485BPOS 1 four85b_rydex.htm 485BPOS

<R>

As filed with the Securities and Exchange Commission on April 25, 2003

</R>

File No. 333-84797
File No. 811-09525

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES

ACT OF 1933 (X)

PRE-EFFECTIVE AMENDMENT NO.___ ( )

<R>

POST-EFFECTIVE AMENDMENT NO. 6 (X)

</R>

and

REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 (X)

<R>

AMENDMENT NO. 7 (X)

</R>

RYDEX DYNAMIC FUNDS
(Exact Name of Registrant as Specified in Charter)
c/o 9601 Blackwell Road, Suite 500
Rockville, Maryland 20850
(Address of Principal Executive Offices, Zip Code)

Registrant’s Telephone Number, including Area Code (301) 296-5100

Albert P. Viragh, Jr.
Rydex Funds
9601 Blackwell Road, Suite 500
Rockville, Maryland 20850
(Name and Address of Agent for Service of Process)

<R>

Copies to:
W. John McGuire
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Ave, N.W.
Washington, D.C. 20004

It is proposed that this filing will become effective (check appropriate box):
____ immediately upon filing pursuant to paragraph (b)
_X__on (April 30, 2003) pursuant to paragraph (b)(1)(v)
____ 60 days after filing pursuant to paragraph (a)(1)
____ on (date) pursuant to paragraph (a)(1)
____ 75 days after filing pursuant to paragraph (a)(2)
____ on (date) pursuant to paragraph (a)(2) of rule 485

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a previously-filed post-effective amendment.

</R>

RYDEX DYNAMIC FUNDS

Prospectus

H-Class Shares

May 1, 2003

Titan 500 Fund
Tempest 500 Fund
Velocity 100 Fund
Venture 100 Fund

The Securities and Exchange Commission has not approved or disapproved the Trust’s shares or passed upon the accuracy or adequacy of this Prospectus.
Any representation to the contrary is a criminal offense.

TABLE OF CONTENTS

1	RYDEX DYNAMIC FUNDS OVERVIEW
2		Titan 500 Fund
5		Tempest 500 Fund
9		Velocity 100 Fund
12		Venture 100 Fund
16	INVESTMENTS AND RISK
22	SHAREHOLDER INFORMATION
23	TRANSACTION INFORMATION
25	BUYING FUND SHARES
27	SELLING FUND SHARES
29	EXCHANGING FUND SHARES
31	RYDEX ACCOUNT POLICIES
32	DISTRIBUTION AND SHAREHOLDER SERVICES PLAN
32	DIVIDENDS AND DISTRIBUTIONS
33	TAX INFORMATION
34	MANAGEMENT OF THE FUNDS
36	FINANCIAL HIGHLIGHTS
40	BENCHMARK INFORMATION

PROSPECTUS 1

RYDEX DYNAMIC FUNDS
H CLASS SHARES
9601 BLACKWELL ROAD, SUITE 500, ROCKVILLE, MARYLAND 20850
800.820.0888 • 301.296.5100 • WWW.RYDEXFUNDS.COM

Rydex Dynamic Funds (the “Trust”) is a mutual fund complex offering professionally managed investment portfolios, four of which are described in this Prospectus (the “Dynamic Funds” or the “Funds”). H-Class Shares of the Dynamic Funds are sold principally to professional money managers (“intermediaries”) and to investors who take part in certain strategic and tactical asset allocation investment programs. Investors may exchange shares of the Funds through the Rydex Web site – www.rydexfunds.com – and over the phone.

THE FUNDS’ INVESTMENT OBJECTIVES
Each Fund has a separate investment objective. The investment objective of each Dynamic Fund is non-fundamental and may be changed without shareholder approval.

RISKS OF INVESTING IN THE FUNDS
The value of the Funds may fluctuate. In addition, Fund shares:

MAY DECLINE IN VALUE, AND YOU MAY LOSE MONEY
ARE NOT FEDERALLY INSURED
ARE NOT GUARANTEED BY ANY GOVERNMENT AGENCY
ARE NOT BANK DEPOSITS
ARE NOT GUARANTEED TO ACHIEVE THEIR OBJECTIVES

TITAN 500 FUND (RYTNX)

FUND OBJECTIVE

The Titan 500 Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the performance of the S&P 500^®Index (the “underlying index”).

If the Fund meets its objective, the value of the Fund’s shares will tend to increase on a daily basis by 200% of the value of any increase in the underlying index. When the value of the underlying index declines, the value of the Fund’s shares should also decrease on a daily basis by 200% of the value of any decrease in the underlying index (e.g., if the underlying index goes down by 5%, the value of the Fund’s shares should go down by 10% on that day).

PORTFOLIO INVESTMENT STRATEGY

The Fund pursues its investment objective through what is referred to as a “master-feeder arrangement.” The Fund invests all of its assets in the Titan 500 Master Fund, a separate series of the Trust with an identical investment objective.

The Titan 500 Master Fund employs as its portfolio investment strategy a program of investing in leveraged instruments, such as equity index swaps, futures contracts and options on securities, futures contracts, and stock indices. Equity index swaps, futures and options contracts enable the Titan 500 Master Fund to pursue its objective without investing directly in the securities included in the benchmark, or in the same proportion that those securities are represented in that benchmark. On a day-to-day basis, the Titan 500 Master Fund holds U.S. Government securities or cash equivalents to collateralize these futures and options contracts. The Titan 500 Master Fund also may purchase equity securities.

RISK CONSIDERATIONS

The Titan 500 Master Fund is subject to a number of risks that will affect the value of its shares, including:

EQUITY RISK – The equity markets are volatile, and the value of the Fund’s futures and options contracts and other securities may fluctuate significantly from day to day. Equity market volatility may cause the value of your investment in the Fund to decrease.

DERIVATIVE RISK – The Fund’s use of equity derivatives to pursue its investment objective may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. These risks may cause the Fund to experience higher losses than a fund that does not use derivatives.

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

SWAP COUNTERPARTY CREDIT RISK – The Fund is subject to credit risk on the amount it expects to receive from swap agreement counterparties. If a swap counterparty defaults on its payment obligations to the Fund, this default will cause the value of your investment in the Fund to decrease.

PROSPECTUS 3

TRACKING ERROR RISK – The Advisor may not be able to cause the Fund’s performance to match that of the Fund’s benchmark, either on a daily or aggregate basis. Tracking error may cause the Fund’s performance to be less than you expect.

TRADING HALT RISK – If a trading halt occurs, the Fund may temporarily be unable to purchase or sell options or futures contracts. Such a trading halt near the time the Fund prices its shares may limit the Fund’s ability to use leverage and may prevent the Fund from achieving its investment objective.

INVESTOR PROFILE

Investors who expect the S&P 500^®Index to go up and want highly accelerated investment gains when that index does so. These investors must also be willing to bear the risk of equally accelerated losses if the S&P 500^®Index goes down.

PERFORMANCE

The bar chart and table below show the performance of the Titan 500 Fund H-Class both year by year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

TITAN 500 FUND

HIGHEST QUARTER RETURN	18.88	%
(quarter ended 12/31/01)

LOWEST QUARTER RETURN	- 35.04	%
(quarter ended 9/30/02)

AVERAGE ANNUAL TOTAL RETURN (for periods ended December 31, 2002)¹

					FUND RETURN
					AFTER TAXES ON
			FUND RETURN		DISTRIBUTIONS
	FUND RETURN		AFTER TAXES ON		AND SALE OF
	BEFORE TAXES		DISTRIBUTIONS		FUND SHARES
	H-CLASS SHARES		H-CLASS SHARES²		H-CLASS SHARES²		S&P 500 INDEX³

PAST ONE YEAR	-46.60	%	-46.60	%	-28.61	%	-22.09	%
SINCE INCEPTION	-38.28	%	-38.28	%	-27.80	%	-16.41	%
(5/19/00)

¹ These figures assume the reinvestment of dividends and capital gains distributions.

² After-tax returns are calculated using the highest historical federal income and capital gains tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. Fund Returns After Tax on Distributions assume a continued investment in the fund and shows the effect of taxes on fund distributions. Fund Returns After Taxes on Distributions and Sale of Fund Shares assume all shares were redeemed at the end of each measurement period, and shows the effect of any taxable gain (or offsetting loss) on redemption, as well as the effects of taxes on fund distributions. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns for other classes of shares will differ from those shown above.

³ The S&P 500^®Index is a capitalization-weighted index composed of 500 common stocks, which are chosen by the Standard & Poor’s Corporation (“S&P”). Returns reflect no deduction for fees, expenses, or taxes.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold H-Class Shares of the Titan 500 Fund.

SHAREHOLDER FEES*	NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)†
MANAGEMENT FEES	0.90	%
DISTRIBUTION (12b-1) FEES	0.25	%
OTHER EXPENSES	0.60	%
TOTAL ANNUAL FUND OPERATING EXPENSES	1.75	%

*	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Titan 500 Master Fund.

EXAMPLE

This Example is intended to help you compare the cost of investing in the H-Class Shares of the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time period indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s estimated operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your cost would be:

TITAN 500 FUND	1 YEAR		3 YEARS		5 YEARS		10 YEARS

H-CLASS	$	184	$	569	$	979	$	2,122

PROSPECTUS 5

TEMPEST 500 FUND (RYTPX)

FUND OBJECTIVE

The Tempest 500 Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the inverse (opposite) performance of the S&P 500^®Index (the “underlying index”).

If the Fund meets its objective, the value of the Fund’s shares will tend to increase on a daily basis by 200% of the value of any decrease in the underlying index (e.g., if the underlying index goes down by 5%, the value of the Fund’s shares should go up by 10% on that day). When the value of the underlying index increases, the value of the Fund’s shares should decrease on a daily basis by 200% of the value of any increase in the underlying index (e.g., if the underlying index goes up by 5%, the value of the Fund’s shares should go down by 10% on that day).

PORTFOLIO INVESTMENT STRATEGY

The Fund pursues its investment objective through what is referred to as a “master-feeder arrangement.” The Fund invests all of its assets in the Tempest 500 Master Fund, a separate series of the Trust with an identical investment objective.

The Tempest 500 Master Fund employs as its portfolio investment strategy a program of engaging in short sales of securities and investing in leveraged instruments, such as equity index swaps, futures contracts and options on securities, futures contracts, and stock indices. Equity index swaps, short sales, futures and options contracts enable the Tempest 500 Master Fund to pursue its objective without selling short each of the securities included in the benchmark. On a day-to-day basis, the Tempest 500 Master Fund holds U.S. Government securities or cash equivalents to collateralize these futures and options contracts.

RISK CONSIDERATIONS

The Tempest 500 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

SHORT SALES RISK – Short sales are transactions in which the Fund sells a security it does not own. If the security the Fund sold short goes down in price between the time the Fund sells the security and closes its short position, the Fund will realize a gain on the transaction. Conversely, if the security goes up in price during the period, the Fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.

INVESTOR PROFILE

Investors who expect the S&P 500^®Index to go down and want highly accelerated investment gains when that index does so. These investors must also be willing to bear the risk of equally accelerated losses if the S&P 500^®Index goes up.

PERFORMANCE

The bar chart and table on the following page show the performance of the Tempest 500 Fund H-Class both year by year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

PROSPECTUS 7

HIGHEST QUARTER RETURN	34.51	%
(quarter ended 9/30/01)

LOWEST QUARTER RETURN	-19.40	%
(quarter ended 12/31/01)

AVERAGE ANNUAL TOTAL RETURN (for periods ended December 31, 2002)¹

					FUND RETURN
					AFTER TAXES ON
			FUND RETURN		DISTRIBUTIONS
	FUND RETURN		AFTER TAXES ON		AND SALE OF
	BEFORE TAXES		DISTRIBUTIONS		FUND SHARES
	H-CLASS SHARES		H-CLASS SHARES²		H-CLASS SHARES²		S&P 500 INDEX³

PAST ONE YEAR	37.48	%	37.05	%	23.01	%	-22.09	%
SINCE INCEPTION	27.56	%	27.29	%	22.67	%	-16.41	%
(5/19/00)

¹ These figures assume the reinvestment of dividends and capital gains distributions.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold H-Class Shares of the Tempest 500 Fund.

SHAREHOLDER FEES*	NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)†
MANAGEMENT FEES	0.90	%
DISTRIBUTION (12b-1) FEES	0.25	%
OTHER EXPENSES	0.60	%
TOTAL ANNUAL FUND OPERATING EXPENSES	1.75	%

*	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Tempest 500 Master Fund.

EXAMPLE

This Example is intended to help you compare the cost of investing in the H-Class Shares of the Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time period indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s estimated operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your cost would be:

TEMPEST 500 FUND	1 YEAR		3 YEARS		5 YEARS		10 YEARS

H-CLASS	$	184	$	569	$	979	$	2,122

PROSPECTUS 9

VELOCITY 100 FUND (RYVYX)

FUND OBJECTIVE

The Velocity 100 Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the performance of the Nasdaq 100 Index^®(the “underlying index”).

PORTFOLIO INVESTMENT STRATEGY

The Fund pursues its investment objective through what is referred to as a “master-feeder arrangement.” The Fund invests all of its assets in the Velocity 100 Master Fund, a separate series of the Trust with an identical investment objective.

The Velocity 100 Master Fund employs as its portfolio investment strategy a program of investing in leveraged instruments, such as equity index swaps, futures contracts and options on securities, futures contracts, and stock indices. Equity index swaps, futures and options contracts enable the Velocity 100 Master Fund to pursue its objective without investing directly in the securities included in the benchmark, or in the same proportion that those securities are represented in that benchmark. On a day-to-day basis, the Velocity 100 Master Fund holds U.S. Government securities or cash equivalents to collateralize these futures and options contracts. The Velocity 100 Master Fund also may purchase equity securities.

RISK CONSIDERATIONS

The Velocity 100 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

INVESTOR PROFILE

Investors who expect the Nasdaq 100 Index^®to go up and want highly accelerated investment gains when that index does so. These investors must also be willing to bear the risk of equally accelerated losses if the Nasdaq 100 Index^®goes down.

PERFORMANCE

The bar chart and table below show the performance of the Velocity 100 Fund H-Class both year by year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

HIGHEST QUARTER RETURN	72.09	%
(quarter ended 12/31/01)

LOWEST QUARTER RETURN	-62.24	%
(quarter ended 9/30/01)

AVERAGE ANNUAL TOTAL RETURN (for periods ended December 31, 2002)¹

					FUND RETURN
					AFTER TAXES ON
			FUND RETURN		DISTRIBUTIONS
	FUND RETURN		AFTER TAXES ON		AND SALE OF
	BEFORE TAXES		DISTRIBUTIONS		FUND SHARES		NASDAQ
	H-CLASS SHARES		H-CLASS SHARES²		H-CLASS SHARES²		100 INDEX³

PAST ONE YEAR	-68.47	%	-68.47	%	-42.04	%	-37.58	%
SINCE INCEPTION	-70.81	%	-70.81	%	-42.89	%	-36.25	%
(5/24/00)

¹ These figures assume the reinvestment of dividends and capital gains distributions.

³ The Nasdaq 100 Index^®is a modified capitalization-weighted index composed of 100 of the largest non-financial companies listed on the Nasdaq Stock Market Inc. Returns reflect no deduction for fees, expenses, or taxes.

PROSPECTUS 11

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold H-Class shares of the Velocity 100 Fund.

SHAREHOLDER FEES*	NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)†
MANAGEMENT FEES	0.90	%
DISTRIBUTION (12b-1) FEES	0.25	%
OTHER EXPENSES	0.60	%
TOTAL ANNUAL FUND OPERATING EXPENSES	1.75	%

*	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Velocity 100 Master Fund.

EXAMPLE

This Example is intended to help you compare the cost of investing in the H-Class Shares of the Fund with the cost of investing in other mutual funds.

VELOCITY 100 FUND	1 YEAR		3 YEARS		5 YEARS		10 YEARS

H-CLASS	$	184	$	569	$	979	$	2,122

VENTURE 100 FUND (RYVNX)

FUND OBJECTIVE

The Venture 100 Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the inverse (opposite) performance of the Nasdaq 100 Index^®(the “underlying index”).

PORTFOLIO INVESTMENT STRATEGY

The Fund pursues its investment objective through what is referred to as a “master-feeder arrangement.” The Fund invests all of its assets in the Venture 100 Master Fund, a separate series of the Trust with an identical investment objective.

The Venture 100 Master Fund employs as its portfolio investment strategy a program of engaging in short sales of securities and investing in leveraged instruments, such as equity index swaps, futures contracts and options on securities, futures contracts, and stock indices. Equity index swaps, short sales, futures and options contracts enable the Venture 100 Master Fund to pursue its objective without selling short each of the securities included in the benchmark. On a day-to-day basis, the Venture 100 Master Fund holds U.S. Government securities or cash equivalents to collateralize these futures and options contracts.

RISK CONSIDERATIONS

The Venture 100 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

PROSPECTUS 13

SHORT SALES RISK - Short sales are transactions in which the Fund sells a security it does not own. If the security the Fund sold short goes down in price between the time the Fund sells the security and closes its short position, the Fund will realize a gain on the transaction. Conversely, if the security goes up in price during the period, the Fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.

INVESTOR PROFILE

Investors who expect the Nasdaq 100 Index^®to go down and want highly accelerated investment gains when that index does so. These investors must also be willing to bear the risk of equally accelerated losses if the Nasdaq 100 Index^®goes up.

PERFORMANCE

The bar chart and table on the following page show the performance of the Venture 100 Fund H-Class both year by year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

HIGHEST QUARTER RETURN	116.97	%
(quarter ended 9/30/01)

LOWEST QUARTER RETURN	-51.13	%
(quarter ended 12/31/01)

AVERAGE ANNUAL TOTAL RETURN (for periods ended December 31, 2002)¹

					FUND RETURN
					AFTER TAXES ON
			FUND RETURN		DISTRIBUTIONS
	FUND RETURN		AFTER TAXES ON		AND SALE OF
	BEFORE TAXES		DISTRIBUTIONS		FUND SHARES		NASDAQ
	H-CLASS SHARES		H-CLASS SHARES²		H-CLASS SHARES²		100 INDEX³

PAST ONE YEAR	50.92	%	49.30	%	31.24	%	-37.58	%
SINCE INCEPTION	16.52	%	15.86	%	13.16	%	-34.96	%
(5/23/00)

¹ These figures assume the reinvestment of dividends and capital gains distributions.

PROSPECTUS 15

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold H-Class Shares of the Venture 100 Fund.

SHAREHOLDER FEES*	NONE
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)†
MANAGEMENT FEES	0.90	%
DISTRIBUTION (12b-1) FEES	0.25	%
OTHER EXPENSES	0.60	%
TOTAL ANNUAL FUND OPERATING EXPENSES	1.75	%

*	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Venture 100 Master Fund.

EXAMPLE

VENTURE 100 FUND	1 YEAR		3 YEARS		5 YEARS		10 YEARS

H-CLASS	$	184	$	569	$	979	$	2,122

MORE INFORMATION ABOUT FUND
INVESTMENTS AND RISK

Each Dynamic Fund’s objective is to provide investment results that match the performance measured on a daily basis of a specific benchmark. The current benchmark used by each Dynamic Fund is set forth below:

FUND NAME	BENCHMARK

TITAN 500 FUND	200% OF THE PERFORMANCE OF THE S&P 500^® INDEX
TEMPEST 500 FUND	200% OF THE INVERSE (OPPOSITE) PERFORMANCE OF THE S&P 500^®
	INDEX
VELOCITY 100 FUND	200% OF THE PERFORMANCE OF THE NASDAQ 100 INDEX^®
VENTURE 100 FUND	200% OF THE INVERSE (OPPOSITE) PERFORMANCE OF THE NASDAQ
	100 INDEX^®

A BRIEF GUIDE TO THE BENCHMARKS

The S&P 500^®Index. The S&P 500^®Index is a capitalization-weighted index composed of 500 common stocks, which are chosen by the Standard & Poor’s Corporation (“S&P”) on a statistical basis.

The Nasdaq 100 Index^®. The Nasdaq 100 Index^®is a modified capitalization weighted index composed of 100 of the largest non-financial companies listed on The Nasdaq Stock Market, Inc. (“Nasdaq”).

UNDERSTANDING COMPOUNDING & THE EFFECT OF LEVERAGE

It is important to understand the effects of compounding when investing in any mutual fund, especially funds which use leverage as part of their investment strategy. The following simple examples provide an illustration:

Example A: Assume you invest $100 in Fund A, a typical index fund that seeks to match the performance of its underlying index. If the index increases 10% on day one, the value of the your shares in Fund A would be expected to increase $10 (10% of $100) to $110. The next day, if the index decreases 10%, the value of your shares in Fund A would be expected to decrease $11 (10% of $110) to $99.

Example B: Assume you invested $100 in Fund B, a fund that seeks to return 200% of the performance of the same index. On day one, the value of your shares in Fund B would be expected to increase $20 (20% of $100) to $120. On day two, however, the value of your shares in the leveraged fund would be expected to decrease $24 (20% of $120) to $96.

Because of the effect of compounding, in each case the value of your investment declined even though the index went up 10% on day one and down 10% on day two. However, the effect of compounding was more pronounced when combined with leverage (Example B). Because of the effect of compounding, the performance of a leveraged fund will appear to be skewed when compared to its underlying index over extended periods of time.

PROSPECTUS 17

MASTER-FEEDER INVESTMENT STRUCTURE

As discussed in their respective Fund Overviews, the Funds pursue their respective investment objectives indirectly by investing through what is referred to as a “master-feeder arrangement.” Under the master-feeder arrangement, a Fund’s investment portfolio is comprised solely of shares of a “master fund,” which is a separate mutual fund that has an identical investment objective, e.g., the Titan 500 Fund acts as a “feeder fund,” holding shares of its master fund as its only investment. As a result, the Fund has an indirect interest in all of the securities owned by the master fund. Because of this indirect interest, the Fund’s investment returns should be the same as those of the master fund, adjusted for Fund expenses.

Rydex Global Advisors (the “Advisor”) manages the investment portfolios of each Fund and its corresponding master fund. Under the master-feeder arrangement, the Advisor has adjusted its fees in order to avoid any “layering” of fees, e.g., each Fund’s Total Annual Operating Expenses have not increased as a result of investing through a master-feeder arrangement. In addition, the Advisor may discontinue investing through the master-feeder arrangement and manage the Funds directly if the Trust’s Board determines that doing so would be in the best interests of shareholders.

ADVISOR’S PORTFOLIO INVESTMENT STRATEGY IN MANAGING THE DYNAMIC MASTER FUNDS

In managing the Dynamic Master Funds, the Advisor uses a “passive” investment strategy to manage each Fund’s portfolio, meaning that the Advisor does not attempt to select securities based on their individual potential to perform better than the market. The Advisor’s primary objective is to match the performance of each Fund’s benchmark as closely as possible on a daily basis. The Advisor uses quantitative analysis techniques to structure each Fund to obtain the highest correlation to its particular benchmark. The Advisor does not engage in temporary defensive investing, keeping each Fund’s assets fully invested in all market environments. The Advisor monitors each Fund on an ongoing basis, and makes adjustments to its portfolio, as necessary, to minimize tracking error and to maximize liquidity.

The Advisor pursues the Dynamic Funds’ investment objectives by regularly utilizing leveraged instruments, such as futures contracts and options on securities, futures contracts, and stock indices. In addition, the Advisor will regularly utilize short selling techniques designed to help the Tempest 500 Fund’s and the Venture 100 Fund’s performance to inversely correlate to 200% of the performance of the S&P 500^®Index and the Nasdaq 100 Index^®, respectively.

OTHER INVESTMENT PRACTICES AND STRATEGIES

Please see the statement of additional information (the “SAI”) for a more complete list of portfolio investment strategies, permitted investments and related risks.

WHO MAY WANT TO INVEST IN THE RYDEX DYNAMIC FUNDS

The Dynamic Funds may be appropriate for investors who believe that over the long term, the value of a particular index will increase or decrease, and that by investing with the objective of doubling the index’s daily return they will achieve superior results over time. Investors should understand that since each Fund seeks to double the daily performance of the index underlying its benchmark, it should have twice the daily volatility of a conventional index fund. This increases the potential risk of loss.

The Dynamic Funds may be appropriate for investors who use a portfolio investment strategy that relies on frequent buying, selling, or exchanging among stock mutual funds, since the Funds do not limit how often an investor may exchange among Funds. In addition, the Funds do not impose any transaction fees when investors exchange shares. The Funds provide multiple opportunities for investors to capitalize on market trends and to capture market momentum with intra-day Fund share pricing and trading. Dynamic asset allocators may also utilize intra-day trading as a defensive strategy to react to market movements before investments are adversely affected.

The Dynamic Funds may also be appropriate for investors who use an investment strategy that involves the strategic allocation of investments among different asset classes. By utilizing consistently applied leverage, the Funds’ portfolio investment strategy can create alternative investment opportunities for strategic asset allocators who seek to match the S&P 500’s or Nasdaq 100’s daily return because less capital is needed to achieve a desired exposure. For example, an investor might invest $50,000 in a conventional S&P 500^®Index fund. Alternatively, that same investor could invest half that amount – $25,000 – in the Titan 500 Fund and target the same daily return. This increased cash position could then be used for a tactical overlay, such as the introduction of an additional asset class or an undervalued market sector.

RISKS OF INVESTING IN THE FUNDS

As indicated below, the Funds (which includes their respective “master fund”) are subject to a number of risks that may affect the value of the Funds’ shares.

EQUITY RISK (All Funds) – The Funds invest primarily in instruments that attempt to track the price movement of equity indices as well as equity securities, including common stocks. Investments in equity securities and equity derivatives in general are subject to market risks that may cause their prices to fluctuate over time. Fluctuations in the value of equity securities in which the Funds invest will cause the net asset value of the Funds to fluctuate. Historically, the equity markets have moved in cycles, and the value of the Funds’ equity securities and equity derivatives may fluctuate drastically from day-to-day. This price volatility is the principal risk of investing in equity securities. Because of their link to the equity markets and use of leverage, an investment in the Funds may be more suitable for investors who can bear the risk of short-term principal fluctuations, which at times may be significant.

PROSPECTUS 19

NON-DIVERSIFICATION RISK (All Funds) – Since each Fund is non-diversified, each Fund may invest in the securities of a limited number of issuers. To the extent that a Fund invests a significant percentage of its assets in a limited number of issuers, the Fund is subject to the risks of investing in those few issuers, and may be more susceptible to a single adverse economic or regulatory occurrence.

INDUSTRY CONCENTRATION RISK (All Funds) – None of the Funds will invest 25% or more of the value of the Fund’s total assets in the securities of one or more issuers conducting their principal business activities in the same industry or group of industries; except that, to the extent the index underlying a Fund’s benchmark is concentrated in a particular industry, a Fund will necessarily be concentrated in that industry. Currently, the index underlying the Velocity 100 Fund’s and the Venture 100 Fund’s benchmark—the Nasdaq 100 Index^®—is concentrated in technology companies. The risk of concentrating Fund investments in a limited number of issuers conducting business in the same industry or group of industries is that a Fund will be more susceptible to the risks associated with that industry or group of industries than a fund that does not concentrate its investments.

TRACKING ERROR RISK (All Funds) – While the Funds do not expect returns to deviate significantly from their respective benchmarks on a daily basis, certain factors may affect their ability to achieve close correlation. These factors may include Fund expenses, imperfect correlation between the Funds’ investments and those of their benchmarks, rounding of share prices, changes to the benchmark, regulatory policies, and leverage. The cumulative effect of these factors may over time cause the Funds’ returns to deviate from their respective benchmarks on an aggregate basis. The magnitude of any tracking error may be affected by a higher portfolio turnover rate.

TRADING HALT RISK (All Funds) – The Funds typically will hold short- term options and futures contracts. The major exchanges on which these contracts are traded, such as the Chicago Mercantile Exchange (“CME”), have established limits on how much an option or futures contract may decline over various time periods within a day. If an option or futures contract’s price declines more than the established limits, trading on the exchange is halted on that instrument. If a trading halt occurs, the Funds may temporarily be unable to purchase or sell options or futures contracts. Such a trading halt near the time the Funds price their shares may limit the Funds’ ability to use leverage and may prevent the Funds from achieving their investment objectives. In such an event, the Funds also may be required to use a “fair-value” method to price their outstanding contracts.

FUTURES AND OPTIONS RISK (All Funds) – The Funds may invest a percentage of their assets in futures and options contracts. The Funds may use futures contracts and related options for bona fide hedging purposes to offset changes in the value of securities held or expected to be acquired. They may also be used to gain exposure to a particular market or instrument, to create a synthetic money market position, and for certain other tax-related purposes. The Funds will only enter into futures contracts traded on a national futures

exchange or board of trade. Futures and options contracts are described in more detail below:

FUTURES CONTRACTS – Futures contracts and options on futures contracts provide for the future sale by one party and purchase by another party of a specified amount of a specific security at a specified future time and at a specified price. An option on a futures contract gives the purchaser the right, in exchange for a premium, to assume a position in a futures contract at a specified exercise price during the term of the option. Index futures are futures contracts for various indices that are traded on registered securities exchanges.

OPTIONS – The buyer of an option acquires the right to buy (a call option) or sell (a put option) a certain quantity of a security (the underlying security) or instrument at a certain price up to a specified point in time. The seller or writer of an option is obligated to sell (a call option) or buy (a put option) the underlying security. When writing (selling) call options on securities, the Funds may cover their positions by owning the underlying security on which the option is written or by owning a call option on the underlying security. Alternatively, the Funds may cover their position by maintaining in a segregated account cash or liquid securities equal in value to the exercise price of the call option written by the Funds. The risks associated with the Funds’ use of futures and options contracts include: • The Funds experiencing losses over certain ranges in the market that exceed losses experienced by the funds that do not use futures contracts and options.

• There may be an imperfect correlation between the changes in market value of the securities held by Funds and the prices of futures and options on futures.

• Although the Funds will only purchase exchange-traded futures, due to market conditions there may not always be a liquid secondary market for a futures contract. As a result, the Funds may be unable to close out their futures contracts at a time which is advantageous.

• Trading restrictions or limitations may be imposed by an exchange, and government regulations may restrict trading in futures contracts and options.

• Because option premiums paid or received by the Funds are small in relation to the market value of the investments underlying the options, buying and selling put and call options can be more speculative than investing directly in securities.

PROSPECTUS 21

EARLY CLOSING RISK (All Funds) – The normal close of trading of securities listed on Nasdaq and the New York Stock Exchange (“NYSE”) is 4:00 p.m., Eastern Time. Unanticipated early closings may result in a Fund being unable to sell or buy securities on that day. If an exchange closes early on a day when one or more of the Funds needs to execute a high volume of securities trades late in a trading day, a Fund might incur substantial trading losses.

SHORT SALES RISK (Tempest 500 Fund and Venture 100 Fund) – Short sales are transactions in which a Fund sells a security it does not own. To complete the transaction, the Fund must borrow the security to make delivery to the buyer. The Fund is then obligated to replace the security borrowed by purchasing the security at the market price at the time of replacement. The price at such time may be higher or lower than the price at which the security was sold by the Fund. If the underlying security goes down in price between the time the Fund sells the security and buys it back, the Fund will realize a gain on the transaction. Conversely, if the underlying security goes up in price during the period, the Fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.

SWAP COUNTERPARTY CREDIT RISK (All Funds) – The Funds may enter into equity index or interest rate swap agreements for purposes of attempting to gain exposure to a particular group of stocks or to an index of stocks without actually purchasing those stocks, or to hedge a position. The Funds will use short-term swap agreements to exchange the returns (or differentials in rates of return) earned or realized in particular predetermined investments or instruments. A Fund will not enter into any swap agreement unless the Advisor believes that the other party to the transaction is creditworthy. The use of equity swaps involves risks that are different from those associated with ordinary portfolio securities transactions. Swap agreements may be considered to be illiquid. A Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty.

INVESTING WITH RYDEX:

SHAREHOLDER INFORMATION

H-Class Shares are offered directly through Rydex shareholder services and also through authorized securities brokers and other financial intermediaries.
OPENING YOUR ACCOUNT
You will need to open a Rydex shareholder account to make share transactions – buy, sell or exchange shares of the Funds. You can request an account application by calling Rydex shareholder services at 800.820.0888 or 301.296.5406 or simply download an application from the Rydex Web site –www.rydexfunds.com. You may also use the Rydex Web site to open certain types of accounts electronically using an e-signature. For more information on opening an account, call Rydex shareholder services at 800.820.0888 or 301.296.5406 or visit www.rydexfunds.com.
The type of application you will need to complete depends on the type of account you want to open. For example, if you are opening a retirement account, such as an IRA, you will need to fill out a different application than you would if you were opening a regular account. When you call Rydex to request an account application, be sure to let the shareholder services representative know what type of account you want to open to ensure that you receive the correct application.
If you open your account through a broker or other financial intermediary, your broker will ordinarily assist you in completing the necessary application to open your account with Rydex.

MINIMUM AMOUNTS
The minimum initial investment amount and minimum account balance for H-Class Shares are:

$25,000 self-directed accounts (including retirement accounts)
$15,000 for accounts managed by a registered investment advisor

For new IRA accounts to meet H-Class Shares’ minimum investment amount requirements, you must transfer an existing IRA (or multiple IRAs) to open an IRA account with Rydex There are no minimum amounts for subsequent investments in the Funds. Rydex reserves the right to modify its minimum account requirements at any time, with or without prior notice to you.

TIPS TO SUCCESSFULLY COMPLETE YOUR ACCOUNT APPLICATION
• You must provide each account holder’s social security number or tax ID number and date of birth on the application to avoid a delay in processing.
• Attach the title page and signature page of trust documents when establishing a trust account.
• When establishing an account for your corporation, partnership or self directed retirement plan, please indicate the correct account type to ensure proper tax reporting, and provide a certified resolution or other documentation evidencing your authority to open the account and engage in transactions.
• You must provide a street address (Rydex does not accept P.O. Box only addresses).
• Be sure to sign the application.

PROSPECTUS 23

TRANSACTION INFORMATION

This section provides important information about the procedures that you must follow when you buy, sell or exchange shares of the Funds. You may submit transaction orders to buy, sell or exchange Fund shares on any day that the NYSE is open for business (a “Business Day”).
CALCULATING NAV
The price at which you buy, sell and exchange shares is the net asset value per share, which is also known as NAV. Each Fund calculates its NAV by: Taking the current market value of its total assets

Subtracting any liabilities
Dividing that amount by the total number of shares owned by shareholders

The Dynamic Funds calculate NAV twice each Business Day, first in the morning and again in the afternoon. The morning NAV is calculated as of 10:45 a.m., Eastern Time and the afternoon NAV is calculated as of the regularly scheduled close of normal trading on the NYSE (normally, 4:00 p.m., Eastern Time).

If the primary exchange or market where a Fund’s securities or other investments trade closes early - such as on days in advance of holidays generally observed by participants in these markets - the Funds may calculate NAV as of the earlier closing time. On days when the exchange or market is scheduled to close early, such as the day before a holiday, the Dynamic Funds will only calculate NAV once at the close of the exchange or market. For more information on these early closings, please call 800.820.0888 or visit the Rydex Web site.
TRANSACTION CUT-OFF TIMES
All shareholder transaction orders are processed at the NAV next determined after your transaction order is received in good form by the Funds’ transfer agent, subject to the Funds’ transaction cut-off times. All share transaction orders must be received by the Funds’ transfer agent before the cut-off times below to be processed at that Business Day’s NAV. The cut-off times allow the Funds’ transfer agent to ensure that your order request is in good form, meaning that it is complete and contains all necessary information; has all supporting documentation (such as trust documents, beneficiary designations, proper signature guarantees, IRA rollover forms, etc.); and is accompanied by sufficient purchase proceeds. Any application that is sent to the transfer agent does not constitute a purchase order until the transfer agent processes the application and receives correct payment by check or wire transfer.

	MORNING CUT-OFF	AFTERNOON CUT-OFF
FUND	TIME (ET)	TIME (ET)

DYNAMIC FUNDS	10:30 a.m.	3:45 p.m.*

* For Internet transactions in the Dynamic Funds, the cut-off time is 3:55 p.m., Eastern time. For more information on Internet transactions, visit www.rydexfunds.com.

EARLY TRANSACTION CUT-OFF TIMES

On any day that a Fund calculates NAV earlier than normal, as described above, Rydex reserves the right to advance the time on that day by which shareholder transaction orders must be received by the transfer agent.

TRANSACTIONS THROUGH YOUR FINANCIAL INTERMEDIARY

You will ordinarily submit your transaction orders through your financial intermediary or other securities dealer through which you opened your shareholder account. Your intermediary is responsible for ensuring that your transaction order contains all of the necessary information and promptly transmitting your order to the Funds. Upon acceptance by your intermediary or securities dealer, your order will be processed at the Fund’s next determined NAV. Intermediaries may charge fees for the services they provide to you in connection with processing your transaction order or maintaining your account with them. Each intermediary also may have its own rules about share transactions, limits on the number of share transactions you are permitted to make in a given time period, and may have earlier cut-off times for processing your transaction order. In addition, intermediaries may not offer intra-day trading or pricing regardless of when you place you place your order with your intermediary. For more information about your financial intermediary’s rules and procedures, you should contact your intermediary directly.

PROSPECTUS 25

BUYING FUND SHARES

The Funds offer their shares continuously and investors may submit purchase orders to buy shares on any Business Day. However, Rydex reserves the right to reject or refuse, in whole or in part, any purchase order for Fund shares. Purchase orders, like any other share transaction, are subject to the Funds’ transaction cut-off times.

PURCHASE PROCEDURES

The Funds offer you the option to send purchase orders by mail, fax or internet and send purchase proceeds by check, wire transfer or ACH. The Funds do not accept cash or cash equivalents, such as travelers checks, money orders, bearer bonds, government checks, third-party checks or credit card convenience checks. Cashiers checks, bank checks, official checks and treasurers’ checks under $10,000 are also not accepted. You may buy shares and send your purchase proceeds by any of the methods described below:

	*Initial Purchase*	*Subsequent Purchases*

	Complete the account	Complete the Rydex
	application that corresponds	investment slip included with
	to the type of account you	your quarterly statement or
BY MAIL	are opening.	send written purchase
		instructions that include:
IRA and other	• Make sure to designate
retirement	which Rydex Fund(s) you	• your name
accounts require	want to purchase.
additional		• your shareholder account
paperwork.	• Make sure your investment	number
	meets the account minimum.
Call Rydex		• which Rydex Fund(s) you
Shareholder		want to purchase.
Services to
request a	Make your check payable to Rydex Dynamic Funds.
Retirement
Account Investor	Your check must be drawn on a U.S. bank and payable in U.S.
application kit.	Dollars.

