EX-12(a)(1)
CodeOfEthics.doc Procedure Number: IC02.2.2
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CODE OF ETHICS
PROCEDURE CREATION DATE: Adopted December 11, 1998 (by RDF,
RSF, RVT, RGA, RFS, and RDI)
Adopted [Date] (by Sphinx and RSP)
Adopted by the Advisors,
February 1, 2005
Adopted by the Board, February 11,
2005
PROCEDURE REVIEWED AS OF: September 2004
PROCEDURE REVISED AS OF: February 1, 2002
January 30, 2003
August 25, 2003
February 1, 2005
REGULATORY RULES: Rule 17j-1 of the Investment
Company Act of 1940 and Rule
204A-1 under the Investment
Advisers Act of 1940
BUSINESS UNIT: Compliance Department
RESPONSIBILITY: Compliance Administrator
MANAGER RESPONSIBLE: Compliance Manager
COVERED ENTITIES:
This Combined Code of Ethics adopted under Rule 17j-1 under the Investment
Company Act of 1940 (the "1940 Act") and Rule 204A-1 under the Investment
Advisers Act of 1940 (the "Advisers Act") covers the following companies:
<Table>
<Caption>
TRUSTS ADVISORS SERVICE PROVIDERS
- --------------------------------------------- -------------------------------------- ----------------------------------------
o Rydex Dynamic Funds o PADCO Advisors, Inc. o Rydex Fund Services, Inc.
- --------------------------------------------- -------------------------------------- ----------------------------------------
o Rydex Series Funds o PADCO Advisors II, Inc. o Rydex Distributors, Inc.
- --------------------------------------------- -------------------------------------- ----------------------------------------
o Rydex Variable Trust o Rydex Capital Partners I, LLC
- --------------------------------------------- --------------------------------------- ----------------------------------------
o Rydex ETF Trust o Rydex Capital Partners II, LLC
- --------------------------------------------- --------------------------------------- ----------------------------------------
o Rydex Capital Partners Sphinx Fund
- --------------------------------------------- ------------------------------------ ----------------------------------------
</Table>
PROCEDURE:
Rydex Dynamic Funds, Rydex Series Funds, Rydex Variable Trust, Rydex ETF
Trust, and Rydex Capital Partners Sphinx Fund (each a "Trust" and jointly the
"Trusts"), and PADCO Advisors, Inc., PADCO Advisors II, Inc., Rydex Capital
Partners I, LLC, Rydex Capital Partners II, LLC, Rydex Fund Services, Inc. and
Rydex Distributors, Inc. (each a "Company," jointly the "Companies," and
together with the Trusts, "Rydex") are confident that their officers, trustees,
directors and employees act with integrity and good faith. Rydex recognizes,
however, that personal interests may conflict with a Trust's or Company's
interests where trustees, directors, officers or employees:
o Know about present or future portfolio transactions or
o Have the power to influence portfolio transactions; and
o Engage in personal transactions in securities.
In an effort to prevent these conflicts from arising and in accordance with
Rule 17j-1(b)(1) under the 1940 Act and Rule 204A-1 under the Advisers Act,
Rydex has adopted this Code of Ethics and all amendments thereto (together, the
"Code") to prohibit transactions that create, may create, or appear to create
conflicts of interest, and to establish reporting requirements and enforcement
procedures. Each trustee, director, officer and employee of Rydex should
carefully read and review this Code.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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1. ABOUT RYDEX
1.1 Rydex Dynamic Funds, Rydex Series Funds, Rydex Variable Trust,
and Rydex ETF Trust are separately registered open-end
management investment companies. Rydex Capital Partners Sphinx
Fund is a non-diversified closed-end management investment
company. Each Trust may consist of multiple investment
portfolios (each a "Fund" and together, the "Rydex Funds").
The Rydex Funds may be grouped primarily into three broad
categories: (1) Benchmark Funds (one of which is
exchange-traded), (2) Sector Funds, and (3) Strategic Funds.
In addition, there is a Money Market Fund and a closed-end
fund of hedge funds (the "Sphinx Fund").
