SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS
Dear Shareholder:
On June 28, 2007, Security Benefit Corporation and Security Benefit Life
Insurance Company (together, "Security Benefit") entered into a Purchase and
Sale Agreement with Rydex NV, Inc., ICT Holdings, LLC, Rydex Holdings, Inc.
("Rydex Holdings"), and Investment Capital Technologies, LLC ("ICT" and together
with Rydex Holdings, "Rydex") pursuant to which PADCO Advisors, Inc. and PADCO
Advisors II, Inc., d/b/a Rydex Investments, (the "Advisor"), the investment
adviser to the Rydex family of mutual funds, together with several other Rydex
entities, will be acquired by Security Benefit (the "Transaction"). Security
Benefit is a financial services firm that provides a broad variety of retirement
plan and other financial products to customers in the advisor, banking,
education, government, institutional, and qualified plan markets. Upon
completion of the Transaction, the Advisor, Rydex Distributors, Inc., the Rydex
Funds' distributor, and Rydex Fund Services, Inc., the administrator and
transfer agent for Rydex Series Funds, Rydex Dynamic Funds and Rydex Variable
Trust, will be wholly-owned subsidiaries of Security Benefit. Although the
Transaction is not expected to have any material impact on the Rydex Funds or
their shareholders, it will result in a change of control of the Advisor. Under
the requirements of the Investment Company Act of 1940, this change of control
will cause the automatic termination of each of the investment advisory
agreements between the Advisor and each of the Rydex Funds, including each
series of the Rydex Series Funds and Rydex Dynamic Funds (the "Funds").
Accordingly, by this proxy statement, we are requesting that the shareholders of
the Funds vote on whether to approve new investment advisory agreements to take
the place of the current investment advisory agreements that will be terminated,
so that the Advisor may continue to manage the Funds.
A Special Joint Meeting of Shareholders (the "Meeting") of each of the
Funds, which are listed in the Notice of Special Joint Meeting of Shareholders
on page 1, has been scheduled for Thursday, October 4, 2007. If you are a
shareholder of record of any of the Funds as of the close of business on August
6, 2007 you are entitled to vote at the Meeting and any adjournment of the
Meeting.
At the Meeting, you will be asked to approve new investment advisory
agreements with the Advisor under terms that are the same in all material
respects to those of the previous investment advisory agreements. NO FEE
INCREASE IS EXPECTED TO RESULT FROM APPROVING THE NEW INVESTMENT ADVISORY
AGREEMENTS.
I'm sure that you, like most people, lead a busy life and are tempted to
put this proxy aside for another day. Please don't. The failure to return
proxies could delay the Meeting and the approval of new investment advisory
agreements. YOUR VOTE IS IMPORTANT TO US. PLEASE TAKE A FEW MINUTES TO REVIEW
THIS PROXY STATEMENT AND VOTE YOUR SHARES TODAY.
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While you are, of course, welcome to join us at the Meeting and vote in
person, it is not necessary to do so. As a convenience, we have created three
other options by which to vote your shares:
o THE INTERNET: Follow the instructions located on your proxy card and
make sure this option is available at the time you plan to vote.
o BY PHONE: The phone number is located on your proxy card. Be sure
you have your control number, which is located on your proxy card,
available at the time you call.
o BY MAIL: Simply execute your proxy card and enclose it in the
postage paid envelope found in this proxy package.
Whether or not you plan to attend the Meeting, we need your vote. Please
do not hesitate to call 1-877-256-6082 if you have any questions about the
proposals under consideration. Thank you for taking the time to consider these
important proposals and for your investment in the Funds.
EVERY VOTE IS IMPORTANT NO MATTER
HOW MANY SHARES YOU OWN
The Advisor has engaged the services of Broadridge Financial Solutions,
Inc. ("Broadridge"), as the professional proxy solicitation agent, to assist
shareholders through the voting process. As the Meeting approaches, if you have
not yet voted, Broadridge may contact you to remind you to vote your shares in
order to be represented at the Meeting. If you have any questions about the
Proxy Statement or the execution of your vote, please contact Broadridge at
1-877-256-6082. They will be happy to assist you. Please see your proxy card for
additional information on how to cast your vote.
We appreciate your time and consideration.
Sincerely,
/s/ Carl G. Verboncoeur
Carl G. Verboncoeur
President
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE, ALONG
WITH INSTRUCTIONS ON HOW TO VOTE OVER THE INTERNET OR BY TELEPHONE SHOULD YOU
PREFER TO VOTE BY ONE OF THOSE METHODS.
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VERY IMPORTANT NEWS FOR SHAREHOLDERS
We recommend that you read the complete Proxy Statement. For your
convenience, we have provided a brief overview of the proposals to be voted on
at the Meeting.
QUESTIONS AND ANSWERS
Q. WHY AM I RECEIVING THIS PROXY STATEMENT?
A. You are receiving these proxy materials -- a booklet that includes the
Proxy Statement and your proxy card -- because you have the right to vote
on these important proposals concerning your investment in the Funds. Each
of the proposals relates to actions that need to be taken in response to
the impending change in control of Rydex Investments (the "Advisor"), the
investment adviser to the Funds.
Q. WHY AM I BEING ASKED TO VOTE ON NEW INVESTMENT ADVISORY AGREEMENTS?
A. The Investment Company Act of 1940, as amended (the "1940 Act"), the law
that regulates mutual funds, including the Funds, requires that an
investment advisory agreement between an investment adviser and a fund
terminate whenever there is a change in control of the investment adviser.
After such investment advisory agreement terminates, a new investment
advisory agreement between the investment adviser and the fund must be
approved by the shareholders of the fund in order for the investment
adviser to continue to manage the fund's investments.
The Advisor is a wholly-owned subsidiary of Rydex Holdings, Inc., which is
a wholly-owned subsidiary of Rydex NV, Inc. Rydex NV, Inc. is owned by
various trusts controlled by the Viragh family (the "Viragh Family
Trust"). On June 28, 2007, Security Benefit Corporation and Security
Benefit Life Insurance Company (together, "Security Benefit") entered into
a Purchase and Sale Agreement with Rydex NV, Inc., ICT Holdings, LLC,
Rydex Holdings, Inc. ("Rydex Holdings") and Investment Capital
Technologies, LLC ("ICT" and together with Rydex Holdings, "Rydex")
pursuant to which Security Benefit will acquire 100% of the outstanding
shares of common stock of Rydex Holdings and 100% of the outstanding
limited liability company interests of ICT (the "Transaction"). Once
completed, the Transaction will result in a change of control of Rydex
Holdings and, ultimately, the Advisor. The change of control of the
Advisor, in turn, will result in the termination of each of the investment
advisory agreements between the Advisor and Rydex Series Funds and Rydex
Dynamic Funds (each, a "Current Agreement" and collectively, the "Current
Agreements").
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At a Special Meeting of the Boards of Trustees of Rydex Series Funds and
Rydex Dynamic Funds (the "Board") held on July 10, 2007, and subsequently,
during the Board's regular quarterly meeting held on August 27, 2007, the
Board considered and voted in favor of new investment advisory agreements
for Rydex Series Funds and Rydex Dynamic Funds (each, a "New Agreement"
and collectively, the "New Agreements") pursuant to which, subject to
their approval by each Fund's shareholders, as applicable, the Advisor
will continue to serve as investment adviser to each Fund after the
completion of the Transaction. The Advisor's fees for its services to the
Funds under each New Agreement will be the same as its fees under the
corresponding Current Agreement. The other terms of the New Agreements
will also be the same in all material respects to those of the Current
Agreements.
Q. HOW WILL THE CHANGE IN CONTROL OF THE ADVISOR AFFECT ME?
A. Other than the change in the ownership, the operations of the Advisor, the
fees payable to the Advisor and the persons responsible for the day-to-day
investment management of the Funds are expected to remain unchanged.
Security Benefit and the current management of the Advisor have assured
the Board that there will be no reduction in the nature or quality of the
investment advisory services provided to each Fund as a result of the
change in ownership.
Q. HOW DOES THE BOARD SUGGEST THAT I VOTE?
A. After careful consideration, the Board voted unanimously to recommend that
you vote "FOR" all of the proposals contained in the Proxy Statement.
Please see the section entitled "Board Recommendation" with respect to
each proposal for a discussion of the Board's considerations in making
such recommendations.
Q. WILL MY VOTE MAKE A DIFFERENCE?
A. Yes. Your vote is needed to ensure that the proposals can be acted upon.
We encourage all shareholders to participate in the governance of their
Fund(s). Additionally, your immediate response on the enclosed proxy card
will help save the costs of any further solicitations.
Q. I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?
A. Every vote is important. If numerous shareholders just like you fail to
vote, the Funds may not receive enough votes to go forward with the
Special Joint Meeting of Shareholders (the "Meeting"). If this happens,
the Funds will need to solicit votes again. This may delay the Meeting and
the approval of the New Agreements.
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Q. HOW DO I PLACE MY VOTE?
A. You may provide a Fund with your vote by mail, by Internet, by telephone,
or in person. You may use the enclosed postage-paid envelope to mail your
proxy card. Please follow the enclosed instructions to utilize any of
these voting methods. If you need more information on how to vote, or if
you have any questions, please call the Funds' proxy solicitation agent.
Q. WHOM DO I CALL IF I HAVE QUESTIONS?
A. We will be happy to answer your questions about this proxy solicitation.
Please call the Funds' proxy solicitation agent, Broadridge, at
1-877-256-6082 between 9:30 a.m. and 9:00 p.m., Eastern Time, Monday
through Friday, and between 10:00 a.m. and 6:00 p.m., Eastern Time on
Saturday.
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE, ALONG
WITH INSTRUCTIONS ON HOW TO VOTE OVER THE INTERNET OR BY TELEPHONE SHOULD YOU
PREFER TO VOTE BY ONE OF THOSE METHODS.
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RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS
9601 Blackwell Road, Suite 500
Rockville, Maryland 20850
NOTICE OF SPECIAL JOINT MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, OCTOBER 4, 2007
Notice is hereby given that a Special Joint Meeting of Shareholders (the
"Meeting") of Rydex Series Funds and Rydex Dynamic Funds (each a "Trust" and
together, the "Trusts") and each of their respective series (each a "Fund" and
collectively, the "Funds") listed below will be held at the offices of Rydex
Investments, 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850 on
Thursday, October 4, 2007 at 4:30 p.m. Eastern Time.
RYDEX SERIES FUNDS
Absolute Return Strategies Internet Fund Mid-Cap Value Fund
Fund
Inverse Government Long Multi-Cap Core Equity Fund
Banking Fund Bond Strategy Fund
(Formerly, Inverse Government Nova Fund
Basic Materials Fund Long Bond Fund)
OTC Fund
Biotechnology Fund Inverse High Yield Strategy
Fund Precious Metals Fund
Commodities Strategy Fund
(Formerly, Commodities Fund) Inverse Mid-Cap Strategy Fund Real Estate Fund
(Formerly, Inverse Mid-Cap
Consumer Products Fund Fund) Retailing Fund
Electronics Fund Inverse OTC Strategy Fund Russell 2000(R) 1.5x Strategy
(Formerly, Inverse OTC Fund) Fund (Formerly, Russell 2000(R)
Energy Fund Advantage Fund)
Inverse Russell 2000(R)
Energy Services Fund Strategy Fund (Formerly, Russell 2000(R) Fund
Inverse Russell 2000(R) Fund)
Essential Portfolio Aggressive S&P 500 Fund
Fund Inverse S&P 500 Strategy Fund
(Formerly, Inverse S&P 500 Sector Rotation Fund
Essential Portfolio Fund)
Conservative Fund Small-Cap Growth Fund
Japan 1.25x Strategy Fund
Essential Portfolio Moderate (Formerly, Japan Advantage Small-Cap Value Fund
Fund Fund)
Strengthening Dollar 2x
Europe 1.25x Strategy Fund Large-Cap Growth Fund Strategy Fund (Formerly,
(Formerly, Europe Advantage Dynamic Strengthening Dollar
Fund) Large-Cap Value Fund Fund)
Financial Services Fund Leisure Fund Technology Fund
Government Long Bond 1.2x Managed Futures Strategy Telecommunications Fund
Strategy Fund (Formerly, Fund
Government Long Bond Transportation Fund
Advantage Fund) Mid-Cap 1.5x Strategy Fund
(Formerly, Mid-Cap Advantage U.S. Government Money
Health Care Fund Fund) Market Fund
Hedged Equity Fund Mid-Cap Growth Fund Utilities Fund
High Yield Strategy Fund Weakening Dollar 2x Strategy
Fund (Formerly, Dynamic
Weakening Dollar Fund)
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RYDEX DYNAMIC FUNDS
Dow 2x Strategy Fund Inverse Russell 2000(R) 2x Russell 2000(R) 2x Strategy
(Formerly, Dynamic Dow Strategy Fund (Formerly, Fund (Formerly, Dynamic
Fund) Inverse Dynamic Russell Russell 2000(R) Fund)
2000(R) Fund)
Inverse Dow 2x Strategy Fund S&P 500 2x Strategy Fund
(Formerly, Inverse Dynamic Inverse S&P 500 2x Strategy (Formerly, Dynamic S&P 500
Dow Fund) Fund (Formerly, Inverse Fund)
Dynamic S&P 500 Fund)
Inverse OTC 2x Strategy Fund
(Formerly, Inverse Dynamic OTC 2x Strategy Fund
OTC Fund) (Formerly, Dynamic OTC Fund)
At the Meeting, shareholders of record (the "Shareholders") will be asked
to consider and act on the following proposals (each, a "Proposal"):
DESCRIPTION OF PROPOSAL: TRUST/FUNDS SOLICITED:
1. THE APPROVAL OF A NEW INVESTMENT RYDEX SERIES FUNDS:
ADVISORY AGREEMENT BETWEEN RYDEX All Funds (Except the Absolute Return
SERIES FUNDS AND PADCO ADVISORS, Strategies Fund and Hedged
INC.* Equity Fund)
2. THE APPROVAL OF A NEW INVESTMENT RYDEX SERIES FUNDS:
ADVISORY AGREEMENT BETWEEN RYDEX Absolute Return Strategies Fund
SERIES FUNDS AND PADCO ADVISORS, Hedged Equity Fund
INC.*
3. THE APPROVAL OF A NEW INVESTMENT RYDEX DYNAMIC FUNDS:
ADVISORY AGREEMENT BETWEEN RYDEX All Funds
DYNAMIC FUNDS AND PADCO
ADVISORS, INC.*
4. ANY OTHER BUSINESS PROPERLY
BROUGHT BEFORE THE MEETING.*
* PADCO Advisors, Inc. and PADCO Advisors II, Inc. collectively do business as
Rydex Investments.
Your vote is important no matter how many shares you own, and all
Shareholders are cordially invited to attend the Meeting and vote in person.
However, if you are unable to attend the Meeting, you are requested to mark,
sign and date the enclosed proxy card and return it promptly by mail in the
enclosed, postage-paid envelope so that the Meeting may be held and a maximum
number of shares may be voted. In addition, you can vote easily and quickly by
Internet or by telephone. You may change or revoke your vote even though a proxy
has already been returned by written notice to the Trusts, by submitting a
subsequent proxy by mail, by Internet, by telephone, or by voting in person at
the Meeting.
Shareholders of record at the close of business on August 6, 2007 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
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FOR A FREE COPY OF THE FUNDS' MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS,
SHAREHOLDERS MAY CALL 1-800-820-0888, VISIT THE FUNDS' WEB SITE AT
WWW.RYDEXINVESTMENTS.COM, OR WRITE TO THE FUNDS AT 9601 BLACKWELL ROAD, SUITE
500, ROCKVILLE, MARYLAND 20850. In addition, the Funds are required by federal
law to file reports, proxy statements and other information with the U.S.
Securities and Exchange Commission (the "SEC"). The SEC maintains a website that
contains information about the Funds (www.sec.gov). You can inspect and copy the
proxy material, reports and other information at the public reference facilities
of the SEC located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You
can also obtain copies of these materials from the SEC Office of Freedom of
Information and Privacy Act Operations, Operations Center, 6432 General Green
Way, Alexandria, VA 22313-2413, at prescribed rates.
By Order of the Board of Trustees
/s/ Carl G. Verboncoeur
Carl G. Verboncoeur
President
September 6, 2007
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RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS
9601 Blackwell Road, Suite 500
Rockville, Maryland 20850
PROXY STATEMENT
SPECIAL JOINT MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, OCTOBER 4, 2007
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Rydex Series Funds and Rydex Dynamic Funds
(each a "Trust" and together, the "Trusts") and each of their respective series
(each a "Fund" and collectively, the "Funds"):
RYDEX SERIES FUNDS
Absolute Return Strategies High Yield Strategy Fund Mid-Cap Growth Fund
Fund
Internet Fund Mid-Cap Value Fund
Banking Fund
Inverse Government Long Multi-Cap Core Equity Fund
Basic Materials Fund Bond Strategy Fund (Formerly,
Inverse Government Long Nova Fund
Biotechnology Fund Bond Fund)
OTC Fund
Commodities Strategy Fund Inverse High Yield Strategy
(Formerly, Commodities Fund) Fund Precious Metals Fund
Consumer Products Fund Inverse Mid-Cap Strategy Fund Real Estate Fund
(Formerly, Inverse Mid-Cap
Electronics Fund Fund) Retailing Fund
Energy Fund Inverse OTC Strategy Fund Russell 2000(R) 1.5x Strategy
(Formerly, Inverse OTC Fund) Fund (Formerly, Russell 2000(R)
Energy Services Fund Advantage Fund)
Inverse Russell 2000(R) Strategy
Essential Portfolio Aggressive Fund (Formerly, Inverse Russell 2000(R) Fund
Fund Russell 2000(R) Fund)
S&P 500 Fund
Essential Portfolio Inverse S&P 500 Strategy Fund
Conservative Fund (Formerly, Inverse S&P 500 Sector Rotation Fund
Fund)
Essential Portfolio Moderate Small-Cap Growth Fund
Fund Japan 1.25x Strategy Fund
(Formerly, Japan Advantage Small-Cap Value Fund
Europe 1.25x Strategy Fund Fund)
(Formerly, Europe Advantage Strengthening Dollar 2x
Fund) Large-Cap Growth Fund Strategy Fund (Formerly,
Dynamic Strengthening Dollar
Financial Services Fund Large-Cap Value Fund Fund)
Government Long Bond 1.2x Leisure Fund Technology Fund
Strategy Fund (Formerly,
Government Long Bond Managed Futures Strategy Telecommunications Fund
Advantage Fund) Fund
Transportation Fund
Health Care Fund Mid-Cap 1.5x Strategy Fund
(Formerly, Mid-Cap Advantage U.S. Government Money
Hedged Equity Fund Fund) Market Fund
Utilities Fund
Weakening Dollar 2x Strategy
Fund (Formerly, Dynamic
Weakening Dollar Fund)
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RYDEX DYNAMIC FUNDS
Dow 2x Strategy Fund Inverse Russell 2000(R) 2x Russell 2000(R) 2x Strategy
(Formerly, Dynamic Dow Strategy Fund (Formerly, Fund (Formerly, Dynamic
Fund) Inverse Dynamic Russell Russell 2000(R) Fund)
2000(R) Fund)
Inverse Dow 2x Strategy Fund S&P 500 2x Strategy Fund
(Formerly, Inverse Dynamic Inverse S&P 500 2x Strategy (Formerly, Dynamic S&P 500
Dow Fund) Fund (Formerly, Inverse Fund)
Dynamic S&P 500 Fund)
Inverse OTC 2x Strategy Fund
(Formerly, Inverse Dynamic OTC 2x Strategy Fund
OTC Fund) (Formerly, Dynamic OTC Fund)
INTRODUCTION AND GENERAL INFORMATION
GENERAL INFORMATION. As used in this Proxy Statement, the Trusts' Board of
Trustees is referred to as the "Board," and the term "Trustee" includes each
member of the Board. A Trustee that is an interested person of the Trusts is
referred to in this Proxy Statement as an "Interested Trustee." A Trustee may be
an interested person of the Trust because he or she is affiliated with the
Trusts' investment adviser, PADCO Advisors, Inc., the Trusts' principal
underwriter or any of their affiliates. Together with PADCO Advisors II, Inc.,
PADCO Advisors, Inc. operates as Rydex Investments (the "Advisor"). Trustees
that are not interested persons of the Trust are referred to in this Proxy
Statement as "Independent Trustees."
Each of the Trusts is organized as a Delaware statutory trust and, as
such, is not required to hold annual meetings of Shareholders. The Board has
called the Special Joint Meeting of Shareholders (the "Meeting") in order to
permit the Funds' shareholders of record as of August 6, 2007 (the "Record Date"
and the "Shareholders") to consider and vote on the Proposals described in the
foregoing notice.
Your vote is important no matter how many shares you own. If you wish to
participate in the Meeting you may submit the proxy card included with this
Proxy Statement or attend in person. You can vote easily and quickly by mail, by
Internet, by telephone or in person. At any time before the Meeting, you may
revoke your vote, even though a proxy has already been returned, by written
notice to the Trusts at 9601 Blackwell Road, Suite 500, Rockville, Maryland
20850 or by submitting a subsequent proxy, by mail, by Internet, by telephone or
by voting in person at the Meeting. Should you require additional information
regarding any of the proposals contained in this Proxy Statement, or replacement
proxy cards, you may contact the Funds proxy solicitation agent at
1-877-256-6082.
In addition to the solicitation of proxies by mail, the Board and officers
of the Trusts, as well as employees of any proxy soliciting firm engaged by the
Board and the officers of the Trusts, may solicit proxies in person or by
telephone. Persons holding shares as nominees will, upon request, be reimbursed
for their reasonable expenses incurred in sending soliciting materials to their
principals. Security Benefit, as defined below, and the Advisor, together with
its affiliates, have agreed to bear the costs of the Meeting and the production
and dissemination of the proxy materials. The proxy card and this Proxy
Statement are being mailed to Shareholders on or about September 6, 2007.
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QUORUM AND MEETING ADJOURNMENTS. Each whole share is entitled to one vote,
and each fractional share is entitled to a proportionate fractional vote on each
matter as to which such shares are to be voted at the Meeting. One-third (33
1/3%) of a Fund's shares entitled to vote on a proposal constitutes a quorum.
Abstentions and broker non-votes will not be counted for or against a proposal,
but will be counted for purposes of determining whether a quorum is present.
Because the affirmative vote of a majority of the outstanding voting securities
of each Fund, as defined below, is required to approve a proposal, abstentions
and broker non-votes will effectively be a vote against a proposal.
If a quorum is not present at the Meeting, or if a quorum is present at
the Meeting but sufficient votes to approve one or more of the proposals are not
received, or if other matters arise requiring shareholder attention, the persons
named as proxy agents may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares present at the Meeting or
represented by proxy. The persons named as proxies will vote those proxies that
they are entitled to vote FOR such proposal in favor of such an adjournment, and
will vote those proxies required to be voted AGAINST such proposal, against such
an adjournment.
VOTE REQUIRED TO APPROVE PROPOSALS. If a quorum is present at the Meeting,
Proposals 1, 2, and 3 require the affirmative vote of a "majority of the
outstanding voting securities" of each Fund to approve the Proposal with respect
to that Fund. Under the Investment Company Act of 1940, as amended (the "1940
Act"), the vote of a "majority of the outstanding voting securities" of a Fund
means the affirmative vote of the lesser of (a) 67% or more of the voting
securities present at the meeting or represented by proxy if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy or (b) more than 50% of the outstanding voting securities.
VOTING PROCESS. You can vote in any one of the following four ways:
o BY INTERNET: Follow the instructions located on your proxy card and
make sure this option is available at the time you plan to vote.
o BY TELEPHONE: Use a touch-tone telephone to call the toll-free phone
number located on your proxy card. Be sure you have your control
number, which is located on your proxy card, available at the time
of the call.
o BY MAIL: Simply execute your proxy card and enclose it in the
postage paid envelope found in this proxy package.
o IN PERSON: Vote your shares in person at the Meeting..
Shares represented by duly executed proxies will be voted in accordance
with the instructions given. All proxy cards solicited that are properly
executed and received in time to be voted at the Meeting will be voted at the
Meeting or any adjournment thereof according to the instructions on the proxy
card. If no specification is made on
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a proxy card, it will be voted FOR the matters specified on the proxy card. At
any time before it has been voted, your proxy may be revoked in one of the
following ways: (i) by sending a signed, written letter of revocation to the
Secretary of the Trusts; (ii) by properly executing a later-dated proxy (by any
of the methods of voting described above); or (iii) by attending the Meeting,
requesting return of any previously delivered proxy, and voting in person.
DISCUSSIONS OF PROPOSALS 1-3:
APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENTS
Proposals 1, 2, and 3 relate to the approval by Shareholders of new
investment advisory agreements for the Trusts. The 1940 Act, which regulates
investment companies such as the Trusts, requires an investment advisory
agreement between an investment adviser and an investment company to terminate
whenever there is a change in control of the investment company's investment
adviser. After such investment advisory agreement terminates, a new investment
advisory agreement must be approved by shareholders of the investment company in
order for the investment adviser to continue to manage the investment company's
investments. FOR THE REASONS DISCUSSED BELOW, THE BOARD RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE APPROVAL OF EACH OF THE NEW INVESTMENT ADVISORY
AGREEMENTS.
INFORMATION REGARDING THE CHANGE IN CONTROL OF THE ADVISOR
INFORMATION REGARDING THE TRANSACTION. The Advisor is a wholly-owned
subsidiary of Rydex Holdings, Inc. ("Rydex Holdings") which is a wholly-owned
subsidiary of Rydex NV, Inc. Rydex NV, Inc. is owned by various trusts
controlled by the Viragh family (the "Viragh Family Trusts"). On June 28, 2007,
Security Benefit Corporation and Security Benefit Life Insurance Company
(together, "Security Benefit") entered into a Purchase and Sale Agreement with
Rydex NV, Inc., ICT Holdings, LLC, Rydex Holdings and Investment Capital
Technologies, LLC ("ICT" and together with Rydex Holdings, "Rydex") pursuant to
which Security Benefit will acquire 100% of the outstanding shares of common
stock of Rydex Holdings and 100% of the outstanding limited liability company
interests of ICT (the "Transaction"). Once completed, the Transaction will
result in a change of control of Rydex Holdings and, ultimately, the Advisor.
The change of control of the Advisor, in turn, will result in the termination of
each of the investment advisory agreements between the Advisor and the Trusts
(each, a "Current Agreement" and collectively, the "Current Agreements"). The
Transaction is not expected to result in a change in the persons responsible for
the day-to-day management of the Funds, or in the operations of the Funds or in
any changes in the investment approach of the Advisor with respect to the Funds.
INTEREST OF CERTAIN PERSONS IN THE TRANSACTION. Certain executive officers
and both of the Interested Trustees of the Trusts are participants in the Rydex
Holdings, Inc. Amended and Restated Value Participation Plan established to
reward certain key executives of Rydex for the increase in value of Rydex over
time. Upon the Closing
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of the Transaction, which is valued at approximately $752,000,000, subject to
adjustment in accordance with the Purchase and Sale Agreement, and at certain
defined times thereafter, certain of these executive officers and Interested
Trustees will be entitled to receive payments thereunder. As a result of this
direct and indirect interest in the Transaction and the Advisor, and any future
employment arrangements with Security Benefit, these executive officers and
Interested Trustees may be deemed to have a substantial interest in shareholder
approval of the new investment advisory agreements.
THE APPROVAL OF THE NEW AGREEMENTS. At a Special Meeting of the Boards of
Trustees held on July 10, 2007 (the "July Board Meeting"), the Board considered
and voted in favor of a new investment advisory agreement for each Trust (each,
a "New Agreement" and collectively, the "New Agreements") pursuant to which,
subject to their approval by each Fund's Shareholders, as applicable, the
Advisor will continue to serve as investment adviser to each Fund after the
completion of the Transaction. The Advisor's fees for its services to the Funds
under each New Agreement will be the same as its fees under the corresponding
Current Agreement. The other terms of the New Agreements will also be the same
in all material respects to those of the Current Agreements. In reviewing the
New Agreements, the Board considered its review of relevant materials relating
to the Current Agreements at the previous annual renewal meeting on August 27,
2006. At the Board's most recent annual renewal meeting on August 27, 2007 (the
"2007 Renewal Meeting"), the Board reconsidered and again voted in favor of the
New Agreements. In reviewing the New Agreements, the Board considered all of the
relevant materials relating to both the Current and New Agreements that were
presented to the Board at the July Board Meeting and 2007 Renewal Meeting.
