SOURCE: Rydex Investments

September 20, 2005 11:00 ET

Rydex Launches Two Mutual Funds Using Hedge Fund Strategies

New Quant-Oriented Funds Seek to Deliver Benefits of Hedge Fund Investing in Mutual Fund Vehicle

ROCKVILLE, MD -- (MARKET WIRE) -- September 20, 2005 -- Rydex Investments today announced a significant expansion of its alternative product line-up business with the launch of two mutual funds that seek to offer hedge fund-like strategies and returns. The new funds -- Rydex Hedged Equity Fund and Rydex Absolute Return Strategies Fund -- are designed to give investors access to popular hedge fund-like strategies with the liquidity, transparency and lower-cost benefits of mutual fund investing.

"The introduction of these funds gives investors new choices in absolute return investing," said Jeff Joseph, managing director Rydex Capital Partners. "Interest in hedge funds continues to grow and many individuals have had limited choices to gain exposure to these vehicles. In addition, the recent challenging market environment has caused more investors to seek access to absolute return investment strategies. We believe our new funds are well positioned to help investors meet their investment goals by seeking hedge fund-like returns within a mutual fund, thus offering the advantages of convenient access, liquidity and transparency within an SEC-regulated vehicle."

Rydex Hedged Equity Fund (RYSTX) seeks to provide capital appreciation consistent with the risks and returns of long/short hedge funds, and Rydex Absolute Return Strategy Fund (RYMSX) seeks returns similar to those produced by the hedge fund universe. The new funds harness Rydex's proprietary approach to managing money that is grounded in intensive quantitative research.

Joseph said Rydex portfolio department research and analysis shows that most of the risk-reward of hedge fund investing can be delivered by using "a quantitative process that can successfully identify, isolate and invest in the styles and strategies that comprise the majority of hedge fund returns."

"Our style analysis shows that delivering consistent hedge fund-like returns may be possible by focusing on the opportunity sets of skill-based strategies," said Mike Dellapa, portfolio manager at Rydex. "Alpha is hard to achieve on a consistent basis, and is increasingly hard to attain in directionless or range-bound markets. Thus, the new funds seek to deliver the type of performance typically sought after by hedge fund investors, but with an approach that takes advantage of premiums in the market in an attempt to deliver consistent returns."

The funds will be managed by Rydex's portfolio team which has extensive quantitative investing experience. The funds will employ a variety of strategies including going short and using leverage and arbitraging. The funds, which have a minimum investment of $25,000 for direct investors in H-Class shares, $1,000 for A- and C-Class retirement accounts and $2,500 for all other A- and C-Class share accounts, are also significant because the fees are in keeping with those charged by mutual funds. Investors will have access to daily NAVs via their phone system and web site.

For more information about the new funds or Rydex's other mutual fund offerings, please visit www.rydexinvestments.com or call 800-820-0888.

About Rydex

Rydex Investments, the investment advisor to Rydex funds, continues to drive change in the financial industry by introducing investment products and services that challenge conventional thinking, empower investors and provide essential new options for uncertain market conditions. Rydex manages $13 billion in assets via more than 50 mutual funds, including two ETFs, as well as a registered fund of hedge funds. For more information, call 800.820.0888 or visit www.rydexinvestments.com.

For more complete information regarding Rydex funds please call 800.820.0888 for a prospectus. Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. The fund's prospectus contains this and other information about the fund. Please read the prospectus carefully before you invest or send money.

Both Rydex Absolute Return Strategies Fund and Rydex Hedged Equity Fund are subject to a number of risks and may not be suitable for all investors. The funds' use of derivatives such as futures, options and swap agreements may expose the funds to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. The more the funds invest in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. The funds' use of short selling involves increased risks and costs. The funds risk paying more for a security than they received from its sale. Rydex Absolute Return Strategies Fund's investments in high yield securities and unrated securities of similar credit quality ("junk bonds") may be subject to greater levels of interest rate, credit and liquidity risk than funds that do not invest in such securities. The fund's fixed-income investments will change in value in response to interest rate changes and other factors. The fund's exposure to foreign currencies subjects the fund to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of short positions, that the U.S. dollar will decline in value relative to the currency being hedged. Additionally, diplomatic, political or economic developments in foreign countries could adversely impact the fund's investment in securities of foreign companies. These risks may cause the fund to experience higher losses and/or volatility than a fund that does not invest in derivatives, use leverage or short sales or have exposure to high yield/fixed income securities, foreign currencies and/or securities. Rydex Hedged Equity Fund's fixed-income investments will change in value in response to interest rate changes and other factors. In addition, the value of securities with longer maturities will fluctuate more in response to interest rate changes. Additionally, diplomatic, political or economic developments in foreign countries could adversely impact the fund's investment in securities of foreign companies. These risks may cause the fund to experience higher losses and/or volatility than a fund that does not invest in derivatives, use leverage or short sales or have exposure to fixed income or foreign securities.

These are non-diversified funds. This presents greater risk of loss of principal as the financial condition or market's assessment of such securities changes.

Rydex Distributors, Inc., an affiliate of Rydex Investments and Rydex Capital Partners, is the distributor of the Rydex funds.

Contact Information