AMENDMENT
DATED AUGUST 28, 2006
TO THE
ADVISORY AGREEMENT
BETWEEN
RYDEX SERIES FUNDS
AND PADCO ADVISORS, INC.,
DATED APRIL 30, 2004,
AS AMENDED
AMENDMENT DATED
AUGUST 28, 2006
TO THE
ADVISORY AGREEMENT
DATED APRIL 30, 2004, AS AMENDED,
BETWEEN
RYDEX SERIES FUNDS
AND
PADCO ADVISORS, INC.
The following amendment is applicable to Schedule A of the Advisory Agreement
between Rydex Series Funds (the "Trust") and PADCO Advisors, Inc. (the
"Adviser"), dated April 30, 2004, as amended to date (the "Agreement"), and is
hereby incorporated into and made a part of the Agreement:
Schedule A of the Agreement is amended, effective August 28, 2006, to read as
follows:
The Trust 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 the
following fee schedule:
FUND RATE FUND RATE
---- ---- ---- ----
Nova* ............................................................ 0.75% Banking ......................................... 0.85%
Nova Master ...................................................... 0.75% Basic Materials ................................. 0.85%
Inverse S&P 500 (formerly Ursa)*.................................. 0.90% Biotechnology ................................... 0.85%
Inverse S&P 500 Master (formerly Ursa Master) .................... 0.90% Consumer Products ............................... 0.85%
OTC* ............................................................. 0.75% Electronics ..................................... 0.85%
OTC Master ....................................................... 0.75% Energy .......................................... 0.85%
Inverse OTC (formerly Arktos)* ................................... 0.90% Energy Services ................................. 0.85%
Inverse OTC Master (formerly Arktos Master) ...................... 0.90% Financial Services .............................. 0.85%
Mid-Cap Advantage (formerly Medius)* ............................. 0.90% Health Care ..................................... 0.85%
Mid-Cap Advantage Master (formerly Medius Master) ................ 0.90% Internet ........................................ 0.85%
Xxxxxxx 2000 Advantage (formerly Mekros) ......................... 0.90% Leisure ......................................... 0.85%
FUND RATE FUND RATE
---- ---- ---- ----
Government Long Bond Advantage (formerly U.S. Government Bond).... 0.50% Precious Metals ................................. 0.75%
Inverse Government Long Bond (formerly Juno)* .................... 0.90% Real Estate ..................................... 0.85%
Inverse Government Long Bond Master (formerly Juno Master) ....... 0.90% Retailing ....................................... 0.85%
Europe Advantage (formerly Large-Cap Europe) ..................... 0.90% Technology ...................................... 0.85%
Japan Advantage (formerly Large-Cap Japan)........................ 0.90% Telecommunications .............................. 0.85%
Large-Cap Value .................................................. 0.75% Transportation .................................. 0.85%
Large-Cap Growth ................................................. 0.75% Utilities* ...................................... 0.85%
Mid-Cap Value .................................................... 0.75% Utilities Master................................. 0.85%
Mid-Cap Growth ................................................... 0.75% Commodities...................................... 0.75%
Inverse Mid-Cap* ................................................. 0.90% Sector Rotation ................................. 0.90%
Inverse Mid-Cap Master ........................................... 0.90% Multi-Cap Core Equity (formerly Core Equity)** .. 0.70%
Small-Cap Value .................................................. 0.75% S&P 500.......................................... 0.75%
Small-Cap Growth ................................................. 0.75% Xxxxxxx 2000..................................... 0.75%
Inverse Xxxxxxx 2000 (formerly Inverse Small-Cap)* ............... 0.90% Essential Portfolio Moderate .................... 0.00%
Inverse Xxxxxxx 2000 Master (formerly Inverse Small-Cap Master) .. 0.90% Essential Portfolio Conservative................. 0.00%
Dynamic Strengthening Dollar (formerly Strengthening Dollar)...... 0.90% Essential Portfolio Aggressive .................. 0.00%
Dynamic Weakening Dollar (formerly Weakening Dollar).............. 0.90% MANAGED FUTURES FUND ............................ 0.90%
U.S. Government Money Market...................................... 0.50%
All-Cap Value..................................................... 0.90%
ADDITIONS ARE NOTED IN BOLD.
* The fee will be reduced to 0.00% for any period during which the Fund
invests through a master-feeder structure.
** The management fee with respect to the Multi-Cap 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.
1. MULTI-CAP CORE EQUITY FUND MANAGEMENT FEE.
The management fee with respect to the Multi-Cap 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 H-Class
Share of the Fund and the performance of the Index over the most recent
12-month period. The performance of one H-Class 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:
FUND'S INDEX'S FUND'S
FOR THE ROLLING 12-MONTH INVESTMENT CUMULATIVE PERFORMANCE RELATIVE
PERFORMANCE PERIOD PERFORMANCE CHANGE 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 Multi-Cap Core Equity Fund calculates the
Adviser's management fee rate for the month-ended December 31 as follows:
o 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.
o 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%.
o 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.
o The dollar amount of the performance adjustment is added to the
dollar amount of the basic fee, producing the adjusted management
fee.
2. 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.
3. CHANGES TO THE "INDEX" OR THE "CLASS"
The Trustees have initially designated the Xxxxxxx 3000 Index and the
H-Class Shares as the index and class to be used for purposes of
determining the Performance Adjustment (referred to herein as the "Index"
and the "Class," respectively). 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 (i) that another securities index is a more
appropriate benchmark than the Index for purposes of evaluating the
performance of the Trust; and/or (ii) that a different class of shares of
the Trust representing interests in the Fund other than the Class is most
appropriate for use 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, and/or a different class of shares
(the "Successor Class") may be substituted in 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. The use of a Successor Class of shares
for purposes of calculating the Performance Adjustment shall apply to the
entire performance period so long as such Successor Class was outstanding
at the beginning of such period. In the event that such Successor Class of
shares was not outstanding for all or a portion of the Performance Period,
it may only be used in calculating that portion of the Performance
adjustment attributable to the period during which such Successor Class
was outstanding and any prior portion of the Performance Period shall be
calculated using the Class of shares previously designated.
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 28th day of August, 2006.
RYDEX SERIES FUNDS
By: /s/ XXXX X. XXXXXXXXXXX
-----------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
PADCO ADVISORS, INC.
By: /s/ XXXX X. XXXXXXXXXXX
-----------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