While Rydex expects the Transaction to be completed by the end of the
fourth quarter of 2007, it is subject to various conditions, and may be delayed
or even terminated due to unforeseen circumstances. If for some reason the
Transaction does not occur, the Current Agreements will not automatically
terminate and will remain in effect, and the New Agreements will not be entered
into, even if they have been approved by Fund shareholders.
THE CURRENT AGREEMENTS
With the exception of the Rydex Series Funds investment advisory agreement
relating to the Absolute Return Strategies Fund and Hedged Equity Fund, which
were formed in 2005, the Current Agreements have been in place between each
Trust and the Advisor since April 30, 2004. On April 30, 2004, a Special Meeting
of Shareholders was held to approve the Current Agreements for each Trust
following a change of control of the Advisor resulting from the passing of Mr.
Albert P. "Skip" Viragh, Jr., who was previously the controlling shareholder of
the Advisor (the "2004 Special Meeting"). The Current Agreements are
substantially similar to the investment advisory agreements that were approved
at the time of each Trust's original creation and organization, and have been
revised only to the extent necessary to
8
incorporate non-material changes required by regulation or new industry
standards. Each Current Agreement had an initial term of two years, after which
the continuance of each Current Agreement must be specifically approved at least
annually: (i) by the vote of the Trustees or by a vote of the shareholders; and
(ii) by the vote of a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on such approval. In accordance with
the Board's best practices, each Current Agreement has been renewed by the Board
on an annual basis following its initial approval.
BOARD CONSIDERATIONS IN APPROVING THE NEW AGREEMENTS AND THE
CONTINUATION OF THE CURRENT AGREEMENTS
In preparation for the 2007 Renewal Meeting, the Board requested and
received written materials from the Advisor about: (a) the quality of the
Advisor's investment management and other services; (b) the Advisor's investment
management personnel; (c) the Advisor's operations and financial condition; (d)
the Advisor's brokerage practices (including any soft dollar arrangements) and
investment strategies; (e) the level of the advisory fees that the Advisor
charges the Funds compared with the fees it charges to comparable mutual funds
or accounts; (f) each Fund's overall fees and operating expenses compared with
similar mutual funds; (g) the level of the Advisor's profitability from its
Fund-related operations; (h) the Advisor's compliance systems; (i) the Advisor's
policies on and compliance procedures for personal securities transactions; (j)
the Advisor's reputation, expertise and resources in domestic financial markets;
and (k) Fund performance compared with similar mutual funds. Certain of these
considerations are discussed in more detail below.
In its deliberations at the 2007 Renewal Meeting, the Board did not
identify any single piece of information that was all-important or controlling.
Based on the Board's deliberations and its evaluation of the information
referenced above and described in more detail below, the Board, including all of
the Independent Trustees, unanimously: (a) concluded that terms of the Current
Agreements and New Agreements were fair and reasonable; (b) concluded that the
Advisor's fees were reasonable in light of the services that the Advisor
provides to the Funds; (c) agreed to renew each Current Agreement for an
additional one-year term; and (d) agreed to approve the New Agreements for an
initial term of two years.
In approving the New Agreements and the continuation of the Current
Agreements at the 2007 Renewal Meeting, the Board, including the Independent
Trustees advised by independent counsel, considered the factors discussed below.
NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED BY THE ADVISOR. At the
2007 Renewal Meeting, the Board reviewed the scope of services to be provided by
the Advisor under each Current Agreement and noted that there would be no
significant differences between the scope of services required to be provided by
the Advisor for the past year and the scope of services required to be provided
by the Advisor for the upcoming year. In reviewing the scope of services
provided to the Funds by the
9
Advisor, the Board reviewed and discussed the Advisor's investment experience,
noting that the Advisor and its affiliates have committed significant resources
over time to the support of the Funds. The Board also considered the Advisor's
compliance program and its compliance record with respect to the Funds. In that
regard, the Board noted that the Advisor provides information regarding the
portfolio management and compliance to the Board on a periodic basis in
connection with regularly scheduled meetings of the Board. In addition to the
above considerations, the Board reviewed and considered the Advisor's investment
processes and strategies, and matters related to the Advisor's portfolio
transaction policies and procedures. In particular, the Board noted the
substantial volume of portfolio trades and shareholder transaction activity, in
general, processed by the Advisor due to the unlimited exchange policy of the
majority of the Funds. The Board further noted that the Funds have consistently
met their investment objectives since their respective inception dates. Based on
this review, the Board concluded that the nature, extent, and quality of
services to be provided by the Advisor to the Funds under the Current Agreements
were appropriate and continued to support the Board's original selection of the
Advisor as investment adviser to the Funds.
FUND EXPENSES AND PERFORMANCE OF THE FUNDS AND THE ADVISOR. At the 2007
Renewal Meeting, the Board reviewed statistical information prepared by the
Advisor regarding the expense ratio components, including actual advisory fees,
waivers/reimbursements, and gross and net total expenses of each Fund in
comparison with the same information for other funds registered under the 1940
Act determined by the Advisor to comprise each Fund's applicable peer group.
Because few funds seek to provide unlimited exchange privileges similar to those
of the majority of the Funds, each Fund's applicable peer group is generally
limited to the funds of two unaffiliated mutual fund families. In addition, the
Board reviewed statistical information prepared by the Advisor relating to the
performance of each Fund, as well as each Fund's ability to successfully track
its benchmark over time, and a comparison of each Fund's performance to funds
with similar investment objectives for the same periods and to appropriate
indices/benchmarks, in light of total return, yield and market trends. The Board
further noted that despite the unique nature of the Funds, the peer fund
information presented to the Board was meaningful because the peer funds'
investment objectives and strategies were closely aligned with those of the
Funds. The Board noted that most of the Funds either outperformed their peer
funds or performed in line with them over relevant periods. The Board also noted
that the investment advisory fees for the Funds were equivalent to those of
their peers and that the overall expenses for the Funds were only slightly
higher than the total expenses of the peer funds, due in part to differing share
classes and distribution fees. Based on this review, the Board concluded that
the investment advisory fees and expense levels and the historical performance
of the Funds, as managed by the Advisor, as compared to the investment advisory
fees and expense levels and performance of the peer funds, were satisfactory for
the purposes of approving the continuance of the Current Agreements.
10
COSTS OF SERVICES PROVIDED TO THE FUNDS AND PROFITS REALIZED BY THE
ADVISOR AND ITS AFFILIATES. At the 2007 Renewal Meeting, the Board reviewed
information about the profitability of the Funds to the Advisor based on the
advisory fees payable under the Current Agreements for the last calendar year.
The Advisor also presented the Board with material discussing its methodology
for determining the level of advisory fees assessable to the Funds. The Board
analyzed the Funds' expenses, including the investment advisory fees paid to the
Advisor. The Board also reviewed information regarding direct revenue received
by the Advisor and ancillary revenue received by the Advisor and/or its
affiliates in connection with the services provided to the Funds by the Advisor
(as discussed below) and/or its affiliates. The Board also discussed the
Advisor's profit margin as reflected in the Advisor's profitability analysis and
reviewed information regarding economies of scale (as discussed below). Based on
this review, the Board concluded that the profits to be realized by the Advisor
and its affiliates under the Current Agreements and from other relationships
between the Funds and the Advisor and/or its affiliates, if any, were within the
range the Board considered reasonable and appropriate.
ECONOMIES OF SCALE. In connection with its review of the Funds'
profitability analysis at the 2007 Renewal Meeting, the Board reviewed
information regarding economies of scale or other efficiencies that may result
from increases in the Funds' asset levels. The Board noted that neither the
Current Agreements nor the New Agreements for the Funds provided for any
breakpoints in the investment advisory fees as a result of increases in the
asset levels of the Funds. The Board also noted that though the Advisor's assets
under management were significant, the amount is spread among more than 100
Funds. Further limiting the realization of economies of scale, is the ability of
shareholders of many of the Funds to engage in unlimited trading. The Board also
reviewed and considered the Advisor's historic profitability as investment
adviser to the Funds and determined that reductions in advisory fees or
additions of breakpoints were not warranted at this juncture. Based on this
review, the Board, recognizing its responsibility to consider this issue at
least annually, determined that the economies of scale, if any, were de minimis.
OTHER BENEFITS TO THE ADVISOR AND/OR ITS AFFILIATES. At the 2007 Renewal
Meeting, in addition to evaluating the services provided by the Advisor, the
Board also considered the nature, extent, quality and cost of the
administrative, distribution, and shareholder services performed by the
Advisor's affiliates under separate agreements. The Board noted that the Advisor
reports its use of soft dollars to the Board on a quarterly basis, as well as
any portfolio transactions on behalf of the Funds placed through an affiliate of
the Funds or the Advisor pursuant to Rule 17e-1 under the 1940 Act. Based on its
review, the Board concluded that the nature and quality of the services provided
by the Advisor's affiliates to each Trust will benefit the Funds' shareholders,
and that any ancillary benefits would not be disadvantageous to the Funds'
shareholders, particularly in light of the Board's view that the Funds'
shareholders benefit from investing in a fund that is part of a large family of
funds offering a variety of investment strategies and services.
11
ADDITIONAL CONSIDERATIONS IN APPROVING THE NEW AGREEMENTS
On June 18, 2007, the Trustees met with representatives of Security
Benefit and the management of the Advisor for the purpose of learning more about
Security Benefit and the proposed Transaction. Immediately following the
announcement that Rydex and Security Benefit entered into a purchase and sale
agreement, the Trustees requested that the Advisor provide the Board with
additional information pertaining to the effect of the proposed change of
control on the Advisor's personnel and operations and the terms of the New
Agreements. The Advisor presented its response to the Board's request for
additional information prior to and at a Special Meeting of the Boards of
Trustees held on July 10, 2007. The Advisor provided the Board with oral and
written information to help the Board evaluate the impact of the change of
control on the Advisor, the Advisor's ability to continue to provide investment
advisory services to the Funds under the New Agreements, and informed the Board
that the contractual rate of the Advisor's fees will not change under the New
Agreements. The Advisor also affirmed that the terms of the New Agreements were
the same in all material respects to those of the Current Agreements.
The Trustees deliberated on the approval of each New Agreement in light of
the information provided. The Board determined that the terms of the New
Agreements set forth materially similar rights, duties and obligations on the
Advisor with regard to the services to be provided to the Trusts, and provided
at least the same level of protection to each Trust, the Funds and the Funds'
shareholders as the Current Agreements. The Board also noted that the Advisor's
fee for its services to the Funds under the New Agreements would be the same as
its fees under the Current Agreements. The Board further noted that all
considerations, determinations and findings related to the approval of the
continuation of the Current Agreements, as discussed above, were equally
relevant to their approval of the New Agreements, along with the additional
factors relevant to the proposed change of control discussed below.
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY THE ADVISOR;
PERFORMANCE OF THE FUNDS. The Board noted that the Advisor was taking
appropriate steps to maintain its associates through the closing of the
Transaction by, in part, keeping them informed of the potential Transaction and
awarding key personnel with incentives to emphasize their value to the Advisor.
As a result of these efforts, it is anticipated that the key investment and
management personnel servicing the Funds will remain with the Advisor following
the Transaction and that the investment and management services provided to the
Funds by the Advisor will not change. The Board also considered the Advisor's
and Security Benefit's representations to the Board that Security Benefit
intends for the Advisor to continue to operate following the closing of the
Transaction in much the same manner as it operates today, and that the
Transaction should have no impact on the day-to-day operations of the Advisor,
or the persons responsible for the management of the Funds. Based on this
review, the Board concluded that the range and quality of services provided by
the Advisor to the Funds were appropriate and were expected to continue under
the New Agreements,
12
and that there was no reason to expect the consummation of the Transaction to
have any adverse effect on the services provided by the Advisor and its
affiliates or the future performance of the Funds.
FUND EXPENSES. The Board also considered the fact that the fees payable to
the Advisor and other expenses of the Funds would be the same under the New
Agreements as they are under the Current Agreements, and on this basis, the
Board concluded that these fees and expenses continued to be satisfactory for
the purposes of approving the New Agreements. More detailed information
regarding the fees under each New Agreement is contained in the discussion below
with respect to Proposals 1, 2, and 3.
COSTS OF SERVICES PROVIDED TO THE FUNDS AND PROFITS REALIZED BY THE
ADVISOR AND ITS AFFILIATES. Because the Advisor's fees under the New Agreements
are the same as those assessed under the Current Agreements, the Board concluded
that the profits to be realized by the Advisor and its respective affiliates
under the New Agreements and from other relationships between the Funds and the
Advisor, if any, should remain within the range the Board considered reasonable
and appropriate. The Board further noted that, although it is not possible to
predict how the Transaction may affect the Advisor's future profitability from
its relationship with the Funds, this matter would be given further
consideration on an annual basis going forward.
ECONOMIES OF SCALE. The Board further considered the potential economies
of scale that may result from the Transaction, and concluded that the extent of
such economies of scale could not be predicted in advance of the closing of the
Transaction.
DESCRIPTION OF THE TERMS OF THE NEW AGREEMENTS. A form of each New
Agreement is attached to this proxy statement as Appendices B through D. Each
form of New Agreement provides that the Advisor's fees with respect to each Fund
will remain unchanged from the fees contained in its corresponding Current
Agreement. Each New Agreement provides that unless terminated as provided
therein, the New Agreement shall continue for an initial term of two years.
Thereafter, the New Agreement shall continue in effect for successive annual
periods provided such continuance is specifically approved at least annually (i)
by the vote of the Trustees or by a vote of the shareholders; and (ii) by the
vote of a majority of the Independent Trustees, cast in person at a meeting
called for the purpose of voting on such approval. Each New Agreement provides
for automatic termination, without the payment of any penalty, in the event of
its assignment (as defined by the 1940 Act).
The New Agreements are substantially similar to each other, with the
exception of the parties to the agreement. Pursuant to each New Agreement, the
Advisor will act as investment adviser to each Fund. Each of the New Agreements
will require the Advisor to:
o provide the Funds with investment research, advice and supervision
and shall furnish continuously an investment program for the Funds,
consistent with the respective investment objectives and policies of
each Fund;
13
o determine, in its discretion and without prior consultation, what
securities shall be purchased for the Funds, what securities shall
be held or sold by the Funds and what portion of the Funds' assets
shall be held uninvested in cash, subject always to the provisions
of the Trust's Declaration of Trust, By-Laws and its registration
statement on file with the U.S. Securities and Exchange Commission
(the "SEC");
o discharge its responsibilities subject to the control of the
officers and the Board, and in compliance with the objectives,
policies, and limitations set forth in the Funds' prospectus(es) and
applicable laws and regulations;
o vote any proxies for Fund securities;
o provide the Trust, and any other agent designated by the Trust, with
records concerning the Advisor's activities which each Fund is
required to maintain; and
o provide other reports reasonably requested by the Trust's officers
and Board concerning the Advisor's discharge of the foregoing
responsibilities
Each New Agreement also authorizes the Advisor to select the brokers or
dealers that will execute the purchases and sales of securities of each Fund and
directs the Advisor to use its best efforts to obtain the best available price
and most favorable execution. Subject to policies established by the Board, the
Advisor also may effect individual securities transactions at commission rates
in excess of the minimum commission rates available, if the Advisor determines
in good faith that such amount of commission is reasonable in relation to the
value of the brokerage or research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Advisor's overall
responsibilities with respect to each Fund.
Under the terms of each New Agreement, the Advisor agrees to render its
services and to provide, at its own expense, the office space, furnishings,
equipment and personnel required by it to perform the services on the terms and
for the compensation provided therein, as discussed in further detail below.
Each New Agreement provides that the Advisor shall indemnify and hold harmless
the Trust against losses by reason of or arising out of: (i) the Advisor being
in material violation of (A) any applicable federal or state law, rule, or
regulation, (B) any investment policy or restriction set forth in the Funds'
Registration Statement, or (C) any written guidelines or instruction provided in
writing by the Board; or (ii) the Advisor's willful misfeasance, bad faith or
gross negligence generally in the performance of its duties under, or its
reckless disregard of, its obligations and duties.
INFORMATION ABOUT THE ADVISOR. PADCO Advisors, Inc. serves as the
investment adviser to each Trust. Together with PADCO Advisors II, Inc., PADCO
Advisors, Inc. operates as Rydex Investments. PADCO Advisors, Inc. is organized
as a Maryland corporation with its principal place of business located at 9601
Blackwell Road, Suite 500, Rockville, Maryland 20850. Rydex Holdings is the sole
shareholder of PADCO
14
Advisors, Inc. Rydex Holdings is a wholly-owned subsidiary of Rydex NV, Inc. The
Viragh Family Trust currently owns a controlling interest in Rydex NV, Inc.
These companies may, prior to or after consummation of the Transaction, be
merged into limited liability companies. Such merger will not be considered a
change in control of the Advisor.
The name and principal occupation of each director and principal executive
officer of PADCO Advisors, Inc. are listed below. Unless otherwise noted, the
business address of each director and officer is c/o Rydex Investments, 9601
Blackwell Road, Suite 500, Rockville, Maryland 20850. Following the closing of
the Transaction, Messrs. Viragh and Mses. Dahl and Viragh will relinquish their
positions as directors of the Advisor and may be replaced by directors elected
by the Advisor's shareholders.
NAME TITLE PRINCIPAL OCCUPATION
---------------------------------------------------------------------------------------------
Jean M. Dahl Director Director of Rydex NV, Inc., Rydex Holdings,
Inc., PADCO Advisors, Inc., PADCO Advisors II,
Inc., Rydex Fund Services, Inc., Rydex
Distributors, Inc. and Advisor Research Center,
Inc.; Vice President of Rydex NV, Inc.; Director
of Viragh Family Foundation; and Employee of
Dynamic Holdings, Inc.
Katherine A. Viragh Director Director of Rydex NV, Inc., Rydex Holdings,
Inc., PADCO Advisors, Inc., PADCO Advisors II,
Inc., Rydex Fund Services, Inc., Rydex
Distributors, Inc. and Advisor Research Center,
Inc.; Treasurer of Rydex NV, Inc.; Manager and
Voting Trustee of ICT Holdings, LLC; Manager,
President, Secretary and Treasurer of Investment
Capital Technologies, LLC; Director and Treasurer
of Viragh Family Foundation; Director and
Employee of Dynamic Holdings, Inc.; Trustee of
Spring Hill College; Trustee of 2003 Dynamic
Irrevocable Trust, 2003 Irrevocable Trust for
Family of Skip Viragh and other family trusts
Mark S. Viragh Director Director of Rydex NV, Inc., Rydex Holdings,
Inc., PADCO Advisors, Inc., PADCO Advisors II,
Inc., Rydex Fund Services, Inc., Rydex
Distributors, Inc. and Advisor Research Center,
Inc.; Secretary of Rydex NV, Inc.; Director and
President of Viragh Family Foundation; Director
and President of The Skip Viragh Foundation,
Inc.; Director and President of Nova Foundation,
Inc.; Director and Employee of Dynamic Holdings,
Inc.; Trustee of 2003 Dynamic Irrevocable Trust,
2003 Irrevocable Trust for Family of Skip Viragh
and other family trusts
Robert J. Viragh Director Director and Chairman of the Board of Rydex NV,
Inc., Rydex Holdings, Inc., PADCO Advisors,
Inc., PADCO Advisors II, Inc., Rydex Fund
Services, Inc., Rydex Distributors, Inc. and
Advisor Research Center, Inc.; President of
Rydex NV, Inc.; Director of Viragh Family
Foundation; Employee of Dynamic Holdings, Inc.
15
NAME TITLE PRINCIPAL OCCUPATION
--------------------------------------------------------------------------------------------
Carl G. Verboncoeur* Chief Executive Chief Executive Officer, PADCO Advisors, Inc.
Officer and and PADCO Advisors II, Inc.; Chief Executive
Treasurer Officer, President and Treasurer, Rydex Fund
Services, Inc. and Rydex Distributors, Inc.;
President and Treasurer, Rydex Holdings, Inc.
Michael P. Byrum* Chief Investment Chief Investment Officer, President and
Officer, President Secretary, PADCO Advisors, Inc. and PADCO
and Secretary Advisors II, Inc.; Secretary, Rydex Holdings,
Inc.
Joanna M. Haigney Chief Compliance Chief Compliance Officer, PADCO Advisors, Inc.
Officer and PADCO Advisors II, Inc.
* Messrs. Verboncoeur and Byrum also serve as Interested Trustees of each of the
Trusts.
PROPOSALS 1 AND 2. THE APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENTS
BETWEEN RYDEX SERIES FUNDS AND PADCO ADVISORS, INC.
TRUSTS/FUNDS VOTING RYDEX SERIES FUNDS/ALL FUNDS (EXCEPT FOR THE ABSOLUTE
ON PROPOSAL 1: RETURN STRATEGIES FUND AND HEDGED EQUITY FUND)
TRUSTS/FUNDS VOTING RYDEX SERIES FUNDS/ABSOLUTE RETURN STRATEGIES FUND AND
ON PROPOSAL 2: HEDGED EQUITY FUND ONLY
The Current Agreement between the Advisor and the Trust with respect to
all of the Trust's Funds, except for the Absolute Return Strategies Fund and
Hedged Equity Fund, is dated April 30, 2004, and was approved by the
shareholders of the Trust at the 2004 Special Meeting. The Current Agreement
between the Advisor and the Trust for the Absolute Return Strategies Fund and
Hedged Equity Fund was approved by the Board and each Fund's Sole Shareholder on
May 23, 2005 following their formation and registration with the SEC. In
accordance with the Board's best practices, both Current Agreements have been
renewed by the Board on an annual basis following each Current Agreement's
initial approval. The Current Agreements will remain in place until the
completion of the Transaction at which time, as a result of the change in the
control of the Advisor, the Current Agreements will terminate and, subject to
shareholder approval, the New Agreements will go into effect. The terms of the
New Agreements, including fees, are identical, with the exception of the date
and term, to the terms of the Current Agreements. Forms of the New Agreements
are included as Appendix B and Appendix C to this Proxy Statement.
The tables that follow provide, with respect to each of the Trust's Funds:
(i) the Advisor's annual rate of compensation under the Current and New
Agreements, stated as a percentage of the Fund's assets; (ii) the amount of
advisory fees paid to the Advisor pursuant to the Current Agreements for the
Trust's most recently com-
16
pleted fiscal year ended March 31, 2007; (iii) amounts paid by the Funds to
Rydex Fund Services, Inc. (the "Administrator"), an affiliate of the Advisor,
for administration services for the Trust's most recently completed fiscal year
ended March 31, 2007; (iv) amounts paid by the Funds to the Administrator for
accounting services for the Trust's most recently completed fiscal year ended
March 31, 2007; and (v) amounts paid by the Funds to Rydex Distributors, Inc.
(the "Distributor"), an affiliate of the Advisor, for services provided pursuant
to the Funds' distribution and shareholder services plans for the Trust's most
recently completed fiscal year ended March 31, 2007. For the fiscal year ended
March 31, 2007, the Trust's Funds did not pay any brokerage commissions to the
Distributor (or any other affiliate of the Advisor).
ADMINISTRATIVE ACCOUNTING
ADVISORY FEES SERVICE SERVICE
PAID TO FEES PAID TO FEES PAID TO
CURRENT AND ADVISOR ADMINISTRATOR ADMINISTRATOR
ANTICIPATED FOR FISCAL FOR FISCAL YEAR FOR FISCAL YEAR
ADVISORY YEAR ENDED ENDED ENDED
FUND FEE RATE 2007 2007 2007
--------------------------------------------------------------------------------------------------------
Absolute Return Strategies Fund 1.15% $ 1,992,108 ++ ++
Banking Fund 0.85% $ 121,210 $ 35,650 $ 14,260
Basic Materials Fund 0.85% $ 359,658 $ 105,782 $ 42,313
Biotechnology Fund 0.85% $ 840,080 $ 247,082 $ 98,833
Commodities Strategy Fund 0.75% $ 351,996 $ 117,332 $ 46,933
Consumer Products Fund 0.85% $ 378,535 $ 111,334 $ 44,534
Electronics Fund 0.85% $ 275,192 $ 80,939 $ 32,375
Energy Fund 0.85% $ 1,070,459 $ 314,841 $ 125,936
Energy Services Fund 0.85% $ 1,476,202 $ 434,177 $ 173,278
Essential Portfolio Aggressive Fund 0.00% **** ++ ++
Essential Portfolio Conservative Fund 0.00% **** ++ ++
Essential Portfolio Moderate Fund 0.00% **** ++ ++
Europe 1.25x Strategy Fund 0.90% $ 796,962 $ 221,379 $ 88,551
Financial Services Fund 0.85% $ 406,806 $ 119,649 $ 47,860
Government Long Bond 1.2x
Strategy Fund 0.50% $ 563,994 $ 225,598 $ 112,799
Health Care Fund 0.85% $ 586,043 $ 172,365 $ 68,946
Hedged Equity Fund 1.15% $ 414,760 ++ ++
High Yield Strategy Fund 0.75% ** + +
Internet Fund 0.85% $ 155,611 $ 45,768 $ 18,307
Inverse Government Long Bond
Strategy Fund 0.90% $ 9,286,719* $ 2,278,030 $ 642,519
Inverse High Yield Strategy Fund 0.75% ** + +
Inverse Mid-Cap Strategy Fund 0.90% $ 268,708 $ 74,641 $ 29,856
Inverse OTC Strategy Fund 0.90% $ 1,603,243* $ 445,126 $ 177,663
Inverse Russell 2000(R) Strategy Fund 0.90% $ 1,033,413 $ 287,059 $ 114,824
Inverse S&P 500 Strategy Fund 0.90% $ 4,211,861* $ 1,169,307 $ 403,674
Japan 1.25x Strategy Fund 0.90% $ 700,396 $ 194,554 $ 77,822
17
ADMINISTRATIVE ACCOUNTING
ADVISORY FEES SERVICE SERVICE
PAID TO FEES PAID TO FEES PAID TO
CURRENT AND ADVISOR ADMINISTRATOR ADMINISTRATOR
ANTICIPATED FOR FISCAL FOR FISCAL YEAR FOR FISCAL YEAR
ADVISORY YEAR ENDED ENDED ENDED
FUND FEE RATE 2007 2007 2007
--------------------------------------------------------------------------------------------------------
Large-Cap Growth Fund 0.75% $ 282,005 $ 94,002 $ 37,601
Large-Cap Value Fund 0.75% $ 1,298,799 $ 432,933 $ 172,985
Leisure Fund 0.85% $ 270,721 $ 79,624 $ 31,850
Managed Futures Strategy Fund 0.90% $ 39,487 $ 10,969 $ 4,387
Mid-Cap 1.5x Strategy Fund 0.90% $ 525,676 $ 146,021 $ 58,408
Mid-Cap Growth Fund 0.75% $ 201,402 $ 67,134 $ 26,854
Mid-Cap Value Fund 0.75% $ 326,530 $ 108,843 $ 43,537
Multi-Cap Core Equity Fund 0.90% $ 489,471 $ 196,779 $ 78,712
Nova Fund 0.75% $ 1,719,438* $ 572,813 $ 227,366
OTC Fund 0.75% $ 5,348,630 $ 1,782,877 $ 541,188
Precious Metals Fund 0.75% $ 1,641,503 $ 547,168 $ 217,752
Real Estate Fund 0.85% $ 449,638 $ 132,246 $ 52,899
Retailing Fund 0.85% $ 138,347 $ 40,690 $ 16,276
Russell 2000(R) 1.5x Strategy Fund 0.90% $ 960,601 $ 266,834 $ 106,733
Russell 2000(R) Fund 0.75% $ 60,560 $ 20,187 $ 8,075
S&P 500 Fund 0.75% $ 90,508 $ 30,169 $ 12,068
Sector Rotation Fund 0.90% $ 3,152,003 $ 875,556 $ 324,995
Small-Cap Growth Fund 0.75% $ 234,482 $ 78,161 $ 31,264
Small-Cap Value Fund 0.75% $ 288,899 $ 96,300 $ 38,520
Strengthening Dollar 2x Strategy Fund 0.90% $ 197,221 $ 54,784 $ 21,913
Technology Fund 0.85% $ 331,368 $ 97,461 $ 38,984
Telecommunications Fund 0.85% $ 246,756 $ 72,575 $ 29,030
Transportation Fund 0.85% $ 315,775 $ 92,875 $ 37,150
U.S. Government Money Market Fund 0.50% $ 6,601,467 $ 2,640,587 $ 732,665
Utilities Fund 0.85% $ 462,211 $ 135,944 $ 54,378
Weakening Dollar 2x Strategy Fund 0.90% $ 1,300,330 $ 361,203 $ 144,481
* Prior to April 1, 2007, the Funds pursued their respective investment
objectives indirectly through a master-feeder arrangement, and the advisory fees
were paid by the corresponding master fund. Effective April 1, 2007, the Funds
discontinued their master-feeder arrangements and now pursue their investment
objectives directly. As a result, the Funds pay all fees and expenses.