	Include the name of the Rydex Fund(s) you want to purchase
	on your check.

	*If you do not specify which Rydex Fund(s) you want to*
	*purchase, your investment will be credited to the Rydex*
	*U.S. Government Money Market Fund, which is offered in*
	*a separate prospectus.*

	Mail your application and	Mail your written purchase
	check to:	instructions and check to:

	Mailing Address:
	Rydex Dynamic Funds
	Attn: Ops. Dept.
	9601 Blackwell Road, Suite 500
	Rockville, MD 20850

	*Initial Purchase*	*Subsequent Purchases*

	Obtain an account number	Be sure to designate in your
	by completing the account	wire instructions which
	application that corresponds	Rydex Fund(s) you want to
	to the type of account you	purchase.
	are opening. Then, fax or
BY WIRE	mail it to Rydex.
	• Make sure to designate
Rydex fax	which Rydex Fund(s) you
number:	want to purchase.
301.296.5103
	• Make sure your investment
Rydex	meets the account
shareholder	minimum.
services phone
number:	To obtain “same-day credit” (to get that Business Day’s NAV)
800.820.0888	for your purchase order, *you must call Rydex shareholder*
or	*services and provide the following information prior to*
301.296.5406	*the transaction cut-off time for the Rydex Fund(s) you*
	*are purchasing:*

	• Account Number
	• Fund Name
	• Amount of Wire
	• Fed Wire Reference Number
	You will receive a confirmation number to verify that your
	purchase order has been accepted.


	*If you do not notify Rydex shareholder services of the*
	*incoming wire, your purchase order cannot be*
	*processed until the next Business Day.*

	Wire Instructions:
	U.S. Bank
	Cincinnati, OH
	Routing Number: 0420-00013
	For Account of: Rydex Dynamic Funds H-Class Shares
	Account Number: 48038-9030
	[Your Name]
	[Your shareholder account number]

	*If you do not specify which Rydex Fund(s) you want to*
	*purchase, your investment will be credited to the Rydex*
	*U.S. Government Money Market Fund, which is offered*
	ina separate prospectus.

BY INTERNET	Follow the directions on the Rydex Web site -
(ACH)	www.rydexfunds.com

PROSPECTUS 27

CANCELLED PURCHASE ORDERS
Rydex will ordinarily cancel your purchase order under the following circumstances:

if your bank does not honor your check for any reason
if the transfer agent does not receive your wire transfer
if the transfer agent does not receive your ACH transfer
if your bank does not honor your ACH transfer

If your purchase order is cancelled for any of these reasons, you will not be entitled to benefit from any increase in NAV that the Fund(s) may have experienced from the time of your order to the time of its cancellation. In addition, if the Fund(s) NAV decreases in value from the time of your order to the time of its cancellation, the Fund(s) will hold you liable for any losses that it incurs as a result of your cancelled order.

SELLING FUND SHARES

The Funds redeem their shares continuously and investors may sell their shares back to the Funds on any Business Day. You may redeem all or any portion of your Fund shares at the next determined NAV after the transfer agent processes and the Fund receives your redemption order. However, your redemption order may not reduce your total account balance below the minimum account requirement. Redemption orders, like any other share transaction, are subject to the Funds’ transaction cut-off times.

The Funds may suspend your right to redeem your shares during times when trading on the NYSE is suspended or restricted, or otherwise as permitted by the SEC. The Funds reserve the right to pay part of your redemption proceeds in liquid securities with a market value equal to the redemption price.

REDEMPTION PROCEDURES
The Funds offer you the option to send redemption orders by:

	Rydex Dynamic Funds
MAIL	Attn: Ops. Dept.
	9601 Blackwell Road, Suite 500
	Rockville, MD 20850


	301.296.5103
	If you send your redemption order by fax, you should call
FAX	Rydex shareholder services at 800.820.0888 or 301.296.5406 to
	verify that your fax was received.


TELEPHONE	800.820.0888 or 301.296.5406

Whether you transmit your redemption order by mail, fax or telephone, you must include the following information in your redemption order:

your name
your shareholder account number
Fund name(s)
dollar amount or number of shares you would like to sell
whether you want your sale proceeds sent to you by check, wire or ACH
signature of account owner(s) (not required for telephone redemptions)

You may only place a redemption order if you are the registered owner of the account or the registered owner has given you written authorization to trade the account. You will receive a confirmation number for your redemption. Please retain it for your records.

REDEMPTIONS FROM QUALIFIED RETIREMENT ACCOUNTS
Redeeming shares that you hold through a tax-qualified retirement account may have adverse tax consequences to you. You should consult your tax advisor before redeeming shares and making distributions from your tax qualified account. All redemptions from tax-qualified retirement accounts must be in writing and must specify whether Rydex should withhold taxes from your redemption proceeds.

RECEIVING YOUR REDEMPTION PROCEEDS
Your redemption proceeds normally will be sent within five Business Days of the transfer agent receiving your request. For redemption orders that settle on federal bank holidays, your redemption proceeds will be wired on the next Business Day following the holiday. For investments made by check or ACH (not wire purchases), payment of redemption proceeds may be delayed until the transfer agent is reasonably satisfied that your check has cleared. It may take up to 15 days for your check to clear.

All redemptions will be mailed to your address of record or wired to your bank account of record. You may request overnight mail service for an additional fee. If you request payment of redemption proceeds to a third party or to a location other than your address of record or bank account of record, your redemption request must be in writing and must include a signature guarantee.

SIGNATURE GUARANTEES
Signature guarantees help protect you and your account against fraud. You can obtain a signature guarantee at most banks and financial intermediaries. A notary public cannot provide a signature guarantee. You may not use fax to transmit a signature guarantee to the Funds.

PROSPECTUS 29

continue to earn dividends until the check clears. If your Money Market Fund’s balance is insufficient to cover the amount of your check, the transfer agent will automatically exchange sufficient funds from your Rydex Fund with the highest account balance to cover the check.

You can obtain a checkwriting application by calling 800.820.0888. Because of the difficulty of determining in advance the exact value of your Fund account, you may not use a check to close your account. There is no fee for the checkwriting privilege, but if payment on a check is stopped upon your request, or if the check cannot be honored because of insufficient funds or other valid reasons, you may be charged a fee by the financial institution where you presented your check for payment. The Funds may suspend the checkwriting privilege at any time.

INVOLUNTARY REDEMPTIONS

Any request for a redemption when your account balance is below the currently applicable minimum investment amount, or would be below that minimum as a result of the redemption, will be treated as a request for the complete redemption of your account.

EXCHANGING FUND SHARES

Unlike most mutual funds, Rydex offers unlimited exchange privileges with no minimum holding periods or transaction fees. An exchange is when you sell shares of one Rydex Fund and use the proceeds from that sale to purchase shares of another Rydex Fund. Investors may make exchanges on any Business Day of H-Class Shares of any Dynamic Fund for H-Class Shares, Investor Class Shares or Advisor Class Shares of any other Fund, on the basis of the respective net asset values of the shares involved. Exchange requests, like any other share transaction, are subject to the Funds’ transaction cut-off times. The exchange privilege may be modified or discontinued at any time.

EXCHANGE PROCEDURES

The Funds offer you the option to send exchange requests by:

	Rydex Dynamic Funds
MAIL	Attn: Ops. Dept.
	9601 Blackwell Road, Suite 500
	Rockville, MD 20850

	301.296.5103
	If you send your redemption order by fax, you should call
FAX	Rydex shareholder services at 800.820.0888 or 301.296.5406 to
	verify that your fax was received.

TELEPHONE	800.820.0888 or 301.296.5406

INTERNET	www.rydexfunds.com

Whether you transmit your exchange request by mail, fax, telephone or internet, you must include the following information in your exchange request:

your name
your shareholder account number
Fund name(s) you are exchanging out of (selling) and Fund name(s) you are exchanging in to (buying)
dollar amount, number of shares or percentage of Fund position involved in the exchange
signature of account owner(s) (not required for telephone exchanges)

You may only place exchange orders if you are the registered owner of the account or the registered owner has given you written authorization to trade the account. You will receive confirmation number for your exchange. Please retain it for your records.
MINIMUM EXCHANGE AMOUNTS
The minimum amount for an exchange is either $1,000 or 100% of the Fund position from which the exchange is coming, whichever is less. If you are exchanging the minimum amount, you may not split the proceeds between multiple Rydex Funds. If you place exchange transactions in shares or in percentages, the minimum exchange amount still applies.

PROSPECTUS 31

RYDEX ACCOUNT POLICIES

LOW BALANCE ACCOUNTS
If, for any reason, your account balance across all Rydex Funds drops below the required minimum, Rydex reserves the right to redeem your remaining shares without any additional notification to you. In addition, to offset the administrative expense of servicing small accounts, the Funds may impose an administrative fee of $25 per year during periods where your account balance falls below the account minimum requirements for any reason.

CHANGES TO YOUR ACCOUNT
For information on what is required to make changes and/or additions to your account, please visit the Rydex Web site at www.rydexfunds.com or call 800.820.0888 or 301.296.5406. If you own shares that are registered in your intermediary’s name, and you want to transfer the registration to another intermediary or want the shares registered in your name, then you should contact your intermediary for instructions on how to make this change.

TRANSACTIONS OVER TELEPHONE OR INTERNET
Internet and telephone transactions are extremely convenient, but are not risk free. To ensure that your Internet and telephone transactions are safe, secure, and as risk-free as possible, the Rydex Funds have instituted certain safeguards and procedures for determining the identity of Web site users (including the use of secure passwords and 128-bit encryption technology) and telephone callers and authenticity of instructions. As a result, neither the Funds nor their transfer agent will be responsible for any loss, liability, cost, or expense for following Internet, telephone or wire instructions they reasonably believe to be genuine. If you or your intermediaries make exchange requests by telephone or Internet, you will generally bear the risk of any loss. Neither the Funds, nor their transfer agent, are responsible for Internet transactions that are not received.

STATEMENTS & CONFIRMATIONS
You will receive statements and trade confirmation of your investment transactions. You may elect to suppress trade confirmations by requesting this option in writing. You may choose to receive your confirmations and/or statements either by mail or electronically.

eDELIVERY SERVICES
eDelivery offers shareholders the convenience of receiving all communications (such as trade confirmations, statements, prospectuses and shareholder reports, etc.) from the Funds through the Web via email notification. For more information on eDelivery, please visit the Rydex Web site at www.rydexfunds.com.

SERVICE AND OTHER FEES
Rydex may charge the following administrative fees for services associated with the following:

$15 for wire transfers of redemption proceeds under $5,000
$50 on purchase checks returned for insufficient funds
$25 to stop payment of a redemption check within 10 Business Days of the settlement date

$15 for standard overnight packages (fee may be higher for special delivery options)
$25 for bounced draft checks or ACH transactions
$25 per year for low balance accounts

Rydex reserves the right to change any of these fees or add additional service fees at any time.
RETIREMENT ACCOUNT FEES
Certain retirement plans such as IRA, Roth IRA and 403(b) accounts, are charged an annual $15 maintenance fee. Upon liquidating your retirement account, a $15 account-closing fee will be taken from the proceeds of your redemption.

DISTRIBUTION AND SHAREHOLDER SERVICES PLAN

The Funds have adopted a Distribution (12b-1) Plan and a Shareholder Services Plan with respect to H-Class Shares that allows the Funds to pay distribution and/or services fees to Rydex Distributors, Inc. (the “Distributor”) and other firms that provide distribution and/ or shareholder services (“Service Providers”). If a Service Provider provides distribution services, the Funds will pay distribution fees to the Distributor at an annual rate not to exceed .25% of average daily net assets, pursuant to Rule 12b-1 of the Investment Company Act of 1940. If a Service Provider provides shareholder services, the Funds will pay service fees to the Distributor at an annual rate not to exceed .25% of the average daily net assets of a Fund. The Distributor will, in turn, pay the Service Provider for the services it provides. Because these Funds pay these fees out of assets on an ongoing basis, over time these fees may cost you more than other types of sales charges.

DIVIDENDS AND DISTRIBUTIONS

TIMING OF PAYMENTS
Income dividends, if any, are paid at least annually by each of the Funds. If you own Fund shares on a Fund’s record date, you will be entitled to receive the dividend. The Funds may declare and pay dividends on the same date. The Funds make distributions of capital gains, if any, at least annually. The Funds, however, may declare a special capital gains distribution if the Trustees believe that such a distribution would be in the best interest of the shareholders of a Fund.

DIVIDEND PAYMENT OPTIONS
Dividends and distributions will be paid in the form of additional Fund shares unless you have elected to receive payment in cash. If you did not elect to receive cash payments of dividends and distributions on your application, you must notify the Funds in writing to change your election prior to the date of the next distribution. Your election will become effective for dividends paid after the Funds receive your written notice. To cancel your election, simply send written notice to the Funds.

PROSPECTUS 33

TAX INFORMATION

The following is a summary of some important tax issues that affect the Funds and their shareholders. The summary is based on current tax laws, which may be changed by legislative, judicial or administrative action. You should not consider this summary to be a detailed explanation of the tax treatment of the Funds, or the tax consequences of an investment in the Funds. More information about taxes is located in the SAI. You are urged to consult your tax advisor regarding specific questions as to federal, state and local income taxes.

TAX STATUS OF EACH FUND

Each Fund is treated as a separate entity for federal tax purposes, and intends to qualify for the special tax treatment afforded regulated investment companies. As long as a Fund qualifies as a regulated investment company, it pays no federal income tax on the earnings it distributes to shareholders.

TAX STATUS OF DISTRIBUTIONS

• Each Fund will, at least annually, distribute substantially all of its net investment income and net capital gains income.

• The income dividends and short-term capital gains distributions you receive from the Funds will be taxed as ordinary income.

• Any long-term capital gains distributions you receive from a Fund are taxable as long-term capital gains regardless of how long you have owned your shares.

• Dividends and distributions are generally taxable to you whether you receive them in cash or in additional shares.

• Corporate shareholders may be entitled to a dividends-received deduction for the portion of dividends they receive that are attributable to dividends received by a fund from U.S. corporations, subject to certain limitations. • Long-term capital gains distributions will result from gains on the sale or exchange of capital assets held by a Fund for more than one year.

• Distributions paid in January but declared by a Fund in October, November or December of the previous year may be taxable to you in the previous year.

TAX STATUS OF SHARE TRANSACTIONS

Each sale, exchange, or redemption of Fund shares may be a taxable event to you. For tax purposes, an exchange of Fund shares for shares of a different Rydex Fund is treated the same as a sale. You should consider the tax consequences of any redemption or exchange before making such a request, especially with respect to redemptions, if you invest in the Funds through a tax-qualified retirement plan.

STATE TAX CONSIDERATIONS

A Fund is not liable for any income or franchise tax in Delaware as long as it qualifies as a regulated investment company for federal income tax purposes. In addition to federal taxes, distributions by the Funds and ownership of Fund shares may be subject to state and local taxes. You should consult your tax advisor regarding how state and local tax laws affect your investment in Fund shares.

MANAGEMENT OF THE FUNDS

INVESTMENT ADVISOR

Rydex Global Advisors (the “Advisor”), 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850, serves as investment advisor and manager of the Funds. Albert P. Viragh, Jr., the Chairman of the Board and the President of the Advisor, owns a controlling interest in the Advisor. From 1985 until the incorporation of the Advisor, Mr. Viragh was a Vice President of Money Management Associates (“MMA”), a Maryland-based registered investment advisor. From 1992 to June 1993, Mr. Viragh was the portfolio manager of The Rushmore Nova Portfolio, a series of The Rushmore Fund, Inc., an investment company managed by MMA.

The Advisor makes investment decisions for the assets of the Funds and continuously reviews, supervises, and administers each Fund’s investment program. The Trustees of the Trust supervise the Advisor and establish policies that the Advisor must follow in its day-to-day management activities. Under investment advisory agreements between the Trust and the Advisor, the Funds paid the Advisor a fee at an annualized rate for the fiscal year ended December 31, 2002, based on the average daily net assets for each Fund, as set forth below:

FUND	ADVISORY FEE*

TITAN 500 FUND	0.90	%
TEMPEST 500FUND	0.90	%
VELOCITY 100 FUND	0.90	%
VENTURE 100 FUND	0.90	%

*The Advisory Fees paid represent the fees paid at the master fund level.

The Advisor bears all of its own costs associated with providing these advisory services and the expenses of the Trustees, which are affiliated with the Advisor. The Advisor may make payments from its own resources to broker-dealers and other financial institutions in connection with the sale of Fund shares.

The Advisor has voluntarily agreed to maintain the actual Total Annual Operating Expenses of the H-Class Shares of the Dynamic Funds at an “expense cap” of 1.75% for the past three years of Fund operations. This means that the Advisor will reimburse certain expenses of the Funds so that expenses do not exceed 1.75%. Because the Advisor’s agreement to maintain an expense cap is voluntary, the Advisor may discontinue all or part of its reimbursements at any time. In addition, if at any point during the first three years of Fund operations it becomes unnecessary for the Advisor to make reimbursements, the Advisor may retain the difference between the Total Annual Operating Expenses of any Fund and 1.75% to recapture any of its prior reimbursements.

PORTFOLIO MANAGER

PROSPECTUS 35

launch of the OTC, Precious Metals, U.S. Government Bond, Ursa and Arktos Funds, and helped to create the Rydex Sector Funds. He was named Vice President of Portfolio in 1998, and Executive Vice President in 2000. Prior to joining Rydex, Mr. Byrum worked for Money Management Associates, the investment advisor to Rushmore Funds, Inc. He holds a degree in finance from Miami University of Ohio.

An investment team supervised by Mr. Byrum manages each of the Rydex Funds.

FINANCIAL HIGHLIGHTS
TITAN 500 FUND

The financial highlights tables are intended to help you understand the Funds’ financial performance for the period of operations of H-Class Shares. Certain information reflects financial results for a single H-Class Share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in an H-Class Share of the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the financial statements and related notes, appears in the Rydex Dynamic Funds’ 2002 Annual Report. The 2002 Annual Report is available by telephoning the transfer agent at 800.820.0888 or 301.296.5100. The Annual Report is incorporated by reference in the SAI.

	YEAR				YEAR			PERIOD
	ENDED				ENDED			ENDED
	DECEMBER 31,				DECEMBER 31,			DECEMBER 31,
H CLASS		2002			2001			2000*


Per Share Operating Performance:
Net Asset Value - Beginning of Period		$	13.22		$	20.01		$	25.00

Net Investment Income (Loss)†			(.07	)		(.08	)		.60
Net Realized and Unrealized
Losses on Securities			(6.09	)		(6.71	)		(5.58	)

Net Decrease in Net Asset Value
Resulting from Operations			(6.16	)		(6.79	)		(4.98	)


Distributions to Shareholders
From Net Investment Income			—			—			(.01	)
From Realized Gain on Investments			—			—			—


Net Decrease in Net Asset Value			(6.16	)		(6.79	)		(4.99	)


Net Asset Value - End of Period		$	7.06		$	13.22		$	20.01


Total Investment Return	(46.60			)%	(33.93		)%	(19.92		)%
Ratios to Average Net Assets:
Gross Expenses, including expenses
of the corresponding Master Portfolio			1.75	%		1.89	%		2.21	%**
Net Expenses, including expenses of the
corresponding Master Portfolio			1.75	%		1.75	%		1.75	%**
Net Investment Income (Loss)			(0.81	)%		(0.52	)%		4.08	%**
Supplementary Data:
Portfolio Turnover Rate***			1,227	%		1,494	%		—
Net Assets, End of Period (000's omitted)		$	124,716		$	97,786		$	64,745

†	Calculated using the average daily shares outstanding for the period.
*	Commencement of Operations: May 19, 2000 -- Titan 500 Fund H-Class.
**	Annualized
***	Portfolio turnover ratio is calculated without regard to short-term securities having a maturity of less than one year.

PROSPECTUS 37

TEMPEST 500 FUND




	YEAR			YEAR			PERIOD
	ENDED			ENDED			ENDED
	DECEMBER 31,			DECEMBER 31,			DECEMBER 31,
H CLASS	2002				2001		2000*


Per Share Operating Performance:
Net Asset Value - Beginning of Period	$	68.39		$	56.61		$	50.00

Net Investment Income (Loss)†		(.71	)		(.27	)		.95
Net Realized and Unrealized
Gains on Securities		26.33			12.05			5.98

Net Increase in Net Asset Value
Resulting from Operations		25.62			11.78			6.93

Distributions to Shareholders
From Net Investment Income		—			—			(.32	)
From Realized Gain on Investments		(0.74	)		—			—


Net Increase in Net Asset Value		24.88			11.78			6.61

Net Asset Value - End of Period	$	93.27		$	68.39		$	56.61


Total Investment Return		37.48	%		20.81	%		13.92	%


Ratios to Average Net Assets:
Gross Expenses, including expenses
of the corresponding Master Portfolio		1.75	%		1.75	%		2.59	%**
Net Expenses, including expenses of the
corresponding Master Portfolio		1.75	%		1.75	%		1.75	%**
Net Investment Income (Loss)		(0.81	)%		(0.39	)%		2.95	%**
Supplementary Data:
Portfolio Turnover Rate***		—			—			—
Net Assets, End of Period (000's omitted)	$	340,962		$	128,237		$	35,941

†	Calculated using the average daily shares outstanding for the period.
*	Commencement of Operations: May 19, 2000 -- Tempest 500 Fund H-Class.
**	Annualized
***	Portfolio turnover ratio is calculated without regard to short-term securities having a maturity of less than one year.

FINANCIAL HIGHLIGHTS
VELOCITY 100 FUND

	YEAR			YEAR			PERIOD
	ENDED			ENDED			ENDED
	DECEMBER 31,			DECEMBER 31,			DECEMBER 31,
H CLASS	2002				2001		2000*


Per Share Operating Performance:
Net Asset Value - Beginning of Period	$	32.06		$	104.70		$	250.00

Net Investment Income (Loss)†		(.12	)		(.14	)		2.30
Net Realized and Unrealized
Losses on Securities		(21.83	)		(72.50	)		(147.60	)

Net Decrease in Net Asset Value
Resulting from Operations		(21.95	)		(72.64	)		(145.30	)


Distributions to Shareholders
From Net Investment Income		—			—			—
From Realized Gain on Investments		—			—			—


Net Decrease in Net Asset Value		(21.95	)		(72.64	)		(145.30	)


Net Asset Value - End of Period	$	10.11		$	32.06		$	104.70


Total Investment Return	(68.47		)%	(69.38		)%		(58.12	)%
Ratios to Average Net Assets:
Gross Expenses, including expenses
of the corresponding Master Portfolio		1.75	%		1.75	%		2.16	%**
Net Expenses, including expenses of the
corresponding Master Portfolio		1.75	%		1.75	%		1.75	%**
Net Investment Income (Loss)		(0.81	)%		(0.81	)%		1.89	%**
Supplementary Data:
Portfolio Turnover Rate***		298	%		733	%		757	%
Net Assets, End of Period (000's omitted)	$	162,943		$	197,495		$	130,126

†	Calculated using the average daily shares outstanding for the period.
††	Per Share amounts for the period ended December 31, 2000 have been restated to reflect a 1:10 reverse stock split effective April 20, 2001.
*	Commencement of Operations: May 24, 2000 – Velocity 100 Fund H-Class.
**	Annualized
***	Portfolio turnover ratio is calculated without regard to short-term securities having a maturity of less than one year.

PROSPECTUS 39

VENTURE 100 FUND





		YEAR			YEAR			PERIOD
		ENDED			ENDED			ENDED
	DECEMBER 31,				DECEMBER 31,			DECEMBER 31,
H CLASS		2002				2001		2000*


Per Share Operating Performance:
Net Asset Value - Beginning of Period		$	48.87		$	51.44		$	50.00

Net Investment Income (Loss)†			(.58	)		(.29	)		1.01
Net Realized and Unrealized
Gains (Losses) on Securities			25.41			(2.28	)		.90

Net Increase (Decrease) in Net Asset Value
Resulting from Operations			24.83			(2.57	)		1.91


Distributions to Shareholders
From Net Investment Income			—			—			(.47	)
From Realized Gain on Investments			(1.99	)		—			—


Net Increase (Decrease) in Net Asset Value			22.84			(2.57	)		1.44


Net Asset Value - End of Period		$	71.71		$	48.87		$	51.44


Total Investment Return			50.92	%		(5.00	)%		3.92	%
Ratios to Average Net Assets:
Gross Expenses, including expenses
of the corresponding Master Portfolio			1.75	%		1.75	%		2.41	%**
Net Expenses, including expenses of the
corresponding Master Portfolio			1.75	%		1.75	%		1.75	%**
Net Investment Income (Loss)			(0.80	)%		(0.50	)%		4.87	%**
Supplementary Data:
Portfolio Turnover Rate***			—			—			—
Net Assets, End of Period (000's omitted)		$	299,375		$	136,249		$	28,808

†	Calculated using the average daily shares outstanding for the period.
*	Commencement of Operations: May 23, 2000 -- Venture100 Fund H-Class.
**	Annualized
***	Portfolio turnover ratio is calculated without regard to short-term securities having a maturity of less than one year.

BENCHMARK INFORMATION

S&P and Nasdaq (the “Index Publishers”) do not sponsor, endorse, sell or promote the Dynamic Funds and make no representation or warranty, implied or express, to the investors in the Dynamic Funds, or any members of the public, regarding:
the advisability of investing in index funds;

the ability of any index to track stock market performance;
the accuracy and/or the completeness of the aforementioned indices or any data included therein;
the results to be obtained by any of the Dynamic Funds, the investors in the Dynamic Funds, or any person or entity from the use of the indices or data included therein; and
the merchantability or fitness for a particular purpose for use with respect to the indices or any data included therein.

Further, none of the Index Publishers:

Recommend that any person invest in the Funds or any other securities;
Have any responsibility or liability for or make any decisions about the timing, amount or pricing of the Funds, including calculation of NAV;
Have any responsibility or liability for the administration, management or marketing of the Funds;
Consider the needs of the Funds or the investors in the Funds in determining, composing or calculating the indexes or has any obligation to do so;
Will have any liability in connection with the Funds or for any errors, omissions or interruptions in connection with the indexes or the related data;
Will be liable for any lost profits or indirect punitive, special or consequential damages or losses, even if such Index Publisher knows that they might occur.

“Standard & Poor’s^®,” S&P^®,” “S&P 500^®,” “Standard & Poor’s 500,” “500,” “Standard & Poor’s MidCap 400” and “S&P MidCap 400” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Rydex Global Advisors. The Rydex Funds are not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of investing in the Rydex Funds.
More information about the Index Publishers is located in the SAI.

A FAMILY OF FUNDS DESIGNED EXCLUSIVELY FOR FINANCIAL PROFESSIONALS AND SOPHISTICATED INVESTORS

Additional information about the Funds is included in the SAI dated May 1, 2003, which contains more detailed information about the Funds. The SAI has been filed with the SEC and is incorporated by reference into this Prospectus and, therefore, legally forms a part of this Prospectus. The SEC maintains the EDGAR database on its Web site (“http://www.sec.gov”) that contains each SAI, material incorporated by reference, and other information regarding registrants that file electronically with the SEC. You may also review and copy documents at the SEC Public Reference room in Washington, D.C. (for information on the operation of the Public Reference Room, call 202.942.8090). You may request documents by mail from the SEC, upon payment of a duplication fee, by writing to: Securities and Exchange Commission, Public Reference Section, Washington, D.C. 20549-0102. You may also obtain this information upon payment of a duplication fee, by emailing the SEC at the following address: publicinfo@sec.gov.

You may obtain a copy of the SAI or the annual or semi-annual reports, without charge by calling 800.820.0888 or 301.296.5100 or by writing to Rydex Dynamic Funds, at 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850. Additional information about the Funds’ investments is available in the annual and semi-annual reports. Also, in the Funds’ annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds’ performance during its last fiscal year.

No one has been authorized to give any information or to make any representations not contained in this Prospectus or in the Trust’s SAI in connection with the offering of Fund Shares. Do not rely on any such information or representations as having been authorized by the Trust or Rydex Global Advisors. This prospectus does not constitute an offering by the Funds in any jurisdiction where such an offering is not lawful.

The Trust’s SEC registration number is 811-09525.

9601 Blackwell Road
Suite 500
Rockville, MD 20850
800.820.0888
www.rydexfunds.com

RDYNHP-1-5/03

RYDEX DYNAMIC FUNDS

Prospectus

C-Class Shares

May 1, 2003

Titan 500 Fund
Tempest 500 Fund
Velocity 100 Fund
Venture 100 Fund

TABLE OF CONTENTS

1	RYDEX DYNAMIC FUNDS OVERVIEW
2	Titan 500 Fund
5	Tempest 500 Fund
9	Velocity 100 Fund
13	Venture 100 Fund
17	INVESTMENTS AND RISK
23	SHAREHOLDER INFORMATION
24	TRANSACTION INFORMATION
25	SALES CHARGES
26	BUYING FUND SHARES
28	SELLING FUND SHARES
30	EXCHANGING FUND SHARES
32	RYDEX ACCOUNT POLICIES
33	DISTRIBUTION AND SHAREHOLDER SERVICES PLAN
33	DIVIDENDS AND DISTRIBUTIONS
34	TAX INFORMATION
35	MANAGEMENT OF THE FUNDS
37	FINANCIAL HIGHLIGHTS
41	BENCHMARK INFORMATION

PROSPECTUS 1

RYDEX DYNAMIC FUNDS
C CLASS SHARES

9601 BLACKWELL ROAD, SUITE 500, ROCKVILLE, MARYLAND 20850
800.820.0888 • 301.296.5100 • WWW.RYDEXFUNDS.COM

Rydex Dynamic Funds (the “Trust”) is a mutual fund complex offering professionally managed investment portfolios, four of which are described in this Prospectus (the “Dynamic Funds” or the “Funds”). C-Class Shares of the Dynamic Funds are sold primarily through broker-dealers and other financial institutions ("intermediaries") whose clients take part in certain strategic and tactical asset allocation investment programs. Investors may exchange shares of the Funds through the Rydex Web site – www.rydexfunds.com – and over the phone.

THE FUNDS’ INVESTMENT OBJECTIVES

Each Fund has a separate investment objective. The investment objective of each Dynamic Fund is non-fundamental and may be changed without shareholder approval.

RISKS OF INVESTING IN THE FUNDS

The value of the Funds may fluctuate. In addition, Fund shares:

MAY DECLINE IN VALUE, AND YOU MAY LOSE MONEY
ARE NOT FEDERALLY INSURED
ARE NOT GUARANTEED BY ANY GOVERNMENT AGENCY
ARE NOT BANK DEPOSITS
ARE NOT GUARANTEED TO ACHIEVE THEIR OBJECTIVES

TITAN 500 FUND (RYCTX)

FUND OBJECTIVE

PORTFOLIO INVESTMENT STRATEGY

RISK CONSIDERATIONS

The Titan 500 Master Fund is subject to a number of risks that will affect the value of its shares, including:

EQUITY RISK—The equity markets are volatile, and the value of the Fund’s futures and options contracts and other securities may fluctuate significantly from day to day. Equity market volatility may cause the value of your investment in the Fund to decrease.

DERIVATIVE RISK—The Fund's use of equity derivatives to pursue its investment objective may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. These risks may cause the Fund to experience higher losses than a fund that does not use derivatives.

LEVERAGING RISK—The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

SWAP COUNTERPARTY CREDIT RISK—The Fund is subject to credit risk on the amount it expects to receive from swap agreement counterparties. If a swap counterparty defaults on its payment obligations to the Fund, this default will cause the value of your investment in the Fund to decrease.

PROSPECTUS 3

TRACKING ERROR RISK—The Advisor may not be able to cause the Fund’s performance to match that of the Fund’s benchmark, either on a daily or aggregate basis. Tracking error may cause the Fund’s performance to be less than you expect.

TRADING HALT RISK—If a trading halt occurs, the Fund may temporarily be unable to purchase or sell options or futures contracts. Such a trading halt near the time the Fund prices its shares may limit the Fund’s ability to use leverage and may prevent the Fund from achieving its investment objective.

INVESTOR PROFILE

PERFORMANCE

The bar chart and table below show the performance of the Titan 500 Fund C-Class both year by year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

HIGHEST QUARTER RETURN	18.59%
(quarter ended 12/31/01)

LOWEST QUARTER RETURN	-35.18%
(quarter ended 9/30/02)

AVERAGE ANNUAL TOTAL RETURN (for periods ended December 31, 2002)¹

					FUND RETURN
					AFTER TAXES ON
			FUND RETURN		DISTRIBUTIONS
	FUND RETURN		AFTER TAXES ON		AND SALE OF
	BEFORE TAXES		DISTRIBUTIONS		FUND SHARES
	C-CLASS SHARES		C-CLASS SHARES²		C-CLASS SHARES²		S&P 500 INDEX³

PAST ONE YEAR	-47.09	%	-47.09	%	-28.92	%	-22.09	%
SINCE INCEPTION	-41.61	%	-41.61	%	-31.04	%	-18.47	%
(11/27/00)

¹ These figures assume the reinvestment of dividends and capital gains distributions.

³ The S&P 500^®Index is a capitalization-weighted index composed of 500 common stocks, which are chosen by the Standard & Poor's Corporation ("S&P"). Returns reflect no deduction for fees, expenses, or taxes.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold C-Class Shares of the Titan 500 Fund.

SHAREHOLDER FEES*
MAXIMUM DEFERRED SALES CHARGE (LOAD)**
(as a percentage of initial purchase price)	1.00	%
ANNUAL FUND OPERATING EXPENSES(expenses that are deducted from fund assets) †
MANAGEMENT FEES	0.90	%
DISTRIBUTION (12b-1) AND SHAREHOLDER SERVICE FEES	1.00	%
OTHER EXPENSES	0.60	%
TOTAL ANNUAL FUND OPERATING EXPENSES	2.50	%

**	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
**	The deferred sales charge applies for the first year following purchase and will be waived for customers of financial intermediaries that have entered into arrangements with the Distributor to forego transaction-based compensation in connection with the initial purchase.
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Titan 500 Master Fund.

EXAMPLE

This Example is intended to help you compare the cost of investing in the C-Class Shares of the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time period indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s estimated operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your cost would be:

TITAN 500 FUND	1 YEAR		3 YEARS		5 YEARS		10 YEARS

C-CLASS
IF YOU SELL YOUR
SHARES AT THE END
OF THE PERIOD:	$	363	$	806	$	1,376	$	2,924

IF YOU DO NOT SELL
YOUR SHARES AT
THE END OF THE
PERIOD:	$	263	$	806	$	1,376	$	2,924

PROSPECTUS 5

TEMPEST 500 FUND (RYCBX)

FUND OBJECTIVE

PORTFOLIO INVESTMENT STRATEGY

RISK CONSIDERATIONS

The Tempest 500 Master Fund is subject to a number of risks that will affect the value of its shares, including:

SHORT SALES RISK—Short sales are transactions in which the Fund sells a security it does not own. If the security the Fund sold short goes down in price between the time the Fund sells the security and closes its short position, the Fund will realize a gain on the transaction. Conversely, if the security goes up in price during the period, the Fund will realize a loss on

the transaction. The risk of such price increases is the principal risk of engaging in short sales.

LEVERAGING RISK—The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

INVESTOR PROFILE

PERFORMANCE

The bar chart and table on the following page show the performance of the Tempest 500 Fund C-Class for one year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

PROSPECTUS 7

HIGHEST QUARTER RETURN	32.79	%
(quarter ended 9/30/02)

LOWEST QUARTER RETURN	-19.56	%
(quarter ended 12/31/02)

AVERAGE ANNUAL TOTAL RETURN (for periods ended December 31, 2002)¹

					FUND RETURN
					AFTER TAXES ON
			FUND RETURN		DISTRIBUTIONS
	FUND RETURN		AFTER TAXES ON		AND SALE OF
	BEFORE TAXES		DISTRIBUTIONS		FUND SHARES
	C-CLASS SHARES		C-CLASS SHARES²		C-CLASS SHARES²		S&P 500 INDEX³

PAST ONE YEAR	36.54	%	36.12	%	22.43	%	-22.09	%
SINCE INCEPTION	25.93	%	25.72	%	21.00	%	-17.98	%
(03/07/01)

¹ These figures assume the reinvestment of dividends and capital gains distributions.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold C-Class Shares of the Tempest 500 Fund.

SHAREHOLDER FEES*
MAXIMUM SALES CHARGE (LOAD)**
(as a percentage of initial purchase price)	1.00	%
ANNUAL FUND OPERATING EXPENSES(expenses that are deducted from fund assets)†
MANAGEMENT FEES	0.90	%
DISTRIBUTION (12b-1) AND SHAREHOLDER SERVICE FEES	1.00	%
OTHER EXPENSES	0.60	%
TOTAL ANNUAL FUND OPERATING EXPENSES	2.50	%

**	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
**	The deferred sales charge applies for the first year following purchase and will be waived for customers of financial intermediaries that have entered into arrangements with the Distributor to forego transaction-based compensation in connection with the initial purchase.
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Tempest 500 Master Fund.

EXAMPLE

This Example is intended to help you compare the cost of investing in the C-Class Shares of the Fund with the cost of investing in other mutual funds.