1.2 PADCO Advisors, Inc., PADCO Advisors II, Inc., Rydex Capital
Partners I, LLC, and Rydex Capital Partners II, LLC (the
"Advisors") are each investment advisers. PADCO Advisors, Inc.
is the investment adviser for Rydex Dynamic Funds and Rydex
Series Funds and PADCO Advisors II, Inc. is the investment
adviser for Rydex Variable Trust and Rydex ETF Trust. Rydex
Capital Partners I, LLC is the investment adviser for the
Sphinx Fund and Rydex Capital Partners II, LLC is the
investment adviser for Rydex Capital Partners Equity Market
Neutral Fund, LP, a private equity fund.
1.3 Rydex Distributors, Inc. serves as the distributor to the
Rydex Funds.
1.4 Rydex Financial Services, Inc. provides general administrative
services and serves as the transfer agent to the Rydex Dynamic
Funds, Rydex Series Funds and Rydex Variable Trust.
2. ABOUT THIS CODE OF ETHICS
2.1 TRANSACTION-RELATED AND REPORTING PROVISIONS
This Code sets forth specific prohibitions relating to
securities transactions and also sets out certain reporting requirements. They
cover the persons identified below:
o All Company officers and directors;
o Employees who have access to nonpublic
information regarding any clients' purchase
or sale of securities or the portfolio
holdings of any reportable fund, e.g.
portfolio management and fund accounting
personnel, are involved in making securities
recommendations to clients, or have access
to such recommendations that are nonpublic;
o All Trustees of the Trusts, both Interested
and Independent; and
o Natural persons in a control relationship
with a Company who obtain information
concerning recommendations made to a Fund
about the purchase or sale of a security and
are not specifically covered by any other
section of the Code.
For the prohibitions and reporting requirements that apply to
you, please refer to Parts A-D, as indicated below. (Definitions of underlined
terms are included in Appendix A.)
o Independent Trustees of the Trusts.......................................Part A
o Interested Trustees of the Trusts........................................Part B
o Access Persons...........................................................Part C
o Natural Control Persons..................................................Part D
2.2 OTHER PROVISIONS
The remainder of this Code sets forth general principles, required
course of conduct, reporting obligations, and Rydex's review, enforcement and
recordkeeping responsibilities as well as other miscellaneous information.
3. STATEMENT OF GENERAL PRINCIPLES
In recognition of the trust and confidence placed in Rydex by
shareholders of the Trusts, and because Rydex believes that their operations
should benefit shareholders, Rydex has adopted the following universally
applicable principles.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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>> Shareholders' interests are paramount. You must place
shareholder interests before your own.
>> You must accomplish all personal securities transactions in a
manner that avoids even the appearance of a conflict of your
personal interests with those of a Trust and its shareholders.
>> You must avoid actions or activities that allow (or appear to
allow) you or your family to profit or benefit from your
position with Rydex, or that bring into question your
independence or judgment.
>> You must comply with all applicable federal securities laws,
including the prohibitions against the misuse of material
nonpublic information, in conducting yourself and the
operations of Rydex.
4. REQUIRED COURSE OF CONDUCT
4.1 PROHIBITION AGAINST FRAUD, DECEIT AND MANIPULATION
You cannot, in connection with the purchase or sale, directly
or indirectly, of a security held or to be acquired by any Fund:
(a) employ any device, scheme or artifice to defraud the
Fund;
(b) make to the Fund any untrue statement of a material
fact or omit to state to the Fund a material fact
necessary in order to make the statements made, in
light of the circumstances under which they are made,
not misleading;
(c) engage in any act, practice or course of business
which would operate as a fraud or deceit upon the
Fund; or
(d) engage in any manipulative practice with respect to
the Fund.
Two of the most common risks associated with personal
securities transactions are front-running and trading opposite a fund. For
example, front-running would include the purchase of a security any time within
seven days ahead of when a fund purchases the same security or the sale of a
security any time within seven days ahead of when a fund sells the same
security. An example of trading opposite a fund would include the sale of a
security any time within seven days after a fund purchases the same security or
the purchase of a security any time within seven days after a fund sells the
same security.