** The Multi-Cap Core Equity Fund pays the Advisor a management fee that is
comprised of two components: the first component is an annual basic fee (the
"basic fee") equal to 0.70% of the Multi-Cap Core Equity Fund's average daily
net assets, and the second component is a performance fee adjustment. The
performance fee adjustment may cause the basic fee to increase to a maximum of
0.90% or decrease to a minimum of 0.50%, depending on the investment performance
of the Multi-Cap Core Equity Fund relative to the Russell 3000(R) Index (the
"Index"). The performance comparison will be made for a rolling 12-month period,
with performance adjustments made at the end of each month beginning 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 adjustment is being computed. For every 0.0375% of difference
between the performance of the Fund and the performance of the Index, the
Advisor's fee will be adjusted upwards or downwards by 0.01%. The maximum
annualized performance adjustment is +/-.20%.
18
*** The Advisor has contractually agreed to pay all operating expenses of the
Fund, excluding interest expense and taxes (expected to be de minimis),
brokerage commissions and other expenses connected with the execution of
portfolio transactions, short dividend expenses, and extraordinary expenses.
**** Currently, the Advisor receives an investment advisory fee for managing the
underlying funds in which the Fund invests. The underlying funds pay a monthly
investment advisory fee to the Advisor for its services. The fee is based on the
average daily net assets of each underlying fund and calculated at an annual
rate for each underlying fund. The Fund benefits from the investment advisory
services provided to the underlying funds and, as shareholders of those
underlying funds, indirectly bear a proportionate share of those underlying
funds' advisory fees.
***** The Advisor has contractually agreed to pay all other expenses of the
Fund, excluding Acquired Fund fees and expenses, interest expense and taxes
(expected to be de minimis), brokerage commissions and other expenses connected
with the execution of portfolio transactions and extraordinary expenses.
+ Not in operation for the period indicated.
++ The Advisor has contractually agreed to pay all other expenses of the Fund,
excluding Acquired Fund fees and expenses, interest expense and taxes (expected
to be de minimis), brokerage commissions and other expenses connected with the
execution of portfolio transactions, short dividend expenses, and extraordinary
expenses.
ADVISOR CLASS A-CLASS C-CLASS H-CLASS
(0.25% (0.25% (1.00% (0.25%
FUND 12b-1 FEE) 12b-1 FEE) 12b-1 FEE) 12b-1 FEE)
--------------------------------------------------------------------------------------------
Absolute Return Strategies Fund $ 0 $ 58,127 $ 285,188 $ 303,643
Banking Fund $ 16,122 $ 1,674 $ 23,741 $ 0
Basic Materials Fund $ 41,694 $ 5,520 $ 71,259 $ 0
Biotechnology Fund $ 56,889 $ 4,770 $ 41,643 $ 0
Commodities Strategy Fund $ 0 $ 19,910 $ 39,089 $ 87,649
Consumer Products Fund $ 42,369 $ 7,309 $ 51,821 $ 0
Electronics Fund $ 22,968 $ 1,620 $ 41,888 $ 0
Energy Fund $ 79,931 $ 9,324 $ 207,274 $ 0
Energy Services Fund $ 117,553 $ 20,589 $ 262,107 $ 0
Essential Portfolio Aggressive Fund * * * $ 0
Essential Portfolio Conservative Fund * * * $ 0
Essential Portfolio Moderate Fund * * * $ 0
Europe 1.25x Strategy Fund $ 0 $ 13,852 $ 102,152 $ 181,989
Financial Services Fund $ 82,950 $ 4,419 $ 34,965 $ 0
Government Long Bond 1.2x
Strategy Fund $ 149,084 $ 21,024 $ 118,464 $ 0
Health Care Fund $ 103,705 $ 2,509 $ 65,663 $ 0
Hedged Equity Fund $ 0 $ 10,650 $ 68,716 $ 62,337
High Yield Strategy Fund * * * *
Internet Fund $ 22,920 $ 498 $ 14,170 $ 0
Inverse Government Long Bond
Strategy Fund $ 312,661 $ 246,078 $ 3,486,307 $ 0
Inverse High Yield Strategy Fund * * * *
Inverse Mid-Cap Strategy Fund $ 0 $ 2,011 $ 12,007 $ 69,629
19
ADVISOR CLASS A-CLASS C-CLASS H-CLASS
(0.25% (0.25% (1.00% (0.25%
FUND 12b-1 FEE) 12b-1 FEE) 12b-1 FEE) 12b-1 FEE)
----------------------------------------------------------------------------------------------
Inverse OTC Strategy Fund $ 74,306 $ 10,396 $ 177,866 $ 0
Inverse Russell 2000(R) Strategy Fund N/A $ 38,847 $ 115,423 $ 219,357
Inverse S&P 500 Strategy Fund $ 193,487 $ 33,088 $ 459,255 $ 0
Japan 1.25x Strategy Fund N/A $ 16,556 $ 98,004 $ 153,498
Large-Cap Growth Fund N/A $ 3,540 $ 69,264 $ 43,145
Large-Cap Value Fund N/A $ 4,941 $ 115,503 $ 399,116
Leisure Fund $ 51,088 $ 1,591 $ 19,657 $ 0
Managed Futures Strategy Fund N/A $ 3,691 $ 1,237 $ 6,971
Mid-Cap 1.5x Strategy Fund N/A $ 8,845 $ 206,504 $ 85,550
Mid-Cap Growth Fund N/A $ 4,101 $ 23,493 $ 57,160
Mid-Cap Value Fund N/A $ 4,726 $ 58,816 $ 89,413
Multi-Cap Core Equity Fund N/A $ 11,912 $ 307,638 $ 107,957
Nova Fund $ 219,037 $ 44,272 $ 440,615 $ 0
OTC Fund $ 99,982 $ 6,843 $ 120,998 $ 0
Precious Metals Fund $ 47,515 $ 13,616 $ 237,719 $ 0
Real Estate Fund $ 0 $ 10,137 $ 49,235 $ 109,800
Retailing Fund $ 22,195 $ 443 $ 24,278 $ 0
Russell 2000(R) 1.5x Strategy Fund N/A $ 13,730 $ 243,222 $ 192,298
Russell 2000(R) Fund N/A $ 345 $ 13,784 $ 16,395
S&P 500 Fund N/A $ 2,165 $ 15,891 $ 24,031
Sector Rotation Fund N/A $ 105,166 $ 1,245,924 $ 458,909
Small-Cap Growth Fund N/A $ 2,255 $ 38,252 $ 66,343
Small-Cap Value Fund N/A $ 3,993 $ 89,479 $ 69,937
Strengthening Dollar 2x Strategy Fund N/A $ 653 $ 23,161 $ 48,340
Technology Fund $ 58,471 $ 1,072 $ 21,306 $ 0
Telecommunications Fund $ 25,768 $ 3,060 $ 29,707 $ 0
Transportation Fund $ 37,309 $ 4,874 $ 48,768 $ 0
U.S. Government Money Market Fund $ 914,889 $ 37,781 $ 1,296,958 $ 0
Utilities Fund $ 41,440 $ 8,039 $ 76,467 $ 0
Weakening Dollar 2x Strategy Fund N/A $ 31,546 $ 110,290 $ 302,084
* Not in operation for the period indicated.
20
BOARD RECOMMENDATION ON PROPOSALS 1 AND 2.
At its meeting on August 27, 2007, based on its deliberations on and
evaluation of the information described above, the Board, including all of the
Independent Trustees, unanimously: (a) concluded that the terms of the New
Agreements are fair and reasonable; (b) concluded that the Advisor's fees are
reasonable in light of the services that the Advisor will provide to the Funds;
and (c) agreed to approve the New Agreements for an initial term of two years
and to recommend the approval of the New Agreements to Shareholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS
OF THE FUNDS VOTE "FOR" PROPOSALS 1 AND 2.
PROPOSAL 3. THE APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN RYDEX
DYNAMIC FUNDS AND PADCO ADVISORS, INC.
TRUSTS/FUNDS VOTING ON PROPOSAL 3: RYDEX DYNAMIC FUNDS/ALL FUNDS
The Current Agreement between the Advisor and the Trust is dated April 30,
2004, and was approved by the shareholders of the Trust at the 2004 Special
Meeting. In accordance with the Board's best practices, the Current Agreement
has been renewed by the Board on an annual basis following its initial approval.
The Current Agreement will remain in place until the completion of the
Transaction at which time, as a result of the change in the control of the
Advisor, the Current Agreement will terminate and, subject to shareholder
approval, the New Agreement will go into effect. The terms of the New Agreement,
including fees, are identical, with the exception of the date and term, to the
terms of the Current Agreement. A form of the New Agreement is included as
Appendix D to this Proxy Statement.
The tables below provide, with respect to each of the Trust's Funds: (i)
the Advisor's annual rate of compensation under the Current and New Agreements,
stated as a percentage of the Fund's assets; (ii) the amount of advisory fees
paid to the Advisor pursuant to the Current Agreement for the Trust's most
recently completed fiscal year ended December 31, 2006; (iii) amounts paid by
the Funds to the Administrator for the Trust's most recently completed fiscal
year ended December 31, 2006; (iv) amounts paid by the Funds to the
Administrator for accounting services for the Trust's most recently completed
fiscal year ended December 31, 2006; and (v) amounts paid by the Funds to the
Distributor for services provided pursuant to the Funds' distribution and
shareholder services plans for the Trust's most recently completed fiscal year
ended December 31, 2006. For the fiscal year ended December 31, 2007, the
Trust's Funds did not pay any brokerage commissions to the Distributor (or any
other affiliate of the Advisor).
21
ACCOUNTING
ADMINISTRATIVE SERVICE FEES
ADVISORY SERVICE FEES PAID TO
CURRENT AND FEES PAID TO PAID TO ADMINISTRATOR
ANTICIPATED ADVISOR FOR ADMINISTRATOR FOR FISCAL YEAR
ADVISORY FEE FISCAL YEAR FOR FISCAL YEAR ENDED
FUND RATE ENDED 2006 ENDED 2006 2006
----------------------------------------------------------------------------------------------------------
Dow 2x Strategy Fund 0.90% $ 329,352* $ 91,444 $ 54,866
Inverse Dow 2x Strategy Fund 0.90% $ 547,920* $ 152,132 $ 91,279
Inverse OTC 2x Strategy Fund 0.90% $4,061,782* $1,127,743 $ 676,646
Inverse Russell 2000(R) 2x Strategy Fund 0.90% $ 250,813** $ 69,670** $ 41,802**
Inverse S&P 500 2x Strategy Fund 0.90% $3,614,232* $1,003,468 $ 602,081
OTC 2x Strategy Fund 0.90% $4,221,125* $1,172,105 $ 703,263
Russell 2000(R) 2x Strategy Fund 0.90% $ 165,379** $ 45,939** $ 27,563**
S&P 500 2x Strategy Fund 0.90% $2,764,337* $ 767,493 $ 460,496
* Prior to January 1, 2007, the Funds pursued their respective investment
objectives indirectly through a master-feeder arrangement, and the advisory fees
were paid by the corresponding master fund. Effective January 1, 2007, the Funds
discontinued their master-feeder arrangements and now pursue their investment
objectives directly. As a result, the Funds pay all fees and expenses.
** Since the commencement of operations on May 31, 2006.
A-CLASS C-CLASS H-CLASS
(0.25% 12b-1 (1.00% 12b-1 (0.25% 12b-1
FUND FEE) FEE) FEE)
-------------------------------------------------------------------------------------
Dow 2x Strategy Fund $ 5,100 $ 39,415 $ 76,490
Inverse Dow 2x Strategy Fund $ 5,669 $ 36,398 $ 137,364
Inverse OTC 2x Strategy Fund $17,062 $349,437 $1,023,321
Inverse Russell 2000(R) 2x Strategy Fund $ 1,534* $ 9,939* $ 65,652*
Inverse S&P 500 2x Strategy Fund $24,088 $352,079 $ 891,360
OTC 2x Strategy Fund $19,859 $523,520 $1,021,367
Russell 2000(R) 2x Strategy Fund $ 1,126* $ 10,352* $ 42,224*
S&P 500 2x Strategy Fund $18,965 $568,728 $ 606,345
* Since the commencement of operations on May 31, 2006.
BOARD RECOMMENDATION ON PROPOSAL 3.
At its meeting on August 27, 2007, based on its deliberations on and
evaluation of the information described above, the Board, including all of the
Independent Trustees, unanimously: (a) concluded that the terms of the New
Agreement are fair and reasonable; (b) concluded that the Advisor's fees are
reasonable in light of the services that the Advisor will provide to the Funds;
and (c) agreed to approve the New Agreement for an initial term of two years and
to recommend the approval of the New Agreement to Shareholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT
SHAREHOLDERS OF THE FUNDS VOTE "FOR" PROPOSAL 3.
22
GENERAL INFORMATION ABOUT THE TRUSTS
AND OTHER MATTERS
INFORMATION ABOUT TRUST OFFICERS AND SERVICE PROVIDERS
PRINCIPAL UNDERWRITER. Rydex Distributors, Inc., located at 9601 Blackwell
Road, Suite 500, Rockville, Maryland 20850, serves as the distributor and
principal underwriter to the Trusts.
ADMINISTRATOR. Rydex Fund Services, Inc., 9601 Blackwell Road, Suite 500,
Rockville, Maryland 20850, serves as the administrator for the Trusts.
TRUST OFFICERS. Trust Officers. Set forth below are the names, ages,
position with the Trusts, length of term of office, and the principal
occupations for a minimum of the last five years of each of the persons
currently serving as officers of the Trusts. The business address of each
officer is 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850. None of
the officers, other than the Chief Compliance Officer, receives compensation
from the Trusts for their services.
POSITION(S) NUMBER OF
HELD WITH PORTFOLIOS IN
THE TRUSTS, FUND OTHER
TERM OF COMPLEX DIRECTOR-
NAME, ADDRESS OFFICE AND OVERSEEN BY SHIPS
AND AGE OF LENGTH OF PRINCIPAL OCCUPATION(S) TRUSTEE/ HELD BY
TRUSTEE/OFFICER TIME SERVED DURING PAST 5 YEARS OFFICER TRUSTEE
----------------------------------------------------------------------------------------------------------
Carl G. Trustee from PADCO ADVISORS, INC.: 138 None.
Verboncoeur 2004 to Chief Executive Officer from October
(54) present; 2003 to present; Executive Vice President
President from December 2002 to October 2003;
from 2003 to President from October 2003 to May 2004;
present; Vice and Treasurer from December 2002 to
President present
from 1997 to
present; and PADCO ADVISORS II, INC.:
Treasurer Chief Executive Officer from December
from 1997 to 2003 to present; Executive Vice President
2003. from December 2002 to December 2003;
President from December 2002 to May
2004 and Treasurer from December 2003
to present
RYDEX CAPITAL PARTNERS I, LLC:
Treasurer from October 2003 to April
2007, and Executive Vice President from
October 2003 to August 2006
RYDEX CAPITAL PARTNERS II, LLC:
Treasurer from October 2003 to April
2007, and Executive Vice President from
October 2003 to August 2006
RYDEX ADVISORY SERVICES:
Chief Executive Officer from August 2004
to present
23
POSITION(S) NUMBER OF
HELD WITH PORTFOLIOS IN
THE TRUSTS, FUND OTHER
TERM OF COMPLEX DIRECTOR-
NAME, ADDRESS OFFICE AND OVERSEEN BY SHIPS
AND AGE OF LENGTH OF PRINCIPAL OCCUPATION(S) TRUSTEE/ HELD BY
TRUSTEE/OFFICER TIME SERVED DURING PAST 5 YEARS OFFICER TRUSTEE
----------------------------------------------------------------------------------------------------------
RYDEX DISTRIBUTORS, INC.:
President and Chief Executive Officer
from December 2003 to present; Treasurer
from December 2002 to present; Executive
Vice President from December 2002 to
December 2003; and Vice President from
December 2001 to December 2002
RYDEX FUND SERVICES, INC.:
Chief Executive Officer from December
2003 to present; President and Treasurer
from December 2002 to present; and
Executive Vice President from December
2001 to December 2002
RYDEX HOLDINGS, INC.:
Chief Executive Officer, President and
Treasurer from December 2005 to present
ADVISOR RESEARCH CENTER, INC.:
Chief Executive Officer, President and
Treasurer from May 2006 to present
RYDEX SPECIALIZED PRODUCTS, LLC:
Chief Executive Officer, Director and
Treasurer from September 2005 to present
Michael Trustee and PADCO ADVISORS, INC.: 138 None.
P. Byrum (36) Secretary Chief Investment Officer from August 2006
from 2005 to present; Chief Operating Officer from
to present. October 2003 to May 2004; Executive Vice
President from December 2002 to May 2004;
President from May 2004 to present; and
Secretary from December 2002 to present
PADCO ADVISORS II, INC.:
Chief Investment Officer from August 2006
to present; Chief Operating Officer from
December 2003 to May 2004; Executive Vice
President from December 2002 to May 2004;
President from May 2004 to present; and
Secretary from December 2002 to present
RYDEX ADVISORY SERVICES:
President from August 2004 to present
RYDEX CAPITAL PARTNERS I, LLC:
President and Secretary from October
2003 to April 2007
RYDEX CAPITAL PARTNERS II, LLC:
President and Secretary from October
2003 to April 2007
24
POSITION(S) NUMBER OF
HELD WITH PORTFOLIOS IN
THE TRUSTS, FUND OTHER
TERM OF COMPLEX DIRECTOR-
NAME, ADDRESS OFFICE AND OVERSEEN BY SHIPS
AND AGE OF LENGTH OF PRINCIPAL OCCUPATION(S) TRUSTEE/ HELD BY
TRUSTEE/OFFICER TIME SERVED DURING PAST 5 YEARS OFFICER TRUSTEE
----------------------------------------------------------------------------------------------------------
RYDEX DISTRIBUTORS, INC.:
Secretary from December 2001 to May
2004; Executive Vice President from
December 2002 to May 2004; and Chief
Operating Officer from December 2003 to
May 2004
RYDEX FUND SERVICES, INC.:
Secretary from December 2002 to present;
Executive Vice President from December
2002 to August 2006; and Chief Operating
Officer from December 2003 to May 2004
RYDEX HOLDINGS, INC.:
Secretary from December 2005 to present
and Executive Vice President from
December 2005 to August 2006
ADVISOR RESEARCH CENTER, INC.:
Secretary from May 2006 to present and
Executive Vice President from May 2006
to August 2006
RYDEX SPECIALIZED PRODUCTS, LLC:
Director and Secretary from September
2005 to present
Nick Bonos (43) Vice President Senior Vice President of Fund Services of 138 Not
and Treasurer PADCO Advisors, Inc. from August 2006 to Applicable.
from 2003 to present; Senior Vice President of Rydex
present. Fund Services, Inc. from December 2003 to
August 2006; Vice President of
Accounting, Rydex Fund Services, Inc.
from 2001 to 2003; and Chief Financial
Officer and Manager of Rydex Specialized
Products, LLC from September 2005 to
present
Joanna M. Chief Chief Compliance Officer of PADCO 138 Not
Haigney (40) Compliance Advisors, Inc. and PADCO Advisors II, Applicable.
Officer from Inc. from May 2005 to present and Rydex
2004 to Capital Partners I, LLC and Rydex Capital
present; and Partners II, LLC from August 2006 to
Secretary April 2007; Vice President of Compliance
from 2000 to of PADCO Advisors, Inc. from August
present. 2006 to present; Assistant Secretary of
Rydex Distributors, Inc. from December
2001 to December 2003; and Vice
President of Rydex Distributors, Inc.
from December 2003 to May 2004 and Rydex
Fund Services, Inc. from December 2001
to August 2006
25
POSITION(S) NUMBER OF
HELD WITH PORTFOLIOS IN
THE TRUSTS, FUND OTHER
TERM OF COMPLEX DIRECTOR-
NAME, ADDRESS OFFICE AND OVERSEEN BY SHIPS
AND AGE OF LENGTH OF PRINCIPAL OCCUPATION(S) TRUSTEE/ HELD BY
TRUSTEE/OFFICER TIME SERVED DURING PAST 5 YEARS OFFICER TRUSTEE
----------------------------------------------------------------------------------------------------------
Joseph Arruda Assistant Vice President of PADCO Advisors, Inc. 138 Not
(40) Treasurer and PADCO Advisors II, Inc. from 2004 to Applicable.
from 2006 present; Director of Accounting of PADCO
to present. Advisors, Inc. and PADCO Advisors II,
Inc. from 2003 to 2004; Vice President of
Mutual Funds, State Street Bank & Trust
from 2000 to 2003.
Paula Billos Controller Director of Fund Administration of 138 Not
(33) from 2006 PADCO Advisors, Inc. and PADCO Applicable.
to present. Advisors II, Inc. from 2001 to present.
SHAREHOLDERS SHARING THE SAME ADDRESS
If two or more Shareholders share the same address, only one copy of this
Proxy Statement will be delivered to that address, unless a Fund has received
contrary instructions from one or more of the Shareholders at that shared
address. Upon written or oral request, a Fund will deliver promptly a separate
copy of this Proxy Statement to a Shareholder at a shared address. Please note
that each Shareholder will receive a separate proxy card, regardless of whether
he or she resides at a shared address. Please call the Funds' proxy solicitation
agent at 1-877-256-6082 or forward a written request to a Fund c/o Rydex
Investments, 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850 if you
would like to: (1) receive a separate copy of this Proxy Statement; (2) receive
your annual reports or proxy statements separately in the future; or (3) request
delivery of a single copy of annual reports or proxy statements if you are
currently receiving multiple copies at a shared address.
OUTSTANDING SHARES AND SIGNIFICANT SHAREHOLDERS
Shareholders of record on the Record Date are entitled to notice of and to
vote at the Meeting and any adjournments or postponements thereof. Appendix A to
this Proxy Statement lists for each Fund the total number of shares outstanding
as of the Record Date for each class of each Fund's shares. It also identifies
holders, as of the Record Date, of more than 5% of any class of shares of each
Fund.
SHAREHOLDER PROPOSALS
The Trusts are organized as statutory trusts under the laws of Delaware.
As such, the Trusts are not required to, and do not, hold annual shareholder
meetings. Nonetheless, the Board may call a special meeting of shareholders for
action by shareholder vote as may be required by the 1940 Act or as required or
permitted by each Trust's Declaration of Trust and By-Laws. Shareholders who
wish to present a proposal for action at a future meeting should submit a
written proposal to the Secretary
26
of Rydex Series Funds and/or Rydex Dynamic Funds, as applicable, c/o Rydex
Investments, 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850 for
inclusion in a future proxy statement. Shareholder proposals to be presented at
any future meeting of a Trust must be received by the Trust in writing within a
reasonable amount of time before the Trust solicits proxies for that meeting, in
order to be considered for inclusion in the proxy materials for that meeting.
Whether a proposal is submitted in a proxy statement will be determined in
accordance with applicable federal and state laws. Shareholders retain the right
to request that a meeting of the shareholders be held for the purpose of
considering matters requiring shareholder approval.
OTHER MATTERS
The Trustees know of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is their
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed proxy.
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS
For a free copy of either Trust's most recent Annual Report (and most
recent Semi-Annual Report succeeding the Annual Report, if any), Shareholders
may call 1-800-820-0888, visit the Funds' website at www.rydexinvestments.com,
or write to the applicable Trust at 9601 Blackwell Road, Suite 500, Rockville,
Maryland 20850.
OTHER BUSINESS
The Board does not intend to present any other business at the Meeting. If
any other matter may properly come before the Meeting, or any adjournment
thereof, the persons named in the accompanying proxy card(s) intend to vote,
act, or consent thereunder in accordance with their best judgment at that time
on such matters. No annual or other special meeting is currently scheduled for
the Trusts. Mere submission of a shareholder proposal does not guarantee the
inclusion of the proposal in the proxy statement or presentation of the proposal
at the Meeting because inclusion and presentation are subject to compliance with
certain federal regulations.
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE, ALONG
WITH INSTRUCTIONS ON HOW TO VOTE OVER THE INTERNET OR BY TELEPHONE SHOULD YOU
PREFER TO VOTE BY ONE OF THOSE METHODS. YOU MAY ALSO ATTEND THE MEETING AND VOTE
IN PERSON.