TEMPEST 500 FUND	1 YEAR		3 YEARS		5 YEARS		10 YEARS

C-CLASS
IF YOU SELL YOUR
SHARES AT THE END
OF THE PERIOD:	$	363	$	806	$	1,376	$	2,924

IF YOU DO NOT SELL
YOUR SHARES AT
THE END OF THE
PERIOD:	$	263	$	806	$	1,376	$	2,924

PROSPECTUS 9

VELOCITY 100 FUND (RYCCX)

FUND OBJECTIVE

PORTFOLIO INVESTMENT STRATEGY

RISK CONSIDERATIONS

The Velocity 100 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK—The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

INVESTOR PROFILE

PERFORMANCE

The bar chart and table on the following page show the performance of the Velocity 100 Fund C-Class both year by year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

PROSPECTUS 11

HIGHEST QUARTER RETURN	73.85	%
(quarter ended 12/31/01)

LOWEST QUARTER RETURN	-62.97	%
(quarter ended 9/30/01)

AVERAGE ANNUAL TOTAL RETURN (for periods ended December 31, 2002)¹

					FUND RETURN
					AFTER TAXES ON
			FUND RETURN		DISTRIBUTIONS
	FUND RETURN		AFTER TAXES ON		AND SALE OF
	BEFORE TAXES		DISTRIBUTIONS		FUND SHARES		NASDAQ
	C-CLASS SHARES		C-CLASS SHARES²		C-CLASS SHARES²		100 INDEX³

PAST ONE YEAR	-69.19	%	-69.19	%	-42.48	%	-37.58	%

SINCE INCEPTION	-73.49	%	-73.49	%	-48.28	%	-38.96	%
(11/20/00)

¹ These figures assume the reinvestment of dividends and capital gains distributions.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold C-Class Shares of the Velocity 100 Fund.

SHAREHOLDER FEES*
MAXIMUM SALES CHARGE (LOAD)**
(as a percentage of initial purchase price)	1.00	%
ANNUAL FUND OPERATING EXPENSES(expenses that are deducted from fund assets)†
MANAGEMENT FEES	0.90	%
DISTRIBUTION (12b-1) AND SHAREHOLDER SERVICE FEES	1.00	%
OTHER EXPENSES	0.60	%
TOTAL ANNUAL FUND OPERATING EXPENSES	2.50	%

**	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
**	The deferred sales charge applies for the first year following purchase and will be waived for customers of financial intermediaries that have entered into arrangements with the Distributor to forego transaction-based compensation in connection with the initial purchase.
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Velocity 100 Master Fund.

EXAMPLE

This Example is intended to help you compare the cost of investing in the C-Class Shares of the Fund with the cost of investing in other mutual funds.

VELOCITY 100 FUND	1 YEAR		3 YEARS		5 YEARS		10 YEARS

C-CLASS
IF YOU SELL YOUR
SHARES AT THE END
OF THE PERIOD:	$	363	$	806	$	1,376	$	2,924
IF YOU DO NOT SELL
YOUR SHARES AT
THE END OF THE
PERIOD:	$	263	$	806	$	1,376	$	2,924

PROSPECTUS 13

VENTURE 100 FUND (RYCDX)

FUND OBJECTIVE

PORTFOLIO INVESTMENT STRATEGY

RISK CONSIDERATIONS

The Venture 100 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

security goes up in price during the period, the Fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.

INVESTOR PROFILE

PERFORMANCE

The bar chart and table on the following page show the performance of the Venture 100 Fund C-Class for one year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

PROSPECTUS 15

HIGHEST QUARTER RETURN	66.50	%
(quarter ended 6/30/02)

LOWEST QUARTER RETURN	-37.17	%
(quarter ended 12/31/02)

AVERAGE ANNUAL TOTAL RETURN (for periods ended December 31, 2002)¹

					FUND RETURN
					AFTER TAXES ON
			FUND RETURN		DISTRIBUTIONS
	FUND RETURN		AFTER TAXES ON		AND SALE OF
	BEFORE TAXES		DISTRIBUTIONS		FUND SHARES		NASDAQ
	C-CLASS SHARES		C-CLASS SHARES²		C-CLASS SHARES²		100 INDEX³

PAST ONE YEAR	50.09	%	48.46	%	30.73	%	-37.58	%
SINCE INCEPTION	13.95	%	13.27	%	10.93	%	-32.21	%
(03/08/01)

¹ These figures assume the reinvestment of dividends and capital gains distributions.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold C-Class Shares of the Venture 100 Fund.

SHAREHOLDER FEES*
MAXIMUM DEFERRED SALES CHARGE (LOAD)**
(as a percentage of initial purchase price)	1.00	%
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)†
MANAGEMENT FEES	0.90	%
DISTRIBUTION (12b-1) AND SHAREHOLDER SERVICE FEES	1.00	%
OTHER EXPENSES	0.60	%
TOTAL ANNUAL FUND OPERATING EXPENSES	2.50	%

*	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
**	The deferred sales charge applies for the first year following purchase and will be waived for customers of financial intermediaries that have entered into arrangements with the Distributor to forego transaction-based compensation in connection with the initial purchase.
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Venture 100 Master Fund.

EXAMPLE

This Example is intended to help you compare the cost of investing in the C-Class Shares of the Fund with the cost of investing in other mutual funds.

VENTURE 100 FUND	1 YEAR		3 YEARS		5 YEARS		10 YEARS

C-CLASS
IF YOU SELL YOUR
SHARES AT THE END
OF THE PERIOD:	$	363	$	806	$	1,376	$	2,924

IF YOU DO NOT SELL
YOUR SHARES AT THE
END OF THE PERIOD:	$	263	$	806	$	1,376	$	2,924

PROSPECTUS 17

MORE INFORMATION ABOUT FUND

INVESTMENTS AND RISK

FUND NAME	BENCHMARK

TITAN 500 FUND	200% OF THE PERFORMANCE OF THE S&P 500^® INDEX
TEMPEST 500 FUND	200% OF THE INVERSE (OPPOSITE) PERFORMANCE OF THE S&P
	INDEX

VELOCITY 100 FUND	200% OF THE PERFORMANCE OF THE NASDAQ 100 INDEX^®
VENTURE 100 FUND	200% OF THE INVERSE (OPPOSITE) PERFORMANCE OF THE NASDAQ
	100 INDEX^®

A BRIEF GUIDE TO THE BENCHMARKS

The S&P 500^®Index. The S&P 500^®Index is a capitalization-weighted index composed of 500 common stocks, which are chosen by the Standard & Poor’s Corporation (“S&P”) on a statistical basis.

UNDERSTANDING COMPOUNDING & THE EFFECT OF LEVERAGE

xample A: Assume you invest $100 in Fund A, a typical index fund that seeks to match the performance of its underlying index. If the index increases 10% on day one, the value of the your shares in Fund A would be expected to increase $10 (10% of $100) to $110. The next day, if the index decreases 10%, the value of your shares in Fund A would be expected to decrease $11 (10% of $110) to $99.

MASTER-FEEDER INVESTMENT STRUCTURE

ADVISOR’S PORTFOLIO INVESTMENT STRATEGY IN MANAGING THE DYNAMIC MASTER FUNDS

OTHER INVESTMENT PRACTICES AND STRATEGIES

Please see the statement of additional information (the “SAI”) for a more complete list of portfolio investment strategies, permitted investments and related risks.

PROSPECTUS 19

WHO MAY WANT TO INVEST IN THE RYDEX DYNAMIC FUNDS

RISKS OF INVESTING IN THE FUNDS

As indicated below, the Funds (which includes their respective “master fund”) are subject to a number of risks that may affect the value of the Funds’ shares.

PROSPECTUS 21

a synthetic money market position, and for certain other tax-related purposes. The Funds will only enter into futures contracts traded on a national futures exchange or board of trade. Futures and options contracts are described in more detail below:

FUTURES CONTRACTS

– Futures contracts and options on futures contracts provide for the future sale by one party and purchase by another party of a specified amount of a specific security at a specified future time and at a specified price. An option on a futures contract gives the purchaser the right, in exchange for a premium, to assume a position in a futures contract at a specified exercise price during the term of the option. Index futures are futures contracts for various indices that are traded on registered securities exchanges.

The risks associated with the Funds’ use of futures and options contracts include:

• The Funds experiencing losses over certain ranges in the market that exceed losses experienced by the funds that do not use futures contracts and options.

• There may be an imperfect correlation between the changes in market value of the securities held by Funds and the prices of futures and options on futures.

• Trading restrictions or limitations may be imposed by an exchange, and government regulations may restrict trading in futures contracts and options.

PROSPECTUS 23

INVESTING WITH RYDEX:

SHAREHOLDER INFORMATION

C-Class Shares are offered exclusively through authorized securities brokers and other financial intermediaries.

OPENING YOUR ACCOUNT

You will need to open a Rydex shareholder account to make share transactions – buy, sell or exchange shares of the Funds. You can request an account application by calling Rydex shareholder services at 800.820.0888 or 301.296.5406 or simply download an application from the Rydex Web site –www.rydexfunds.com. You may also use the Rydex Web site to open certain types of accounts electronically using an e-signature. For more information on opening an account, call Rydex shareholder services at 800.820.0888 or 301.296.5406 or visit www.rydexfunds.com.

The type of application you will need to complete depends on the type of account you want to open. For example, if you are opening a retirement account, such as an IRA, you will need to fill out a different application than you would if you were opening a regular account. When you call Rydex to request an account application, be sure to let the shareholder services representative know what type of account you want to open to ensure that you receive the correct application.

If you open your account through a broker or other financial intermediary, your broker will ordinarily assist you in completing the necessary application to open your account with Rydex.

MINIMUM AMOUNTS

The minimum initial investment amount and minimum account balance for C-Class Shares are:

$1,000 for retirement accounts
$2,500 for all other accounts

There are no minimum amounts for subsequent investments in the Funds. Rydex reserves the right to modify its minimum account requirements at any time, with or without prior notice to you.

TIPS TO SUCCESSFULLY COMPLETE YOUR ACCOUNT APPLICATION

• You must provide each account holder’s social security number or tax ID number and date of birth on the application to avoid a delay in processing.

• Attach the title page and signature page of trust documents when establishing a trust account.

• When establishing an account for your corporation, partnership or self directed retirement plan, please indicate the correct account type to ensure proper tax reporting, and provide a certified resolution or other documentation evidencing your authority to open the account and engage in transactions.

• You must provide a street address (Rydex does not accept P.O. Box only addresses).

• Be sure to sign the application.

TRANSACTION INFORMATION

CALCULATING NAV

The price at which you buy, sell and exchange shares is the net asset value per share, which is also known as NAV. Each Fund calculates its NAV by:

Taking the current market value of its total assets
Subtracting any liabilities
Dividing that amount by the total number of shares owned by shareholders

TRANSACTION CUT-OFF TIMES

All shareholder transaction orders are processed at the NAV next determined after your transaction order is received in good form by the Fund’s transfer agent, subject to the Fund’s transaction cut-off times. All share transaction orders must be received by the Fund’s transfer agent before the cut-off times below to be processed at that Business Day’s NAV. The cut-off times allow the Fund’s transfer agent to ensure that your order request is in good form, meaning that it is complete and contains all necessary information; has all supporting documentation (such as trust documents, beneficiary designations, proper signature guarantees, IRA rollover forms, etc.); and is accompanied by sufficient purchase proceeds. Any application that is sent to the transfer agent does not constitute a purchase order until the transfer agent processes the application and receives correct payment by check or wire transfer.

	MORNING CUT-OFF	AFTERNOON CUT-OFF
FUND	TIME (ET)	TIME (ET)

DYNAMIC FUNDS	10:30 a.m.	3:45 p.m.*

* For Internet transactions in the Dynamic Funds, the cut-off time is 3:55 p.m., Eastern time. For more information on Internet transactions, visit www.rydexfunds.com.

PROSPECTUS 25

EARLY TRANSACTION CUT-OFF TIMES

TRANSACTIONS THROUGH YOUR FINANCIAL INTERMEDIARY

SALES CHARGES

You can buy C-Class Shares at the offering price, which is the net asset value per share, without any up-front sales charge so that the full amount of your purchase is invested in the Funds. If you sell your shares within 12 months purchase, you will normally have to pay a 1% CDSC based on your initial purchase price or current market value, whichever is lower. The CDSC is used to reimburse the Distributor for paying your financial intermediary a sales commission equal to 1.00% of the purchase price of your investment connection with your initial purchase. If your intermediary has entered into arrangements with the Distributor to forego receipt of that initial 1.00% sales commission, the Fund will waive any otherwise applicable CDSC when you redeem your C-Class Shares. For more information about whether your broker-dealer has entered into such an arrangement, contact your intermediary directly.

WAIVER OF CDSC

The CDSC will be waived for the redemption of C-Class Shares:

purchased through a financial intermediary that has entered into arrangements with the Distributor to forego transaction-based compensation in connection with the initial purchase;
purchased by reinvesting dividends;
following the death or disability of a shareholder;
that, in the aggregate, do not exceed 10% of the current market value of the Shares; and
resulting from the Funds’ right to redeem accounts that maintain a balance below the current applicable minimum investment.

The policy of waiving the CDSC for certain redemptions may be modified or discontinued, with respect to new shareholders, at any time.

BUYING FUND SHARES

PURCHASE PROCEDURES

The Funds offer you the option to send purchase orders by mail, fax or internet and send purchase proceeds by check, wire transfer or ACH. The Funds do not accept cash or cash equivalents, such as travelers checks, money orders, bearer bonds, government checks, third-party checks or credit card convenience checks. Cashiers checks, bank checks, official checks and treasurers’ checks under $10,000 are also not accepted. You may buy shares and send your purchase proceeds by any of the methods described below:

	*Initial Purchase*	*Subsequent Purchases*

	Complete the account	Complete the Rydex
	application that corresponds	investment slip included with
	to the type of account you	your quarterly statement or
BY MAIL	are opening.	send written purchase
		instructions that include:
IRA and other	• Make sure to designate
retirement	which Rydex Fund(s) you	• your name
accounts require	want to purchase.
additional		• your shareholder account
paperwork.	• Make sure your investment	number
	meets the account minimum.
Call Rydex		• which Rydex Fund(s) you
Shareholder		want to purchase.
Services to
request a	Make your check payable to Rydex Dynamic Funds.
Retirement
Account Investor	Your check must be drawn on a U.S. bank and payable in U.S.
application kit.	Dollars.

	Include the name of the Rydex Fund(s) you want to purchase
	on your check.
	*If you do not specify which Rydex Fund(s) you want to*
	*purchase, your investment will be credited to the Rydex*
	*U.S. Government Money Market Fund, which is offered*
	in *a separate prospectus.*

	Mail your application and	Mail your written purchase
	check to:	instructions and check to:

	Mailing Address:
	Rydex Dynamic Funds
	Attn: Ops. Dept.
	9601 Blackwell Road, Suite 500
	Rockville, MD 20850

PROSPECTUS 27

	*Initial Purchase*	*Subsequent Purchases*

	Obtain an account number	Be sure to designate in your
	by completing the account	wire instructions which
	application that corresponds	Rydex Fund(s) you want to
	to the type of account you	purchase.
	are opening. Then, fax or
BY WIRE	mail it to Rydex.
	• Make sure to designate
Rydex fax	which Rydex Fund(s) you
number:	want to purchase.
301.296.5103
	• Make sure your investment
	meets the account
Rydex	minimum.
shareholder
services phone	To obtain “same-day credit” (to get that Business Day’s NAV)
number:	for your purchase order, *you must call Rydex shareholder*
800.820.0888	*services and provide the following information prior to*
or	*the transaction cut-off time for the Rydex Fund(s) you*
301.296.5406	*are purchasing:*

	• Account Number
	• Fund Name
	• Amount of Wire
	• Fed Wire Reference Number
	You will receive a confirmation number to verify that your
	purchase order has been accepted.


	*If you do not notify Rydex shareholder services of the*
	*incoming wire, your purchase order cannot be*
	*processed until the next Business Day.*

	Wire Instructions:
	U.S. Bank
	Cincinnati, OH
	Routing Number: 0420-00013
	For Account of: Rydex Dynamic Funds C-Class Shares
	Account Number: 48038-9030
	[Your Name]
	[Your shareholder account number]

	*If you do not specify which Rydex Fund(s) you want to*
	*purchase, your investment will be credited to the Rydex*
	*U.S. Government Money Market Fund, which is offered in*
	*a separate prospectus.*

BY INTERNET	Follow the directions on the Rydex Web site -
RYDEXPRESS	www.rydexfunds.com
INVEST (ACH)

CANCELLED PURCHASE ORDERS

Rydex will ordinarily cancel your purchase order under the following circumstances:

if your bank does not honor your check for any reason
if the transfer agent does not receive your wire transfer
if the transfer agent does not receive your ACH transfer
if your bank does not honor your ACH transfer

SELLING FUND SHARES

REDEMPTION PROCEDURES

The Funds offer you the option to send redemption orders by:

	Rydex Dynamic Funds
MAIL	Attn: Ops. Dept.
	9601 Blackwell Road, Suite 500
	Rockville, MD 20850

	301.296.5103
	If you send your redemption order by fax, you should call
FAX	Rydex shareholder services at 800.820.0888 or 301.296.5406 to
	verify that your fax was received.

TELEPHONE	800.820.0888 or 301.296.5406

PROSPECTUS 29

Whether you transmit your redemption order by mail, fax or telephone, you must include the following information in your redemption order:

your name
your shareholder account number
Fund name(s)
dollar amount or number of shares you would like to sell
whether you want your sale proceeds sent to you by check, wire or ACH
signature of account owner(s) (not required for telephone redemptions)

REDEMPTIONS FROM QUALIFIED RETIREMENT ACCOUNTS

Redeeming shares that you hold through a tax-qualified retirement account may have adverse tax consequences to you. You should consult your tax advisor before redeeming shares and making distributions from your tax qualified account. All redemptions from tax-qualified retirement accounts must be in writing and must specify whether Rydex should withhold taxes from your redemption proceeds.

RECEIVING YOUR REDEMPTION PROCEEDS

Your redemption proceeds, less any applicable CDSC normally will be sent within five Business Days of the transfer agent receiving your request. For redemption orders that settle on federal bank holidays, your redemption proceeds will be wired on the next Business Day following the holiday. For investments made by check or ACH (not wire purchases), payment of redemption proceeds may be delayed until the transfer agent is reasonably satisfied that your check has cleared. It may take up to 15 days for your check to clear.

SIGNATURE GUARANTEES

Signature guarantees help protect you and your account against fraud. You can obtain a signature guarantee at most banks and financial intermediaries. A notary public cannot provide a signature guarantee. You may not use fax to transmit a signature guarantee to the Funds.

REDEEMING SHARES BY CHECKWRITING

If you hold shares directly, you may redeem shares from the Money Market Fund by writing checks for $500 or more on your existing account. The checks may be made payable to any person or entity and your account will continue to earn dividends until the check clears. If your Money Market Fund’s balance is insufficient to cover the amount of your check, the transfer agent will automatically exchange sufficient funds from your Rydex Fund with the highest account balance to cover the check.

INVOLUNTARY REDEMPTIONS

EXCHANGING FUND SHARES

Unlike most mutual funds, Rydex offers unlimited exchange privileges with no minimum holding periods or transaction fees. An exchange is when you sell shares of one Rydex Fund and use the proceeds from that sale to purchase shares of another Rydex Fund. Investors may make exchanges on any Business Day of C-Class Shares of any Dynamic Fund for C-Class Shares of any other Fund, on the basis of the respective net asset values of the shares involved. Exchange requests, like any other share transaction, are subject to the Funds’ transaction cut-off times. The exchange privilege may be modified or discontinued at any time.

EXCHANGE PROCEDURES

The Funds offer you the option to send exchange requests by:

	Rydex Dynamic Funds
MAIL	Attn: Ops. Dept.
	9601 Blackwell Road, Suite 500
	Rockville, MD 20850

	301.296.5103
	If you send your redemption order by fax, you should call
FAX	Rydex shareholder services at 800.820.0888 or 301.296.5406 to
	verify that your fax was received.

TELEPHONE	800.820.0888 or 301.296.5406

INTERNET	www.rydexfunds.com

PROSPECTUS 31

Whether you transmit your exchange request by mail, fax, telephone or internet, you must include the following information in your exchange request:

your name
your shareholder account number
Fund name(s) you are exchanging out of (selling) and Fund name(s) you are exchanging in to (buying)
dollar amount, number of shares or percentage of Fund position involved in the exchange
signature of account owner(s) (not required for telephone exchanges)

MINIMUM EXCHANGE AMOUNTS

The minimum amount for an exchange is either $1,000 or 100% of the Fund position from which the exchange is coming, whichever is less. If you are exchanging the minimum amount, you may not split the proceeds between multiple Rydex Funds. If you place exchange transactions in shares or in percentages, the minimum exchange amount still applies.

RYDEX ACCOUNT POLICIES

LOW BALANCE ACCOUNTS

If, for any reason, your account balance across all Rydex Funds drops below the required minimum, Rydex reserves the right to redeem your remaining shares without any additional notification to you. In addition, to offset the administrative expense of servicing small accounts, the Funds may impose an administrative fee of $25 per year during periods where your account balance falls below the account minimum requirements for any reason.

CHANGES TO YOUR ACCOUNT

For information on what is required to make changes and/or additions to your account, please visit the Rydex Web site at www.rydexfunds.com or call 800.820.0888 or 301.296.5406. If you own shares that are registered in your intermediary’s name, and you want to transfer the registration to another intermediary or want the shares registered in your name, then you should contact your intermediary for instructions on how to make this change.

TRANSACTIONS OVER TELEPHONE OR INTERNET

Internet and telephone transactions are extremely convenient, but are not risk free. To ensure that your Internet and telephone transactions are safe, secure, and as risk-free as possible, the Rydex Funds have instituted certain safeguards and procedures for determining the identity of Web site users (including the use of secure passwords and 128-bit encryption technology) and telephone callers and authenticity of instructions. As a result, neither the Funds nor their transfer agent will be responsible for any loss, liability, cost, or expense for following Internet, telephone or wire instructions they reasonably believe to be genuine. If you or your intermediaries make exchange requests by telephone or Internet, you will generally bear the risk of any loss. Neither the Funds, nor their transfer agent, are responsible for Internet transactions that are not received.

STATEMENTS & CONFIRMATIONS

You will receive statements and trade confirmation of your investment transactions. You may elect to suppress trade confirmations by requesting this option in writing. You may choose to receive your confirmations and/or statements either by mail or electronically.

eDELIVERY SERVICES

eDelivery offers shareholders the convenience of receiving all communications (such as trade confirmations, statements, prospectuses and shareholder reports, etc.) from the Funds through the Web via email notification. For more information on eDelivery, please visit the Rydex Web site at www.rydexfunds.com.

SERVICE AND OTHER FEES

Rydex may charge the following administrative fees for services associated with the following:

$15 for wire transfers of redemption proceeds under $5,000
$50 on purchase checks returned for insufficient funds
$25 to stop payment of a redemption check within 10 Business Days of the settlement date

PROSPECTUS 33

$15 for standard overnight packages (fee may be higher for special delivery options)
$25 for bounced draft checks or ACH transactions
$25 per year for low balance accounts

Rydex reserves the right to change any of these fees or add additional service fees at any time.

RETIREMENT ACCOUNT FEES

Certain retirement plans such as IRA, Roth IRA and 403(b) accounts, are charged an annual $15 maintenance fee. Upon liquidating your retirement account, a $15 account-closing fee will be taken from the proceeds of your redemption.

DISTRIBUTION AND
SHAREHOLDER SERVICES PLAN

The Funds have adopted a Distribution and Shareholder Services Plan pursuant to Rule 12b-1 of the Investment Company Act of 1940 (the “C-Class Plan”) applicable to C-Class Shares that allows the Funds to pay annual distribution and service fees of 1.00% of the Funds’ average daily net assets. The annual .75% distribution fee reimburses Rydex Distributors, Inc. (the “Distributor”) for paying your intermediary an on-going sales commission. The annual .25% service fee compensates your intermediary for providing ongoing services to you. The Distributor advances the first year’s distribution and service fees, and retains the distribution and service fees on accounts with no authorized intermediary of record. Because the Fund pays these fees out of assets on an on-going basis, over time these fees may cost you more than other types of sales charges.

DIVIDENDS AND DISTRIBUTIONS

TIMING OF PAYMENTS

Income dividends, if any, are paid at least annually by each of the Funds. If you own Fund shares on a Fund’s record date, you will be entitled to receive the dividend. The Funds may declare and pay dividends on the same date. The Funds make distributions of capital gains, if any, at least annually. The Funds, however, may declare a special capital gains distribution if the Trustees believe that such a distribution would be in the best interest of the shareholders of a Fund.

DIVIDEND PAYMENT OPTIONS

Dividends and distributions will be paid in the form of additional Fund shares unless you have elected to receive payment in cash. If you did not elect to receive cash payments of dividends and distributions on your application, you must notify the Funds in writing to change your election prior to the date of the next distribution. Your election will become effective for dividends paid after the Funds receive your written notice. To cancel your election, simply send written notice to the Funds.

TAX INFORMATION

TAX STATUS OF EACH FUND

TAX STATUS OF DISTRIBUTIONS

• Each Fund will, at least annually, distribute substantially all of its net investment income and net capital gains income.

• The income dividends and short-term capital gains distributions you receive from the Funds will be taxed as ordinary income.

• Any long-term capital gains distributions you receive from a Fund are taxable as long-term capital gains regardless of how long you have owned your shares.

• Dividends and distributions are generally taxable to you whether you receive them in cash or in additional shares.

• Long-term capital gains distributions will result from gains on the sale or exchange of capital assets held by a Fund for more than one year.

• Distributions paid in January but declared by a Fund in October, November or December of the previous year may be taxable to you in the previous year.

TAX STATUS OF SHARE TRANSACTIONS

STATE TAX CONSIDERATIONS

PROSPECTUS 35

MANAGEMENT OF THE FUNDS

INVESTMENT ADVISOR

FUND	ADVISORY FEE*

TITAN 500 FUND	0.90	%
TEMPEST 500FUND	0.90	%
VELOCITY 100 FUND	0.90	%
VENTURE 100 FUND	0.90	%

*The Advisory Fees paid represent the fees paid at the master fund level.

The Advisor bears all of its own costs associated with providing these advisory services and the expenses of the Trustees which are affiliated with the Advisor. The Advisor may make payments from its own resources to broker-dealers and other financial institutions in connection with the sale of Fund shares.

The Advisor has voluntarily agreed to maintain the actual Total Annual Operating Expenses of the C-Class Shares of the Dynamic Funds at an “expense cap” of 2.50% (before sales charge) for the first three years of Fund operations. This means that the Advisor will reimburse certain expenses of the Funds so that expenses do not exceed 2.50%. Because the Advisor’s agreement to maintain an expense cap is voluntary, the Advisor may discontinue all or part of its reimbursements at any time. In addition, if at any point during the first three years of Fund operations it becomes unnecessary for the Advisor to make reimbursements, the Advisor may retain the difference between the Total Annual Operating Expenses of C-Class Shares of any Fund and 2.50% (before sales charge) to recapture any of its prior reimbursements.

PORTFOLIO MANAGER

Michael P. Byrum, CFA, Chief Investment Officer, has been associated with Rydex since the Advisor was founded in 1993, and since that time played a key role in the development of the firm’s portfolio investment strategy and product offerings. As Senior Portfolio Manager, he was instrumental in the launch of the OTC, Precious Metals, U.S. Government Bond, Ursa and Arktos Funds, and helped to create the Rydex Sector Funds. He was named Vice President of Portfolio in 1998, and Executive Vice President in 2000. Prior to joining Rydex, Mr. Byrum worked for Money Management Associates, the investment advisor to Rushmore Funds, Inc. He holds a degree in finance from Miami University of Ohio.

An investment team supervised by Mr. Byrum manages each of the Rydex Funds.

PROSPECTUS 37

FINANCIAL HIGHLIGHTS
TITAN 500 FUND

The financial highlights tables are intended to help you understand the Funds’ financial performance for the period of operations of C-Class Shares. Certain information reflects financial results for a single C-Class Share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in a C-Class Share of the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the financial statements and related notes, appears in the Rydex Dynamic Funds’ 2002 Annual Report. The 2002 Annual Report is available by telephoning the transfer agent at 800.820.0888 or 301.296.5100. The Annual Report is incorporated by reference in the SAI.

	YEAR				YEAR		PERIOD
	ENDED			ENDED			ENDED
	DECEMBER 31,			DECEMBER 31,			DECEMBER 31,
C-CLASS	2002				2001		2000*


Per Share Operating Performance:
Net Asset Value - Beginning of Period	$	13.08		$	20.00		$	21.34

Net Investment Income (Loss)†		(.14	)		(.19	)			.06
Net Realized and Unrealized
Losses on Securities		(6.02	)		(6.73	)		(1.40		)

Net Decrease in Net Asset Value
Resulting from Operations		(6.16	)		(6.92	)		(1.34		)
Distributions to Shareholders
From Net Investment Income		—			—				—
From Realized Gain on Investments		—			—				—


Net Decrease in Net Asset Value		(6.16	)		(6.92	)		(1.34		)


Net Asset Value - End of Period	$	6.92		$	13.08		$		20.00


Total Investment Return	(47.09		)%	(34.60		)%		(6.28		)%
Ratios to Average Net Assets:
Gross Expenses, including expenses of the
corresponding Master Portfolio		2.50	%		2.64	%		2.50		%**
Net Expenses, including expenses of the
corresponding Master Portfolio		2.50	%		2.50	%		2.50		%**
Net Investment Income (Loss)		(1.56	)%		(2.08	)%			3.10	%**
Supplementary Data:
Portfolio Turnover Rate***		1,227	%		1,494	%			—
Net Assets, End of Period (000's omitted)	$	11,491		$	7,965			$	190

†	Calculated using the average daily shares outstanding for the period.
*	Commencement of Operations: November 27, 2000 -- Titan 500 Fund C-Class.
**	Annualized
***	Portfolio turnover ratio is calculated without regard to short-term securities having a maturity of less than one year.

FINANCIAL HIGHLIGHTS
TEMPEST 500 FUND

		YEAR		PERIOD
	ENDED			ENDED
	DECEMBER 31,			DECEMBER 31,
C-CLASS		2002		2001*


Per Share Operating Performance:
Net Asset Value - Beginning of Period	$	67.98		$	61.02

Net Investment Loss†		(1.36	)		(.88	)
Net Realized and Unrealized
Gains on Securities		26.19			7.84

Net Increase in Net Asset Value
Resulting from Operations		24.83			6.96
Distributions to Shareholders
From Net Investment Income		—			—
From Realized Gain on Investments		(.74	)		—

Net Increase in Net Asset Value		24.09			6.96


Net Asset Value - End of Period	$	92.07		$	67.98


Total Investment Return		36.54	%		11.41	%
Ratios to Average Net Assets:
Gross Expenses, including expenses of the
corresponding Master Portfolio		2.50	%		2.50	%**
Net Expenses, including expenses of the
corresponding Master Portfolio		2.50	%		2.50	%**
Net Investment Loss		(1.49	)%		(1.52	)%**


Supplementary Data:
Portfolio Turnover Rate***		—			—
Net Assets, End of Period (000's omitted)	$	16,786		$	1,231

†	Calculated using the average daily shares outstanding for the period.
*	Commencement of Operations: March 7, 2001 -- Tempest 500 Fund C-Class.
**	Annualized
***	Portfolio turnover ratio is calculated without regard to short-term securities having a maturity of less than one year.

PROSPECTUS 39

VELOCITY 100 FUND

	YEAR				YEAR		PERIOD
	ENDED			ENDED			ENDED
	DECEMBER 31,			DECEMBER 31,			DECEMBER 31,
C-CLASS	2002				2001		2000*


Per Share Operating Performance:
Net Asset Value - Beginning of Period	$	31.45		$	104.50			$	160.00

Net Investment Loss†		(.19	)		(.45	)			(2.00	)
Net Realized and Unrealized
Losses on Securities	(21.57		)		(72.60	)			(53.50	)

Net Decrease in Net Asset Value
Resulting from Operations	(21.76		)		(73.05	)			(55.50	)
Distributions to Shareholders
From Net Investment Income		—			—				—
From Realized Gain on Investments		—			—				—


Net Decrease in Net Asset Value	(21.76		)		(73.05	)			(55.50	)


Net Asset Value - End of Period	$	9.69		$	31.45			$	104.50


Total Investment Return	(69.19		)%	(69.90		)%			(34.69	)%
Ratios to Average Net Assets:
Gross Expenses, including expenses of the
corresponding Master Portfolio		2.50	%		2.50	%			2.50	%**
Net Expenses, including expenses of the
corresponding Master Portfolio		2.50	%		2.50	%			2.50	%**
Net Investment Loss		(1.54	)%		(1.58	)%			(14.36	)%**
Supplementary Data:
Portfolio Turnover Rate***		298	%		733	%			757	%
Net Assets, End of Period (000's omitted)	$	15,311		$	15,205			$	83

†	Calculated using the average daily shares outstanding for the period.
††	Per share amounts for the period ended December 31, 2000 have been restated to reflect a 1:10 stock split effective April 20, 2001.
*	Commencement of Operations: November 20, 2000 – Velocity 100 Fund C-Class.
**	Annualized
***	Portfolio turnover ratio is calculated without regard to short-term securities having a maturity of less than one year.

FINANCIAL HIGHLIGHTS
VENTURE 100 FUND

		YEAR		PERIOD
		ENDED		ENDED
	DECEMBER 31,			DECEMBER 31,
C-CLASS		2002		2001*


Per Share Operating Performance:
Net Asset Value - Beginning of Period	$	48.72		$	57.68

Net Investment Loss†		(1.13	)		(.69	)
Net Realized and Unrealized
Gains (Losses) on Securities		25.48			(8.27	)

Net Increase (Decrease) in Net Asset Value
Resulting from Operations		24.35			(8.96	)
Distributions to Shareholders
From Net Investment Income		—			—
From Realized Gain on Investments		(1.99	)		—

Net Increase (Decrease) in Net Asset Value		22.36			(8.96	)


Net Asset Value - End of Period	$	71.08		$	48.72


Total Investment Return		50.09	%	(15.53		)%
Ratios to Average Net Assets:
Gross Expenses, including expenses of the
corresponding Master Portfolio		2.50	%		2.50	%**
Net Expenses, including expenses of the
corresponding Master Portfolio		2.50	%		2.50	%**
Net Investment Loss		(1.60	)%		(1.42	)%**


Supplementary Data:
Portfolio Turnover Rate***		—			—
Net Assets, End of Period (000's omitted)	$	22,654		$	5,794

†	Calculated using the average daily shares outstanding for the period.
*	Commencement of Operations: March 8, 2001 – Venture 100 Fund C-Class.
**	Annualized
***	Portfolio turnover ratio is calculated without regard to short-term securities having a maturity of less than one year.

PROSPECTUS 41

BENCHMARK INFORMATION

the advisability of investing in index funds;
the ability of any index to track stock market performance;
the accuracy and/or the completeness of the aforementioned indices or any data included therein;
the results to be obtained by any of the Dynamic Funds, the investors in the Dynamic Funds, or any person or entity from the use of the indices or data included therein; and
the merchantability or fitness for a particular purpose for use with respect to the indices or any data included therein.

Further, none of the Index Publishers:

Recommend that any person invest in the Funds or any other securities;
Have any responsibility or liability for or make any decisions about the timing, amount or pricing of the Funds, including calculation of NAV;
Have any responsibility or liability for the administration, management or marketing of the Funds;
Consider the needs of the Funds or the investors in the Funds in determining, composing or calculating the indexes or has any obligation to do so;
Will have any liability in connection with the Funds or for any errors, omissions or interruptions in connection with the indexes or the related data;
Will be liable for any lost profits or indirect punitive, special or consequential damages or losses, even if such Index Publisher knows that they might occur.

More information about the Index Publishers is located in the SAI.

A FAMILY OF FUNDS DESIGNED EXCLUSIVELY FOR FINANCIAL PROFESSIONALS AND SOPHISTICATED INVESTORS

The Trust’s SEC registration number is 811-09525.

9601 Blackwell Road
Suite 500
Rockville, MD 20850
800.820.0888
www.rydexfunds.com

RDYCP-1-5/03


		RYDEX DYNAMIC FUNDS


		PROSPECTUS A-ClassSHARES May 1, 2003 TITAN 500 FUND TEMPEST 500 FUND VELOCITY 100 FUND VENTURE 100 FUND



		The Securities and Exchange Commission has not approved or disapproved the Trust’s shares or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

TABLE OF CONTENTS

	3	RYDEX DYNAMIC FUNDS OVERVIEW

	4	Titan 500 Fund

	8	Tempest 500 Fund

	12	Velocity 100 Fund

	16	Venture 100 Fund

	20	INVESTMENTS AND RISKS

	25	SHAREHOLDER INFORMATION

	26	TRANSACTION INFORMATION

	29	BUYING FUND SHARES

	31	SELLING FUND SHARES

	32	EXCHANGING FUND SHARES

	34	RYDEX ACCOUNT POLICIES

	35	DISTRIBUTION PLAN

	35	DIVIDENDS AND DISTRIBUTIONS

	35	TAX INFORMATION

	37	MANAGEMENT OF THE FUNDS

	38	BENCHMARK INFORMATION

PROSPECTUS 3

RYDEX DYNAMIC FUNDS

A-CLASS SHARES
9601 BLACKWELL ROAD, SUITE 500, ROCKVILLE, MARYLAND 20850
800.820.0888 • 301.296.5100 • WWW.RYDEXFUNDS.COM

A-Class Shares of the Dynamic Funds are sold primarily through broker-dealers and other financial institutions ("intermediaries") whose clients take part in certain strategic and tactical asset allocation investment programs. Investors may exchange shares of the Funds through the Rydex Web site – www.rydexfunds.com – and over the phone.

THE FUNDS’ INVESTMENT OBJECTIVES
Each Fund has a separate investment objective. The investment objective of each Dynamic Fund is non-fundamental and may be changed without shareholder approval.

RISKS OF INVESTING IN THE FUNDS

The value of the Funds may fluctuate. In addition, Fund shares:

•	MAY DECLINE IN VALUE, AND YOU MAY LOSE MONEY

•	ARE NOT FEDERALLY INSURED

•	ARE NOT GUARANTEED BY ANY GOVERNMENT AGENCY

•	ARE NOT BANK DEPOSITS

•	ARE NOT GUARANTEED TO ACHIEVE THEIR OBJECTIVES

TITAN 500 FUND

FUND OBJECTIVE
The Titan 500 Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the performance of the S&P 500^® Index (the “underlying index”).

PORTFOLIO INVESTMENT STRATEGY
The Fund pursues its investment objective through what is referred to as a “master-feeder arrangement.” The Fund invests all of its assets in the Titan 500 Master Fund, a separate series of the Trust with an identical investment objective.

