Exhibit 99.H1
AMENDED AND RESTATED
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (the "Agreement"), dated as of August 11, 1998, and
amended and restated as of November 15, 2004, is entered into by and between
RYDEX VARIABLE TRUST, a Delaware business trust (the "Trust"), and RYDEX FUND
SERVICES, INC., a Maryland corporation (the "Servicer").
WITNESSETH:
WHEREAS, the Trust is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Servicer is registered as a transfer agent under the
Securities Exchange Act of 1934, as amended; and
WHEREAS, the Trust wishes to have the Servicer perform general
administrative, shareholder, dividend disbursement, transfer agent, and
registrar and other services for the Trust and to act in such capacity in the
manner set forth in this Agreement, and the Servicer is willing to act in such
capacity in accordance with the provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt,
sufficiency, and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree and proms as follows:
1. SERVICES TO BE PROVIDED.
In consideration of the compensation to be paid by the Trust to the
Servicer pursuant to Section 4 of this Agreement, the Servicer will:
a. Manage, supervise, and conduct the affairs and business of the
Trust and matters incidental thereto. In the performance of its
duties, the Servicer will comply with the Trust's Prospectus and its
Statement of Additional Information, as the same may be amended from
time to time, all as delivered to the Servicer (collectively, the
"Controlling Documents"). The Servicer will also use its best efforts
to safeguard and promote the welfare of the Trust, and to comply with
other policies which the Board of Trustees of the Trust (the "Board")
may from time to time specify. The Servicer will furnish or provide to
the Trust general administrative services as the Trust may reasonably
require in the conduct of its affairs and business, including, without
limitation, the services described on Schedule I attached hereto.
b. Provide the Trust with all required shareholder and dividend
disbursement services, including, without limitation, those services
described on Schedule II, attached hereto. The Servicer will maintain
sufficient trained personnel and equipment and supplies to perform
such services in conformity with the Controlling Documents and such
other reasonable standards of performance as the Trust may from time
to time specify, and otherwise in an accurate, timely, and efficient
manner.
c. Provide the Trust with all required stock transfer agent and
registrar services, including, without limitation, those services
described on Schedule III attached hereto. The Servicer will maintain
sufficient trained personnel and equipment and supplies to perform
such services in conformity with the Controlling Documents and such
other reasonable standards of performance as the Trust may from time
to time specify, and otherwise in an accurate, timely, and efficient
manner.
2. OBLIGATIONS OF THE TRUST.
The Trust will have the following obligations under this Agreement:
a. The Trust shall keep the Servicer continuously and fully informed
as to the composition of the Trust's investment portfolio and the
nature of all of the Trust's assets and liabilities, and shall cause
the investment managers of the Trust's series to cooperate with the
Servicer in all matters so as to enable the Servicer to perform the
Servicer's functions under this Agreement.
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b. The Trust shall furnish the Servicer with any materials or
information which the Servicer may reasonably request to enable the
Servicer to perform the Servicer's functions under this Agreement.
c. The Trust shall turn over to the Servicer the accounts and
records previously maintained by or for the Trust. The Servicer shall
be entitled to rely exclusively on the completeness and correctness of
the accounts and records turned over to the Servicer by the Trust;
provided, that such reliance is made in good faith, and the Trust
shall indemnify and hold the Servicer harmless of and from any and all
expenses (including, without limitation, attorneys' and accountants'
fees), damages, claims, suits, liabilities, actions, demands, and
losses whatsoever arising out of or in connection with any error,
omission, inaccuracy, or other deficiency of such accounts and records
or in connection with the failure of the Trust to provide any portion
of such accounts and records or to provide any information to the
Servicer necessary or appropriate to perform the Servicer's functions
hereunder; and provided, further, that such accounts, records, and
other information shall belong to the Trust and be considered
confidential, and shall not be disclosed to other than Federal and
state regulators without permission from the Trust.
