CUSTODY AGREEMENT
Agreement made as of the 18th day of January, 2000, between Rydex Dynamic
Funds, (the "Trust"), a business trust organized under the laws of Delaware and
having its office at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx,
00000 acting for and on behalf of all mutual fund portfolios as are currently
authorized and issued by the Trust or may be authorized and issued by the Trust
subsequent to the date of this Agreement (the "Funds"), which are operated and
maintained by the Trust for the benefit of the holders of shares of the Funds,
and Firstar Bank, N.A. (the "Custodian"), a national banking association having
its principal office and place of business at Firstar Bank Center, 000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxx 00000, which Agreement provides for the furnishing of
custodian services to the Funds.
WITNESSETH:
that for and in consideration of the mutual promises hereinafter set forth the
Trust, on behalf of the Funds, and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include the controller,
Assistant Controller, Senior Portfolio Accountant, and Portfolio Accountant, or
any other person, whether or not any such person is an officer or employee of
the trust, duly authorized by the Board of Trustees of the Trust to give Oral
Instructions on behalf of the funds and listed in the Certificate annexed hereto
as Appendix A or such other Certificate as may be received by the Custodian from
time to time, subject in each case to any limitations on the authority of such
person as set forth in appendix A or any such Certificate.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees, provided the Custodian has received a
certified copy of a resolution of Board of Trustees of the Trust specifically
approving deposits in the Book-Entry System.
3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian which is signed on behalf of the funds by an Officer of the Trust and
is actually received by the Custodian.
4. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository" shall
further mean and include any other person or clearing agency authorized to act
as a depository under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees, provided that the Custodian has received
a certified copy of a resolution of the board of /Trustees of the Trust
specifically approving such other person or clearing agency as a depository.
5. "Dividend and Transfer Agent" shall mean the dividend and transfer
agent active, from time to time, in such capacity pursuant to a written
agreement with the Fund, changes in which the Trust shall immediately report to
the Custodian writing.
6. "Money Market Security" shall be deemed to include, without limitation,
debt obligations issued or guaranteed as to principal and/or interest by the
government of the United States or agencies or instrumentalities thereof,
commercial paper, obligations (including certificates of deposit, bankers'
acceptances, repurchase and reverse repurchase agreements with respect to the
same) and bank time deposits of domestic banks that are members of Federal
Deposit Insurance Trust, and short-term corporate obligations where the purchase
and sale of such securities normally require settlement in federal funds or
their equivalent on the same day or such purchase or sale.
7. "Officers" shall be deemed to include the controller, Assistant
controller, Senior Portfolio Accountant, and Portfolio Accountant of the Trust
listed in the Certificate annexed hereto as Appendix A or such other Certificate
as may be received by the Custodian form time to time.
8. "Oral Instructions" shall mean oral instructions actually received by
the Custodian from an Authorized Person (or from a person which the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions from Authorized Persons in such manner so that such Written
Instructions are received by the Custodian on the next business day.
9. "Prospectus" or "Prospectuses" shall mean the Fund's currently
effective prospectuses and statements of additional information, as filed with
and declared effective by the Securities and Exchange Commission.
10. "Security or Securities" shall mean Money Market Securities, common or
preferred stocks, options, futures, gold, silver, bonds, debentures, corporate
debt securities, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interest therein, or any property assets.
11. "Written Instructions" shall mean communication actually received by
the custodian from one Authorized Person or from one person which the Custodian
reasonably believes in good faith to be an Authorized Person in writing, telex
or any other data transmission
system whereby the receiver of such communication is able to verify by codes or
otherwise with a reasonable degree of certainty the authenticity of the senders
of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Trust, acting for and on behalf of the funds, hereby constitutes
and appoints the Custodian as custodian of all the Securities and monies at any
time owned by the Funds during the period this Agreement ("Fund Assets").
2. The Custodian hereby accepts appointment as such Custodian and agrees
to perform the duties thereof as hereinafter set forth.
ARTICLE III
DOCUMENTS TO BE FURNISHED BY THE TRUST
The Trust hereby agrees to furnish to the Custodian the following
documents:
1. A copy of its Declaration of Trust (the "Declaration of Trust")
certified by its Secretary.
2. A copy of its By-Laws certified by its Secretary.
3. A copy of the resolution of its Board of Trustees appointing the
Custodian certified by its Secretary.
4. A copy of the most recent Prospectuses of the Trust.
5. A Certificate of the President and Secretary setting forth the names
and signatures of the present Officers of the Trust.
