Rydex S&P 500 2x Strategy

Objective And Strategy

Objective
Investment results that correlate to the 200% of the performance of the S&P 500 Index on a daily basis. The fund does not seek to achieve its investment objective over a period of time greater than one day.

Strategy
Invests principally in securities of companies included in the underlying Index and in leveraged instruments, such as equity swap agreements, futures contracts and options on securities, futures contracts and stock indices. 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).
Tax Inefficient Fund

Principal Risks

* This portfolio is non-diversified, with the potential to invest a greater portion of its assets in a limited number of companies. Consequently, this portfolio may have more risk as changes in the value of a single security may have a more significant effect on the portfolio's net asset value.

* This portfolio can leverage or use leveraged instruments or derivatives. Portfolios that use leverage, that is, borrow money, are subject to the risk that the cost of borrowing money to leverage will exceed the returns for the securities purchased or that the securities purchased may actually go down in value. Thus, the portfolio's net asset value can decrease more quickly than if the portfolio had not borrowed. Portfolios that use leveraged instruments or derivatives such as futures, options and swap agreements, may expose the portfolio to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. The more a portfolio invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments.

* This portfolio is subject to tracking error risk such that the Advisor may not be able to cause the portfolio's performance to match or exceed that of its benchmark, either on a daily or an aggregate basis. Tracking error may cause the portfolio's performance to be less than you expect.

* Certain portfolios are subject to active trading risk. (Some may derive a significant portion of their assets from investors who take part in certain strategic and tactical asset allocation programs). The frequent exchange of shares of the portfolio may cause the portfolio to experience high turnover. High portfolio turnover may result in the portfolio having to pay higher transaction costs and may negatively impact the portfolio manager's ability to achieve the investment objective of the portfolio.