RYDEX MULTI-CAP CORE EQUITY FUND PROXY
FREQUENTLY ASKED QUESTIONS
Q. WHY ARE SHAREHOLDERS RECEIVING A PROXY STATEMENT?
A. Shareholders of Rydex Multi-Cap Core Equity Fund, as of the September 11,
2008 record date, are receiving proxy materials--a booklet that includes the
Proxy Statement and a Proxy Card--because they have the right to vote on each of
the proposals concerning their investment in the fund. Each of the proposals
relates to actions that need to be taken in response to changes in the structure
and operation of the fund.
Q. WHAT ARE SHAREHOLDERS BEING ASKED TO VOTE ON?
A. The Advisor recently recommended, and the fund's Board approved, a new
principal investment strategy that will change the investment focus of the fund
from a core equity strategy to a 130/30 global equity strategy under the new
name Rydex Global 130/30 Strategy Fund. There is a proposal to hire Security
Global Advisors LLC ("SGI") as the fund's subadvisor and a proposal to increase
the fund's management fee. Shareholders of the fund are entitled to vote
separately on the approval of SGI's subadvisory agreement and the amendment to
Rydex's investment advisory agreement, which reflects the new management fee for
the fund.
Q. WHAT IS A 130/30 STRATEGY?
A. A 130/30 strategy involves selling short securities that the advisor believes
are likely to decrease in value and buying securities "long" that the advisor
expects will experience price appreciation. The strategy is referred to as
"130/30" because the advisor sells short approximately 30% of the value of the
fund's assets and uses the proceeds of those short sales, along with the other
assets of the fund, to take long positions.
Q. WHAT IS THE OBJECTIVE AND STRATEGY OF RYDEX GLOBAL 130/30 STRATEGY FUND?
A. The fund's objective seeks to provide long-term capital appreciation and its
strategy is to invest in long and short positions of common stock of companies
from all over the world--holding long securities that may outperform the market,
and selling short securities that may underperform the market.
Q. WHY IS RYDEX INVESTMENTS CHANGING THE INVESTMENT STRATEGY OF RYDEX MULTI-CAP
CORE EQUITY FUND?
A. The advisor believes that the fund's new investment strategy may be
appropriate for investors seeking a "core" investment focus for their own
portfolios. Although the fund's new investment strategy differs in many respects
from the fund's current investment strategy, the fund's investment objective of
long-term capital appreciation will not be changing. It is recommended that
shareholders consult with their financial advisor to determine if the fund is
right for their portfolio.
Q. WHAT ARE THE ADDITIONAL RISKS TO THE FUND IF THE PROPOSALS ARE PASSED AND THE
NEW INVESTMENT STRATEGY IS IMPLEMENTED?
A. If approved by shareholders, the new investment strategy may subject
shareholders to additional risks, including: currency risk; foreign issuer
exposure risk; investment in investment companies risk; leveraging risk; and
short sales risk. The fund may not be suitable for all investors. There are
special risk considerations associated with international investing, including
fluctuating exchange rates, government regulations and differences in liquidity,
which may affect the volatility of the fund. The use of derivatives, such as
futures, options and swap agreements may expose the fund to additional risks.
The use of leverage by a mutual fund increases the risk to the fund. The more a
mutual fund invests in leverage instruments, the more the leverage will magnify
any gains or losses on those investments. Additionally, short-selling involves
increased risks and costs. You risk paying more for a security than you received
from its sale. There is no assurance that any Rydex fund will achieve its
objective and/or strategy.
Q. WHY IS RYDEX RAISING ITS FEES FOR THE NEW FUND?
A. In view of the increased complexities associated with investing assets under
a global equity 130/30 strategy, the Advisor recommended, and the Board
approved, an increase in the fund's management fee. In addition, the proposal
aligns the management fee and subadvisory fee with competitive market expenses
for similar funds and makes it competitive.
Q. WHY IS RYDEX ADDING A SUBADVISOR TO THE FUND?
A. To bring Rydex Global 130/30 Strategy Fund to market, SGI was selected as the
subadvisor to the fund. SGI has a talented and capable team of portfolio
managers and research analysts with substantial experience in managing assets in
accordance with global equity mandates as well as alternative investment
strategies, such as the fund's new 130/30 strategy.
