Exhibit 99.B(d)(4)
FORM OF
AMENDMENT
DATED MAY 23, 2005
TO THE
ADVISORY AGREEMENT
BETWEEN RYDEX VARIABLE TRUST
AND PADCO ADVISORS II, INC.,
DATED APRIL 30, 2004,
AS AMENDED
FORM OF
AMENDMENT
TO THE
ADVISORY AGREEMENT
DATED APRIL 30, 2004, AS AMENDED,
BETWEEN
RYDEX VARIABLE TRUST
AND
PADCO ADVISORS II, INC.
The Fund will pay to the Adviser as compensation for the Adviser's services
rendered, a fee, computed daily at an annual rate based on the average daily net
assets of the respective Fund, in accordance with the following fee schedule:
FUND RATE
---- ----
Nova 0.75%
Ursa 0.90%
OTC 0.75%
U.S. Government Bond 0.50%
Juno 0.90%
Arktos 0.90%
Medius 0.90%
Mekros 0.90%
Large-Cap Europe 0.90%
Large-Cap Japan 0.90%
Large-Cap Value 0.75%
Large-Cap Growth 0.75%
Mid-Cap Value 0.75%
Mid-Cap Growth 0.75%
Inverse Mid-Cap 0.90%
Small-Cap Value 0.75%
Small-Cap Growth 0.75%
Inverse Small-Cap 0.90%
Titan 500 0.90%
Tempest 500 0.90%
Velocity 100 0.90%
Venture 100 0.90%
Banking 0.85%
Basic Materials 0.85%
Biotechnology 0.85%
Consumer Products 0.85%
Electronics 0.85%
Energy 0.85%
Energy Services 0.85%
Financial Services 0.85%
Health Care 0.85%
Internet 0.85%
Leisure 0.85%
Precious Metals 0.75%
Real Estate 0.85%
Retailing 0.85%
Technology 0.85%
Telecommunications 0.85%
Transportation 0.85%
Utilities 0.85%
Sector Rotation 0.90%
Core Equity* 0.70%
CLS AdvisorOne Xxxxxxx VT 0.90%
CLS AdvisorOne Clermont VT 0.90%
FUND RATE
---- ----
Long Dynamic Dow 30 0.90%
Inverse Dynamic Dow 30 0.90%
U.S. Government Money Market 0.50%
STRENGTHENING DOLLAR 0.90%
WEAKENING DOLLAR 0.90%
COMMODITIES 0.75%
ADDITIONS ARE NOTED IN BOLD.
* The management fee with respect to the Core Equity Fund (the "Fund") is
comprised of a basic fee (the "Basic Fee") at the annual rate of 0.70% of the
Fund's average daily net assets and a performance adjustment (the "Performance
Adjustment") as discussed below.
A. CALCULATING THE PERFORMANCE ADJUSTMENT. The performance adjustment
shall be calculated monthly by:
(i) Determining the difference in performance (the "Performance
Difference") between the Fund and the Xxxxxxx 3000 Index (the
"Index"), as described in paragraph C;
(ii) Using the Performance Difference calculated under paragraph
B(ii) to determine the performance adjustment ( the "Performance
Adjustment"), as illustrated in paragraph D; and
(iii) Adding the Performance Adjustment to the Basic Fee to determine
the management fee for the applicable month.
B. COMPUTING THE PERFORMANCE DIFFERENCE. The Performance Difference is
calculated monthly, and is determined by measuring the percentage difference
between the performance of one Share of the Fund and the performance of the
Index over the most recent 12-month period. The performance of one Share of the
Fund shall be measured by computing the percentage difference, carried to five
decimal places, between the net asset value as of the last business day of the
period selected for comparison and the net asset value of such share as of the
last business day of the prior period, adjusted for dividends or capital gain
distributions treated as reinvested immediately. The performance of the Index
will be established by measuring the percentage difference, carried to five
decimal places, between the beginning and ending values of the Index for the
comparison period, with dividends or capital gain distributions on the
securities that comprise the Index being treated as reinvested immediately.
C. DETERMINING THE PERFORMANCE ADJUSTMENT. For every 0.0375% in
Performance Difference, the Adviser's fee will be adjusted upwards or downwards
by 0.01%. The maximum adjustment rate is 0.20% per year, resulting in a minimum
possible annual fee of 0.50% and a maximum possible annual fee of 0.90%.
D. PERFORMANCE ADJUSTMENT EXAMPLE. The following example illustrates the
application of the Performance Adjustment:
FOR THE ROLLING 12-MONTH FUND'S INVESTMENT INDEX'S FUND'S PERFORMANCE
PERFORMANCE PERIOD PERFORMANCE CUMULATIVE CHANGE RELATIVE TO THE INDEX
------------------------- ----------------- ----------------- ---------------------
January 1 $ 50.00 100.00
December 31 $ 55.25 110.20
Absolute change $ +5.25 $ +10.20
Actual change +10.50% +10.20% +0.30%
Based on these assumptions, the Fund calculates the Adviser's management fee
rate for the month-ended December 31 as follows:
- The portion of the annual basic fee rate of 0.70% applicable to that month
is multiplied by the Fund's average daily net assets for the month. This
results in the dollar amount of the basic fee.
- The +0.30% difference between the performance of the Fund and the record of
the Index is divided by 3.75, producing a rate of 0.08%.
- The 0.08% rate (adjusted for the number of days in the month) is multiplied
by the Fund's average daily net assets for the performance period. This
results in the dollar amount of the performance adjustment.
- The dollar amount of the performance adjustment is added to the dollar
amount of the basic fee, producing the adjusted management fee.
PERFORMANCE PERIODS. For the period from July 1, 2003 through May 31, 2004, the
Adviser will be paid at the Base Rate, without regard to any Performance
Adjustment. For the month ending June 30, 2004, the Adviser will begin applying
the Performance Adjustment as described herein, based upon the performance of
the Fund relative to the performance of the Index during the 12-month period
from July 1, 2003 through June 30, 2004. The 12-month comparison period will
roll over with each succeeding month, so that it will always equal 12 months,
ending with the month for which the performance incentive adjustment is being
computed.
CHANGES TO THE "INDEX." The Trustees have initially designated the Xxxxxxx 3000
Index as the index to be used for purposes of determining the Performance
Adjustment (referred to herein as the "Index"). From time to time, to the extent
permitted by the 1940 Act, the Trustees may, by a vote of the Trustees of the
Trust voting in person, including a majority of the Trustees who are not parties
to this Agreement or "interested persons" (as defined in the 1940 Act) of any
such parties, determine that another securities index is a more appropriate
benchmark than the Index for purposes of evaluating the performance of the Fund
in calculating the Performance Adjustment. After ten days' written notice to the
Adviser, a different index (the "Successor Index") may be substituted for the
Index in prospectively calculating the Performance Adjustment. However, the
calculation of that portion of the Performance Adjustment attributable to any
portion of the performance period prior to the adoption of the Successor Index
will still be based upon the Fund's performance compared to the Index.
In witness whereof, the parties hereto have caused this Amendment to be
executed in their names and on their behalf and through their duly-authorized
officers as of the 23rd day of May, 2005.
RYDEX VARIABLE TRUST
By:
--------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
PADCO ADVISORS, INC.
By:
--------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
