Exhibit (9)(f)
Amended and Restated
Fidelity Bond Allocation Agreement
Among
Rydex Series Trust,
PADCO Advisors, Inc.,
The Rydex Advisor Variable Annuity Account,
PADCO Advisors II, Inc.,
PADCO Service Company, Inc.,
and
The PADCO 401(k) and Profit Sharing Plan
AMENDED AND RESTATED
ALLOCATION AGREEMENT
THIS ALLOCATION AGREEMENT (the "Agreement"), is made as
of this 23rd day of June, 1997, by and among:
RYDEX SERIES TRUST (the "Trust"), a registered
investment company organized as a Delaware business
trust on March 9, 1993, with its principal place of
business at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxx 00000, on behalf of the Trust
and the Trust's series of THE NOVA FUND, THE URSA
FUND, THE RYDEX OTC FUND, THE RYDEX PRECIOUS METALS
FUND, THE RYDEX U.S. GOVERNMENT BOND FUND, THE JUNO
FUND, THE RYDEX U.S. GOVERNMENT MONEY MARKET FUND,
THE RYDEX INSTITUTIONAL MONEY MARKET FUND, and THE
RYDEX HIGH YIELD FUND, and all future registered
investment companies which are named insureds under
a joint fidelity bond, as described below, and for
which PADCO Advisors, Inc. acts as investment
adviser and for which PADCO Service Company, Inc.
acts as transfer agent and shareholder servicing
agent (the above-referenced entities hereinafter are
collectively referred to as the "Rydex Funds");
PADCO ADVISORS, INC. ("PADCO I"), a registered
investment adviser incorporated under the laws of
the State of Maryland on February 5, 1993, with its
principal place of business at 0000 Xxxxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000;
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT (the
"Separate Account"), a registered investment company
established as a managed separate account of Great
American Reserve Insurance Company ("Great American
Reserve") under the laws of the State of Texas on
April 15, 1996, with its principal place of business
at 00000 Xxxxx Xxxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxx
00000, and with offices at 0000 Xxxxxxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000, on behalf of the Separate
Account and the Separate Account's subaccounts of
THE NOVA SUBACCOUNT, THE URSA SUBACCOUNT, THE OTC
SUBACCOUNT, THE PRECIOUS METALS SUBACCOUNT, THE U.S.
GOVERNMENT BOND SUBACCOUNT, THE JUNO SUBACCOUNT, THE
MONEY MARKET I SUBACCOUNT, and THE MONEY MARKET II
SUBACCOUNT, and all future registered investment
companies which are named insureds under a joint
fidelity bond as described below and for which PADCO
Advisors II, Inc. acts as investment adviser and for
which PADCO Service Company, Inc. acts as subaccount
asset allocation administration servicer (the above-
referenced subaccounts of the Separate Account
hereinafter are collectively referred to as the
"Rydex Subaccounts");
PADCO ADVISORS II, INC. ("PADCO II"), a registered
investment adviser incorporated under the laws of
the State of Maryland on July 5, 1994, with its
principal place of business at 0000 Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000;
PADCO SERVICE COMPANY, INC. (the "Servicer"), a
registered transfer agent incorporated under the
laws of the State of Maryland on October 6, 1993,
with its principal place of business at 0000
Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000; and
PADCO 401(k) & PROFIT SHARING PLAN (the "PADCO
Plan"), an employee benefit welfare or pension
benefit plan established effective January 1, 1994,
subject to the supervision of the rules and
regulations promulgated by the Secretary of the
Department of Labor, that: (i) is a "qualified"
retirement plan, under the provisions of the U.S.
Internal Revenue Code of 1986, as amended; (ii) is
designed to reward eligible employees of PADCO I,
PADCO II, the Servicer, and PADCO Financial Services
Company, Inc., with retirement benefits and to serve
as a funding medium for the accumulation of assets;
(iii) is administered by PADCO I; and (iv) has
designated Xxxxxx X. Xxxxxx, Xx., as the PADCO Plan
trustee.