ARTICLE IV
CUSTODY OF CASH AND SECURITIES
1. The Trust will deliver or cause to be delivered to the Custodian all
Funds Assets, including cash received for the issuance of its shares, at any
time during the period of this Agreement. The Custodian will not be responsible
for such fund Assets until actually received by it. Upon such receipt, the
Custodian shall hold in safekeeping and physically segregate at all times from
the property of any other persons, firms or corporations all Fund Assets
received by it from or for the account of the Funds. Any credits from third
parties that are made to the Funds' account by the Custodian may be reversed if
the monies for them is not finally collected within 90 days from the day the
credits are made. The Custodian is hereby authorized by the Trust, acting on
behalf of the Funds, to actually deposit any fund Assets in the Book-Entry
System or in a Depository, provided, however, that the custodian shall always be
accountable to the Trust for the Fund Assets so deposited. Funds Assets
deposited in the Book-Entry System or the Depository will be represented in
accounts which include only assets held by the custodian for customers,
including but not limited to accounts in which the Custodian acts in a fiduciary
or representative capacity.
2. The Custodian shall credit to a separate account or accounts in the
name of each respective Fund all monies received by it for the account of such
Fund, and shall disburse the same only:
(a) In payment for Securities purchases for the account of such Fund, as
provided in Article V;
(b) In payment of dividends or distributions, as provided in Article VI
hereof;
(c) In payment of original issue or other taxes, as provided in Article
VII hereof;
(d) In payment for shares of such Fund redeemed by it, as provided in
Article VII hereof;
(e) Pursuant to Certificates (i) directing payment and setting forth the
name and address of the person to whom the payment is to be made,
the amount of such payment and the purpose for which payment is to
be made (the Custodian not being required to question such
direction) or (ii) if reserve requirements are established for the
Fund by law or by valid regulation, directing the custodian to
deposit a specified amount of collected funds in the form of U.S.
dollars at a specified Federal Reserve bank and stating the purpose
of such deposit; or
(f) In reimbursement of the expenses and liabilities of the Custodian,
as provided in paragraph 10 of Article IV hereof.
3. Promptly after the close of business on each day the funds are open and
valuing their portfolios, the Custodian shall furnish the Trust with a detailed
statement of monies held for the Fund under this Agreement and with
confirmations and a summary of all transfers to or from the account of the Funds
during said day. Where Securities are transferred to the account of the Fund
without physical delivery, the Custodian shall also identify as belonging to the
Funds a quantity of Securities in a fungible bulk of Securities registered in
the name of the Custodian (or its nominee) or shown on the Custodian's account
on the books of the Book-Entry system or the Depository. At least monthly and
form time to time, the Custodian shall furnish the Trust with a detailed
statement of the Securities held for the Funds under this Agreement.
4. All securities held for the Funds, which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry System, shall
be held by the Custodian in that form; all other Securities held for the Funds
may be registered nominee of the Custodian as the Custodian may from time to
time determine, or in the name of the Book-Entry System or the Depository or
their successor or successors, or their nominee or nominees. The Trust agrees to
furnish to the Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository,
any Securities which it may hold for the account of the Funds and which may from
time to time be registered in the name of the Funds. The Custodian shall hold
all such Securities which are not held in the Book-Entry System by the
Depository or a Sub-Custodian in a separate account or accounts in the name of
the Funds segregated at all times from those of any other fund maintained and
operated by the Trust and from those of any other person or persons.
5. Unless otherwise instructed to the contrary by a Certificate, the
Custodian shall with respect to all Securities held for the Funds in accordance
with this Agreement:
(a) Collect all income due or payable to the Funds with respect to
each fund's Assets;
(b) Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
(c) Surrender Securities in temporary form for definitive
Securities;
(d) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws or
the laws or regulations of any other taxing authority,
including any foreign taxing authority, now or hereafter in
effect; and
(e) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for
the account of the Funds all rights and similar securities
issued with respect to any Securities held by the Custodian
hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian directly
or through the use of the Book-Entry System or the Depository shall:
(a) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any
other instruments whereby the authority or the fund as owner
of any Securities may be exercised;
(b) Deliver any Securities held for the funds in exchange for
other Securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
(c) Deliver any Securities held for the account of the Funds to
any protective committee, reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and received and hold under the terms of this
Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to
evidence such delivery; and
(d) Make such transfers or exchanges of the assets of the Funds
and take such other steps as shall be stated in said
Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Funds.