4.2 LIMITS ON ACCEPTING OR RECEIVING GIFTS
Access Persons cannot accept or receive any gift of more than
de minimis value from any person or entity that does business with or on behalf
of Rydex. This provision does not include:
o occasional meals, tickets to a sporting event or the
theater, or normal business entertainment; and
o any payment or reimbursement for professional
training or educational meetings.
5. CONFIDENTIALITY
All personal securities transactions reports and any other information
filed with Rydex under this Code will be treated as confidential, provided that
such reports and related information may be produced to the Securities and
Exchange Commission (the "SEC") and other regulatory agencies.
6. INTERPRETATION OF PROVISIONS
The Board of Trustees of the Trusts may from time to time adopt such
interpretations of this Code as it deems appropriate.
7. ACKNOWLEDGMENT OF RECEIPT AND ANNUAL CERTIFICATION
Each interested Trustee, director, officer, employee and affiliated
agent of Rydex will receive a copy of the Code and any subsequent amendments to
the Code, and each such person must acknowledge receipt of the Code in writing.
In addition, each such person is required to certify annually that he/she (i)
has read and understands the Code, (ii) is aware that he/she is subject to the
provisions of this Code, (iii) has complied with the Code at all times during
the
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1-WA/2302161.8 Page 3 of 15
CodeOfEthics.doc Procedure Number: IC02.2.2
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previous calendar year, and (iv) has, during the previous calendar year,
reported all holdings and transactions that he/she is required to report
pursuant to the Code. The acknowledgement of receipt and certification may be
made electronically via the rydex.starcompliance.com web site.
EXCEPTION HANDLING:
The Compliance Officer, in his or her discretion, may exempt any person
from any specific provision of the Code, if the Compliance Officer determines
that (a) the services of the person are valuable to Rydex; (b) the failure to
grant this exemption will result in an undue burden on the person or prevent the
person from being able to render services to Rydex; and (c) granting the
exemption does not detrimentally affect the shareholders of the Rydex Funds. The
Compliance Officer will prepare a report documenting the nature of any exemption
granted, the persons involved and the reasons for granting such exemption.
Any person granted an exemption with respect to a particular transaction
must furnish the Compliance Officer with a written report concerning that
transaction within three (3) days of the transaction.
REPORTING REQUIREMENTS:
1. INDIVIDUAL REPORTING OBLIGATIONS
See Parts A, B, C or D as appropriate, for your specific reporting
obligations.
1.1 OBLIGATION TO REPORT VIOLATIONS OF THE CODE
In addition to the individual reporting requirements
referenced above, any violation of the Code must be promptly reported to the
Compliance Officer.
2. ANNUAL WRITTEN REPORT TO THE BOARD
At least once a year, the Compliance Officer, on behalf of Rydex, will
provide the Board of Trustees of each Trust a written report that includes:
2.1 ISSUES ARISING UNDER THE CODE
The Report will describe any issue(s) that arose during the
previous year under the Code, including any material Code violations, and any
resulting sanctions.
2.2 CERTIFICATION
The Report will certify to the Boards of Trustees that each
Company has adopted measures reasonably necessary to prevent its personnel from
violating the Code currently and in the future.
3. PERIODIC REVIEW AND REPORTING
The Compliance Officer (or his or her designee) will report to the
Boards of Trustees at least annually as to the operation of this Code and will
address in any such report the need (if any) for further changes or
modifications to this Code.
TESTING AND REVIEW:
Each Trust and Company shall appoint the Compliance Officer.
1. DUTIES OF THE COMPLIANCE OFFICER
1.1 The Compliance Officer will, on a quarterly basis, compare all
reported personal securities transactions with the Trusts'
completed portfolio transactions and a list of securities
being considered for purchase or sale by the Advisors to
determine whether a Code violation may have occurred. The
Compliance Officer may request additional information or take
any other appropriate measure that the Compliance Officer
decides is necessary to aid in this determination. Before
determining that a person has violated the Code, the
Compliance Officer must give the person an opportunity to
supply explanatory material.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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1.2 If the Compliance Officer determines that a Code violation may
have occurred, the Compliance Officer must submit the
determination, together with the confidential quarterly report
and any explanatory material provided by the person, to the
President of the Trust or Company and fund counsel
("Counsel"). The President of the Trust or Company and Counsel
will independently determine whether the person violated the
Code.