This Agreement is entered into by the aforementioned parties
(collectively, the "Joint Insureds") under the following
circumstances:
W I T N E S S E T H
WHEREAS, Section 17(g), "Transactions of Certain
Affiliated Persons and Underwriters," of the Investment
Company Act of 1940, as amended (the "1940 Act"), provides
that the Securities and Exchange Commission (the "Commission")
is authorized to require that officers and employees of
registered investment companies be bonded against larceny and
embezzlement, and the Commission, under Rule 17g-1, "Bonding
of Officers and Employees of Registered Management Investment
Companies," under the 1940 Act, has promulgated rules and
regulations dealing with this subject;
WHEREAS, the Trust, the Rydex Funds, PADCO I, the
Separate Account, the Rydex Subaccounts, PADCO II, the
Servicer, and the PADCO Plan are named or will be named as
joint insureds under the terms of a certain bond or policy of
insurance which insures against larceny and embezzlement of
officers and employees (the "Fidelity Bond"), a copy of which
Fidelity Bond is attached hereto as Exhibit A;
WHEREAS, the trustees of the Trust (the "Trustees"),
including each of the Trustees who is not an "interested
person" of the Trust, as that term is defined in Section
2(a)(19) of the 1940 Act (the "Independent Trustees"), and the
managers of the Separate Account (the "Managers"), including
each of the Managers who is not an "interested person" of the
Separate Account (the "Independent Managers"), as that term is
defined in Section 2(a)(19) of the 1940 Act, have considered
all relevant factors, including, but not limited to, the
number of the parties named as "joint insureds" under the
joint Fidelity Bond, the nature of the business activities of
such Joint Insureds, the amount of the joint insured bond, the
amount of the premium for such bond, and the ratable
allocation of the premium among all parties named as insureds
under the joint Fidelity Bond, and have determined that the
share of the premium allocated to each of the Rydex Funds and
to each of the Rydex Subaccounts is less than the premium each
such Rydex Fund and each such Rydex Subaccount, respectively,
would have had to pay if each such Rydex Fund and each such
Rydex Subaccount had provided and maintained a single insured
bond, as required pursuant to paragraph (e) of Rule 17g-1, and
also have determined that it would be in the best interests of
(i) the Trust and the Rydex Funds and (ii) the Separate
Account and the Rydex Subaccounts for (i) the Trust and the
Rydex Funds and (ii) the Separate Account and the Rydex
Subaccounts, respectively, to be included as covered joint
insureds under the joint insured Fidelity Bond, pursuant to
the requirements of Rule 17g-1 under the 1940 Act;
WHEREAS, the Trustees of the Trust, including each of the
Independent Trustees, and the Managers, including each of the
Independent Managers, has given due consideration to all
factors relevant to the form, amount, and apportionment of
premiums and recoveries on such joint insured Fidelity Bond
and such Managers have approved the term and amount of the
Fidelity Bond, the portions of the premium payable by each of
the Rydex Funds, the Rydex Subaccounts, PADCO I, PADCO II, the
Servicer, and the PADCO Plan, and the manner in which recovery
of said Fidelity Bond, if any, shall be shared by and among
the parties hereto as set forth; and
WHEREAS, the Trust, the Rydex Funds, PADCO I, the
Separate Account, the Rydex Subaccounts, PADCO II, the
Servicer, and the PADCO Plan now desire to enter into the
agreement required by Rule 17g-l(f) under the 1940 Act to
establish the manner in which recovery on said Fidelity Bond,
if any, shall be shared.
NOW, THEREFORE, IT IS HEREBY AGREED by and among the
parties as follows:
1. Payment of Premiums
PADCO I shall pay twelve percent (12%), PADCO II shall
pay three percent (3%), the Servicer shall pay three percent
(3%), and the Rydex Funds and the Rydex Subaccounts shall pay
eighty percent (80%) of the premium payable under the Fidelity
Bond; and PADCO I also shall pay an additional two percent
(2%) of the premium payable under the Fidelity Bond, which
portion of this premium is attributable to the PADCO Plan,
which is administered by PADCO I. Each of the Rydex Funds and
the Rydex Subaccounts shall pay that percentage of said amount
of the premium due under the Fidelity Bond which is derived by
a fraction, (i) the denominator of which is the total net
assets of all the Rydex Funds and Rydex Subaccounts combined,
and (ii) the numerator of which is the total net assets of
each such Rydex Fund or each such Rydex Subaccount
individually.
Each of the Rydex Funds, PADCO I, each of the Rydex
Subaccounts, PADCO II, the Servicer, and the PADCO Plan, agree
that the appropriateness of the allocation of said premium
will be determined jointly by PADCO I and PADCO II
(collectively, the "Advisors") on a monthly basis, subject to
approval by both the Trustees and the Managers of both the
Fidelity Bond and this Allocation Agreement no less often than
annually.
2. Allocation of Recoveries
(a) If more than one of the parties hereto is damaged in
a single loss for which recovery is received under the
Fidelity Bond, each such party shall receive that portion of
the recovery which represents the loss sustained by that
party, unless the recovery is inadequate to indemnify fully
such party sustaining a loss.
(b) If the recovery is inadequate to indemnify fully
each such party sustaining a loss, then the recovery shall be
allocated among such parties as follows:
(i) Each such party sustaining a loss shall be
allocated an amount equal to the lesser of that party's actual
loss or the minimum amount of bond which would be required to
be maintained by such party under a single insured bond
(determined as of the time of the loss) in accordance with the
provisions of Rule 17g-l(d)(1) under the 1940 Act.