7. The Custodian shall promptly deliver to the Trust all notices, proxy
material and executed but unvoted proxies pertaining to shareholder meetings of
Securities held by the Funds. The Custodian shall not vote or authorize the
voting of any Securities or give any consent, waiver or approval with respect
thereto unless so directed by a Certificate or Written Instruction.
8. The Custodian shall promptly deliver to the Trust all material received
by the Custodian and pertaining to Securities held by the Funds with respect to
tender or exchange offers, calls for redemption or purchase, expiration of
rights, name changes, stock splits and stock dividends, or any other activity
involving rights in such Securities.
ARTICLE V
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase of Securities by the Funds, the Trust
shall deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, a Certificate or Written Instructions,
and (ii) with respect to each purchase of Money Market Securities, Written
Instructions, a Certificate or Oral Instructions, specifying with respect to
each such purchase: (a) the name of the issuer and the title of the Securities,
(b) the principal amount purchased and accrued interest, if any, (c) the date of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase and (f) the name of the person from whom or the
broker through whom the purchase was made. The Custodian shall upon receipt of
Securities purchased by or for the funds, pay out of the monies held for the
account of the Funds the total amount payable to the person from whom or the
broker through whom the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Written Instructions
or Oral Instructions.
2. Promptly after each sale of Securities by the Trust for the account of
the Fund, the Trust shall deliver to the Custodian (i) with respect to each sale
of Securities which are not Money Market Securities, a Certificate or Written
Instructions, and (ii) with respect to each sale of Money Market Securities,
Written Instructions, a Certificate o r Oral Instructions, specifying with
respect to each such sale: (a) the name of the issuer and the title of the
Security, (b) the principal amount sold, and accrued interest, if any, (c) the
date of sale, (d) the sale price per unit, (e) the total amount payable to the
Funds upon such sale and (f) the name of the broker through whom or the person
to whom the sale was made. The Custodian shall deliver the Securities upon
receipt of the total amount payable to the Funds upon such sale, provided that
the same conforms to the total amount payable as set forth in such Certificate,
Written Instructions or Oral Instructions. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to it, and
may deliver Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
3. Promptly after the time as of which the Trust, on behalf of a Fund,
either -
(a) writes an option on Securities or writes a covered put option
in respect of a Security, or
(b) notifies the Custodian that its obligations in respect of any
put or call option, as described in the Trust's Prospectus,
require that the Fund deposit Securities or additional
Securities with the Custodian, specifying the type and value
of Securities required to be so deposited, or
(c) notifies the Custodian that its obligations in respect of any
other Security, as described in each Fund';s respective
Prospectus, require that the Fund deposit Securities or
additional Securities with the Custodian, specifying
the type and value of Securities required to be so deposited,
the Custodian will cause to be segregated or identified as
deposited, pursuant to the Fund's obligations as set forth in
such Prospectus, Securities of such kinds and having such
aggregate values as are required to meet the Fund's
obligations in respect thereof. The Trust will provide to the
Custodian, as of the end of each trading day, the market value
of each Fund's option liability if any and the market value of
its portfolio of common stocks.
4. On contractual settlement date, the account of each respective Fund
will be charged for all purchases settling on that day, regardless of whether or
not delivery is made. On contractual settlement date, sale proceeds will
likewise be credited to the account of such fund irrespective of delivery.
In the case of "sale fails", the Custodian may request the assistance of
the Funds in making delivery of the failed Security.
ARTICLE VI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Trust shall furnish to the Custodian a copy of the resolution of
the Board of Trustees, certified by the Secretary, either (i) setting forth the
date of the declaration of any dividend or distribution in respect of shares of
the Funds, the date of payment thereof, the record date as of which Funds
shareholders entitled to payment shall be determined, the amount payable per
share to Funds shareholders of record as of that date and the total amount to be
paid by the Dividend and Transfer Agent of the Funds on the payment date, or
(ii) authorizing the declaration of dividends and distributions in respect of
shares of the Funds on a daily basis and authorizing the Custodian to rely on
Written Instructions or a Certificate setting forth the date of the declaration
of any such dividend or distribution, the date of payment thereof, the record
date as of which Funds shareholders entitled to payment shall be determined, the
amount payable per share to Funds shareholders of record as of that date and the
total amount to be paid by the Dividend and Transfer Agent on the payment date.
2. Upon the payment date specified in such resolution, Written
Instructions or Certificate, as the case may be, the Custodian shall arrange for
such payments to be made by the Dividend and Transfer Agent out of monies held
for the account of the Funds.
