) The Subadviser is a limited liability company duly organized and
validly existing under the laws of the state of Kansas with the power to
own and possess its assets and carry on its business as it is now being
conducted;
(f) The execution, delivery and performance by the Subadviser of this
Agreement are within the Subadviser's powers and have been duly authorized
by all necessary action on the part of its members, and no action by or in
respect of, or filing with, any governmental body, agency or official is
required on the part of the Subadviser for the execution, delivery and
performance by the Subadviser of this Agreement, and the execution,
delivery and performance by the Subadviser of this Agreement do not
contravene or constitute a default under (i) any provision of applicable
law, rule or regulation, (ii) the Subadviser's governing instruments, or
(iii) any agreement, judgment, injunction, order, decree or other
instrument binding upon the Subadviser;
(g) This Agreement is a valid and binding agreement of the Subadviser;
(h) The Form ADV of the Subadviser previously provided to the Adviser
is a true and complete copy of the form filed with the Commission and the
information contained therein is accurate and complete in all material
respects as of its filing date, 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;
(i) The Subadviser has adopted compliance policies and procedures
reasonably designed to prevent violations of the Investment Advisers Act
and the rules thereunder, has provided the Adviser with a copy of such
compliance policies and procedures (and will provide them with any
amendments thereto), and agrees to assist the Fund in complying with the
Funds' compliance program adopted pursuant to Rule 38a-1 under the
Investment Company Act, to the extent applicable. The Subadviser
understands that the Boards of Trustees of the Fund are required to approve
the Subadviser's compliance policies and procedures and acknowledges that
this Agreement is conditioned upon such Board approval; and
(j) The Subadviser shall not divert any Fund's portfolio securities
transactions to a broker or dealer in consideration of such broker or
dealer's promotion or sales of shares of the Fund, any other series of the
Trust, or any other registered investment company.
7. NON-EXCLUSIVITY. The services of the Subadviser with respect to the Fund
are not deemed to be exclusive, and the Subadviser and its officers shall be
free to render investment advisory and administrative or other services to
others (including other investment companies) and to engage in other activities
so long as its duties hereunder are not impaired thereby.
8. REPRESENTATIONS AND WARRANTIES OF ADVISER. The Adviser represents and
warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under the
Investment Advisers Act;
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(b) The Adviser is a Maryland corporation duly organized and validly
existing under the laws of the State of Maryland with the power to own and
possess its assets and carry on its business as it is now being conducted;
(c) The execution, delivery and performance by the Adviser of this
Agreement and the Advisory Agreement are within the Adviser's powers and
have been duly authorized by all necessary action on the part of its
directors, and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of the
Adviser for the execution, delivery and performance by the Adviser of this
Agreement, and the execution, delivery and performance by the Adviser of
this Agreement do not contravene or constitute a default under (i) any
provision of applicable law, rule or regulation, (ii) the Adviser's
governing instruments, or (iii) any agreement, judgment, injunction, order,
decree or other instrument binding upon the Adviser;
(d) This Agreement and the Advisory Agreement are valid and binding
agreements of the Adviser;
(e) The Form ADV of the Adviser previously provided to the Subadviser
is a true and complete copy of the form filed with the Commission and the
information contained therein is accurate and complete in all material
respects as of its filing date 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;
(f) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV at least 48 hours prior to the execution of this
Agreement.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE INFORMATION.
All representations and warranties made by the Subadviser and the Adviser
pursuant to Sections 6 and 8 hereof shall survive for the duration of this
Agreement and the parties hereto shall promptly notify each other in writing
upon becoming aware that any of the foregoing representations and warranties are
no longer true.
10. LIABILITY AND INDEMNIFICATION.
(a) LIABILITY. In the absence of willful misfeasance, bad faith or
gross negligence on the part of the Subadviser or a breach of its duties
hereunder, the Subadviser shall not be subject to any liability to the
Adviser, to the Fund, or any of Fund's shareholders, and, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the
Adviser or a breach of its duties hereunder, the Adviser shall not be
subject to any liability to the Subadviser, for any act or omission in the
case of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of Investments;
PROVIDED, HOWEVER, that nothing herein shall relieve the Adviser and the
Subadviser from any of their respective obligations under applicable law,
including, without limitation, the federal and state securities laws and
the CEA.
(b) INDEMNIFICATION. The Subadviser shall indemnify the Adviser and
the Fund, and their respective officers and directors, for any liability
and expenses, including attorneys' fees, which may be sustained by the
Adviser, or the Fund, as a result of the Subadviser's willful misfeasance,
bad faith, or gross negligence, breach of its duties hereunder or violation
of applicable law, including, without limitation, the federal and state
securities laws or the CEA. The Adviser shall
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indemnify the Subadviser and its officers and partners, for any liability
and expenses, including attorneys' fees, which may be sustained as a result
of the Adviser's, or the Fund's willful misfeasance, bad faith, or gross
negligence, breach of its duties hereunder or violation of applicable law,
including, without limitation, the federal and state securities laws or the
CEA.