3. PAYMENT OF FEES AND EXPENSES.
a. The Servicer will pay all of the fees and expenses incurred by
the Servicer in providing the Trust with the services and facilities
described in this Agreement, except as otherwise provided herein.
b. Notwithstanding any other provision of this Agreement, the Trust
will pay, or reimburse the Servicer for the payment of, all fees and
expenses incurred by the Servicer not directly related to the
Servicer's providing the Trust with the services and facilities
described in this Agreement, including, but not limited to, the
following described fees and expenses of the Trust (hereinafter called
"Direct
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Expenses") whether or not billed to the Trust, the Servicer, or any
related entity:
i. fees and expenses of custodian and depositories and banking
services fees and costs;
ii. fees and expenses of outside legal counsel and any legal
counsel directly employed by the Trust;
iii. fees and expenses of independent auditors and income tax
preparation and expenses of obtaining quotations for the
purpose of calculating the value of the Trust's assets;
iv. all Federal, state, and local taxes (including, without
limitation, stamp, excise, income, and franchise taxes);
v costs of stock certificates and other expenses of issuing
and redeeming shares of the Trust ("Shares");
vi. costs incidental to or associated with shareholder meetings;
vii. fees and expenses of registering or qualifying shares for
sale under Federal and state securities laws;
viii costs (including postage) of printing and mailing
prospectuses, confirmations, proxy statements, and other
reports and notices to shareholders and to governmental
agencies;
ix. premiums on all insurance and bonds and other expenses of
fidelity and liability insurance and bonding covering the
Trust;
x. fees and expenses of the disinterested Trustees and expenses
incidental to the meetings of the Board;
xi. dues and expenses associated with membership in the
Investment Company Institute and the Mutual Fund Education
Alliance; costs (including postage) of printing and mailing
prospectuses,
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confirmations, proxy statements, annual, semi-annual and
quarterly reports, and other reports and notices to
shareholders and to governmental agencies;
4. COMPENSATION.
As consideration for the services provided hereunder, the Trust will pay
the Servicer a fee on the last day of each month in which this Agreement is in
effect, at the following annual rates based on the average daily net assets (the
"Assets") of each of the Trust's series (a "Fund") for such month:
THE U.S. GOVERNMENT BOND FUND
0.20% of Assets
THE U.S. GOVERNMENT MONEY MARKET FUND
0.20% of Assets
THE NOVA FUND
0.25% of Assets
THE URSA FUND
0.25% of Assets
THE OTC FUND
0.25% of Assets
THE ARKTOS FUND
0.25% of Assets
THE JUNO FUND
0.25% of Assets
THE LARGE-CAP EUROPE FUND
0.25% of Assets
THE LARGE-CAP JAPAN FUND
0.25% of Assets
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THE MEKROS FUND
0.25% of Assets
THE MEDIUS FUND
0.25% of Assets
THE TITAN 500 FUND
0.25% of Assets
THE TEMPEST 500 FUND
0.25% of Assets
THE VELOCITY 100 FUND
0.25% of Assets
THE VENTURE 100 FUND
0.25% of Assets
THE LONG DYNAMIC DOW 30 FUND
0.25% of Assets
THE INVERSE DYNAMIC DOW 30 FUND
0.25% of Assets
THE LARGE-CAP VALUE FUND
0.25% of Assets
THE LARGE-CAP GROWTH FUND
0.25% of Assets
THE MID-CAP VALUE FUND
0.25% of Assets
THE MID-CAP GROWTH FUND
0.25% of Assets
THE INVERSE MID-CAP FUND
0.25% of Assets
THE SMALL-CAP VALUE FUND
0.25% of Assets
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THE SMALL-CAP GROWTH FUND
0.25% of Assets
THE INVERSE SMALL-CAP FUND
0.25% of Assets
THE BANKING FUND
0.25% of Assets
THE BASIC MATERIALS FUND
0.25% of Assets
THE BIOTECHNOLOGY FUND
0.25% of Assets
THE CONSUMER PRODUCTS FUND
0.25% of Assets
THE ELECTRONICS FUND
0.25% of Assets
THE ENERGY FUND
0.25% of Assets