ARTICLE VII
SALE AND REDEMPTION OF SHARES OF THE FUND
1. The Custodian shall receive and credit to the account of each Fund such
payments for shares of such Fund issued or sold from time to time as are
received from the distributor for the Fund's shares, from the Dividend and
Transfer Agent of the Fund, or from the Trust.
2. Upon receipt of Written Instructions, the Custodian shall arrange for
payment of redemption proceeds to be made by the Dividend and Transfer Agent out
of the monies held for the account of the respective Fund in the total amount
specified in the Written Instructions.
3. Notwithstanding the above provisions regarding the redemption of any
shares of the Fund, whenever shares of the Funds are redeemed pursuant to any
check redemption privilege which may from time to time be offered by the Funds,
the Custodian, unless otherwise subsequently instructed by Written Instructions
shall, upon receipt of any Written Instructions setting forth that the
redemption is in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of such check redemption
privilege out of the money held in the account of the Funds for such purposes.
ARTICLE VII
INDEBTEDNESS
In connection with any borrowings, the Trust, on behalf of the Funds, will
cause to be delivered to the Custodian by a bank or broker (including the
Custodian, if the borrowing is from the Custodian), requiring Securities as
collateral for such borrowings, a notice or undertaking in the form currently
employed by any such bank or broker setting forth the amount which such bank or
broker will loan to the Funds against delivery of a stated amount of collateral.
The Trust shall promptly deliver to the Custodian a Certificate specifying with
respect to each such borrowing: (a) the name of the bank or broker, (b) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Trust, acting on
behalf of the Fund, or other loan agreement, (c) the date and time, if known, on
which is to be entered into, (d) the date on which the loan becomes due and
payable, (e) the total amount payable to the Fund on the borrowing date, (f) the
market value of Securities collateralizing the loan, including the name of the
issuer, the title and the number of shares or the principal amount of any
particular Securities and (g) a statement that such loan is in conformance with
the Investment Company of 1940 and the Fund's then current Prospectus. The
Custodian shall deliver on the borrowing date specified in a Certificate the
specified collateral and the executed promissory note, if any, against delivery
by the lending bank or broker of the total amount of the loan payable provided
that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank or broker,
keep such collateral in its possession, but such collateral shall be subject to
all rights therein given the lending bank or broker, by virtue of any promissory
note or loan agreement. The Custodian shall deliver in the manner directed by
the Trust from time to time such Securities as additional collateral as may be
specified in a Certificate to collateralized further any transaction described
in this paragraph. The Trust shall cause all Securities released from collateral
status to be returned directly to the Custodian and the Custodian shall receive
from time to time such return of collateral as may be tendered to it. In the
event that the Trust fails to specify in a Certificate or Written Instructions
the name of the issuer, the title and number of shares or the principal amount
of any particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities. The
Custodian may require such reasonable conditions with respect to such collateral
and its dealings with third-partly lenders as it may deem appropriate.
ARTICLE IX
CONCERNING THE CUSTODIAN
1. Except as otherwise provided herein, the Custodian shall not be liable
for any loss or damage, including counsel fees, resulting from its action or
omission to act or otherwise, except for any such loss or damage arising out of
its negligence or willful misconduct. The Trust, on behalf of the Funds and only
from Fund Assets (or insurance purchased by the Trust with respect to its
liabilities on behalf of the Fund hereunder), shall defend, indemnify and hold
harmless the Custodian and its Trustees, Officers, Employees and Agents with
respect to any loss, claim, liability or cost (including reasonable attorneys'
fees) arising or alleged to arise from or relating to the Trust's duties with
respect to the Funds hereunder or any other action or inaction of the Trust or
its Trustees, Officers, Employees or Agents as to the Funds, except such as may
arise from the negligent action, omission or willful misconduct of the
Custodian, its Trustees, Officers, Employees or Agents. The Custodian shall
defend, indemnify and hold harmless the Trust and its Trustees, Officers,
Employees or Agents with respect to any loss, claim, liability or cost
(including reasonable attorneys' fees) arising or alleged to arise from or
relating to the Custodian's duties with respect to the Funds hereunder or any
other action of inaction of the Custodian or its Trustees, Officers, Employees,
Agents, nominees or Sub-Custodians as to the Funds, except such as may arise
from the negligent action, omission or willful misconduct of the Trust, its
Trustees, Officers, Employees or Agents. The Custodian may, with respect to
questions of law apply for and obtain the advice and opinion of counsel to the
Trust at the expense of the Funds, or of its own counsel at its own expense, and
shall be fully protected with respect to anything done or omitted by it in good
faith in conformity with the advice or opinion of counsel to the Trust, and
shall be similarly protected with respect to anything done or omitted by it in
good faith in conformity with advice or opinion of its counsel, unless counsel
to the Funds shall, within a reasonable time after being notified of legal
advice received by the Custodian, have a differing interpretation of such
question of law. The Custodian shall be liable to the Trust for any proximate
loss or damage resulting from the use of the Book-Entry System or any Depository
arising by reason of any negligence, misfeasance or misconduct on the part of
the Custodian or any of its employees, agents, nominees or Sub-Custodians but
not for any special, incidental, consequential, or punitive damages; provided,
however, that nothing contained herein shall preclude recovery by the Trust, on
behalf of the Funds, of principal and of interest to the date of recovery on,
Securities incorrectly omitted from the Fund's account or penalties imposed on
the Trust, in connection with the Funds, for any failures to deliver Securities.