1.3 No person is required to participate in a determination of
whether he or she has committed a Code violation or of the
imposition of any sanction against himself or herself. If a
securities transaction of the President is under
consideration, a Vice President will act for the President for
purposes of this Section.
2. SANCTIONS
If the President and Counsel find that the person violated the Code,
the President will impose upon the person sanctions that the President deems
appropriate and will report the violation and the sanction imposed to the Board
of Trustees of the Rydex Funds at the next regularly scheduled board meeting
unless, in the sole discretion of the Trusts' President, circumstances warrant
an earlier report.
RECORDKEEPING:
The Companies will maintain records as set forth below. These records will
be maintained in accordance with Rule 31a-2 under the 1940 Act and Rule
204-2(a)(12) under the Advisers Act and will be available for examination by
representatives of the SEC.
o A copy of this Code and any other code which is, or at any time within the
past five years has been, in effect will be preserved in an easily
accessible place;
o A list of all persons who are, or within the past five years have been,
required to submit reports under this Code will be maintained in an easily
accessible place;
o A copy of each report made by a person under this Code will be preserved
for a period of not less than five years from the end of the fiscal year in
which it is made, the first two years in an easily accessible place;
o A copy of each duplicate brokerage confirmation and each periodic statement
provided under this Code will be preserved for a period of not less than
five years from the end of the fiscal year in which it is made, the first
two years in an easily accessible place.
o A record of any Code violation and of any sanctions taken will be preserved
in an easily accessible place for a period of not less than five years
following the end of the fiscal year in which the violation occurred;
o A copy of each annual report to the Board of Trustees will be maintained
for at least five years from the end of the fiscal year in which it is
made, the first two years in an easily accessible place;
o A copy of all Acknowledgements of Receipt and Annual Certifications as
required by this Code for each person who is currently, or within the past
five years was required to provide such Acknowledgement of Receipt or
Annual Certification; and
o The Companies will maintain a record of any decision, and the reasons
supporting the decision, to approve the acquisition of securities in an
initial public offering ("IPO") or a private placement, for at least five
years after the end of the fiscal year in which the approval is granted.
DISCLOSURE:
The Code of Ethics will be disclosed in accordance with the requirements of
Forms ADV, N1-A, and N-2.
REVISIONS:
These procedures shall remain in effect until amended, modified or
terminated. The Boards of Trustees must approve any material amendments to the
Code within six months of the amendment.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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PART A PROCEDURES FOR INDEPENDENT TRUSTEES AND DIRECTORS
GENERAL OBLIGATIONS.
1. REQUIRED TRANSACTION REPORTS
1.1 On a quarterly basis you must report any securities
transactions, as well as any securities accounts established.
You must submit your report to the Compliance Officer no later
than 30 calendar days after the end of the calendar quarter in
which the transaction to which the report relates was
effected. Quarterly Personal Securities Transactions Reports
will be made electronically, via the rydex.starcompliance.com
web site. You will receive notification via email when the
Quarterly Transaction Report is due, including instructions on
how to access the information and complete the report.
1.2 If you had no reportable transactions or did not open any
securities accounts during the quarter, you are not required
to submit a report.
1.3 Reports of individual securities transactions are required
only if you knew at the time of the transaction or, in the
ordinary course of fulfilling your official duties as a
Trustee, should have known, that during the 15-calendar day
period immediately preceding or following the date of your
transaction, the same security was purchased or sold, or was
being considered for purchase or sale, by a Fund.
Note: The "should have known" standard does not:
(a) imply a duty of inquiry;
(b) presume you should have deduced or extrapolated from
discussions or memoranda dealing with the Fund's
investment strategies; or
(c) impute knowledge from your prior knowledge of the
Fund's portfolio holdings, market considerations, or
investment policies, objectives and restrictions.
2. WHAT SECURITIES ARE COVERED UNDER YOUR QUARTERLY REPORTING OBLIGATION?
If the transaction is reportable because it came within paragraph (1),
above, you must report all transactions in securities that: (i) you directly or
indirectly beneficially own or (ii) because of the transaction, you acquire
direct or indirect beneficial ownership. The report must also contain any
account you established in which any securities were held during the quarter.