27
APPENDIX A
OUTSTANDING SHARES AND SIGNIFICANT SHAREHOLDERS
I. OUTSTANDING SHARES
As of the Record Date, the total number of shares outstanding for each
Fund and for each class of each Fund is set forth in the table below:
-----------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
-----------------------------------------------------------------------------------------------------------------------------
INVESTOR ADVISOR H-CLASS C-CLASS A-CLASS
TRUST AND FUND CLASS SHARES CLASS SHARES SHARES SHARES SHARES TOTAL
-----------------------------------------------------------------------------------------------------------------------------
RYDEX SERIES FUNDS
Absolute Return Strategies 0.000 0.000 8,224,140.058 2,497,160.303 1,977,174.252 12,698,474.613
Banking 683,605.026 55,359.197 0.000 43,868.359 9,861.836 792,694.418
Basic Materials 2,783,137.537 309,644.878 0.000 306,355.812 141,661.676 3,540,799.903
Biotechnology 2,722,648.186 224,523.516 0.000 116,156.205 60,396.140 3,123,724.047
Commodities Strategy 0.000 0.000 1,733,247.854 339,440.898 468,532.028 2,541,220.780
Consumer Products 253,661.596 931,422.764 0.000 94,450.430 60,340.813 1,339,875.603
Electronics 1,294,352.444 198,502.883 0.000 358,476.676 15,909.149 1,867,241.152
Energy 2,606,434.191 839,334.911 0.000 976,174.011 259,364.127 4,681,307.240
Energy Services 2,253,355.070 473,334.690 0.000 630,670.533 227,496.737 3,584,857.030
Essential Portfolio
Aggressive 0.000 0.000 684,585.896 762,441.910 1,511,996.799 2,959,024.605
Essential Portfolio
Conservative 0.000 0.000 503,023.168 343,965.433 161,577.818 1,008,566.419
Essential Portfolio Moderate 0.000 0.000 909,456.619 2,454,256.805 1,017,761.638 4,381,475.062
Europe 1.25x Strategy 0.000 0.000 2,915,169.025 522,080.015 494,208.981 3,931,458.021
Financial Services 704,199.108 221,966.683 0.000 183,000.751 23,742.005 1,132,908.547
Government Long Bond
1.2x Strategy 6,106,512.335 848,491.334 0.000 969,110.915 1,091,204.903 9,015,319.487
A-1
-------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
-------------------------------------------------------------------------------------------------------------------------------
INVESTOR ADVISOR H-CLASS C-CLASS A-CLASS
TRUST AND FUND CLASS SHARES CLASS SHARES SHARES SHARES SHARES TOTAL
-------------------------------------------------------------------------------------------------------------------------------
Health Care 2,007,646.679 905,575.294 0.000 453,803.424 59,006.952 3,426,032.349
Hedged Equity 0.000 0.000 1,364,412.795 346,605.428 295,391.950 2,006,410.173
High Yield Strategy 0.000 0.000 117,855.651 3,764.826 1,580.897 123,201.374
Internet 132,547.215 86,427.921 0.000 32,128.008 2,610.522 253,713.666
Inverse Government
Long Bond Strategy 14,116,963.060 1,437,300.312 0.000 9,530,988.166 2,167,955.797 27,253,207.335
Inverse High Yield Strategy 0.000 0.000 334,840.268 31,590.314 72,393.060 438,823.642
Inverse Mid Cap Strategy 0.000 0.000 225,622.383 42,857.004 20,115.859 288,595.246
Inverse OTC Strategy 4,713,037.030 153,058.996 0.000 740,072.250 152,404.330 5,758,572.606
Inverse Russell 2000(R)
Strategy 0.000 0.000 2,596,882.119 206,131.600 228,138.695 3,031,152.414
Inverse S&P 500 Strategy 7,435,365.417 457,249.122 0.000 1,036,100.557 328,803.590 9,257,518.686
Japan 1.25x Strategy 0.000 0.000 845,149.466 391,182.699 541,393.527 1,777,725.692
Large-Cap Growth 0.000 0.000 2,358,866.131 233,682.273 90,564.526 2,683,112.930
Large-Cap Value 0.000 0.000 675,301.960 150,168.178 174,531.480 1,000,001.618
Leisure 78,124.614 72,251.109 0.000 71,701.233 6,573.717 228,650.673
Managed Futures Strategy 0.000 0.000 4,302,478.895 431,044.143 1,535,388.905 6,268,911.943
Mid-Cap 1.5x Strategy 0.000 0.000 537,052.587 379,460.139 68,180.446 984,693.172
Mid-Cap Growth 0.000 0.000 604,900.009 70,757.326 137,166.130 812,823.465
Mid-Cap Value 0.000 0.000 524,987.757 150,297.761 108,957.397 784,242.915
Multi-Cap Core Equity 0.000 0.000 2,022,257.710 1,728,282.220 271,916.260 4,022,456.190
Nova 3,628,470.294 1,189,543.989 0.000 1,322,498.378 484,481.304 6,624,993.965
OTC 53,466,304.266 1,016,425.183 0.000 729,449.929 477,535.325 55,689,714.703
Precious Metals 2,337,508.546 128,273.446 0.000 415,832.260 86,097.558 2,967,711.810
Real Estate 0.000 0.000 180,931.591 31,941.601 151,966.580 364,839.772
Retailing 357,419.377 113,612.964 0.000 117,603.051 9,136.723 597,772.115
Russell 2000(R) 1.5x Strategy 0.000 0.000 789,948.982 467,432.256 157,046.982 1,414,428.220
A-2
------------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
------------------------------------------------------------------------------------------------------------------------------------
INVESTOR ADVISOR H-CLASS C-CLASS A-CLASS
TRUST AND FUND CLASS SHARES CLASS SHARES SHARES SHARES SHARES TOTAL
------------------------------------------------------------------------------------------------------------------------------------
Russell 2000(R) 0.000 0.000 178,081.450 18,907.570 12,550.992 209,540.012
S&P 500 0.000 0.000 578,034.378 47,515.767 141,153.063 766,703.208
Sector Rotation 0.000 0.000 9,038,926.359 7,990,978.821 2,806,533.134 19,836,438.314
Small Cap Growth 0.000 0.000 173,536.766 45,200.128 83,111.218 301,848.112
Small Cap Value 0.000 0.000 142,423.474 36,024.516 102,681.587 281,129.577
Strengthening Dollar
2x Strategy 0.000 0.000 789,279.592 109,225.706 60,821.465 959,326.763
Technology 2,729,117.328 485,067.077 0.000 443,322.349 62,845.638 3,720,352.392
Telecommunications 2,384,300.593 701,439.361 0.000 444,107.718 115,083.256 3,644,930.928
Transportation 208,143.242 165,237.606 0.000 79,876.279 11,539.813 464,796.940
U.S. Government
Money Market 946,991,169.719 170,507,803.360 0.000 147,755,321.360 25,931,219.270 1,291,185,513.709
Utilities 649,616.176 84,122.398 0.000 233,764.227 89,502.989 1,057,005.790
Weakening Dollar 2x Strategy 0.000 0.000 3,143,374.982 521,560.898 847,012.820 4,511,948.700
------------------------------------------------------------------------------------------------------------------------------------
RYDEX DYNAMIC FUNDS
------------------------------------------------------------------------------------------------------------------------------------
Dow 2x Strategy 0.000 0.000 1,325,457.811 193,108.225 110,429.875 1,628,995.911
Inverse Dow 2x Strategy 0.000 0.000 1,549,300.335 189,478.655 141,308.141 1,880,087.131
Inverse OTC 2x Strategy 0.000 0.000 18,172,358.411 2,330,871.822 722,841.774 21,226,072.007
Inverse Russell 2000(R) 2x
Strategy 0.000 0.000 2,198,330.559 138,751.622 908,887.013 3,245,969.194
Inverse S&P 500 2x Strategy 0.000 0.000 6,747,157.629 1,279,836.695 652,433.307 8,679,427.631
OTC 2x Strategy 0.000 0.000 14,949,421.154 1,300,035.311 569,878.358 16,819,334.823
Russell 2000(R) 2x Strategy 0.000 0.000 1,429,492.112 106,495.357 43,687.315 1,579,674.784
S&P 500 2x Strategy 0.000 0.000 5,922,383.157 941,989.198 353,409.750 7,217,782.105
A-3
II. SIGNIFICANT SHAREHOLDERS
As of the Record Date, the following persons were the only persons who
were record owners or, to the best knowledge of the Trust, were beneficial
owners of 5% or more of the shares of a Fund.
RYDEX SERIES FUNDS
INVESTOR CLASS
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Banking National Financial Svcs 200 Liberty Street, 79,940.944 11.69%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Banking Schwab Special Custody Attn: Mutual Funds Team E, 128,924.360 18.86%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Basic Materials National Financial Svcs 200 Liberty Street, 1,201,758.432 43.18%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Basic Materials Schwab Special Custody Attn: Mutual Funds Team E, 633,615.107 22.77%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Biotechnology National Financial Svcs 200 Liberty Street, 1,038,663.556 38.15%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Biotechnology Ameritrade Inc For The P.O. Box 2226, 146,227.626 5.37%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Biotechnology Schwab Special Custody Attn: Mutual Funds Team E, 681,274.837 25.02%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Consumer Products National Financial Svcs 200 Liberty Street, 39,384.255 15.53%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Consumer Products Schwab Special Custody Attn: Mutual Funds Team E, 107,132.598 42.23%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Electronics National Financial Svcs 200 Liberty Street, 532,125.760 41.11%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Electronics FTC & Co Datalynx P.O. Box 173736, 104,950.091 8.11%
Denver, CO 80217-3736
A-4
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Electronics Schwab Special Custody Attn: Mutual Funds Team E, 189,237.884 14.62%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Energy National Financial Svcs 200 Liberty Street, 752,601.985 28.87%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Energy Schwab Special Custody Attn: Mutual Funds Team E, 283,570.357 10.88%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Energy Services National Financial Svcs 200 Liberty Street, 747,623.008 33.18%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Energy Services FTC & Co Datalynx P.O. Box 173736, 188,611.513 8.37%
Denver, CO 80217-3736
Energy Services Schwab Special Custody Attn: Mutual Funds Team E, 267,794.493 11.88%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Financial Services National Financial Svcs 200 Liberty Street, 158,190.543 22.46%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Financial Services Merrill Lynch, Pierce, 4800 Deer Lake Drive E, 92,906.838 13.19%
Fenner & Smith, Inc. For 3rd Floor
The Sole Benefit Of Its Jacksonville, FL 32246
Customers
Financial Services FTC & Co Datalynx P.O. Box 173736, 35,971.618 5.11%
Denver, CO 80217-3736
Financial Services Schwab Special Custody Attn: Mutual Funds Team E, 43,242.735 6.14%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Government Long National Financial Svcs 200 Liberty Street, 782,694.408 12.82%
Bond 1.2x Strategy Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Government Long D & L Partners LP 9 Isla Bahia Drive, 833,003.885 13.64%
Bond 1.2x Strategy Fort Lauderdale, FL 33316-
2397
A-5
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Government Long Trust Company Of America P.O. Box 6503, 1,635,126.721 26.78%
Bond 1.2x Strategy Englewood, CO 80155
Government Long Schwab Special Custody Attn: Mutual Funds Team E, 349,741.165 5.73%
Bond 1.2x Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Health Care National Financial Svcs 200 Liberty Street, 772,668.337 38.49%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Health Care Schwab Special Custody Attn: Mutual Funds Team E, 581,866.170 28.98%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Internet National Financial Svcs 200 Liberty Street, 13,833.844 10.44%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Internet Schwab Special Custody Attn: Mutual Funds Team E, 74,220.743 56.00%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Inverse Government National Financial Svcs 200 Liberty Street, 2,179,207.249 15.44%
Long Bond Strategy Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Inverse Government Turtle & Co P.O. Box 5489, 1,572,683.793 11.14%
Long Bond Strategy c/o State Street Bank Boston, MA 02206-5489
& Trust Co
Inverse Government Merrill Lynch, Pierce, 4800 Deer Lake Drive E, 812,732.698 5.76%
Long Bond Strategy Fenner & Smith, Inc. For 3rd Floor,
The Sole Benefit Of Its Jacksonville, FL 32246
Customers
Inverse Government Ameritrade Inc For The P.O. Box 2226, 729,183.283 5.17%
Long Bond Strategy Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Inverse Government Schwab Special Custody Attn: Mutual Funds Team E, 2,802,564.511 19.85%
Long Bond Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
A-6
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Inverse OTC Strategy National Financial Svcs 200 Liberty Street, 1,703,380.751 36.14%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Inverse OTC Strategy Ameritrade Inc For The P.O. Box 2226, 410,124.292 8.70%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Inverse OTC Strategy Schwab Special Custody Attn: Mutual Funds Team E, 527,919.719 11.20%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Inverse S&P 500 National Financial Svcs 200 Liberty Street, 1,466,183.462 19.72%
Strategy Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Inverse S&P 500 Ameritrade Inc For The P.O. Box 2226, 509,528.746 6.85%
Strategy Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Inverse S&P 500 Schwab Special Custody Attn: Mutual Funds Team E, 1,770,575.485 23.81%
Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Leisure National Financial Svcs 200 Liberty Street, 22,708.348 29.07%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Leisure Schwab Special Custody Attn: Mutual Funds Team E, 14,180.662 18.15%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Nova National Financial Svcs 200 Liberty Street, 1,014,052.617 27.95%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Nova Ameritrade Inc For The P.O. Box 2226, 225,729.966 6.22%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Nova Schwab Special Custody Attn: Mutual Funds Team E, 544,343.996 15.00%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
A-7
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
OTC National Financial Svcs 200 Liberty Street, 9,433,907.444 17.64%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
OTC Ameritrade Inc For The P.O. Box 2226, 3,031,502.296 5.67%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
OTC Genworth Financial Trust 3200 N Central, 4,637,028.574 8.67%
Company FBO Genworth Suite 612,
Financial Asset Mgmt, Inc. Phoenix, AZ 85012
FBO Their Mutual Clients
OTC Schwab Special Custody Attn: Mutual Funds Team E, 15,949,765.515 29.83%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Precious Metals National Financial Svcs 200 Liberty Street, 267,871.361 11.46%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Precious Metals Ameritrade Inc For The P.O. Box 2226, 280,316.616 11.99%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Precious Metals Schwab Special Custody Attn: Mutual Funds Team E, 276,586.110 11.83%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Retailing National Financial Svcs 200 Liberty Street, 39,308.703 11.00%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Retailing Schwab Special Custody Attn: Mutual Funds Team E, 111,163.190 31.10%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Technology National Financial Svcs 200 Liberty Street, 479,096.746 17.56%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Technology FTC & Co Datalynx P.O. Box 173736, 553,110.651 20.27%
Denver, CO 80217-3736
A-8
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Technology Schwab Special Custody Attn: Mutual Funds Team E, 433,096.965 15.87%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Telecommunications National Financial Svcs 200 Liberty Street, 1,258,495.586 52.78%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Telecommunications Schwab Special Custody Attn: Mutual Funds Team E, 144,692.560 6.07%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Transportation National Financial Svcs 200 Liberty Street, 61,454.358 29.53%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Transportation FTC & Co Datalynx P.O. Box 173736, 16,617.756 7.98%
Denver, CO 80217-3736
Transportation Schwab Special Custody Attn: Mutual Funds Team E, 37,699.793 18.11%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
U.S. Government National Financial Svcs 200 Liberty Street, 135,845,955.620 14.35%
Money Market Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Utilities National Financial Svcs 200 Liberty Street, 409,330.671 63.01%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
A-9
RYDEX SERIES FUNDS
ADVISOR CLASS
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Banking Nationwide Trust P.O. Box 182029, 8,283.249 14.96%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Banking Ameritrade Inc For The P.O. Box 2226, 3,267.055 5.90%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Banking FTC & Co Datalynx P.O. Box 173736, 9,531.554 17.22%
Denver, CO 80217-3736
Basic Materials Nationwide Trust P.O. Box 182029, 72,379.328 23.37%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Basic Materials Ameritrade Inc For The P.O. Box 2226, 33,808.984 10.92%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Biotechnology National Financial Svcs 200 Liberty Street, 36,313.772 16.17%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Biotechnology Nationwide Trust P.O. Box 182029, 42,276.580 18.83%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Biotechnology Ameritrade Inc For The P.O. Box 2226, 57,396.781 25.56%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Consumer Products Trust Company P.O. Box 6503, 69,569.858 7.47%
Englewood, CO 80155
Electronics Nationwide Trust P.O. Box 182029, 49,119.986 24.75%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Electronics Ameritrade Inc For The P.O. Box 2226, 14,070.773 7.09%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Electronics FTC & Co Datalynx P.O. Box 173736, 43,767.254 22.05%
Denver, CO 80217-3736
Electronics Genworth Financial Trust 3200 N Central, 25,723.705 12.96%
Company FBO Genworth Suite 612,
Financial Asset Mgmt, Inc. Phoenix, AZ 85012
FBO Their Mutual Clients
Energy Nationwide Trust P.O. Box 182029 328,065.675 39.09%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
A-10
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Energy Services National Financial Svcs 200 Liberty Street, 51,750.287 10.93%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Energy Services Nationwide Trust Company, P.O. Box 182029, 99,813.361 21.09%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Energy Services FTC & Co Datalynx P.O. Box 173736, 38,012.310 8.03%
Denver, CO 80217-3736
Financial Services National Financial Svcs 200 Liberty Street, 14,429.433 6.50%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Financial Services Counsel Trust Co FBO 235 St Charles Way, 21,318.761 9.60%
FTJFC Suite 100,
York, PA 17402
Financial Services Nationwide Trust Company, P.O. Box 182029, 16,642.571 7.50%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Financial Services Genworth Financial Trust 3200 N Central, 57,692.079 25.99%
Company FBO Genworth Suite 612,
Financial Asset Mgmt, Inc. Phoenix, AZ 85012
FBO Their Mutual Clients
Government Long Nationwide Trust Company, P.O. Box 182029, 399,096.224 47.04%
Bond 1.2x Strategy FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Government Long Nationwide Insurance Co, P.O. Box 182029, 79,352.859 9.35%
Bond 1.2x Strategy QPVA c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Government Long Trust Company of America P.O. Box 6503, 67,942.476 8.01%
Bond 1.2x Strategy Englewood, CO 80112
Health Care Counsel Trust Co FBO 235 St Charles Way, 553,771.270 61.15%
FTJFC Suite 100,
York, PA 17402
Health Care Nationwide Trust Company, P.O. Box 182029, 72,907.267 8.05%
FSB C/O: IPO Portfolio Columbus, OH 43218-2029
Accounting
Internet National Financial Svcs 200 Liberty Street, 54,234.968 62.75%
Corp For Exclusive Benefit New York, NY 10281-9999
of Our Customers
Russ Lennon
A-11
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Internet Nationwide Trust Company, P.O. Box 182029, 6,987.803 8.09%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Internet Ameritrade Inc For The P.O. Box 2226, 5,440.118 6.29%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Inverse Government National Financial Svcs 200 Liberty Street, 105,897.049 7.37%
Long Bond Strategy Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Inverse Government Nationwide Trust Company, P.O. Box 182029, 176,532.193 12.28%
Long Bond Strategy FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Inverse OTC Strategy National Financial Svcs 200 Liberty Street, 14,616.946 9.55%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Inverse OTC Strategy Citigroup Global Markets 333 West 34th Street - 18,748.120 12.25%
Inc. 3rd Floor,
New York, NY 10001
Inverse OTC Strategy Citigroup Global Markets 333 West 34th Street - 9,105.322 5.95%
Inc. 3rd Floor,
New York, NY 10001
Inverse OTC Strategy UBS Financial Services P.O. Box 3321, 8,604.510 5.62%
Inc. FBO UBS-Finsvc CDN 1000 Harbor Blvd,
FBO Mr James M Weehawken, NJ 07086-
Schabacker 8154
Inverse OTC Strategy Ameritrade Inc For The P.O. Box 2226, 15,308.263 10.00%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Inverse S&P 500 Ameritrade Inc For The P.O. Box 2226, 37,042.998 8.10%
Strategy Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Inverse S&P 500 Citigroup Global Markets 333 West 34th Street - 46,016.796 10.06%
Strategy Inc. 3rd Floor,
New York, NY 10001
Leisure Counsel Trust Co FBO 235 St Charles Way, 7,892.407 10.92%
FTJFC Suite 100,
York, PA 17402
Leisure Nationwide Trust Company, P.O. Box 182029, 7,138.257 9.88%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
A-12
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Leisure Ameritrade Inc For The P.O. Box 2226, 12,104.793 16.75%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Leisure FTC & Co Datalynx P.O. Box 173736, 5,365.038 7.43%
Denver, CO 80217-3736
Leisure FTC & Co Datalynx P.O. Box 173736, 7,129.771 9.87%
Denver, CO 80217-3736
Leisure Genworth Financial Trust 3200 N Central, 5,647.384 7.82%
Company FBO Genworth Suite 612,
Financial Asset Mgmt, Inc. Phoenix, AZ 85012
FBO Their Mutual Clients
Nova Citigroup Global Markets 333 West 34th Street - 101,038.561 8.49%
Inc. 3rd Floor,
New York, NY 10001
Nova Nationwide Trust Company, P.O. Box 182029, 177,440.191 14.92%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Nova Ameritrade Inc For The P.O. Box 2226, 184,318.140 15.49%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
OTC National Financial Svcs 200 Liberty Street, 68,294.041 6.72%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
OTC Nationwide Trust Company, P.O. Box 182029, 320,634.144 31.55%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
OTC Ameritrade Inc For The P.O. Box 2226, 88,139.884 8.67%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Precious Metals National Financial Svcs 200 Liberty Street, 31,551.131 24.60%
Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Precious Metals Nationwide Trust Company, P.O. Box 182029, 20,753.732 16.18%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Precious Metals State Street Bank And 801 Pennsylvania Avenue, 7,133.055 5.56%
Trust Kansas City, MO 64105
Co FBO Systems
Alternatives Int LLC 401k
A-13
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Precious Metals Ameritrade Inc for the P.O. Box 2226, 8,140.121 6.35%
Exclusive Benefit of Our Omaha, NE 68103-2226
Customers
Precious Metals FTC & Co Datalynx P.O. Box 173736, 15,684.552 12.23%
Denver, CO 80217-3736
Retailing Counsel Trust Co 235 St Charles Way, 18,230.897 16.05%
FBO FTJFC Suite 100,
York, PA 17402
Retailing Nationwide Trust Company, P.O. Box 182029, 7,480.224 6.58%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Retailing Genworth Financial Trust 3200 N Central, 14,035.357 12.35%
Company FBO Genworth Suite 612,
Financial Asset Mgmt, Phoenix, AZ 85012
Inc.
FBO Their Mutual Clients
Technology Nationwide Trust Company, P.O. Box 182029, 62,258.149 12.83%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Technology FTC & Co Datalynx P.O. Box 173736, 80,791.450 16.66%
Denver, CO 80217-3736
Technology Genworth Financial Trust 3200 N Central, 69,632.322 14.36%
Company FBO Genworth Suite 612,
Financial Asset Mgmt, Phoenix, AZ 85012
Inc.
FBO Their Mutual Clients
Telecommunications National Financial Svcs 200 Liberty Street, 113,686.426 16.21%
Corp For Exclusive New York, NY 10281-9999
Benefit
Of Our Customers
Russ Lennon
Telecommunications Nationwide Trust Company, P.O. Box 182029, 123,640.399 17.63%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Transportation Brown Brothers Harriman 525 Washington Blvd, 87,000.000 52.65%
And Company As Custodian Jersey City, NJ 07310
United States
Transportation Counsel Trust Co 235 St Charles Way, 9,186.545 5.56%
FBO FTJFC Suite 100,
York, PA 17402
U.S. Government National Financial Attn.: Mutual Fund 31,254,593.660 18.33%
Money Market Services, LLC. For The Dept. (5th Flr),
Exclusive Benefit Of: Our 200 Liberty Street,
Customers) 1 World Financial Center,
New York, NY 10281
A-14
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
U.S. Government FTC & Co Datalynx P.O. Box 173736, 37,433,366.230 21.95%
Money Market Denver, CO 80217-3736
U.S. Government Trust Company Of America P.O. Box 6503, 9,187,927.130 5.39%
Money Market Englewood, CO 80120
U.S. Government Trust Company Of America P.O. Box 6503, 13,711,825.060 8.04%
Money Market Englewood, CO 80120
Utilities National Financial Svcs 200 Liberty Street, 4,394.006 5.22%
Corp For Exclusive New York, NY 10281-9999
Benefit Of Our Customers
Russ Lennon
Utilities Counsel Trust Co 235 St Charles Way, 10,197.089 12.12%
FBO FTJFC Suite 100,
York, PA 17402
Utilities Nationwide Trust Company, P.O. Box 182029, 7,565.990 8.99%
FSB c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Utilities Trust Company Of America P.O. Box 6503, Englewood, 8,132.105 9.67%
CO 80112
RYDEX SERIES FUNDS
H CLASS
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Absolute Return National Financial Svcs 200 Liberty Street, 1,399,054.285 17.01%
Strategies Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Absolute Return Prudential Investment Mail Stop 194-201, 1,087,388.445 13.22%
Strategies Management Services FBO 194 Wood Avenue, South
Mutual Fund Clients Attn: Iselin, NJ 08830
Pruchoice Unit
Absolute Return Ameritrade Inc For The P.O. Box 2226, 426,063.614 5.18%
Strategies Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Absolute Return Schwab Special Custody Attn: Mutual Funds Team E, 1,978,370.033 24.06%
Strategies Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
A-15
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Commodities National Financial Svcs 200 Liberty Street, 206,445.172 11.91%
Strategy Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Commodities Ameritrade Inc For The P.O. Box 2226, 106,366.389 6.14%
Strategy Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Commodities FTC & Co Datalynx P.O. Box 173736, 87,327.670 5.04%
Strategy Denver, CO 80217-3736
Commodities Schwab Special Custody Attn: Mutual Funds Team E, 818,577.316 47.23%
Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Essential Portfolio National Financial Svcs 200 Liberty Street, 66,265.285 9.68%
Aggressive Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Essential Portfolio FTC & Co Datalynx P.O. Box 173736, 128,763.925 18.81%
Aggressive Denver, CO 80217-3736
Essential Portfolio Schwab Special Custody Attn: Mutual Funds Team E, 66,540.771 9.72%
Aggressive Account - Reinv For 101 Montgomery Street
Benefit Of Customers San Francisco, CA 94104-
4122
Essential Portfolio National Financial Svcs 200 Liberty Street, 59,956.492 11.92%
Conservative Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Essential Portfolio Schwab Special Custody Attn: Mutual Funds Team E, 31,451.470 6.25%
Conservative Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Essential Portfolio National Financial Svcs 200 Liberty Street, 69,889.058 7.68%
Moderate Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers Russ
Lennon
Essential Portfolio Schwab Special Custody Attn: Mutual Funds Team E, 90,180.541 9.92%
Moderate Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Europe 1.25x National Financial Svcs 200 Liberty Street, 556,950.059 19.11%
Strategy Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers Russ
Lennon
Europe 1.25x Nationwide Trust P.O. Box 182029, 157,209.926 5.39%
Strategy Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
A-16
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Europe 1.25x Ameritrade Inc For The P.O. Box 2226, 328,942.339 11.28%
Strategy Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Europe 1.25x Schwab Special Custody Attn: Mutual Funds Team E, 731,511.681 25.09%
Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Hedged Equity Prudential Investment Mail Stop 194-201, 241,556.047 17.70%
Management Services 194 Wood Avenue,
FBO Mutual Fund Clients South Iselin, NJ 08830
Attn: Pruchoice Unit
Hedged Equity Ameritrade Inc For The P.O. Box 2226, 200,429.201 14.69%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Hedged Equity Schwab Special Custody Attn: Mutual Funds Team E, 428,658.844 31.42%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
High Yield Strategy National Financial Svcs 200 Liberty Street, 56,513.772 47.95%
Corp For Exclusive New York, NY 10281-9999
Benefit Of Our Customers
Russ Lennon
High Yield Strategy Rydex Distributors 9601 Blackwell Rd, 20,200.000 17.14%
Suite 500,
Rockville, MD 20850