In any case in which one party hereto may be asked to indemnify the other
or hold the other harmless, the party from whom indemnification is sought (the
"Indemnification Party") shall be advised of all pertinent facts concerning the
situation in question, and the party claiming a right to indemnification (the
"Indemnified Party") will use reasonable care to identify and notify the
Indemnifying Party promptly concerning any situation which presents or appears
to present a claim for indemnification against the Indemnifying Party. The
Indemnifying Party shall have the option to defend the Indemnified Party against
any claim which may be the subject of the indemnification, and in the event the
Indemnifying Party so elects, such defense shall be conducted by counsel chosen
by the Indemnifying Party and satisfactory to the Indemnified
Party and the Indemnifying Party will so notify the Indemnified Party and
thereupon such Indemnifying Party shall take over the complete defense of the
claim and the Indemnifying Party shall sustain no further legal or other
expenses in such situation for which indemnification has been sought under this
paragraph, except the expenses of any additional counsel retained by the
Indemnified Party. In no case shall any party claiming the right to
indemnification confess any claim or make any compromise in any case in which
the other party has been asked to indemnify such party (unless such confession
or compromise is made with such other party's prior written consent).
The obligations of the parties hereto under this paragraph shall survive
the termination of this Agreement.
2. Without limiting the generality of the foregoing, the Custodian, acting
in the capacity of Custodian hereunder, shall be under no obligation to inquire
into, and shall not be liable for :
(a) The validity of the issue of any Securities purchased by or
for the account of the Funds, the legality of the purchase
thereof, or the propriety of the amount paid therefor;
(b) The legality of the sale of any Securities by or for the
account of the Funds, or the propriety of the amount for which
the same are sold;
(c) The legality of the issue or sale of any shares of the Funds,
or the sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any shares of the Funds, or
the propriety of the amount to be paid, therefor;
(e) The legality of the declaration or payment of any dividend by
the Trust in respect of shares of the Funds;
(f) The legality of any borrowing by the Trust, on behalf of the
Funds, using Securities as collateral;
(g) The sufficiency of any deposit made pursuant to a Certificate
described in clause (ii) of paragraph 2(e) of Article IV
hereof.
3. The Custodian shall not be liable for any money or collected funds in
U.S. dollars deposited in a Federal Reserve Bank in accordance with a
Certificate described in clause (ii) of paragraph 2(e) of Article IV hereof, nor
be liable for or considered to be the Custodian of any money, whether or not
represented by any check, draft, or other instrument for the payment of money,
received by it on behalf of the Funds until the Custodian actually receives and
collects such money directly or by the final crediting of the account
representing the Fund's interest at the Book-Entry System or Depository.
4. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Funds from the Dividend and
Transfer Agent of the Funds nor take any action to effect payment or
distribution by the Dividend and Transfer Agent of the Funds of any amount paid
by the Custodian to the Dividend and Transfer Agent of the Funds in accordance
with this Agreement.
5. Income due or payable to the Funds with respect to Funds Assets will be
credited to the account of the Funds as follows:
(a) Dividends will be credited on the first business day following
payable date irrespective of collection.
(b) Interest on fixed rate municipal bonds and debt securities
issued or guaranteed as to principal and/or interest by the
government of the United States or agencies or
instrumentalities thereof (excluding securities issued by the
Government National Mortgage Association) will be credited on
payable date irrespective of collection.