RISK CONSIDERATIONS
The Titan 500 Master Fund is subject to a number of risks that will affect the value of its shares, including:

DERIVATIVE RISK – The Fund's use of equity derivatives to pursue its investment objective may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. These risks may cause the Fund to experience higher losses than a fund that does not use derivatives.

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

PROSPECTUS 5

INVESTOR PROFILE
Investors who expect the S&P 500^® Index to go up and want highly accelerated investment gains when that index does so. These investors must also be willing to bear the risk of equally accelerated losses if the S&P 500^® Index goes down.

PERFORMANCE
The bar chart and table show the performance of the H-Class Shares of the Titan 500 Fund (which are not offered in this Prospectus) both year by year and as an average over different periods of time. Since the H-Class Shares are invested in the same portfolio of securities, returns for the A-Class Shares of the Fund will be substantially similar to that of the H-Class Shares shown here, and will differ only to the extent that each class has different expenses. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

TITAN 500 FUND

HIGHEST QUARTER RETURN 18.88%
(quarter ended 12/31/01)

LOWEST QUARTER RETURN -35.04%
(quarter ended 9/30/02)

Sales loads are not included in this bar chart and, if these amounts were reflected, returns would be less than those shown.

AVERAGE ANNUAL TOTAL RETURN(for periods ended December 31, 2002)¹

			FUND RETURN
			AFTER TAXES
			ON
		FUND RETURN	DISTRIBUTIONS
	FUND RETURN	AFTER TAXES ON	AND SALE OF
	BEFORE TAXES	DISTRIBUTIONS	FUND SHARES
	H-CLASS	H-CLASS	H-CLASS	S&P 500
	SHARES	SHARES²	SHARES²	INDEX³

PAST ONE YEAR	-46.60%	-46.60%	-28.61%	-22.09%
SINCE INCEPTION	-38.28%	-38.28%	-27.80%	-16.41%
(5/19/00)

1	These figures assume the reinvestment of dividends and capital gains distributions.
2	After-tax returns are calculated using the highest historical federal income and capital gains tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. Fund Returns After Tax on Distributions assume a continued investment in the fund and shows the effect of taxes on fund distributions. Fund Returns After Taxes on Distributions and Sale of Fund Shares assume all shares were redeemed at the end of each measurement period, and shows the effect of any taxable gain (or offsetting loss) on redemption, as well as the effects of taxes on fund distributions. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns for other classes of shares will differ from those shown above.
3	The S&P 500^®Index is a capitalization-weighted index composed of 500 common stocks, which are chosen by the Standard & Poor's Corporation ("S&P"). Returns reflect no deduction for fees, expenses, or taxes.

PROSPECTUS 7

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold A-Class Shares of the Titan 500 Fund.

SHAREHOLDER FEES*
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES**
(as a percentage of initial purchase price)	5.75%
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) †

MANAGEMENT FEES	0.90%
DISTRIBUTION (12b-1) FEES	0.25%
OTHER EXPENSES	0.60%
TOTAL ANNUAL FUND OPERATING EXPENSES	1.75%

*	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
**	Represents the maximum sales charge (load) imposed on purchases. This sales charge varies depending on how much you invest. You may pay less than the maximum sales charge because of waivers and reduced sales charges that may be available. See “Sales Charges.”
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Titan 500 Master Fund.

EXAMPLE This Example is intended to help you compare the cost of investing in the A-Class Shares of the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time period indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s estimated operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your cost would be:

	1 YEAR	3 YEARS	5 YEARS	10 YEARS

TITAN 500 FUND A-CLASS	$748	$1,111	$1,497	$2,575

TEMPEST 500 FUND

FUND OBJECTIVE
The Tempest 500 Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the inverse (opposite) performance of the S&P 500^®Index(the “underlying index”).

PORTFOLIO INVESTMENT STRATEGY
The Fund pursues its investment objective through what is referred to as a “master-feeder arrangement.” The Fund invests all of its assets in the Tempest 500 Master Fund, a separate series of the Trust with an identical investment objective.

RISK CONSIDERATIONS
The Tempest 500 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

PROSPECTUS 9

Conversely, if the security goes up in price during the period, the Fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.

INVESTOR PROFILE
Investors who expect the S&P 500^® Indexto go down and want highly accelerated investment gains when that index does so. These investors must also be willing to bear the risk of equally accelerated losses if the S&P 500^®Index goes up.

PERFORMANCE
The bar chart and table show the performance of the H-Class Shares of the Tempest 500 Fund (which are not offered in this Prospectus) both year by year and as an average over different periods of time. Since the H-Class Shares are invested in the same portfolio of securities, returns for the A-Class Shares of the Fund will be substantially similar to that of the H-Class Shares shown here, and will differ only to the extent that each class has different expenses. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

TEMPEST 500 FUND

HIGHEST QUARTER RETURN 34.51%
(quarter ended 9/30/01)

LOWEST QUARTER RETURN -19.40%
(quarter ended 12/31/01)

Sales loads are not included in this bar chart and, if these amounts were reflected, returns would be less than those shown.

AVERAGE ANNUAL TOTAL RETURN(for periods ended December 31, 2002)¹

			FUND RETURN
	FUND	FUND RETURN	AFTER TAXES ON
	RETURN	AFTER TAXES	DISTRIBUTIONS
	BEFORE	ON	AND SALE OF
	TAXES	DISTRIBUTIONS	FUND SHARES
	H-CLASS	H-CLASS	H-CLASS	S&P 500
	SHARES	SHARES²	SHARES²	INDEX³

PAST ONE YEAR	37.48%	37.05%	23.01%	-22.09%
SINCE INCEPTION	27.56%	27.29%	22.67%	-16.41%
(5/19/00)

1	These figures assume the reinvestment of dividends and capital gains distributions.
2	After-tax returns are calculated using the highest historical federal income and capital gains tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. Fund Returns After Tax on Distributions assume a continued investment in the fund and shows the effect of taxes on fund distributions. Fund Returns After Taxes on Distributions and Sale of Fund Shares assume all shares were redeemed at the end of each measurement period, and shows the effect of any taxable gain (or offsetting loss) on redemption, as well as the effects of taxes on fund distributions. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns for other classes of shares will differ from those shown above.
3	The S&P 500® Index is a capitalization-weighted index composed of 500 common stocks, which are chosen by the Standard & Poor's Corporation ("S&P"). Returns reflect no deduction for fees, expenses, or taxes.

PROSPECTUS 11

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold A-Class Shares of the Tempest 500 Fund.

SHAREHOLDER FEES*
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES**
(as a percentage of initial purchase price)	5.75%
ANNUAL FUND OPERATING EXPENSES(expenses that are deducted from fund assets)^†
MANAGEMENT FEES	0.90%
DISTRIBUTION (12b-1) FEES. . . . . . .	0.25%
OTHER EXPENSES	0.60%
TOTAL ANNUAL FUND OPERATING EXPENSES	1.75%

*	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
**	Represents the maximum sales charge (load) imposed on purchases. This sales charge varies depending on how much you invest. You may pay less than the maximum sales charge because of waivers and reduced sales charges that may be available. See “Sales Charges.”
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Tempest 500 Master Fund.

EXAMPLE This Example is intended to help you compare the cost of investing in the A-Class Shares of the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time period indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s estimated operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your cost would be:

	1 YEAR	3 YEARS	5 YEARS	10 YEARS

TEMPEST 500 FUND A-CLASS	$748	$1,111	$1,497	$2,575

VELOCITY 100 FUND

FUND OBJECTIVE
The Velocity 100 Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the performance of the Nasdaq 100 Index^®(the “underlying index”).

PORTFOLIO INVESTMENT STRATEGY
The Fund pursues its investment objective through what is referred to as a “master-feeder arrangement.” The Fund invests all of its assets in the Velocity 100 Master Fund, a separate series of the Trust with an identical investment objective.

RISK CONSIDERATIONS

The Velocity 100 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

SWAP COUNTERPARTY CREDIT RISK – The Fund is subject to credit risk on the amount it expects to receive from swap agreement counterparties. If a swap counterparty defaults on its payment

PROSPECTUS 13

obligations to the Fund, this default will cause the value of your investment in the Fund to decrease.

INVESTOR PROFILE
Investors who expect the Nasdaq 100 Index^®to go up and want highly accelerated investment gains when that index does so. These investors must also be willing to bear the risk of equally accelerated losses if the Nasdaq 100 Index^®goes down.

PERFORMANCE
The bar chart and table show the performance of the H-Class Shares of the Velocity 100 Fund (which are not offered in this Prospectus) both year by year and as an average over different periods of time. Since the H-Class Shares are invested in the same portfolio of securities, returns for the A-Class Shares of the Fund will be substantially similar to that of the H-Class Shares shown here, and will differ only to the extent that each class has different expenses. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

VELOCITY 100 FUND

HIGHEST QUARTER RETURN 72.09%
(quarter ended 12/31/01)

LOWEST QUARTER RETURN -62.24%
(quarter ended 9/30/01)

Sales loads are not included in this bar chart and, if these amounts were reflected, returns would be less than those shown.

AVERAGE ANNUAL TOTAL RETURN(for periods ended December 31, 2002)¹

			FUND RETURN
			AFTER TAXES ON
		FUND RETURN	DISTRIBUTIONS
	FUND RETURN	AFTER TAXES ON	AND SALE OF
	BEFORE TAXES	DISTRIBUTIONS	FUND SHARES	NASDAQ
	H-CLASS SHARES	H-CLASS SHARES²	H-CLASS SHARES²	100 INDEX³

PAST ONE YEAR	-68.47%	-68.47%	-42.04%	-37.58%
SINCE INCEPTION	-70.81%	-70.81%	-42.89%	-36.25%
(5/24/00)

1	These figures assume the reinvestment of dividends and capital gains distributions.
2	After-tax returns are calculated using the highest historical federal income and capital gains tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. Fund Returns After Tax on Distributions assume a continued investment in the fund and shows the effect of taxes on fund distributions. Fund Returns After Taxes on Distributions and Sale of Fund Shares assume all shares were redeemed at the end of each measurement period, and shows the effect of any taxable gain (or offsetting loss) on redemption, as well as the effects of taxes on fund distributions. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns for other classes of shares will differ from those shown above.
3	The Nasdaq 100 Index® is a modified capitalization-weighted index composed of 100 of the largest non-financial companies listed on the Nasdaq Stock Market. Returns reflect no deduction for fees, expenses, or taxes.

PROSPECTUS 15

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold A-Class Shares of the Velocity 100 Fund.

SHAREHOLDER FEES*
MAXIMUM SALES CHARGE (LOAD) **
(as a percentage of initial purchase price)	5.75%
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from fund assets)^†
MANAGEMENT FEES	0.90%
DISTRIBUTION (12b-1) FEES	0.25%
OTHER EXPENSES	0.60%
TOTAL ANNUAL FUND OPERATING EXPENSES	1.75%

*	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
**	Represents the maximum sales charge (load) imposed on purchases. This sales charge varies depending on how much you invest. You may pay less than the maximum sales charge because of waivers and reduced sales charges that may be available. See “Sales Charges.”
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Velocity 100 Master Fund.

EXAMPLE This Example is intended to help you compare the cost of investing in the A-Class Shares of the Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time period indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s estimated operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your cost would be:

	1 YEAR	3 YEARS	5 YEARS	10 YEARS

VELOCITY 100 FUND A-CLASS	$748	$1,111	$1,497	$2,575

VENTURE 100 FUND

FUND OBJECTIVE
The Venture 100 Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the inverse (opposite) performance of the Nasdaq 100Index^®(the “underlying index”).

PORTFOLIO INVESTMENT STRATEGY
The Fund pursues its investment objective through what is referred to as a “master-feeder arrangement.” The Fund invests all of its assets in the Venture 100 Master Fund, a separate series of the Trust with an identical investment objective.

RISK CONSIDERATIONS

The Venture 100 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

PROSPECTUS 17

INVESTOR PROFILE
Investors who expect the Nasdaq 100 Index^® to go down and want highly accelerated investment gains when that index does so. These investors must also be willing to bear the risk of equally accelerated losses if the Nasdaq 100 Index^® goes up.

PERFORMANCE
The bar chart and table show the performance of the H-Class Shares of the Venture 100 Fund (which are not offered in this Prospectus) both year by year and as an average over different periods of time. Since the H-Class Shares are invested in the same portfolio of securities, returns for the A-Class Shares of the Fund will be substantially similar to that of the H-Class Shares shown here, and will differ only to the extent that each class has different expenses. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

VENTURE 100 FUND

HIGHEST QUARTER RETURN 116.97%
(quarter ended 9/30/01)

LOWEST QUARTER RETURN -51.13%
(quarter ended 12/31/01)

Sales loads are not included in this bar chart and, if these amounts were reflected, returns would be less than those shown.

AVERAGE ANNUAL TOTAL RETURN(for periods ended December 31, 2002)¹

			FUND RETURN
		FUND RETURN	AFTER TAXES ON
		AFTER TAXES ON	DISTRIBUTIONS
	FUND RETURN	DISTRIBUTIONS	AND SALE OF
	BEFORE TAXES	H-CLASS	FUND SHARES	NASDAQ
	H-CLASS SHARES	SHARES²	H-CLASS SHARES²	100 INDEX³

PAST ONE YEAR	50.92%	49.30%	31.24%	-37.58%
SINCE INCEPTION	16.52%	15.86%	13.16%	-34.96%
(5/23/00)

1	These figures assume the reinvestment of dividends and capital gains distributions.
2	After-tax returns are calculated using the highest historical federal income and capital gains tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. Fund Returns After Tax on Distributions assume a continued investment in the fund and shows the effect of taxes on fund distributions. Fund Returns After Taxes on Distributions and Sale of Fund Shares assume all shares were redeemed at the end of each measurement period, and shows the effect of any taxable gain (or offsetting loss) on redemption, as well as the effects of taxes on fund distributions. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns for other classes of shares will differ from those shown above
3	The Nasdaq 100 Index® is a modified capitalization-weighted index composed of 100 of the largest non-financial companies listed on the Nasdaq Stock Market. Returns reflect no deduction for fees, expenses, or taxes.

PROSPECTUS 19

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold A-Class Shares of the Venture 100 Fund.

SHAREHOLDER FEES*
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES**
(as a percentage of initial purchase price)	5.75%
*ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)^†*
MANAGEMENT FEES	0.90%
DISTRIBUTION (12b-1) FEES	0.25%
OTHER EXPENSES	0.60%
TOTAL ANNUAL FUND OPERATING EXPENSES	1.75%

*	The Fund may impose a wire transfer charge of $15 on certain redemptions under $5,000.
**	Represents the maximum sales charge (load) imposed on purchases. This sales charge varies depending on how much you invest. You may pay less than the maximum sales charge because of waivers and reduced sales charges that may be available. See "Sales Charges."
†	This table and the example include both the fees paid by the Fund and its share of the fees of the Venture 100 Master Fund.

EXAMPLE This Example is intended to help you compare the cost of investing in the A-Class Shares of the Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time period indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s estimated operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your cost would be:

	1 YEAR	3 YEARS	5 YEARS	10 YEARS

VENTURE 100 FUND A-CLASS	$748	$1,111	$1,497	$2,575

MORE INFORMATION ABOUT FUND
INVESTMENTS AND RISK

FUND NAME		BENCHMARK
TITAN 500 FUND		200% OF THE PERFORMANCE OF THE S&P 500®INDEX
TEMPEST 500 FUND		200% OF THE INVERSE (OPPOSITE) PERFORMANCE OF
		THE S&P 500®INDEX
VELOCITY 100 FUND		200% OF THE PERFORMANCE OF THE NASDAQ 100
		INDEX®
VENTURE 100 FUND		200% OF THE INVERSE (OPPOSITE) PERFORMANCE OF
		THE NASDAQ 100 INDEX®

A BRIEF GUIDE TO THE BENCHMARKS

TheS&P 500^® Index. The S&P 500^® Indexis a capitalization-weighted index composed of 500 common stocks, which are chosen by the Standard & Poor’s Corporation (“S&P”) on a statistical basis.

TheNasdaq 100 Index^®. The Nasdaq 100 Index^®is a modified capitalization weighted index composed of 100 of the largest non-financial companies listed on The Nasdaq Stock Market, Inc. (“Nasdaq”).

UNDERSTANDING COMPOUNDING & THE EFFECT OF LEVERAGE

MASTER-FEEDER INVESTMENT STRUCTURE
As discussed in their respective Fund Overviews, the Funds pursue their respective investment objectives indirectly by investing through what is referred to as a “master-feeder arrangement.” Under the master-

PROSPECTUS 21

feeder arrangement, a Fund’s investment portfolio is comprised solely of shares of a “master fund,” which is a separate mutual fund that has an identical investment objective, e.g., the Titan 500 Fund acts as a “feeder fund,” holding shares of its master fund as its only investment. As a result, the Fund has an indirect interest in all of the securities owned by the master fund. Because of this indirect interest, the Fund’s investment returns should be the same as those of the master fund, adjusted for Fund expenses.

ADVISOR’S PORTFOLIO INVESTMENT STRATEGY IN MANAGING THE DYNAMIC MASTER FUNDS
In managing the Dynamic Master Funds, the Advisor uses a “passive” investment strategy to manage each Fund’s portfolio, meaning that the Advisor does not attempt to select securities based on their individual potential to perform better than the market. The Advisor’s primary objective is to match the performance of each Fund’s benchmark as closely as possible on a daily basis. The Advisor uses quantitative analysis techniques to structure each Fund to obtain the highest correlation to its particular benchmark. The Advisor does not engage in temporary defensive investing, keeping each Fund’s assets fully invested in all market environments. The Advisor monitors each Fund on an ongoing basis, and makes adjustments to its portfolio, as necessary, to minimize tracking error and to maximize liquidity.

OTHER INVESTMENT PRACTICES AND STRATEGIES
Please see the statement of additional information (the "SAI ") for a more complete list of portfolio investment strategies, permitted investments and related risks.

WHO MAY WANT TO INVEST IN THE RYDEX DYNAMIC FUNDS
The Dynamic Funds may be appropriate for investors who believe that over the long term, the value of a particular index will increase or decrease, and that by investing with the objective of doubling the index’s daily return they will achieve superiorresults over time. Investors should understand that since each Fund seeks to double the daily performance of the index underlying its benchmark, it should have twice the daily volatility of a conventional index fund. This increases the potential risk of loss.

often an investor may exchange among Funds. In addition, the Funds do not impose any transaction fees when investors exchange shares. The Funds provide multiple opportunities for investors to capitalize on market trends and to capture market momentum with intra-day Fund share pricing and trading. Dynamic asset allocators may also utilize intra-day trading as a defensive strategy to react to market movements before investments are adversely affected.

The Dynamic Funds may also be appropriate for investors who use an investment strategy that involves the strategic allocation of investments among different asset classes. By utilizing consistently applied leverage, the Funds' portfolio investment strategy can create alternative investment opportunities for strategic asset allocatorswho seek to match the S&P 500’s or Nasdaq 100’s daily return because less capital is needed to achieve a desired exposure. For example, an investor might invest $50,000 in a conventional S&P 500^® Indexfund. Alternatively, that same investor could invest half that amount – $25,000 – in the Titan 500 Fund and target the same daily return. This increased cash position could then be used for a tactical overlay, such as the introduction of an additional asset class or an undervalued market sector.

RISKS OF INVESTING IN THE FUNDS
As indicated below, the Funds (which includes their respective “master fund”) are subject to a number of risks that may affect the value of the Funds’ shares.

EQUITY RISK(All Funds) –The Funds invest primarily in instruments that attempt to track the price movement of equity indices as well as equity securities, including common stocks. Investments in equity securities and equity derivatives in general are subject to market risks that may cause their prices to fluctuate over time. Fluctuations in the value of equity securities in which the Funds invest will cause the net asset value of the Funds to fluctuate. Historically, the equity markets have moved in cycles, and the value of the Funds’ equity securities and equity derivatives may fluctuate drastically from day-to-day. This price volatility is the principal risk of investing in equity securities. Because of their link to the equity markets and use of leverage, an investment in the Funds may be more suitable for investors who can bear the risk of short-term principal fluctuations, which at times may be significant.

NON-DIVERSIFICATION RISK(All Funds) –Since each Fund is non-diversified, each Fund may invest in the securities of a limited number of issuers. To the extent that a Fund invests a significant percentage of its assets in a limited number of issuers, the Fund is subject to the risks of investing in those few issuers, and may be more susceptible to a single adverse economic or regulatory occurrence.

INDUSTRY CONCENTRATION RISK(All Funds) –None of the Funds will invest 25% or more of the value of the Fund’s total assets in the securities of one or more issuers conducting their principal business activities in the same industry or group of industries; except that, to the extent the index underlying a Fund’s benchmark is concentrated in a particular industry, a Fund will necessarily be concentrated in that industry. Currently, the index underlying the Velocity 100 Fund’s and the Venture 100 Fund’s benchmark— the Nasdaq 100^® Index—is concentrated in technology companies. The risk of concentrating Fund investments in a limited number of issuers conducting business in the same industry or group of industries is that a Fund will be more

PROSPECTUS 23

susceptible to the risks associated with that industry or group of industries than a fund that does not concentrate its investments.

TRACKING ERROR RISK(All Funds) –While the Funds do not expect returns to deviate significantly from their respective benchmarks on a daily basis, certain factors may affect their ability to achieve close correlation. These factors may include Fund expenses, imperfect correlation between the Funds’ investments and those of their benchmarks, rounding of share prices, changes to the benchmark, regulatory policies, and leverage. The cumulative effect of these factors may over time cause the Funds’ returns to deviate from their respective benchmarks on an aggregate basis. The magnitude of any tracking error may be affected by a higher portfolio turnover rate.

TRADING HALT RISK(All Funds) –The Funds typically will hold short- term options and futures contracts. The major exchanges on which these contracts are traded, such as the Chicago Mercantile Exchange (“CME”), have established limits on how much an option or futures contract may decline over various time periods within a day. If an option or futures contract’s price declines more than the established limits, trading on the exchange is halted on that instrument. If a trading halt occurs, the Funds may temporarily be unable to purchase or sell options or futures contracts. Such a trading halt near the time the Funds price their shares may limit the Funds’ ability to use leverage and may prevent the Funds from achieving their investment objectives. In such an event, the Funds also may be required to use a “fair-value” method to price their outstanding contracts.

FUTURES AND OPTIONS RISK(All Funds) –The Funds may invest a percentage of their assets in futures and options contracts. The Funds may use futures contracts and related options for bona fide hedging purposes to offset changes in the value of securities held or expected to be acquired. They may also be used to gain exposure to a particular market or instrument, to create a synthetic money market position, and for certain other tax-related purposes. The Funds will only enter into futures contracts traded on a national futures exchange or board of trade. Futures and options contracts are described in more detail below:

FUTURES CONTRACTS –Futures contracts and options on futures contracts provide for the future sale by one party and purchase by another party of a specified amount of a specific security at a specified future time and at a specified price. An option on a futures contract gives the purchaser the right, in exchange for a premium, to assume a position in a futures contract at a specified exercise price during the term of the option. Index futures are futures contracts for various indices that are traded on registered securities exchanges.

OPTIONS –The buyer of an option acquires the right to buy (a call option) or sell (a put option) a certain quantity of a security (the underlying security) or instrument at a certain price up to a specified point in time. The seller or writer of an option is obligated to sell (a call option) or buy (a put option) the underlying security. When writing (selling) call options on securities, the Funds may cover their positions by owning the underlying security on which the option is written or by owning a call option on the underlying security. Alternatively, the Funds may cover their position by maintaining in a segregated account cash or liquid securities equal in value to the exercise price of the call option written by the Funds.

The risks associated with the Funds’ use of futures and options contracts include:

• The Funds experiencing losses over certain ranges in the market that exceed losses experienced by the funds that do not use futures contracts and options.

• There may be an imperfect correlation between the changes in market value of the securities held by Funds and the prices of futures and options on futures.

• Trading restrictions or limitations may be imposed by an exchange, and government regulations may restrict trading in futures contracts and options.

EARLY CLOSING RISK(All Funds) –The normal close of trading of securities listed on Nasdaq and the New York Stock Exchange (“NYSE”) is 4:00 p.m., Eastern Time. Unanticipated early closings may result in a Fund being unable to sell or buy securities on that day. If an exchange closes early on a day when one or more of the Funds needs to execute a high volume of securities trades late in a trading day, a Fund might incur substantial trading losses.

SHORT SALES RISK(Tempest 500 Fund and Venture 100 Fund) –Short sales are transactions in which a Fund sells a security it does not own. To complete the transaction, the Fund must borrow the security to make delivery to the buyer. The Fund is then obligated to replace the security borrowed by purchasing the security at the market price at the time of replacement. The price at such time may be higher or lower than the price at which the security was sold by the Fund. If the underlying security goes down in price between the time the Fund sells the security and buys it back, the Fund will realize a gain on the transaction. Conversely, if the underlying security goes up in price during the period, the Fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.

SWAP COUNTERPARTY CREDIT RISK(All Funds) –The Funds may enter into equity index or interest rate swap agreements for purposes of attempting to gain exposure to a particular group of stocks or to an index of stocks without actually purchasing those stocks, or to hedge a position. The Funds will use short-term swap agreements to exchange the returns (or differentials in rates of return) earned or realized in particular predetermined investments or instruments. A Fund will not enter into any swap agreement unless the Advisor believes that the other party to the transaction is creditworthy. The use of equity swaps involves risks that are different from those associated with ordinary portfolio securities transactions. Swap agreements may be considered to be illiquid. A Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty.

PROSPECTUS 25

INVESTING WITH RYDEX: SHAREHOLDER INFORMATION

A-Class Shares are offered exclusively through authorized securities brokers and other financial professionals.

OPENING YOUR ACCOUNT You will need to open a Rydex shareholder account to make share transactions - buy, sell or exchange shares of the Funds. You can request an account application by calling Rydex shareholder services at 800.820.0888 or 301.296.5406 or simply download an application from the Rydex Web site - www.rydexfunds.com. You may also use the Rydex Web site to open certain types of accounts electronically using an e-signature. For more information on opening an account, call Rydex shareholder services at 800.820.0888 or 301.296.5406 or visit www.rydexfunds.com.

The type of application you will need to complete depends on the type of account you want to open. For example, if you are opening a retirement account, such as an IRA, you will need to fill out a different application than you would if you were opening a regular account. When you call Rydex to request an account application, be sure to let the shareholder services representative know what type of account you want to open to ensure that you receive the correct application.

If you open your account through a broker or other financial intermediary, your broker will ordinarily assist you in completing the necessary application to open your account with Rydex.

MINIMUM AMOUNTS The minimum initial investment amount and minimum account balance for A-Class Shares are:

	•	$1,000 for retirement accounts
	•	$2,500 for all other accounts

There are no minimum amounts for subsequent investments in the Funds. Rydex reserves the right to modify its minimum account requirements at any time, with or without prior notice to you.


TIPS TO SUCCESSFULLY COMPLETE YOUR ACCOUNT APPLICATION
•	You must provide each account holder’s social security number or tax ID number and date of birth on the application to avoid a delay in processing.

•	Attach the title page and signature page of trust documents when establishing a trust account.

•	When establishing an account for your corporation, partnership or self directed retirement plan, please indicate the correct account type to ensure proper tax reporting, and provide a certified resolution or other documentation evidencing your authority to open the account and engage in transactions.

•	You must provide a street address (Rydex does not accept P.O. Box only addresses).

•	Be sure to sign the application.

TRANSACTION INFORMATION

This section provides important information about the procedures that you must follow when you buy, sell or exchange shares of the Funds. You may submit transaction orders to buy, sell or exchange Fund shares on any day that the NYSE is open for business (a “Business Day”).

CALCULATING NAV The price at which you buy, sell and exchange shares is the net asset charges. Purchases of A-Class Shares are sold subject to a front-end sales charge. Each Fund calculates its NAV by:

•	Taking the current market value of its total assets
•	Subtracting any liabilities
•	Dividing that amount by the total number of shares owned by shareholders

The Dynamic Funds calculate NAV twice each Business Day, first in the morning and again in the afternoon. The morning NAV is calculated as of 10:45 a.m., Eastern Time and the afternoon NAV is calculated as of the regularly scheduled close of normal trading on the NYSE (normally, 4:00 p.m., Eastern Time).

If the primary exchange or market where a Fund’s securities or other generally observed by participants in these markets - the Funds may calculate NAV as of the earlier closing time. On days when the a holiday, the Dynamic Funds will only calculate NAV once at the close of the exchange or market. For more information on these early closings, please call 800.820.0888 or visit the Rydex Web site.

TRANSACTION CUT-OFF TIMES All shareholder transaction orders are processed at the NAV next determined after your transaction order is received in good form by the Fund’s transfer agent, subject to the Fund’s transaction cut-off times and any applicable front end sales charge. All share transaction orders must be received by the Fund’s transfer agent before the cut-off times below to be processed at that Business Day’s NAV. The cut-off times allow the Fund’s transfer agent to ensure that your order request is in good form, meaning that it is complete and contains all necessary information; has all supporting documentation (such as trust documents, beneficiary designations, proper signature guarantees, IRA rollover forms, etc.); and is accompanied by sufficient purchase proceeds. Any application that is sent to the transfer agent does not constitute a purchase order until the transfer agent processes the application and receives correct payment by check or wire transfer.

FUND	MORNING CUT-OFF	AFTERNOON CUT-OFF
	TIME (ET)	TIME (ET)

DYNAMIC FUNDS	10:30 a.m.	3:45 p.m.*

* For Internet transactions in the Dynamic Funds, the cut-off time is 3:55 p.m., Eastern time. For more information on Internet transactions, visit www.rydexfunds.com.

PROSPECTUS 27

EARLY TRANSACTION CUT-OFF TIMES
On any day that a Fund calculates NAV earlier than normal, as described above, Rydex reserves the right to advance the time on that day by which shareholder transaction orders must be received by the transfer agent.

TRANSACTIONS THROUGH YOUR FINANCIAL INTERMEDIARY
You will ordinarily submit your transaction orders through your financial intermediary or other securities dealer through which you opened your shareholder account. Your intermediary is responsible for ensuring that your transaction order contains all of the necessary information and promptly transmitting your order to the Funds. Upon acceptance by your intermediary or securities dealer, your order will be processed at the Fund’s next determined NAV. Intermediaries may charge fees for the services they provide to you in connection with processing your transaction order or maintaining your account with them. Each intermediary also may have its own rules about share transactions, limits on the number of share transactions you are permitted to make in a given time period, and may have earlier cut-off times for processing your transaction order. In addition, intermediaries may not offer intra-day trading or pricing regardless of when you place you place your order with your intermediary. For more information about your financial intermediary’s rules and procedures, you should contact your intermediary directly.

SALES CHARGES

A-Class Shares are sold at NAV, plus the applicable front-end sales charge. The sales charge is used to pay your financial intermediary a sales commission up to a total of 5.75% of the purchase price of your investment in connection with your initial purchase. However, in some cases, described below, your purchase may not be subject to an initial sales charge, and the offering price will be the net asset value. In other cases, you may be eligible for a reduced sales charge. The sales charge varies depending on the amount of your purchase. The current sales charge rates are as follows:

	Sales Charge as %	Sales Charge as % of
Amount of Investment	of Offering Price	Net Amount Invested

Less than $25,000	5.75%	6.10%

$25,000 but less than	5.25%	5.54%
$50,000

$50,000 but less than	4.75%	4.99%
$100,000

$100,000 but less than	3.75%	3.90%
$250,000

$250,000 but less than	2.75%	2.83%
$500,000

$500,000 but less than	2.00%	2.04%
$1,000,000

Greater than $1,000,000	1.00%	1.01%

HOW TO REDUCE YOUR SALES CHARGE
You may be eligible to purchase A-Class Shares for reduced sales charges. To qualify for these reductions, you or your financial intermediary must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment. For additional information, including information on aggregating purchases among related accounts to receive reduced sales charges, see the SAI.

RIGHTS OF ACCUMULATION To qualify for the lower sales charge rates that apply to larger purchases of A-Class Shares, you may combine your new purchases of A-Class Shares with the shares of any other A-Class Shares of Rydex Funds that you already own. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all other A-Class Shares you own.

Additionally, you may combine simultaneous purchases of A-Class Shares with the shares of any other class of Rydex Funds (other than money market funds) to reduce the sales charge rate that applies to purchases of A-Class Shares. The reduced sales charge will apply only to current purchases and must be requested when you buy your shares.

LETTERS OF INTENT Under a Letter of Intent (“LOI”), you commit to purchase a specified dollar amount of A-Class Shares of Rydex Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested.

SALES CHARGE WAIVERS The sales charge on purchases of A-Class Shares is waived for certain types of investors, including:

•	Directors and officers of any fund sponsored by the Advisor or any of its subsidiaries and their immediate families (i.e., spouse, children, mother or father).

•	Employees of the Advisor and their immediate families, or any full-time employee or registered representative of the Distributor or of broker-dealers having dealer agreements with the Distributor (a “Selling Broker”) and their immediate families (or any trust, pension, profit sharing or other benefit plan for the benefit of such persons).

•	Any full-time employee of a bank, savings and loan, credit union or other financial institution that utilizes a Selling Broker to clear purchases of the fund’s shares and their immediate families.

•	Participants in certain “wrap-fee” or asset allocation programs or other fee based arrangements sponsored by broker-dealers and other financial institutions that have entered into agreements with the Distributor.

•	Any accounts established on behalf of registered investment advisers or their clients by broker-dealers that charge a transaction fee and that have entered into agreements with the Distributor.

•	Separate accounts used to fund certain unregistered variable annuity contracts or Section 403(b) or 401(a) or (k) accounts.

SALES CHARGE EXCEPTIONS You will not pay initial sales charges on the following:

•	A-Class Shares purchased by reinvesting dividends and distributions.

•	When exchanging A-Class Shares of one Fund for A-Class Shares of another Fund.

PROSPECTUS 29

BUYING FUND SHARES

PURCHASE PROCEDURES
The Funds offer you the option to send purchase orders by mail, fax or internet and send purchase proceeds by check, wire transfer or ACH. The Funds do not accept cash or cash equivalents, such as travelers checks, money orders, bearer bonds, government checks, third-party checks or credit card convenience checks. Cashiers checks, bank checks, official checks and treasurers' checks under $10,000 are also not accepted. You may buy shares and send your purchase proceeds by any of the methods described below:

BY MAIL
IRA and other retirement accounts require additional paperwork.

Call Rydex Shareholder Services to request a Retirement Account Investor application kit.

Initial Purchase

Complete the account application that corresponds to the type of account you are opening.

• Make sure to designate which Rydex Fund(s) you want to purchase.
• Make sure your investment meets the account minimum.

Subsequent Purchases

Complete the Rydex investment slip included with your quarterly statement or send written purchase instructions that include:

•  your name
•  your shareholder account number
•  which Rydex Fund(s) you want to purchase.

Make your check payable to Rydex Dynamic Funds.
Your check must be drawn on a U.S. bank and payable in U.S. Dollars.

Include the name of the Rydex Fund(s) you want to purchase on your check.

If you do not specify which Rydex Fund(s) you want to purchase, your investment will be credited to the Rydex U.S. Government Money Market Fund, which is offered pursuant to a separate prospectus.

Mail your application and check to:

Mail your written purchase instructions and check to:

Mailing Address:

Rydex Dynamic Funds
Attn: Ops. Dept.
9601 Blackwell Road, Suite 500
Rockville, MD 20850

BY WIRE

Rydex fax number: 301.296.5103

Rydex shareholder services phone number: 800.820.0888 or 301.296.5406

Initial Purchase

Obtain an account number by completing the account application that corresponds to the type of account you are opening. Then, fax or mail it to Rydex.

• Make sure to designate which Rydex Fund(s) you want to purchase.
• Make sure your investment meets the account minimum.

Subsequent Purchases

Be sure to designate in your wire instructions which Rydex Fund(s) you want to purchase.

To obtain “same-day credit” (to get that Business Day’s NAV) for your purchase order,you must call Rydex shareholder services and provide the following information prior to the transaction cut-off time for the Rydex Fund(s) you are purchasing:

•  Account Number
•  Fund Name
•  Amount of Wire
•  Fed Wire Reference Number
You will receive a confirmation number to verify that your purchase order has been accepted.

If you do not notify Rydex shareholder services of the incoming wire, your purchase order cannot be processed until the next Business Day.

Wire Instructions:
U.S. Bank
Cincinnati, OH
Routing Number: 0420-00013
For Account of: Rydex Dynamic Funds A-Class
Shares
Account Number: 48038-9030
[Your Name]
[Your shareholder account number]

If you do not specify which Rydex Fund(s) you want to purchase, your investment will be credited to the Rydex U.S. Government Money Market Fund, which is offered pursuant to a separate prospectus.

BY INTERNET (ACH)

Follow the directions on the Rydex Web site - www.rydexfunds.com

CANCELLED PURCHASE ORDERS

Rydex will ordinarily cancel your purchase order under the following circumstances:

•	if your bank does not honor your check for any reason

•	if the transfer agent does not receive your wire transfer

•	if the transfer agent does not receive your ACH transfer

•	if your bank does not honor your ACH transfer

If your purchase order is cancelled for any of these reasons, you will not be entitled to benefit from any increase in NAV that the Fund(s) may have experienced from the time of your order to the time of its cancellation. In addition, if the Fund(s) NAV decreases in value from the time of your order to the time of its cancellation, the Fund(s) will hold you liable for any losses that it incurs as a result of your cancelled order.

PROSPECTUS 31

SELLING FUND SHARES

REDEMPTION PROCEDURES

The Funds offer you the option to send redemption orders by:

		Rydex Funds
MAIL		Attn: Ops. Dept.
		9601 Blackwell Road, Suite 500
		Rockville, MD 20850

		301.296.5103
FAX		If you send your redemption order by fax, you
		should call Rydex shareholder services at
		800.820.0888 or 301.296.5406 to verify that your
		fax was received.

TELEPHONE		800.820.0888 or 301.296.5406

Whether you transmit your redemption order by mail, fax or telephone, you must include the following information in your redemption order:

•	your name

•	your shareholder account number

•	Fund name(s)

•	dollar amount or number of shares you would like to sell

•	whether you want your sale proceeds sent to you by check, wire or ACH

•	signature of account owner(s) (not required for telephone redemptions)

You may only place a redemption order if you are the registered owner of the account or the registered owner has given you written authorization to trade the account. You will receive a confirmation number for your redemption. Please retain it for your records.