High Yield Strategy Dynamic Seed Capital, 10211 Wincopin Circle, 34,627.197 29.38%
LLC Ste 450,
Columbia, MD 21044
Inverse High Yield National Financial Svcs 200 Liberty Street, 76,660.624 22.89%
Strategy Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
Inverse High Yield Pershing LLC P.O. Box 2052, 38,236.835 11.42%
Strategy Jersey City, NJ 07303-
9998
Inverse High Yield Rydex Distributors 9601 Blackwell Rd, 24,439.329 7.30%
Strategy Suite 500,
Rockville, MD 20850
Inverse Mid-Cap National Financial Svcs 200 Liberty Street, 111,688.462 49.50%
Strategy Corp For Exclusive Benefit New York, NY 10281-9999
Of Our Customers
Russ Lennon
A-17
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Inverse Mid-Cap Schwab Special Custody Attn: Mutual Funds Team E, 25,413.385 11.26%
Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Inverse Russell 2000(R) National Financial Svcs 200 Liberty Street, 855,320.520 32.94%
Strategy Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Inverse Russell 2000(R) Nationwide Trust P.O. Box 182029, 405,869.292 15.63%
Strategy Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Inverse Russell 2000(R) Schwab Special Custody Attn: Mutual Funds Team E, 609,441.775 23.47%
Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Japan 1.25x Strategy National Financial Svcs 200 Liberty Street, 209,080.045 24.74%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Japan 1.25x Strategy Merrill Lynch, Pierce, 4800 Deer Lake Drive E, 67,324.102 7.97%
Fenner & Smith, Inc. For 3rd Floor,
The Sole Benefit Of Its Jacksonville, FL 32246
Customers
Japan 1.25x Strategy Nationwide Trust P.O. Box 182029, 103,598.481 12.26%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Japan 1.25x Strategy Schwab Special Custody Attn: Mutual Funds Team E, 69,650.734 8.24%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Large-Cap Growth National Financial Svcs 200 Liberty Street, 138,842.571 5.89%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Large-Cap Growth Nationwide Trust P.O. Box 182029, 1,447,155.767 61.35%
Company, FSB c/o: IPO Columbus, OH 43218-
Portfolio Accounting 2029
Large-Cap Growth FTC & Co Datalynx P.O. Box 173736, 291,086.580 12.34%
Denver, CO 80217-3736
Large-Cap Value National Financial Svcs 200 Liberty Street, 79,821.518 11.82%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
A-18
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Large-Cap Value Nationwide Trust P.O. Box 182029, 270,203.315 40.01%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Large-Cap Value Schwab Special Custody Attn: Mutual Funds Team 51,600.923 7.64%
Account - Reinv For E, 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Managed Futures National Financial Svcs 200 Liberty Street, 1,573,816.710 36.58%
Strategy Corp For Exclusive New York, NY 10281-9999
Benefit Of Our Customers
Russ Lennon
Managed Futures Schwab Special Custody Attn: Mutual Funds Team 852,360.499 19.81%
Strategy Account - Reinv For E, 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Mid-Cap 1.5x National Financial Svcs 200 Liberty Street, 111,092.721 20.69%
Strategy Corp For Exclusive New York, NY 10281-9999
Benefit Of Our Customers
Russ Lennon
Mid-Cap 1.5x Prudential Investment Mail Stop 194-201, 47,625.296 8.87%
Strategy Management Services 194 Wood Avenue,
FBO Mutual Fund Clients South Iselin, NJ 08830
Attn: Pruchoice Unit
Mid-Cap 1.5x Nationwide Trust P.O. Box 182029, 27,581.275 5.14%
Strategy Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Mid-Cap 1.5x Schwab Special Custody Attn: Mutual Funds Team 59,199.294 11.02%
Strategy Account - Reinv For E, 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Mid-Cap Growth National Financial Svcs 200 Liberty Street, 31,832.484 5.26%
Corp For Exclusive New York, NY 10281-9999
Benefit Of Our Customers
Russ Lennon
Mid-Cap Growth Nationwide Trust P.O. Box 182029, 145,719.259 24.09%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Mid-Cap Growth FTC & Co Datalynx P.O. Box 173736, 242,244.585 40.05%
Denver, CO 80217-3736
Mid-Cap Value Nationwide Trust P.O. Box 182029, 383,110.353 72.98%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
A-19
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Multi-Cap Core National Financial Svcs 200 Liberty Street, 176,926.960 8.75%
Equity Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Multi-Cap Core Merrill Lynch, Pierce, 4800 Deer Lake Drive E, 537,340.673 26.57%
Equity Fenner & Smith, Inc. For 3rd Floor,
The Sole Benefit Of Its Jacksonville, FL 32246
Customers
Multi-Cap Core Ameritrade Inc For The P.O. Box 2226, 131,739.546 6.51%
Equity Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Real Estate FTC & Co Datalynx P.O. Box 173736, 12,923.278 7.14%
Denver, CO 80217-3736
Russell 2000(R) National Financial Svcs 200 Liberty Street, 11,744.071 6.59%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Russell 2000(R) Dynamic Seed Capital, 10211 Wincopin Circle, 52,226.976 29.33%
LLC Ste 450,
Columbia, MD 21044
Russell 2000(R) Schwab Special Custody Attn: Mutual Funds Team E, 54,353.786 30.52%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Russell 2000(R) Frank P Barravecchia Mystic, CT 06355 19,911.930 11.18%
(IRA)
Russell 2000(R) 1.5x National Financial Svcs 200 Liberty Street, 160,251.737 20.29%
Strategy Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Russell 2000(R) 1.5x Schwab Special Custody Attn: Mutual Funds Team E, 119,194.326 15.09%
Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Sector Rotation National Financial Svcs 200 Liberty Street, 881,223.555 9.75%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Sector Rotation Prudential Investment Mail Stop 194-201, 1,058,218.645 11.71%
Management Services 194 Wood Avenue,
FBO Mutual Fund Clients South Iselin, NJ 08830
Attn: Pruchoice Unit
A-20
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Sector Rotation Schwab Special Custody Attn: Mutual Funds Team E, 1,008,806.122 11.16%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Small-Cap Growth National Financial Svcs 200 Liberty Street, 25,329.430 14.60%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Small-Cap Growth Nationwide Trust P.O. Box 182029, 76,321.022 43.98%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Small-Cap Growth Nationwide Insurance Co, P.O. Box 182029, 10,346.893 5.96%
QPVA c/o: IPO Portfolio Columbus, OH 43218-2029
Accounting
Small-Cap Value National Financial Svcs 200 Liberty Street, 8,161.802 5.73%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Small-Cap Value Nationwide Trust P.O. Box 182029, 58,096.004 40.79%
Company, FSB c/o: IPO Columbus, OH 43218-2029
Portfolio Accounting
Small-Cap Value Nationwide Insurance Co, P.O. Box 182029, 8,815.527 6.19%
QPVA c/o: Ipo Portfolio Columbus, OH 43218-2029
Accounting
S&P 500 National Financial Svcs 200 Liberty Street, 101,901.634 17.63%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Strengthening Dollar National Financial Svcs 200 Liberty Street, 227,541.522 28.83%
2x Strategy Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Strengthening Dollar Ameritrade Inc For The P.O. Box 2226, 42,775.430 5.42%
2x Strategy Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Strengthening Dollar Schwab Special Custody Attn: Mutual Funds Team E, 126,014.381 15.97%
2x Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Weakening Dollar 2x National Financial Svcs 200 Liberty Street, 750,536.164 23.88%
Strategy Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
A-21
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Weakening Dollar 2x Merrill Lynch, Pierce, 4800 Deer Lake Drive E, 267,620.027 8.51%
Strategy Fenner & Smith, Inc. For 3rd Floor,
The Sole Benefit Of Its Jacksonville, FL 32246
Customers
Weakening Dollar 2x Schwab Special Custody Attn: Mutual Funds Team E, 734,653.175 23.37%
Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
RYDEX SERIES FUNDS
A-CLASS
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Absolute Return Rydex EPT Moderate 9601 Blackwell Rd, 113,249.995 5.73%
Strategies Suite 500,
Rockville, MD 20850
Banking Larry L McIver Trust P.O. Box 2052, 2,460.358 24.95%
Jersey City, NJ 07303-
9998
Banking IRA FBO Stephen M P.O. Box 2052, 553.191 5.61%
Jersey City, NJ 07303-
9998
Banking McDonald TOD Christ 10479 NW 3rd Street, 705.813 7.16%
Plantation, FL 33324-1703
Banking Raymond James & Assoc 880 Carillon Pkwy, 528.748 5.36%
Inc FBO Reed Sep Petersburg, FL 33716
Banking Christine McDonald R 10479 NW 3rd Street, 1,411.624 14.31%
Plantation, FL 33324-1703
Banking McDonald TOD Christ 10479 NW 3rd Street, 705.813 7.16%
Plantation, FL 33324-1703
Basic Materials Schwab Special Custody Attn: Mutual Funds Team E, 7,985.828 5.64%
Account-Reinv For Benefit 101 Montgomery Street,
Of Customers San Francisco, CA 94104-
4122
Biotechnology Citigroup Global Markets 333 West 34th Street - 4,529.416 7.50%
Inc. 3rd Floor,
New York, NY 10001
A-22
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Commodities Rydex EPT Moderate 9601 Blackwell Rd, 139,232.919 29.72%
Strategy Suite 500,
Rockville, MD 20850
Commodities Rydex EPT Aggressive 9601 Blackwell Rd, 81,577.822 17.41%
Strategy Suite 500,
Rockville, MD 20850
Commodities MG Trust Company Cust. 700 17th Street, Suite 27,724.879 5.92%
Strategy FBO Greenbrook IMA 300, Denver, CO 80202
Consumer Products MG Trust Company Cust. 700 17th Street, Suite 12,345.170 20.46%
FBO Greenbrook IMA 300, Denver, CO 80202
Electronics NFSC FEBO Ronald G 7600 Riverside Dr, 1,908.208 11.99%
Perkins Casper, WY 82604
Electronics IRA FBO Patrick W Co P.O. Box 2052, 1,369.257 8.61%
Jersey City, NJ 07303-
9998
Electronics IRA FBO Thomas J Cav P.O. Box 2052, 1,877.934 11.80%
Jersey City, NJ 07303-
9998
Electronics William Briere P.O. Box 2052, 985.532 6.19%
Jersey City, NJ 07303-
9998
Electronics Southwest Securities FBO P.O. Box 509002, 3,588.731 22.56%
Carl C Seemann & Patricia Dallas, TX 75250
H Seemann JTWROS
Essential Portfolio NFSC FBO Linda M 3400 Harborview Dr, 26,763.491 16.56%
Conservative Schmidt-Aro Gig Harbor, WA 98335
Essential Portfolio Royall Ann 9785 Towne Centre Drive, 9,410.552 5.82%
Conservative San Diego, CA 92121-
1968
Essential Portfolio Dorsey Patricia 9785 Towne Centre Drive, 62,017.014 6.09%
Moderate San Diego, CA 92121-
1968
Europe 1.25x Rydex EPT Moderate 9601 Blackwell Rd, 253,335.112 51.26%
Strategy Suite 500,
Rockville, MD 20850
Europe 1.25x Rydex EPT Aggressive 9601 Blackwell Rd, 108,475.836 21.95%
Strategy Suite 500,
Rockville, MD 20850
Europe 1.25x Rydex EPT Conservative 9601 Blackwell Rd, 55,447.693 11.22%
Strategy Suite 500,
Rockville, MD 20850
A-23
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Financial Services Peggy Jo Stibbins P.O. Box 2052, 1,894.477 7.98%
Jersey City, NJ 07303-
9998
Financial Services Larry L McIver Trust P.O. Box 2052, 1,408.961 5.93%
Jersey City, NJ 07303-
9998
Financial Services Cynthia M Kempe 501 North Broadway, 2,143.790 9.03%
St Louis, MO 63102
Financial Services Geraldine H Canipe P.O. Box 201, 2,085.184 8.78%
Spruce Pine, NC 28777-
0201
Financial Services Penson Financial 1700 Pacific Avenue, 1,327.659 5.59%
Services, Suite 1400,
Inc. Dallas, TX 75201
Financial Services Penson Financial 1700 Pacific Avenue, 1,327.659 5.59%
Services, Inc. Suite 1400,
Dallas, TX 75201
Financial Services Penson Financial 1700 Pacific Avenue, 1,788.942 7.53%
Services, Inc. Suite 1400,
Dallas, TX 75201
Government Long Citigroup Global Mkt 333 West 34th Street - 63,927.117 5.86%
Bond 1.2x Strategy 3rd Floor,
New York, NY 10001
Government Long Rydex EPT Moderate 9601 Blackwell Rd, 352,131.256 32.27%
Bond 1.2x Strategy Suite 500,
Rockville, MD 20850
Government Long Rydex EPT Aggressive 9601 Blackwell Rd, 138,763.442 12.72%
Bond 1.2x Strategy Suite 500,
Rockville, MD 20850
Government Long Rydex EPT Conservative 9601 Blackwell Rd, 201,993.476 18.51%
Bond 1.2x Strategy Suite 500,
Rockville, MD 20850
Government Long Tifkat LP 1055 W 7TH St, 210,744.866 9.72%
Bond 1.2x Strategy Ste 2540,
Los Angeles, CA 90017-
2551
Health Care UBS Financial Services 20405 Manor Rd, 6,149.783 10.42%
Inc. FBO Randall C Shorewood, MN 55331-
McDaniel Marianne M 9470
McDaniel JT TEN WROS
Health Care Penson Financial 1700 Pacific Avenue, 3,223.727 5.46%
Services, Inc. Suite 1400,
Dallas, TX 75201
A-24
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Hedged Equity Pershing LLC P.O. Box 2052, 41,634.241 14.09%
Jersey City, NJ 07303-
9998
Hedged Equity Kenneth A Swanstrom & 2968 Mill Road, 35,491.420 12.02%
Margaret L Swanstrom JT Doylestown, Pa 18902-
WROS 1652
Hedged Equity Jack L. Wyszomierski & 6635 Armitage Road, 15,243.902 5.16%
Kathy D. Wyszomierski JT New Hope, PA 18938-
WROS 5616
Hedged Equity Rydex EPT Moderate 9601 Blackwell Rd, 33,448.871 11.32%
Suite 500,
Rockville, MD 20850
Hedged Equity Rydex EPT Aggressive 9601 Blackwell Rd, 23,182.557 7.85%
Suite 500,
Rockville, MD 20850
High Yield Strategy Julie Slovak 501 North Broadway, 293.767 18.58%
St Louis, MO 63102
High Yield Strategy Robert A Murdock Or Haverhill, MA 01830 390.467 24.70%
M Patricia Murdock
High Yield Strategy Harry E Yewens III 501 North Broadway, 194.522 12.30%
St Louis, MO 63102
High Yield Strategy Billie Frank Hunter 501 North Broadway, 302.141 19.11%
St Louis, MO 63102
High Yield Strategy Rydex Distributors 9601 Blackwell Rd, 400.000 25.30%
Suite 500,
Rockville, MD 20850
Internet IRA FBO Terrill L Br P.O. Box 2052, 178.664 6.84%
Jersey City, NJ 07303-
9998
Internet Elsman Barbara 1801 Market Street, 247.219 9.47%
Philadelphia, PA 19103-
1675
Internet Deborah A Guyette (RIRA) Myrtle Beach, SC 29588- 215.016 8.24%
5337
Internet Amos Nivens (RIRA) Chesterfield, SC 29709 361.139 13.83%
Internet RBC Dain Rauscher Inc 1916 46th St NW, 232.139 8.89%
FBO Corey M McGlone & Rochester, MN 55901
Elizabeth A McGlone JT
TEN/WROS
Internet Proctor Robert 9785 Towne Centre Drive, 288.838 11.06%
San Diego, CA 92121-
1968
A-25
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Inverse High Yield NFSC FEBO Peapack P.O. Box 178, Gladstone, 5,000.000 6.91%
Strategy Gladstone Bank NJ 07934
Inverse High Yield Dengel & Co P.O. Box 3199, Church 37,500.000 51.80%
Strategy Street Station,
New York, NY 10008
Inverse High Yield Schwab Special Custody Attn: Mutual Funds Team E, 9,549.308 13.19%
Strategy Account-Reinv For Benefit 101 Montgomery Street,
Of Customers San Francisco, CA 94104-
4122
Inverse Mid-Cap Citigroup Global Mkt 333 West 34th Street - 1,384.344 6.88%
Strategy 3rd Floor,
New York, NY 10001
Inverse Mid-Cap Citigroup Global Mkt 333 West 34th Street - 6,021.267 29.93%
Strategy 3rd Floor,
New York, NY 10001
Inverse Mid-Cap Curtis A Zeigler P.O. Box 173859, 1,754.518 8.72%
Strategy Denver, CO 80217
Inverse Mid-Cap Fred Elbert Hulse Rev 210 Maple Street, 1,956.400 9.73%
Strategy Trust Dtd 5-2-92 Doris H Brevard, NC 28712-3824
Hulse SUCC TTEE
Inverse Mid-Cap UBS Financial Services 4808 Knox Ave S, 1,345.742 6.69%
Strategy Inc. FBO Paul F Werler Minneapolis, MN 55419-
Ann F Werler JT TEN WROS 5239
Inverse Mid-Cap Citigroup Global Markets 333 West 34th Street - 1,177.379 5.85%
Strategy Inc. 3rd Floor,
New York, NY 10001
Inverse OTC Strategy Capital Bank & Trust Co c/o Plan Premier/Fascorp, 60,860.967 12.74%
FBO Vining Sparks Ibg, 8515 E Orchard Road, 2T2,
LP 401K Plan Englewood, CO 80111
Inverse OTC Strategy Citigroup Global Mkt 333 West 34th Street - 8,864.186 5.82%
3rd Floor,
New York, NY 10001
Inverse OTC Strategy Citigroup Global Mkt 333 West 34th Street - 8,864.186 5.82%
3rd Floor,
New York, NY 10001
Inverse OTC Strategy Citigroup Global Mkt 333 West 34th Street - 8,864.186 5.82%
3rd Floor,
New York, NY 10001
Inverse Russell Pershing LLC P.O. Box 2052, 13,657.471 5.99%
2000(R) Strategy Jersey City, NJ 07303-
9998
A-26
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Inverse Russell Citigroup Global Markets 333 West 34th Street - 21,881.560 9.59%
2000(R) Strategy Inc. 3rd Floor,
New York, NY 10001
Inverse Russell Schwab Special Custody Attn: Mutual Funds Team E, 14,323.178 6.28%
2000(R) Strategy Account-Reinv For Benefit 101 Montgomery Street.
Of Customers San Francisco, CA 94104-
4122
Inverse S&P 500 Citigroup Global Markets 333 West 34th Street - 21,189.773 6.44%
Strategy Inc. 3rd Floor,
New York, NY 10001
Inverse S&P 500 Levenson Harvey S 333 West 34th Street - 17,393.468 5.29%
Strategy 3rd Floor,
New York, NY 10001
Inverse S&P 500 Loyd Jr PA 108 Shasta, Houston, TX 25,713.965 7.82%
Strategy 77024-6914
Japan 1.25x Strategy Rydex EPT Moderate 9601 Blackwell Rd, 259,297.227 47.89%
Suite 500,
Rockville, MD 20850
Japan 1.25x Strategy Rydex EPT Aggressive 9601 Blackwell Rd, 210,093.369 38.81%
Suite 500,
Rockville, MD 20850
Large-Cap Growth Rydex EPT Moderate 9601 Blackwell Rd, 33,699.024 37.21%
Suite 500,
Rockville, MD 20850
Large-Cap Growth Rydex EPT Aggressive 9601 Blackwell Rd, 22,180.773 24.49%
Suite 500,
Rockville, MD 20850
Large-Cap Growth Rydex EPT Conservative 9601 Blackwell Rd, 8,789.997 9.71%
Suite 500,
Rockville, MD 20850
Large-Cap Growth LPL Financial Services 9785 Towne Centre 9,628.900 10.63%
Drive, San Diego, CA
92121-1968
Large-Cap Value Rydex EPT Moderate 9601 Blackwell Rd, 86,563.365 49.60%
Suite 500,
Rockville, MD 20850
Large-Cap Value Rydex EPT Aggressive 9601 Blackwell Rd, 20,368.535 11.67%
Suite 500,
Rockville, MD 20850
Large-Cap Value Rydex EPT Conservative 9601 Blackwell Rd, 28,514.201 16.34%
Suite 500,
Rockville, MD 20850
Leisure NFSC FEBO The Laddie And Deanna 753.979 11.47%
Laddie & Deanna Hardy Hardy FA TR, U/A 4/18/99,
TTEE 5063 Solitude Court,
Rancho Cucamonga, CA
91737
A-27
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Leisure NFSC FEBO Delaware San Berdu USD 403(B)7 425.170 6.47%
Charter Guar & TR TTE FBO Cynthia McKewan,
P.O. Box 1104,
Highland CA 92346
Leisure SEP FBO Wesley E G P.O. Box 2052, 1,066.369 16.22%
Jersey City, NJ 07303-
9998
Leisure Allan Friedland 2 Journal Sq. Plaza, 332.796 5.06%
Jersey City, NJ 07306
Leisure Buckeye Rubber & Pack P.O. Box 94984, 353.732 5.38%
PS FBO: K. L National Cleveland, OH 44101-
City Bank Ttee Trust 4984
Mutual Funds
Mid-Cap 1.5x Pershing LLC P.O. Box 2052, 4,568.122 6.70%
Strategy Jersey City, NJ 07303-
9998
Mid-Cap Growth Rydex EPT Moderate 9601 Blackwell Rd, 71,971.741 52.47%
Suite 500,
Rockville, MD 20850
Mid-Cap Growth Rydex EPT Aggressive 9601 Blackwell Rd, 40,337.949 29.41%
Suite 500,
Rockville, MD 20850
Mid-Cap Growth Rydex EPT Conservative 9601 Blackwell Rd, 14,055.794 10.25%
Suite 500,
Rockville, MD 20850
Mid-Cap Value Rydex EPT Moderate 9601 Blackwell Rd, 43,504.141 39.93%
Suite 500,
Rockville, MD 20850
Mid-Cap Value Rydex EPT Aggressive 9601 Blackwell Rd, 20,777.384 19.07%
Suite 500,
Rockville, MD 20850
Mid-Cap Value Rydex EPT Conservative 9601 Blackwell Rd, 7,923.188 7.27%
Suite 500,
Rockville, MD 20850
Mid-Cap Value John S Nelson And P.O. Box 2052, 6,641.873 6.10%
Jersey City, NJ 07303-
9998
Multi-Cap Core RBC Dain Rauscher FBO 6825 Grenadier Blvd, 32,429.319 11.93%
Equity Bruce H Raimy Trust Naples, FL 34108-7215
Multi-Cap Core First Clearing, LLC 5901 Patterson Avenue, 14,476.401 5.32%
Equity Joseph B Haddad Profit Richmond, Va 23226-
Sharing Plan PSP 2538
A-28
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Multi-Cap Core Rydex EPT Moderate 9601 Blackwell Rd, 55,335.325 20.35%
Equity Suite 500,
Rockville, MD 20850
Multi-Cap Core Rydex EPT Aggressive 9601 Blackwell Rd, 36,624.085 13.47%
Equity Suite 500,
Rockville, MD 20850
Multi-Cap Core Rydex EPT Conservative 9601 Blackwell Rd, 18,371.606 6.76%
Equity Suite 500,
Rockville, MD 20850
Nova Great Infinity Corp 333 West 34th Street - 147,588.870 30.46%
3rd Floor,
New York, NY 10001
Nova William & Anna Beverly Hills, CA 90210- 59,657.835 12.31%
Tenenblatt TTEES 3320
Nova Rydex EPT Moderate 9601 Blackwell Rd, 92,313.431 19.05%
Suite 500,
Rockville, MD 20850
OTC Rydex EPT Moderate 9601 Blackwell Rd, 334,561.766 70.06%
Suite 500,
Rockville, MD 20850
Real Estate Rydex EPT Moderate 9601 Blackwell Rd, 70,672.192 46.51%
Suite 500,
Rockville, MD 20850
Real Estate Rydex EPT Aggressive 9601 Blackwell Rd, 58,939.114 38.78%
Suite 500,
Rockville, MD 20850
Real Estate Rydex EPT Conservative 9601 Blackwell Rd, 11,306.900 7.44%
Suite 500,
Rockville, MD 20850
Retailing IRA FBO Martin F S P.O. Box 2052, 514.124 5.63%
Jersey City, NJ 07303-
9998
Retailing IRA FBO Merlin Dav P.O. Box 2052, 1,929.549 21.12%
Jersey City, NJ 07303-
9998
Retailing SEP FBO John H Sop P.O. Box 2052, 786.782 8.61%
Jersey City, NJ 07303-
9998
Retailing IRA FBO Martha D O P.O. Box 2052, 803.859 8.80%
Jersey City, NJ 07303-
9998
Retailing IRA FBO Carol A Mi P.O. Box 2052, 2,130.119 23.31%
Jersey City, NJ 07303-
9998
Retailing Proctor Robert 9785 Towne Centre Drive, 886.918 9.71%
San Diego, CA 92121-
1968
A-29
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Russell 2000(R) Ernesto Erdmann P.O. Box 2052, 837.125 6.67%
Jersey City, NJ 07303-
9998
Russell 2000(R) Robert W Baird & Co. 777 East Wisconsin 787.388 6.27%
Inc. Avenue, Milwaukee, WI
53202-5391
Russell 2000(R) Burroughs Suzanne 777 East Wisconsin 1,295.493 10.32%
Avenue, Milwaukee, WI
53202-5391
Russell 2000(R) Schwab Special Custody Attn: Mutual Funds Team 671.009 5.35%
Account-Reinv For E, 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Russell 2000(R) Cashman John 9785 Towne Centre Drive, 648.347 5.17%
San Diego, CA 92121-
1968
Russell 2000(R) 1.5x Pershing LLC P.O. Box 2052, 53,178.589 33.86%
Strategy Jersey City, NJ 07303-
9998
Russell 2000(R) 1.5x Rydex EPT Moderate 9601 Blackwell Rd, 26,153.045 16.65%
Strategy Suite 500,
Rockville, MD 20850
Russell 2000(R) 1.5x Rydex EPT Aggressive 9601 Blackwell Rd, 35,578.956 22.65%
Strategy Suite 500,
Rockville, MD 20850
S&P 500 FTC & Co P.O. Box 173736, Denver, 29,106.593 20.62%
CO 80217-3736
Small-Cap Growth Rydex EPT Moderate 9601 Blackwell Rd, 37,849.321 45.54%
Suite 500,
Rockville, MD 20850
Small-Cap Growth Rydex EPT Aggressive 9601 Blackwell Rd, 30,218.261 36.36%
Suite 500,
Rockville, MD 20850
Small-Cap Growth Rydex EPT Conservative 9601 Blackwell Rd, 7,927.872 9.54%
Suite 500,
Rockville, MD 20850
Small-Cap Value Rydex EPT Moderate 9601 Blackwell Rd, 34,977.841 34.06%
Suite 500,
Rockville, MD 20850
Small-Cap Value Rydex EPT Aggressive 9601 Blackwell Rd, 41,962.561 40.87%
Suite 500,
Rockville, MD 20850
Small-Cap Value Rydex EPT Conservative 9601 Blackwell Rd, 6,591.623 6.42%
Suite 500,
Rockville, MD 20850
A-30
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Technology Oppenheimer & Co Inc. 125 Broad Street, 4,222.302 6.72%
Cust FBO James L New York, NY 10004
Newman RLVR IRA
Technology Oppenheimer & Co Inc. 125 Broad Street, 6,127.882 9.75%
Cust FBO Edward A New York, NY 10004
Aabak IRA
Technology Southwest Securities Inc P.O. Box 509002, 3,575.413 5.69%
FBO Carl C Seemann & Dallas, TX 75250
Patricia H Seemann
JTWROS
Technology Oppenheimer & Co Inc. 125 Broad Street, 3,686.956 5.87%
FBO Mark C Schaefer New York, NY 10004
Technology Oppenheimer & Co Inc. 125 Broad Street, 6,794.322 10.81%
FBO Edward Aabak New York, NY 10004
Telecommunications Gerald J Hellebusch P.O. Box 2052, 7,039.821 6.12%
Jersey City, NJ 07303-
9998
Transportation NFSC FBO 5552 Fox Hollow Drive, 697.350 6.04%
Linda Harris Smith Boca Raton, FL 33486
Transportation IRA FBO Dennis Dean P.O. Box 2052, 1,035.554 8.97%
Jersey City, NJ 07303-
9998
Transportation James G P Collins P.O. Box 2052, 1,409.204 12.21%
Jersey City, NJ 07303-
9998
Transportation Civil Air Patrol Inc 1 North Jefferson, St 3,296.229 28.56%
Louis, MO 63103
Transportation Oppenheimer & Co Inc. 125 Broad Street, 931.246 8.07%
FBO James L Newman New York, NY 10004
U.S. Government Rydex EPT Conservative 9601 Blackwell Rd, 1,926,761.970 7.43%
Money Market Suite 500,
Rockville, MD 20850
U.S. Government Schwab Special Custody Attn: Mutual Funds Team E, 6,549,496.420 25.26%
Money Market Account--Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Utilities UBS Financial Services 610 Ocean Blvd, 6,136.438 6.86%
Inc. FBO Gail K Ronca Golden Beach, FL 33160-
2218
A-31
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Transportation IRA FBO Dennis Dean P.O. Box 2052, 1,035.554 8.97%
Jersey City, NJ 07303-
9998
Transportation James G P Collins P.O. Box 2052, 1,409.204 12.21%
Jersey City, NJ 07303-
9998
Transportation Civil Air Patrol Inc 1 North Jefferson, St 3,296.229 28.56%
Louis, MO 63103
Transportation Oppenheimer & Co Inc. 125 Broad Street, 931.246 8.07%
FBO James L Newman New York, NY 10004
U.S. Government Rydex EPT Conservative 9601 Blackwell Rd, 1,926,761.970 7.43%
Money Market Suite 500,
Rockville, MD 20850
U.S. Government Schwab Special Custody Attn: Mutual Funds Team E, 6,549,496.420 25.26%
Money Market Account--Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Utilities UBS Financial Services 610 Ocean Blvd, 6,136.438 6.86%
Inc. FBO Gail K Ronca Golden Beach, FL 33160-
2218
RYDEX SERIES FUNDS
C-CLASS
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Absolute Return Schwab Special Custody Attn: Mutual Funds Team E, 125,571.577 5.03%
Strategies Account-Reinv For Benefit 101 Montgomery Street,
Of Customers San Francisco, CA 94104-
4122
Banking Jackie L Lawing P.O. Box 3321, 2,796.770 6.38%
1000 Harbor Blvd,
Weehawken, NJ 07086-
8154
Banking IRA FBO Scott Rausch P.O. Box 2052, 3,866.612 8.81%
Jersey City, NJ 07303-
9998
Banking First Clearing, LLC Scott 14700 Ne 63rd Ct, 7,516.660 17.13%
R Sonners & Vicki F Vancouver, WA 98686-
Sonners JT TEN 2080
Commodities FTC & Co P.O. Box 173736, 110,054.670 32.42%
Strategy Denver, CO 80217-3736
Commodities Schwab Special Custody Attn: Mutual Funds Team E, 28,575.988 8.42%
Strategy Account-Reinv For Benefit 101 Montgomery Street,
Of Customers San Francisco, CA 94104-
4122
A-32
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Consumer Products John H Sykes P.O. Box 2052, 7,812.451 8.27%
Jersey City, NJ 07303-
9998
Financial Services Eric S Barton P.O. Box 2052, 14,609.204 7.98%
Jersey City, NJ 07303-
9998
Financial Services London L Fletcher-Ba P.O. Box 2052, 32,870.709 17.96%
Jersey City, NJ 07303-
9998
Hedged Equity Schwab Special Custody Attn: Mutual Funds Team E, 141,723.327 40.89%
Account-Reinv For Benefit 101 Montgomery Street,
Of Customers San Francisco, CA 94104-
4122
High Yield Strategy NFS LLC FEBO 24 Tower Rd, 993.641 26.39%
Stephen D Brown Lincoln, MA 01773
High Yield Strategy Rydex Distributors 9601 Blackwell Rd, 400.000 10.62%
Suite 500,
Rockville, MD 20850
High Yield Strategy William Bradley Springfield, MA 01119 1,196.227 31.77%
High Yield Strategy Anthony E Riccio or Plaistow, NH 03865 205.086 5.45%
Lillian P Riccio
High Yield Strategy Merril L Sloppy Miamisburg, OH 45342 220.058 5.85%
High Yield Strategy Homer C Rogers Sr Dayton, OH 45403 235.753 6.26%
Internet UBS Financial Services Inc. 9441 LBJ Freeway, 6,438.693 20.04%
FBO Paul B Mason Suite 605,
Dorothy M Mason Ten Comm Dallas, TX 75243-4636
Inverse High Yield Christopher L Poli 16 Brisbane Rd, 1,939.488 6.14%
Strategy Montauk, NY 11954
Inverse High Yield Schwab Special Custody Attn: Mutual Funds Team E, 12,662.949 40.08%
Strategy Account-Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Japan 1.25x Strategy David Manlowe P.O. Box 2052, 24,211.024 6.19%
Jersey City, NJ 07303-
9998
Large-Cap Growth Randolph K & Mary H 204 West Bailey, 17,658.312 7.56%
Vest REV LIV TR Naperville, IL 60565
Mid-Cap 1.5x Schwab Special Custody Attn: Mutual Funds Team E, 28,622.580 7.54%
Strategy Account-Reinv for 101 Montgomery Street,
Benefit of Customers San Francisco, CA 94104-
4122
A-33
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
-------------------------------------------------------------------------------------------------------------------
Real Estate Schwab Special Custody Attn: Mutual Funds Team E, 4,189.621 13.12%
Account-Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Retailing NFS LLC FEBO Jackson 433 Ave T, 43,402.778 36.91%
Family Trust Brooklyn, NY 11223
Retailing NFS LLC FEBO Jack 433 Ave T, 6,504.770 5.53%
Chehebar Cust Brooklyn, NY 11223
Retailing NFS LLC FEBO Jack 433 Ave T, 6,504.770 5.53%
Chehebar Cust Brooklyn, NY 11223
Russell 2000(R) NFSC FBO Thomas E 118 Jaffrey Road, 3,861.714 20.42%
Carroll Malvern, PA 19355
Russell 2000(R) Michael S. Simeone 639 Tamarack Road, 3,337.794 17.65%
Cheshire, CT 06410-3227
Russell 2000(R) Le Ann Talbot 551 Riverbend Drive, 4,182.617 22.12%
Victor, ID 83455
Russell 2000(R) William L Tabing Wichita, KS 67211 1,759.944 9.31%
S&P 500 NFSC FBO Thomas E 118 Jaffrey Road, 4,438.665 9.34%
Carroll Malvern, PA 19355
S&P 500 NFSC FBO Agnes S 3138 Guildford Dr, 7,154.510 15.06%
Andrews Baton Rouge, LA 70808
S&P 500 Pershing LLC P.O. Box 2052 3,005.867 6.33%
Jersey City, NJ 07303-
9998
S&P 500 Stifel Nicolaus & Co Inc 501 North Broadway, 2,525.906 5.32%
Christopher Pellegrino St Louis, MO 63102
S&P 500 Radiologic PSP 1700 Lake Alvamar Dr, 4,505.691 9.48%
Lawrence, KS 66047
Small-Cap Growth First Clearing, Llc 4507 Roxbury Rd, 2,350.470 5.20%
David & Priscella Corona Dl Mar, CA 92625-
Moore Family 3126
(Survivor's) Trust
