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497

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RYDEX SERIES FUNDS

Amendment Flag

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false

Document Effective Date

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Mar. 11, 2013

Supplement [Text Block]

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RYDEX SERIES FUNDS

Multi-Hedge Strategies Fund (the “Fund”)

Supplement dated March 11, 2013

to the currently effective Statutory and Summary Prospectuses

dated May 1, 2012, as supplemented from time to time

This supplement provides new and additional information beyond that contained in the Statutory and Summary Prospectuses (together, the “Prospectuses”) listed above and should be read in conjunction with the Prospectuses.

Effective immediately, the discussion of the Fund’s principal investment strategies and the Fund’s principal risks are revised as described below to reflect the likelihood of the Fund obtaining leverage through the use of borrowings. The changes to the Fund’s principal investment strategies will have no impact on the Fund’s investment objective and investment policies.

Risk Narrative [Text Block]

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Under the heading “Principal Risks” in the Fund’s “Fund Summary” section, the following changes apply:

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The following principal risk is added:

Borrowing Risk — The Fund may borrow for several purposes, including investment purposes (i.e., to purchase additional portfolio securities). The Fund’s borrowings, which would be in the form of loans from banks, may be on a secured or unsecured basis and at fixed or variable rates of interest. The Fund’s ability to obtain leverage through borrowings is dependent upon its ability to establish and maintain an appropriate line of credit. Borrowing also will cost the Fund interest expense and other fees. The cost of borrowing may reduce the Fund’s return. In addition to any more stringent terms imposed by a lender, the 1940 Act requires the Fund to maintain continuous asset coverage of not less than 300% with respect to all borrowings. This would allow the Fund to borrow for such purposes an amount equal to as much as 33 1/3% of the value of its total assets. The Fund will borrow only if the value of the Fund’s assets, including borrowings, is equal to at least 300% of all borrowings, including the proposed borrowing. If at any time the Fund should fail to meet this 300% coverage requirement, within three business days, the Fund will seek to reduce its borrowings to meet the requirement. The Fund may be required to dispose of portfolio investments on unfavorable terms if market fluctuations reduce its asset coverage to less than 300%.

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The existing “Leveraging Risk” is deleted and replaced in its entirety by the following:

Leveraging Risk — The Fund derives substantially all of its commodities exposure from its investment in derivatives and other financial instruments that provide leveraged exposure. The Fund’s investment in these instruments generally requires a small investment relative to the amount of investment exposure assumed. As a result, such investments may give rise to losses that exceed the amount invested in those instruments. Because such instruments are an integral part of the Fund’s investment strategy, the use of such instruments may expose the Fund to potentially dramatic losses or gains in the value of its portfolio. The cost of investing in such instruments generally increases as interest rates increase, which will lower the Fund’s return. Leverage may also arise through the use of borrowings for investment purposes. To the extent the Fund purchases securities while it has outstanding borrowings, it is using leverage, i.e., using borrowed funds for investment. Leveraging will exaggerate the effect on the net asset value of any increase or decrease in the market value of the Fund’s portfolio. Money borrowed for leveraging will be subject to interest costs that may or may not be recovered by appreciation of the securities purchased. The 1940 Act limits the Fund from borrowing in an amount no more than 33 1/3% of its assets.