3. WHAT SECURITIES AND TRANSACTIONS MAY BE EXCLUDED FROM YOUR REPORT?
You are not required to detail or list the following securities or
transactions on your quarterly report:
(a) Purchases or sales effected for any account over
which you have no direct or indirect influence or
control.
(b) Purchases you made solely with the dividend proceeds
received in a dividend reinvestment plan or that are
part of an automatic payroll deduction plan or other
similar type of plan, where you purchase securities
issued by your employer.
(c) Purchases arising from the exercise of rights issued
by an issuer pro rata to all holders of a class of
its securities, as long as you acquired these rights
from the issuer, and sales of such rights so
acquired.
(d) Purchases of securities issued by the U.S. Government
or its agencies, bankers' acceptances, bank
certificates of deposit, commercial paper, high
quality short-term debt instruments, including
repurchase agreements, and registered open-end mutual
funds, other than reportable funds.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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(e) Purchases or sales which are non-volitional on your
part, including purchases or sales upon exercise of
puts or calls written by you and sales from a margin
account to a bona fide margin call.
You may include a statement in your report that the report shall not be
construed as your admission that you have any direct or indirect beneficial
ownership in the security included in the report.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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PART B INTERESTED TRUSTEES AND DIRECTORS
GENERAL OBLIGATIONS.
1. PROVIDING A LIST OF SECURITIES
You must provide the Compliance Officer with a complete listing of all
securities you beneficially own as of December 31 of the previous year. Each
following year, you must submit a revised list to the Compliance Officer showing
the securities you beneficially own as of December 31. You must submit the
initial listing within 10 calendar days of the date you first become a Trustee,
and each update no later than 30 calendar days after the start of the year. The
Initial Holdings Report and Annual Holdings Report, as applicable, will be
delivered electronically, via the rydex.starcompliance.com web site. You will
receive notification via email when the applicable report is due, including
instructions on how to access the information and complete the report.
You are not required to provide this list of securities if you are not
currently affiliated with or employed by a Trust's investment adviser(s) or
distributor.
2. REQUIRED TRANSACTION REPORTS
On a quarterly basis you must report any securities transactions, as
well as any securities accounts established. You must submit your report to the
Compliance Officer no later than 30 calendar days after the end of the calendar
quarter in which the transaction to which the report relates was effected.
Quarterly Personal Securities Transactions Reports will be made electronically,
via the rydex.starcompliance.com web site. You will receive notification via
email when the Quarterly Transaction Report is due, including instructions on
how to access the information and complete the report.
If you had no reportable transactions or did not open any securities
accounts during the quarter, you are still required to submit a report. Please
sign in the space provided and submit the report with no transactions listed.
3. WHAT SECURITIES ARE COVERED UNDER YOUR QUARTERLY REPORTING OBLIGATION?
You must report all transactions in securities that: (i) you directly
or indirectly beneficially own or (ii) because of the transaction, you acquire
direct or indirect beneficial ownership. The report must also contain any
account you established in which any securities were held during the quarter.
4. PRE-APPROVAL OF IPOS AND PRIVATE PLACEMENTS
You must obtain approval from the Compliance Officer before acquiring
beneficial ownership of any securities offered in connection with an IPO or a
private placement.
5. WHAT SECURITIES AND TRANSACTIONS MAY BE EXCLUDED FROM YOUR REPORT?
You are not required to detail or list the following securities or
transactions on your report:
(a) Purchases or sales effected for any account over
which you have no direct or indirect influence or
control.
(b) Purchases you made solely with the dividend proceeds
received in a dividend reinvestment plan or that are
part of an automatic payroll deduction plan or other
similar type of plan, where you purchase securities
issued by your employer.
(c) Purchases arising from the exercise of rights issued
by an issuer pro rata to all holders of a class of
its securities, as long as you acquired these rights
from the issuer, and sales of such rights so
acquired.