Strengthening Dollar Smulekoff Investment Co 1 North Jefferson, 6,009.786 5.50%
2x Strategy St Louis, MO 63103
Strengthening Dollar Dr Max Hutton Dexter, MI 48130 8,488.402 7.77%
2x Strategy
Transportation First Trust Co P.O. Box 173736, 32,141.281 40.24%
Denver, CO, 80217-3736
U.S. Government Schwab Special Custody Attn: Mutual Funds Team E, 10,056,789.270 6.81%
Money Market Account-Reinv For Benefit 101 Montgomery Street,
Of Customers San Francisco, CA 94104-
4122
A-34
RYDEX DYNAMIC FUNDS
H-CLASS
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Dow 2x Strategy National Financial Svcs 200 Liberty Street, 190,783.501 14.39%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Inverse Dow 2x National Financial Svcs 200 Liberty Street, 268,427.608 17.33%
Strategy Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Inverse Dow 2x Ameritrade Inc For The P.O. Box 2226, 128,833.847 8.32%
Strategy Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Inverse Dow 2x Schwab Special Custody Attn: Mutual Funds Team E, 160,655.940 10.37%
Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Inverse OTC 2x National Financial Svcs 200 Liberty Street, 2,838,402.609 15.62%
Strategy Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Inverse OTC 2x Ameritrade Inc For The P.O. Box 2226, 1,533,030.077 8.44%
Strategy Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
Inverse OTC 2x Schwab Special Custody Attn: Mutual Funds Team E, 2,190,448.622 12.05%
Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Inverse Russell 2000(R) National Financial Svcs 200 Liberty Street, 792,269.012 36.04%
2x Strategy Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Inverse Russell 2000(R) Tivoli Partners LP 42 East 81st St, 351,843.207 16.01%
2x Strategy New York, NY 10028
Inverse Russell 2000(R) Schwab Special Custody Attn: Mutual Funds Team E, 274,265.444 12.48%
2x Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Inverse Russell 2000(R) Peter Kenner New York, NY 10028 116,848.048 5.32%
2x Strategy
Inverse S&P 500 2x National Financial Svcs 200 Liberty Street, 1,008,091.929 14.94%
Strategy Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
A-35
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Inverse S&P 500 2x Schwab Special Custody Attn: Mutual Funds Team E, 1,158,086.038 17.16%
Strategy Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
OTC 2x Strategy National Financial Svcs 200 Liberty Street, 2,352,059.778 15.73%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
OTC 2x Strategy Ameritrade Inc For The P.O. Box 2226, 815,905.048 5.46%
Exclusive Benefit Of Our Omaha, NE 68103-2226
Customers
OTC 2x Strategy Schwab Special Custody Attn: Mutual Funds Team E, 1,531,416.064 10.24%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
Russell 2000(R) 2x National Financial Svcs 200 Liberty Street, 75,066.356 5.25%
Strategy Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
Russell 2000(R) 2x Richard F Schneider Fort Lauderdale, FL 82,143.543 5.75%
Strategy 33316
S&P 500 2x Strategy National Financial Svcs 200 Liberty Street, 1,008,182.481 17.02%
Corp For Exclusive New York, NY 10281-
Benefit Of Our Customers 9999
Russ Lennon
S&P 500 2x Strategy Citicorp USA, Inc FBO 500 West Madison St, 943,984.807 15.94%
General Welfare Group Llc Ste 700,
Chicago, IL 60661
S&P 500 2x Strategy Merrill Lynch, Pierce, 4800 Deer Lake Drive E, 436,551.376 7.37%
Fenner & Smith, Inc. For 3rd Floor,
The Sole Benefit Of Its Jacksonville, FL 32246
Customers
S&P 500 2x Strategy Schwab Special Custody Attn: Mutual Funds Team E, 876,845.258 14.81%
Account - Reinv For 101 Montgomery Street,
Benefit Of Customers San Francisco, CA 94104-
4122
A-36
RYDEX DYNAMIC FUNDS
A-CLASS
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Dow 2x Strategy NFSC FEBO David G Myers 18 Ridge Farm Rd, 6,653.042 6.02%
TTEE Burr Ridge, IL 60527
Inverse Dow 2x Baxter Seymour 777 East Wisconsin Ave. 8,156.846 5.77%
Strategy Milwaukee, WI 53202-
5391
Inverse OTC 2x The Broadhead Limited 1 North Jefferson, St 37,125.080 5.14%
Strategy Partnership Louis, MO 63103
Inverse OTC 2x MS&Co FBO Huey Wilson 3636 Sherwood Forest 74,294.186 10.28%
Strategy & Angelina Wilson Blvd, #650,
Compro/LOC/ACCT Baton Rouge, LA 70816-
5216
Inverse OTC 2x H Wilson, A Wilson & 3636 Sherwood Forest, 37,147.084 5.14%
Strategy Greg Cotter Co-Ttees #650, Baton Rouge, LA
Huey & Angelina Wilson 70816-5216
Foundation TR U/A DTD
9/19/86
Inverse Russell 2000(R) NFSC FEBO Price Flex 106 Valerie Dr, 69,425.160 7.64%
2x Strategy Fund LP Lafayette, LA 70508
Inverse Russell 2000(R) NFSC FEBO Price Flex 106 Valerie Dr, 69,425.160 7.64%
2x Strategy Fund Qualified LP Lafayette, LA 70508
Inverse Russell 2000(R) Tiedemann Trust Comp 1201 North Market Street, 45,785.913 5.04%
2x Strategy Suite 1406,
Wilmington, DE 19801
Inverse S&P 500 2x Levenson Harvey 188 Cheshire Way, 44,735.716 6.86%
Strategy Naples, FL 34110
Inverse S&P 500 2x UBS Financial Services 188 Cheshire Way, 52,137.721 7.99%
Strategy Inc. FBO Harvey Stuart Naples, FL 34110-4413
Levenson
Inverse S&P 500 2x MS&Co FBO Huey Wilson 3636 Sherwood Forest 36,710.710 5.63%
Strategy & Angelina Wilson Blvd, #650,
Compro/LOC/ACCT Baton Rouge, LA 70816-
5216
OTC 2x Strategy Rydex EPT Aggressive 9601 Blackwell Rd, 144,203.424 25.30%
Suite 500,
Rockville, MD 20850
OTC 2x Strategy MS&Co FBO Griffith RA 8735 La Palma Lane, 29,989.525 5.26%
Naples, FL 34108-7755
OTC 2x Strategy Rachel A Griffith Dallas, TX 75240 33,742.534 5.92%
OTC 2x Strategy Schwab Special Custody Attn: Mutual Funds Team E 68,577.312 12.03%
Account-Reinv for Benefit 101 Montgomery Street
of Customers San Francisco, CA 94104-
4122
A-37
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Russell 2000(R) 2x NFSC FEBO 18 Ridge Farm Rd, 3,662.049 8.38%
Strategy David G Myers TTEE Burr Ridge, IL 60527
Russell 2000(R) 2x Michael P. Rubino TT P.O. Box 2052, 7,182.501 16.44%
Strategy Jersey City, NJ 07303-
9998
Russell 2000(R) 2x Paul Kostyak and P.O. Box 2052, 2,783.577 6.37%
Strategy Jersey City, NJ 07303-
9998
Russell 2000(R) 2x Morgan Keegan & 50 North Front Street, 7,013.680 16.05%
Strategy Company, Inc. Memphis, TN 38103
Russell 2000(R) 2x Southwest Securities Inc P.O. Box 509002, 5,319.139 12.18%
Strategy FBO Thomas Edward Dallas, TX 75250
Dunn
Russell 2000(R) 2x Schwab Special Custody Attn: Mutual Funds Team 3,676.279 8.41%
Strategy Account-Reinv For Benefit E, 101 Montgomery Street,
Of Customers San Francisco, CA 94104-
4122
S&P 500 2x Strategy Robert Ray Harris 5810 Carriage Ln, 22,089.508 6.25%
Greensboro, NC 27410-
9121
S&P 500 2x Strategy Rydex EPT Aggressive 9601 Blackwell Rd, 65,255.774 18.46%
Suite 500,
Rockville, MD 20850
S&P 500 2x Strategy Fouce Enterprises Ltd. 16633 Ventura Blvd, 23,834.685 6.74%
Partnership #1010, Encino, CA
91436-1857
RYDEX DYNAMIC FUNDS
C-CLASS
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Inverse Dow 2x Schwab Special Custody Attn: Mutual Funds Team E, 18,755.288 9.90%
Strategy Account-Reinv For Benefit 101 Montgomery Street,
Of Customers San Francisco, CA 94104-
4122
Inverse Dow 2x RBC Dain Rauscher Inc 15254 Broom Street Ne, 12,205.711 6.44%
Strategy FBO Ann E Powel Bainbridge Isl, WA 98110
Inverse Russell 2000(R) Trust Co P.O. Box 6503, 7,671.891 5.53%
2x Strategy Englewood, CO 80155
A-38
PERCENTAGE
OF FUND
NAME OF ADDRESS OF NUMBER OF SHARES
FUND BENEFICIAL OWNER BENEFICIAL OWNER SHARES OWNED OUTSTANDING
------------------------------------------------------------------------------------------------------------------
Inverse Russell 2000(R) Trust Co P.O. Box 6503, 12,350.127 8.90%
2x Strategy Englewood, CO 80155
Russell 2000 2x NFS FBO Randall May 14816 Southpointe Curv, 11,863.757 11.14%
Strategy Burnsville, MN 55306
Russell 2000(R) 2x Oppenheimer & Co. Inc. 580 California Street, 7,220.014 6.78%
Strategy Suite 2300,
San Francisco, CA 94104
A-39
APPENDIX B
ADVISORY AGREEMENT
ADVISORY AGREEMENT made as of this __th day of ________________, 2007 by
and between RYDEX SERIES FUNDS (the "Trust"), a Delaware statutory trust
registered as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and PADCO ADVISORS, INC., a Maryland corporation with
its principal place of business at 9601 Blackwell Road, Suite 500, Rockville,
Maryland 20850 (the "Adviser").
WITNESSETH
WHEREAS, the Board of Trustees (the "Board") of the Trust has selected the
Adviser to act as investment adviser to the Trust on behalf of the series set
forth on Schedule A to this Agreement (each a "Fund" and, collectively, the
"Funds"), as such Schedule may be amended from time to time upon mutual
agreement of the parties, and to provide certain related services, as more fully
set forth below, and to perform such services under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits set
forth herein, the Trust and the Adviser do hereby agree as follows:
1. THE ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Adviser shall
act as investment adviser with respect to the Funds. In such capacity, the
Adviser shall, subject to the supervision of the Board, regularly provide
the Funds with investment research, advice and supervision and shall
furnish continuously an investment program for the Funds, consistent with
the respective investment objectives and policies of each Fund. The
Adviser shall determine, from time to time, what securities shall be
purchased for the Funds, what securities shall be held or sold by the
Funds and what portion of the Funds' assets shall be held uninvested in
cash, subject always to the provisions of the Trust's Declaration of
Trust, By-Laws and its registration statement on Form N-1A (the
"Registration Statement") under the 1940 Act, and under the Securities Act
of 1933, as amended (the "1933 Act"), covering Fund shares, as filed with
the Securities and Exchange Commission (the "Commission"), and to the
investment objectives, policies and restrictions of the Funds, as each of
the same shall be from time to time in effect. To carry out such
obligations, the Adviser shall exercise full discretion and act for the
Funds in the same manner and with the same force and effect as the Funds
themselves might or could do with respect to purchases, sales or other
transactions, as well as with respect to all other such things necessary
or incidental to the furtherance or conduct of such purchases, sales or
other transactions. No reference in this Agreement to the Adviser having
full discretionary authority over each Fund's investments shall in any way
limit the right of the Board, in its sole discretion, to establish or
revise policies in connection with the management of a Fund's assets or to
otherwise exercise its right to control the overall management of a Fund.
B-1
(b) COMPLIANCE. The Adviser agrees to comply with the requirements
of the 1940 Act, the Investment Advisers Act of 1940 (the "Advisers Act"),
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Commodity Exchange Act and the respective rules and regulations
thereunder, as applicable, as well as with all other applicable federal
and state laws, rules, regulations and case law that relate to the
services and relationships described hereunder and to the conduct of its
business as a registered investment adviser. The Adviser also agrees to
comply with the objectives, policies and restrictions set forth in the
Registration Statement, as amended or supplemented, of the Funds, and with
any policies, guidelines, instructions and procedures approved by the
Board and provided to the Adviser. In selecting each Fund's portfolio
securities and performing the Adviser's obligations hereunder, the Adviser
shall cause the Fund to comply with the diversification and source of
income requirements of Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"), for qualification as a regulated investment
company. The Adviser shall maintain compliance procedures that it
reasonably believes are adequate to ensure its compliance with the
foregoing. No supervisory activity undertaken by the Board shall limit the
Adviser's full responsibility for any of the foregoing.
(c) PROXY VOTING. The Board has the authority to determine how
proxies with respect to securities that are held by the Funds shall be
voted, and the Board has initially determined to delegate the authority
and responsibility to vote proxies for the Funds' securities to the
Adviser. So long as proxy voting authority for the Funds has been
delegated to the Adviser, the Adviser shall exercise its proxy voting
responsibilities. The Adviser shall carry out such responsibility in
accordance with any instructions that the Board shall provide from time to
time, and at all times in a manner consistent with Rule 206(4)-6 under the
Advisers Act and its fiduciary responsibilities to the Trust. The Adviser
shall provide periodic reports and keep records relating to proxy voting
as the Board may reasonably request or as may be necessary for the Funds
to comply with the 1940 Act and other applicable law. Any such delegation
of proxy voting responsibility to the Adviser may be revoked or modified
by the Board at any time.
(d) RECORDKEEPING. The Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the
Funds, except as otherwise provided herein or as may be necessary for the
Adviser to supply to the Trust or its Board the information required to be
supplied under this Agreement.
The Adviser shall maintain separate books and detailed records of
all matters pertaining to Fund assets advised by the Adviser required by
Rule 31a-1 under the 1940 Act (other than those records being maintained
by any administrator, custodian or transfer agent appointed by the Funds)
relating to its responsibilities provided hereunder with respect to the
Funds, and shall preserve such records for the periods and in a manner
prescribed therefore by Rule 31a-2 under the 1940 Act (the "Fund Books and
Records"). The Fund Books and Records
B-2
shall be available to the Board at any time upon request, shall be
delivered to the Trust upon the termination of this Agreement and shall be
available without delay during any day the Trust is open for business.
(e) HOLDINGS INFORMATION AND PRICING. The Adviser shall provide
regular reports regarding Fund holdings, and shall, on its own initiative,
furnish the Trust and its Board from time to time with whatever
information the Adviser believes is appropriate for this purpose. The
Adviser agrees to immediately notify the Trust if the Adviser reasonably
believes that the value of any security held by a Fund may not reflect
fair value. The Adviser agrees to provide any pricing information of which
the Adviser is aware to the Trust, its Board and/or any Fund pricing agent
to assist in the determination of the fair value of any Fund holdings for
which market quotations are not readily available or as otherwise required
in accordance with the 1940 Act or the Trust's valuation procedures for
the purpose of calculating the Fund net asset value in accordance with
procedures and methods established by the Board.
(f) COOPERATION WITH AGENTS OF THE TRUST. The Adviser agrees to
cooperate with and provide reasonable assistance to the Trust, any Trust
custodian or foreign sub-custodians, any Trust pricing agents and all
other agents and representatives of the Trust, such information with
respect to the Funds as they may reasonably request from time to time in
the performance of their obligations, provide prompt responses to
reasonable requests made by such persons and establish appropriate
interfaces with each so as to promote the efficient exchange of
information and compliance with applicable laws and regulations.
2. CODE OF ETHICS. The Adviser has adopted a written code of ethics that
it reasonably believes complies with the requirements of Rule 17j-1 under the
1940 Act, which it will provide to the Trust. The Adviser shall ensure that its
Access Persons (as defined in the Adviser's Code of Ethics) comply in all
material respects with the Adviser's Code of Ethics, as in effect from time to
time. Upon request, the Adviser shall provide the Trust with a (i) a copy of the
Adviser's current Code of Ethics, as in effect from time to time, and (ii)
certification that it has adopted procedures reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by the Adviser's Code of
Ethics. Annually, the Adviser shall furnish a written report, which complies
with the requirements of Rule 17j-1, concerning the Adviser's Code of Ethics to
the Trust. The Adviser shall respond to requests for information from the Trust
as to violations of the Code of Ethics by Access Persons and the sanctions
imposed by the Adviser. The Adviser shall immediately notify the Trust of any
material violation of the Code of Ethics, whether or not such violation relates
to a security held by any Fund.
3. INFORMATION AND REPORTING. The Adviser shall provide the Trust and its
respective officers with such periodic reports concerning the obligations the
Adviser has assumed under this Agreement as the Trust may from time to time
reasonably request.
B-3
(a) NOTIFICATION OF BREACH/COMPLIANCE REPORTS. The Adviser shall
notify the Trust immediately upon detection of (i) any material failure to
manage any Fund in accordance with its investment objectives and policies
or any applicable law; or (ii) any material breach of the Funds' or the
Adviser's policies, guidelines or procedures. In addition, the Adviser
shall provide a quarterly report regarding each Fund's compliance with its
investment objectives and policies, applicable law, including, but not
limited to the 1940 Act and Subchapter M of the Code, and the Fund's
policies, guidelines or procedures as applicable to the Adviser's
obligations under this Agreement. The Adviser agrees to correct any such
failure promptly and to take any action that the Board may reasonably
request in connection with any such breach. Upon request, the Adviser
shall also provide the officers of the Trust with supporting
certifications in connection with such certifications of Fund financial
statements and disclosure controls pursuant to the Sarbanes-Oxley Act. The
Adviser will promptly notify the Trust in the event (i) the Adviser is
served or otherwise receives notice of any action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court,
public board, or body, involving the affairs of the Trust (excluding class
action suits in which a Fund is a member of the plaintiff class by reason
of the Fund's ownership of shares in the defendant) or the compliance by
the Adviser with the federal or state securities laws or (ii) an actual
change in control of the Adviser resulting in an "assignment" (as defined
in the 1940 Act) has occurred or is otherwise proposed to occur.
(b) BOARD AND FILINGS INFORMATION. The Adviser will also provide the
Trust with any information reasonably requested regarding its management
of the Funds required for any meeting of the Board, or for any shareholder
report, amended registration statement, proxy statement, or prospectus
supplement to be filed by the Trust with the Commission. The Adviser will
make its officers and employees available to meet with the Board from time
to time on due notice to review its investment management services to the
Funds in light of current and prospective economic and market conditions
and shall furnish to the Board such information as may reasonably be
necessary in order for the Board to evaluate this Agreement or any
proposed amendments thereto.
(c) TRANSACTION INFORMATION. The Adviser shall furnish to the Trust
such information concerning portfolio transactions as may be necessary to
enable the Trust or its designated agent to perform such compliance
testing on the Funds and the Adviser's services as the Trust may, in its
sole discretion, determine to be appropriate. The provision of such
information by the Adviser to the Trust or its designated agent in no way
relieves the Adviser of its own responsibilities under this Agreement.
4. BROKERAGE.
(a) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of a Fund, neither the Adviser nor any of its
directors,
B-4
officers or employees will act as a principal or agent or receive any
commission except as permitted by the 1940 Act.
(b) PLACEMENT OF ORDERS. The Adviser shall arrange for the placing
of all orders for the purchase and sale of securities for a Fund's account
with brokers or dealers selected by the Adviser. In the selection of such
brokers or dealers and the placing of such orders, the Adviser is directed
at all times to seek for the Fund the most favorable execution and net
price available under the circumstances. It is also understood that it is
desirable for the Fund that the Adviser have access to brokerage and
research services provided by brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers, consistent with section 28(e) of the 1934 Act
and any Commission staff interpretations thereof. Therefore, the Adviser
is authorized to place orders for the purchase and sale of securities for
a Fund with such brokers, subject to review by the Board from time to time
with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Adviser in connection with its or its affiliates' services to other
clients.
(c) AGGREGATED TRANSACTIONS. On occasions when the Adviser deems the
purchase or sale of a security to be in the best interest of a Fund as
well as other clients of the Adviser, the Adviser may, to the extent
permitted by applicable law and regulations, aggregate the order for
securities to be sold or purchased. In such event, the Adviser will
allocate securities or futures contracts so purchased or sold, as well as
the expenses incurred in the transaction, in the manner the Adviser
reasonably considers to be equitable and consistent with its fiduciary
obligations to the Fund and to such other clients under the circumstances.
(d) AFFILIATED BROKERS. The Adviser or any of its affiliates may act
as broker in connection with the purchase or sale of securities or other
investments for a Fund, subject to: (a) the requirement that the Adviser
seek to obtain best execution and price within the policy guidelines
determined by the Board and set forth in the Fund's current prospectus and
SAI; (b) the provisions of the 1940 Act; (c) the provisions of the
Advisers Act; (d) the provisions of the 1934 Act; and (e) other provisions
of applicable law. These brokerage services are not within the scope of
the duties of the Adviser under this Agreement. Subject to the
requirements of applicable law and any procedures adopted by the Board,
the Adviser or its affiliates may receive brokerage commissions, fees or
other remuneration from a Fund for these services in addition to the
Adviser's fees for services under this Agreement.
5. CUSTODY. Nothing in this Agreement shall permit the Adviser to take or
receive physical possession of cash, securities or other investments of a Fund.
6. ALLOCATION OF CHARGES AND EXPENSES. The Adviser will bear its own costs
of providing services hereunder. Other than as herein specifically indicated,
the
B-5
Adviser shall not be responsible for a Fund's expenses, including brokerage and
other expenses incurred in placing orders for the purchase and sale of
securities and other investment instruments.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) PROPERLY REGISTERED. The Adviser is registered as an investment
adviser under the Advisers Act, and will remain so registered for the
duration of this Agreement. The Adviser is not prohibited by the Advisers
Act or the 1940 Act from performing the services contemplated by this
Agreement, and to the best knowledge of the Adviser, there is no
proceeding or investigation that is reasonably likely to result in the
Adviser being prohibited from performing the services contemplated by this
Agreement. The Adviser agrees to promptly notify the Trust of the
occurrence of any event that would disqualify the Adviser from serving as
an investment adviser to an investment company. The Adviser is in
compliance in all material respects with all applicable federal and state
law in connection with its investment management operations.
(b) ADV DISCLOSURE. The Adviser has provided the Trust with a copy
of its Form ADV as most recently filed with the Commission and will,
promptly after filing any amendment to its Form ADV with the Commission,
furnish a copy of such amendment(s) to the Trust. The information
contained in the Adviser's Form ADV is accurate and complete in all
material respects and does not omit to state any material fact necessary
in order to make the statements made, in light of the circumstances under
which they were made, not misleading.
(c) FUND DISCLOSURE DOCUMENTS. The Adviser has reviewed and will in
the future review, the Registration Statement, and any amendments or
supplements thereto, the annual or semi-annual reports to shareholders,
other reports filed with the Commission and any marketing material of the
Funds (collectively the "Disclosure Documents") and represents and
warrants that with respect to disclosure about the Adviser, the manner in
which the Adviser manages the Funds or information relating directly or
indirectly to the Adviser, such Disclosure Documents contain or will
contain, as of the date thereof, no untrue statement of any material fact
and does not omit any statement of material fact which was required to be
stated therein or necessary to make the statements contained therein not
misleading.
(d) USE OF THE NAME "RYDEX". The Adviser has the right to use the
name "Rydex" in connection with its services to the Trust and that,
subject to the terms set forth in Section 8 of this Agreement, the Trust
shall have the right to use the name "Rydex" in connection with the
management and operation of the Funds. The Adviser is not aware of any
threatened or existing actions, claims, litigation or proceedings that
would adversely effect or prejudice the rights of the Adviser or the Trust
to use the name "Rydex".
B-6
(e) INSURANCE. The Adviser maintains errors and omissions insurance
coverage in an appropriate amount and shall provide prior written notice
to the Trust (i) of any material changes in its insurance policies or
insurance coverage; or (ii) if any material claims will be made on its
insurance policies. Furthermore, the Adviser shall upon reasonable request
provide the Trust with any information it may reasonably require
concerning the amount of or scope of such insurance.
(f) NO DETRIMENTAL AGREEMENT. The Adviser represents and warrants
that it has no arrangement or understanding with any party, other than the
Trust, that would influence the decision of the Adviser with respect to
its selection of securities for a Fund, and that all selections shall be
done in accordance with what is in the best interest of the Fund.
(g) CONFLICTS. The Adviser shall act honestly, in good faith and in
the best interests of the Trust including requiring any of its personnel
with knowledge of Fund activities to place the interest of the Funds
first, ahead of their own interests, in all personal trading scenarios
that may involve a conflict of interest with the Funds, consistent with
its fiduciary duties under applicable law.
(h) REPRESENTATIONS. The representations and warranties in this
Section 7 shall be deemed to be made on the date this Agreement is
executed and at the time of delivery of the quarterly compliance report
required by Section 3(a), whether or not specifically referenced in such
report.
8. THE NAME "RYDEX". The Adviser grants to the Trust a license to use the
name "Rydex" (the "Name") as part of the name of any Fund. The foregoing
authorization by the Adviser to the Trust to use the Name as part of the name of
any Fund is not exclusive of the right of the Adviser itself to use, or to
authorize others to use, the Name; the Trust acknowledges and agrees that, as
between the Trust and the Adviser, the Adviser has the right to use, or
authorize others to use, the Name. The Trust shall (1) only use the Name in a
manner consistent with uses approved by the Adviser; (2) use its best efforts to
maintain the quality of the services offered using the Name; (3) adhere to such
other specific quality control standards as the Adviser may from time to time
promulgate. At the request of the Adviser, the Trust will (a) submit to Adviser
representative samples of any promotional materials using the Name; and (b)
change the name of any Fund within three months of its receipt of the Adviser's
request, or such other shorter time period as may be required under the terms of
a settlement agreement or court order, so as to eliminate all reference to the
Name and will not thereafter transact any business using the Name in the name of
any Fund; provided, however, that the Trust may continue to use beyond such date
any supplies of prospectuses, marketing materials and similar documents that the
Trust had at the date of such name change in quantities not exceeding those
historically produced and used in connection with such Fund.
