Morgan, Lewis & Bockius LLP
1111 Pennsylvania Ave., NW
Washington, DC 20004
LAURA E. FLORES
202.739.5684
lflores@morganlewis.com
August 27, 2007
VIA EDGAR CORRESPONDENCE
Mr. Christian T. Sandoe
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: RYDEX SERIES FUNDS (THE "TRUST") - POST-EFFECTIVE AMENDMENT ("PEA") NO.
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68 (FILE NOS. 33-59692 AND 811-07584)
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Dear Mr. Sandoe:
This letter responds to your comments to the Trust's Post-Effective Amendment
No. 68, filed on March 23, 2007 for the purpose of introducing the International
Rotation Fund (the "Fund") into the Trust. The following summarizes your
comments, and our response to those comments. Unless otherwise noted,
capitalized terms have the same meaning as contained in the Fund's Prospectuses
and/or Statement of Additional Information ("SAI").
1. COMMENT. Please explain how the Advisor will determine whether an ETF
will provide exposure to the components of the Index.
RESPONSE. When available, the Advisor will seek to invest in ETFs that
provide direct exposure to a component country included in the Index.
However, in the event that there is not an available ETF, or a
sufficiently liquid ETF, that provides exposure to a particular country
included in the Index, the Advisor will seek to invest in an ETF, or a
combination of ETFs, that will closely correlate to the performance of
the particular country. Accordingly, we have revised the first sentence
under "Principal Investment Strategy" as follows (new language appears
in bold for the purposes of this correspondence only):
"The Fund seeks to achieve its investment objective by investing in
exchange-traded funds ("ETFs") and other financial instruments that:
(1) provide exposure to, OR CLOSELY CORRELATE WITH, THE PERFORMANCE OF
certain foreign countries included in the MSCI
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World ex-US Index (the "Index") and (2) have the potential to generate
returns, before fees and expenses, in excess to those of the Index."
2. COMMENT. Please disclose whether the Fund intends to invest in
affiliated ETFs.
RESPONSE. We have further revised the first sentence under "Principal
Investment Strategy" as follows (new language appears in bold for the
purposes of this correspondence only):
"The Fund seeks to achieve its investment objective by investing in
exchange-traded funds ("ETFs"), SOME OF WHICH MAY BE AFFILIATED WITH
THE FUND, and other financial instruments that: (1) provide exposure
to, or closely correlate with, the performance of certain foreign
countries included in the MSCI World ex-US Index (the "Index") and (2)
have the potential to generate returns, before fees and expenses, in
excess to those of the Index."
3. COMMENT. Please revise the language in the first sentence under
"Example" as appropriate for A-Class Shares and C-Class Shares.
RESPONSE. We have revised the language as follows:
"This Example is intended to help you compare the cost of investing in
the A-Class Shares or C-Class Shares of the International Rotation Fund
with the cost of investing in other mutual funds."
4. COMMENT. Please consider revising the reference to "extremely volatile"
foreign markets in the discussion of the "Foreign Issuer Exposure Risk"
included in Item 4 in consideration of the fact that the Index includes
developed market countries.
RESPONSE. We have revised the language as follows (new language appears
in bold for the purposes of this correspondence only):
"Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices in foreign markets MAY
FLUCTUATE MORE THAN THOSE OF SECURITIES TRADED ON U.S. MARKETS."
5. COMMENT. Please confirm whether the list of sales charge waivers
applicable to A-Class Shares is an exhaustive list. If it is not,
please revise the list to include all of the types of investors for
which the sales charge will be waived.
RESPONSE. We have confirmed with our client that the list included
under "Sales Charge Waivers" is an exhaustive list of the types of
investors that are eligible to receive sales charge waivers. We have
also revised the language preceding the list to clarify this point as
follows:
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"The sales charge on purchases of A-Class Shares is waived for the
following types of investors:"
6. COMMENT. Please explain who will make the Fund whole should an investor
fail to pay any losses incurred in their account as a result of a
decrease in the Fund's NAV that occurred between the time the investor
placed his or her order and the time he or she cancelled that order.
RESPONSE. The Fund may pursue all available options for recourse,
including seeking reimbursement from the shareholder or any financial
intermediary involved in the order. The Advisor is under no obligation
to make the Fund whole, but may voluntarily make a payment to the Fund
to cover such loss.
7. COMMENT. Please confirm that the information provided under
"Performance of Comparable Account" is disclosed in a manner that is
consistent with the guidance set forth in the Nicholas-Applegate
No-Action Letters.
RESPONSE. We believe that the comparable account information is
disclosed in a manner that is consistent with such guidance.
***
I hereby acknowledge on behalf of Rydex Series Funds (the "Trust") that: (i) the
Trust is responsible for the adequacy and accuracy of the disclosure in its
registration statement; (ii) SEC staff comments or changes to disclosure in
response to staff comments in the registration statement reviewed by the staff
do not foreclose the SEC from taking any action with respect to the registration
statement; and (iii) the Trust may not assert SEC staff comments as a defense in
any proceeding initiated by the SEC or any person under the federal securities
laws of the United States. ***
If you have any additional questions or comments, please do not hesitate to
contact either John McGuire at 202.739.5654 or me at 202.739.5684.
Sincerely,
/s/ Laura E. Flores
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Laura E. Flores
cc: Joanna M. Haigney
W. John McGuire, Esq.
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