(d) Purchases of securities issued by the U.S. Government
or its agencies, bankers' acceptances, bank
certificates of deposit, commercial paper, high
quality short-term debt instruments, including
repurchase agreements, and registered open-end mutual
funds, other than reportable funds.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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(e) Purchases or sales which are non-volitional on your
part, including purchases or sales upon exercise of
puts or calls written by you and sales from a margin
account to a bona fide margin call.
You may include a statement in your report that the report shall not be
construed as your admission that you have any direct or indirect beneficial
ownership in the security included in the report.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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PART C ACCESS PERSONS
GENERAL OBLIGATIONS
1. THIRTY-DAY PROHIBITION ON SELLING SECURITIES
You cannot sell a security within 30 calendar days of acquiring that
security.
2. PROVIDING A LIST OF SECURITIES
You must provide the Compliance Officer with a complete listing of all
securities you beneficially own as of December 31 of the previous year. Each
following year, you must submit a revised list to the Compliance Officer showing
the securities you beneficially own as of December 31. You must submit the
initial listing within 10 calendar days of the date you first become an Access
Person, and each update no later than 30 calendar days after the start of the
year. The Initial Holdings Report and Annual Holdings Report, as applicable,
will be delivered electronically, via the rydex.starcompliance.com web site. You
will receive notification via email when the applicable report is due, including
instructions on how to access the information and complete the report.
You are not required to provide this list of securities if you are not
currently affiliated with or employed by a Trust's investment adviser(s) or
distributor.
3. DUPLICATE BROKERAGE CONFIRMATION AND STATEMENTS
You must direct your brokers to provide the Compliance Officer with
duplicate copies of confirmations of all securities transactions in which you
will acquire beneficial ownership of a security and copies of periodic
statements for all personal securities accounts.
4. PRE-CLEARANCE REQUIREMENT
You must submit a report detailing every proposed securities
transaction in which you will acquire a beneficial ownership interest to the
Compliance Officer and obtain pre-clearance for each securities transaction
prior to engaging in the transaction. The report shall include the name of the
security, date of the proposed transaction, quantity, price, and broker-dealer
through which the transaction is to be effected.
4.1 PRE-APPROVAL OF IPOS AND PRIVATE PLACEMENTS
You must obtain approval from the Compliance Officer before
acquiring beneficial ownership of any securities offered in connection with an
IPO or a private placement.
5. REQUIRED TRANSACTION REPORTS
On a quarterly basis you must report transactions in securities, as
well as any securities accounts established. You must submit your report to the
Compliance Officer no later than 30 calendar days after the end of the calendar
quarter in which the transaction to which the report relates was effected.
Quarterly Personal Securities Transactions Reports will be made electronically,
via the rydex.starcompliance.com web site. You will receive notification via
email when the Quarterly Transaction Report is due, including instructions on
how to access the information and complete the report.
If you had no reportable transactions or did not open any securities
accounts during the quarter, you are still required to submit a report. Please
sign in the space provided and submit the report with no transactions listed.
6. WHAT SECURITIES ARE COVERED UNDER YOUR QUARTERLY REPORTING OBLIGATION?
You must report all transactions in securities that: (i) you directly
or indirectly beneficially own or (ii) because of the transaction, you acquire
direct or indirect beneficial ownership. The report must contain any account you
established in which any securities were held during the quarter.
7. WHAT SECURITIES AND TRANSACTIONS MAY BE EXCLUDED FROM YOUR REPORT?
You are not required to detail or list the following securities or
transactions on your report.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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(a) Purchases or sales effected for any account over
which you have no direct or indirect influence or
control.
(b) Purchases you made solely with the dividend proceeds
received in a dividend reinvestment plan or that are
part of an automatic payroll deduction plan or other
similar type of plan, where you purchase securities
issued by your employer.
(c) Purchases arising from the exercise of rights issued
by an issuer pro rata to all holders of a class of
its securities, as long as you acquired these rights
from the issuer, and sales of such rights so
acquired.
(d) Purchases of securities issued by the U.S. Government
or its agencies, bankers' acceptances, bank
certificates of deposit, commercial paper, high
quality short-term debt instruments, including
repurchase agreements, and registered open-end mutual
funds, other than reportable funds.