REDEMPTIONS FROM QUALIFIED RETIREMENT ACCOUNTS Redeeming shares that you hold through a tax-qualified retirement account may have adverse tax consequences to you. You should consult your tax advisor before redeeming shares and making distributions from your tax qualified account. All redemptions from tax-

qualified retirement accounts must be in writing and must specify whether Rydex should withhold taxes from your redemption proceeds.

SIGNATURE GUARANTEES

REDEEMING SHARES BY CHECKWRITING
If you hold shares directly, you may redeem shares from the Money Market Fund by writing checks for $500 or more on your existing account. The checks may be made payable to any person or entity and your account will continue to earn dividends until the check clears. If your Money Market Fund’s balance is insufficient to cover the amount of your check, the transfer agent will automatically exchange sufficient funds from your Rydex Fund with the highest account balance to cover the check.

INVOLUNTARY REDEMPTIONS
Any request for a redemption when your account balance is below the currently applicable minimum investment amount, or would be below that minimum as a result of the redemption, will be treated as a request for the complete redemption of your account.

EXCHANGING FUND SHARES

Unlike most mutual funds, Rydex offers unlimited exchange privileges with no minimum holding periods or transaction fees. An exchange is when you sell shares of one Rydex Fund and use the proceeds from that sale to purchase shares of another Rydex Fund. Investors may make exchanges on any Business Day of A-Class Shares of any Dynamic Fund for A-Class Shares of any other Fund, on the basis of the respective net asset values of the shares involved. Exchange requests, like any other share transaction, are subject to the Funds’ transaction cut-off times. The exchange privilege may be modified or discontinued at any time.

PROSPECTUS 33

EXCHANGE PROCEDURES

The Funds offer you the option to send exchange requests by:

		Rydex Funds
MAIL		Attn: Ops. Dept.
		9601 Blackwell Road, Suite 500
		Rockville, MD 20850

		301.296.5103
FAX		If you send your redemption order by fax, you
		should call Rydex shareholder services at
		800.820.0888 or 301.296.5406 to verify that your
		fax was received.

TELEPHONE		800.820.0888 or 301.296.5406
INTERNET		www.rydexfunds.com

Whether you transmit your exchange request by mail, fax, telephone or internet, you must include the following information in your exchange request:

•	your name

•	your shareholder account number

•	Fund name(s) you are exchanging out of (selling) and Fund name(s) you are exchanging in to (buying)

•	dollar amount, number of shares or percentage of Fund position involved in the exchange

•	signature of account owner(s) (not required for telephone exchanges)

You may only place exchange orders if you are the registered owner of the account or the registered owner has given you written authorization to trade the account. You will receive confirmation number for your exchange. Please retain it for your records.

MINIMUM EXCHANGE AMOUNTS The minimum amount for an exchange is either $1,000 or 100% of the Fund position from which the exchange is coming, whichever is less. If you are exchanging the minimum amount, you may not split the proceeds between multiple Rydex Funds. If you place exchange transactions in shares or in percentages, the minimum exchange amount still applies.

RYDEX ACCOUNT POLICIES

Neither the Funds, nor their transfer agent, are responsible for Internet transactions that are not received.

eDelivery Services
eDelivery offers shareholders the convenience of receiving all communications (such as trade confirmations, statements, prospectuses and shareholder reports, etc.) from the Funds through the Web via email notification. For more information on eDelivery, please visit the Rydex Web site at www. rydexfunds .com.

SERVICE AND OTHER FEES
Rydex may charge the following administrative fees for services associated with the following:

• $15 for wire transfers of redemption proceeds under $5,000

• $50 on purchase checks returned for insufficient funds

• $25 to stop payment of a redemption check within 10 Business Days
of the settlement date

• $15 for standard overnight packages (fee may be higher for special
delivery options)

PROSPECTUS 35

• $25 for bounced draft checks or ACH transactions

• $25 per year for low balance accounts

Rydex reserves the right to change any of these fees or add additional service fees at any time.

RETIREMENT ACCOUNT FEES

DISTRIBUTION PLAN
The Funds have adopted a Distribution Plan (the “Plan”) applicable to A-Class Shares that allows the Funds to pay distribution fees to Rydex Distributors, Inc. (the “Distributor”) and other firms that provide distribution services (“Service Providers”). If a Service Provider provides distribution services, the Funds will pay distribution fees to the Distributor at an annual rate not to exceed .25% of average daily net assets, pursuant to Rule 12b-1 of the Investment Company Act of 1940. The Distributor will, in turn, pay the Service Provider out of its fees. Because the Funds pay these fees out of assets on an ongoing basis, over time these fees may cost you more than other types of sales charges.

DIVIDENDS AND DISTRIBUTIONS

TAX INFORMATION

The following is a summary of some important tax issues that affect the Funds and their shareholders. The summary is based on current tax laws, which may be changed by legislative, judicial or administrative action. You should not consider this summary to be a detailed explanation of the tax treatment of the Funds, or the tax consequences of an investment in the Funds.More information about taxes is located in the Statement of Additional Information (“SAI”). You are urged to consult your tax advisor regarding specific questions as to federal, state and local income taxes.

TAX STATUS OF EACH FUND

TAX STATUS OF DISTRIBUTIONS

• Each Fund will, at least annually, distribute substantially all of its net investment income and net capital gains income.

• The income dividends and short-term capital gains distributions you receive from the Funds will be taxed as ordinary income.

• Any long-term capital gains distributions you receive from a Fund are taxable as long-term capital gains regardless of how long you haveowned your shares.

• Dividends and distributions are generally taxable to you whether you receive them in cash or in additional shares.

• Long-term capital gains distributions will result from gains on the sale or exchange of capital assets held by a Fund for more than one year.

• Distributions paid in January but declared by a Fund in October, November or December of the previous year may be taxable to you in the previous year.

TAX STATUS OF SHARE TRANSACTIONS
Each sale, exchange, or redemption of Fund shares may be a taxable event to you. For tax purposes, an exchange of Fund shares for shares of a different Rydex Fund is treated the same as a sale. You should consider the tax consequences of any redemption or exchange before making such a request, especially with respect to redemptions, if you invest in the Funds through a tax-qualified retirement plan.

STATE TAX CONSIDERATIONS
A Fund is not liable for any income or franchise tax in Delaware as long as it qualifies as a regulated investment company for federal income tax purposes. In addition to federal taxes, distributions by the Funds and ownership of Fund shares may be subject to state and local taxes. You should consult your tax advisor regarding how state and local tax laws affect your investment in Fund shares.

PROSPECTUS 37

MANAGEMENT OF THE FUNDS

INVESTMENT ADVISOR

FUND	ADVISORY FEE*
TITAN 500 FUND	0.90	%
TEMPEST 500FUND	0.90	%
VELOCITY 100 FUND	0.90	%
VENTURE 100 FUND	0.90	%

*The Advisory Fees paid represent the fees paid at the master fund level.

PORTFOLIO MANAGER

An investment team supervised by Mr. Byrum manages each of the Rydex Funds.

BENCHMARK INFORMATION

• the advisability of investing in index funds;

• the ability of any index to track stock market performance;

• the accuracy and/or the completeness of the aforementioned indices or any data included therein;

• the results to be obtained by any of the Dynamic Funds, the investors in the Dynamic Funds, or any person or entity from the use of the indices or data included therein; and

• the merchantability or fitness for a particular purpose for use with respect to the indices or any data included herein.

Further, none of the Index Publishers:

• Recommend that any person invest in the Funds or any other securities;

• Have any responsibility or liability for or make any decisions about the timing, amount or pricing of the Funds, including calculation of NAV;

• Have any responsibility or liability for the administration, management or marketing of the Funds;

• Consider the needs of the Funds or the investors in the Funds in determining, composing or calculating the indexes or has any obligation to do so;

• Will have any liability in connection with the Funds or for any errors, omissions or interruptions in connection with the indexes or the related data;

• Will be liable for any lost profits or indirect punitive, special or consequential damages or losses, even if such Index Publisher knows that they might occur.

“Standard & Poor’s^®,” S&P^®,” “S&P 500^®,” “Standard & Poor’s 500,” “500,” “Standard & Poor’s MidCap 400” and “S&P MidCap 400” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Rydex Global Advisors. The Rydex Funds are not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of investing in the Rydex Funds.

More information about the Index Publishers is located in the SAI.

PROSPECTUS 39


A FAMILY OF FUNDS DESIGNED EXCLUSIVELY FOR FINANCIAL PROFESSIONALS AND SOPHISTICATED INVESTORS


Additional information about the Funds is included in the SAI datedMay 1, 2003, which contains more detailed information about the Funds. The SAI has been filed with the SEC and is incorporated by reference into this Prospectus and, therefore, legally forms a part of this Prospectus. The SEC maintains the EDGAR database on its Web site (“http://www.sec.gov”) that contains each SAI, material incorporated by reference, and other information regarding registrants that file electronically with the SEC. You may also review and copy documents at the SEC Public Reference room in Washington, D.C. (for information on the operation of the Public Reference Room, call 202.942.8090). You may request documents by mail from the SEC, upon payment of a duplication fee, by writing to: Securities and Exchange Commission, Public Reference Section, Washington, D.C. 20549-0102. You may also obtain this information upon payment of a duplication fee, by emailing the SEC at the following address: publicinfo@sec.gov. You may obtain a copy of the SAI or the annual or semi-annual reports, without charge by calling 800.820.0888 or 301.296.5100 or by writing to Rydex Dynamic Funds, at 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850. Additional information about the Funds’ investments is available in the annual and semi-annual reports. Also, in the Funds’ annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds’ performance during its last fiscal year. No one has been authorized to give any information or to make any representations not contained in this Prospectus or in the Trust’s SAI in connection with the offering of Fund Shares. Do not rely on any such information or representations as having been authorized by the Trust or Rydex Global Advisors. This prospectus does not constitute an offering by the Funds in any jurisdiction where such an offering is not lawful. The Trust’s SEC registration number is 811-09525. 9601 BLACKWELL ROAD SUITE 500 ROCKVILLE, MD 20850 800.820.0888 www.rydexfunds.com RDYNAP-1-5/03


		RYDEX DYNAMIC FUNDS


		PROSPECTUS May 1, 2003 TITAN 500 FUND TEMPEST 500 FUND VELOCITY 100 FUND VENTURE 100 FUND



		The Securities and Exchange Commission has not approved or disapproved the Trust’s shares or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

TABLE OF CONTENTS

		DYNAMIC FUNDS

	04	Titan 500 Master Fund

	07	Tempest 500 Master Fund

	10	Velocity 100 Master Fund

	13	Venture 100 Master Fund


	16	INVESTMENTS AND RISKS

	20	SHAREHOLDER INFORMATION

	20	DIVIDENDS AND DISTRIBUTIONS

	21	TAX INFORMATION

	22	MANAGEMENT OF THE FUNDS

	23	FINANCIAL HIGHLIGHTS

	25	BENCHMARK INFORMATION

PROSPECTUS 3

RYDEX DYNAMIC FUNDS

9601 BLACKWELL ROAD, SUITE 500, ROCKVILLE, MARYLAND 20850
800.820.0888 • 301.296.5100 • WWW.RYDEXFUNDS.COM

Rydex Dynamic Funds (the “Trust”) is a mutual fund complex offering professionally managed investment portfolios, four of which are described in this Prospectus (the “Master Funds” or "Funds"). Shares of the Master Funds are available solely through "master-feeder arrangements" with feeder funds of the Trust.

THE FUNDS’ INVESTMENT OBJECTIVES
Each Fund has a separate investment objective. The investment objective of each Master Fund is non-fundamental and may be changed without shareholder approval.

RISKS OF INVESTING IN THE FUNDS

The value of the Funds may fluctuate. In addition, Fund shares:

•	MAY DECLINE IN VALUE, AND YOU MAY LOSE MONEY

•	ARE NOT FEDERALLY INSURED

•	ARE NOT GUARANTEED BY ANY GOVERNMENT AGENCY

•	ARE NOT BANK DEPOSITS

•	ARE NOT GUARANTEED TO ACHIEVE THEIR OBJECTIVES

TITAN 500 MASTER FUND

FUND OBJECTIVE
The Titan 500 Master Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the performance of the S&P 500^® Index (the “underlying index”).

PORTFOLIO INVESTMENT STRATEGY
The Titan 500 Master Fund employs as its portfolio investment strategy a program of investing in leveraged instruments, such as equity index swaps, futures contracts and options on securities, futures contracts, and stock indices. Equity index swaps, futures and options contracts enable the Titan 500 Master Fund to pursue its objective without investing directly in the securities included in the benchmark, or in the same proportion that those securities are represented in that benchmark. On a day-to-day basis, the Titan 500 Master Fund holds U.S. Government securities or cash equivalents to collateralize these futures and options contracts. The Titan 500 Master Fund also may purchase equity securities.

RISK CONSIDERATIONS

The Titan 500 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

PROSPECTUS 5

PERFORMANCE
The bar chart and table below show the performance of the Titan 500 Master Fund both year by year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

TITAN 500 MASTER FUND

HIGHEST QUARTER RETURN* 18.88%
(quarter ended 12/31/01)

LOWEST QUARTER RETURN* -35.04%
(quarter ended 9/30/02)

* Reflects performance of H Class Shares of the Titan 500 Fund

AVERAGE ANNUAL TOTAL RETURN(for periods ended December 31, 2002)¹

	FUND RETURN
	BEFORE TAXES
	MASTER FUND	S&P 500 INDEX²

PAST ONE YEAR	-46.16%	-22.09%
SINCE INCEPTION	-40.06%	-16.41%
(01/01/01)

¹These figures assume the reinvestment of dividends and capital gains distributions.
²The S&P 500® Index is a capitalization-weighted index composed of 500 common stocks, which are chosen by the Standard & Poor's Corporation ("S&P") Returns reflect no deduction for fees, expenses, or taxes.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Titan 500 Master Fund.

SHAREHOLDER FEES	NONE

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from
fund assets)
MANAGEMENT FEES	0.90%
DISTRIBUTION (12b-1) AND SHAREHOLDER SERVICE FEES	NONE
OTHER EXPENSES	0.04%
TOTAL ANNUAL FUND OPERATING EXPENSES	0.94

EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

	1 YEAR	3 YEARS	5 YEARS	10 YEARS

TITAN 500 MASTER FUND	$99	$308	$535	$1,186

PROSPECTUS 7

TEMPEST 500 MASTER FUND

FUND OBJECTIVE
The Tempest 500 Master Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the inverse (opposite) performance of the S&P 500^®Index(the “underlying index”).

PORTFOLIO INVESTMENT STRATEGY

RISK CONSIDERATIONS

The Tempest 500 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

PERFORMANCE
The bar chart and table below show the performance of the Tempest 500 Master Fundboth year by year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

TEMPEST 500 MASTER FUND

HIGHEST QUARTER RETURN* 34.51%
(quarter ended 9/30/01)

LOWEST QUARTER RETURN* -19.40%
(quarter ended 12/31/01)

* Reflects performance of H Class Shares of the Tempest 500 Fund

AVERAGE ANNUAL TOTAL RETURN(for periods ended December 31, 2002)¹

	FUND RETURN
	BEFORE TAXES
	MASTER FUND	S&P 500 INDEX²

PAST ONE YEAR	38.61%	-22.09%
SINCE INCEPTION	29.92%	-16.41%
(01/01/01)

¹ These figures assume the reinvestment of dividends and capital gains distributions.
²The S&P 500® Index is a capitalization-weighted index composed of 500 common stocks, which are chosen by the Standard & Poor's Corporation ("S&P") Returns reflect no deduction for fees, expenses, or taxes.

PROSPECTUS 9

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold shares of the Tempest 500 Master Fund.

SHAREHOLDER FEES	NONE

ANNUAL FUND OPERATING EXPENSES(expenses that are deducted from fund assets)
MANAGEMENT FEES	0.90%
DISTRIBUTION (12b-1) AND SHAREHOLDER SERVICE FEES	NONE
OTHER EXPENSES	0.04%
TOTAL ANNUAL FUND OPERATING EXPENSES	0.94%

EXAMPLE
This Example is intended to help you compare the cost of investing in the Shares of the Fund with the cost of investing in other mutual funds.

	1 YEAR	3 YEARS	5 YEARS	10 YEARS

TEMPEST 500 MASTER FUND	$99	$308	$535	$1,186

VELOCITY 100 MASTER FUND

FUND OBJECTIVE
The Velocity 100 Master Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the performance of the Nasdaq 100^® Index(the “underlying index”) .

PORTFOLIO INVESTMENT STRATEGY
The Velocity 100 Master Fund employs as its portfolio investment strategy a program of investing in leveraged instruments, such as equity index swaps, futures contracts and options on securities, futures contracts, and stock indices. Equity index swaps, futures and options contracts enable the Velocity 100 Master Fund to pursue its objective without investing directly in the securities included in the benchmark, or in the same proportion that those securities are represented in that benchmark. On a day-to-day basis, the Velocity 100 Master Fund holds U.S. Government securities or cash equivalents to collateralize these futures and options contracts. The Velocity 100 Master Fund also may purchase equity securities.

RISK CONSIDERATIONS

The Velocity 100 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

PROSPECTUS 11

PERFORMANCE
The bar chart and table below show the performance of theVelocity 100 Master Fund both year by year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

VELOCITY 100 MASTER FUND

HIGHEST QUARTER RETURN* 72.09%
(quarter ended 12/31/01)

LOWEST QUARTER RETURN* -62.24%
(quarter ended 9/30/01)

* Reflects performance of the H Class Shares of the Velocity 100 Fund

AVERAGE ANNUAL TOTAL RETURN(for periods ended December 31, 2002)¹

	FUND RETURN
	BEFORE TAXES
	MASTER FUND	NASDAQ 100 INDEX²

PAST ONE YEAR	-68.13%	-37.58%
SINCE INCEPTION	-68.68%	-36.25%
(01/01/01)

¹ These figures assume the reinvestment of dividends and capital gains distributions.
²The Nasdaq 100 Index® is a modified capitalization-weighted index composed of 100 of the largest non-financial companies listed on the Nasdaq Stock Market. Returns reflect no deduction for fees, expenses, or taxes.

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Velocity 100 Mater Fund.

SHAREHOLDER FEES	NONE

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from fund assets)
MANAGEMENT FEES	0.90%
DISTRIBUTION (12b-1) FEES	NONE
OTHER EXPENSES	0.04%
TOTAL ANNUAL FUND OPERATING EXPENSES	0.94%

EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

	1 YEAR	3 YEARS	5 YEARS	10 YEARS

VELOCITY 100 MASTER FUND	$99	$308	$535	$1,186

PROSPECTUS 13

VENTURE 100 MASTER FUND

FUND OBJECTIVE
The Venture 100 Master Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the inverse (opposite) performance of the Nasdaq 100Index^®(the “underlying index”).

PORTFOLIO INVESTMENT STRATEGY
The Venture 100 Master Fund employs as its portfolio investment strategy a program of engaging in short sales of securities and investing in leveraged instruments, such as equity index swaps, futures contracts and options on securities, futures contracts, and stock indices. Equity index swaps, short sales, futures and options contracts enable the Venture 100 Master Fund to pursue its objective without selling short each of the securities included in the benchmark. On a day-to-day basis, the Venture 100 Master Fund holds U.S. Government securities or cash equivalents to collateralize these futures and options contracts.

RISK CONSIDERATIONS

The Venture 100 Master Fund is subject to a number of risks that will affect the value of its shares, including:

LEVERAGING RISK – The more the Fund invests in leveraged instruments, the more this leverage will magnify any losses on those investments.

INVESTOR PROFILE

Investors who expect the Nasdaq 100 Index^® to go down and want highly accelerated investment gains when that index does so. These investors must also be willing to bear the risk of equally accelerated losses if the Nasdaq 100 Index^® goes up.

PERFORMANCE

The bar chart and table below show the performance of theVenture 100 Master Fund for both year by year and as an average over different periods of time. The variability of performance over time provides an indication of the risks of investing in the Fund. Of course, this past performance does not necessarily indicate how the Fund will perform in the future.

VENTURE 100 MASTER FUND

HIGHEST QUARTER RETURN* 116.97%
(quarter ended 9/30/01)

LOWEST QUARTER RETURN* -51.13%
(quarter ended 12/31/01)

* Reflects performance of H Class Sharesof the Venture 100 Fund

AVERAGE ANNUAL TOTAL RETURN(for periods ended December 31, 2002)¹

	FUND RETURN
	BEFORE TAXES
	MASTER FUND	NASDAQ 100 INDEX²

PAST ONE YEAR	52.46%	-37.58%
SINCE INCEPTION	20.82%	-34.96%
(01/01/01)

PROSPECTUS 15

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold shares of the Venture 100 Master Fund.

SHAREHOLDER FEES	NONE

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
MANAGEMENT FEES	0.90%
DISTRIBUTION (12b-1) AND SHAREHOLDER SERVICE FEES	NONE
OTHER EXPENSES	0.04%
TOTAL ANNUAL FUND OPERATING EXPENSES	0.94%

EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

	1 YEAR	3 YEARS	5 YEARS	10 YEARS

VENTURE 100 MASTER FUND	$99	$308	$535	$1,186

MORE INFORMATION ABOUT FUND

INVESTMENTS AND RISK

Each Master Fund’s objective is to provide investment results that match the performance measured on a daily basis of a specific benchmark. The current benchmark used by each Master Fund is set forth below:

FUND NAME	BENCHMARK
TITAN 500 MASTER FUND	200% OF THE PERFORMANCE OF THE S&P 500^®INDEX
TEMPEST 500 MASTER FUND	200% OF THE INVERSE (OPPOSITE) PERFORMANCE OF THE S&P 500^®INDEX
VELOCITY 100 MASTER FUND	200% OF THE PERFORMANCE OF THE NASDAQ 100 INDEX^®
VENTURE 100 MASTER FUND	200% OF THE INVERSE (OPPOSITE) PERFORMANCE OF THE NASDAQ 100 INDEX^®

A BRIEF GUIDE TO THE BENCHMARKS
TheS&P 500^® Index. The S&P 500^® Indexis a capitalization-weighted index composed of 500 common stocks, which are chosen by the Standard & Poor’s Corporation (“S&P”) on a statistical basis.

TheNasdaq 100 Index^®. The Nasdaq 100 Index^®is a modified capitalization weighted index composed of 100 of the largest non-financial companies listed on The Nasdaq Stock Market, Inc. (“Nasdaq”).

UNDERSTANDING COMPOUNDING & THE EFFECT OF LEVERAGE

Because of the effect of compounding, in each case the value of your investment declined even though the index went up 10% on day one and down 10% on day two. However, the effect of compounding was more pronounced when combined with leverage ( Example B). Because of the effect of compounding, the performance of a leveraged fund will appear to be skewed when compared to its underlying index over extended periods of time.

ADVISOR’S INVESTMENT STRATEGY IN MANAGING THE MASTER FUNDS
In managing the Master Funds, the Advisor uses a “passive” investment strategy to manage each Fund’s portfolio, meaning that the Advisor does not attempt to select securities based on their individual potential to perform better than the market. The Advisor’s primary objective is to match the performance of each Fund’s benchmark as closely as

PROSPECTUS 17

possible on a daily basis. The Advisor uses quantitative analysis techniques to structure each Fund to obtain the highest correlation to its particular benchmark. The Advisor does not engage in temporary defensive investing, keeping each Fund’s assets fully invested in all market environments. The Advisor monitors each Fund on an ongoing basis, and makes adjustments to its portfolio, as necessary, to minimize tracking error and to maximize liquidity.

The Advisor pursues the Master Funds’ investment objectives by regularly utilizing leveraged instruments, such as futures contracts and options on securities, futures contracts, and stock indices. In addition, the Advisor will regularly utilize short selling techniques designed to help the Tempest 500 Fund’s and the Venture 100 Fund’s performance to inversely correlate to 200% of the performance of the S&P 500^® Indexand the Nasdaq 100 Index^®, respectively.

RISKS OF INVESTING IN THE FUNDS
As indicated below, the Funds are subject to a number of risks that may affect the value of the Funds’ shares.

EQUITY RISK(All Funds) –The Funds invest primarily in instruments that attempt to track the price movement of equity indices as well as equity securities, including common stocks. Investments in equity securities and equity derivatives in general are subject to market risks that may cause their prices to fluctuate over time. Fluctuations in the value of equity securities in which the Funds invest will cause the net asset value of the Funds to fluctuate. Historically, the equity markets have moved in cycles, and the value of the Funds’ equity securities and equity derivatives may fluctuate drastically from day-to-day. This price volatility is the principal risk of investing in equity securities. Because of their link to the equity markets and use of leverage, an investment in the Funds may be more suitable for investors who can bear the risk of short-term principal fluctuations, which at times may be significant.

NON-DIVERSIFICATION RISK(All Funds) –Since each Fund is non-diversified, each Fund may invest in the securities of a limited number of issuers. To the extent that a Fund invests a significant percentage of its assets in a limited number of issuers, the Fund is subject to the risks of investing in those few issuers, and may be more susceptible to a single adverse economic or regulatory occurrence.

The risks associated with the Funds’ use of futures and options contracts include:

PROSPECTUS 19

• The Funds experiencing losses over certain ranges in the market that exceed losses experienced by the funds that do not use future scontracts and options.

• There may be an imperfect correlation between the changes in market value of the securities held by Funds and the prices of futures and options on futures.

• Although the Funds will only purchase exchange-traded futures,due to market conditions there may not always be a liquid secondary market for a futures contract. As a result, the Funds maybe unable to close out their futures contracts at a time which is advantageous.

• Trading restrictions or limitations may be imposed by an exchange, and government regulations may restrict trading infutures contracts and options.

SHORT SALES RISK(TEMPEST 500 MASTER FUND AND VENTURE 100 MASTER FUND) –Short sales are transactions in which a Fund sells a security it does not own. To complete the transaction, the Fund must borrow the security to make delivery to the buyer. The Fund is then obligated to replace the security borrowed by purchasing the security at the market price at the time of replacement. The price at such time may be higher or lower than the price at which the security was sold by the Fund. If the underlying security goes down in price between the time the Fund sells the security and buys it back, the Fund will realize a gain on the transaction. Conversely, if the underlying security goes up in price during the period, the Fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.

INVESTING WITH RYDEX:

SHAREHOLDER INFORMATION

Shares of the Master Funds are offered only to feeder funds in the Trust's "master-feeder" structure.

Feeder Funds may submit transaction orders to buy or sell Fund shares on any day that the NYSE is open for business (a “Business Day”).

CALCULATING NAV

The price at which you buy or sell shares is the net asset value per share, which is also known as NAV. Each Fund calculates its NAV by:

• Taking the current market value of its total assets

• Subtracting any liabilities

• Dividing that amount by the total number of shares owned by shareholders

The Master Funds calculate NAV twice each Business Day, first in the morning and again in the afternoon. The morning NAV is calculated as of 10:45 a.m., Eastern Time and the afternoon NAV is calculated as of the regularly scheduled close of normal trading on the NYSE (normally, 4:00 p.m., Eastern Time).

DIVIDENDS AND DISTRIBUTIONS

TIMING OF PAYMENTS

DIVIDEND PAYMENT OPTIONS

Dividends and distributions are paid in the form of additional Fund shares to the Feeder Funds.

PROSPECTUS 21

TAX INFORMATION

The following is a summary of some important tax issues that affect the Funds and their shareholders. The summary is based on current tax laws, which may be changed by legislative, judicial or administrative action. You should not consider this summary to be a detailed explanation of the tax treatment of the Funds, or the tax consequences of an investment in the Funds.More information about taxes is located in the Statement of Additional Information (“SAI”). You are urged to consult your tax advisor regarding specific questions as to federal, state and local income taxes.

TAX STATUS OF EACH FUND
Each Fund is treated as a separate entity for federal tax purposes, and intends to qualify for the special tax treatment afforded regulated investment companies. As long as a Fund qualifies as a regulated investment company, it pays no federal income tax on the earnings it distributes to shareholders.

TAX STATUS OF DISTRIBUTIONS
• Each Fund will, at least annually, distribute substantially all of its net investment income and net capital gains income.

• The income dividends and short-term capital gains distributions you receive from the Funds will be taxed as ordinary income.

• Any long-term capital gains distributions you receive from a Fund are taxable as long-term capital gains regardless of how long you have owned your shares.

• Dividends and distributions are generally taxable to you whether you receive them in cash or in additional shares.

• Long-term capital gains distributions will result from gains on the sale or exchange of capital assets held by a Fund for more than one year.

• Distributions paid in January but declared by a Fund in October, November or December of the previous year may be taxable to you in the previous year.

TAX STATUS OF SHARE TRANSACTIONS
Each sale, exchange, or redemption of Fund shares may be a taxable event to you.For tax purposes, an exchange of Fund shares for shares of a different Rydex Fund is treated the same as a sale. You should consider the tax consequences of any redemption or exchange before making such a request, especially with respect to redemptions, if you invest in the Funds through a tax-qualified retirement plan.

MANAGEMENT OF THE FUNDS

INVESTMENT ADVISOR

FUND	ADVISORY FEE
TITAN 500 MASTER FUND	0.90	%
TEMPEST 500 MASTER FUND	0.90	%
VELOCITY 100 MASTER FUND	0.90	%
VENTURE 100 MASTER FUND	0.90	%

PORTFOLIO MANAGER

Government Bond, Ursa and Arktos Funds, and helped to create the Rydex Sector Funds. He was named Vice President of Portfolio in 1998, and Executive Vice President in 2000. Prior to joining Rydex, Mr. Byrum worked for Money Management Associates, the investment advisor to Rushmore Funds, Inc. He holds a degree in finance from Miami University of Ohio.

An investment team supervised by Mr. Byrum manages each of the Rydex Funds.

PROSPECTUS 23

RYDEX DYNAMIC FUNDS
FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the Funds’ financial performance for the period of operations. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in a share of the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the financial statements and related notes, appears in the Rydex Dynamic Funds' 2002 Annual Report. The 2002 Annual Report is available by telephoning the transfer agent at 800.820.0888 or 301.296.5100. The Annual Report is incorporatedby reference in the SAI.


		*Titan 500 Master Fund*						*Tempest 500 Master Fund*

		*Year*			*Year*			*Year*			*Year*
		*Ended*			*Ended*			*Ended*			*Ended*
		*December 31,*			*December 31,*			*December 31,*			*December 31,*
		*2002*			2001*			*2002*			2001*

Per Share Operating Performance:
Net Asset Value - Beginning of Period	$	32.91		$	50.00		$	60.43		$	50.00

Net Investment Income (Loss)		.14			.76			.41			.81

Net Realized and Unrealized

Gains (Losses) on Securities		(15.33	)		(17.21	)		22.92			10.00

Net Increase (Decrease) in Net Asset Value

Resulting from Operations		(15.19	)		(16.45	)		23.33			10.81

Distributions to Shareholders

From Net Investment Income		-			(.03	)		-			(.38	)

From Return of Capital		-			(.61	)		-			-

Net Increase (Decrease) in Net Asset Value		(15.19	)		(17.09	)		23.33			10.43

Net Asset Value - End of Period	$	17.72		$	32.91		$	83.76		$	60.43

Total Investment Return		(46.16	)%		(33.19	)%		38.61	%		21.69	%
Ratios to Average Net Assets:
Gross Expenses		0.94	%		1.19	%		0.94	%		0.91	%
Net Expenses		0.94	%		1.19	%		0.94	%		0.91	%
Net Investment Income		0.64	%		1.50	%		0.52	%		1.93	%
Supplementary Data:
Portfolio Turnover Rate**		1,227	%		1,494	%		-			-
Net Assets, End of Period (000's omitted)	$	136,301		$	105,454		$	357,949		$	129,611

*	Since the commencement of Operations: January 1, 2001 -- Titan Master 500 Fund and Tempest 500 Master Fund
**	Portfolio turnover ratio is calculated without regard to short-term securities having a maturity of less than one year. The Tempest 500 Master Fund typically holds most of its investments in options and futures contracts which are deemed short-term securities

RYDEX DYNAMIC FUNDS
FINANCIAL HIGHLIGHTS


		*Velocity 100 Master Fund*						*Venture 100 Master Fund*

		*Year*			*Year*			*Year*			*Year*
		*Ended*			*Ended*			*Ended*			*Ended*
		*December 31,*			*December 31,*			*December 31,*			*December 31,*
		*2002*			2001*			*2002*			2001*

Per Share Operating Performance:
Net Asset Value - Beginning of Period	$	15.44		$	50.00		$	47.73		$	50.00

Net Investment Income (Loss)		(.02	)		.09			.47			.45

Net Realized and Unrealized

Gains (Losses) on Securities		(10.50	)		(34.65	)		24.57			(2.51	)

Net Increase (Decrease) in Net Asset Value

Resulting from Operations		(10.52	)		(34.56	)		25.04			(2.06	)

Distributions to Shareholders

From Net Investment Income		-			-			-			(.21	)

From Realized Gain on Investments		-			-			-			-

Net Increase (Decrease) in Net Asset Value		(10.52	)		(34.56	)		25.04			(2.27	)

Net Asset Value - End of Period	$	4.92		$	15.44		$	72.77		$	47.73

Total Investment Return		(68.13	)%		(69.12	)%		52.46	%		(4.31	)%
Ratios to Average Net Assets:
Gross Expenses		0.94	%		0.97	%		0.94	%		0.89	%
Net Expenses		0.94	%		0.97	%		0.94	%		0.89	%
Net Investment Income (Loss)		(0.27	)%		0.74	%		0.67	%		2.52	%
Supplementary Data:
Portfolio Turnover Rate**		298	%		733	%		-			-
Net Assets, End of Period (000's omitted)	$	178,374		$	213,072		$	322,191		$	142,174

*	Since the commencement of Operations: January 1, 2001 -- Velocity 100 Master Fund and Venture 100 Master Fund
**	Portfolio turnover ratio is calculated without regard to short-term securities having a maturity of less than one year. The Venture100 Master Fund typically holds most of its investments in options and futures contracts which are deemed short-term securities

PROSPECTUS 25

BENCHMARK INFORMATION

S&P and Nasdaq (the “Index Publishers”) do not sponsor, endorse, sell or promote the Dynamic Funds and make no representation or warranty, implied or express, to the investors in the Dynamic Funds, or any members of the public, regarding:

	•	the advisability of investing in index funds;

	•	the ability of any index to track stock market performance;

	•	the accuracy and/or the completeness of the aforementioned indices or any data included therein;

	•	the results to be obtained by any of the Dynamic Funds, the investors in the Dynamic Funds, or any person or entity from the use of the indices or data included therein; and

	•	the merchantability or fitness for a particular purpose for use with respect to the indices or any data included therein.

Further, none of the Index Publishers:
	•	Recommend that any person invest in the Funds or any other securities;

	•	Have any responsibility or liability for or make any decisions about the timing, amount or pricing of the Funds, including calculation of NAV;

	•	Have any responsibility or liability for the administration, management or marketing of the Funds;

	•	Consider the needs of the Funds or the investors in the Funds in determining, composing or calculating the indexes or has any obligation to do so;

	•	Will have any liability in connection with the Funds or for any errors, omissions or interruptions in connection with the indexes or the related data;

	•	Will be liable for any lost profits or indirect punitive, special or consequential damages or losses, even if such Index Publisher knows that they might occur.

“Standard & Poor’s^®,” S&P^®,” “S&P 500^®,” “Standard & Poor’s 500,” “500,” “Standard & Poor’s MidCap 400” and “S&P MidCap 400” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Rydex Global Advisors. The Rydex Funds are not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of investing in the Rydex Funds.

More information about the Index Publishers is located in the SAI.


A FAMILY OF FUNDS DESIGNED EXCLUSIVELY FOR FINANCIAL PROFESSIONALS AND SOPHISTICATED INVESTORS


Additional information about the Funds is included in the SAI datedMay 1, 2003, which contains more detailed information about the Funds. The SAI has been filed with the SEC and is incorporated by reference into this Prospectus and, therefore, legally forms a part of this Prospectus. The SEC maintains the EDGAR database on its Web site (“http://www.sec.gov”) that contains each SAI, material incorporated by reference, and other information regarding registrants that file electronically with the SEC. You may also review and copy documents at the SEC Public Reference room in Washington, D.C. (for information on the operation of the Public Reference Room, call 202.942.8090). You may request documents by mail from the SEC, upon payment of a duplication fee, by writing to: Securities and Exchange Commission, Public Reference Section, Washington, D.C. 20549-0102. You may also obtain this information upon payment of a duplication fee, by emailing the SEC at the following address: publicinfo@sec.gov. You may obtain a copy of the SAI or the annual or semi-annual reports, without charge by calling 800.820.0888 or 301.296.5100 or by writing to Rydex Dynamic Funds, at 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850. Additional information about the Funds’ investments is available in the annual and semi-annual reports. Also, in the Funds’ annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds’ performance during its last fiscal year. No one has been authorized to give any information or to make any representations not contained in this Prospectus or in the Trust’s SAI in connection with the offering of Fund Shares. Do not rely on any such information or representations as having been authorized by the Trust or Rydex Global Advisors. This prospectus does not constitute an offering by the Funds in any jurisdiction where such an offering is not lawful. The Trust’s SEC registration number is 811-09525. 9601 BLACKWELL ROAD SUITE 500 ROCKVILLE, MD 20850 800.820.0888 www.rydexfunds.com RDYNHP-1-5/03

STATEMENT OF ADDITIONAL INFORMATION

RYDEX DYNAMIC FUNDS

9601 BLACKWELL ROAD, SUITE500,
ROCKVILLE, MARYLAND 20850

800.820.0888
301.296.5100

WWW.RYDEXFUNDS.COM

This Statement of Additional Information (“SAI”) relates to shares of the following portfolios (the “Funds”) of Rydex Dynamic Funds (the “Trust”):

TITAN 500 FUND
TEMPEST 500 FUND
VELOCITY 100 FUND
VENTURE 100 FUND
TITAN 500 MASTER FUND
TEMPEST 500 MASTER FUND
VELOCITY 100 MASTER FUND
VENTURE 100 MASTER FUND

This SAI is not a prospectus. It should be read in conjunction with the Trust’s prospectuses for the C Class, H Class and A Class Shares, dated May 1, 2003. Copies of the Trust’s prospectuses are available, without charge, upon request to the Trust at the address above or by telephoning the Trust at the telephone numbers above. The Trust’s most recent financial statements are incorporated herein by reference to, and must be delivered with, this SAI.