(ii) The remaining portion of the proceeds shall be
allocated to each such party sustaining a loss not fully
covered by the allocation under subparagraph 2(b)(i), above,
in the proportion that each such party's last payment of
premium bears to the sum of the last such premium payments of
all such parties. If such allocation would result in any
party which had sustained a loss receiving a portion of the
recovery in excess of the loss actually sustained, such excess
portion shall be allocated among the other parties whose
losses would not be fully indemnified. The allocation shall
bear the same proportion as each such party's last payment of
premium bears to the sum of the last premium payments of all
parties entitled to receive a share of the excess. Any
allocation in excess of a loss actually sustained by any such
party shall be reallocated in the same manner.
3. Obligation to Maintain Minimum Coverage
(a) Each of the Rydex Funds and each of the Rydex
Subaccounts represents and warrants to each of the other
parties hereto that the minimum amount of coverage required of
each such Rydex Fund and each such Rydex Subaccount,
respectively, shall be determined as of the date hereof
pursuant to the schedule set forth in paragraph (d)(1) of Rule
17g-1 under the 1940 Act. The parties hereto agree that the
Advisors will determine jointly, no less than at the end of
each calendar quarter, the minimum amount of coverage which
would be required of each of the Rydex Funds and each of the
Rydex Subaccounts by Rule 17g-1(d)(1) if a determination with
respect to the adequacy of the coverage were currently being
made.
(b) In the event that the total amount of the minimum
coverages thus determined exceeds the amount of coverage of
the then-effective Fidelity Bond, the Trustees and the
Managers will be notified and will determine whether it is
necessary or appropriate to increase the total amount of
coverage of the Fidelity Bond to an amount not less than the
total amount of such minimums, or to secure such excess
coverage for one or more of the parties hereto, which, when
added to the total coverage of the Fidelity Bond, will equal
an amount of such minimums.
(c) Unless either or both the Trust and the Separate
Account elects to terminate this Agreement (pursuant to
Paragraph 4, below) and the Trust's and the Separate Account's
respective participation in a joint-insured bond, each Rydex
Fund and each Rydex Subaccount agrees to pay the Rydex Fund's
and the Rydex Subaccount's respective fair portion of the new
or additional premium (taking into account all of the then-
existing circumstances).
4. Prior Agreements; Termination
This Agreement shall supersede all prior agreements
relating to an allocation of premium on any joint insured bond
and shall apply to the present Fidelity Bond coverage and any
renewal or replacement thereof. This Agreement shall continue
until terminated by any party hereto upon the giving of not
less than sixty (60) days notice to the other parties hereto
in writing.
5. Law Governing
This Agreement is governed by the laws of the State of
Maryland (without reference to such state's conflict of law
rules).
6. Counterparts
This Agreement may be executed in counterparts, each of
which shall be deemed an original, but which together shall
constitute one and the same instrument.
7. Amendment, Modification, and Waiver
No term or provision of this Agreement may be amended,
modified, or waived without the affirmative vote or action by
written consent of each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be duly executed by their duly-authorized officers
as of the date first above written.
ATTEST: RYDEX SERIES TRUST
By:/s/ Xxxxxx X. Xxxxxx By:/s/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx, Xx.
Vice President President
ATTEST: RYDEX SERIES TRUST on behalf of
the RYDEX FUNDS of RYDEX SERIES
TRUST
By:/s/Xxxxxx X. Xxxxxx By:/s/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx, Xx.
Vice President President
ATTEST: PADCO ADVISORS, INC.
By:/s/ Xxxxxx X. Xxxxxx By:/s/Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx, Xx.
Secretary President
ATTEST: RYDEX ADVISOR VARIABLE
ANNUITY ACCOUNT
By:/s/ Xxxxxx X. Xxxxxx By:/s/ L. Xxxxxxx Xxxxxxxxx
Xxxxxx X. Xxxxxx L. Xxxxxxx Xxxxxxxxx
Vice President Vice President
ATTEST: RYDEX ADVISOR VARIABLE ANNUITY
ACCOUNT on behalf of the
RYDEX SUBACCOUNTS of RYDEX
ADVISOR VARIABLE ANNUITY
ACCOUNT
By:/s/ Xxxxxx X. Xxxxxx By:/s/ Xxxxxxx Xxxxxxxxx
Xxxxxx X. Xxxxxx L. Xxxxxxx Xxxxxxxxx
Vice President Vice President
ATTEST: PADCO ADVISORS II, INC.
By:/s/ Xxxxxx X. Xxxxxx By:/s/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx, Xx.
Secretary President
ATTEST: PADCO SERVICE COMPANY, INC.
By:/s/ Xxxxxx X. Xxxxxx By:/s/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx, Xx.
Secretary President
ATTEST: PADCO 401(k) & PROFIT
SHARING PLAN
By:/s/ Xxxxxx X. Xxxxxx By:/s/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx, Xx.
Vice President PADCO Plan Trustee
PADCO Advisors, Inc.
PADCO Plan Administrator
