Legal Proceedings
Tribune Company
Rydex Series Funds has been named as a defendant and a putative member of
the proposed defendant class of shareholders in the case entitled Official
Committee of Unsecured Creditors of Tribune Co. v. FitzSimons, No. 12-2652
(S.D.N.Y.) (formerly Adv. Pro. No. 10-54010 (Bankr. D. Del.)) (the
FitzSimons Action), as a result of ownership of shares in the Tribune
Company (Tribune) in 2007 by certain series of the Rydex Series Funds
when Tribune effected a leveraged buyout transaction (LBO) by which
Tribune converted to a privately-held company. In its complaint, the
Unsecured Creditors Committee (the UCC) has alleged that, in connection
with the LBO, insiders and shareholders were overpaid for their Tribune
stock using financing that the insiders knew would, and ultimately did,
leave the Tribune insolvent. The UCC has asserted claims against certain
insiders, shareholders, professional advisers, and others involved in the
LBO, and is attempting to obtain from these individuals and entities the
proceeds paid out in connection with the LBO.

Rydex Series Funds also has been named as a defendant in one or more of a
group of lawsuits filed by a group of Tribune creditors that allege state
law constructive fraudulent conveyance claims against former Tribune
shareholders (the SLCFC actions).

The FitzSimons action and the SLCFC actions have been consolidated with
the majority of the other Tribune LBO-related lawsuits in a multidistrict
litigation proceeding captioned In re Tribune Company Fraudulent
Conveyance Litig., No. 11-md-2696 (S.D.N.Y.) (the MDL Proceeding). On
November 6, 2012, the defendants moved to dismiss the SLCFC actions.
On December 21, 2012, the plaintiffs filed a memorandum in opposition to
the motion to dismiss. On February 4, 2013, the defendants filed a reply
in support of the motion to dismiss. The Court has not yet issued a
decision on the motion.

None of these lawsuits allege any wrongdoing on the part of Rydex Series
Funds. The following series of Rydex Series Funds held shares of Tribune
and tendered these shares as part of Tribunes LBO: Nova Fund, S&P 500 Pure
Value Fund, Multi-Cap Core Equity Fund, S&P 500 Fund, Multi-Hedge
Strategies Fund and Hedged Equity Fund (the Funds). The value of the
proceeds received by the foregoing Funds was $28,220, $109,242, $9,860,
$3,400, $1,181,160, and $10,880, respectively. At this stage of the
proceedings, Rydex Series Funds is not able to make a reliable predication
as to the outcome of these lawsuits or the effect, if any, on a Funds net
asset value.

Lyondell Chemical Company
In December 2011, Rydex Series Funds was named as a defendant in
Weisfelner, as Trustee of the LB Creditor Trust, v. Fund 1 (In re Lyondell
Chemical Co.), Adv. Pro. No. 10-4609 (Bankr. S.D.N.Y.).

Similar to the claims made in the Tribune matter, the Weisfelner complaint
seeks to have set aside and recovered as fraudulent transfers from former
Lyondell Chemical Company (Lyondell) shareholders the consideration paid
to them pursuant to the cash out merger of Lyondell shareholders in
connection with the combination of Lyondell and Basell AF in 2007.
Lyondell filed for bankruptcy in 2008.

A motion to dismiss is currently pending before the Bankruptcy Court.

This lawsuit does not allege any wrongdoing on the part of Rydex Series
Funds. The following series of Rydex Series Funds received cash proceeds
from the cash out merger in the following amounts: Basic Materials Fund -
$1,725,168, U.S. Long Short Momentum Fund - $2,193,600, Global 130/30
Strategy Fund - $37,920, Hedged Equity Fund - $1,440, and Multi-Hedge
Strategies Fund - $1,116,480. At this stage of the proceedings, Rydex
Series Funds is not able to make a reliable predication as to the outcome
of these lawsuits or the effect, if any, on a Funds net asset value.