THE ENERGY SERVICE FUND
0.25% of Assets
THE FINANCIAL SERVICES FUND
0.25% of Assets
THE HEALTH CARE FUND
0.25% of Assets
THE INTERNET FUND
0.25% of Assets
THE LEISURE FUND
0.25% of Assets
THE PRECIOUS METALS FUND
0.25% of Assets
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THE REAL ESTATE FUND
0.25% of Assets
THE RETAILING FUND
0.25% of Assets
THE TECHNOLOGY FUND
0.25% of Assets
THE SECTOR ROTATION FUND
0.25% of Assets
THE CORE EQUITY FUND
0.25% of Assets
THE TELECOMMUNICATIONS FUND
0.25% of Assets
THE TRANSPORTATION FUND
0.25% of Assets
THE UTILITIES FUND
0.25% of Assets
THE CLS ADVISORONE XXXXXXX VT FUND
0.25% of Assets
THE CLS ADVISORONE CLERMONT VT FUND
0.25% of Assets
In the event that this Agreement commences on a date other than on the
beginning of any calendar month, or if this Agreement terminates on a date other
than the end of any calendar month, the fees payable hereunder by the Trust
shall be proportionately reduced according to the number of days during such
month that services were not rendered hereunder by the Servicer.
5. REPORTS TO THE BOARD OF TRUSTEES.
The Servicer will consult with the Board at such times as the Board
reasonably requests with respect to the services provided hereunder, and the
Servicer will cause its officers to attend
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such meetings with the Board, and to furnish such oral or written reports to the
Board, as the Board may reasonably request. In addition, the Servicer agrees to
provide to the Board such reports and other information as the Board may
reasonably request in order to enable the Board to perform a review of the
Servicer's performance under this Agreement.
6. TERM OF AGREEMENT.
This Agreement shall become effective as of the date the Trust commences
its investment operations and shall continue for an initial two-year term and
shall continue automatically from year-to-year thereafter unless terminated in
accordance with the provisions of Section 7 of this Agreement.
7. TERMINATION.
This Agreement may be terminated, without the payment of any penalty, by
either party hereto upon at least sixty (60) days' written notice to the other
party. Any termination by the Trust will be pursuant to a vote of a majority of
the Trustees.
8. STANDARD OF CARE.
a. Except as provided by law, the Servicer will be under no
liability or obligation to anyone with respect to any failure on the
part of the Board or any investment manager to perform any of their
obligations under the Controlling Documents, or for any error or
omission whatsoever on the part of the Board or any investment
manager.
b. The Servicer will not be liable for any error of judgment or
mistake of law or for any loss caused by the Trust in connection with
the matters to which this Agreement relates; provided, however, that
the Servicer has acted in the premises with the care, skill, prudence,
and diligence under the circumstances then prevailing that a prudent
man acting in like capacity and familiar with such matters would use
in the conduct of any enterprise of a like character and with like
aims, and in accordance with such other requirements of law; provided,
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further, however, that nothing in this Agreement will protect the
Servicer against any liability to the Trust to which the Servicer
would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of the Servicer's duties
hereunder or by reason of the Servicer's reckless disregard of the
Servicer's obligations and duties hereunder.
9. OTHER ACTIVITIES OF THE SERVICER.
Subject to the provisions of Section 5 of this Agreement, with respect
to advance notice of the Servicer's taking on of new clients or ventures of
material significance, nothing herein contained will limit or restrict the right
of the Servicer to engage in any other business or to render services of any
kind to any other corporation, firm, individual, or association.