(e) Purchases or sales which are non-volitional on your
part, including purchases or sales upon exercise of
puts or calls written by you and sales from a margin
account to a bona fide margin call.
You may include a statement in your report that the report shall not be
construed as your admission that you have any direct or indirect beneficial
ownership in the security included in the report.
8. SEVEN-DAY BLACKOUT PERIOD ON PERSONAL SECURITIES TRANSACTIONS
You cannot purchase or sell, directly or indirectly, any security in
which you had (or by reason of such transaction acquire) any beneficial
ownership at any time within seven calendar days before or after the time that
the same (or a related) security is being purchased or sold by any Rydex Fund.
This provision will only apply if you obtain specific information regarding the
purchase or sale of a security by a Rydex Fund.
8.1 EXCEPTION TO BLACKOUT PERIOD
The seven-day blackout period does not apply to the purchase
or sale of any security (i) of a company with a market capitalization in excess
of $500 million, (ii) included in either the S&P 500 Composite Index or the
NASDAQ 100 Index, and (iii) made in dollar amounts less than $25,000.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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PART D NATURAL CONTROL PERSONS
GENERAL OBLIGATIONS.
1. PROVIDING A LIST OF SECURITIES
You must provide the Compliance Officer with a complete listing of all
securities you beneficially own as of December 31 of the previous year. Each
following year, you must submit a revised list to the Compliance Officer showing
the securities you beneficially own as of December 31. You must submit the
initial listing within 10 calendar days of the date you first become a natural
control person, and each update no later than 30 calendar days after the start
of the year. The Initial Holdings Report and Annual Holdings Report, as
applicable, will be delivered electronically, via the rydex.starcompliance.com
web site. You will receive notification via email when the applicable report is
due, including instructions on how to access the information and complete the
report.
You are not required to provide this list of securities if you are not
currently affiliated with or employed by the Trusts' investment adviser(s) or
distributor.
2. REQUIRED TRANSACTION REPORTS
On a quarterly basis you must report any securities transactions, as
well as any securities accounts established. You must submit your report to the
Compliance Officer no later than 30 calendar days after the end of the calendar
quarter in which the transaction to which the report relates was effected.
Quarterly Personal Securities Transactions Reports will be made electronically,
via the rydex.starcompliance.com web site. You will receive notification via
email when the Quarterly Transaction Report is due, including instructions on
how to access the information and complete the report.
If you had no reportable transactions or did not open any securities
accounts during the quarter, you are still required to submit a report. Please
sign in the space provided and submit the report with no transactions listed.
3. WHAT SECURITIES ARE COVERED UNDER YOUR QUARTERLY OBLIGATION?
You must report all transactions in securities that: (i) you directly
or indirectly beneficially own or (ii) because of the transaction, you acquire
direct or indirect beneficial ownership. The report must also include any
account you established in which securities were held during the quarter.
4. PRE-APPROVAL OF IPOS AND PRIVATE PLACEMENTS
You must obtain approval from the Compliance Officer before acquiring
beneficial ownership of any securities offered in connection with an IPO or a
private placement.
5. WHAT SECURITIES AND TRANSACTIONS ARE EXCLUDED FROM YOUR REPORTING
OBLIGATION?
You are not required to detail or list the following securities or
transactions on your report:
(a) Purchases or sales effected for any account over
which you have no direct or indirect influence or
control.
(b) Purchases you made solely with the dividend proceeds
received in a dividend reinvestment plan or that are
part of an automatic payroll deduction plan, where
you purchase securities issued by your employer.
(c) Purchases arising from the exercise of rights issued
by an issuer pro rata to all holders of a class of
its securities, as long as you acquired these rights
from the issuer, and sales of such rights so
acquired.
(d) Purchases of securities issued by the U.S. Government
or its agencies, bankers' acceptances, bank
certificates of deposit, commercial paper, high
quality short-term debt instruments, including
repurchase agreements, and registered open-end mutual
funds, other than reportable funds.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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(e) Purchases or sales which are non-volitional on your
part, including purchases or sales upon exercise of
puts or calls written by you and sales from a margin
account to a bona fide margin call.