The date of this SAI is May 1, 2003

STATEMENT OF ADDITIONAL INFORMATION

TABLE OF CONTENTS

	Page


GENERAL INFORMATION ABOUT THE TRUST	1


INVESTMENT POLICIES, TECHNIQUES AND RISK FACTORS	1

INVESTMENT RESTRICTIONS	10

BROKERAGE ALLOCATION AND OTHER PRACTICES	11

MANAGEMENT OF THE TRUST	14

PRINCIPAL HOLDERS OF SECURITIES	23

DETERMINATION OF NET ASSET VALUE	24

PERFORMANCE INFORMATION	25

CALCULATION OF RETURN QUOTATIONS	25

PURCHASE AND REDEMPTION OF SHARES	28

A CLASS SHARES – INITIAL SALES CHARGES, REDUCTIONS AND
WAIVERS	28

DIVIDENDS, DISTRIBUTIONS, AND TAXES	32

OTHER INFORMATION	36

INDEX PUBLISHERS	37

COUNSEL	37

INDEPENDENT ACCOUNTANT AND CUSTODIAN	37

FINANCIAL STATEMENTS	37

1-WA/1976699.2

-i-

GENERAL INFORMATION ABOUT THE TRUST

The Trust was organized as a Delaware business trust on August 6, 1999. The Trust is permitted to offer separate portfolios and different classes of shares. All payments received by the Trust for shares of any Fund belong to that Fund. Each Fund has its own assets and liabilities.

Currently, the Trust is comprised of the following series: Titan 500 Fund, Tempest 500 Fund, Velocity 100 Fund, Venture 100 Fund, Titan 500 Master Portfolio, Tempest 500 Master Portfolio, Velocity 100 Master Portfolio, and Venture 100 Master Portfolio (collectively, the “Feeder Funds”). The Titan 500 Master Portfolio, Tempest 500 Master Portfolio, Velocity 100 Master Portfolio, and Venture 100 Master Portfolio (collectively, the “Master Funds”) serve as master funds in a master-feeder arrangement with the Titan 500 Fund, Tempest 500 Fund, Velocity 100 Fund, and Venture 100 Fund, respectively (the “Feeder Funds”).

The Feeder Funds pursue their respective investment objectives indirectly by investing through what is referred to as a “master-feeder” structure. The Trust was reorganized into the master-feeder structure on December 31, 2000. As a result of the reorganization, each of the predecessor Titan 500, Tempest 500, Velocity 100 and Venture 100 Funds sold all of its assets and liabilities to its corresponding Master Fund in exchange for shares of such Master Fund.

The Feeder Funds currently offer C Class Shares, H Class Shares, and A Class Shares.The different classes provide for variations in sales charges and certain shareholder servicing and distribution expenses and in the minimum initial investment requirement. Sales charges and minimum investment requirements with respect to a class are described in the separate prospectus applicable to such class (the “Prospectus”). For more information on shareholder servicing and distribution see “Distribution” below.Additional Funds and/or classes may be created from time to time.

INVESTMENT POLICIES, TECHNIQUES AND RISK FACTORS

General
Each Fund’s investment objective and principal investments are described in the Prospectuses. The following information supplements, and should be read in conjunction with, those sections of the Prospectuses. Under the master-feeder arrangement, the Feeder Funds invest exclusively in the Master Funds. As a result, references in this section to “Funds” generally apply to the Master Funds only. Except as otherwise designated, each Feeder Fund reserves the right to invest in the types of instruments as its corresponding Master Fund. However, each Feeder Fund has no present intention to pursue its respective investment strategy other than by investing 100% of its assets in its corresponding Master Fund.

Portfolio management is provided to each Fund by the Trust’s investment advisor, PADCO Advisors, Inc., a Maryland corporation with offices at 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850. PADCO Advisors, Inc. operates under the name Rydex Global Advisors (the “Advisor”). The investment strategies of the Funds discussed below and in the Prospectus may be used by a Fund if, in the opinion of the Advisor, these strategies will be advantageous to that Fund. A Fund is free to reduce or eliminate its activity in any of those areas without violating the Fund’s fundamental investment policies. There is no assurance that any of these strategies or any other strategies and methods of investment available to a Fund will result in the achievement of that Fund’s objectives.

Borrowing
The Funds may borrow money, including borrowing for investment purposes. Borrowing for investment is known as leveraging. Leveraging investments, by purchasing securities with

borrowed money, is a speculative technique that increases investment risk, but also increases investment opportunity. Since substantially all of a Fund’s assets will fluctuate in value, whereas the interest obligations on borrowings may be fixed, the net asset value per share (“NAV”) of the Fund will increase more when the Fund’s portfolio assets increase in value and decrease more when the Fund’s portfolio assets decrease in value than would otherwise be the case. Moreover, interest costs on borrowings may fluctuate with changing market rates of interest and may partially offset or exceed the returns on the borrowed funds. Under adverse conditions, the Funds might have to sell portfolio securities to meet interest or principal payments at a time investment considerations would not favor such sales. The Funds intend to use leverage during periods when the Advisor believes that the respective Fund’s investment objective would be furthered.

Each Fund may also borrow money to facilitate management of the Fund’s portfolio by enabling the Fund to meet redemption requests when the liquidation of portfolio instruments would be inconvenient or disadvantageous. Such borrowing is not for investment purposes and will be repaid by the borrowing Fund promptly.

As required by the 1940 Act, a Fund must maintain continuous asset coverage (total assets, including assets acquired with borrowed funds, less liabilities exclusive of borrowings) of 300% of all amounts borrowed. If, at any time, the value of the Fund’s assets should fail to meet this 300% coverage test, the Fund, within three days (not including Sundays and holidays), will reduce the amount of the Fund’s borrowings to the extent necessary to meet this 300% coverage. Maintenance of this percentage limitation may result in the sale of portfolio securities at a time when investment considerations otherwise indicate that it would be disadvantageous to do so.

In addition to the foregoing, the Funds are authorized to borrow money as a temporary measure for extraordinary or emergency purposes in amounts not in excess of 5% of the value of the Fund’s total assets. This borrowing is not subject to the foregoing 300% asset coverage requirement The Funds are authorized to pledge portfolio securities as the Advisor deems appropriate in connection with any borrowings.

Illiquid Securities
While none of the Funds anticipates doing so, each Fund may purchase illiquid securities, including securities that are not readily marketable and securities that are not registered (“restricted securities”) under the Securities Act of 1933, as amended (the “1933 Act”), but which can be offered and sold to “qualified institutional buyers” under Rule 144A under the 1933 Act. A Fund will not invest more than 15% of the Fund’s net assets in illiquid securities. If the percentage of a Fund’s net assets invested in illiquid securities exceeds 15% due to market activity, the Fund will take appropriate measures to reduce its holdings of illiquid securities. The term “illiquid securities” for this purpose means securities that cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which the Fund has valued the securities. Under the current guidelines of the staff of the Securities and Exchange Commission (the “SEC”), illiquid securities also are considered to include, among other securities, purchased over-the-counter options, certain cover for over-the-counter options, repurchase agreements with maturities in excess of seven days, and certain securities whose disposition is restricted under the federal securities laws. The Fund may not be able to sell illiquid securities when the Advisor considers it desirable to do so or may have to sell such securities at a price that is lower than the price that could be obtained if the securities were more liquid. In addition, the sale of illiquid securities also may require more time and may result in higher dealer discounts and other selling expenses than does the sale of securities that are not illiquid. Illiquid securities also may be more difficult to value due to the unavailability of reliable

- 2 -

market quotations for such securities, and investment in illiquid securities may have an adverse impact on net asset value.

Institutional markets for restricted securities have developed as a result of the promulgation of Rule 144A under the 1933 Act, which provides a “safe harbor” from 1933 Act registration requirements for qualifying sales to institutional investors. When Rule 144A restricted securities present an attractive investment opportunity and meet other selection criteria, a Fund may make such investments whether or not such securities are “illiquid” depending on the market that exists for the particular security. The trustees of the Trust (the “Trustees”) have delegated the responsibility for determining the liquidity of Rule 144A restricted securities, which may be invested in by a Fund, to the Advisor.

Investments in Other Investment Companies
The Funds presently may invest in the securities of other investment companies to the extent that such an investment would be consistent with the requirements of Section 12(d)(1) of the 1940 Act. A Fund, therefore, may invest in the securities of another investment company (the “acquired company”) provided that the Fund, immediately after such purchase or acquisition, does not own in the aggregate: (i) more than 3% of the total outstanding voting stock of the acquired company; (ii) securities issued by the acquired company having an aggregate value in excess of 5% of the value of the total assets of the Fund; or (iii) securities issued by the acquired company and all other investment companies (other than Treasury stock of the Fund) having an aggregate value in excess of 10% of the value of the total assets of the Fund. A Fund may also invest in the securities of other investment companies if such securities are the only investment securities held by the Fund, such as through a master-feeder arrangement. Each Feeder Fund currently pursues its respective investment objective through such an arrangement.

If a Fund invests in, and, thus, is a shareholder of, another investment company, the Fund’s shareholders will indirectly bear the Fund’s proportionate share of the fees and expenses paid by such other investment company, including advisory fees, in addition to both the management fees payable directly by the Fund to the Fund’s own investment advisor and the other expenses that the Fund bears directly in connection with the Fund’s own operations.

Lending of Portfolio Securities
Subject to the investment restrictions set forth below, each of the Funds may lend portfolio securities to brokers, dealers, and financial institutions, provided that cash equal to at least 100% of the market value of the securities loaned is deposited by the borrower with the Fund and is maintained each business day in a segregated account pursuant to applicable regulations. While such securities are on loan, the borrower will pay the lending Fund any income accruing thereon, and the Fund may invest the cash collateral in portfolio securities, thereby earning additional income. A Fund will not lend its portfolio securities if such loans are not permitted by the laws or regulations of any state in which the Fund’s shares are qualified for sale, and the Funds will not lend more than 33¹/₃% of the value of the Fund’s total assets. Loans would be subject to termination by the lending Fund on four business days’ notice, or by the borrower on one day’s notice. Borrowed securities must be returned when the loan is terminated. Any gain or loss in the market price of the borrowed securities, which occurs during the term of the loan inures to the lending Fund and that Fund’s shareholders. A lending Fund may pay reasonable finders, borrowers, administrative, and custodial fees in connection with a loan.

Options Transactions
Options on Securities. The Titan 500 Master Fund and Velocity 100 Master Fund may buy call options and write (sell) put options on securities, and the Tempest 500 Master Fund and Venture 100 Master Fund may buy put options and write call options on securities for the purpose of realizing the Fund’s investment objective. By writing a call option on securities, a Fund becomes obligated during

- 3 -

the term of the option to sell the securities underlying the option at the exercise price if the option is exercised. By writing a put option, a Fund becomes obligated during the term of the option to purchase the securities underlying the option at the exercise price if the option is exercised.

During the term of the option, the writer may be assigned an exercise notice by the broker-dealer through whom the option was sold. The exercise notice would require the writer to deliver, in the case of a call, or take delivery of, in the case of a put, the underlying security against payment of the exercise price. This obligation terminates upon expiration of the option, or at such earlier time that the writer effects a closing purchase transaction by purchasing an option covering the same underlying security and having the same exercise price and expiration date as the one previously sold. Once an option has been exercised, the writer may not execute a closing purchase transaction. To secure the obligation to deliver the underlying security in the case of a call option, the writer of a call option is required to deposit in escrow the underlying security or other assets in accordance with the rules of the Option Clearing Corporation (the “OCC”), an institution created to interpose itself between buyers and sellers of options. The OCC assumes the other side of every purchase and sale transaction on an exchange and, by doing so, gives its guarantee to the transaction.

A Fund may purchase and write options on an exchange or over-the-counter. Over-the-counter options (“OTC options”) differ from exchange-traded options in several respects. They are transacted directly with dealers and not with a clearing corporation, and therefore entail the risk of non-performance by the dealer. OTC options are available for a greater variety of securities and for a wider range of expiration dates and exercise prices than are available for exchange-traded options. Because OTC options are not traded on an exchange, pricing is done normally by reference to information from a market maker. It is the position of the SEC that OTC options are illiquid.

Options on Security Indices. The Titan 500 Master Fund and Velocity 100 Master Fund may purchase call options and write put options, and the Tempest 500 Master Fund and Venture 100 Master Fund may purchase put options and write call options, on stock indices listed on national securities exchanges or traded in the over-the-counter market as an investment vehicle for the purpose of realizing the Fund’s investment objective.

Options on indices are settled in cash, not in delivery of securities. The exercising holder of an index option receives, instead of a security, cash equal to the difference between the closing price of the securities index and the exercise price of the option. When a Fund writes a covered option on an index, the Fund will be required to deposit and maintain with a custodian cash or liquid securities equal in value to the aggregate exercise price of a put or call option pursuant to the requirements and the rules of the applicable exchange. If, at the close of business on any day, the market value of the deposited securities falls below the contract price, the Fund will deposit with the custodian cash or liquid securities equal in value to the deficiency.

Options on Futures Contracts. Under Commodities Futures Trading Commission (“CFTC”) Regulations, a Fund may engage in futures transactions, either for “bona fide hedging” purposes, as this term is defined in the CFTC Regulations, or for non-hedging purposes to the extent that the aggregate initial margins and option premiums required to establish such non-hedging positions do not exceed 5% of the liquidation value of the Fund’s portfolio. In the case of an option on futures contracts that is “in-the-money” at the time of purchase (i.e., the amount by which the exercise price of the put option exceeds the current market value of the underlying security, or the amount by which the current market value of the underlying security exceeds the exercise price of the call option), the in-the-money amount may be excluded in calculating this 5% limitation.

When a Fund purchases or sells a stock index futures contract, or sells an option thereon, the Fund “covers” its position. To cover its position, a Fund may maintain with its custodian bank (and marked-to-market on a daily basis), a segregated account consisting of cash or liquid securities that,

- 4 -

when added to any amounts deposited with a futures commission merchant as margin, are equal to the market value of the futures contract or otherwise “cover” its position. If the Fund continues to engage in the described securities trading practices and properly segregates assets, the segregated account will function as a practical limit on the amount of leverage which the Fund may undertake and on the potential increase in the speculative character of the Fund’s outstanding portfolio securities. Additionally, such segregated accounts will generally assure the availability of adequate funds to meet the obligations of the Fund arising from such investment activities.

A Fund may cover its long position in a futures contract by purchasing a put option on the same futures contract with a strike price (i.e., an exercise price) as high or higher than the price of the futures contract. In the alternative, if the strike price of the put is less than the price of the futures contract, the Fund will maintain in a segregated account cash or liquid securities equal in value to the difference between the strike price of the put and the price of the futures contract. A Fund may also cover its long position in a futures contract by taking a short position in the instruments underlying the futures contract, or by taking positions in instruments with prices which are expected to move relatively consistently with the futures contract. A Fund may cover its short position in a futures contract by taking a long position in the instruments underlying the futures contracts, or by taking positions in instruments with prices which are expected to move relatively consistently with the futures contract.

A Fund may cover its sale of a call option on a futures contract by taking a long position in the underlying futures contract at a price less than or equal to the strike price of the call option. In the alternative, if the long position in the underlying futures contract is established at a price greater than the strike price of the written (sold) call, the Fund will maintain in a segregated account cash or liquid securities equal in value to the difference between the strike price of the call and the price of the futures contract. A Fund may also cover its sale of a call option by taking positions in instruments with prices, which are expected to move relatively consistently with the call option. A Fund may cover its sale of a put option on a futures contract by taking a short position in the underlying futures contract at a price greater than or equal to the strike price of the put option, or, if the short position in the underlying futures contract is established at a price less than the strike price of the written put, the Fund will maintain in a segregated account cash or liquid securities equal in value to the difference between the strike price of the put and the price of the futures contract. A Fund may also cover its sale of a put option by taking positions in instruments with prices, which are expected to move relatively consistently with the put option.

Swap Agreements
The Funds may enter into equity index or interest rate swap agreements for purposes of attempting to gain exposure to the stocks making up an index of securities in a market without actually purchasing those stocks, or to hedge a position. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a day to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested in a “basket” of securities representing a particular index. Forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap,” interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or “floor”; and interest rate dollars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.

Most swap agreements entered into by the Funds calculate the obligations of the parties to the agreement on a “net basis.” Consequently, a Fund’s current obligations (or rights) under a swap

- 5 -

agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”).

A Fund’s current obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating assets determined to be liquid. Obligations under swap agreements so covered will not be construed to be “senior securities” for purposes of a Fund’s investment restriction concerning senior securities. Because they are two party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid for the Fund illiquid investment limitations. A Fund will not enter into any swap agreement unless the Advisor believes that the other party to the transaction is creditworthy. A Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty.

Each Fund may enter into swap agreements to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment is restricted for legal reasons or is otherwise impracticable. The counterparty to any swap agreement will typically be a bank, investment banking firm or broker/dealer. The counterparty will generally agree to pay the Fund the amount, if any, by which the notional amount of the swap agreement would have increased in value had it been invested in the particular stocks, plus the dividends that would have been received on those stocks. The Fund will agree to pay to the counterparty a floating rate of interest on the notional amount of the swap agreement plus the amount, if any, by which the notional amount would have decreased in value had it been invested in such stocks. Therefore, the return to the Fund on any swap agreement should be the gain or loss on the notional amount plus dividends on the stocks less the interest paid by the Fund on the notional amount.

Swap agreements typically are settled on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Payments may be made at the conclusion of a swap agreement or periodically during its term. Swap agreements do not involve the delivery of securities or other underlying assets. Accordingly, the risk of loss with respect to swap agreements is limited to the net amount of payments that a Fund is contractually obligated to make. If the other party to a swap agreement defaults, a Fund’s risk of loss consists of the net amount of payments that such Fund is contractually entitled to receive, if any. The net amount of the excess, if any, of a Fund’s obligations over its entitlements with respect to each equity swap will be accrued on a daily basis and an amount of cash or liquid assets, having an aggregate net asset value at least equal to such accrued excess will be maintained in a segregated account by a Fund’s custodian. Inasmuch as these transactions are entered into for hedging purposes or are offset by segregated cash of liquid assets, as permitted by applicable law, the Funds and their Advisor believe that these transactions do not constitute senior securities under the 1940 Act and, accordingly, will not treat them as being subject to a Fund’s borrowing restrictions.

The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid in comparison with the markets for other similar instruments, which are traded in the over-the-counter market. The Advisor, under the supervision of the Board of Trustees, is responsible for determining and monitoring the liquidity of Fund transactions in swap agreements.

The use of equity swaps is a highly specialized activity, which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions.

- 6 -

Portfolio Turnover
The Trust anticipates that investors in the Funds, as part of an asset allocation investment strategy, will frequently purchase and/or redeem shares of the Funds. The nature of the Funds as asset allocation tools will cause the Funds to experience substantial portfolio turnover. (See “Risks of Investing in the Funds” in the Trust’s Prospectuses). Because each Fund’s portfolio turnover rate to a great extent will depend on the purchase, redemption, and exchange activity of the Fund’s investors, it is very difficult to estimate what the Fund’s actual turnover rate will be in the future.

“Portfolio Turnover Rate” is defined under the rules of the SEC as the value of the securities purchased or securities sold, excluding all securities whose maturities at the time of acquisition were one year or less, divided by the average monthly value of such securities owned during the year. Based on this definition, instruments with remaining maturities of less than one year are excluded from the calculation of the portfolio turnover rate. Instruments excluded from the calculation of portfolio turnover generally would include the futures contracts and option contracts in which the Funds invest since such contracts generally have remaining maturities of less than one year.

Repurchase Agreements
As discussed in the Trust’s Prospectuses, each of the Funds may enter into repurchase agreements with financial institutions. The Funds each follow certain procedures designed to minimize the risks inherent in such agreements. These procedures include effecting repurchase transactions only with large, well-capitalized and well-established financial institutions whose condition will be continually monitored by the Advisor. In addition, the value of the collateral underlying the repurchase agreement will always be at least equal to the repurchase price, including any accrued interest earned on the repurchase agreement. In the event of a default or bankruptcy by a selling financial institution, a Fund will seek to liquidate such collateral. However, the exercising of each Fund’s right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Fund could suffer a loss. It is the current policy of each of the Funds not to invest in repurchase agreements that do not mature within seven days if any such investment, together with any other illiquid assets held by the Fund, amounts to more than 15% of the Fund’s total assets. The investments of each of the Funds in repurchase agreements, at times, may be substantial when, in the view of the Advisor, liquidity or other considerations so warrant.

Reverse Repurchase Agreements
Each Fund may use reverse repurchase agreements as part of its investment strategy. Reverse repurchase agreements involve sales by a Fund of portfolio assets concurrently with an agreement by the Fund to repurchase the same assets at a later date at a fixed price. Generally, the effect of such a transaction is that the Fund can recover all or most of the cash invested in the portfolio securities involved during the term of the reverse repurchase agreement, while the Fund will be able to keep the interest income associated with those portfolio securities. Such transactions are advantageous only if the interest cost to the Fund of the reverse repurchase transaction is less than the cost of obtaining the cash otherwise. Opportunities to achieve this advantage may not always be available, and the Funds intend to use the reverse repurchase technique only when this will be advantageous to the Funds. Each Fund will establish a segregated account with the Trust’s custodian bank in which the Fund will maintain cash or cash equivalents or other portfolio securities equal in value to the Fund’s obligations in respect of reverse repurchase agreements.

Short Sales
The Tempest 500 Fund, Tempest 500 Master Fund, Venture 100 Fund, and Venture 100 Master Fund also may engage in short sales transactions under which the Fund sells a security it does not own. To complete such a transaction, the Fund must b orrow the security to make delivery to the buyer. The Fund then is obligated to replace the security borrowed by purchasing the security at the market price at the time of replacement. The price at such time may be more or less than the price at which the

- 7 -

security was sold by the Fund. Until the security is replaced, the Fund is required to pay to the lender amounts equal to any dividends or interest, which accrue during the period of the loan. To borrow the security, the Fund also may be required to pay a premium, which would increase the cost of the security sold. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet the margin requirements, until the short position is closed out.

Until the Tempest 500 Fund, Tempest 500 Master Fund, Venture 100 Fund, or Venture 100 Master Fund closes its short position or replaces the borrowed security, the Fund will: (a) maintain a segregated account containing cash or liquid securities at such a level that (i) the amount deposited in the account plus the amount deposited with the broker as collateral will equal the current value of the security sold short and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time the security was sold short; or (b) otherwise cover the Fund’s short position. Each of the Funds may use up to 100% of its portfolio to engage in short sales transactions and collateralize its open short positions.

The Titan 500 Fund, Titan 500 Master Fund, Velocity 100 Fund, and Velocity 100 Master Fund each may engage in short sales if, at the time of the short sale, the Fund owns or has the right to acquire an equal amount of the security being sold at no additional cost. While none of these Funds currently expect to do so, these Funds may make a short sale when the Fund wants to sell the security it owns at a current attractive price, in order to hedge or limit the exposure of the Fund’s position.

Stock Index Futures Contracts
A Fund may buy and sell stock index futures contracts with respect to any stock index traded on a recognized stock exchange or board of trade. A stock index futures contract is a contract to buy or sell units of an index at a specified future date at a price agreed upon when the contract is made. The stock index futures contract specifies that no delivery of the actual stocks making up the index will take place. Instead, settlement in cash must occur upon the termination of the contract, with the settlement being the difference between the contract price and the actual level of the stock index at the expiration of the contract.

At the time a Fund purchases a futures contract, an amount of cash, U.S. Government securities or other liquid securities equal to the market value of the futures contract will be deposited in a segregated account with the Fund’s custodian. When writing a futures contract, the Fund will maintain with its custodian liquid assets that, when added to the amounts deposited with a futures commission merchant or broker as margin, are equal to the market value of the instruments underlying the contract. Alternatively, a Fund may “cover” its position by owning the instruments underlying the contract (or, in the case of an index futures contract, a portfolio with a volatility substantially similar to that of the index on which the futures contract is based), or holding a call option permitting the Fund to purchase the same futures contract at a price no higher than the price of the contract written by the Fund (or at a higher price if the difference is maintained in liquid assets with the Fund’s custodian).

Tracking Error
The following factors may affect the ability of the Funds to achieve correlation with the performance of their respective benchmarks: (1) Fund expenses, including brokerage (which may be increased by high portfolio turnover); (2) a Fund holding less than all of the securities in the benchmark and/or securities not included in the benchmark; (3) an imperfect correlation between the performance of instruments held by a Fund, such as futures contracts and options, and the performance of the underlying securities in the market; (4) bid-ask spreads (the effect of which may be increased by portfolio turnover); (5) a Fund holding instruments traded in a market that has become illiquid or disrupted; (6) Fund share prices being rounded to the nearest cent; (7) changes to the index underlying a benchmark that are not disseminated in advance; (8) the need to conform a Fund’s portfolio holdings

- 8 -

to comply with investment restrictions or policies or regulatory or tax law requirements; or (9) market movements that run counter to a leveraged Fund’s investments. Market movements that run counter to a leveraged Fund’s investments will cause some divergence between the Fund and its benchmark over time due to the mathematical effects of leveraging. The magnitude of the divergence is dependent upon the magnitude of the market movement, its duration, and the degree to which the Fund is leveraged. The tracking error of a leveraged Fund is generally small during a well-defined up trend or downtrend in the market when measured from price peak to price peak, absent a market decline and subsequent recovery, however, the deviation of the Fund from its benchmark may be significant.

U.S. Government Securities
The Funds may invest in U.S. Government Securities. Securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities include U.S. Treasury securities, which are backed by the full faith and credit of the U.S. Treasury and which differ only in their interest rates, maturities, and times of issuance. U.S. Treasury bills have initial maturities of one year or less; U.S. Treasury notes have initial maturities of one to ten years; and U.S. Treasury bonds generally have initial maturities of greater than ten years. Certain U.S. Government Securities are issued or guaranteed by agencies or instrumentalities of the U.S. Government including, but not limited to, obligations of U.S. Government agencies or instrumentalities such as Fannie Mae, the Government National Mortgage Association, the Small Business Administration, the Federal Farm Credit Administration, the Federal Home Loan Banks, Banks for Cooperatives (including the Central Bank for Cooperatives), the Federal Land Banks, the Federal Intermediate Credit Banks, the Tennessee Valley Authority, the Export-Import Bank of the United States, the Commodity Credit Corporation, the Federal Financing Bank, the Student Loan Marketing Association, and the National Credit Union Administration.

Some obligations issued or guaranteed by U.S. Government agencies and instrumentalities, including, for example, Government National Mortgage Association pass-through certificates, are supported by the full faith and credit of the U.S. Treasury. Other obligations issued by or guaranteed by federal agencies, such as those securities issued by Fannie Mae, are supported by the discretionary authority of the U.S. Government to purchase certain obligations of the federal agency, while other obligations issued by or guaranteed by federal agencies, such as those of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the U.S. Treasury, while the U.S. Government provides financial support to such U.S. Government-sponsored federal agencies, no assurance can be given that the U.S. Government will always do so, since the U.S. Government is not so obligated by law. U.S. Treasury notes and bonds typically pay coupon interest semi-annually and repay the principal at maturity.

When-Issued and Delayed-Delivery Securities
Each Fund, from time to time, in the ordinary course of business, may purchase securities on a when-issued or delayed-delivery basis (i.e., delivery and payment can take place between a month and 120 days after the date of the transaction). These securities are subject to market fluctuation and no interest accrues to the purchaser during this period. At the time a Fund makes the commitment to purchase securities on a when-issued or delayed-delivery basis, the Fund will record the transaction and thereafter reflect the value of the securities, each day, of such security in determining the Fund’s net asset value. A Fund will not purchase securities on a when-issued or delayed-delivery basis if, as a result, more than 15% of the Fund’s net assets would be so invested. At the time of delivery of the securities, the value of the securities may be more or less than the purchase price. The Fund will also establish a segregated account with the Fund’s custodian bank in which the Fund will maintain cash or liquid securities equal to or greater in value than the Fund’s purchase commitments for such when-issued or delayed-delivery securities. The Trust does not believe that a Fund’s net asset value or income will be adversely affected by the Fund’s purchase of securities on a when-issued or delayed-delivery basis.

- 9 -

INVESTMENT RESTRICTIONS

Fundamental Policies
The following investment limitations are fundamental policies of the Funds, which cannot be changed with respect to a Fund without the consent of the holders of a majority of that Fund’s outstanding shares. The term “majority of the outstanding shares” means the vote of (i) 67% or more of a Fund’s shares present at a meeting, if more than 50% of the outstanding shares of that Fund are present or represented by proxy, or (ii) more than 50% of that Fund’s outstanding shares, whichever is less.

A Fund shall not:

1.		Borrow money in an amount exceeding 33¹/₃% of the value of its total assets, provided that, for purposes of this limitation, investment strategies which either obligate the Fund to purchase securities or require the Fund to segregate assets are not considered to be borrowing. Asset coverage of a least 300% is required for all borrowing, except where the Fund has borrowed money for temporary purposes in amounts not exceeding 5% of its total assets. The Fund will not purchase securities while its borrowing exceeds 5% of its total assets.
2.		Make loans if, as a result, more than 33¹/₃% of its total assets would be lent to other parties, except that the Fund may (i) purchase or hold debt instruments in accordance with its investment objective and policies; (ii) enter into repurchase agreements; and (iii) lend its securities.
3.		Act as an underwriter of securities of other issuers except as it may be deemed an underwriter in selling a portfolio security.
4.		Invest in interests in oil, gas, or other mineral exploration or development programs and oil, gas or mineral leases.
5.		Issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC.
6.		Purchase or sell real estate, physical commodities, or commodities contracts, except that the Fund may purchase (i) marketable securities issued by companies which own or invest in real estate (including real estate investment trusts), commodities, or commodities contracts; and (ii) commodities contracts relating to financial instruments, such as financial futures contracts and options on such contracts.
7.		Invest 25% or more of the value of the Fund’s total assets in the securities of one or more issuers conducting their principal business activities in the same industry; except that, to the extent the benchmark selected for a particular Fund is concentrated in a particular industry, the Fund will necessarily be concentrated in that industry. This limitation does not apply to investments or obligations of the U.S. Government or any of its agencies or instrumentalities.

Non-Fundamental Policies
The following investment limitations are non-fundamental policies of the Funds and may be changed with respect to any Fund by the Board of Trustees.

Each Fund may not:

Invest in warrants.

- 10 -

2.		Invest in real estate limited partnerships.
3.		Invest in mineral leases.
4.		Pledge, mortgage or hypothecate assets except to secure permitted borrowings or related to the deposit of assets in escrow or the posting of collateral in segregated accounts in compliance with the SEC’s position regarding the asset segregation requirements imposed by Section 18 of the 1940 Act.
5.		Invest in companies for the purpose of exercising control.
6.		Purchase securities on margin or effect short sales, except that a Fund may (i) obtain short-term credits as necessary for the clearance of security transactions; (ii) provide initial and variation margin payments in connection with transactions involving futures contracts and options on such contracts; and (iii) make short sales “against the box” or in compliance with the SEC’s position regarding the asset segregation requirements imposed by Section 18 of the 1940 Act.
7.		Invest its assets in securities of any investment company, except as permitted by the 1940 Act or any rule, regulation or order of the SEC.
8.		Purchase or hold illiquid securities,i.e., securities that cannot be disposed of for their approximate carrying value in seven days or less (which term includes repurchase agreements and time deposits maturing in more than seven days) if, in the aggregate, more than 15% of its net assets would be invested in illiquid securities.

The foregoing percentages: (i) are based on total assets (except for the limitation on illiquid securities, which is based on net assets); (ii) will apply at the time of the purchase of a security; and (iii) shall not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of a purchase of such security.

BROKERAGE ALLOCATION AND OTHER PRACTICES

Brokerage Transactions.Generally, equity securities are bought and sold through brokerage transactions for which commissions are payable. Purchases from underwriters will include the underwriting commission or concession, and purchases from dealers serving as market makers will include a dealer’s mark-up or reflect a dealer’s mark-down. Money Market Securities and other debt securities are usually bought and sold directly from the issuer or an underwriter or market maker for the securities. Generally, a Fund will not pay brokerage commissions for such purchases. When a debt security is bought from an underwriter, the purchase price will usually include an underwriting commission or concession. The purchase price for securities bought from dealers serving as market makers will similarly include the dealer’s mark up or reflect a dealer’s mark down. When a Fund executes transactions in the over-the-counter market, it will generally deal with primary market makers unless prices that are more favorable are otherwise obtainable. In addition, the Advisor may place a combined order, often referred to as “bunching,” for two or more accounts it manages, including a Fund, engaged in the purchase or sale of the same security or other instrument if, in its judgment, joint execution is in the best interest of each participant and will result in best price and execution. Transactions involving commingled orders are allocated in a manner deemed equitable to each account or fund. Although it is recognized that, in some cases, the joint execution of orders could adversely affect the price or volume of the security that a particular account or the Fund may obtain, it is the opinion of the Advisor and the Trust’s Board of Trustees that the advantages of combined orders outweigh the possible disadvantages of separate transactions. In addition, in some instances the Fund effecting the larger portion of a combined order may not benefit to the same extent as participants effecting

- 11 -

smaller portions of the combined order. Nonetheless, the Advisor believes that the ability of a Fund to participate in higher volume transactions will generally be beneficial to the Fund.

For the fiscal period ended December 31, 2000, 2001, and 2002 the Funds paid the following brokerage commissions:

Fund*		Total Brokerage Commissions Paid for the fiscal year ending 2000 ($)	Total Brokerage Commissions Paid to Affiliates for the fiscal year ending 2000 ($)		Aggregate Brokerage Commissions for the fiscal year ending 2000 ($)		Total Brokerage Commissions Paid for thef iscal year ending 2001 ($)	Total Brokerage Commissions Paid to Affiliates for the fiscal year ending 2001 ($)		Aggregate Brokerage Commissions for the fiscal year ending 2001 ($)		Total Brokerage Commissions Paid for the fiscal year ending 2002 ($)	Total Brokerage Commissions Paid toAffiliates for the fiscal year ending2 002 ($)		Aggregate Brokerage Commissions for the fiscal year ending 2002 ($)
Titan 500	$	17,075	$0	$	17,075	$	819,488	$0	$	819,488	$	8,797,851	$0	$	8,797,851
Tempest 500	$	23,489	$0	$	23,489	$	26,928	$0	$	26,928	$	433,743	$0	$	433,743
Velocity 100	$	1,080	$0	$	1,080	$	75,187	$0	$	75,187	$	536,984	$0	$	536,984
Venture 100	$	826	$0	$	826	$	10,290	$0	$	10,290	$	448,976	$0	$	448,976
*Amounts shown represent commission payments by the Master Funds.

Brokerage Selection.The Trust does not expect to use one particular broker or dealer, and when one or more brokers is believed capable of providing the best combination of price and execution, the Funds’ Advisor may select a broker based upon brokerage or research services provided to the Advisor. The Advisor may pay a higher commission than otherwise obtainable from other brokers in return for such services only if a good faith determination is made that the commission is reasonable in relation to the services provided.

Section 28(e) of the 1934 Act permits the Advisor, under certain circumstances, to cause each Fund to pay a broker or dealer a commission for effecting a transaction in excess of the amount of commission another broker or dealer would have charged for effecting the transaction in recognition of the value of brokerage and research services provided by the broker or dealer. In addition to agency transactions, the Advisor may receive brokerage and research services in connection with certain riskless principal transactions, in accordance with applicable SEC guidance. Brokerage and research services include: (1) furnishing advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; (2) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and the performance of accounts; and (3) effecting securities transactions and performing functions incidental thereto (such as clearance, settlement, and custody). In the case of research services, the Advisor believes that access to independent investment research is beneficial to their investment decision-making processes and, therefore, to each Fund.

To the extent research services may be a factor in selecting brokers, such services may be in written form or through direct contact with individuals and may include information as to particular companies and securities as well as market, economic, or institutional areas and information which assists in the valuation and pricing of investments. Examples of research-oriented services for which the advisor might utilize Fund commissions include research reports and other information on the economy, industries, sectors, groups of securities, individual companies, statistical information, political developments, technical market action, pricing and appraisal services, credit analysis, risk measurement analysis, performance and other analysis. The Advisor may use research services furnished by brokers in servicing all client accounts and

- 12 -

not all services may necessarily be used in connection with the account that paid commissions to the broker providing such services. Information so received by the Advisor will be in addition to and not in lieu of the services required to be performed by the Funds’ Advisor under the Advisory Agreement. Any advisory or other fees paid to the Advisor are not reduced as a result of the receipt of research services.

In some cases the Advisor may receive a service from a broker that has both a “research” and a “non-research” use. When this occurs, the Advisor makes a good faith allocation, under all the circumstances, between the research and non-research uses of the service. The percentage of the service that is used for research purposes may be paid for with client commissions, while the Advisor will use its own funds to pay for the percentage of the service that is used for non-research purposes. In making this good faith allocation, the Advisor faces a potential conflict of interest, but the Advisor believes that its allocation procedures are reasonably designed to ensure that it appropriately allocates the anticipated use of such services to their research and non-research uses.

From time to time, a Fund may purchase new issues of securities for clients in a fixed price offering. In these situations, the seller may be a member of the selling group that will, in addition to selling securities, provide the advisor with research services. The NASD has adopted rules expressly permitting these types of arrangements under certain circumstances. Generally, the seller will provide research “credits” in these situations at a rate that is higher than that which is available for typical secondary market transactions. These arrangements may not fall within the safe harbor of Section 28(e).

For the Trust’s most recently completed fiscal year, the Funds paid the following commissions on brokerage transactions directed to brokers pursuant to an agreement or understanding whereby the broker provides research or other brokerage services to the Advisor:

		*Total Dollar Amount of*
	*Total Dollar Amount of*	*Transactions Involving*
*Fund*	*Brokerage Commissions for*	*Brokerage Commissions*
	*Research Services*	*for Research Services*

Titan 500	53,071	253,197

Velocity 100	4,369	13,873

*Amounts shown represent commission payments by the Master Funds.