9. ADVISER'S COMPENSATION. The Funds shall pay to the Adviser, as
compensation for the Adviser's services hereunder, a fee, determined as
described in Schedule
B-7
A that is attached hereto and made a part hereof. Such fee shall be computed
daily and paid not less than monthly in arrears by the Funds.
The method for determining net assets of a Fund for purposes hereof shall
be the same as the method for determining net assets for purposes of
establishing the offering and redemption prices of Fund shares as described in
the Funds' prospectus(es). In the event of termination of this Agreement, the
fee provided in this Section shall be computed on the basis of the period ending
on the last business day on which this Agreement is in effect subject to a pro
rata adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month.
10. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder,
the Adviser is and shall be an independent contractor and, unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Trust or any Fund in any way or otherwise
be deemed to be an agent of the Trust or any Fund. If any occasion should arise
in which the Adviser gives any advice to its clients concerning the shares of a
Fund, the Adviser will act solely as investment counsel for such clients and not
in any way on behalf of the Fund.
11. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in section 2(a)(4) of the 1940 Act); provided that such termination
shall not relieve the Adviser of any liability incurred hereunder.
This Agreement may not be added to or changed orally and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act, when applicable.
12. DURATION AND TERMINATION.
(a) This Agreement shall become effective as of the date executed
and shall remain in full force and effect continually thereafter, subject
to renewal as provided in Section 12(d) and unless terminated
automatically as set forth in Section 11 hereof or until terminated as
follows:
(b) The Trust may cause this Agreement to terminate either (i) by
vote of its Board or (ii) with respect to any Fund, upon the affirmative
vote of a majority of the outstanding voting securities of the Fund; or
(c) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Trust; or
(d) This Agreement shall automatically terminate two years from the
date of its execution unless its renewal is specifically approved at least
annually thereafter by (i) a majority vote of the Trustees, including a
majority vote of such Trustees who are not interested persons of the Trust
or the Adviser, at a meeting
B-8
called for the purpose of voting on such approval; or (ii) the vote of a
majority of the outstanding voting securities of each Fund; provided,
however, that if the continuance of this Agreement is submitted to the
shareholders of the Funds for their approval and such shareholders fail to
approve such continuance of this Agreement as provided herein, the Adviser
may continue to serve hereunder as to the Funds in a manner consistent
with the 1940 Act and the rules and regulations thereunder; and
Termination of this Agreement pursuant to this Section shall be without
payment of any penalty.
In the event of termination of this Agreement for any reason, the Adviser
shall, immediately upon notice of termination or on such later date as may be
specified in such notice, cease all activity on behalf of the Funds and with
respect to any of their assets, except as otherwise required by any fiduciary
duties of the Adviser under applicable law. In addition, the Adviser shall
deliver the Fund Books and Records to the Trust by such means and in accordance
with such schedule as the Trust shall direct and shall otherwise cooperate, as
reasonably directed by the Trust, in the transition of portfolio asset
management to any successor of the Adviser.
13. CERTAIN DEFINITIONS. For the purposes of this Agreement:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" shall have the meaning as set forth in the 1940
Act, subject, however, to such exemptions as may be granted by the
Commission under the 1940 Act or any interpretations of the Commission
staff.
(b) "Interested persons" and "Assignment" shall have their
respective meanings as set forth in the 1940 Act, subject, however, to
such exemptions as may be granted by the Commission under the 1940 Act or
any interpretations of the Commission staff.
14. LIABILITY OF THE ADVISER. The Adviser shall indemnify and hold
harmless the Trust and all affiliated persons thereof (within the meaning of
Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in
Section 15 of the 1933 Act) (collectively, the "Adviser Indemnitees") against
any and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses) by reason of or arising out of: (a) the
Adviser being in material violation of any applicable federal or state law, rule
or regulation or any investment policy or restriction set forth in the Funds'
Registration Statement or any written guidelines or instruction provided in
writing by the Board, (b) a Fund's failure to satisfy the diversification or
source of income requirements of Subchapter M of the Code, or (c) the Adviser's
willful misfeasance, bad faith or gross negligence generally in the performance
of its duties hereunder or its reckless disregard of its obligations and duties
under this Agreement.
15. ENFORCEABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the
B-9
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms or provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
16. LIMITATION OF LIABILITY. The parties to this Agreement acknowledge and
agree that all litigation arising hereunder, whether direct or indirect, and of
any and every nature whatsoever shall be satisfied solely out of the assets of
the affected Fund and that no Trustee, officer or holder of shares of beneficial
interest of the Fund shall be personally liable for any of the foregoing
liabilities. The Trust's Certificate of Trust, as amended from time to time, is
on file in the Office of the Secretary of State of the State of Delaware. Such
Certificate of Trust and the Trust's Declaration of Trust describe in detail the
respective responsibilities and limitations on liability of the Trustees,
officers, and holders of shares of beneficial interest.
17. JURISDICTION. This Agreement shall be governed by and construed in
accordance with the substantive laws of state of Delaware and the Adviser
consents to the jurisdiction of courts, both state or federal, in Delaware, with
respect to any dispute under this Agreement.
18. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement and
shall not affect its construction.
19. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their duly authorized officers as of the date first
above written.
RYDEX SERIES FUNDS, on behalf of each Fund
listed on Schedule A
By:
--------------------------------------
Name: Carl G. Verboncoeur
Title: President
PADCO ADVISORS, INC.
By:
--------------------------------------
Name: Carl G. Verboncoeur
Title: Chief Executive Officer
B-10
SCHEDULE A
TO THE
ADVISORY AGREEMENT
DATED _____________, 2007 BETWEEN
RYDEX SERIES FUNDS
AND
PADCO ADVISORS, INC.
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
--------------------------------------------------------------------------------
Nova Fund* ............................................................ 0.75%
Nova Master ........................................................... 0.75%
Inverse S&P 500 Strategy* ............................................. 0.90%
Inverse S&P 500 Strategy Master ....................................... 0.90%
OTC* .................................................................. 0.75%
OTC Master ............................................................ 0.75%
Inverse OTC Strategy .................................................. 0.90%
Mid-Cap 1.5x Strategy* ................................................ 0.90%
Mid-Cap 1.5x Strategy Master .......................................... 0.90%
Russell 2000(R) 1.5x Strategy ......................................... 0.90%
Government Long Bond 1.2x Strategy..................................... 0.50%
Inverse Government Long Bond
Strategy* ............................................................. 0.90%
Inverse Government Long Bond Master ................................... 0.90%
Europe 1.25x Strategy ................................................. 0.90%
Japan 1.25x Strategy .................................................. 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 Strategy* ............................................. 0.90%
Inverse Mid-Cap Strategy Master ....................................... 0.90%
Small-Cap Value ....................................................... 0.75%
Small-Cap Growth ...................................................... 0.75%
Inverse Russell 2000(R) Strategy ...................................... 0.90%
Strengthening Dollar 2x Strategy ...................................... 0.90%
Weakening Dollar 2x Strategy .......................................... 0.90%
U.S. Government Money Market .......................................... 0.50%
High Yield Strategy ................................................... 0.75%
FUND RATE
--------------------------------------------------------------------------------
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%
Commodities Strategy .................................................. 0.75%
Sector Rotation ....................................................... 0.90%
Multi-Cap Core Equity** ............................................... 0.70%
S&P 500 ............................................................... 0.75%
Russell 2000(R) ....................................................... 0.75%
Essential Portfolio Moderate .......................................... 0.00%
Essential Portfolio Conservative ...................................... 0.00%
Essential Portfolio Aggressive ........................................ 0.00%
Managed Futures Strategy .............................................. 0.90%
Inverse High Yield Strategy ........................................... 0.75%
B-11
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.
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 Russell 3000(R) 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%.
B-12
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 Russell 3000(R) 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;
B-13
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.
B-14
APPENDIX C
ADVISORY AGREEMENT
ADVISORY AGREEMENT made as of this __th day of _________________, 2007 by
and between RYDEX SERIES FUNDS (the "Trust"), a Delaware statutory trust
registered as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and PADCO ADVISORS, INC., a Maryland corporation with
its principal place of business at 9601 Blackwell Road, Suite 500, Rockville,
Maryland 20850 (the "Adviser").
WITNESSETH
WHEREAS, the Board of Trustees (the "Board") of the Trust has selected the
Adviser to act as investment adviser to the Trust on behalf of the series set
forth on Schedule A to this Agreement (each a "Fund" and, collectively, the
"Funds"), as such Schedule may be amended from time to time upon mutual
agreement of the parties, and to provide certain related services, as more fully
set forth below, and to perform such services under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits set
forth herein, the Trust and the Adviser do hereby agree as follows:
1. THE ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Adviser shall
act as investment adviser with respect to the Funds. In such capacity, the
Adviser shall, subject to the supervision of the Board, regularly provide
the Funds with investment research, advice and supervision and shall
furnish continuously an investment program for the Funds, consistent with
the respective investment objectives and policies of each Fund. The
Adviser shall determine, from time to time, what securities shall be
purchased for the Funds, what securities shall be held or sold by the
Funds and what portion of the Funds' assets shall be held uninvested in
cash, subject always to the provisions of the Trust's Declaration of
Trust, By-Laws and its registration statement on Form N-1A (the
"Registration Statement") under the 1940 Act, and under the Securities Act
of 1933, as amended (the "1933 Act"), covering Fund shares, as filed with
the Securities and Exchange Commission (the "Commission"), and to the
investment objectives, policies and restrictions of the Funds, as each of
the same shall be from time to time in effect. To carry out such
obligations, the Adviser shall exercise full discretion and act for the
Funds in the same manner and with the same force and effect as the Funds
themselves might or could do with respect to purchases, sales or other
transactions, as well as with respect to all other such things necessary
or incidental to the furtherance or conduct of such purchases, sales or
other transactions. No reference in this Agreement to the Adviser having
full discretionary authority over each Fund's investments shall in any way
limit the right of the Board, in its sole discretion, to establish or
revise policies in connection with the management of a Fund's assets or to
otherwise exercise its right to control the overall management of a Fund.
C-1
(b) COMPLIANCE. The Adviser agrees to comply with the requirements
of the 1940 Act, the Investment Advisers Act of 1940 (the "Advisers Act"),
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Commodity Exchange Act and the respective rules and regulations
thereunder, as applicable, as well as with all other applicable federal
and state laws, rules, regulations and case law that relate to the
services and relationships described hereunder and to the conduct of its
business as a registered investment adviser. The Adviser also agrees to
comply with the objectives, policies and restrictions set forth in the
Registration Statement, as amended or supplemented, of the Funds, and with
any policies, guidelines, instructions and procedures approved by the
Board and provided to the Adviser. In selecting each Fund's portfolio
securities and performing the Adviser's obligations hereunder, the Adviser
shall cause the Fund to comply with the diversification and source of
income requirements of Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"), for qualification as a regulated investment
company. The Adviser shall maintain compliance procedures that it
reasonably believes are adequate to ensure its compliance with the
foregoing. No supervisory activity undertaken by the Board shall limit the
Adviser's full responsibility for any of the foregoing.
(c) PROXY VOTING. The Board has the authority to determine how
proxies with respect to securities that are held by the Funds shall be
voted, and the Board has initially determined to delegate the authority
and responsibility to vote proxies for the Funds' securities to the
Adviser. So long as proxy voting authority for the Funds has been
delegated to the Adviser, the Adviser shall exercise its proxy voting
responsibilities. The Adviser shall carry out such responsibility in
accordance with any instructions that the Board shall provide from time to
time, and at all times in a manner consistent with Rule 206(4)-6 under the
Advisers Act and its fiduciary responsibilities to the Trust. The Adviser
shall provide periodic reports and keep records relating to proxy voting
as the Board may reasonably request or as may be necessary for the Funds
to comply with the 1940 Act and other applicable law. Any such delegation
of proxy voting responsibility to the Adviser may be revoked or modified
by the Board at any time.
(d) RECORDKEEPING. The Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the
Funds, except as otherwise provided herein or as may be necessary for the
Adviser to supply to the Trust or its Board the information required to be
supplied under this Agreement.
The Adviser shall maintain separate books and detailed records of
all matters pertaining to Fund assets advised by the Adviser required by
Rule 31a-1 under the 1940 Act (other than those records being maintained
by any administrator, custodian or transfer agent appointed by the Funds)
relating to its responsibilities provided hereunder with respect to the
Funds, and shall preserve such records for the periods and in a manner
prescribed therefore by Rule 31a-2 under the 1940 Act (the "Fund Books and
Records"). The Fund Books and Records
C-2
shall be available to the Board at any time upon request, shall be
delivered to the Trust upon the termination of this Agreement and shall be
available without delay during any day the Trust is open for business.
(e) HOLDINGS INFORMATION AND PRICING. The Adviser shall provide
regular reports regarding Fund holdings, and shall, on its own initiative,
furnish the Trust and its Board from time to time with whatever
information the Adviser believes is appropriate for this purpose. The
Adviser agrees to immediately notify the Trust if the Adviser reasonably
believes that the value of any security held by a Fund may not reflect
fair value. The Adviser agrees to provide any pricing information of which
the Adviser is aware to the Trust, its Board and/or any Fund pricing agent
to assist in the determination of the fair value of any Fund holdings for
which market quotations are not readily available or as otherwise required
in accordance with the 1940 Act or the Trust's valuation procedures for
the purpose of calculating the Fund net asset value in accordance with
procedures and methods established by the Board.
(f) COOPERATION WITH AGENTS OF THE TRUST. The Adviser agrees to
cooperate with and provide reasonable assistance to the Trust, any Trust
custodian or foreign sub-custodians, any Trust pricing agents and all
other agents and representatives of the Trust, such information with
respect to the Funds as they may reasonably request from time to time in
the performance of their obligations, provide prompt responses to
reasonable requests made by such persons and establish appropriate
interfaces with each so as to promote the efficient exchange of
information and compliance with applicable laws and regulations.
2. CODE OF ETHICS. The Adviser has adopted a written code of ethics that
it reasonably believes complies with the requirements of Rule 17j-1 under the
1940 Act, which it will provide to the Trust. The Adviser shall ensure that its
Access Persons (as defined in the Adviser's Code of Ethics) comply in all
material respects with the Adviser's Code of Ethics, as in effect from time to
time. Upon request, the Adviser shall provide the Trust with a (i) a copy of the
Adviser's current Code of Ethics, as in effect from time to time, and (ii)
certification that it has adopted procedures reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by the Adviser's Code of
Ethics. Annually, the Adviser shall furnish a written report, which complies
with the requirements of Rule 17j-1, concerning the Adviser's Code of Ethics to
the Trust. The Adviser shall respond to requests for information from the Trust
as to violations of the Code of Ethics by Access Persons and the sanctions
imposed by the Adviser. The Adviser shall immediately notify the Trust of any
material violation of the Code of Ethics, whether or not such violation relates
to a security held by any Fund.
3. INFORMATION AND REPORTING. The Adviser shall provide the Trust and its
respective officers with such periodic reports concerning the obligations the
Adviser has assumed under this Agreement as the Trust may from time to time
reasonably request.
C-3
(a) NOTIFICATION OF BREACH/COMPLIANCE REPORTS. The Adviser shall
notify the Trust immediately upon detection of (i) any material failure to
manage any Fund in accordance with its investment objectives and policies
or any applicable law; or (ii) any material breach of any of the Funds' or
the Adviser's policies, guidelines or procedures. In addition, the Adviser
shall provide a quarterly report regarding each Fund's compliance with its
investment objectives and policies, applicable law, including, but not
limited to the 1940 Act and Subchapter M of the Code, and the Fund's
policies, guidelines or procedures as applicable to the Adviser's
obligations under this Agreement. The Adviser agrees to correct any such
failure promptly and to take any action that the Board may reasonably
request in connection with any such breach. Upon request, the Adviser
shall also provide the officers of the Trust with supporting
certifications in connection with such certifications of Fund financial
statements and disclosure controls pursuant to the Sarbanes-Oxley Act. The
Adviser will promptly notify the Trust in the event (i) the Adviser is
served or otherwise receives notice of any action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court,
public board, or body, involving the affairs of the Trust (excluding class
action suits in which a Fund is a member of the plaintiff class by reason
of the Fund's ownership of shares in the defendant) or the compliance by
the Adviser with the federal or state securities laws or (ii) an actual
change in control of the Adviser resulting in an "assignment" (as defined
in the 1940 Act) has occurred or is otherwise proposed to occur.
(b) BOARD AND FILINGS INFORMATION. The Adviser will also provide the
Trust with any information reasonably requested regarding its management
of the Funds required for any meeting of the Board, or for any shareholder
report, amended registration statement, proxy statement, or prospectus
supplement to be filed by the Trust with the Commission. The Adviser will
make its officers and employees available to meet with the Board from time
to time on due notice to review its investment management services to the
Funds in light of current and prospective economic and market conditions
and shall furnish to the Board such information as may reasonably be
necessary in order for the Board to evaluate this Agreement or any
proposed amendments thereto.
(c) TRANSACTION INFORMATION. The Adviser shall furnish to the Trust
such information concerning portfolio transactions as may be necessary to
enable the Trust or its designated agent to perform such compliance
testing on the Funds and the Adviser's services as the Trust may, in its
sole discretion, determine to be appropriate. The provision of such
information by the Adviser to the Trust or its designated agent in no way
relieves the Adviser of its own responsibilities under this Agreement.
4. BROKERAGE.
(a) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of a Fund, neither the Adviser nor any of its
directors,
C-4
officers or employees will act as a principal or agent or receive any
commission except as permitted by the 1940 Act.
(b) PLACEMENT OF ORDERS. The Adviser shall arrange for the placing
of all orders for the purchase and sale of securities for a Fund's account
with brokers or dealers selected by the Adviser. In the selection of such
brokers or dealers and the placing of such orders, the Adviser is directed
at all times to seek for the Fund the most favorable execution and net
price available under the circumstances. It is also understood that it is
desirable for the Fund that the Adviser have access to brokerage and
research services provided by brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers, consistent with section 28(e) of the 1934 Act
and any Commission staff interpretations thereof. Therefore, the Adviser
is authorized to place orders for the purchase and sale of securities for
a Fund with such brokers, subject to review by the Board from time to time
with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Adviser in connection with its or its affiliates' services to other
clients.
(c) AGGREGATED TRANSACTIONS. On occasions when the Adviser deems the
purchase or sale of a security to be in the best interest of a Fund as
well as other clients of the Adviser, the Adviser may, to the extent
permitted by applicable law and regulations, aggregate the order for
securities to be sold or purchased. In such event, the Adviser will
allocate securities or futures contracts so purchased or sold, as well as
the expenses incurred in the transaction, in the manner the Adviser
reasonably considers to be equitable and consistent with its fiduciary
obligations to the Fund and to such other clients under the circumstances.
(d) AFFILIATED BROKERS The Adviser or any of its affiliates may act
as broker in connection with the purchase or sale of securities or other
investments for a Fund, subject to: (a) the requirement that the Adviser
seek to obtain best execution and price within the policy guidelines
determined by the Board and set forth in the Fund's current prospectus and
SAI; (b) the provisions of the 1940 Act; (c) the provisions of the
Advisers Act; (d) the provisions of the 1934 Act; and (e) other provisions
of applicable law. These brokerage services are not within the scope of
the duties of the Adviser under this Agreement. Subject to the
requirements of applicable law and any procedures adopted by the Board,
the Adviser or its affiliates may receive brokerage commissions, fees or
other remuneration from a Fund for these services in addition to the
Adviser's fees for services under this Agreement.
5. CUSTODY. Nothing in this Agreement shall permit the Adviser to take or
receive physical possession of cash, securities or other investments of a Fund.
6. ALLOCATION OF CHARGES AND EXPENSES. The Adviser will bear its own costs
of providing services hereunder. The Adviser agrees to pay all expenses incurred
by the Trust except for interest, taxes, brokerage and other expenses incurred
in placing
C-5
orders for the purchase and sale of securities and other investment instruments,
extraordinary expenses, and distribution fees and expenses paid by the Trust
under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) PROPERLY REGISTERED. The Adviser is registered as an investment
adviser under the Advisers Act, and will remain so registered for the
duration of this Agreement. The Adviser is not prohibited by the Advisers
Act or the 1940 Act from performing the services contemplated by this
Agreement, and to the best knowledge of the Adviser, there is no
proceeding or investigation that is reasonably likely to result in the
Adviser being prohibited from performing the services contemplated by this
Agreement. The Adviser agrees to promptly notify the Trust of the
occurrence of any event that would disqualify the Adviser from serving as
an investment adviser to an investment company. The Adviser is in
compliance in all material respects with all applicable federal and state
law in connection with its investment management operations.
(b) ADV DISCLOSURE. The Adviser has provided the Trust with a copy
of its Form ADV as most recently filed with the Commission and will,
promptly after filing any amendment to its Form ADV with the Commission,
furnish a copy of such amendment(s) to the Trust. The information
contained in the Adviser's Form ADV is accurate and complete in all
material respects and does not omit to state any material fact necessary
in order to make the statements made, in light of the circumstances under
which they were made, not misleading.
(c) FUND DISCLOSURE DOCUMENTS. The Adviser has reviewed and will in
the future review, the Registration Statement, and any amendments or
supplements thereto, the annual or semi-annual reports to shareholders,
other reports filed with the Commission and any marketing material of the
Funds (collectively the "Disclosure Documents") and represents and
warrants that with respect to disclosure about the Adviser, the manner in
which the Adviser manages the Funds or information relating directly or
indirectly to the Adviser, such Disclosure Documents contain or will
contain, as of the date thereof, no untrue statement of any material fact
and does not omit any statement of material fact which was required to be
stated therein or necessary to make the statements contained therein not
misleading.
(d) USE OF THE NAME "RYDEX". The Adviser has the right to use the
name "Rydex" in connection with its services to the Trust and that,
subject to the terms set forth in Section 8 of this Agreement, the Trust
shall have the right to use the name "Rydex" in connection with the
management and operation of the Funds. The Adviser is not aware of any
threatened or existing actions, claims, litigation or proceedings that
would adversely effect or prejudice the rights of the Adviser or the Trust
to use the name "Rydex".
C-6
INSURANCE. The Adviser maintains errors and omissions insurance
coverage in an appropriate amount and shall provide prior written notice
to the Trust (i) of any material changes in its insurance policies or
insurance coverage; or (ii) if any material claims will be made on its
insurance policies. Furthermore, the Adviser shall upon reasonable request
provide the Trust with any information it may reasonably require
concerning the amount of or scope of such insurance.
(f) NO DETRIMENTAL AGREEMENT. The Adviser represents and warrants
that it has no arrangement or understanding with any party, other than the
Trust, that would influence the decision of the Adviser with respect to
its selection of securities for a Fund, and that all selections shall be
done in accordance with what is in the best interest of the Fund.
(g) CONFLICTS. The Adviser shall act honestly, in good faith and in
the best interests of the Trust including requiring any of its personnel
with knowledge of Fund activities to place the interest of the Funds
first, ahead of their own interests, in all personal trading scenarios
that may involve a conflict of interest with the Funds, consistent with
its fiduciary duties under applicable law.
(h) REPRESENTATIONS. The representations and warranties in this
Section 7 shall be deemed to be made on the date this Agreement is
executed and at the time of delivery of the quarterly compliance report
required by Section 3(a), whether or not specifically referenced in such
report.
8. THE NAME "RYDEX". The Adviser grants to the Trust a sublicense to use
the name "Rydex" (the "Name") as part of the name of any Fund. The foregoing
authorization by the Adviser to the Trust to use the Name as part of the name of
any Fund is not exclusive of the right of the Adviser itself to use, or to
authorize others to use, the Name; the Trust acknowledges and agrees that, as
between the Trust and the Adviser, the Adviser has the right to use, or
authorize others to use, the Name. The Trust shall (1) only use the Name in a
manner consistent with uses approved by the Adviser; (2) use its best efforts to
maintain the quality of the services offered using the Name; (3) adhere to such
other specific quality control standards as the Adviser may from time to time
promulgate. At the request of the Adviser, the Trust will (a) submit to Adviser
representative samples of any promotional materials using the Name; and (b)
change the name of any Fund within three months of its receipt of the Adviser's
request, or such other shorter time period as may be required under the terms of
a settlement agreement or court order, so as to eliminate all reference to the
Name and will not thereafter transact any business using the Name in the name of
any Fund; provided, however, that the Trust may continue to use beyond such date
any supplies of prospectuses, marketing materials and similar documents that the
Trust had on the date of such name change in quantities not exceeding those
historically produced and used in connection with such Fund.
9. ADVISER'S COMPENSATION. The Funds shall pay to the Adviser, as
compensation for the Adviser's services hereunder, a fee, determined as
described in Schedule
C-7
A that is attached hereto and made a part hereof. Such fee shall be computed
daily and paid not less than monthly in arrears by the Funds.
The method for determining net assets of a Fund for purposes hereof shall
be the same as the method for determining net assets for purposes of
establishing the offering and redemption prices of Fund shares as described in
the Funds' prospectus(es). In the event of termination of this Agreement, the
fee provided in this Section shall be computed on the basis of the period ending
on the last business day on which this Agreement is in effect subject to a pro
rata adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month.
10. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder,
the Adviser is and shall be an independent contractor and, unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Trust or any Fund in any way or otherwise
be deemed to be an agent of the Trust or any Fund. If any occasion should arise
in which the Adviser gives any advice to its clients concerning the shares of a
Fund, the Adviser will act solely as investment counsel for such clients and not
in any way on behalf of the Fund.
11. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in section 2(a)(4) of the 1940 Act); provided that such termination
shall not relieve the Adviser of any liability incurred hereunder.
This Agreement may not be added to or changed orally and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act, when applicable.
12. DURATION AND TERMINATION.
(a) This Agreement shall become effective as of the date executed
and shall remain in full force and effect continually thereafter, subject
to renewal as provided in Section 12(d) and unless terminated
automatically as set forth in Section 11 hereof or until terminated as
follows:
(b) The Trust may cause this Agreement to terminate either (i) by
vote of its Board or (ii) with respect to any Fund, upon the affirmative
vote of a majority of the outstanding voting securities of the Fund; or
(c) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Trust; or
(d) This Agreement shall automatically terminate two years from the
date of its execution unless its renewal is specifically approved at least
annually thereafter by (i) a majority vote of the Trustees, including a
majority vote of such Trustees who are not interested persons of the Trust
or the Adviser, at a meeting called for the purpose of voting on such
approval; or (ii) the vote of a majority
C-8
of the outstanding voting securities of each Fund; provided, however, that
if the continuance of this Agreement is submitted to the shareholders of
the Funds for their approval and such shareholders fail to approve such
continuance of this Agreement as provided herein, the Adviser may continue
to serve hereunder as to the Funds in a manner consistent with the 1940
Act and the rules and regulations thereunder; and
Termination of this Agreement pursuant to this Section shall be without
payment of any penalty.
In the event of termination of this Agreement for any reason, the Adviser
shall, immediately upon notice of termination or on such later date as may be
specified in such notice, cease all activity on behalf of the Funds and with
respect to any of their assets, except as otherwise required by any fiduciary
duties of the Adviser under applicable law. In addition, the Adviser shall
deliver the Fund Books and Records to the Trust by such means and in accordance
with such schedule as the Trust shall direct and shall otherwise cooperate, as
reasonably directed by the Trust, in the transition of portfolio asset
management to any successor of the Adviser.
13. CERTAIN DEFINITIONS. For the purposes of this Agreement:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" shall have the meaning as set forth in the 1940
Act, subject, however, to such exemptions as may be granted by the
Commission under the 1940 Act or any interpretations of the Commission
staff.
(b) "Interested persons" and "Assignment" shall have their
respective meanings as set forth in the 1940 Act, subject, however, to
such exemptions as may be granted by the Commission under the 1940 Act or
any interpretations of the Commission staff.
14. LIABILITY OF THE ADVISER. The Adviser shall indemnify and hold
harmless the Trust and all affiliated persons thereof (within the meaning of
Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in
Section 15 of the 1933 Act) (collectively, the "Adviser Indemnitees") against
any and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses) by reason of or arising out of: (a) the
Adviser being in material violation of any applicable federal or state law, rule
or regulation or any investment policy or restriction set forth in the Funds'
Registration Statement or any written guidelines or instruction provided in
writing by the Board, (b) a Fund's failure to satisfy the diversification or
source of income requirements of Subchapter M of the Code, or (c) the Adviser's
willful misfeasance, bad faith or gross negligence generally in the performance
of its duties hereunder or its reckless disregard of its obligations and duties
under this Agreement.