You may include a statement in your report that the report shall not be
construed as your admission that you have any direct or indirect beneficial
ownership in the security included in the report.
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CodeOfEthics.doc Procedure Number: IC02.2.2
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APPENDIX A DEFINITIONS
Access person includes: (a) any trustee, director or officer and (b) any
supervised person who has access to nonpublic information regarding any clients'
purchase or sale of securities or the portfolio holdings of any reportable fund,
e.g. portfolio management and fund accounting personnel, is involved in making
securities recommendations to clients, or has access to such recommendations
that are nonpublic.
Beneficial ownership means the same as under Section 16 of the Securities
Exchange Act of 1934 and Rule 16a-1(a)(2) thereunder. You should generally
consider yourself the beneficial owner of any security in which you have a
direct or indirect pecuniary interest. In addition, you should consider yourself
the beneficial owner of securities held by your spouse, your minor children, a
relative who shares your home, or other persons by reason of any contract,
arrangement, understanding or relationship that provides you with sole or shared
voting or investment power.
Control means the same as that under Section 2(a)(9) of the 1940 Act. Section
2(a)(9) provides that "control" means the power to exercise a controlling
influence over the management or policies of a company, unless such power is
solely the result of an official position with such company. Ownership of 25% or
more of a company's outstanding voting securities is presumed to give the holder
of such securities control over the company. This presumption may be countered
by the facts and circumstances of a given situation.
Independent trustee means a trustee of a Trust who is not an "interested person"
of the Trust within the meaning of Section 2(a)(19) of the 1940 Act. As of
February 1, 2005, the Trusts' independent trustees are:
Corey A. Colehour
J. Kenneth Dalton
Roger Somers
John O. Demaret
Patrick T. McCarville
Werner E. Keller
Thomas F. Lydon Jr.
Initial public offering ("IPO") means an offering of securities registered under
the Securities Act of 1933, the issuer of which, immediately before
registration, was not subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934.
Interested trustee means a trustee of a Trust who is an "interested person" of
the Trust within the meaning of Section 2(a)(19) of the 1940 Act. As of February
1, 2005, the Trusts' only interested trustees are:
Carl G. Verboncoeur
Michael P. Byrum
Private placement means an offering that is exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) in the
Securities Act of 1933.
Purchase or sale of a security includes, among other things, the writing of an
option to purchase or sell a security.
Reportable fund means any fund for which you serve as investment adviser, any
fund whose investment adviser or principal underwriter controls you, is
controlled by you, or is under common control with you, or any closed-end fund
regardless of affiliation. For purposes of this Code definition, control has the
same meaning as it does above.
Security means the same as that set forth in Section 2(a)(36) of the 1940 Act,
except that it does not include securities issued by the U.S. Government or its
agencies, bankers' acceptances, bank certificates of deposit, commercial paper,
shares of registered open-end mutual funds other than reportable funds, and high
quality short-term debt instruments,
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including repurchase agreements. A security does not include index futures or
other commodities. For purposes of this Code, a security does include futures,
options, options on futures, and other types of derivatives.
A security held or to be acquired by a Trust (or any Fund) means any security
which, within the most recent 15 days, (i) is or has been held by a Trust (or
any Fund) or (ii) is being or has been considered by a Trust's Advisor or
sub-adviser for purchase by the Trust (or any Fund), and any option to purchase
or sell, and any security convertible into or exchangeable for any security.
A security is being purchased or sold by a Trust from the time a purchase or
sale program has been communicated to the person who places buy and sell orders
for the Trust until the program has been fully completed or terminated.
Compliance Officer means the chief compliance officer of Rydex Dynamic Funds,
Rydex Series Funds, Rydex Variable Trust, Rydex ETF Trust, and the Sphinx Fund
pursuant to Rule 38a-1 under the 1940 Act and the chief compliance officer of
PADCO Advisors, Inc., PADCO Advisors II, Inc., Rydex Capital Partners I, LLC,
and Rydex Capital Partners II, LLC pursuant to Rule 206(4)-7 under the Advisers
Act, or any person designated by such chief compliance officer to act in the
chief compliance officer's absence. As of February 1, 2005, the Compliance
Officer is:
Joanna M. Haigney
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