Brokerage with Fund Affiliates.A Fund may execute brokerage or other agency transactions through registered broker-dealer affiliates of either the Fund, the Advisor or the Distributor for a commission in conformity with the 1940 Act, the 1934 Act and rules promulgated by the SEC. Under the 1940 Act and the 1934 Act, affiliated broker-dealers are permitted to receive and retain compensation for effecting portfolio transactions for the Fund on an exchange if a written contract is in effect between the affiliate and the Fund expressly permitting the affiliate to receive and retain such compensation. These rules further require that commissions paid to the affiliate by the Fund for exchange transactions not exceed“usual and customary” brokerage commissions. The rules define “usual and customary” commissions to include amounts which are “reasonable and fair compared to the commission, fee or other remuneration received or to be received by other brokers in connection with comparable transactions involving similar securities being purchased or sold on a securities exchange during a comparable period of time.” The Trustees, including those who are not “interested persons” of the Fund, have adopted procedures for evaluating the reasonableness of commissions paid to affiliates and review these procedures periodically.

- 13 -

Securities of “Regular Broker-Dealers.”The Funds are required to identify any securities of its “regular brokers and dealers” (as such term is defined in the 1940 Act) which the Funds may hold at the close of their most recent fiscal year. “Regular brokers or dealers” of the Trust are the ten brokers or dealers that, during the most recent fiscal year, (i) received the greatest dollar amounts of brokerage commissions from the Trust’s portfolio transactions, (ii) engaged as principal in the largest dollar amounts of portfolio transactions of the Trust, or (iii) sold the largest dollar amounts of the Trust’s shares. At December 31, 2002, the following Funds held the following securities of the Trust’s “regular brokers or dealers”:

Fund	Type	Regular Brokers or Dealers	$ Amount
	of Security		Held

Titan 500 Master Fund	Repurchase Agreement	U.S. Bank	$2,464,878

	Repurchase Agreement	PaineWebber, Inc.	$2,464,878

	Repurchase Agreement	Salomon Smith Barney, Inc.	$2,464,878

	Repurchase Agreement	Lehman Brothers, Inc.	$102,636

	Common Stock	Lehman Brothers, Inc.	$602,177

	Common Stock	U.S. Bank	$1,022,592

Tempest 500 Master Fund	Repurchase Agreement	U.S. Bank	$27,757,905

	Repurchase Agreement	PaineWebber, Inc.	$27,757,905

	Repurchase Agreement	Salomon Smith Barney, Inc.	$27,757,905

	Repurchase Agreement	Lehman Brothers, Inc.	$130,096

Velocity 100 Master Fund	Repurchase Agreement	U.S. Bank	$3,557,688

	Repurchase Agreement	PaineWebber, Inc.	$3,557,688

	Repurchase Agreement	Salomon Smith Barney, Inc.	$3,557,688

	Repurchase Agreement	Lehman Brothers, Inc.	$22,570,049

Venture 100 Master Fund	Repurchase Agreement	U.S. Bank	$21,034,610

	Repurchase Agreement	PaineWebber, Inc.	$21,034,610

	Repurchase Agreement	Salomon Smith Barney, Inc.	$21,034,610

	Repurchase Agreement	Lehman Brothers, Inc.	$44,325,535

MANAGEMENT OF THE TRUST

Board Responsibilities.The management and affairs of the Trust and the Rydex Family of Funds are supervised by the Trustees under the laws of the State of Delaware. Each Trustee is responsible for the 8 Funds in the Trust as well as other funds in the Rydex Family of Funds, including the Funds of the Rydex Series Funds, the Rydex Variable Trust and the Rydex ETF Trust, that are described in a separate prospectus and SAI. In total the Rydex Family of Funds is comprised of 87 Funds, each of which is overseen by the Trustees. The Trustees have approved contracts, as described below, under which certain companies provide essential management services to the Trust.

Members of the Board.Set forth below are the names, ages, position with the Trust, length of term of office, and the principal occupations for a minimum of the last five years of each of the persons currently serving as Trustees of the Trust. Unless otherwise noted, the business address of each Trustee is 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850.

- 14 -

Trustees

*^/ Albert P. Viragh, Jr. (61)**
	Chairman of the Board of Trustees and President of Rydex Series Funds, a registered mutual fund, 1993 to present; Chairman of the Board of Trustees and President of Rydex Variable Trust, a registered mutual fund, 1998 to present; Chairman of the Board of Trustees and President of Rydex Dynamic Funds, a registered mutual fund, 1999 to present; Chairman of the Board of Trustees and President of Rydex ETF Trust, a registered mutual fund, 2002 to present; Chairman of the Board of Directors, President, and Treasurer of PADCO Advisors, Inc., investment advisor, 1993 to present; Chairman, President, and Treasurer of Rydex Capital Partners I, LLC, investment advisor, 2002 to present; Chairman, President and Treasurer of Rydex Capital Partners II, LLC, investment advisor, 2002 to present; Chairman of the Board of Directors, President, and Treasurer of Rydex Fund Services, Inc., shareholder and transfer agent servicer, 1993 to present; Chairman of the Board of Directors, President, and Treasurer of PADCO Advisors II, Inc., investment advisor, 1998 to present; Chairman of the Board of Directors, President, and Treasurer of Rydex Distributors, Inc., a registered broker-dealer firm, 1996 to present; Vice President of Rushmore Investment Advisors Ltd., a registered investment advisor, 1985 to 1993.

Corey A. Colehour (57)
	Trustee of Rydex Series Funds, 1993 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; Senior Vice President of Marketing of Schield Management Company, a registered investment advisor, 1985 to present.

J. Kenneth Dalton (62)
	Trustee of Rydex Series Funds, 1995 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; Mortgage Banking Consultant and Investor, The Dalton Group, a real estate company, 1995 to present; President, CRAM Mortgage Group, Inc., 1966 to 1995.

John O. Demaret (63)
	Trustee of Rydex Series Funds, 1997 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; Founder and Chief Executive Officer, Health Cost Controls America, Chicago, Illinois, 1987 to 1996; sole practitioner, Chicago, Illinois, 1984 to 1987; General Counsel for the Chicago Transit Authority, 1981 to 1984; Senior Partner, O’Halloran, LaVarre & Demaret, Northbrook, Illinois, 1978 to 1981.

Patrick T. McCarville (60)
	Trustee of Rydex Series Funds, 1997 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; Founder and Chief Executive Officer, Par Industries, Inc., Northbrook, Illinois, 1977 to present; President and Chief Executive Officer, American Health Resources, Northbrook, Illinois, 1984 to 1986.

	*/ This trustee is deemed to be an “interested person” of the Trust, within the meaning of Section 2(a)(19) of the 1940 Act, inasmuch as this person is affiliated with the Advisor, as described herein.
	- 15 -1-WA/1976699.2

Trustees

Roger Somers (58)
	Trustee of Rydex Series Funds, 1993 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; President, Arrow Limousine, 1963 to present.

Board Standing Committees.The Board has established the following standing committee:

· •

Audit Committee.The Board has a standing Audit Committee that is composed of each of the independent Trustees of the Trust. The Audit Committee operates under a written charter approved by the Board. The principal responsibilities of the Audit Committee include: recommending which firm to engage as the Trust’s independent auditor and whether to terminate this relationship; reviewing the independent auditors’ compensation, the proposed scope and terms of its engagement, and the firm’s independence; serving as a channel of communication between the independent auditor and the Trustees; reviewing the results of each external audit, including any qualifications in the independent auditors’ opinion, any related management letter, management’s responses to recommendations made by the independent auditors in connection with the audit, reports submitted to the Committee by the internal auditing department of the Trust’s Servicer that are material to the Trust as a whole, if any, and management’s responses to any such reports; reviewing the Trust’s audited financial statements and considering any significant disputes between the Trust’s management and the independent auditor that arose in connection with the preparation of those financial statements; considering, in consultation with the independent auditors and the Trust’s senior internal accounting executive, if any, the independent auditors’ report on the adequacy of the Trust’s internal financial controls; reviewing, in consultation with the Trust’s independent auditors, major changes regarding auditing and accounting principles and practices to be followed when preparing the Trust’s financial statements; and other audit related matters. Messrs. Colehour, Dalton, Demaret, McCarville, and Somers currently serve as members of the Audit Committee. The Audit Committee meets periodically, as necessary, and met 4 times in the most recently completed fiscal year.

Fund Shares Owned by Board Members. The following table shows the dollar amount range of each Trustee’s “beneficial ownership” of shares of each Fund and all Rydex Funds as of the end of the most recently completed calendar year. Shares of the Master Funds are not available for purchase by individuals. Dollar amount ranges disclosed are established by the SEC. “Beneficial ownership” is determined in accordance with Rule 16a-1(a)(2) under the Securities Exchange Act of 1934 (“1934 Act”). The Trustees and officers of the Trust own less than 1% of the outstanding shares of the Trust.

		Aggregate Dollar Range of
	Dollar Range of Fund Shares	Shares in All Rydex Funds
Name	(Rydex Dynamic Funds only)	Overseen by Trustee

Viragh	over $100,000 – Velocity 100 Fund	over $100,000

Colehour	$0	$0

Dalton	$0	$0

Demaret	$0	$50,001 - $100,000

McCarville	$0	$10,001-$50,000

Somers	$10,001-$50,000 –Velocity 100 Fund	$50,001 - $100,000

*Valuation date is December 31, 2002.

Board Compensation.The aggregate compensation paid by the Trust to each of its Trustees serving during the fiscal year ended December 31, 2002, is set forth in the table below:

- 16 -

Name ofPerson, Position	Aggregate Compensation From Trust	Pension or Retirement Benefits Accrued as Part of Trust's Expenses	Estimated Annual Benefits Upon Retirement	Total Compensation from Fund Complex For Service on Four Boards*

Albert P. Viragh, Jr.,	$0	$0	$0	$0
Chairman and
President

Corey A. Colehour,	$7,000	$0	$0	$48,500
Trustee

J. Kenneth Dalton,	$7,000	$0	$0	$48,500
Trustee

Roger Somers
Trustee	$7,000	$0	$0	$48,500

John O. Demaret,	$7,000	$0	$0	$48,500
Trustee

Patrick T. McCarville,	$7,000	$0	$0	$48,500
Trustee

* Each member of the Board of Trustees also serves as a Trustee to Rydex Series Funds, Rydex Variable Trust, and Rydex ETF Trust.

Trust Officers.Set forth below are the names, ages, position with the Trust, length of term of office, and the principal occupations fora minimumthe last five years of each of the persons currently serving as Executive Officers of the Trust. Unless otherwise noted, the business address of each Officer is 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850. None of the Officers receive compensation from the Trust for their services.


Robert M. Steele (44)
	Vice President and Treasurer of Rydex Series Funds, 1997 to present; Vice President and Treasurer of Rydex Variable Trust, 1998 to present; Vice President and Treasurer of Rydex Dynamic Funds, 1999 to present; Vice President and Treasurer of Rydex ETF Trust, 2003 to present; Executive Vice President of Rydex Fund Services, Inc., 2000 to present; Vice President of Rydex Distributors, Inc., 1997 to present; Senior Vice President, Crestar Bank, 1995 to 1997; Senior Vice President, Crestar Asset Management Company, a registered investment advisor, 1993 to 1995; Vice President of Perpetual Savings Bank, 1987 to 1993.

Carl G. Verboncoeur (50)
	Trustee of Rydex Series Funds, 1995 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; Mortgage Banking Consultant and Investor, The Dalton Group, a real estate company, 1995 to present; President, CRAM Mortgage Group, Inc., 1966 to 1995.

- 17 -


Michael P. Byrum (32)
	Vice President of Rydex Series Funds, 1997 to present; Vice President of the Rydex Variable Trust, 1998 to present; Vice President of Rydex Dynamic Funds, 1999 to present; Vice President of Rydex ETF Trust, 2003 to present; Executive Vice President and Senior Portfolio Manager of PADCO Advisors, Inc., investment advisor, 1993 to present; Executive Vice President and Senior Portfolio Manager of PADCO Advisors II, Inc., investment advisor, 1996 to present; Secretary of Rydex Distributors, Inc., 1996 to present; Investment Representative, Money Management Associates, a registered investment advisor, 1992 to 1993.

Joanna M. Haigney (36)
	Assistant Secretary of Rydex Series Funds, 2000 to present; Assistant Secretary of the Rydex Variable Trust, 2000 to present; Assistant Secretary of Rydex Dynamic Funds, 2000 to present; Assistant Secretary of Rydex ETF Trust, 2003 to present; Vice President of Compliance of Rydex Fund Services, Inc., 2000 to present; Assistant Secretary of the Rydex Dynamic Funds, 2000 to present; Vice President Fund Administration, Chase Global Funds Services Co., a division of Chase Manhattan Bank NA, 1994 to 1999.

Advisor
PADCO Advisors, Inc., 9601 Blackwell Road, Suite 500, Rockville, MD 20850, provides portfolio management to each Fund pursuant to an advisory contract with the Trust. The Advisor was incorporated in the State of Maryland on February 5, 1993 and does business under the name Rydex Global Advisors (the “Advisor”). Albert P. Viragh, Jr., the Chairman of the Board of Trustees and President of the Advisor, owns a controlling interest in the Advisor.

The Advisor manages the investment and the reinvestment of the assets of each of the Funds, in accordance with the investment objectives, policies, and limitations of the Fund, subject to the general supervision and control of the Trustees and the officers of the Trust. The Advisor bears all costs associated with providing these advisory services and the expenses of the Trustees of the Trust who are affiliated with or interested persons of the Advisor. The Advisor, from its own resources, including profits from advisory fees received from the Funds, provided such fees are legitimate and not excessive, may make payments to broker-dealers and other financial institutions for their expenses in connection with the distribution of Fund shares, and otherwise currently pay all distribution costs for Fund shares.

Under an investment advisory agreement the Advisor serves as the investment advisor for each series of the Trust and provides investment advice to the Funds and oversees the day-to-day operations of the Funds, subject to direction and control by the Trustees and the officers of the Trust. As of December 31, 2002, assets under management of the Advisor were approximately $6.0 billion. Pursuant to the advisory agreement with the Advisor, the Funds pay the Advisor the following fees at an annual rate, which is calculated daily and paid monthly, at an annual rate of 0.90% of the average daily net assets of each Master Fund. The Advisor may, from time to time reimburse certain expenses of the Funds in order to limit the Funds’ operating expenses as described in the Prospectuses.

For the fiscal years ended December 31, 2000, 2001 and 2002 the Advisor received the following investment advisory fees:

Fund		Advisory Fees Paid

	2000	2001	2002

Titan 500	$282,832	$890,162	$1,246,242

Tempest 500	$110,048	$685,484	$2,167,544

Velocity 100	$453,458	$1,480,345	$1,751,183

- 18 -

Fund		Advisory Fees Paid

	2000	2001	2002

Venture 100	$160,418	$657,577	$2,051,146

Board Considerations in Approving the Advisory Agreement. The investment advisory agreement must be specifically approved at least annually (i) by the vote of the Trustees or by a vote of the shareholders of the Fund and (ii) by the vote of a majority of the Trustees who are not parties to the investment advisory agreement or “interested persons” of any party thereto, cast in person at a meeting called for the purpose of voting on such approval. Each year, the Board of Trustees calls and holds a meeting to decide whether to renew the investment advisory agreement for the upcoming year. In preparation for the meeting, the Board requests and reviews a wide variety of information from the Advisor. The Trustees use this information, as well as information that other Fund service providers may submit to the Board, to help them decide whether to renew the investment advisory agreement for another year.

Before this year’s meeting, the Board requested and received written materials from the Advisor about: (a) the quality of the Advisor’s investment management and other services; (b) the Advisor’s investment management personnel; (c) the Advisor’s operations and financial condition; (d) the Advisor’s brokerage practices (including any soft dollar arrangements) and investment strategies; (e) the level of the advisory fees that the Advisor charges each Fund compared with the fees it charges to comparable mutual funds or accounts(if any); (f) each Fund’s overall fees and operating expenses compared with similar mutual funds; (g) the level of the Advisor’s profitability from its Fund-related operations; (h) the Advisor’s compliance systems; (i) the Advisor’s policies on and compliance procedures for personal securities transactions; (j) the Advisor’ reputation, expertise and resources in domestic financial markets; and (k) each Fund’s performance compared with similar mutual funds.

At the meeting, representatives from the Advisor presented additional oral and written information to the Board to help the Board evaluate the Advisor’s fee and other aspects of the investment advisory agreement. Other Fund service providers also provided the Board with additional information at the meeting. The Trustees then discussed the written materials that the Board received before the meeting and the Advisor’s oral presentation and any other information that the Board received at the meeting, and deliberated on the renewal of the investment advisory agreement in light of this information. In its deliberations, the Board did not identify any single piece of information that was all-important orcontrolling.

Based on the Board’s deliberations and its evaluation of the information described above, the Board, including all of the independent Trustees, unanimously: (a) concluded that terms of the investment advisory agreement are fair and reasonable; (b) concluded that the Advisor’s fees are reasonable in light of the services that the Advisor provides to the Fund; and (c) agreed to renew the investment advisory agreement for another year.

The Administrative Service Agreement and Accounting Service Agreement

General administrative, shareholder, dividend disbursement, transfer agent, and registrar services are provided to the Trust and the Funds by Rydex Fund Services, Inc. (the “Servicer”), 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850, subject to the general supervision and control of the Trustees and the officers of the Trust, pursuant to a service agreement between the Trust and the Servicer. The Servicer is wholly-owned by Albert P. Viragh, Jr., who is the Chairman of the Board and the President of the Trust and the sole controlling person and majority owner of the Advisor.

Under the service agreement, the Servicer provides the Trust and each Fund with all required general administrative services, including, without limitation, office space, equipment, and personnel; clerical and general back office services; bookkeeping, internal accounting, and secretarial services; the determination of net asset values; and the preparation and filing of all reports, registration statements, proxy statements, and all other materials required to be filed or furnished by the Trust and each Fund

- 19 -

under federal and state securities laws. The Servicer also maintains the shareholder account records for each Fund, disburses dividends and distributions payable by each Fund, and produces statements with respect to account activity for each Fund and each Fund’s shareholders. The Servicer pays all fees and expenses that are directly related to the services provided by the Servicer to each Fund; each Fund reimburses the Servicer for all fees and expenses incurred by the Servicer which are not directly related to the services the Servicer provides to the Fund under the service agreement. In consideration for its services, the Servicer is entitled to a fee, which is calculated daily and paid monthly, at an annual rate of 0.25% of the average daily net assets of each Fund.

Pursuant to an Accounting Services Agreement, the Servicer serves as Accounting Services Agent and performs certain record keeping and accounting functions for a fee calculated at an annual percentage rate of one-tenth of one percent (0.10%) on the first $250 million of the average daily net assets, three-fortieths of one percent (0.075%) on the next $250 million of the average daily net assets, one- twentieth of one percent (0.05%) on the next $250 million of the average daily net assets, and one- thirty third of one percent (0.03%) on the average daily net assets over $750 million of the Funds. Certain officers and trustees of the Trust are also officers and directors of the Servicer.

For the fiscal years ended December 31, 2000, 2001 and 2002 the Funds paid the Servicer the following service fees:

Fund	Administrative Service Fees Paid

	2000	2001	2002

Titan 500	$78,565	$246,937	$346,089

Tempest 500	$30,569	$190,201	$602,104

Velocity 100	$125,961	$411,079	$486,257

Venture 100	$44,561	$182,598	$569,266

Pursuant to an Accounting Service Agreement the Servicer serves as Accounting Services Agent and performs certain record keeping and accounting functions. The Servicer received the following fees for the fiscalyears ended December 31, 2000, 2001 and 2002:

Fund	Accounting Services Fees Paid

	2000	2001	2002

Titan 500	$21,812	$72,258	$138,406

Tempest 500	$11,874	$67,128	$232,367

Velocity 100	$28,796	$107,939	$193,704

Venture 100	$15,622	$63,833	$223,449

Distribution
Pursuant to the Distribution Agreement adopted by the Trust, Rydex Distributors, Inc. (the “Distributor”), 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850, acts as distributor for the shares of the Trust under the general supervision and control of the Trustees and the officers of the Trust. The Distribution Agreement grants the Distributor the exclusive right to distribute the shares of the Trust. In addition, the Distribution Agreement permits the Distributor to receive as compensation any front-end sales load or contingent deferred sales charge collected by the Funds or other asset-based sales charges collected pursuant to any distribution or shareholder services plans adopted by the Funds on behalf of the various classes of shares. Each of the Funds’ current distribution and shareholder services plans, as well as a description of the services performed under each, are described below.

C Class Distribution and Shareholder Servicing Plan –Each Fund has adopted a Distribution and Shareholder Services Plan for C Class Shares (the “C Class Plan”). Under the C Class Plan, the Distributor, or designated Service Providers, may receive up to 1.00% of each Fund’s assets

- 20 -

attributable to C Class Shares as compensation for distribution and shareholder services pursuant to Rule 12b-1 of the 1940 Act. The C Class Plan allows for payment of up to .75% of each Fund’s assets attributable to C Class Shares as compensation for distribution services and up to .25% of each Fund’s assets attributable to C Class Shares as compensation for shareholder services.

Following are the fees paid under the C Class Distribution and Shareholder Servicing Plan for the fiscal period ended December 31, 2002:

Fund	12b-1 Fees Paid	12b-1 Fees Paid
	(%)	($)

Titan 500	1.00%	$125,102

Tempest 500	1.00%	$59,229

Velocity 100	1.00%	$136,167

Venture 100	1.00%	$91,277

H Class Distribution Plan and Shareholder Services Plan– Each Fund has adopted a Distribution Plan and a Shareholder Services Plan for their H Class Shares. Under the Distribution Plan, the Distributor, or designated Service Providers, may receive up to .25% of each Fund’s assets attributable to H Class Shares as compensation for distribution services pursuant to Rule 12b-1 of the 1940 Act. The Shareholder Services Plan permits the payment of up to .25% of each Fund’s assets attributable to H Class Shares to designated Service Providers as compensation for providing shareholder services, which are not primarily intended to result in the sale of the shares of the Funds.

Following are the fees paid under the H Class Distribution Plan for the fiscal period ended December 31, 2002:

Fund	12b-1 Fees Paid	12b-1 Fees Paid year ending 2001
	(%)	($)

Titan 500	0.25%	$314,521

Tempest 500	0.25%	$586,457

Velocity 100	0.25%	$452,221

Venture 100	0.25%	$547,263

A Class Distribution and Shareholder Services Plan –Each Fund has adopted a Distribution Plan and a Shareholder Services Plan applicable to A Class Shares. Under the Distribution Plan, the Distributor, or designated Service Providers, may receive up to .25% of each Fund’s assets attributable to A Class Shares as compensation for distribution services pursuant to Rule 12b-1 of the 1940 Act. The Shareholder Services Plan permits the payment of up to .25% of each Fund’s assets attributable to A Class Shares to designated Service Providers as compensation for providing shareholder services, which are not primarily intended to result in the sale of the shares of the Funds.

No fees were paid under the A Class Distribution and Shareholder Services Plan for the fiscal year ended December 31, 2002.

Description of Distribution and Shareholder Services –Distribution services may include: (i) services in connection with distribution assistance, or (ii) payments to financial institutions and other financial intermediaries, such as banks, savings and loan associations, insurance companies, investment counselors, broker-dealers, mutual fund “supermarkets” and the Distributor’s affiliates and subsidiaries, as compensation for services or reimbursement of expenses incurred in connection with

- 21 -

distribution assistance. The Distributor may, at its discretion, retain a portion of such payments to compensate itself for distribution services and distribution related expenses such as the costs of preparation, printing, mailing or otherwise disseminating sales literature, advertising, and prospectuses (other than those furnished to current shareholders of the Fund), promotional and incentive programs, and such other marketing expenses that the Distributor may incur.

Shareholder services may include: (i) maintaining accounts relating to clients that invest in shares; (ii) arranging for bank wires; (iii) responding to client inquiries relating to the services performed by the Services Provider; (iv) responding to inquiries from clients concerning their investment in shares; (v) assisting clients in changing dividend options, account designations and addresses; (vi) providing information periodically to clients showing their position in shares; (vii) forwarding shareholder communications from the Funds such as proxies, shareholder reports, annual reports, and dividend distribution and tax notices to clients; and (viii) processing dividend payments from the Funds on behalf of clients.

Costs and Expenses
Each Fund bears all expenses of its operations other than those assumed by the Advisor or the Servicer. Fund expenses include: the management fee; the servicing fee (including administrative, transfer agent, and shareholder servicing fees); custodian and accounting fees and expenses; legal and auditing fees; securities valuation expenses; fidelity bonds and other insurance premiums; expenses of preparing and printing prospectuses, confirmations, proxy statements, and shareholder reports and notices; registration fees and expenses; proxy and annual meeting expenses, if any; all federal, state, and local taxes (including, without limitation, stamp, excise, income, and franchise taxes); organizational costs; non-interested Trustees’ fees and expenses; the costs and expenses of redeeming shares of the Fund; fees and expenses paid to any securities pricing organization; dues and expenses associated with membership in any mutual fund organization; and costs for incoming telephone WATTS lines. In addition, each of the Funds pays an equal portion of the Trustee fees and expenses for attendance at Trustee meetings for the Trustees of the Trust who are not affiliated with or interested persons of the Advisor.

Business Continuity and Disaster Recovery
The Advisor, the Distributor and the Servicer (collectively, the “Service Providers”) have developed a joint Business Continuity and Disaster Recovery Program that is designed to minimize the disruption of normal business operations in the event of a disaster. While the Service Providers believe that the Program is comprehensive and should enable them to survive a disaster and reestablish normal business operations in a timely manner, under certain unusual or unexpected circumstances the Service Providers could be prevented or hindered from providing services to the Funds for extended periods of time. These circumstances may include, without limitation, acts of God, acts of government in its sovereign or contractual capacity, any act of declared or undeclared war or of a public enemy (including acts of terrorism), power shortages or failures, utility or communication failure or delays, labor disputes, strikes, shortages, supply shortages, system failures or malfunctions. Under each Service Provider’s agreement with the Trust, absent willful misfeasance, bad faith or gross negligence on the part of the Service Provider, or the reckless disregard of their respective obligations, the Service Provider generally will not be liable for any related losses to the Funds or to the Funds’ shareholders as a result of such an occurrence.

- 22 -

PRINCIPAL HOLDERS OF SECURITIES

As of April 3, 2003, the following persons were the only persons who were record owners or, to the knowledge of the Trust, beneficial owners of 5% or more of the shares of the Funds.

Name and Address	# of Shares	Percent

Titan 500 Fund – H Class

National Financial Svcs. Corp.	5,636,143.64	19.96
200 Liberty Street
New York, NY 10281

Schwab Inc.	3,850,312.70	13.64
Attn: Mutual Funds Team E
101 Montgomery Street
San Francisco, CA 94104-4122

Tempest 500 Fund –H Class

Schwab Inc.	653,327.94	15.66
Attn: Mutual Funds Team E
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Serv. Corp.	591,012.89	14.17
200 Liberty Street
New York, NY 10281

National Investor Serv. Corp.	320,903.81	7.69
55 Water Street, 32^ndFloor
New York, NY 10041

Velocity 100 Fund – H Class

National Financial Serv. Corp.	4,032,393.51	18.00
200 Liberty Street
New York, NY 10281

Schwab Inc.	3,341,262.82	14.91
Attn: Mutual Funds Team E
101 Montgomery Street
San Francisco, CA 94104-4122

National Investor Serv. Corp.	1,227,551.17	5.48
55 Water Street
32^ndFloor
New York, NY 10041-3299

Venture 100 Fund – H Class

Schwab Inc.	709,056.55	15.94
Attn: Mutual Funds Team E
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Serv. Corp.	595,824.68	13.40
200 Liberty Street
New York, NY 10281

National Investor Serv. Corp.	232,016.20	5.22
55 Water Street
32^ndFloor
New York, NY 10041-3299

Venture 100 Fund – C Class

- 23 -

Name and Address	# of Shares	Percent

First Clearing Corporation	83,965.76	21.26
4 Bristol Road
Northfield, IL 60093

Canadian Imperial Holdings Inc.	27,674.87	7.01
New York, NY 10017

CIBC Bank and Trust Company	39,812.98	10.08
PO Box 694
Grand Cayman (B.W.I.)
Cayman Islands

DETERMINATION OF NET ASSET VALUE

The net asset value of a Fund serves as the basis for the purchase and redemption price of that Fund’s shares. The net asset value per share of a Fund is calculated by dividing the market value of the Fund’s securities plus the value of its other assets, less all liabilities, by the number of outstanding shares of the Fund. If market quotations are not readily available, a security will be valued at fair value by the Advisor using methods established or ratified by the Board of Trustees.

Options on securities and indices purchased by a Fund generally are valued at their last bid price in the case of exchange-traded options or, in the case of options traded in the over-the-counter (“OTC”) market, the average of the last bid price as obtained from two or more dealers unless there is only one dealer, in which case that dealer’s price is used. Futures contracts generally are valued based upon the unrealized gain or loss on the contract determined with reference to the first price reported by established futures exchanges after the close of a Fund pricing cycle, or alternatively, with reference to the average price at which futures are bought and sold by a Fund. Options on futures contracts generally are valued with reference to the underlying futures contract. If the market makes a limit move with respect to a particular commodity, the commodity will be valued at fair value by the Advisor using methods established or ratified by the Board of Trustees.

On days when the Chicago Board of Trade (“CBOT”) is closed during its usual business hours, but the shares of a Fund have been purchased, redeemed, and/or exchanged, the portfolio securities held by a Fund which are traded on the CBOT are valued at the earlier of (i) the time of the execution of the last trade of the day for a Fund in those CBOT-traded portfolio securities and (ii) the time of the close of the CBOT Evening Session. On days when the CBOT is closed during its usual business hours and there is no need for a Fund to execute trades on the CBOT, the value of the CBOT-traded portfolio securities held by a Fund will be the mean of the bid and asked prices for those CBOT-traded portfolio securities at the open of the CBOT Evening Session.

OTC securities held by a Fund shall be valued at the last sales price or, if no sales price is reported, the mean of the last bid and asked price is used. Securities listed on the Nasdaq National Market and Nasdaq SmallCap Market may be valued at the Nasdaq Official Closing Price, which may differ from the last sales price reported. The portfolio securities of a Fund that are listed on national exchanges are taken at the last sales price of such securities on such exchange; if no sales price is reported, the mean of the last bid and asked price is used. For valuation purposes, all assets and liabilities initially expressed in foreign currency values will be converted into U.S. dollar values at the mean between the bid and the offered quotations of such currencies against U.S. dollars as last quoted by any recognized dealer. If such quotations are not available, the rate of exchange will be determined in good faith by the Advisor based on guidelines adopted by the Trustees. Dividend income and other distributions are recorded on the ex-dividend date, except for certain dividends from foreign securities, which are recorded as soon as the Trust is informed after the ex-dividend date.

- 24 -

Illiquid securities, securities for which reliable quotations or pricing services are not readily available, and all other assets will be valued at their respective fair value as determined in good faith by, or under procedures established by, the Trustees, which procedures may include the delegation of certain responsibilities regarding valuation to the Advisor or the officers of the Trust. The officers of the Trust report, as necessary, to the Trustees regarding portfolio valuation determination. The Trustees, from time to time, will review these methods of valuation and will recommend changes, which may be necessary to assure that the investments of the Funds are valued at fair value.

PERFORMANCE INFORMATION

From time to time, each of the Funds may include the Fund’s total return in advertisements or reports to shareholders or prospective shareholders. Quotations of average annual total return for a Fund will be expressed in terms of the average annual compounded rate of return on a hypothetical investment in the Fund over a period of at least one, five, and ten years (up to the life of the Fund) (the ending date of the period will be stated). Total return of a Fund is calculated from two factors: the amount of dividends earned by each Fund share and by the increase or decrease in value of the Fund’s share price. See “Calculation of Return Quotations.”

Performance information for each of the Funds contained in reports to shareholders or prospective shareholders, advertisements, and other promotional literature may be compared to the record of various unmanaged indices. Performance information for the Funds may be compared to various unmanaged indices, including, but not limited to, the S&P 500 Indexâ or the Dow Jones Industrial Average, the Nasdaq 100 Indexâ, and the Nasdaq Composite Indexâ.

Such unmanaged indices may assume the reinvestment of dividends, but generally do not reflect deductions for operating costs and expenses. In addition, a Fund’s total return may be compared to the performance of broad groups of comparable mutual funds with similar investment goals, as such performance is tracked and published by such independent organizations as Lipper Analytical Services, Inc. (“Lipper”), CDA Investment Technologies, Inc., Morningstar, Inc. and other independent organizations. When these organizations tracking results are used, the Fund will be compared to the appropriate fund category, that is, by fund objective and portfolio holdings. Performance figures are based on historical results and are not intended to indicate future performance.

In addition, rankings, ratings, and comparisons of investment performance and/or assessments of the quality of shareholder service appear in numerous financial publications such as Money, Forbes, Kiplinger’s Magazine, Personal Investor, Morningstar, Inc., and similar sources.

CALCULATION OF RETURN QUOTATIONS

Total Return Quotation (Before Taxes).The total return of a Fund refers to the average annual compounded rate of return of a hypothetical investment for designated time periods (including but not limited to, the period from which that Fund commenced operations through the specified date), assuming that the entire investment is redeemed at the end of each period. In particular, total return will be calculated according to the following formula: P (1 + T)ⁿ = ERV, where P = a hypothetical initial investment of $1,000; T = average annual total return; n = number of years; and ERV = ending redeemable value, as of the end of the designated time period, of a hypothetical $1,000 investment made at the beginning of the designated time period.

Total Return Quotation (After-Taxes on Distributions).The total return (after-taxes on distributions) of a Fund refers to the average annual compounded rate of return, taking into account the tax impact of Fund dividends and distributions made to shareholders, of a hypothetical investment for designated time periods (including but not limited to, the period from

- 25 -

which that Fund commenced operations through the specified date), assuming no liquidation of the investment at the end of each period. In particular, average annual total return (after-taxes on distributions) is determined by finding the average annual compounded rate of return over the one-, five-, and ten-year periods (or for periods of the Fund’s operations) that would equate the initial amount invested to the after-tax value, according to the following formulas: P (1+T)ⁿ =^ATVD^{,
where P}= a hypothetical initial investment of $1,000; T = average annual total return (after-taxes on distributions); n^{= number of years; and ATV}D^{= value at the end of the one-,} five-, or ten-year periods of a hypothetical $1,000 investment made at the beginning of the time period, after taxes on Fund distributions, and assuming no liquidation of the investment at the end of the measurement periods. The calculation assumes that all distributions by the Funds are reinvested, less the taxes due on such distributions, at the price on the reinvestment dates during the period (adjustments may be made for subsequent recharacterizations of distributions). The calculation further assumes that no taxes are due on the portions of any distributions classified as exempt interest or non-taxable (i.e., return of capital). Taxes due on distributions by the Funds are calculated by applying the highest federal marginal tax rates to each component of the distributions on the reinvestment date (e.g., ordinary income, short-term capital gain, long-term capital gain, etc.). Applicable tax rates may vary over the measurement period. Potential tax liabilities other than federal tax liabilities (e.g., state and local taxes) are not factored into the calculation.

Total Return Quotation (After-Taxes on Distributions and Redemption).The total return (after-taxes on distributions and redemption) of a Fund refers to the average annual compounded rate of return, taking into account the tax impact of Fund dividends and distributions made to shareholders, of a hypothetical investment for designated time periods (including but not limited to, the period from which that Fund commenced operations through the specified date), assuming that the entire investment is redeemed at the end of each period. In particular, average annual total return (after-taxes on distributions) is determined by finding the average annual compounded rate of return over the one-, five-, and ten-year periods (or for periods of the Fund’s operations) that would equate the initial amount invested to the after-tax value, according to the following formulas: P (1+T)ⁿ^{= ATV}DR^{,
where P}= a hypothetical initial investment of $1,000; T = average annual total return (after-taxes on distributions and redemption); n = number of years; and ^ATVDR^{= value at the end of the one-, five-, or ten-year periods of a hypothetical
$1,000} investment made at the beginning of the time period, after taxes on Fund distributions, assuming that the entire investment is redeemed at the end of each measurement period. The calculation assumes that all distributions by the Funds are reinvested, less the taxes due on such distributions, at the price on the reinvestment dates during the period (adjustments may be made for subsequent recharacterizations of distributions). The calculation further assumes that no taxes are due on the portions of any distributions classified as exempt interest or non-taxable (i.e., return of capital). Taxes due on distributions by the Funds are calculated by applying the highest federal marginal tax rates to each component of the distributions on the reinvestment date (e.g., ordinary income, short-term capital gain, long-term capital gain, etc.). Taxes due on redemptions by shareholders are calculated by subtracting the capital gains taxes resulting from the redemption and adding the tax benefit from capital losses resulting from the redemption. Applicable tax rates may vary over the measurement period. Potential tax liabilities other than federal tax liabilities (e.g., state and local taxes) are not factored into the calculation.

Historical Performance.The average annual total return (before taxes), total return (after-taxes on distributions) and total return (after-taxes on distributions and redemption) for each of the Funds was as follows for the one-year, three-year, five-year and since inception periods ended December 31, 2002.