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15. ENFORCEABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
16. LIMITATION OF LIABILITY. The parties to this Agreement acknowledge and
agree that all litigation arising hereunder, whether direct or indirect, and of
any and every nature whatsoever shall be satisfied solely out of the assets of
the affected Fund and that no Trustee, officer or holder of shares of beneficial
interest of the Fund shall be personally liable for any of the foregoing
liabilities. The Trust's Certificate of Trust, as amended from time to time, is
on file in the Office of the Secretary of State of the State of Delaware. Such
Certificate of Trust and the Trust's Declaration of Trust describe in detail the
respective responsibilities and limitations on liability of the Trustees,
officers, and holders of shares of beneficial interest.
17. JURISDICTION. This Agreement shall be governed by and construed in
accordance with the substantive laws of state of Delaware and the Adviser
consents to the jurisdiction of courts, both state and federal, in Delaware,
with respect to any dispute under this Agreement.
18. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement and
shall not affect its construction.
19. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their duly authorized officers as of the date first
above written.
RYDEX SERIES FUNDS, on behalf of each Fund
listed on Schedule A
By:
---------------------------------------
Name: Carl G. Verboncoeur
Title: President
PADCO ADVISORS, INC.
By:
---------------------------------------
Name: Carl G. Verboncoeur
Title: Chief Executive Officer
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SCHEDULE A
TO THE
ADVISORY AGREEMENT
DATED _______________, 2007 BETWEEN
RYDEX SERIES FUNDS
AND
PADCO ADVISORS,INC.
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
--------------------------------------------------------------------------------
Absolute Return Strategies Fund ....................................... 1.15%
Hedged Equity Fund .................................................... 1.15%
Market Neutral Fund ................................................... 1.15%
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APPENDIX D
ADVISORY AGREEMENT
ADVISORY AGREEMENT made as of this __th day of __________________, 2007 by
and between RYDEX DYNAMIC FUNDS (the "Trust"), a Delaware statutory trust
registered as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and PADCO ADVISORS, INC., a Maryland corporation with
its principal place of business at 9601 Blackwell Road, Suite 500, Rockville,
Maryland 20850 (the "Adviser").
WITNESSETH
WHEREAS, the Board of Trustees (the "Board") of the Trust has selected the
Adviser to act as investment adviser to the Trust on behalf of the series set
forth on Schedule A to this Agreement (each a "Fund" and, collectively, the
"Funds"), as such Schedule may be amended from time to time upon mutual
agreement of the parties, and to provide certain related services, as more fully
set forth below, and to perform such services under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits set
forth herein, the Trust and the Adviser do hereby agree as follows:
1. THE ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Adviser shall
act as investment adviser with respect to the Funds. In such capacity, the
Adviser shall, subject to the supervision of the Board, regularly provide
the Funds with investment research, advice and supervision and shall
furnish continuously an investment program for the Funds, consistent with
the respective investment objectives and policies of each Fund. The
Adviser shall determine, from time to time, what securities shall be
purchased for the Funds, what securities shall be held or sold by the
Funds and what portion of the Funds' assets shall be held uninvested in
cash, subject always to the provisions of the Trust's Declaration of
Trust, By-Laws and its registration statement on Form N-1A (the
"Registration Statement") under the 1940 Act, and under the Securities Act
of 1933, as amended (the "1933 Act"), covering Fund shares, as filed with
the U.S. Securities and Exchange Commission (the "Commission"), and to the
investment objectives, policies and restrictions of the Funds, as each of
the same shall be from time to time in effect. To carry out such
obligations, the Adviser shall exercise full discretion and act for the
Funds in the same manner and with the same force and effect as the Funds
themselves might or could do with respect to purchases, sales or other
transactions, as well as with respect to all other such things necessary
or incidental to the furtherance or conduct of such purchases, sales or
other transactions. No reference in this Agreement to the Adviser having
full discretionary authority over each Fund's investments shall in any way
limit the right of the Board, in its sole discretion, to establish or
revise policies in connection with the management of a Fund's assets or to
otherwise exercise its right to control the overall management of a Fund.
D-1
(b) COMPLIANCE. The Adviser agrees to comply with the requirements
of the 1940 Act, the Investment Advisers Act of 1940 (the "Advisers Act"),
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Commodity Exchange Act and the respective rules and regulations
thereunder, as applicable, as well as with all other applicable federal
and state laws, rules, regulations and case law that relate to the
services and relationships described hereunder and to the conduct of its
business as a registered investment adviser. The Adviser also agrees to
comply with the objectives, policies and restrictions set forth in the
Registration Statement, as amended or supplemented, of the Funds, and with
any policies, guidelines, instructions and procedures approved by the
Board and provided to the Adviser. In selecting each Fund's portfolio
securities and performing the Adviser's obligations hereunder, the Adviser
shall cause the Fund to comply with the diversification and source of
income requirements of Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"), for qualification as a regulated investment
company. The Adviser shall maintain compliance procedures that it
reasonably believes are adequate to ensure its compliance with the
foregoing. No supervisory activity undertaken by the Board shall limit the
Adviser's full responsibility for any of the foregoing.
(c) PROXY VOTING. The Board has the authority to determine how
proxies with respect to securities that are held by the Funds shall be
voted, and the Board has initially determined to delegate the authority
and responsibility to vote proxies for the Funds' securities to the
Adviser. So long as proxy voting authority for the Funds has been
delegated to the Adviser, the Adviser shall exercise its proxy voting
responsibilities. The Adviser shall carry out such responsibility in
accordance with any instructions that the Board shall provide from time to
time, and at all times in a manner consistent with Rule 206(4)-6 under the
Advisers Act and its fiduciary responsibilities to the Trust. The Adviser
shall provide periodic reports and keep records relating to proxy voting
as the Board may reasonably request or as may be necessary for the Funds
to comply with the 1940 Act and other applicable law. Any such delegation
of proxy voting responsibility to the Adviser may be revoked or modified
by the Board at any time.
(d) RECORDKEEPING. The Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the
Funds, except as otherwise provided herein or as may be necessary for the
Adviser to supply to the Trust or its Board the information required to be
supplied under this Agreement.
The Adviser shall maintain separate books and detailed records of
all matters pertaining to Fund assets advised by the Adviser required by
Rule 31a-1 under the 1940 Act (other than those records being maintained
by any administrator, custodian or transfer agent appointed by the Funds)
relating to its responsibilities provided hereunder with respect to the
Funds, and shall preserve such records for the periods and in a manner
prescribed therefore by Rule 31a-2 under the 1940 Act (the "Fund Books and
Records"). The Fund Books and Records
D-2
shall be available to the Board at any time upon request, shall be
delivered to the Trust upon the termination of this Agreement and shall be
available without delay during any day the Trust is open for business.
(e) HOLDINGS INFORMATION AND PRICING. The Adviser shall provide
regular reports regarding Fund holdings, and shall, on its own initiative,
furnish the Trust and its Board from time to time with whatever
information the Adviser believes is appropriate for this purpose. The
Adviser agrees to immediately notify the Trust if the Adviser reasonably
believes that the value of any security held by a Fund may not reflect
fair value. The Adviser agrees to provide any pricing information of which
the Adviser is aware to the Trust, its Board and/or any Fund pricing agent
to assist in the determination of the fair value of any Fund holdings for
which market quotations are not readily available or as otherwise required
in accordance with the 1940 Act or the Trust's valuation procedures for
the purpose of calculating the Fund net asset value in accordance with
procedures and methods established by the Board.
(f) COOPERATION WITH AGENTS OF THE TRUST. The Adviser agrees to
cooperate with and provide reasonable assistance to the Trust, any Trust
custodian or foreign sub-custodians, any Trust pricing agents and all
other agents and representatives of the Trust, such information with
respect to the Funds as they may reasonably request from time to time in
the performance of their obligations, provide prompt responses to
reasonable requests made by such persons and establish appropriate
interfaces with each so as to promote the efficient exchange of
information and compliance with applicable laws and regulations.
2. CODE OF ETHICS. The Adviser has adopted a written code of ethics that
it reasonably believes complies with the requirements of Rule 17j-1 under the
1940 Act, which it will provide to the Trust. The Adviser shall ensure that its
Access Persons (as defined in the Adviser's Code of Ethics) comply in all
material respects with the Adviser's Code of Ethics, as in effect from time to
time. Upon request, the Adviser shall provide the Trust with a (i) a copy of the
Adviser's current Code of Ethics, as in effect from time to time, and (ii)
certification that it has adopted procedures reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by the Adviser's Code of
Ethics. Annually, the Adviser shall furnish a written report, which complies
with the requirements of Rule 17j-1, concerning the Adviser's Code of Ethics to
the Trust. The Adviser shall respond to requests for information from the Trust
as to violations of the Code of Ethics by Access Persons and the sanctions
imposed by the Adviser. The Adviser shall immediately notify the Trust of any
material violation of the Code of Ethics, whether or not such violation relates
to a security held by any Fund.
3. INFORMATION AND REPORTING. The Adviser shall provide the Trust and its
respective officers with such periodic reports concerning the obligations the
Adviser has assumed under this Agreement as the Trust may from time to time
reasonably request.
D-3
(a) NOTIFICATION OF BREACH/COMPLIANCE REPORTS. The Adviser shall
notify the Trust immediately upon detection of (i) any material failure to
manage any Fund in accordance with its investment objectives and policies
or any applicable law; or (ii) any material breach of the Funds' or the
Adviser's policies, guidelines or procedures. In addition, the Adviser
shall provide a quarterly report regarding each Fund's compliance with its
investment objectives and policies, applicable law, including, but not
limited to the 1940 Act and Subchapter M of the Code, and the Fund's
policies, guidelines or procedures as applicable to the Adviser's
obligations under this Agreement. The Adviser agrees to correct any such
failure promptly and to take any action that the Board may reasonably
request in connection with any such breach. Upon request, the Adviser
shall also provide the officers of the Trust with supporting
certifications in connection with such certifications of Fund financial
statements and disclosure controls pursuant to the Sarbanes-Oxley Act. The
Adviser will promptly notify the Trust in the event (i) the Adviser is
served or otherwise receives notice of any action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court,
public board, or body, involving the affairs of the Trust (excluding class
action suits in which a Fund is a member of the plaintiff class by reason
of the Fund's ownership of shares in the defendant) or the compliance by
the Adviser with the federal or state securities laws or (ii) an actual
change in control of the Adviser resulting in an "assignment" (as defined
in the 1940 Act) has occurred or is otherwise proposed to occur.
(b) BOARD AND FILINGS INFORMATION. The Adviser will also provide the
Trust with any information reasonably requested regarding its management
of the Funds required for any meeting of the Board, or for any shareholder
report, amended registration statement, proxy statement, or prospectus
supplement to be filed by the Trust with the Commission. The Adviser will
make its officers and employees available to meet with the Board from time
to time on due notice to review its investment management services to the
Funds in light of current and prospective economic and market conditions
and shall furnish to the Board such information as may reasonably be
necessary in order for the Board to evaluate this Agreement or any
proposed amendments thereto.
(c) TRANSACTION INFORMATION. The Adviser shall furnish to the Trust
such information concerning portfolio transactions as may be necessary to
enable the Trust or its designated agent to perform such compliance
testing on the Funds and the Adviser's services as the Trust may, in its
sole discretion, determine to be appropriate. The provision of such
information by the Adviser to the Trust or its designated agent in no way
relieves the Adviser of its own responsibilities under this Agreement.
4. BROKERAGE.
(a) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of a Fund, neither the Adviser nor any of its
directors,
D-4
officers or employees will act as a principal or agent or receive any
commission except as permitted by the 1940 Act.
(b) PLACEMENT OF ORDERS. The Adviser shall arrange for the placing
of all orders for the purchase and sale of securities for a Fund's account
with brokers or dealers selected by the Adviser. In the selection of such
brokers or dealers and the placing of such orders, the Adviser is directed
at all times to seek for the Fund the most favorable execution and net
price available under the circumstances. It is also understood that it is
desirable for the Fund that the Adviser have access to brokerage and
research services provided by brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers, consistent with section 28(e) of the 1934 Act
and any Commission staff interpretations thereof. Therefore, the Adviser
is authorized to place orders for the purchase and sale of securities for
a Fund with such brokers, subject to review by the Board from time to time
with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Adviser in connection with its or its affiliates' services to other
clients.
(c) AGGREGATED TRANSACTIONS. On occasions when the Adviser deems the
purchase or sale of a security to be in the best interest of a Fund as
well as other clients of the Adviser, the Adviser may, to the extent
permitted by applicable law and regulations, aggregate the order for
securities to be sold or purchased. In such event, the Adviser will
allocate securities or futures contracts so purchased or sold, as well as
the expenses incurred in the transaction, in the manner the Adviser
reasonably considers to be equitable and consistent with its fiduciary
obligations to the Fund and to such other clients under the circumstances.
(d) AFFILIATED BROKERS. The Adviser or any of its affiliates may act
as broker in connection with the purchase or sale of securities or other
investments for a Fund, subject to: (a) the requirement that the Adviser
seek to obtain best execution and price within the policy guidelines
determined by the Board and set forth in the Fund's current prospectus and
SAI; (b) the provisions of the 1940 Act; (c) the provisions of the
Advisers Act; (d) the provisions of the 1934 Act; and (e) other provisions
of applicable law. These brokerage services are not within the scope of
the duties of the Adviser under this Agreement. Subject to the
requirements of applicable law and any procedures adopted by the Board,
the Adviser or its affiliates may receive brokerage commissions, fees or
other remuneration from a Fund for these services in addition to the
Adviser's fees for services under this Agreement.
5. CUSTODY. Nothing in this Agreement shall permit the Adviser to take or
receive physical possession of cash, securities or other investments of a Fund.
6. ALLOCATION OF CHARGES AND EXPENSES. The Adviser will bear its own costs
of providing services hereunder. Other than as herein specifically indicated,
the Adviser shall not be responsible for a Fund's expenses, including brokerage
and other
D-5
expenses incurred in placing orders for the purchase and sale of securities and
other investment instruments.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) PROPERLY REGISTERED. The Adviser is registered as an investment
adviser under the Advisers Act, and will remain so registered for the
duration of this Agreement. The Adviser is not prohibited by the Advisers
Act or the 1940 Act from performing the services contemplated by this
Agreement, and to the best knowledge of the Adviser, there is no
proceeding or investigation that is reasonably likely to result in the
Adviser being prohibited from performing the services contemplated by this
Agreement. The Adviser agrees to promptly notify the Trust of the
occurrence of any event that would disqualify the Adviser from serving as
an investment adviser to an investment company. The Adviser is in
compliance in all material respects with all applicable federal and state
law in connection with its investment management operations.
(b) ADV DISCLOSURE. The Adviser has provided the Trust with a copy
of its Form ADV as most recently filed with the Commission and will,
promptly after filing any amendment to its Form ADV with the Commission,
furnish a copy of such amendment(s) to the Trust. The information
contained in the Adviser's Form ADV is accurate and complete in all
material respects and does not omit to state any material fact necessary
in order to make the statements made, in light of the circumstances under
which they were made, not misleading.
(c) FUND DISCLOSURE DOCUMENTS. The Adviser has reviewed and will in
the future review, the Registration Statement, and any amendments or
supplements thereto, the annual or semi-annual reports to shareholders,
other reports filed with the Commission and any marketing material of the
Funds (collectively the "Disclosure Documents") and represents and
warrants that with respect to disclosure about the Adviser, the manner in
which the Adviser manages the Funds or information relating directly or
indirectly to the Adviser, such Disclosure Documents contain or will
contain, as of the date thereof, no untrue statement of any material fact
and does not omit any statement of material fact which was required to be
stated therein or necessary to make the statements contained therein not
misleading.
(d) USE OF THE NAME "RYDEX". The Adviser has the right to use the
name "Rydex" in connection with its services to the Trust and that,
subject to the terms set forth in Section 8 of this Agreement, the Trust
shall have the right to use the name "Rydex" in connection with the
management and operation of the Funds. The Adviser is not aware of any
threatened or existing actions, claims, litigation or proceedings that
would adversely effect or prejudice the rights of the Adviser or the Trust
to use the name "Rydex".
(e) INSURANCE. The Adviser maintains errors and omissions insurance
coverage in an appropriate amount and shall provide prior written notice
to the Trust
D-6
(i) of any material changes in its insurance policies or insurance
coverage; or (ii) if any material claims will be made on its insurance
policies. Furthermore, the Adviser shall upon reasonable request provide
the Trust with any information it may reasonably require concerning the
amount of or scope of such insurance.
(f) NO DETRIMENTAL AGREEMENT. The Adviser represents and warrants
that it has no arrangement or understanding with any party, other than the
Trust, that would influence the decision of the Adviser with respect to
its selection of securities for a Fund, and that all selections shall be
done in accordance with what is in the best interest of the Fund.
(g) CONFLICTS. The Adviser shall act honestly, in good faith and in
the best interests of the Trust including requiring any of its personnel
with knowledge of Fund activities to place the interest of the Funds
first, ahead of their own interests, in all personal trading scenarios
that may involve a conflict of interest with the Funds, consistent with
its fiduciary duties under applicable law.
(h) REPRESENTATIONS. The representations and warranties in this
Section 7 shall be deemed to be made on the date this Agreement is
executed and at the time of delivery of the quarterly compliance report
required by Section 3(a), whether or not specifically referenced in such
report.
8. THE NAME "RYDEX". The Adviser grants to the Trust a license to use the
name "Rydex" (the "Name") as part of the name of any Fund. The foregoing
authorization by the Adviser to the Trust to use the Name as part of the name of
any Fund is not exclusive of the right of the Adviser itself to use, or to
authorize others to use, the Name; the Trust acknowledges and agrees that, as
between the Trust and the Adviser, the Adviser has the right to use, or
authorize others to use, the Name. The Trust shall (1) only use the Name in a
manner consistent with uses approved by the Adviser; (2) use its best efforts to
maintain the quality of the services offered using the Name; (3) adhere to such
other specific quality control standards as the Adviser may from time to time
promulgate. At the request of the Adviser, the Trust will (a) submit to Adviser
representative samples of any promotional materials using the Name; and (b)
change the name of any Fund within three months of its receipt of the Adviser's
request, or such other shorter time period as may be required under the terms of
a settlement agreement or court order, so as to eliminate all reference to the
Name and will not thereafter transact any business using the Name in the name of
any Fund; provided, however, that the Trust may continue to use beyond such date
any supplies of prospectuses, marketing materials and similar documents that the
Trust had at the date of such name change in quantities not exceeding those
historically produced and used in connection with such Fund.
9. ADVISER'S COMPENSATION. The Funds shall pay to the Adviser, as
compensation for the Adviser's services hereunder, a fee, determined as
described in Schedule A that is attached hereto and made a part hereof. Such fee
shall be computed daily and paid not less than monthly in arrears by the Funds.
D-7
The method for determining net assets of a Fund for purposes hereof shall
be the same as the method for determining net assets for purposes of
establishing the offering and redemption prices of Fund shares as described in
the Funds' prospectus(es). In the event of termination of this Agreement, the
fee provided in this Section shall be computed on the basis of the period ending
on the last business day on which this Agreement is in effect subject to a pro
rata adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month.
10. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder,
the Adviser is and shall be an independent contractor and, unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Trust or any Fund in any way or otherwise
be deemed to be an agent of the Trust or any Fund. If any occasion should arise
in which the Adviser gives any advice to its clients concerning the shares of a
Fund, the Adviser will act solely as investment counsel for such clients and not
in any way on behalf of the Fund.
11. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in section 2(a)(4) of the 1940 Act); provided that such termination
shall not relieve the Adviser of any liability incurred hereunder.
This Agreement may not be added to or changed orally and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act, when applicable.
12. DURATION AND TERMINATION.
(a) This Agreement shall become effective as of the date executed
and shall remain in full force and effect continually thereafter, subject
to renewal as provided in Section 12(d) and unless terminated
automatically as set forth in Section 11 hereof or until terminated as
follows:
(b) The Trust may cause this Agreement to terminate either (i) by
vote of its Board or (ii) with respect to any Fund, upon the affirmative
vote of a majority of the outstanding voting securities of the Fund; or
(c) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Trust; or
(d) This Agreement shall automatically terminate two years from the
date of its execution unless its renewal is specifically approved at least
annually thereafter by (i) a majority vote of the Trustees, including a
majority vote of such Trustees who are not interested persons of the Trust
or the Adviser, at a meeting called for the purpose of voting on such
approval; or (ii) the vote of a majority of the outstanding voting
securities of each Fund; provided, however, that if the continuance of
this Agreement is submitted to the shareholders of the Funds for
D-8
their approval and such shareholders fail to approve such continuance of
this Agreement as provided herein, the Adviser may continue to serve
hereunder as to the Funds in a manner consistent with the 1940 Act and the
rules and regulations thereunder; and
Termination of this Agreement pursuant to this Section shall be without
payment of any penalty.
In the event of termination of this Agreement for any reason, the Adviser
shall, immediately upon notice of termination or on such later date as may be
specified in such notice, cease all activity on behalf of the Funds and with
respect to any of their assets, except as otherwise required by any fiduciary
duties of the Adviser under applicable law. In addition, the Adviser shall
deliver the Fund Books and Records to the Trust by such means and in accordance
with such schedule as the Trust shall direct and shall otherwise cooperate, as
reasonably directed by the Trust, in the transition of portfolio asset
management to any successor of the Adviser.
13. CERTAIN DEFINITIONS. For the purposes of this Agreement:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" shall have the meaning as set forth in the 1940
Act, subject, however, to such exemptions as may be granted by the
Commission under the 1940 Act or any interpretations of the Commission
staff.
(a) "Interested persons" and "Assignment" shall have their
respective meanings as set forth in the 1940 Act, subject, however, to
such exemptions as may be granted by the Commission under the 1940 Act or
any interpretations of the Commission staff.
14. LIABILITY OF THE ADVISER. The Adviser shall indemnify and hold
harmless the Trust and all affiliated persons thereof (within the meaning of
Section 2(a)(3) of the 1940 Act) and all controlling persons (as described in
Section 15 of the 1933 Act) (collectively, the "Adviser Indemnitees") against
any and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses) by reason of or arising out of: (a) the
Adviser being in material violation of any applicable federal or state law, rule
or regulation or any investment policy or restriction set forth in the Funds'
Registration Statement or any written guidelines or instruction provided in
writing by the Board, (b) a Fund's failure to satisfy the diversification or
source of income requirements of Subchapter M of the Code, or (c) the Adviser's
willful misfeasance, bad faith or gross negligence generally in the performance
of its duties hereunder or its reckless disregard of its obligations and duties
under this Agreement.
15. ENFORCEABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
D-9
16. LIMITATION OF LIABILITY. The parties to this Agreement acknowledge and
agree that all litigation arising hereunder, whether direct or indirect, and of
any and every nature whatsoever shall be satisfied solely out of the assets of
the affected Fund and that no Trustee, officer or holder of shares of beneficial
interest of the Fund shall be personally liable for any of the foregoing
liabilities. The Trust's Certificate of Trust, as amended from time to time, is
on file in the Office of the Secretary of State of the State of Delaware. Such
Certificate of Trust and the Trust's Declaration of Trust describe in detail the
respective responsibilities and limitations on liability of the Trustees,
officers, and holders of shares of beneficial interest.
17. JURISDICTION. This Agreement shall be governed by and construed in
accordance with the substantive laws of state of Delaware and the Adviser
consents to the jurisdiction of courts, both state and/or federal, in Delaware,
with respect to any dispute under this Agreement.
18. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement and
shall not affect its construction.
19. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their duly authorized officers as of the date first
above written.
RYDEX DYNAMIC FUNDS, on behalf of each
Fund listed on Schedule A
By:
--------------------------------------
Name: Carl G. Verboncoeur
Title: President
PADCO ADVISORS, INC.
By:
--------------------------------------
Name: Carl G. Verboncoeur
Title: Chief Executive Officer
D-10
SCHEDULE A
TO THE
ADVISORY AGREEMENT
DATED ________________, 2007 BETWEEN
RYDEX DYNAMIC FUNDS
AND
PADCO ADVISORS, INC.
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
--------------------------------------------------------------------------------
S&P 500 2x Strategy* ................................................. 0.90%
S&P 500 2x Strategy Master ........................................... 0.90%
Inverse S&P 500 2x Strategy* ......................................... 0.90%
Inverse S&P 500 2x Strategy Master ................................... 0.90%
OTC 2x Strategy* ..................................................... 0.90%
OTC 2x Strategy Master ............................................... 0.90%
Inverse OTC 2x Strategy* ............................................. 0.90%
Inverse OTC 2x Strategy Master ....................................... 0.90%
Dow 2x Strategy* ..................................................... 0.90%
Dow 2x Strategy Master ............................................... 0.90%
Inverse Dow 2x Strategy* ............................................. 0.90%
Inverse Dow 2x Strategy Master ....................................... 0.90%
Russell 2000(R) 2x Strategy .......................................... 0.90%
Inverse Russell 2000(R) 2x Strategy .................................. 0.90%
Russell 2000(R) 2x Strategy Master ................................... 0.90%
Inverse Russell 2000(R) 2x Strategy Master ........................... 0.90%
*The fee will be reduced to 0.00% for any period during which the Fund invests
through a master-feeder structure.
D-11
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[LOGO] RYDEXINVESTMENTS
ESSENTIAL FOR MODERN MARKETS(TM)
---- --------------------------------- ----------------------------- ------------------------------
VOTING VIA THE TELEPHONE VOTING VIA THE INTERNET VOTING VIA THE MAIL
o Read the Proxy Statement and o Read the Proxy Statement o Read the Proxy Statement.
---- have the Proxy Card at hand. and have the Proxy Card at o Check the appropriate
STOP o Call toll-free 1-888-221-0697. hand. boxes on the reverse side.
---- o Follow the recorded o Log on to WWW.PROXYWEB.COM o Sign, date and return the
instructions. o Follow the on-line Proxy Card in the envelope
instructions. provided.
---- --------------------------------- ----------------------------- ------------------------------
----------------------- IF YOU VOTE BY INTERNET OR TELEPHONE, PLEASE DO NOT MAIL YOUR CARD.
999 999 999 999 99 <--
----------------------- RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS
FUND/TRUST NAME PRINTS HERE
PROXY FOR SPECIAL JOINT MEETING OF SHAREHOLDERS ON OCTOBER 4, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joanna Haigney and Michael Byrum, or either of them, proxy, with full power of substitution, to
represent and vote, as designated on the reverse side, all shares of stock the undersigned is entitled to vote at the Special Joint
Meeting of Shareholders of Rydex Funds, to be held at the offices of Rydex Investments, 9601 Blackwell Road, Suite 500, Rockville,
MD 20850 on Thursday, October 4, 2007 at 4:30 p.m. Eastern Time, or at any adjournment thereof, with respect to the matters set
forth on the reverse and described in the accompanying Notice of Special Joint Meeting and Proxy Statement, receipt of which is
hereby acknowledged.
|
|
DATED: __________________, 2007
-----------------------------------------------------
-----------------------------------------------------
Signature(s) (SIGN IN THE BOX)
(Please sign exactly as name appears at left)
(If stock is owned by more than one person, all
owners should sign. Persons signing as executors,
administrators, trustees or in similar capacities
should so indicate.)
RYDEX Funds - SD
| PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X] |
| PLEASE DO NOT USE FINE POINT PENS. |
WHEN PROPERLY SIGNED, SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER.
IF NO DIRECTION IS SUPPLIED, THE PROXY WILL BE VOTED FOR THE PROPOSALS
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE "FOR" PROPOSALS 1, 2 AND 3.
FOR AGAINST ABSTAIN
1. THE APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN RYDEX SERIES FUNDS AND PADCO
ADVISORS, INC.* (All Rydex Series Funds EXCEPT Absolute Return Strategies Fund and Hedged [ ] [ ] [ ]
Equity Fund)
2. THE APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN RYDEX SERIES FUNDS AND PADCO [ ] [ ] [ ]
ADVISORS, INC.* (Absolute Return Strategies Fund and Hedged Equity Fund only)
3. THE APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN RYDEX DYNAMIC FUNDS AND PADCO [ ] [ ] [ ]
ADVISORS, INC.* (All Rydex Dynamic Funds)
* PADCO Advisors, Inc. and PADCO Advisors II, Inc. collectively do business as Rydex Investments.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
RYDEX Funds - SD |
|