New York-based Rydex Investments announces this week that the Internal Revenue Service has cleared the company to use commodities-linked structured notes in its Rydex Commodities Fund through a private letter ruling.

The IRS said that, starting in June, commodity swaps could not count as income to a mutual fund.

Rydex Director of Portfolio Management Jim King said that as of May 1, the fund will put minor limitations on commodities fund trading, due to the change. In its other funds, Rydex allows unlimited trading.

The IRS letter pertains to a very specific type of note, King said.

In turn, Rydex will cap its total expenses at 1.2% of the $43.5 million  fund and waive 35 basis points from its management fee until June 30, 2007.

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