10. SCOPE OF AUTHORITY.
a. Shares purchased by the Servicer on behalf of shareholders of the
Trust ("Shareholders") will be registered with the Servicer, as the
Trust's transfer agent, in the Servicer's name or in the name of the
Servicer's nominee. The Shareholder will be the beneficial owner of
Shares purchased and held by the Servicer in accordance with the
Shareholder's instructions and the Shareholder may exercise all rights
of a Shareholder of the Trust.
b. Neither the Servicer nor any of the Servicer's officers,
employees, agents, or assigns are authorized to make any
representations concerning the Trust or the Shares, except for those
representations contained in the Trust's then current prospectus for
such Shares, copies of which will be supplied by the Trust to the
Servicer, or in such supplemental literature or advertising as may be
authorized by the Trust in writing.
11. AUTHORITY TO ENGAGE SUB-SERVICERS.
In providing the services and assuming the obligations set forth herein,
the Servicer may, at the sole expense of the Servicer, employ one or more
sub-servicers, or may enter into such
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service agreements as the Servicer deems appropriate in connection with the
performance of the Servicer's duties and obligations hereunder. Reference herein
to the duties and responsibilities of the Servicer shall include the duties and
responsibilities of any sub-servicers employed by the Servicer to the extent
that the Servicer shall delegate such duties and responsibilities to such
sub-servicer.
12. INDEMNIFICATION.
a. The Trust shall indemnify the Servicer and hold the Servicer
harmless from and against all actions, suits, and claims, whether
groundless or otherwise, arising directly or indirectly out of or in
connection with the Servicer's performance under this Agreement and
from and against any and all losses, damages, costs, charges,
attorneys' and accountant's fees, payments, expenses, and liabilities
incurred by the Servicer in connection with any such action, suit, or
claim unless caused by the Servicer's breach of this Agreement,
negligence, or willful misconduct. The Servicer shall not be under any
obligation to prosecute or to defend any action, suit, or claim
arising out of or in connection with the Servicer's performance under
this Agreement, which, in the opinion of the Servicer's counsel, may
involve the Servicer in expense or liability, and the Trust shall, so
often as reasonably requested, furnish the Servicer with satisfactory
indemnity against such expense or liability, and upon request of the
Servicer, the Trust shall assume the entire defense of any action,
suit, or claim subject to the foregoing indemnity; provided, however,
that the Servicer shall give the Trust immediate notice of any such
action, suit, or claim brought against the Servicer.
b. The Servicer shall indemnify the Trust and hold the Trust
harmless from all claims and liabilities (including reasonable
attorneys' and accountants' expenses) incurred or assessed against the
Trust arising from the Servicer's negligence, willful misconduct, or
breach of this Agreement.
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13. NOTICES.
a. Communications to the Servicer from the Trust or the Board shall
be addressed to:
Rydex Variable Trust or Rydex Fund Services, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: President
b. Communications from the Servicer to the Trust shall be
addressed to:
Rydex Fund Services, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: President
c. In the event of a change of address, communications will be
addressed to such new address as designated in a written notice from the Trust
or the Servicer, as the case may be. All communications addressed in the above
manner and by registered mail or delivered by hand will be sufficient under this
Agreement.
14. LAW GOVERNING.
This Agreement is governed by the laws of the State of Maryland (without
reference to such state's conflict of law rules).
15. 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.
16. BINDING EFFECT AND ASSIGNMENT.
This Agreement 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 without the written consent of the Servicer, or
by the Servicer without the written consent of the Trust, in
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each case authorized or approved by a resolution of the Trust's Trustees.
17. 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 the Servicer and
the Trust.
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IN WITNESS WHEREOF, the Servicer and the Trust have executed this Agreement
as of the date first written above.
RYDEX VARIABLE TRUST
By: /s/ Xxxx X. Xxxxxxxxxxx
-----------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
RYDEX FUND SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxxxxxx
-----------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
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SCHEDULE I
GENERAL ADMINISTRATIVE SERVICES
The Servicer agrees to provide the Trust with all required general
administrative services, including, without limitation, the following:
1. Office space, equipment, and personnel.
2. Clerical and general back office services.
3. Bookkeeping, internal accounting, secretarial, and other general
administrative services.
