DECHERT Exhibit 12
LLP
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FORM OF OPINION
[July 10, 2009]
Board of Directors
Security Cash Fund
One Security Benefit Place
Topeka, Kansas 66636-0001
Board of Trustees
U.S. Government Money Market Fund
Rydex Series Funds
9601 Blackwell Road, Suite 500
Rockville, Maryland 20850
Dear Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax consequences
to Security Cash Fund, a Kansas corporation (the "Acquired Fund"), to the
holders of the shares of common stock (the "Acquired Fund Shares") of Acquired
Fund (the "Acquired Fund Shareholders"), and to U.S. Government Money Market
Fund (the "Acquiring Fund"), a separate series of Rydex Series Funds, a Delaware
statutory trust (the "Trust"), in connection with the proposed transfer of
substantially all of the properties of Acquired Fund to Acquiring Fund in
exchange solely for voting shares of beneficial interest of Acquiring Fund
("Acquiring Fund Shares") and the assumption of all liabilities of Acquired Fund
by Acquiring Fund, followed by the distribution of such Acquiring Fund Shares
received by Acquired Fund in complete liquidation and termination of Acquired
Fund (the "Reorganization"), all pursuant to the Agreement and Plan of
Reorganization (the "Plan") dated as of [ , 2009] executed by the Acquired
Fund and by the Trust on behalf of Acquiring Fund.
For purposes of this opinion, we have examined and relied upon (1) the
Plan, (2) the Form N-14 filed by Acquiring Fund on [ , 2009] with the
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Securities and Exchange Commission, (3) the related Proxy Statement dated [ ,
2009], (4) the facts and representations contained in the letter dated on or
about the date hereof addressed to us from the Trust on behalf of Acquiring
Fund, (5) the facts and representations contained in the letter dated on or
about the date hereof addressed to us from the Acquired Fund, and (6) such other
documents and instruments as we have deemed necessary or appropriate for
purposes of rendering this opinion.
This opinion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), United States Treasury regulations, judicial decisions, and
administrative rulings and pronouncements of the Internal Revenue Service, all
as in effect on the date hereof. This opinion is conditioned upon the
Reorganization taking place in the manner described in the Plan and the Form
N-14 referred to above.
Based upon the foregoing, it is our opinion that:
1. The acquisition by Acquiring Fund of substantially all of the properties of
Acquired Fund in exchange solely for Acquiring Fund Shares and the
assumption of all liabilities of Acquired Fund by Acquiring Fund followed
by the distribution of Acquiring Fund Shares to the Acquired Fund
Shareholders in exchange for their Acquired Fund shares in complete
liquidation and termination of Acquired Fund will constitute a tax-free
reorganization under Section 368(a) of the Code.
2. Acquired Fund will not recognize gain or loss upon the transfer of
substantially all of its assets to Acquiring Fund in exchange solely for
Acquiring Fund Shares except to the extent that Acquired Fund's assets
consist of contracts described in Section 1256(b) of the Code ("Section
1256 Contracts"); Acquired Fund will be required to recognize gain or loss
on the transfer of any such Section 1256 Contracts to Acquiring Fund
pursuant to the Reorganization as if such Section 1256 Contracts were sold
to Acquiring Fund on the effective date of the Reorganization at their fair
market value.
3. Acquired Fund will not recognize gain or loss upon the distribution to its
shareholders of the Acquiring Fund Shares received by Acquired Fund in the
Reorganization.
4. Acquiring Fund will recognize no gain or loss upon receiving the properties
of Acquired Fund in exchange solely for Acquiring Fund Shares.
Dechert LLP
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5. The adjusted basis to Acquiring Fund of the properties of Acquired Fund
received by Acquiring Fund in the Reorganization will be the same as the
adjusted basis of those properties in the hands of Acquired Fund
immediately before the exchange.
6. Acquiring Fund's holding periods with respect to the properties of Acquired
Fund that Acquiring Fund acquires in the transaction will include the
respective periods for which those properties were held by Acquired Fund
(except where investment activities of Acquiring Fund have the effect of
reducing or eliminating a holding period with respect to an asset).
7. The Acquired Fund Shareholders will recognize no gain or loss upon
receiving Acquiring Fund Shares solely in exchange for Acquired Fund
Shares.
8. The basis of the Acquiring Fund Shares received by an Acquired Fund
Shareholder in the transaction will be the same as the basis of Acquired
Fund Shares surrendered by the Acquired Fund Shareholder in exchange
therefor.
9. An Acquired Fund Shareholder's holding period for the Acquiring Fund Shares
received by the Acquired Fund Shareholder in the transaction will include
the holding period during which the Acquired Fund Shareholder held Acquired
Fund Shares surrendered in exchange therefor, provided that the Acquired
Fund Shareholder held such shares as a capital asset on the date of
Reorganization.
We express no opinion as to the federal income tax consequences of the
Reorganization except as expressly set forth above, or as to any transaction
except those consummated in accordance with the Plan.
Very truly yours,
Dechert LLP
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