- 26 -

Fund	Class	Average Annual Total Return						Aggregate Total
								Return Since
								Inception
	(Inception	One Year		Three Years	Five Years	Since
	Date)					Inception

Titan 500 Fund	H - (5/19/00)

before tax		-46.60	%	N/A	N/A	-38.28	%	-71.75	%

after-tax on
distributions		-46.60	%	N/A	N/A	-38.28	%	-71.75	%

after-tax on
distributions &
redemptions		-28.61	%	N/A	N/A	-27.80	%	-57.40	%

	C - (11/27/00)

Before tax		-47.09	%	N/A	N/A	-41.61	%	-67.57	%

after-tax on
distributions		-47.09	%	N/A	N/A	-41.61	%	-67.57	%

after-tax on
distributions &
redemptions		-28.92	%	N/A	N/A	-31.04	%	-54.06	%

Tempest 500 Fund	H - (5/19/00)

Before tax		37.48	%	N/A	N/A	27.56	%	89.20	%

after-tax on
distributions		37.05	%	N/A	N/A	27.29	%	88.16	%

after-tax on
distributions &
redemptions		23.01	%	N/A	N/A	22.67	%	70.78	%

	C - (3/7/01)

Before tax		36.54	%	N/A	N/A	25.93	%	52.12	%

after-tax on
distributions		36.12	%	N/A	N/A	25.72	%	51.64	%

after-tax on
distributions &
redemptions		22.43	%	N/A	N/A	21.00	%	41.46	%

Velocity 100 Fund	H - (5/24/00)

Before tax		-68.47	%	N/A	N/A	-70.81	%	-95.96	%

after-tax on
distributions		-68.46	%	N/A	N/A	-70.81	%	-95.96	%

after-tax on
distributions &
redemptions		-42.04	%	N/A	N/A	-42.89	%	-76.76	%

	C - (11/20/00)

Before tax		-69.19	%	N/A	N/A	-73.49	%	-93.94	%

after-tax on
distributions		-69.19	%	N/A	N/A	-73.49	%	-93.94	%

- 27 -

Fund	Class	Average Annual Total Return						Aggregate Total
								Return Since
								Inception
	(Inception	One Year		Three Years	Five Years	Since
	Date)					Inception


after-tax on
distributions &
redemptions		-42.48	%	N/A	N/A	-48.28	%	-75.16	%

Venture 100 Fund	H - (5/23/00)

Before tax		50.92	%	N/A	N/A	16.52	%	49.00	%

after-tax on
distributions		49.30	%	N/A	N/A	15.86	%	46.82	%

after-tax on
distributions &
redemptions		31.24	%	N/A	N/A	13.16	%	38.05	%

Tempest 500 Fund	C - (3/8/01)

Before tax		50.09	%	N/A	N/A	13.95	%	26.78	%

after-tax on
distributions		48.46	%	N/A	N/A	13.27	%	25.41	%

after-tax on
distributions &
redemptions		30.73	%	N/A	N/A	10.93	%	20.74	%

PURCHASE AND REDEMPTION OF SHARES

Minimum Investment Requirements
Shareholders will be informed of any increase in the minimum investment requirements by a new prospectus or a prospectus supplement, in which the new minimum is disclosed. Any request for a redemption (including pursuant to check writing privileges) by an investor whose account balance is (a) below the currently applicable minimum investment, or (b) would be below that minimum as a result of the redemption, will be treated as a request by the investor of a complete redemption of that account. In addition, the Trust may redeem an account whose balance (due in whole or in part to redemptions since the time of last purchase) has fallen below the minimum investment amount applicable at the time of the shareholder’s most recent purchase of Fund shares (unless the shareholder brings his or her account value up to the currently applicable minimum investment).

Tax Consequences
Note that in the case of a redemption of tax-qualified retirement plans, a withdrawal of amounts from such a plan may have adverse tax consequences. A shareholder contemplating such a withdrawal should consult his or her own tax advisor. Other shareholders should consider the tax consequences of any redemption.

Suspension of the Right of Redemption
The Funds may suspend the right of redemption or the date of payment: (i) for any period during which the NYSE is closed (other than customary weekend or holiday closings), or trading is restricted; (ii) for any period during which an emergency exists so that sales of a Fund’s investments or the determination of its NAV is not reasonably practicable; or (iii) for such other periods as the SEC may permit for the protection of a Fund’s investors. In cases where Nasdaq, the CME or Chicago Board Options Exchange, or any foreign market where the Funds’ securities trade is closed or trading is restricted, a Fund may ask the SEC to permit the right of redemption to be suspended. On any day

- 28 -

that any of the securities exchanges on which the Funds’ securities trade close early (such as on days in advance of holidays generally observed by participants in these markets), or as permitted by the SEC, the right is reserved to advance the time on that day by which purchase and redemption orders must be received.

Holidays
The NYSE, the Federal Reserve Bank of New York, the Nasdaq, the CME, the CBOT, and other U.S. exchanges are closed on weekends and on the following holidays: (i) New Year’s Day, Martin Luther King Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day (the CBOT and CME will have abbreviated trading schedules), Thanksgiving Day, and Christmas Day; and (ii) the preceding Friday if any of these holidays falls on a Saturday, or the subsequent Monday if any of these holidays falls on a Sunday. Although the Trust expects the same holiday schedules to be observed in the future, each of the aforementioned exchanges may modify its holiday schedule at any time.

Redemptions In-Kind
The Trust intends to pay your redemption proceeds in cash. However, under unusual conditions that make the payment in cash unwise (and for the protection of the remaining shareholders of the Fund) the Trust reserves the right to pay all, or part, of your redemption proceeds in liquid securities with a market value equal to the redemption price(redemption in-kind). The Trust has elected to be governed by Rule 18f-1 of the 1940 Act under which the Trust is obligated to redeem shares for any one shareholder in cash only up to the lesser of $250,000 or 1% of a Fund’s net asset value during any 90-day period. Although it is highly unlikely that your shares would ever actually be redeemed in kind, you would probably have to pay brokerage costs to sell the securities distributed to you.

A CLASS SHARES – INITIAL SALES CHARGES, REDUCTIONS AND WAIVERS

Initial Sales Charges / Dealer Reallowances.A Class Shares of the Funds are sold subject to a front-end sales charge as described in the A Class Shares prospectus. The sales charge is used to compensate the Distributor and participating securities dealers for their expenses incurred in connection with the distribution of the Funds’ shares. You may also be charged a transaction or other fee by the financial institution managing your account.

Selling dealers are normally reallowed a portion of the sales charge by the Distributor. The following table shows the amount of the front-end sales charge that is reallowed to dealers as a percentage of the offering price of A Class Shares.

*Amount of Investment*					*Authorized Dealer Commission as % of Offering Price*

Less than $25,000					5.00%

$25,000 but less than $50,000					4.50%

$50,000 but less than $100,000					4.00%

$100,000 but less than $250,000					3.00%

$250,000 but less than $500,000					2.25%

$500,000 but less than $1,000,000					1.60%

- 29 -


Greater than $1,000,000					1.00%

Reduced Sales Charges.You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your securities dealer are responsible for providing sufficient information at the time of purchase to verify that your purchase qualifies for such treatment.
Rights of Accumulation
You may qualify for reduced initial sales charges based upon your existing investment in shares of any Rydex Fund at the time of the proposed purchase. To determine whether or not a reduced initial sales charge applies to a proposed purchase, the Distributor takes into account not only the money which is invested upon such proposed purchase, but also the value of all shares of the Rydex Funds that you own, calculated at their then current public offering price.
If you qualify for a reduced sales charge, the reduced sales charge applies to the total amount of money being invested, even if only a portion of that amount exceeds the breakpoint for the reduced sales charge. For example, if you already owns qualifying shares of any Rydex Fund with a value of $20,000 and wish to invest an additional $40,000 in an A Class Share of a Fund, the reduced initial sales charge of 4.75% will apply to the full $40,000 purchase and not just to the $10,000 in excess of the $50,000 breakpoint.
To qualify for obtaining the discount applicable to a particular purchase, you or your securities dealer must furnish the Servicer with a list of the account numbers and the names in which your Rydex Fund accounts are registered at the time the purchase is made.
*Aggregating Accounts (Group Purchases)*
1. To receive a reduced sales charge on A Class Shares, investments in any Rydex Fund share class made by you, your spouse and your children under the age of 21 may be aggregated if made for your/their own account(s) and:
•	trust accounts established by the above individuals. However, if the person(s) who established the trust is/are deceased, the trust account may be aggregated with accounts of the person who is the primary beneficiary of the trust;
•	solely controlled business accounts;
•	single participant retirement plans; or
•	endowments or foundations established and controlled by you or your immediate family.
2. Investments made by a trustee or other fiduciary for a single trust estate or fiduciary account and multiple-employee benefit plans of a single employer or affiliated employers – provided they are not aggregated with individual accounts – may also be aggregated.
3. Similarly, investments made for participant accounts of a 403(b) plan that is treated like an employer-sponsored plan, or multiple 403(b) plans of a single employer or affiliated employers, may be aggregated. In addition, investments made for non-profit, charitable or educational organizations (or any employer-sponsored retirement plan for such an endowment or foundation) or any endowments or foundations established and controlled by the organization may be aggregated. Finally, investments made by a common trust fund or other diversified

- 30 -

pooled accounts not specifically formed for the purpose of accumulating fund shares may be aggregated.

Some accounts cannot be aggregated. At the request of certain investment firms, some accounts are set up as “street name” or “nominee” accounts. This means that the investment firm has sole access, and that the Funds have limited access, to the investment firm’s clients’ account information. Since the Servicer has little or no access to certain nominee or street name account information, these accounts generally may not be aggregated for the purpose of receiving reduced sales charges. Check with your securities dealer to determine if this applies to your account.

Letters of Intent

You may also pay reduced initial sales charges by indicating on the account application that you intend to provide a Letter of Intent (“LOI”), and then fulfilling the conditions of that LOI.

The LOI confirms the total investment in shares of the Rydex Funds that you intend to make within the next 13 months. By marking the LOI section on the account application and by signing the account application, you indicate that you understand and agree to the terms of the LOI and that you are bound by the provisions described below:

*Calculating the Initial Sales Charge*:
•	Each purchase of Fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI (to determine what the applicable public offering price is, look at the sales charge table in the section on “Initial Sales Charges” in the prospectus).
•	It is your responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge.
•	The offering price may be further reduced as described below above under “Rights of Accumulation” if the Servicer is advised of all other accounts at the time of the investment.
•	Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI.
*Calculating the Number of Shares to be Purchased*
•	Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period.
•	Purchases made more than 90 days before signing an LOI will be applied toward the completion of the LOI based on the value of the shares purchased that is calculated at the public offering price on the effective date of the LOI.
•	If you meet the original obligation at any time during the 13-month period, you may revise the intended investment amount upward by submitting a written and signed request. This revision will not change the original expiration date.

- 31 -

•	The Servicer will process necessary adjustments upon the expiration or completion date of the LOI.
*Fulfilling the Intended Investment*
•	By signing an LOI, you are not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, you will have to pay the increased amount of sales charge.
•	To assure compliance with the provisions of the 1940 Act, the Servicer will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share) out of the initial purchase (or subsequent purchases if necessary). All dividends and any capital gain distributions on the escrowed shares will be credited to you. All shares purchased, including those escrowed, will be registered in your name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released.
•	If the intended investment is not completed, you will pay the Servicer the difference between the sales charge on the specified amount and the sales charge on the amount actually purchased. If you do not pay such difference within 20 days of the expiration date, you irrevocably appoint the Servicer as your attorney-in-fact to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date.
*Canceling the LOI*
•	If at any time before completing the LOI Program you wish to cancel the agreement, you must give written notice to the Distributor.
•	If at any time before completion the LOI Program you request the Servicer to liquidate or transfer beneficial ownership of your total shares, the LOI will be automatically canceled. If the total amount purchased is less than the amount specified in the LOI, the Servicer will redeem an appropriate number of escrowed shares equal to the difference between the sales charge actually paid and the sales charge that would have been paid if the total purchases had been made at a single time.

Sales Charge Waivers. The A Class Shares’ initial sales charges will be waived for certain types of investors, as described in the Prospectus.

DIVIDENDS, DISTRIBUTIONS, AND TAXES

Dividends and Distributions
Dividends from net investment income and any distributions of net realized capital gains from each of the Funds will be distributed as described in the Trust’s Prospectuses under “Dividends and Distributions.” Normally, all such distributions of a Fund will automatically be reinvested without charge in additional shares of the same Fund.

Federal Tax Treatment of Dividends and Distributions
The following is only a summary of certain additional federal income tax considerations generally affecting the Funds and their shareholders that are not described in the Funds’ Prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Funds or their shareholders, and

- 32 -

the discussion here and in the Funds’ Prospectus is not intended as a substitute for careful tax planning.

The following general discussion of certain federal income tax consequences is based on the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations issued thereunder as in effect on the date of this Statement of Additional Information. New legislation, as well as administrative changes or court decisions, may significantly change the conclusions expressed herein, and may have a retroactive effect with respect to the transactions contemplated herein.

Shareholders are urged to consult their own tax advisors regarding the application of the provisions of tax law described in this Statement of Additional Information in light of the particular tax situations of the shareholders and regarding specific questions as to federal, state, or local taxes.

Regulated Investment Company (“RIC”) Status
Each of the Funds intends to seek to qualify for, and elect to be treated as a RIC under Subchapter M of the Code. Accordingly, each Fund must, among other requirements, (a) derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, and certain other related income, including, generally, certain gains from options, futures and forward contracts derived with respect to its business of investing in such stock, securities or currencies; and (b) diversify its holding so that, at the end of each fiscal quarter of its taxable year, (i) at least 50% of the market value of the Fund’s total assets is represented by cash and cash items, US Government securities, securities of other RICs, and other securities, with such other securities limited, in respect to any one issuer, to an amount not greater than 5% of the value of the Fund’s total assets or 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its total assets is invested in the securities (other than US Government securities or securities of other RICs) of any one issuer or two or more issuers that a Fund controls and which are engaged in the same, or similar, or related trades or businesses. For purposes of the 90% gross income requirement above, foreign currency gains that are not directly related to a Fund’s principal business of investing in stock or securities (or options or futures with respect to stock or securities) may be excluded from income that qualifies under the 90% requirement.

In addition, each Fund must distribute at least 90% of its investment company taxable income (generally includes dividends, taxable interest, and the excess of net short-term capital gains over net long-term capital losses less operating expenses, but determined without any deduction for dividends paid to shareholders) and at least 90% of its net tax-exempt interest income, if any, for each tax year to its shareholders. If a Fund meets all of the RIC requirements, it will not be subject to federal income tax on any of its net investment income or capital gains that it distributes to shareholders. The Board reserves the right not to maintain the qualification of a Fund as a RIC if it determines such course of action to be beneficial to shareholders.

Although each Fund intends to distribute substantially all of its net investment income and may distribute its capital gains for any taxable year, each Fund will be subject to federal income taxation to the extent any such income or gains are not distributed. In addition, as described below, a federal excise tax may be imposed in the event a Fund fails to meet certain distribution thresholds.

As a RIC, a Fund would not be subject to federal income taxes on the net investment income and capital gains that the Fund distributes to the Fund’s shareholders. The distribution of net investment income and capital gains will be taxable to Fund shareholders regardless of whether the shareholder elects to receive these distributions in cash or in additional shares. Distributions reported to Fund shareholders as long-term capital gains shall be taxable as such, regardless of how long the shareholder has owned the shares. Fund shareholders will be notified annually by the Fund as to the

- 33 -

federal tax status of all distributions made by the Fund. Distributions may be subject to state and local taxes.

In the event of a failure by a Fund to qualify as a RIC for any taxable year, all of its taxable income will be subject to tax at regular corporate income tax rates without any deductions for distributions to shareholders. In addition, the Fund’s distributions, to the extent such distributions are derived from the Fund’s current or accumulated earnings and profits, would constitute dividends that would be taxable to the shareholders as ordinary income. In general, subject to certain limitations, such dividends would be eligible for the dividends received deduction for corporate shareholders.

A Fund may invest in complex securities such as equity options, index options, repurchase agreements, and futures contracts. These investments may be subject to numerous special and complex tax rules. These rules could affect whether gains and losses recognized by a Fund are treated as ordinary income or capital gain, accelerate the recognition of income to a Fund and/or defer a Fund’s ability to recognize losses. In turn, those rules may affect the amount, timing or character of the income distributed to you by a Fund. A Fund may be subject to foreign withholding taxes on income it may earn from investing in foreign securities, which may reduce the return on such investments. It is not expected that any of the Funds will be able to pass through to you your pro-rata share of any foreign taxes paid by a Fund.

A Fund has available to it a number of elections under the Code concerning the treatment of certain complex securities for tax purposes. A Fund will utilize the tax treatment that, in the Fund’s judgment, will be most favorable to a majority of investors in the Fund. Taxation of these transactions will vary according to the elections made by the Fund. These tax considerations may have an impact on investment decisions made by the Fund.

A Fund’s transactions in options, under some circumstances, could preclude the Fund’s qualifying for the special tax treatment available to investment companies meeting the requirements of Subchapter M of the Code. However, it is the intention of each Fund’s portfolio management to limit gains from such investments to less than 10% of the gross income of the Fund during any fiscal year in order to maintain this qualification.

Fund Distributions
Distributions of investment company taxable income will be taxable to shareholders as ordinary income, regardless of whether such distributions are paid in cash or are reinvested in additional Shares, to the extent of a Fund’s earnings and profits. Each Fund anticipates that it will distribute substantially all of its investment company taxable income for each taxable year.

Each Fund may either retain or distribute to shareholders its excess of net long-term capital gains over net short-term capital losses (net capital gains). If such gains are distributed as a capital gains distribution, they are taxable to shareholders at rates applicable to long-term capital gains regardless of how long the shares were held. If any such gains are retained, a Fund will pay federal income tax thereon, and, if such Fund makes an election, the shareholders will include such undistributed gains in their income, will increase their basis in Fund shares by the difference between the amount of such includable gains and the tax deemed paid by such shareholder and will be able to claim their share of the tax paid by the Fund as a refundable credit.

If a Fund’s distributions exceed its taxable income and capital gains realized during a taxable year, all or a portion of the distributions made in the same taxable year may be recharacterized as a return of capital to shareholders. A return of capital distribution will generally not be taxable but will reduce each shareholder’s cost basis in a Fund and result in a higher reported capital gain or lower reported capital loss when those shares on which the distribution was received are sold, or exchanged.

- 34 -

Ordinarily, investors should include all dividends as income in the year of payment. However, dividends declared payable to shareholders of record in October, November, or December of one year, but paid in January of the following year, will be deemed for tax purposes to have been received by the shareholder and paid by a Fund in the year in which the dividends were declared.

Investors should be careful to consider the tax implications of purchasing a Fund’s shares just prior to the ex-dividend date of any ordinary income dividend or capital gains distributions. Those investors will be taxable on the entire amount of the dividend or distribution received, even though some or all of the amount distributed may have been realized by a Fund prior to the investor’s purchase.

Each Fund will provide an annual statement to shareholders describing the federal tax status of distributions paid (or deemed to be paid) by the Fund during the year, including the amount of dividends eligible for the corporate dividends-received deduction.

Sale, Exchange, or Redemption of Fund Shares
The sale, exchange or redemption of a Fund share is generally a taxable event for the shareholder. Generally, if you hold your shares as a capital asset, gain or loss on the sale, exchange or redemption of a Fund share will be capital gain or loss. However, if a shareholder realizes a loss on the sale, exchange or redemption of a Fund share held for six months or less and has previously received a capital gains distribution with respect to the share (or any undistributed net capital gains of the Fund with respect to such share are included in determining the shareholder’s long-term capital gains), the shareholder must treat the loss as a long-term capital loss to the extent of the amount of the prior capital gains distribution (or any undistributed net capital gains of the Fund that have been included in determining such shareholder’s long-term capital gains). In addition, any loss realized on a sale or other disposition of Fund shares will be disallowed to the extent an investor repurchases (or enters into a contract or option to repurchase) shares within a period of 61 days (beginning 30 days before and ending 30 days after the disposition of the shares). This loss disallowance rule will apply to shares received through the reinvestment of dividends during the 61-day period.

Federal Excise Tax
If a Fund fails to distribute in a calendar year at least 98% of its ordinary income for the year and 98% of its capital gain net income (the excess of short and long term capital gains over short and long term capital losses) for the one-year period ending on October 31 of that year (and any retained amount from the prior calendar year), a Fund will be subject to a nondeductible 4% Federal excise tax on undistributed amounts not meeting the 98% threshold. Each Fund intends to make sufficient distributions to avoid triggering the tax, but can give no assurances that its distributions will be sufficient to eliminate all excise taxes.

Back-Up Withholding
Each Fund is required to withhold and remit to the U.S. Treasury 30% of (i) reportable taxable dividends and distributions and (ii) the proceeds of any redemptions of Fund shares with respect to any shareholder who is not exempt from withholding due to a failure to furnish the Trust with a correct taxpayer identification number, a failure to report fully dividend or interest income, or failure to certify to the Trust that the shareholder has provided a correct taxpayer identification number and that the shareholder is not subject to withholding, or failure to certify that such a shareholder is a U.S. person (including a U.S. resident alien). (An individual’s taxpayer identification number is generally the individual’s social security number.) The 30% “back-up withholding tax” is not an additional tax and may be credited against a taxpayer’s regular federal income tax liability.

State Tax Issues
Each Fund may be subject to tax or taxes in certain states where the Fund does business. Rules of state and local taxation of dividend and capital gains distributions from regulated investment companies often differ from the rules for federal income taxation described above. Shareholders are

- 35 -

urged to consult their tax advisor regarding state and local tax rules affecting an investment in Fund shares.

Many states grant tax-free status to dividends paid to you from interest earned on direct obligations of the U.S. government, subject in some states to minimum investment requirements that must be met by a fund. Investment in Ginnie Mae or Fannie Mae securities, bankers acceptances, commercial paper, and repurchase agreements collateralized by U.S. government securities do not generally qualify for such tax-fee treatment. The rules on exclusion of this income are different for corporate shareholders.

OTHER INFORMATION

Voting Rights
You receive one vote for every full Fund share owned. Each Fund or class of a Fund will vote separately on matters relating solely to that Fund or class. All shares of the Funds are freely transferable.

As a Delaware business trust, the Trust is not required to hold annual Shareholder meetings unless otherwise required by the 1940 Act. Shareholders approval will be sought, however, for certain changes in the operation of the Trust and for the election of Trustees under certain circumstances. Under the Declaration of Trust, the Trustees have the power to liquidate one or more Funds without shareholder approval. While the Trustees have no present intention of exercising this power, they may do so if a Fund fails to reach a viable size within a reasonable amount of time or for some other extraordinary reason.

In addition, a Trustee may be removed by the remaining Trustees or by shareholders at a special meeting called upon written request of shareholders owning at least 10% of the outstanding shares of the Trust. In the event that such a meeting is requested, the Trust will provide appropriate assistance and information to the shareholders requesting the meeting. Shareholder inquiries can be made by calling 1-800-820-0888 or 301-296-5100, or by writing to the Trust at 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850.

Code of Ethics
The Board ofTrustees of the Trust has adopted a Combined Code of Ethics (the “Code”) pursuant to Rule 17j-1 under the 1940 Act. The Advisor, Servicer and Distributor are also covered by the Code. The Code applies to the personal investing activities of trustees, directors, officers and certain employees (“access persons”). Rule 17j-1 and the Code are designed to prevent unlawful practices in connection with the purchase or sale of securities by access persons. Under the Code, access persons are permitted to engage in personal securities transactions, but are required to report their personal securities transactions for monitoring purposes. In addition, certain access persons are required to obtain approval before investing in initial public offerings or private placements. The Code is on file with the Securities and Exchange Commission, and is available to the public.

Reporting
You will receive the Trust’s unaudited financial information and audited financial statements. In addition, the Trust will send you proxy statements and other reports. If you are a customer of a financial institution that has purchased shares of a Fund for your account, you may, depending upon the nature of your account, receive all or a portion of this information directly from your financial institution.

Shareholder Inquiries
You may visit the Trust’s Web site at www.rydexfunds.com or call 800.820.0888 or 301.296.5100 to obtain information on account statements, procedures, and other related information.

- 36 -

INDEX PUBLISHERS

The Rydex Funds are not sponsored, endorsed, sold or promoted by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”). S&P makes no representation or warranty, express or implied, to the owners of the Rydex Funds or any member of the public regarding the advisability of investing in securities generally or in the Rydex Funds particularly or the ability of the S&P Indexes to track general stock market performance. S&P's only relationship to Rydex Global Advisors is the licensing of certain trademarks and trade names of S&P and of the S&P Indexes which is determined, composed and calculated by S&P without regard to Rydex Global Advisors or the Rydex Funds. S&P has no obligation to take the needs of Rydex Global Advisors or the owners of the Rydex Funds into consideration in determining, composing or calculating the S&P Indexes. S&P is not responsible for and has not participated in the determination of the prices and amount of the Rydex Funds or the timing of the issuance or sale of the Rydex Funds or in the determination or calculation of the net asset value of the Rydex Funds. S&P has no obligation or liability in connection with the administration, marketing or trading of the Rydex Funds.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P INDEXES OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY RYDEX GLOBAL ADVISORS, OWNERS OF THE RYDEX FUNDS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P INDEXES OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P INDEXES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

COUNSEL

Morgan, Lewis & Bockius LLP serves as counsel to the Trust.

INDEPENDENT ACCOUNTANT AND CUSTODIAN

PricewaterhouseCoopers LLP, 250 West Pratt Street, Suite 2100, Baltimore, Maryland 21201, is the independent certified public accountant of the Trust and each of the Funds.

U. S. Bank, 425 Walnut Street, Cincinnati, Ohio 45202, serves as custodian for the Trust and the Funds. The custodian holds the portfolio securities of each Fund and keeps all necessary related accounts and records.

FINANCIAL STATEMENTS

The Trust’s financial statements for the fiscal year ended December 31, 2002, including notes thereto and the report of PricewaterhouseCoopers LLP are incorporated by reference into this SAI. A copy of the Trust’s Annual Report to Shareholders (the “Annual Report”) must accompany the delivery of this Statement of Additional Information.

- 37 -

PART C: OTHER INFORMATION

Item 23.	Exhibits:

(a) (1)	Certificate of Trust of NewCo Trust is incorporated by reference to
	Exhibit (a) (1) of the Initial Registration Statement, as filed August 9,
	1999.

(a) (2)	Declaration of Trust of NewCo Trust is incorporated by reference to
	Exhibit (a) (2) of the Initial Registration Statement, as filed August 9,
	1999.

(a) (3)	Amended and Restated Certificate of Trust, dated November 23, 1999,
	is incorporated herein by reference to Exhibit (a)(3) of Pre-Effective
	Amendment No. 1 to this Registration Statement, filed November 24,1999.

(a) (4)	Amended and Restated Declaration of Trust, dated November 23, 1999,
	is incorporated herein by reference to Exhibit (a)(4) of Pre-Effective
	Amendment No. 1 to this Registration Statement, filed November 24, 1999.

(b) (1)	By-Laws of Registrant are incorporated herein by reference to Exhibit (b)
	of the Initial Registration Statement, as filed August 9, 1999.

(b) (2)	Amended and Restated By-Laws, dated November 23, 1999, are
	incorporated herein by reference to Exhibit (b)(2) of Pre-Effective
	Amendment No. 1 to this Registration Statement, filed November 24,1999.

(c)	Not Applicable.

(d)	Investment Advisory Agreement between the Registrant and PADCO Advisors,
	Inc., is incorporated herein by reference to Exhibit (d) of Post-Effective
	Amendment No. 3 to this Registration Statement, filed April 27, 2001.

(e)	Distribution Agreement between the Registrant and PADCO Financial Services,
	Inc., is incorporated herein by reference to Exhibit (e) of Post-Effective
	Amendment No. 3 to this Registration Statement, filed April 27, 2001.

(f)	Not Applicable.

(g)	Form of Custodian Agreement between the Registrant and Firstar Bank,
	N.A., dated November 1999, is incorporated herein by reference to Exhibit
	(g) of Pre-Effective Amendment No. 1 to this Registration Statement, filed
	November 24, 1999.

iii

(h) (1)	Service Agreement between the Registrant and PADCO Service Company, Inc.,
	is incorporated herein by reference to Exhibit (h)(1) of Post-Effective
	Amendment No. 3 to this Registration Statement, filed April 27, 2001.

(h) (2)	Accounting Services Agreement between the Registrant and PADCO Service
	Company, Inc., is incorporated herein by reference to Exhibit (h)(2) of Post-
	Effective Amendment No. 3 to this Registration Statement, filed April 27, 2001.

(i)	Legal Opinion of Morgan, Lewis & Bockius LLP is filed herewith.

(j)	Consent of Independent Accountants PricewaterhouseCoopers LLP is filed
	herewith.

(k)	Not Applicable.

(l)	Not Applicable.

(m)	Distribution Plan, dated August 10, 1999, as amended February 25, 2000, is
	incorporated herein by reference to Exhibit (m) of Post-Effective Amendment
	No. 3 to this Registration Statement, filed April 27, 2001.

(m)(1)	Distribution and Shareholder Services Plan, dated August 28, 2000, is
	incorporated herein by reference to Exhibit (e) of Post-Effective Amendment No.
	3 to this Registration Statement, filed April 27, 2001.

(n)	Not Applicable.

(o)	Rule 18f-3 Plan, dated August 28, 2000 is incorporated herein by reference to
	Exhibit (e) of Post-Effective Amendment No. 3 to this Registration Statement,
	filed April 27, 2001.

(p)	Combined Code of Ethics for Rydex Series Funds, Rydex Variable Trust,
	Rydex Dynamic Funds, PADCO Advisors, Inc. d/b/a Rydex Global
	Advisors, PADCO Advisors II, Inc. d/b/a Rydex Global Advisors, Rydex
	Distributors, Inc., and PADCO Service Company, Inc. is incorporated by
	reference to Exhibit (p) of Post-Effective Amendment No. 3 to Rydex
	Variable Trust’s Registration Statement (File Nos. 333-57017 and 811-
	08821), filed on April 5, 2000.

Item 24. Persons Controlled by or under Common Control with Registrant

Not Applicable.

Item 25. Indemnification

The Registrant is organized as a Delaware business trust and is operated pursuant to a Declaration of Trust, dated as of August 6, 1999 (the “Declaration of Trust”), that permits the Registrant to indemnify its trustees and officers under certain circumstances. Such indemnification, however, is subject to the limitations imposed by the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended. The Declaration of Trust of the Registrant provides that officers and trustees of the Trust shall be indemnified by the Trust against liabilities and expenses of defense in proceedings against them by reason of the fact that they each serve as an officer or trustee of the Trust or as an officer or trustee of another entity at the request of the entity. This indemnification is subject to the following conditions:

(a)	no trustee or officer of the Trust is indemnified against any liability to the Trust or its
	security holders which was the result of any willful misfeasance, bad faith, gross
	negligence, or reckless disregard of his duties;

(b)	officers and trustees of the Trust are indemnified only for actions taken in good faith
	which the officers and trustees believed were in or not opposed to the best interests of the
	Trust; and

(c)	expenses of any suit or proceeding will be paid in advance only if the persons who will
	benefit by such advance undertake to repay the expenses unless it subsequently is
	determined that such persons are entitled to indemnification.

The Declaration of Trust of the Registrant provides that if indemnification is not ordered by a court, indemnification may be authorized upon determination by shareholders, or by a majority vote of a quorum of the trustees who were not parties to the proceedings or, if this quorum is not obtainable, if directed by a quorum of disinterested trustees, or by independent legal counsel in a written opinion, that the persons to be indemnified have met the applicable standard.

Item 26. Business and other Connections of the Investment Adviser

ADVISER
PADCO Advisors, Inc., d/b/a Rydex Global Advisors, (the “Advisor”) is the investment advisor for the Trust. The principal address of the Advisor is 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850. The Advisor is an investment adviser registered under the Advisers Act.

The officers and directors of the Advisor are as follows:

Name	Position
Albert P. Viragh, Jr	Chairman and President
Albert P. Viragh, Jr	Treasurer
Michael P. Byrum	Executive Vice President
Robert M. Steele	Executive Vice President

Joanna M. Mooney Secretary and Assistant Treasurer

Additional information as to any other business, profession, vocation or employment of substantial nature engaged in by each such officer and director is included in the Trust’s Statement of Additional Information.

Item 27. Principal Underwriters

(a)	Rydex Distributors, Inc. (formerly, PADCO Financial Services, Inc.) serves as the principal
	underwriter for H Class, C Class, and Master Class Shares of the Registrant, Investor Class,
	Advisor Class, C Class, H Class, and Master Class Shares of Rydex Series Funds, the shares of
	Rydex Variable Trust and Rydex ETF Trust, but does not currently serve as the principal
	underwriter for the securities of any other investment company.

(b)	The following information is furnished with respect to the directors and officers of Rydex
	Distributors, Inc.

Name and Principal	Positions and Offices With	Positions and Offices
Business Address*	Underwriter	with Registrant

Albert P. Viragh, Jr.	Chairman of the Board of Directors,	Chairman of the Board
	President and Treasurer	of Trustees and President

Carl G. Verboncoeur	Vice President	Vice President and Treasurer

Robert M. Steele	Vice President	Vice President and Secretary

Timothy Meyer	Vice President	N/A

Michael P. Byrum	Secretary	Vice President

Joanna M. Mooney	Assistant Secretary	Assistant Secretary

Item 28. Location of Accounts and Records

All accounts, books, and records required to be maintained and preserved by Section 31(a) of the

Investment Company Act of 1940, as amended, and Rules 31a-1 and 31a-2 thereunder, will be kept by the Registrant at 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850.

Item 29. Management Services

There are no management-related service contracts not discussed in Parts A and B.

Item 30. Undertakings

None

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, the Registrantcertifies that it meets the requirements of Rule 485(b) of the Securities Act of 1933 for effectiveness of this Registration Statement and has duly caused this Post-Effective Amendment No. 6 to the Registration Statement (File No. 811-09525) to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Rockville, State of Maryland on this 25th day of April, 2003.

Rydex Dynamic Funds

By: /s/Albert P. Viragh, Jr.

Albert P. Viragh, Jr.

President

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 6 to the Registration Statement has been signed below by the following persons in the capacity and on the dates indicated.

<R>

Signature	Title	Date

/s/Albert P. Viragh, Jr.	Chairman of the Board of Trustees,	April 25, 2003
	Principal Executive Officer, and
Albert P. Viragh, Jr.	President

*	Member of the Board of Trustees	April 25, 2003

Corey A. Colehour
*	Member of the Board of Trustees	April 25, 2003

J. Kenneth Dalton
*	Member of the Board of Trustees	April 25, 2003

John O. Demaret
*	Member of the Board of Trustees	April 25, 2003

Patrick T. McCarville
*	Member of the Board of Trustees	April 25, 2003

Roger Somers
*	Member of the Board of Trustees	April 25, 2003

Corey A. Colehour

/s/Carl G. Verboncoeur	Vice President and Treasurer	April 25, 2003

</R>

vii

Carl G. Verboncoeur

*By /s/Albert P. Viragh, Jr.

*Albert P. Viragh, Jr.,

With Power of Attorney

vii

EXHIBIT INDEX

Exhibit #	Name
(a) (1)	Certificate of Trust of NewCo Trust is incorporated by reference to
	Exhibit (a) (1) of the Initial Registration Statement, as filed August 9,
	1999.

(a) (2)	Declaration of Trust of NewCo Trust is incorporated by reference to
	Exhibit (a) (2) of the Initial Registration Statement, as filed August 9,
	1999.

(a) (3)	Amended and Restated Certificate of Trust, dated November 23, 1999,
	is incorporated herein by reference to Exhibit (a)(3) of Pre-Effective
	Amendment No. 1 to this Registration Statement, filed November 24,1999.

(a) (4)	Amended and Restated Declaration of Trust, dated November 23, 1999,
	is incorporated herein by reference to Exhibit (a)(4) of Pre-Effective
	Amendment No. 1 to this Registration Statement, filed November 24, 1999.

(b) (1)	By-Laws of Registrant are incorporated herein by reference to Exhibit (b)
	of the Initial Registration Statement, as filed August 9, 1999.

(b) (2)	Amended and Restated By-Laws, dated November 23, 1999, are
	incorporated herein by reference to Exhibit (b)(2) of Pre-Effective
	Amendment No. 1 to this Registration Statement, filed November 24,1999.

(c)	Not Applicable.

(d)	Investment Advisory Agreement between the Registrant and PADCO Advisors,
	Inc., is incorporated herein by reference to Exhibit (d) of Post-Effective
	Amendment No. 3 to this Registration Statement, filed April 27, 2001.

(e)	Distribution Agreement between the Registrant and PADCO Financial Services,
	Inc., is incorporated herein by reference to Exhibit (e) of Post-Effective
	Amendment No. 3 to this Registration Statement, filed April 27, 2001.

(f)	Not Applicable.

(g)	Form of Custodian Agreement between the Registrant and Firstar Bank,
	N.A., dated November 1999, is incorporated herein by reference to Exhibit
	(g) of Pre-Effective Amendment No. 1 to this Registration Statement, filed
	November 24, 1999.

(h) (1)	Service Agreement between the Registrant and PADCO Service Company, Inc.,
	is incorporated herein by reference to Exhibit (h)(1) of Post-Effective
	Amendment No. 3 to this Registration Statement, filed April 27, 2001.

(h) (2)	Accounting Services Agreement between the Registrant and PADCO Service
	Company, Inc., is incorporated herein by reference to Exhibit (h)(2) of Post-
	Effective Amendment No. 3 to this Registration Statement, filed April 27, 2001.
(i)	Legal Opinion of Morgan, Lewis & Bockius LLP is filed herewith.

(j)	Consent of Independent Accountants PricewaterhouseCoopers LLP is filed
	herewith.
(k)	Not Applicable.

(l)	Not Applicable.

(m)	Distribution Plan, dated August 10, 1999, as amended February 25, 2000, is
	incorporated herein by reference to Exhibit (m) of Post-Effective Amendment
	No. 3 to this Registration Statement, filed April 27, 2001.

(m)(1)	Distribution and Shareholder Services Plan, dated August 28, 2000, is
	incorporated herein by reference to Exhibit (e) of Post-Effective Amendment No.
	3 to this Registration Statement, filed April 27, 2001.

(n)	Not Applicable.

(o)	Rule 18f-3 Plan, dated August 28, 2000 is incorporated herein by reference to
	Exhibit (e) of Post-Effective Amendment No. 3 to this Registration Statement,
	filed April 27, 2001.

(p)	Combined Code of Ethics for Rydex Series Funds, Rydex Variable Trust,
	Rydex Dynamic Funds, PADCO Advisors, Inc. d/b/a Rydex Global
	Advisors, PADCO Advisors II, Inc. d/b/a Rydex Global Advisors, Rydex
	Distributors, Inc., and PADCO Service Company, Inc. is incorporated by
	reference to Exhibit (p) of Post-Effective Amendment No. 3 to Rydex
	Variable Trust’s Registration Statement (File Nos. 333-57017 and 811-
	08821), filed on April 5, 2000.

Total Brokerage Commissions Paid to Affiliates for the fiscal year ending 2000 ($)

Total
Brokerage
Commissions
Paid to
Affiliates for
the fiscal
year ending
2000
($)