(c) Interest on fixed rate corporate debt securities will be
credited on the first business day following payable date
irrespective of collection.
6. Notwithstanding paragraph 5 of this Article IX, the Custodian shall not
be under any duty or obligation to take action to effect collection of any
amount, if the Securities upon which such amount is payable are in default, or
if payment is refused after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and (ii) it shall be
assured to its satisfaction of reimbursement of its costs and expenses in
connection with any such action or, at the Custodian's option, prepayment.
7. The Custodian may appoint one or more financial or banking
institutions, as Depository or Depositories or as Sub-Custodian or
Sub-Custodians, including, but not limited to, the Fund, upon terms and
conditions approved in a Certificate. Current Depository(s) and Sub-Custodian(s)
are noted in Appendix B The Custodian shall not be relieved of any obligation or
liability under this Agreement in connection with the appointment or activities
of such Depositories or Sub-Custodians.
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
the Funds are such as properly may be held by the Funds under the provisions of
the Declarations of Trust and the Trust's By-Laws.
9. The Custodian shall treat all records and other information relating to
the Trust, the Funds and the Funds' Assets as confidential and shall not
disclose any such records or information to any other person unless (a) the
Trust shall have consented thereto in writing or (b) such disclosure is
compelled by law.
10. The Custodian shall be entitled to receive and the Trust agrees to pay
to the Custodian, for the Fund's account from Fund Assets only, such
compensation as shall be determined pursuant to Appendix C attached hereto, as
shall be determined pursuant to amendments to such Appendix approved by the
Custodian and the Trust, on behalf of the Funds. The Custodian shall be entitled
to charge against any money held by it for the accounts of the Funds the amount
of any loss, damage, liability or expense, including counsel fees for which it
shall be entitled to reimbursement under the provisions of this Agreement as
determined by agreement of the Custodian and the Trust or by the final order of
any court or arbitrator having jurisdiction and as to which all rights of appeal
shall have expired. The expenses which the
custodian may charge against the accounts of the Funds include, but are not
limited to, the expenses of Sub-Custodians incurred in settling transactions
involving the purchase and sale of Securities of the Fund.
11. The Custodian shall be entitled to rely upon any Certificate if such
reliance is made in good faith. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Article IV and V hereof. The Trust agrees to forward to
the Custodian Written Instructions from Authorized Persons confirming Oral
Instructions in such manner so that such Written Instructions are received by
the Custodian, whether by hand delivery, telex or otherwise, on the first
business day following the day on which such Oral Instructions are given to the
Custodian. The Trust agrees that the fact that such confirming instructions are
not received by the Custodian shall in no way affect the validity of the
transactions or enforceability of the transactions hereby authorized by the
Trust. The Trust agrees that the Custodian shall incur no liability to the Funds
in acting upon Oral Instructions given to the Custodian hereunder concerning
such transactions.
12. The Custodian will (a) set up and maintain proper books of account and
complete records of all transactions in the amounts maintained by the Custodian
hereunder in such a manner as will meet the obligations of the Funds under the
Investment Company Act of 1940, with particular attention to Section 31 thereof
and Rules 31 a-1 and 31 a-2 thereunder, and (b) preserver for the periods
prescribed by applicable Federal statute or regulation all records required to
be so preserved. The books and records of the Custodian shall be open to
inspection and audit at reasonable times and with prior notice by Officers and
auditors employed by the Trust.
13. The Custodian and its Sub-Custodians shall promptly send to the Trust,
for the account of the Funds, any report received on the systems of internal
accounting control of the Book-Entry System or the Depository and with such
reports on their own systems of internal accounting control as the Trust may
reasonably request from time to time.
14. The Custodian performs only the services of a custodian and shall have
no responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Funds. The Custodian is not a selling
agent for shares of the Funds and performance of its duties as a custodial agent
shall not be deemed to be a recommendation to the Custodian's depositors or
others of shares of the Funds as an investment.