4. Preparation of all annual, semi-annual and quarterly reports, prospectuses,
statements of additional information, proxy statements, and all other
materials required to be filed or furnished by the Trust under Federal and
state securities laws.
5. Process payments of all fees and expenses of the Trust.
6. Perform appropriate IRS and SEC testing for the Trust.
7. Disseminate NAV and other relevant Fund information to external parties.
8. Calculate Fund distributions to ensure compliance with IRS rules.
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SCHEDULE II
SHAREHOLDER AND DIVIDEND, DISBURSEMENT SERVICES
The Servicer agrees to provide the Trust and the Shareholders with all
required shareholder and dividend disbursement services ("Services"), including,
without limitation, the following:
1. The Servicer shall provide the following services to the Shareholders of
the Trust:
a. Aggregating and processing purchases and redemption requests for Trust
Shares from Shareholders.
b. Processing dividend payments from the Trust on behalf of Shareholders.
c. Providing information periodically to Shareholders showing their
positions in Shares.
d. Arranging for bank wires.
e. Responding to Shareholder inquiries relating to the services performed
by the Servicer.
f. Providing subaccounting with respect to Shares beneficially owned by
Shareholders
g. As required by law, forwarding shareholder communications from the
Trust (such as proxies, shareholder reports, annual and semi-annual
financial statements, and dividend, disbursement, and tax notices) to
Shareholders.
h. Providing such other similar services as the Trust may reasonably
request to the extent the Servicer is permitted to do so under
applicable statues, rules, or regulations.
i. Provide to Shareholders a schedule of any fees that the Servicer may
charge directly to the Shareholders for such Services.
2. The Servicer shall also provide the following additional Services:
a. Maintain all records required by law relating to transactions in
Shares and, upon request by the Trust, promptly make such of these
records available to the Trust as the Trust may reasonably request in
connection with the operations of the Trust.
b. Promptly notify the Trust if the Servicer experiences any difficulty
in maintaining the records described in this Schedule II to the
Agreement in an accurate and
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complete manner.
c. Furnish the Trust or any designee of the Trust ("Designee") with such
information relating to the Servicer's performance under this
Agreement as the Trust or the Designee may reasonably request
(including, without limitation, periodic certifications confirming the
provision to Shareholders of the Services described herein), and shall
otherwise cooperate with the Trust and the Trust's Designees
(including, without limitation, any auditors designated by the Trust),
in connection with the preparation of reports to the Board of Trustees
concerning this Agreement and the monies paid or payable by the Trust
pursuant hereto, as well as any other reports or filings that may be
required by law.
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SCHEDULE III
TRANSFER AGENT. AND REGISTRAR SERVICES
The Servicer agrees to provide the Trust with all required transfer agent
and registrar services, including, without limitation, the following:
1. Maintaining all shareholder accounts, including processing of new accounts.
2. Posting address changes and other file maintenance for shareholder
accounts.
3. Posting all transactions to the shareholder file, including:
- Direct purchases
- Wire order purchases
- Direct redemptions
- Wire order redemptions
- Draft redemptions
- Direct exchanges
- Transfers
4. Quality control reviewing of transactions before the mailing of
confirmations, checks, and/or certificates to shareholders.
5. Issuing all checks and shipping and replacing lost checks.
6. Mailing confirmations, checks, and/or certificates resulting from
transaction requests of shareholders.
7. Performing other mailings, including:
- Semi-annual and annual reports
- I.R.S. Form 1099/year-end shareholder reporting
- Systematic withdrawal plan payments
- Daily confirmations
8. Answering all service-related telephone inquiries from shareholders,
including:
- General and policy inquiries (research and resolve problems)
- Trust yield inquiries
- Taking shareholder processing requests and account maintenance
changes by telephone
- Submitting pending requests to correspondence
- Developing reports on telephone activity
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9. Implementing the Trust's Anti Money Laundering Program and monitoring
compliance with the Anti Money Laundering and Foreign Asset Compliance
Policy and Procedures.
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