11. DURATION AND TERMINATION.
(a) DURATION. This Agreement shall become effective upon the date
first above written, provided that this Agreement shall not take effect
with respect to the Fund unless it has first been approved by a vote of a
majority of those Trustees of the Trust, who are not parties to this
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. This Agreement
shall continue in effect for a period of two years from the date hereof,
subject thereafter to being continued in force and effect from year to year
if specifically approved each year by the Board of Trustees or by the vote
of a majority of the Fund's outstanding voting securities. In addition to
the foregoing, each renewal of this Agreement must be approved by the vote
of a majority of the Fund's Trustees who are not parties to this Agreement
or interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval. Prior to voting on the renewal
of this Agreement, the Board of Trustees of the Fund may request and
evaluate, and the Subadviser shall furnish, such information as may
reasonably be necessary to enable the Fund's Board to evaluate the terms of
this Agreement.
(b) TERMINATION. Notwithstanding whatever may be provided herein to
the contrary, this Agreement may be terminated at any time, without payment
of any penalty:
(i) By vote of a majority of the Board of Trustees of the Fund,
or by vote of a majority of the outstanding voting securities of the
Fund, or by the Adviser, in each case, upon sixty (60) days' written
notice to the Subadviser;
(ii) By the Adviser upon breach by the Subadviser of any
representation or warranty contained in Section 6 hereof, which shall
not have been cured within twenty (20) days of the Subadviser's
receipt of written notice of such breach;
(iii) By the Adviser immediately upon written notice to the
Subadviser if the Subadviser becomes unable to discharge its duties
and obligations under this Agreement; or
(iv) By the Subadviser upon 120 days written notice to the
Adviser and the Fund.
This Agreement shall not be assigned (as such term is defined in the
Investment Company Act) without the prior written consent of the parties hereto.
This Agreement shall terminate automatically in the event of its assignment
without such consent or upon the termination of the Advisory Agreement.
12. DUTIES OF THE ADVISER. The Adviser shall continue to have
responsibility for all services to be provided to the Fund pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement.
13. AMENDMENT. This Agreement may be amended by mutual consent of the
parties, provided that the terms of each such amendment with shall be approved
by the Board of Trustees of the Fund or by a vote of a majority of the
outstanding voting securities of the Fund.
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14. NOTICE. Any notice that is required to be given by the parties to each
other (or to the Fund) under the terms of this Agreement shall be in writing,
delivered, or mailed postpaid to the other party, or transmitted by facsimile
with acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Security Global Investors, LLC
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxx, Vice President and Head of Global Equity
Facsimile: (000) 000-0000
With a copy to:
Security Benefit Corporation
One Security Benefit Place
Topeka, KS 66636
Attention: General Counsel
Facsimile: (000) 000-0000
(b) If to the Adviser:
PADCO Advisors, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
With a copy to:
Security Benefit Corporation
One Security Benefit Place
Topeka, KS 66636
Attention: General Counsel
Facsimile: (000) 000-0000
(d) If to the Trust:
Rydex Series Fund
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Secretary
Facsimile: (000) 000-0000
15. GOVERNING LAW; JURISDICTION. Except as indicated in Section 19(b) of
this Agreement, this Agreement shall be governed by and construed in accordance
with the laws of the State of Kansas, without regard to its conflicts of law
provisions.
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16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall together constitute one and the same
instrument.
17. CAPTIONS. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.
18. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision or applicable law, the remainder of the Agreement
shall not be affected adversely and shall remain in full force and effect.
19. CERTAIN DEFINITIONS.
(a) "BUSINESS DAY." As used herein, business day means any customary
business day in the United States on which the New York Stock Exchange is
open.
(b) MISCELLANEOUS. As used herein, "investment company," "affiliated
person," "interested person," "assignment," "broker," "dealer" and
"affirmative vote of the majority of the Fund's outstanding voting
securities" shall all have such meaning as such terms have in the
Investment Company Act. The term "investment adviser" shall have such
meaning as such term has in the Investment Advisers Act and the Investment
Company Act, and in the event of a conflict between such Acts, the most
expansive definition shall control. In addition, where the effect of a
requirement of the Investment Company Act reflected in any provision of
this Agreement is relaxed by a rule, regulation or order of the Commission,
whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
PADCO Advisors, Inc.
By:
------------------------------------
Name:
Title:
Attest:
--------------------------------
Name:
Title:
Security Global Investors, LLC
By:
------------------------------------
Name:
Title:
Attest:
--------------------------------
Name:
Title:
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EXHIBIT A
Compensation
For all services rendered by the Subadviser hereunder, Adviser shall pay to
Subadviser a fee (the "Subadvisory Fee") at an annual rate of 0.65% of the
Fund's average daily net assets.
For purposes of calculating the compensation to be paid hereunder, the Fund's
assets shall be computed in the same manner at the end of the business day as
the value of such net assets is computed in connection with the determination of
the net asset value of the Fund's shares as described in the then current
prospectus for the Fund.
The Subadvisory Fee shall be accrued for each calendar day the Subadviser
renders subadvisory services hereunder and the sum of the daily fee accruals
shall be paid monthly to the Subadviser as soon as practicable following the
last day of each month, by wire transfer if so requested by the Subadviser, but
no later than ten (10) business days thereafter. If this Agreement shall be
effective for only a portion of a year, then the Subadviser's fee for said year
shall be prorated for such portion.
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