ARTICLE X
TERMINATION
1. Either of the parties hereto may terminate this Agreement for any
reason by giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than ninety (90) days after the date
of giving of such notice. If such notice is given by the Trust, on behalf of the
Fund, it shall be accompanied by a copy of a resolution of the Board of Trustees
of the Trust, certified by the Secretary or any Assistant Secretary, electing to
terminate this Agreement and designating a successor custodian or custodians,
each of which
shall be a bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits, or any other entity satisfying the
requirements of the 1940 Act. In the event such notice is given by the
Custodian, the Trust shall, on or before the termination date, deliver to the
Custodian a copy of a resolution of its Board of Trustees, certified by the
Secretary, designating a successor custodian or custodians to act on behalf of
the Funds. In the absence of such designation by the Trust, the Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus, and undivided profits, or
any other entity satisfying the requirements of the 1940 Act. Upon the date set
forth in such notice this Agreement shall terminate, and the Custodian, provided
that it has received a notice of acceptance by the successor custodian, shall
deliver, on that date, directly to the successor custodian all Securities and
monies then owned by the Funds and held by it as Custodian. Upon termination of
this agreement, the Trust shall pay to the Custodian on behalf of the Funds such
compensation as may be due as of the date as such termination. The Trust agrees
on behalf of the Funds that the Custodian shall be reimbursed for its reasonable
costs in connection with the termination of this Agreement.
2. If a successor custodian is not designated by the Trust, on behalf of
the Funds, or by the Custodian in accordance with the preceding paragraph, or
the designated successor cannot or will not serve, the Trust shall upon delivery
by the Custodian to the Trust of all Securities (other than Securities held in
the Book-Entry System which cannot be delivered to the Trust) and monies then
owned by the Funds, other than monies deposited with a Federal Reserve Bank
pursuant to a Certificate described in clause (ii) of paragraph 2(e) of Article
IV, be deemed to be the custodian for the Funds, and the Custodian shall thereby
be relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry System which
cannot be delivered to the Trust to hold such Securities hereunder in accordance
with this Agreement.
ARTICLE XI
MISCELLANEOUS
1. Appendix A sets forth the names and the signatures of all Authorized
Persons. The Trust agrees to furnish to the Custodian, on behalf of the Funds, a
new Appendix A in form similar to the attached Appendix A, if any present
Authorized Person ceases to be an Authorized Person or if any other additional
Authorized Persons are elected or appointed. Until such new Appendix A shall be
received, the Custodian shall be fully protected in acting under the provisions
of this Agreement upon Oral Instructions or signatures of the present Authorized
Persons as set forth in the last delivered Appendix A.
2. No recourse under any obligation of this Agreement or for any claim
based thereon shall be had against any organizer, shareholder, Officer, Trustee,
past, present or future as such, of the Trust or of any such predecessor or
successor, whether by virtue of any constitution, statute or rule of law or
equity, or by the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Agreement and the obligations
thereunder are enforceable solely against Fund Assets, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
organizers, shareholders, Officers,
Trustees of the Trust or of any predecessor or successor, or any of them as
such, because of the obligations contained in this Agreement or implied
therefrom and that any and all such liability is hereby expressly waived and
released by the Custodian as a condition of, and as a consideration for, the
execution of this Agreement.
3. The obligations set forth in this Agreement as having been made by the
Trust have been made by the Trustees of the Trust, acting as such Trustees for
and on behalf of the Funds, pursuant to the authority vested in them under the
laws of the State of Delaware, the Declaration of Trust and the By-Laws of the
Trust. This Agreement has been executed by Officers of the Trust as Officers,
and not individually, and the obligations contained herein are not binding upon
any of the Trustees, Officers, Agents or holders of shares, personally, but bind
only the Trust and then only to the extent of Fund Assets.
4. Such provisions of the Prospectuses of the Funds and any other
documents (including advertising material) specifically mention the Custodian
(other than merely by name and address) shall be reviewed with the Custodian by
the Trust.
5. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at
Firstar Bank Center, 000 Xxxxxx Xxxxxx, X.X. 0000, Xxxxxxxxxx, Xxxx 00000,
attention: Mutual Fund Custody Department, or at such other place as the
Custodian may from time to time designate in writing.
6. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Trust shall be sufficiently given when
delivered to the Trust or on the second business day following the time such
notice is deposited in the U.S. mail postage prepaid and addressed to the Trust
at its office at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000
or at such other place as the Trust may from time to time designate in writing.
7. This Agreement with the exception of Appendices A & B may not be
amended or modified in any manner except by a written agreement executed by both
parties with the same formality as this Agreement, and authorized and approved
by a resolution of the Board of Trustees of the Trust.
8. This Agreement shall extent to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Trust or by the Custodian, and not
attempted assignment by the Trust or the Custodian shall be effective without
the written consent of the other party hereto.
9. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and first year first above written.
ATTEST: RYDEX DYNAMIC FUNDS
/S/ XXXXX X. XXXXXX BY: /S/ XXXX X. XXXXXXXXXXX
---------------------------- ------------------------------
ATTEST: FIRSTAR BANK, N.A.