Q. WHO IS SECURITY GLOBAL INVESTORS?
A. SGI, like Rydex Investments, is an indirect wholly-owned subsidiary of
Security Benefit Corporation. SGI was founded in 1961, has operated as an
investment advisor since 1970 and managed more than $11.5 billion in assets as
of June 30, 2008. SGI has a team of professionals dedicated to the firm's Global
Equity mandate and has extensive experience managing client assets in accordance
with long/short strategies.
Q. WHAT IS RYDEX'S ROLE GOING TO BE WITH REGARD TO THE FUND AFTER IT IS
SUBADVISED?
A. Rydex will continue to serve as the fund's investment advisor and will be
responsible for supervising the activities of SGI, subject to the oversight of
the Board.
Q. WHAT HAPPENS IF I STAY INVESTED IN RYDEX MULTI-CAP CORE EQUITY FUND AND THE
FUND IS CONVERTED INTO THE NEW GLOBAL 130/30 FUND?
A. Since no transaction would be involved, the conversion of shares would not be
considered a taxable event. However, shareholders will be subject to the
management fees of the new fund. It is recommended that shareholders consult
with their financial advisor to determine if the new fund is right for their
portfolio.
Q. IF BOTH PROPOSALS PASS, WHEN WILL THE CHANGES TAKE EFFECT?
A. If shareholders approve both proposals, it is expected that the fund will
implement the changes described in the Proxy Statement as soon as practicable.
Rydex will provide additional updates to shareholders as necessary regarding the
implementation of the changes.
Q. WHAT WILL HAPPEN TO RYDEX MULTI-CAP CORE EQUITY FUND IF THE PROXY IS NOT
PASSED?
A. Each of the proposals must be passed in order to convert Rydex Multi-Cap Core
Equity Fund into Rydex Global 130/30 Strategy Fund. If any of the proposals do
not pass, the fund will continue to operate as Rydex Multi-Cap Core Equity Fund
and will not experience any investment strategy, subadvisor or management fee
changes.
Q. WILL THERE BE SIMILAR CHANGES TO OTHER RYDEX FUNDS?
A. Only Rydex Multi-Cap Core Equity Fund is affected by this proxy. No other
fund changes are being proposed at this time.
Q. AM I SUBJECT TO REDEMPTION FEES IF THEY REDEEM THEIR SHARES OF RYDEX
MULTI-CAP CORE EQUITY FUND?
A. The existing redemption fee policy remains in effect and states that a 1.00%
redemption fee will be imposed on all fund shares redeemed within thirty (30)
days of the date of purchase. Please read the fund's prospectus for more
information regarding the redemption fee policy.
Q. HOW DOES THE BOARD SUGGEST THAT SHAREHOLDERS VOTE?
A. After careful consideration, the Board voted unanimously to recommend that
shareholders vote "FOR" the proposals. Please see the section of the Proxy
Statement entitled "Trustees' Considerations" with respect to each Proposal for
a discussion of the Board's considerations in making such recommendations.
Q. HOW DO SHAREHOLDERS PLACE THEIR VOTE?
A. Shareholders may provide the fund with their vote by mail, online, by phone
or in person at the special shareholders meeting scheduled for November 7, 2008.
If voting by mail, they can use the postage-paid envelope that was sent to them
along with their Proxy Card. To vote by phone, call 888.221.0697. To vote
online, visit www.proxyweb.com. When voting online or by phone, shareholders
should have their Proxy Card in hand.
Q. WHOM DO I CALL IF I HAVE QUESTIONS?
A. For questions, please call our proxy agent, Broadridge Financial Solutions,
Inc., at 866.615.7265 between 9:30 a.m. and 9:00 p.m., Eastern Time, Monday
through Friday, or between 10:00 a.m. and 9:00 p.m., Eastern Time, on Saturday.
FOR MORE COMPLETE INFORMATION REGARDING THE FUND, PLEASE CALL 800.258.4332 OR
CLICK HERE 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.
For financial professional use only. Do not distribute to the public.
Rydex Distributors, Inc., an affiliate of Rydex Investments, is the distributor
of Rydex funds.