/s/ XXXXX X. WYEL BY: /S/ XXXXXXXX X. XXXXXX
---------------------------- ------------------------------
APPENDIX A
AUTHORIZED PERSONS SPECIMEN SIGNATURES
------------------ -------------------
Assistant Controller - Fund Administration: Xxxxx Xxxxxx /s/ Xxxxx Xxxxxx
Assistant Controller - Accounting Operations: Xxxxx Xxxxxx /s/ Xxxxx Xxxxxx
Senior Portfolio Accountant: Xxxxx Xxxxxxxx /s/ Xxxxx Xxxxxxxx
Portfolio Accountant: Xxxxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxxx
Director of Shareholder Services: Xxxxx Xxxxxxx /s/ Xxxxx Xxxxxxx
Supervisor of Operations: Xxxx Xxxxx /s/ Xxxx Xxxxx
Operations Specialist: Xxxxxx Xxxxxx /s/ Xxxxxx Xxxxxx
Operations Specialist: Xxxxx Xxxxxx /s/ Xxxxx Xxxxxx
Operations Specialist: Xxxxxxxx Xxxxxxxx /s/ Xxxxxxxx Xxxxxxxx
APPENDIX B
The following Depository(s) and Sub-Custodians are employed currently by Firstar
Bank, N.A. for securities processing and control:
The Depository Trust Company (New York)
0 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bank of New York
Xxx Xxxx, XX 00000
APPENDIX C
RYDEX DYNAMIC FUNDS
FIRSTAR BANK, N.A.
DOMESTIC CUSTODY FEE SCHEDULE
Firstar Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I. PORTFOLIO TRANSACTION FEES:
(a) For each repurchase agreement transaction $ 7.00
(b) For each portfolio transaction processed through $ 8.00
DTC or Federal Reserve
(c) For each portfolio transaction processed through $ 25.00
Our New York custodian
(d) For each GNMA/Amortized Security Purchase $ 25.00
(e) For each GNMA Prin/Int Paydown, GNMA Sales $ 8.00
(f) For each option/future contract written, exercised $ 25.00
or expired
(g) For each Cedel/Euroclear transaction $100.00
(h) For each disbursement (Fund expenses only) $ 5.00
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange.
II. MONTHLY BASE FEE PER FUND
First 4 months $100.00
Second 4 months $200.00
Third 4 months $300.00
First Year Anniversary and thereafter: $400.00
III. OUT-OF-POCKET EXPENSES
Firstar Bank shall be reimbursed for all out-of-pocket expenses including,
but not limited to postage, insurance, and long distance telephone charges.
IV. XXX DOCUMENTS
Per Shareholder/year to hold each XXX Document $ 8.00
V. EARNINGS CREDITS
On a monthly basis any earnings credits generated from uninvested custody
balances will be applied against any cash management service fees. Earnings
credits are based on a cost of funds tiered earnings credit rate.
FIRSTAR BANK, N.A.
MANAGEMENT FEE SCHEDULE
BUSINESS CHECKING FEES UNIT COST MONTHLY COST
--------------------------------------------------------------------------------
D.D.A. Account Maintenance $14.00
Deposits .42
Deposited Items .109
Checks Paid .159
Deposited Items Returned 6.00
International Returned Items 10.00
NSF Returned Check 25.00
Stop Payments 22.00
CASH MANAGEMENT FEES
Balance Reporting - P.C. Access 50.00 1st Acct
35.00 each add
ACH Transaction .105
ACH Maintenance 40.00
ACH Additions, Deletions, Changes 6.00
ACH Stop Payment 5.00
ACH Debits .12
Issued Items .015
Deposited Items Returned 6.00
International Items Returned 10.00
NSF Returned Checks 25.00
Stop Payments 22.00
Data Transmission per account 110.00
Data Capture* .10
Invoicing for Service Charge 15.00
Wires Incoming
Domestic: 10.00
International: 10.00
Wires Outgoing
Domestic:
Repetitive 12.00
Non Repetitive 13.00
International:
Repetitive 35.00
Non Repetitive 40.00
PC - Initiated Wires
Domestic:
Repetitive 9.00
Non Repetitive 9.00
International:
Repetitive 25.00
Non Repetitive 25.00
UNCOLLECTED CHARGE
Firstar Bank assesses a penalty of prime rate plus 4% on any combined
relationship with average uncollected balances for the month.
